Trade marks abroad: Rookie errors

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16 April 2014

In a recent article entitled ‘Why TMs may be your biggest global sales and marketing risk’, US author Ed Marsh says that most businesses considering expansion concentrate on transactional and business issues rather than intellectual property (IP) law issues.  ‘They fret about payment risk and obsess over logistics’ says Marsh.Often at the expense of‘fundamental strategy work … and other critical preparatory steps requisite for success in international sales.’ In the process, they make‘rookie errors’that inevitably ‘bite them later’.

 

One of these fundamentals is trade marks.  Marsh says that research conducted by the US Patent and Trademarks Office (USPTO) shows that only 15% of American SMEs who sell their goods or services outside of the USA actually realize that their US trade mark registrations don’t extend beyond the USA. One can only speculate about what the percentage would be in South Africa.

 

Marsh gives an example of a common practical problem: ‘You receive some inquiries from an interested rep in a potentially interesting global market … you begin dialogue with the company and agree to authorize them to represent you … although there are periodic inquiries there are no substantive results … you eventually inform your non-performing rep that you are terminating your relationship … you replace them with a capable channel partner that quickly … closes an exciting order.’ And then, far from the success you dreamed of, everything goes pear-shaped, with the goods that you export being seized as counterfeit.   How’s that possible? Because ‘your spurned rep … squatted on your mark … although your products are as genuine as they could be in every regard, they are nevertheless …counterfeit in that market.’

 

So what should you – the savvy exporter of goods or services – be doing?  Well you should certainly make sure that your rep signs an agreement that makes it very clear that they have absolutely no rights to your trade mark.  You should be doing trade mark searching.  And you should be getting trade mark registrations.  We’ll examine searching and registration in more detail.

 

Trade mark searching

 

You search to make sure that you can use your trade mark in the country you’re interested in, in other words to make sure that you won’t be infringing any other company’s rights. You obviously need to search before commencing your commercial activities in the country. But just what activities are we talking about here?

 

According to Marsh, the International Trademark Association (INTA) recommends that you register (and by extension search) in all those countries where:

 

  • Products or parts for your products are manufactured.
  • Your goods or services are sold.
  • Research and development facilities are located.
  • Your products pass through during shipping.
  • You might expand your business in the future.
  • Counterfeiting is likely to be a problem.

It’s a pretty big list! Not everyone remembers to search. Brand South Africa didn’t when it changed its strapline from Alive With Possibility to More Than You Can Imagine, and then discovered that a Portuguese tourist authority had prior rights to the slogan – as a result, Brand South Africa had to change again to South Africa: Inspiring New Ways.  And even the biggest companies don’t always get it right. When Apple cleared the way for iPad, it bought registrations for the mark which it believed covered both Taiwan and China.  It paid US$35 000 for these registrations, only to find that they didn’t in fact extend to China. When Apple launched the iPad in China it was threatened with legal proceedings by a company that did have the mark registered there, and it had to do a much more expensive deal to buy this registration.

 

It’s an anomaly of 21st century business –we like to think that we operate in a global village, yet our trade mark and other IP rights are largely territorial, a separate right for each country. Which explains why the trade mark Polo can be owned in South Africa by a South African company which has absolutely no connection with Polo Ralph Lauren, as has been widely reported by an astonished (and even outraged) South African media.

 

Trade mark registration

 

Searching’s one thing, but South African companies doing business abroad also need to get trade mark registrations in the countries of interest to them.  They can do this in a number of different ways. There are, of course, national registrations, for example a registration in the USA, a registration in China, a registration in Namibia.  Then there are regional registrations. The best known of these is the system that pertains in the European Union, the Community Trade Mark (the name is set to change shortly to European Trade Mark), a single registration which covers every EU country – if you want protection in one, or perhaps simply a small number of EU countries, you might prefer to use national registrations.

 

Lastly there are international registrations. The term ‘ international registration’  is a bit of a  misnomer, because it’s not a case of a single registration having worldwide effect, but rather a way of getting registration in countries that belong to the international registration system (often referred to as the Madrid system) by way of a single registration that’s filed at the headquarters of the World Intellectual Property Organisation (WIPO) in Geneva – in the application you specify exactly which countries you want covered, and the cost of the exercise depends on the number of countries you designate. International registrations are not available to South African companies (with the exception of some who have significant operations abroad), because South Africa is not a member of the Madrid system. Which is a pity, because if it was it would be cheaper for South African companies to protect their trade marks abroad.

 

When it comes to trade mark protection in Africa, there are various options too. There are, of course, national registrations. Then there are two regional registrations systems.  The first of these, OAPI, covers French-speaking Africa, and it’s quite similar to the CTM system in that it involves a single registration covering all of the member countries (there is, in fact, no option of national registrations in these countries). A list of the OAPI countries appears below.  The second regional registration system is called ARIPO, and this is more akin to the international registration  system, in that it involves filing an application at the organisation’s headquarters (in this case in Harare), and designating those countries in which protection is required. A list of the ARIPO trade mark countries also appears below. Finally, international registration is also a possibility in a large number of African countries.

 

DM Kisch has a well-established international trade mark registration practice, with a strong emphasis on Africa. If you need advice on foreign registration, please contact…

OAPI countries: Benin, Burkina-Faso, Cameroon, Central African Republic, Chad, Republic of Congo, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Ivory Coast, Mali, Mauritania, Niger, Senegal, Togo, and the Union of the Comoros.

ARIPO trade mark countries: Botswana, Lesotho, Liberia, Malawi, Namibia, Swaziland, Uganda, United Republic of Tanzania (Tanganyika) and Zimbabwe. 

 

For more information, please contact:

 

LISA MCILWAINE-HILL

Head of Foreign Trade Mark Department and Director

Department: Trade Mark

Tel: +27 11 324 3066

Email: lisam@dmkisch.com