Tariffs, Trade Barriers and Trademarks

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Free trade, fair trade, and tariffs are hot button issues today. Whatever side of the coin you are on, trade between nations is going to continue, in spite of such barriers. Besides tariff s and similar taxes, your clients will also encounter other international trade limitations. One such barrier may be the national trademark rights of others in desired markets. Typically, trademarks are not viewed as “trade barriers,” but in today’s world economy trademark rights may be a more significant impediment to trade than a tariff.

What makes a trademark a trade barrier is that it is a form of private control over commerce within a specific territory. The owner of a United States trademark can control the sale of goods or services in the U.S. under that mark. However, that mark owner has no trademark rights in China because of its U.S. rights.

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BORDER BARRIERS

Since trademark rights give the owner the right to control use of a trademark within a geographic boundary, the trademark can be used as a barrier to control the flow of goods into a country and, in some instances, out of that country. For example, if a registered trademark is recorded with U.S. Customs, the importation of goods into the U.S. bearing that trademark can be stopped. If you consider the volume of goods coming into United States, this is somewhat astonishing. We can attest that this exclusionary procedure works, but you must have a registered trademark to take advantage of it.

BORDER BATTLES

Other countries have similar product import limitation procedures, but also have procedures for stopping exports from that country. For example, a Chinese trademark registration, when recorded with Chinese Customs, gives the owner the right to stop importation of goods using that trademark – and the right to stop exportation of goods manufactured in China that bear that trademark.

Consider the situation where your client does not sell goods in China, but has goods manufactured in China. If another company owns Chinese trademark rights this may be a very significant problem for your client. An illustration: a Chinese company has a trademark registration for the mark “EverLite” for furniture. In actuality, the Chinese company makes lawn chairs, while your client has commercial dining sets made in China under the same trademark. If the Chinese registration is recorded with Chinese Customs, Chinese Customs will only look at what is listed in the trademark registration (e.g., furniture) when seizing goods. There is a distinct likelihood that your client’s commercial dining sets will then be prevented from being shipped out of China.

WINNING BORDER BATTLES

A common client request is to obtain a world-wide trademark registration. Is there such a thing? The short answer is NO. However, with planning and taking advantage of various treaties, clients can obtain trademark rights that extend between and through borders, both from offensive and defensive standpoints. While tariff s are out of your client’s control, securing its trademark rights is something your client can control.

It is wise to pay attention to trademark rights and secure the best possible position at the earliest possible opportunity. First, identify a trademark attorney who has experience in international trademark registrations and inter-country trademark conflict situations. Next, the client’s international markets, both present and future, must then be identified (by country).

Once the countries of interest are identified, trademark availability searches should be done in each of those countries. Such searches provide a display of the terrain and are critical in formulating a strategy for securing rights for crossing borders and for creating barriers (i.e., legal “walls”) for others interested in commercial border crossings.

Although trademark laws from country to country have basic similarities, there are differences which may result in pitfalls for the inexperienced, increasing the cost of securing trademark rights or even proving fatal to doing so.

Once such searching has been conducted, a targeted trademark registration strategy should be followed. Costs at this stage may be significant to the client. However, these costs are insignificant when compared to the costs incurred when your client is prevented from crossing a border because of a lack of trademark rights.

There are ways to manage registration costs. For instance, foreign application filings may be made six months after the U.S. trademark application filing date, thus delaying those filing expenses. The Madrid Protocol is a system that helps minimize national legal fees relating to international trademark application filings. However, the Madrid Protocol does have its limitations and risks. There are also regional filings, the most important of which is the European Union Intellectual Property Office which provides registration in 28 countries.

We have only touched on possible planning for securing trademark rights that help a client’s commercial border crossings, and avoid the need to negotiate a buyback of trademark rights (which is typically a very high tariff to be avoided). Z. Peter Sawicki and James L. Young

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