Some Disadvantages of the Madrid System

In an earlier post we explained the Madrid System for international trademark protection, and listed a number of its considerable advantages. In this post, we look at its major drawback.

The Basic Trademark and its role in the Madrid System

To make a Madrid System Application, it’s necessary to name a “basic trademark”, which is a national trademark application or registration upon which the Madrid application is based. For Australian-based clients, it is often the trademark application that is first lodged with IP Australia.

The status of the international protection afforded by the Madrid System lives and dies with the basic trademark. This has a number of implications which can form traps for the unwary.

Losing Overseas Trademark Rights

Refusal or Withdrawal of the Basic Trademark

Under the Madrid Protocol (but not under the Madrid Agreement) it is possible to use a new trademark application rather than a trademark registration as the basic trademark.

However, if the application is refused or withdrawn before registration then all of the international trademark protection conferred by the Madrid Protocol also falls away. Sometimes the refusal will be based on a reason that will only apply in the home country. For example, a trademark for the word “Flippers” with regards to hats might be refused by IP Australia because another trader based in another Australian city has registered the word “Flippas” for hats. This issue might not exist in any of the other countries, but it would mean that all of the trademark rights all over the world are lost.

Modification of the Basic Trademark

Occasionally, it might only be possible to register a trademark in the home country if the description is modified in a certain way.

For example, the application might be for the word “Flippers” in relation to “hats, scarves, gloves and shoes”, but the trademark examiner might agree to accept that trade mark if “hats” is removed from the description. Alternatively, the description might be for “clothing”, and the trademark examiner might agree to accept the application for registration if it is modified to “clothing except for hats”.

If the applicant amends the description in any way, this amendment will apply to all countries designated by the associated Madrid Protocol application. This would involve gaining narrower rights than would be the case if the Applicant had used a direct national filing instead of the Madrid Protocol.

Cancellation of the Basic Trademark

The basic trademark might be registered in the home country for a while, and then cancelled. This might be because a competitor successfully challenges the trademark registration in court and wins and order to have it removed from the register. If this cancellation occurs within 5 years of the original application date, the rights in all of the other countries are also lost.

Competitors can use this strategy as a deliberate ploy to defeat the trademark rights held internationally. When they do this, it is known as a “central attack“. While this does occur from time to time, it is relatively rate.

Concluding Thoughts

The Madrid System offers many benefits to those seeking international trademark protection. Nevertheless, there are some traps, and if the Madrid application is going to name an pending application rather than an accepted and registered trademark, it is imperative that thorough trademark searches are conducted beforehand.