You would think if anyone can clearly claim to own the iPad trademark it's Apple Inc. But in China that's not necessarily the case.
The company with the world-famous brand lost a court case in Shenzhen Intermediate Peoples Court in late December last year. According to the court ruling, a local company, Shenzhen Proview Technology, owns the iPad name in the Chinese market.
The case is on appeal, but it threatens Apple's rights to sell its highly successful iPad tablet computers in China.
Most manufacturers are sensitive to patent protection and related concerns, but patent issues are only the start. Trademarks, copyrights, domain names and trade secrets are often given insufficient attention.
Such intellectual property rights are territorial, and rights held and protectable in the United States do not necessarily provide protection in a foreign country. Instead, many manufacturers need to be registered in the proposed country as well before executing on market expansion plans.
Obviously, in the case of Apple (IW 500/14) and its iPad, the stakes were huge. Thus far, the dispute has cost the company hundreds of thousands in legal fees and threatens Apple's access to one of the world's largest markets. Such challenges are not unique to Apple either.
In 1992 Nike Inc. (IW 500/56) faced a similar problem when it sought to expand to Spain and ran into prior rights in the same mark held by a local company.
The following are 10 critical steps to consider before expanding into new markets:
1. Obtain U.S. registration. Although the concern involves new markets overseas, having an official U.S. registration for copyrights and trademarks may help enforcement efforts and make it easier to establish rights abroad. The cost of registration is nominal compared to the savings and value provided by these registrations. For more details visit the U.S. Copyright Office website at www.copyright.gov and the U.S. Trademark Office website at www.uspto.gov.
2. Conduct a search to confirm the company's name and brand are available for use in the new country. Most countries require registration of trademark rights and don't recognize "rights arising from use" as we do in the United States, United Kingdom, Australia and Canada. For many countries, search reports can be obtained online while others may require review of local trademark office records.
3. Seek local trademark registration for all brands. Owning a local registration will help with enforcement of rights, prevent others from securing conflicting rights, and is necessary in many countries to secure local rights. Ownership of a copyright registration can also be useful to avoid resort to the courts. A demand letter supported by a government issued registration gets more respect.
4. Consider extending U.S. trademark registrations to foreign countries. Extending U.S. registrations can save time and money in securing rights abroad. The United States and many other countries and regions, including the important markets of Europe, Japan and Australia are parties to the Madrid Protocol, a treaty that allows the owners of a local trademark application or registration to extend those rights to member countries.
5. Use an international copyright notice on catalogs, blueprints, websites, software and other publications and materials. Like trademark rights, copyright protection is territorial. Most countries, however, are parties to the Berne Convention, a treaty that protects works in the foreign country to the same extent they are protected at home. While copyright notice is not required for protection in the United States, it may be required as a condition of protection in foreign courts, so using a copyright notice is a good practice to help deter unauthorized copying.
6. Obtain local domain name registrations. Most U.S. companies rely on registration in the .com domain for their Internet presence since .com is the most popular domain worldwide. However, all countries have country code top level domain names (ccTLDs), which may be important in the local market, such as .de for Germany and .jp for Japan. The ccTLD may be the first choice of local consumers or businesses, and obtaining the local ccTLD registration can aid communication efforts and prevent instances of cybersquatting when entering overseas markets.
7. Obtain non-disclosure agreements (NDAs) from local business partners. NDAs are difficult to enforce in local courts, but it is impossible to enforce one that doesn't exist. Simply having a signed agreement may have some deterrent effect.
8. Avoid putting all of your eggs in one basket. Relying on local manufacturers or other local business partners can put trade secrets at risk. Even in countries with effective judicial systems, legal action is still costly and time consuming. One best practice is to divide production among several foreign manufacturers so that no single entity has all of a company's secrets. The final assembly remains under its sole control.
9. Retain effective local counsel. Using a local attorney with knowledge of the local court system is critical for getting things enforced in a foreign jurisdiction. A letter from the United States may be ignored, but an official letter from a well-respected local attorney or law firm is likely to get attention and respect. One company with a claim in India waited for months to get governmental action until we connected the client with local counsel who appeared in person at the governmental office to pull the request from a pile of folders for the official's immediate attention.
10. Consolidate legal efforts in the hands of trusted U.S. counsel. Inconsistent actions taken from country to country can be damaging to long-term interests. Companies expanding overseas need coordinated efforts to protect intellectual property rights abroad. This is best accomplished by using IP counsel who knows your business, interests and legal needs. Seek counsel with a global view and an international network of contacts.
These steps may not ensure success of new market expansion efforts, but they are likely to dramatically improve your ability to protect your rights abroad and to avoid costly problems down the road.
The investment in the steps outlined here is minimal compared to the cost of dealing with the problems faced by Apple in China or Nike in Spain or the risk of losing valuable rights to foreign infringers.
Mark Partridge is the founder of Partridge IP Law, a Chicago-based law and IP strategy firm (www.partridgeiplaw.com). He has worked in intellectual property law for more than 30 years and was named one of the top trademark lawyers in the 2012 edition of The International Who's Who of Trademark Lawyers.