Imagine this scenario: Your company started selling its products (or services) in the United States, but in the past few years, as demand for your products has grown, you have begun exporting to various foreign countries. Exports were at first, infrequent, and were solely in response to unsolicited inquiries from foreign customers. As your exporting business increased, your company identified local distributors in each country to manage inventory, generate more demand and take care of any related issues.

Now, as foreign sales have become a larger part of your company’s revenue, it has become clear that some of your distributors are not large enough to handle your business (or planned future business), others may not fit your long-term strategic goals, and you are generally looking to increase the size and quality of your foreign distribution network. However, after communicating to one of your old distributors in a large potential market that you will be using a new partner in the future, you are shocked to find out that you don’t own your trademark in that country — your distributor does.

Unfortunately, this is not an uncommon story for companies whose export businesses began relatively unsystematically or who outsourced production or manufacturing abroad, and who did not get legal input or consider potential risks of trademark infringement. The result can often be that today’s great partner and distribution problem-solver becomes tomorrow’s huge headache and possible competitor. How is this possible?

First, it is important to know that, just like patents, trademark rights are jurisdictional; a United States trademark protects use of a mark in the United States only; a Chinese trademark registration protects use of a mark in China only. From a practical point of view, this means that without certain actions, a company that owns a trademark in the United States may be powerless to prevent a third party from using the exact same mark on the exact same goods in a different country. Talk about brand management problems.

Second, with respect to trademark rights, most countries in the world are “registration-based” jurisdictions, not “use-based” jurisdictions. In other words, the first party to file a trademark application with the country’s governing intellectual property body — in the United States, it is the United States Patent and Trademark Office — becomes the presumptive owner of the mark. To put it even more simply — this legal structure can create a race to file trademark applications. Again, from a practical point of view, this means that if your company is using its mark in a foreign country, but a third party files an application to register your mark in that country, the third party may get presumptive ownership of your trademark. Even if you can eventually prove that you owned the mark first, this fight may take years and hundreds of thousands of dollars in legal fees. Furthermore, in the meantime you may be prohibited from using the mark in the jurisdiction where ownership is disputed.

Surely this is a problem that only faces small businesses or is so uncommon as to be almost unheard of, but not so fast. This problem faces business of all sizes, and comes up far more frequently than most people think. Perhaps the most prominent dispute regarding this issue in recent years has been between the U.S. beer brewery Anheuser-Busch Co. Inc. and the Czech Republic beer brewery Budejovicky Budvar regarding the trademark BUDWEISER. Each company began using the mark BUDWEISER in different countries at different times, and this “dueling use” first clashed in Europe when their markets and distribution channels began to overlap. At one time, the companies were involved in dozens of trademark lawsuits all over the world regarding who actually owned rights to BUDWEISER in that country. Similar problems come up every day in every industry across the world.

So the million dollar question is: “How do I ensure that I control my brand worldwide, or at least in the most important jurisdictions for my company?” The answer to this question depends partially on the financial resources available, but there are options for companies of all sizes to greatly reduce their chances of being caught in a trademark dispute over ownership of their own brand:

The first step in protecting a brand is to register a company’s trademark with the United States Patent and Trademark Office in the United States, assuming it is a U.S.-based company. Not only will this protect the mark in the United States, but it creates additional options for protecting the mark in many foreign countries.

Once the trademark application has been filed in the United States, a company is eligible to file an application under the Madrid Agreement Concerning the International Registration of Marks (the “Madrid Protocol”). The Madrid Protocol allows owners to file applications in multiple countries throughout the world under one application, and there are additional benefits to filing within six months of the U.S. application. While not every country in the world is a member of the Madrid Protocol, 79 countries are, and it provides a cost-effective way to file applications quickly in many jurisdictions. Of course, using the Madrid Protocol is not mandatory, and company’s can file separate trademark applications in individual foreign countries if only a few are of importance.

Of course, most companies will not need to file trademark applications in dozens of countries throughout the world — or they will not have the financial resources to do so. As such, there are a few criteria that can help identify the key jurisdictions for a company:

• Distribution Channels. An application should be filed in any country into which a company will be exporting products for distribution prior to beginning discussions with any foreign distributor. Many ownership disputes arise when the distributor is able to “usurp” the mark of an unaware manufacturer.

• Outsourcing Manufacturing. An application should be filed in any country where
a company will be outsourcing manufacturing — particularly because the manufacturer will generally have access to the confidential intellectual property required for product manufacturing.

• Key Markets. Obviously, it is important to have applications filed in every key customer market for the product. The largest consumer markets are the jurisdictions where imitators or infringers are most likely to arise.

Protecting a business brand in foreign jurisdictions is a key element in protecting the growth opportunities for a business. In this area, an ounce of prevention is truly worth a pound of cure — as the costs of obtaining trademark registrations early is a tiny fraction of the cost of fighting for ownership of marks later. The cost of filing an application covering a mark used on one type of good in a foreign country, assuming no unusual complications, will typically run from $800 to $4,000, depending on the country.

Even better, a good U.S. trademark attorney can manage your entire worldwide portfolio of trademarks – leaving you with one main point of contact for all your trademark issues wherever they may arise. Additionally, a good U.S. trademark attorney can recommend appropriate language to include in all your distribution and manufacturing agreements to help preserve ownership of your intellectual property overseas.


Christian Lavers is an associate in the Milwaukee office of Whyte Hirschboeck Dudek S.C. where he is a member of the Corporate Transactions and Business Law, Technology Law and Intellectual Property Groups. In the IP group, he focuses his practice in the areas of trademark, copyright and technology licensing.

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