© 2001, Deeth Williams Wall LLP. All Rights Reserved. By: Gervas W. Wall and Nicholas Whalen (Articling Student at the Firm) Table of Contents
  1. Introduction
  2. The Madrid Agreement and its Limitations
  3. The Madrid Protocol
  4. US Satisfaction with Protocol
  5. Continued Reluctance to the Protocol
  6. Ratification Considerations for Canadians
  7. Conclusion
(Paper given at the 2001 Biennial Niagara-on-the-Lake Intellectual Property Law Symposium, Saturday, June 23, 2001)

INTRODUCTION

The processes needed for globalized trade will ultimately require harmonized processes for the registration of trade marks. The United States has already taken steps in this direction by ratifying the Trademark Law Treaty (TLT) and by initiating the ratification process for the Madrid Protocol. Canada largely conforms to the TLT, and ratification would bring significant burdens without benefit (particularly in requiring a classification system). Still, the process may be inevitable, so it is important to recognize the benefits and the burdens so as to cushion the blow.

Background

As the ratification process of the Madrid Protocol in the United States moves forward, its potential impact on North American trade mark agents is sure to become more pronounced. The Protocol to the Madrid Agreement Concerning the International Registration of Marks ("Madrid Protocol" or "Protocol"), as its name suggests, is a refinement of the Madrid Agreement Concerning the International Registration of Marks ("Madrid Agreement" or "Agreement") which was originally created in 1891. Together, the two treaties are known as the Madrid System. Both treaties attempt to simplify and harmonize the system for the simultaneous registration of new or existing trade marks across member states. The administration of international trade mark registration is also facilitated by Common Regulations under the Madrid Treaties (‘Rules’).

Neither treaty sits in isolation. Two other treaties play a pivotal role in the shape and implementation of the Madrid System. The common source of both treaties is the foreshadowing in Article 19 of the Paris Convention for the Protection of Industrial Property ("Paris Convention").

It is understood that the countries of the Union reserve the right to make separately between themselves special agreements for the protection of industrial property, in so far as these agreements do not contravene the provisions of this Convention.

The Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks ("Nice Agreement") details the preferred scheme for classifying trade marks on goods and services under the Madrid System.

Definitions

The States who are party to the Madrid Agreement make up the ‘Madrid Union’, and International Organizations are also allowed to join as ‘Contracting Parties’. ‘Office’ denotes the administrative body in charge of the registration of marks for a particular Contracting Party. The Office of the country or organization with which the basic registration is filed is known as the ‘Office of origin’. ‘Designated Contracting Parties’ are defined for each application as Contracting Parties designated by the applicant where protection of the mark is also to be extended.

The Madrid System

The process for international registration is very similar under the Agreement and the Protocol. Unless applications are refused, applicants deal solely with their Office of origin, which is responsible for dealing with the International Bureau of the World Intellectual Property Organization.

Marks are protected by country and by class. The Office of origin may establish its own rules and fees for national registration. The International Bureau administers international registration and collects a basic fee, a supplementary fee for each class of protection, and a complementary fee for each designation. The supplementary and complementary fees are distributed amongst Contracting States. Grounds for refusal by a designated Contracting Party are limited to those set out in the Treaty, even if the applicable requirements of national registration might have been more onerous.

The basis for protection in the Agreement is the notion of registration as the genesis of trade mark rights. This notion reflects the legal norm in most European countries, but stands in marked contrast to the "use" based system employed in Common Law countries. In Canada and the United States for example, use of a trade mark creates a property right, and registration creates additional enforcement rights. This ideological contrast is a source of dissatisfaction for Common Law countries.

THE MADRID AGREEMENT AND ITS LIMITATIONS

The Agreement

The Madrid Agreement was signed in 1891 by nine countries (Belgium, France, Guatemala, Italy, The Netherlands, Portugal, Spain, Switzerland, Tunisia) and offers an international registration system through the International Bureau of the World Intellectual Property Organization (WIPO). As of April 15, 2001, there were 52 parties to the Madrid Agreement, though these do not include Canada and United States.1

Under the Madrid Agreement, any national of a Contracting State may request an international registration for a mark, by way of application. The international application may be filed only after registration of the mark in the country of origin of the applicant ("home" or "basic" registration). The international application is filed with the applicant's national Office, designating those other Contracting Parties in whose territory protection is desired.

The application is then directed to the International Bureau, which issues an international registration for the mark, publishes the mark in the International Gazette, and forwards the application to the Offices of designated Contracting Parties for examination pursuant to national law. International registration is subject to the payment of basic, supplementary and complementary fees.

Unless a designated country acts within 12 months to refuse protection, the mark is deemed protected. If refused, the owner of the trade mark may take whatever action is allowed under local legislation, within the deadline set by the notice of refusal.

Once registered on the international register, the trade mark enjoys, in each of the member countries to which the registration extends, the same protection as if it had been directly registered in that country. An international registration lasts twenty years, and may be renewed indefinitely, at twenty-year intervals.

Every international registration enjoys the right of priority provided for by Article 4 of the Paris Convention. This Article preserves the date of application as the date for determining priority.2

The protection provided by the international registration remains dependent on the validity of the mark's home registration; if the home registration is terminated for any reason within 5 years of its issuance (referred to as a "central attack"), the international registration is invalidated.3

Under the Agreement, national offices will apply national trade mark law in examining international applications. Protection may not be refused, even partially, by reason that the applicable national legislation would permit registration only in a limited number of classes or for a limited number of goods or services.4

Problems with the Agreement

Varied legal views of the proper basis for trade mark protection make it difficult to craft an Agreement which will be embraced by all; property, goodwill and public interest can all be used to justify the limited monopoly granted for registered marks.

Theoretically, in a trade mark registration system based on property rights, trade marks can exist without use or function, and multiple similar marks can co-exist. Use or competing use may affect the value of particular mark but not its existence. An unused registered mark may have value in that it prevents competitors from developing the potential of the registrant's idea or it may simply allow for ‘squatting’ by its owner.

In a registration system based on goodwill or commercial activity, ‘use’ is a key element in the creation of trade mark rights. The function of the registered trade mark is the protection of the trade mark owner's investment in the mark, such as money spent on advertising and promotion.

From the standpoint of the public interest, there are benefits to limiting the monopoly trade marks enjoy. Confusing marks create the potential for misplaced reliance and harm. Purely descriptive marks create too wide a monopoly, and can restrict competition.

Trade marks help the public identify the source of goods and services, both to the benefit and detriment of trade mark holders. It is in the public interest that traders should operate and sell products under different names. Where a firm develops a reputation for quality goods, its trade marked products act as a standard for comparison in the marketplace.

While registration systems generally recognize the importance of each of the above interests, preferences still prevail and make harmonization difficult. In Intellectual Property: Patents, Copyright Trade marks and Allied Rights, W.R. Cornish introduces to questions to be asked in the context of international harmonization.5 First, "how far should traders be invested with power to sue upon the unfair business practices of their competitors?"6 Secondly, how should consumer welfare be balanced with international business demands? These interests are not easily reconciled, especially in the international context. After briefly describing the history of the Madrid System, the European Trade mark and the TLT, Cornish notes that "[i]n the confluence of trade mark laws, we can already sense considerable fluctuations of attitude as the different traditions of Member States wash against each other."7 These themes should form a backdrop for any dialogue on entry into international agreements that create or define intellectual property rights, such as the Madrid System.

It is generally accepted that market forces will encourage registration at the Office in the country where standards are lowest. This axiom is at the root of the majority of complaints with the Madrid Agreement, including: its basis for application, fee structure, lack of a use requirement, central attack provisions and examination time.

  1. Basis for Application: Under the Madrid Agreement, an international application must be based on a registered trade mark in a Contracting Party where the applicant has a real and effective industrial or commercial establishment, is domiciled or claims nationality.

    Registration is more difficult and time consuming in Canada than it is in France for example. As a result, membership in the Madrid Agreement provides greater benefits to France, than it would to Canada should it choose to adhere. Consider two applicants with confusing trade marks, one in Canada and one in France, both of whom wish to register in their home countries and in a third Contracting Party. Under the Madrid Agreement, the French applicant would always win the race to register. To be fair, one should be able to file an international application at the same time as a home application.
  2. Fees: The fee structure under the Agreement is also problematic as it allows the various Offices of origin to set national, but not international fees. Where the cost of running the registry in a Contracting Party is higher than the amount received from the International Bureau after dividing the fees amongst member states, the shortfall must be borne by the Contracting Party in question.
  3. Use as a basis for Trade mark Protection: Under the Madrid Agreement, there is no convenient mechanism by which Canada, as a designated Contracting Party, can obtain information on prior use in a foreign jurisdiction. Indeed, Article 5 bis of the Madrid Agreement states that evidence of certain types of use "which might be required by the Offices of the contracting countries shall be exempt from any legalization or certification other than that of the Office of the country of origin."
  4. Central Attack: A further incentive towards least common denominator registration of trade mark is evidenced by the so-called ‘central attack’ provision. The Madrid Agreement provides that if the home country registration is successfully attacked during the first 5 years of the term of the international registration, all extensions of protection in the designated countries also cease. This would have had a particularly unfair impact on US and Canadian trade mark owners since many of the possible grounds of attack on US and Canadian registrations are not available in other countries, or by the US or Canadian Offices as designated Contracting Parties under the Madrid Agreement.
  5. Examination and Opposition: Another concern under the Madrid Agreement is the relatively short time frame for both the Offices of Contracting Parties and national trade mark holders to contest the international mark. One year is too short a pendency period in countries where use, and not registration, forms the primary basis for granting rights.8

    The competitive advantage of a Contracting Party with a shorter registration period is apparent in the following example. Assume that France has a fast registration process which lasts on average one month, and that Canada has a lengthy registration period which lasts on average three years.

    If both countries were party to the Agreement, an applicant could apply in France, and then file an international application designating Canada for extended protection. On average, this would mean that an applicant in France could get registrations in both Canada and France within 17 months (including normal delays). At this stage, the Canadian applicant would not even have a home registration. This problem arises under the dual application of the home registration requirement and the 12-month refusal period. This situation is not unique. Many foreign trade mark applicants would gain an advantage over local applicants in Canada. Applicants would be encouraged to register in France, for example to save time. At the same time, any the public policy interest promoted in Canada by the longer timeframe would be undermined.

THE MADRID PROTOCOL

Advances from the Agreement to the Protocol

The success of an international register is contingent upon broad membership. Many countries with established trade mark traditions (United States, Japan, the United Kingdom, the Scandinavian Countries, Canada and Australia) were not prepared to adhere to the Agreement.

To address some of the shortcomings in the Madrid Agreement, the parties to the Madrid Agreement negotiated the Madrid Protocol.9 It was signed on June 28, 1989 and took effect on April 1, 1996. As of April 15, 2001, 51 countries are party to the Protocol. This marks an increase of 3 since November 1, 2000. While the United States is expected to join sometime this year, neither Canada nor the US is a current signatory to the Protocol.

  1. Basis for Application: Unlike the Madrid Agreement, an international application filed under the Madrid Protocol may be based upon a home country application ("basic application"), or an earlier home country registration ("basic registration"). This addresses the concern that in the race to register, applicants in countries with faster registration processes would be more likely to obtain registrations in third countries for similar or confusing marks.

    The basis for filing international applications under the Protocol remains the same in terms of potential applicants. The person in whose name the basic application or basic registration stands may be a national of the Contracting State in which such an application was filed or registration obtained, or be domiciled, or have a real and effective industrial or commercial establishment in this Contracting State.
  2. 18 Months Election to Refuse Protection (Article 5): The time limit for a designated Contracting Party to refuse registration may be extended from 12 to 18 months if the Contracting Party makes a declaration under Article 5(2)(b) of the Protocol. A Contracting Party may also declare an opposition period of up to 7 months. This opposition period requires notice from the Office of the designated Contracting Party to the International Bureau for each individual application affected.

    This effectively limits the time for refusal in a designated Contracting Party to 25 months. While this is a vast improvement over the 12-month maximum period under the Madrid Agreement, nationals of Contracting Parties to the Madrid Protocol with registration periods longer than 25-months will continue to have more difficulties registering their trade marks (on average) than international applicants.
  3. "Transformation": The Madrid Protocol attempts to combat the problem of central attack, under which the cancellation of an international registration in the country of origin would result in a cancellation of the mark in all international registrations. The Protocol introduces the possibility of choosing a new Office of origin for a mark while retaining the benefit of the original filing date. If a basic application or registration is successfully attacked during the first 5 years of the international registration date, the owner may "transform" their extensions of protection in the designated countries into national filings to retain the effective filing date of the initial registration. This preserves the priority date of the international registration, provided the transformation is initiated within 3 months of being notified of the cancelled registration at the Office of origin.10

    At the expiry of a period of 5 years from the date of the international registration, the international registration becomes independent of the basic application or basic registration, and a transformation would be unnecessary. This is provided that all appeals to cancel the basic application or basic registration that were commenced within 5 years have expired.11
  4. Fees: Member countries may elect to charge their national fees for the examination of Madrid applications. The fees are still collected in Swiss Currency, by the International Bureau, but Contracting Parties may elect to receive either a share of the common complementary fees, or their own fees as set from time to time.12
  5. Registration and Renewal: The registration of a mark with the International Bureau is effective for 10 years, and is renewable. Any international registration can be renewed for a period of 10 years by the payment of a basic fee and any supplementary and complementary fees. This substantially increases the fees that may be recuperated from mark holders.

Treaties Incorporated into the Protocol by Reference

  1. Nice Agreement: The Nice Agreement Concerning the International Classification of Goods and Services for the Registration of Marks (‘Nice Agreement’) creates a standard classification system for trade marks using 34 classes for goods and 8 classes for services. The treaty is incorporated into the Madrid Protocol by reference and is the method of classification employed by the International Bureau.13 Sixty-six countries, including the United States, adhere to some or all of the provisions of the Nice Agreement, but Canada does not.14

    The Protocol suggests that the Nice Classification be used, where possible, by the Office of Origin in submitting international applications.15 This poses two problems for Canada. The first problem is in translating Nice Classes into Canadian descriptions in such a way as to preserve the use requirement of Canadian trade mark law. The second problem would be in certifying Canadian based international applications. Rules of concordance between the descriptions used in Canada and the standardized classes used elsewhere would have to be developed.
  2. Paris Convention for the Protection of Industrial Property: Article 5 of the Protocol restricts the basis on which the Office of a Contracting Party (member states or member international organizations) may refuse protection to an international applicant. Only those criteria set out in the Paris Convention are grounds for refusal. Article 6quinquies of the Paris Convention delineates three legitimate grounds on which a trade mark duly registered in the country of origin may be refused protection:
    1. where the trade mark would infringe on the pre-existing rights of a third party in the country where protection is sought;
    2. where it is not distinctive or indicates merely the kind, quality, quantity, purpose, value, place of origin, or time of production of the goods; and
    3. where the trade mark would be contrary to morality or public order or would deceive the public.
    In accordance with Article 6quinquies B of the Paris Convention, the above permitted grounds of refusal are enlarged by Article 10bis to refuse protection where the mark would be contrary to honest commercial or industrial practices.

    In Bodenhausen, Guide to the Application of the Paris Convention for the Protection of Industrial Property, it is argued that Article 6quinquies of the Paris Convention should be seen as infringing only to a minimal extent on the sovereign power to deny purely statutory rights. Member States are equally free, regardless of Article 6quinquies, to apply to trade mark applications other provisions of their domestic law not concerning the signs of which a trade mark is composed, such as a requirement of previous use of the mark, or the condition that the applicant must possess an industrial or commercial enterprise.16

US SATISFACTION WITH PROTOCOL

Despite certain conflicts, the United States has recently adopted many changes to its domestic law to facilitate ratification of the treaty. The final step in the process is the approval of H.R. 741, a bill currently before the Senate Judiciary Committee, which would allow the United States to sign on as a member of the Madrid Protocol.

Canada has not taken any formal steps to adopt the treaty, but there has been serious discussion on the matter. A draft paper by Mr. Alan Troicuk discusses the potential administrative impact of the Protocol on Canadian domestic law and institutions in depth.17

Mutual Benefits for the United States and the Madrid Union

US participation would do much to further the Protocol's purpose of providing a one-stop, inexpensive "shop" for trade mark applicants who, by filing one application in their country can receive protection from each member country of the Protocol (provided a similar mark does not already exist).

For products marketed and sold on an international scale, international protection could also increase the worth of a related mark by reducing the risk of liability (infringing someone else's national mark) and by reducing international marketing and registration costs.

Each country has its own laws determining the level of protection for trade marks and the type of marks that can be registered for particular products. US citizens seeking protection for their trade marks outside the United States are currently required to register individually in each country in which protection is sought.

On June 27, 1989, at a Diplomatic Conference in Madrid, Spain, the parties to the Madrid Agreement signed the Madrid Protocol. The United States was an observer and advisor to these talks but not a participant in the negotiations since only signatories could amend the Madrid Agreement through the Protocol. Subsequent talks, at which the United States has participated as an observer, have been devoted to developing regulations for the implementation of the Protocol for those countries and entities which have and will become signatories to it.

The goal, a low-cost, efficient system to promote the international registration of marks, would presumably assist US businesses in protecting their proprietary names. This is emblematic of the rhetoric used by proponents of US ratification who wish to appeal to the plight of small businesses, whose owners might otherwise lack the resources to acquire world-wide protection for their marks.

Improvements from the Madrid Agreement to the Protocol

The parties to the Madrid Agreement addressed many of the United States' concerns in drafting the Protocol. As a start, the Protocol improves efficiency by allowing international applications to be based on country of origin applications, so that all applications can be filed at the same time.18 The US also plans to opt for the extended 18-month period in which it can refuse to give effect to an international registration, plus an additional period of the 7 months or one month more than the opposition period, which ever is shorter.19 Higher filing and renewal fees will conform with the national fee structure in the United States. Finally, the US Congress, is satisfied that the Protocol does away with the "central attack" provision of the Madrid Agreement. Under the Protocol, a cancelled international registration may be converted into a national application in a given country and retain the benefit of its original effective filing date, meaning that a U.S. applicant whose mark is canceled in the U.S. will not automatically forfeit international protection.

Status of the Proposed United States Ratification

Ratification of the Madrid Protocol has been an ongoing process in the United States Congress for a number of years. This year, in the 107th Congress, the bill entitled The Madrid Protocol Implementation Act is H.R. 741, which passed the House of Representatives under suspended rules on March 14, 2001 (CR H889-893) and was referred to the Senate Committee on the Judiciary on March 15, 2001 (S.407).20 Despite a warning by the new administration that it would not ratify treaties brokered in the dying days of the old administration, it appears that implementation is still on track.

This bill was first introduced as H.R. 2129 on May 17, 1993 (the 103rd Congress), and passed by a Yea-Nay vote 397 - 3, the bill has been introduced in each subsequent Congress, normally stalling at the Senate Committee stage. The Senate Committee on the Judiciary has filed only one report on the Madrid Protocol Implementation Act. On March 27, 2000, Senator Hatch filed Report No. 106-249, which recommended ratifying the treaty, and detailed many of the Senate's reservations and how they were alleviated.

The United States has never been a signatory to the Madrid Agreement, and originally declined to join "because it contained terms deemed inimical to US intellectual property interests".21 But now, the Senate has opined that its procedural concerns over language, simultaneous filing, fees and publication period have been met. It also has reported that US legal and political concerns over ‘central attack’ and European Union voting have now been adequately addressed.

According to proponents of the ratification process, the Madrid Protocol provides all the benefits of the Madrid System's one-stop shop for worldwide trade mark protection, without requiring any change in substantive US trade mark law. The use requirement in the United States, for example, is alleviated by requiring affidavit evidence of use for each class of good or service during the year prior to the sixth anniversary of the registered trade mark, and within 6-months of every ten year renewal.22

A strong sign in favour of eventual ratification is Senate Report 106-249 endorsing the bill. Apparently, opposition in the 105th Congress was based at least in part on the State Department's attempts to resolve a dispute between the White House and the European Union regarding the voting rights of intergovernmental members of the Madrid Protocol in the Assembly of the Madrid System.

Pursuant to the Protocol, the European Union receives a separate vote as an intergovernmental organization. This vote is cast in addition to the votes of the Member States of the European Union. The existence of a supranational European trade mark issued by the Office for Harmonization in the Internal Market ("European Trade mark Office") justifies the additional vote in part, but offends the democratic concept of one vote per country. There is also the fear that this voting structure may establish a precedent for deviation from the one-vote-one-state principle in future international agreements.

On February 2, 2000, the Council of the European Union and the Representatives of Member States approved a Statement of Intent that resolved the dispute in line with the U.S. position. Where a vote in the Madrid Assembly is called for, the European Union and its Member States will consultations with other Contracting Parties in an effort to reach a common position. Should the Contracting Parties fail to reach a consensus on a given issue, European Union and its Member States have agreed to cast only as many votes as there are European Union Member States. "This agreement is similar to that reflected in the agreement establishing the World Trade Organization, in which the European Commission is permitted a vote, but can cast no more votes than the number of member states."23

According to the most recent Congressional Report from the House Judiciary Committee there is no opposition to the Madrid Protocol Implementation Act, nor to the substantive portions of the treaty, however, one issue remains to be addressed before the Protocol is ratified. During the 106th congress, a private dispute arose over the "Havana Club" mark between a rum distiller (Bacardi) and a French concern (Pernod) which formed a joint venture with the Cuban government. Attempts to modify the bill to prevent the expropriation of a mark registered to a third party were unsuccessful, and, as a result, the Senate ratification of the Protocol and passage of the implementing language were derailed. It is expected that, once a compromise on the matter is reached, the Senate will shortly ratify the Protocol and pass the implementing language.24

Speaking in favour of the Madrid Protocol Implementation Act on the House floor, Representative James Sensenbrenner said that currently

American trade mark owners must hire attorneys or agents in each individual country to acquire protection. This process is both laborious and expensive and discourages small businesses and individuals from registering their marks in Europe.

To which Representative John Conyers added

[t]he most important aspect of the protocol is that it allows entities to file for mark protection with all member countries through one fee and one application.

However, the private dispute over "Havana Club" had a very public aspect. Bacardi won the U.S. trial by virtue of Section 211 Omnibus appropriations act of 1998, which basically states that the U.S. will refuse to recognize trade marks that have been expropriated without compensation. The European Union has taken the position of Pernod, that the U.S. legislation is a violation of international trade rules. WTO members, meeting as the Dispute Settlement Body, agreed on 26 September 2000 to set up a panel to adjudicate on case DS176, "United States - Section 211 Omnibus appropriations act of 1998". The decision to set up the panel was as of right, since this was the EU's second request for a panel. The United States has traditionally stuck to its guns in disputes over the Cuban trade embargo, and so this impasse may be difficult to resolve.

CONTINUED RELUCTANCE TO THE PROTOCOL

While the Madrid Protocol does offer an international registry system more in line with Common Law interests than the Madrid Agreement, a number of practical and ideological considerations persist.

There is no organized opposition to the Madrid Protocol in the United States. Both the International Trademark Association and the U.S. Patent and Trademark Office (USPTO) are lobbying Congress to ratify the treaty. However, there is some concern in two areas.25 First, ratification of the Protocol may lead to overloading at the USPTO as both an Office of origin and as the Office of a designed Contracting Party. This may lead to a competitive disadvantage for US nationals who wish to fill abroad but must suffer the transitional delays. Secondly, and more importantly,

The Protocol will exacerbate the existing problem of over-claiming (even arguably fraudulent over-claiming) in descriptions of goods by foreigners. This will disadvantage US trade mark owners, who cannot similarly over-claim.26

These concerns are mirrored in Canada where the processes and traditions are very similar. Indeed, five practical and ideological problems demonstrate a natural Canadian resistance to the Madrid Protocol.

  1. The classification of marks is not yet in effect in Canada, as it is in other Madrid Protocol countries under the Nice Agreement.
  2. There is no effective process to administer the use requirement of Canadian trade mark law under the Madrid Protocol.
  3. Some amendments to an application would no longer be allowed under the Madrid Protocol, while formerly disallowed changes in title would be.
  4. The time lines for allowance, examination and publication in Canada are substantially different than under the Madrid System.
  5. Dealing with these problems, and with the expected influx of international applications, is expected to dramatically increase the workload of the Canadian Trade-mark Office.
  6. Procedures will be needed to ensure that the duties of the CTMO as Office of origin do not create a conflict of interest.27

Classification

In Canada, trade marks are not classified so much as applications are to contain "a statement in ordinary commercial terms of the specific wares or services in association with which the mark has been or is proposed to be used."28 Descriptions must not be too broad, the classic example being 'women's clothing' as too broad while ‘women's lingerie’ is sufficiently specific.

The Nice Agreement, by contrast, allows an applicant to choose an entire class of goods or services in which he or she trades. The system provides ease of searching, and certainty, but can be seen as a limitation on commercial development where overly broad trade marks are granted. The classic example used by Nice Agreement opponents is that fragrances and laundry detergent appear in the same class.

If Canada were to adhere immediately to the Protocol, the Canadian Trade-marks Office (CTMO) would be responsible for ensuring that international applications originating in Canada conform to the Nice Agreement classifications.29 As the Office of a designated Contracting Party, the CTMO would also have the difficult task of ensuring that the class based international applications conform to the section 30(a) requirements. Effectively, the CTMO would have to operate two systems simultaneously.

The process for remedying errors under this classification scheme could also be extremely costly in time, effort and reputation. Rule 12 of the Combined Madrid System regulations imposes a duty on Offices of origin to remedy classification errors in applications submitted to the International Bureau. The International Bureau is entitled to propose an alternative classification and to charge for this service, where faulty classifications have been attempted. The Office of origin is responsible for certifying the application, but should not jeopardize its position as a defender of the public interest by attempting to act on behalf of an international applicant before the International Bureau.

Alternatively, the Canadian government could adhere to the provisions provided by the Nice Agreement, or develop a system that worked by subdividing Nice categories to facilitate concordance between the international and domestic processes.

Not all authors share the fear that Nice Classes lead to overly broad protection for the trade marks so classified. In fact, Cornish argues that while the existence of separate classes is likely to restrict the range of goods or services outside a named class which can be regarded as similar, it is not decisive on the issue.30

Classification has other effects, too: if trade marks are protected within a class, does that mean that a similar trade mark for distinguishable goods within the class will be refused? What about a similar mark for similar goods in a different classification? Will classification have an effect on the test of confusion?

Limited Accommodation for a Use Requirement

Under Canadian law, it is not possible to obtain a trade mark unless there has been use of the mark in Canada or, with some restrictions, use of the mark in another country. It is possible to fill a preliminary application declaring an intention to use the mark, but registration cannot be completed until use has occurred.31

Applicants seeking to protect a foreign mark in Canada may register based on one of two exceptions. If the mark is registered in a WTO or Paris Convention country, then the applicant need only show use somewhere in the world. If the applicant does not have a registered trade mark, but is from a WTO or Paris Convention country, then it may obtain a registered trade mark in Canada if it can demonstrate that the mark has been made known in Canada though extensive advertising and the like.32

The right of Canada to demand evidence of use of a trade mark before registration is somewhat limited by other international conventions. Under the Paris Convention, refusal can be made on grounds consistent with the limitations in Article 6quinquies, which as discussed above, should not prohibit refusal on the grounds of failure to use. However, Article 5C(1) of the Paris Convention provides:

If, in any country, use of the registered mark is compulsory, the registration may be cancelled only after a reasonable period, and then only if the person concerned does not justify his inaction.

Both Article 15.3 of the Trade-Related Aspects of Intellectual Property Agreement (TRIPs) and NAFTA Article 1708.3 deal with the possibility that an applicant may have to demonstrate use before a trade mark can be registered in a Member State. But this use requirement is not unlimited. Article 15.3 of TRIPs states:

Members may make registrability depend on use. However, actual use of a trade mark shall not be a condition for filing an application for registration. An application shall not be refused solely on the ground that intended use has not taken place before the expiry of a period of three years from the date of application.

The use requirement is similarly limited under Article 3 of the TLT. Applicants are afforded six months, and then up to two and a half years of extensions, to demonstrate use before their application expires in TLT Member States. Canada adheres to the Paris Convention, NAFTA, and the TRIP's Agreement, but does not presently adhere to the TLT. Therefore, Canada is bound by an international obligation to allow 3 years before rejecting a trade mark application on the grounds of that use of the mark has not been established.

Under the Madrid Protocol use can be used as a basis for registrability by a Contracting Party. However, Canada will experience procedural difficulties in trying to obtain evidence of use through the official channels, and in sufficient time to accept or reject the mark. If Canada must develop entirely separate policies upon joining the Madrid Union, it suggests the questions, "why join?" Specialised policies run contrary to the harmonisation goal of a single international trade mark registry.

Besides Madrid Rules 9(6) and 7(2), which allow a designated Contracting Parties to require a declaration of use, the Protocol makes no further provision for the designated Contracting Party to obtain other use-related information. The CTMO would need to contact the applicant directly, or through a local representative to fulfil its current application process. The official international application forms do not contain any space for a date of first use, let alone space for specifying first use with respect to each class to be covered by the trade mark.

In order to preserve the use requirement under the Madrid Protocol, Canada can take one of two courses of action. First, the CTMO could be instructed to notify the International Bureau of a provisional refusal every time an international application designated Canada without identifying a date of first use. As noted by Troicuk, "[s]uch an approach, however, could place a significant additional workload on the CTMO and could subject Canada to criticism from other contracting parties".33 Under the Protocol and the Madrid Regulations, continual reliance on provisional refusals would be impractical and would raise objections from the International as well.

Alternatively, Canada could adopt the proposed US solution of granting the registration on the basis of proposed use for 6 years. If the trade mark holder does not file an affidavit evidencing use between the fifth and sixth anniversary of the registration date, then the registration is cancelled. An affidavit evidencing use would also be required within six months after each ten-year renewal period.

If the main purpose of the existing use requirements is to discourage the so-called "banking of trade-marks" or "trafficking in trade marks", there may be a question as to how much time would be appropriate to wait before cancelling the registration. Three years is the minimum time frame given Canada's commitments under NAFTA and TRIPs. Six years as of right might seem long in the Canadian context.

Pursuant to section 45 of the Canadian Trade-marks Act, the Registrar may request proof of use with respect to any registration. Failure to establish use in Canada, or a good excuse, may result in the registration being amended or expunged. This process does not offend the Madrid Protocol. So, a solution may already exist, provided that the three year time periods under Canada's other international obligations are met.34

Under Article 7 of the Protocol, however, it is not possible to link a use requirement directly with the international renewal process. As noted above, the US solution would be to require an affidavit evidencing use within 6 months after a renewal, and not as a condition of renewal.

In adhering to the Protocol, Canada might notice an increase in the number of marks on the its register that are not actually being used. By removing the CTMO's discretion in s. 45 of the Trade-marks Act, periodical filing of evidence of use would be mandatory. An amended s. 45 could be one mechanism for reducing the "deadwood" in the register.

Amendments and Changes

Certain amendments that are normally permissible in the Canadian trademark application process might require notification under the Madrid System, while certain transfers of title under the Madrid System are not presently allowed in Canada.

Amendments can be made to a Canadian application pursuant to Rules 30 to 33 of the Canadian Trade-Mark Regulations that might not be legitimate from a Madrid Protocol perspective, or which might require additional reporting. Under Article 6(4) of the Protocol, the Office of origin must notify the International Bureau of any facts and decisions relevant to "the rejection, revocation, cancellation or invalidation, in respect of all or some of the goods and services listed in the international registration."35

When presenting an application to the International Bureau, the CTMO would be required to certify that the particulars appearing in both the basic and international applications correspond at the time of the certification.36

Problems in this area might best be avoided by amending the Canadian Trade-marks Regulations to prohibit amendments to a Canadian application once that application has been delivered to the International Bureau as an international application.

Section 48(3) of the Trade-Marks Act requires sufficient documentation for service in Canada to register a transfer of title. Section 34(b) also conflicts with the Protocol and must be amended to allow an applicant or successor-in-title to be a citizen of any Paris Union country and not from the country in which the basic application was filed. In particular, Article 4D of the Paris Convention prevents a Member State from demanding this type of proof or this type of residency.

Timing Issues

The fast timelines anticipated by the Madrid Protocol would be costly to implement in an already backlogged Canadian Trade-mark Office.

The first important deadline is the two months in which an application must be submitted to the International Bureau if it is to retain as its priority date the date of filing at the Office of origin.37 In this two-month period, the Office of origin is expected, under Article 3(1) and Rule 9, to sign the international application, to certify the filing date and that the particulars on the domestic and international applications correspond, and then to present the international application to the International Bureau.

The Office of origin or the applicant, as the case may be, will have three months after being notified of any errors or omissions identified by the International Bureau to rectify those errors or omissions. The responsibility to correct the mistakes may lie with the applicant, the Office of origin, or both, depending on the type of error. No registration is effected until any irregularities are remedied, but speedy corrections may preserve the original priority date of filing at the office of origin. Rule 15(1)(b) gives an applicant or the Office of origin 3 months from the date of notification of the irregularity to make any corrections without prejudice. Rule 15(1)(a) ensures that this loophole is not available for major errors, which bear the date of correction at the IB.

Finally, where receipt of an international application is delayed by a major postal failure, Rule 5(4) could excuse a six month delay beyond the two month period allowed under Article 3(4) or Rule 24(6).

As an Office of origin, the CTMO would have to act quickly to maintain priority for Canadians who wish to benefit from the Protocol.

As an Office of a designated Contracting Party, the CTMO must also be aware of these delays. Before publishing domestic applications, the CTMO must accommodate international applications bearing a priority date up to 6 months earlier.

Increased Workload and Costs at the CTMO

Both the workload and the costs at the CTMO would be expected to increase under the Madrid Protocol.

The workload at the CTMO would increase due to an extra layer of bureaucracy and due to a reduction in the use of agents. Additional paper work and training would be necessary to accommodate the national and international processes, and the correspondence each process generates. There would also be an expected increase in the number of applications. While the number of domestic applications might decrease as foreign applicants take advantage of the Madrid System, each of these would still be an international application to be examined by the CTMO. Plus, some applications will represent registrations that due to cost saving under the Protocol would not otherwise have been submitted by foreign applicants.

There will also be additional work as the CTMO deals with international applicants who are not familiar with the section 30(a) requirements. The CTMO will either need to develop a concordance mechanism or generate more correspondence.

The cost of the increased workload must also be accounted for in the application fee structure. There are restrictions on the fees that can be charged to international applicants, even though these applications might take longer to process. Paragraph B.III.28.04 of WIPO's Guide to the International Registration of Marks states:

There is no provision for an Office to charge a fee in connection with the presentation through it of a request for the recordal of a change or a cancellation.

Advertisement of international trade mark applications is restricted under Articles 3(4) and 3(5) of the Protocol. Article 3(4) provides that marks registered in the International Register are published in a periodical gazette called Les Marques Internationales, for which the contents are specified in Rule 32 of the Madrid Regulations. Article 3(5) of the Protocol provides for some free and some reduced cost copies of Les Marques Internationales to be available to each Office, and also stipulates that "no other publicity may be required of the holder of the international registration."

Therefore, even though the CTMO may wish to re-advertise a proposed mark in the Trade marks Journal (either to give adequate notice to opponents of the mark, or because the categories of the wares and services may have changed since examination by the CTMO), it may not charge an applicant for this service.

Indeed, if a Contracting Party declares under Article 8(7) that it wishes to receive its own complementary fees and not a share of the total amount, then the declared amount may not be higher than the national filing fee and must be "diminished by any savings resulting from the international procedure." Publication of the Trade Mark Journal in Canada would be a cost to be diminished by virtue of Les Marques Internationales.

Avoiding Conflicts of Interest at the CTMO

Advocates of the Canadian trade mark system may take issue with the conflicting duties of the Office of origin as both the defender of the public interest on the one hand, and the agent of applicant in dealing with International Bureau on the other hand. During the stages of a trade mark application, the role of the CTMO is never that of agent for the applicant. Either it acts as the guardian of the register in the examination stage or it (the Opposition Board) acts as an unbiased publisher in the public opposition stage.

Under the Protocol, the CTMO would play a much larger role in certifying the international applications of national mark holders, and then submitting them to the international bureau. The wording of the treaty suggests that an Office of Origin may act as agent for national mark holders in this certification process. In particular, it is sometimes the duty of the Office of origin to rectify errors in international applications on behalf of the trade mark applicant.38

To avoid the appearance of a conflict of interest, the CTMO should require applicants to fill out all forms, and also to remedy any mistakes not identified by the Office of Origin vetting process.

RATIFICATION CONSIDERATIONS FOR CANADIANS

Effects on Canadian Business

In part, the Madrid System builds on the principles laid out in the Paris Convention 1883. Trade mark holders from all Contracting States are to be afforded protection at least equal to that of nationals in all States that have not refused the registration of the mark. The system also creates a bureaucratic framework for the registration of marks internationally. The extent to which Canadian companies would be interested in filing international registrations with Canada as the Office of Origin is unknown. However, as the United States is generally the first foreign jurisdiction where international protection is sought, a Canadian applicant might just as soon register the international application through the USPTO assuming the applicant has established a "real and effective" commercial presence in the United States.

Effects on Canadian Trade-Mark Agents

Clearly, one of the purposes for the Madrid Protocol is to reduce agency costs by simplifying procedures and by reducing grounds for refusal. Under the Protocol, an applicant must wait a maximum of 25 months to know whether it has a valid registration in all designated countries. If it does not, then it can choose to hire local representation in those countries where the Office of origin has submitted a provisional refusal to the International Bureau. Overly broad claims based on classifications and lack of evidence of use cannot be used to deny registration, or the priority based on the date of the basic application/registration in the country of origin.

In effect, the Madrid Protocol could do away with the need for preliminary searches conducted on behalf of foreign applicants. Without a requiring an applicant to prove entitlement to the mark, the work would only begin once an application is contested by way of provisional refusal, or perhaps if the registered trade mark holder wanted local representatives to review the national gazette to contest confusing applications. This latter job, of course, represents only a reinforcement of the examination conducted by the Office of the designated Contracting Party.

For countries like the United States, with a significant amount of wealth attached to trade marks and branding, there should be overall savings to applicants and existing mark holders who wish to file internationally. Local agents could benefit by charging higher prices for international applications.

In countries like Canada, a net importer of trade marks, the business lost on the prosecution side could be significant. Routine filings of US and European trade marks may cease. Local agents would only be necessary in the event of a contested registration, and perhaps as a watchdog to prevent future infringement of the successful international registration.

However, North American registration is not particularly expensive; applicants may well find it worthwhile to continue to file national applications.

CONCLUSION

It is impossible to say how close the United States Congress really is to ratifying the Madrid Protocol. The delay should last at least until the WTO adjudicates on case DS176, "United States - Section 211 Omnibus appropriations act of 1998," and perhaps longer.

For Canada, the changes necessary to implement the Protocol will require more work. Rather than implementing the Protocol in one fell swoop, Canada should take its time to implement some of changes domestically without ratifying. The 10 year registration period, for example, could be readily adopted. Renewal forms and applications for new trade marks could also contain information on anticipated Nice Agreement classification should Canada decide to switch over. This additional information would help the CTMO decide if fears of fraudulent over claiming are legitimate, and whether a classification scheme is worthwhile.

Presently, Canada is not ready to adhere to the Madrid Protocol. Before adhering, Canada must develop Madrid Protocol compliant procedures to protect the public interest from the prospect of overly broad and unused trade marks. The government must also clarify the role of the Office of origin to prevent conflicts of interest. Finally, the government must spend money to ensure that both domestic and international applicants are treated fairly as they queue to register their trade marks.

Endnotes

  1. Contracting Parties and Signatories to Treaties Administered by WIPO, "Madrid Agreement Concerning the International Registration of Marks and the Protocol Relating to that Agreement", online: http://www.wipo.int/treaties/docs/english/g-mdrd-m.doc.
  2. Paris Convention for the Protection of Industrial Property (1883), Article 4(A)(2) [Paris Convention].
  3. This results for dual application of Article 6 of the Madrid Agreement which states that five years must expire before an international registration is independent of a national registration, and Article 3ter (2) which states that registration in a designated Contracting Party "shall cease to be valid on the expiration of the international registration of the mark to which it relates."
  4. Madrid Agreement Concerning the International Registration of Marks, Article 5(1) [Madrid Agreement].
  5. W.R. Cornish, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights, 4th ed. (Sweet & Maxwell: London, 1999) at 15-02.
  6. Ibid.
  7. Ibid. at 15-18.
  8. Madrid Agreement , Article 5(2).
  9. In J.M. Samuels, "The Madrid Protocol and Harmonization of Trademark Laws", 10 C.I.P.R. 667 at 669, the author suggests that the negotiations of the Madrid Protocol were for the benefit of 4 EU countries who where not members to the Madrid Agreement (Great Britain, Ireland, Greece and Denmark). In US. House Report 107-19, the insinuation is that negotiations also took the interests of the United States into account.
  10. Transformations are created by the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks, Article 9quinquies [Madrid Protocol].
  11. Madrid Protocol, Article 6.
  12. Madrid Protocol, Article 8(7).
  13. Madrid Protocol, Article 3(2).
  14. Contracting Parties and Signatories to Treaties Administered by WIPO, "Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks", online: http://www.wipo.int/treaties/docs/english/i-nice.doc.
  15. Common Regulations under the Madrid Agreement Concerning the International Registration of Marks and the Protocol Relating to that Agreement, Rules 9(4)(a)(xiii), 12 [Common Regulations].
  16. Bodenhausen, Guide to the Application of the Paris Convention for the Protection of Industrial Property, at 110. Quoted in Troicuk, "Legal and Technical Implications of Canadian adherence to the Madrid Protocol", draft.
  17. A. Troicuk, Legal and Technical Implications of Canadian Adherence to the Madrid Protocol, a draft paper prepared for the CIPO [Troicuk].
  18. Madrid Protocol, Article 2(1).
  19. Bill H.R. 741, Act to amend the Trademark Act of 1946 to provide for the registration and protection of trademarks used in commerce, in order to carry out provisions of certain international conventions, and for other purposes. (short title Madrid Protocol Implementation Act), 107th Congress, U.S., 2001, secs. 68(c)(1), 68(c)(2) [H.R. 741, 107th Congress].
  20. H.R. 741, 107th Congress.
  21. Report No. 106-249, Report of the Senate Committee on the Judiciary, 2nd Sess., 106th Congress, U.S. Senate, 2000 [U.S. Senate Report No. 106-249].
  22. H.R. 741, 107th Congress, sec. 71.
  23. U.S. Senate Report No. 106-249.
  24. Report No. 107-19, Report of the House of Representatives Committee on the Judiciary, 1st Sess., 107th Congress, U.S. House of Representatives, 2001 [U.S. House Report 107-19].
  25. D. Ehrlich, "Solvable Problems of Madrid Protocol Implementation in the US: Possible Fraud and Increased Register Crowding", April 2001, online: at IP World http://216.3.116.71/IPW/index.htm.
  26. Ibid.
  27. A more thorough analysis on how the Madrid Protocol would impact the Canadian administrative process of Trademark registration can be found in Troicuk, supra note 17, where he suggests some solutions to individual problems, but he does not provide a framework for implementation of the Protocol as a whole.
  28. Trade-mark Act, R.S.C. 1985, c. T-15, s. 30(a).
  29. Rule on duties of Offices of origin, higher fees for having the International Bureau supply the classification.
  30. British Sugar v. James Robertson [1996] R.P.C. 281 at 288-290, where a mark for syrups in Class 30 will exclude as being similar syrups constituting jams. Cited in W.R. Cornish, Intellectual Property: Patents, Copyright, Trade Marks and Allied Rights, 4th ed., (Sweet & Maxwell: London, 1999) at 17-05.
  31. Trade-marks Act, R.S.C. 1985, c.T-13, s. 30.
  32. Ibid. ss.14 & 16.
  33. Troicuk at Part VI, Requirements for Use.
  34. See also, Trade-marks Act, R.S.C. 1985, c. T-15, ss. 18 and 57 where a trademark registration may be expunged if the trademark has been abandoned intentionally or through prolonged non-use.
  35. Madrid Protocol, Article 6(3).
  36. Madrid Protocol, Article 3(1); Common Regulations, Rule 9; Official Application Form, Box 13(a)(ii).
  37. Article 3(4) of the Madrid Protocol.
  38. Common Regulations, Rule 11(4)(b) requires the formalities in Rule 11(4)(a) to be remedied by the Office of origin.
Contact Gervas Wall or Marijo Coates for more information on the Madrid Protocol or Trademark Rights.

Disclaimer: This Newsletter is intended to provide readers with general information on legal developments in the areas of e-commerce, information technology and intellectual property. It is not intended to be a complete statement of the law, nor is it intended to provide legal advice. No person should act or rely upon the information contained in this newsletter without seeking legal advice.

E-TIPS is a registered trade-mark of Deeth Williams Wall LLP.

By Gervas W. Wall
December 24, 2001
Nicholas Whalen
Trademarks