Transfer Pricing Associates

How to Avoid Trademark Troubles in Foreign Countries

post Saturday March 10, 2012



Multinational companies can run into a lot of problems when exporting their products or producing their patented products in foreign countries, especially those that have lax IP protection laws or none at all.    

Chris Griffiths, director of Fine Tune Consulting said in a recent article from Globe and Mail that “what [intellectual property officers] often don’t realize though, is that trademark ownership can also influence their ability to source finished products from a particular country”.

“To have a product that you own made in, sold in, or exported from [any] country, you have to have legal rights to the brand,” Griffiths said. “So even if you don’t intend to sell in a country but do intend to have your product made there, a trademark is crucial protection against an interruption in your supply chain that will affect all of your markets.”

Companies must be careful in countries where they outsource manufacturing but do not sell their products thus do not worry about registering a trademark application.  Even if a company only has manufacturing functions in a country without sales and distribution functions, it still needs to register for intellectual property protection there.  Without registration from say a trademark office in that country, individuals or companies within that country can easily steal the design and sell the products as their own.  If this does happen, it is imperative that the company file suit against or try to stop the mimicking company as quickly as possible, because if not, the more products are sold under the mimicked name, the more ownership of the product that company will develop and people will associate the product with that counterfeiter company, making it much more difficult for the original company to make a case of intellectual property infringement. 

Whether a company’s supply chain is horizontally or vertically integrated, if any part of the supply chain is located in a country with lax IP laws, multinational companies should take some precautions.  A concern for offshore or contract sites where domestic IP law is not strong is that multinationals must make sure that no intellectual property such as trade secrets or know-how becomes explicitly available to employees during the company’s unique distribution or manufacturing processes.  Having a comprehensive registered intellectual property portfolio among multiple countries also greatly helps companies from becoming vulnerable to upsets in their supply chain. 

According to the WIPO, to file an application for registration of a trademark, the company must go to the appropriate national or regional trademark office (some regions such as Europe offer companies the ability to fill out one application and attain trademark registration that applies to multiple countries.  “The application must contain a clear reproduction of the sign filed for registration, including any colors, forms, or three-dimensional features. The application must also contain a list of goods or services to which the sign would apply.  It must be distinctive, so that consumers can distinguish it as identifying a particular product, as well as from other trademarks identifying other products.”  To make it even easier, the WIPO administers a system of international registration of marks governed by two treaties, the Madrid Agreement Concerning the International Registration of Marks and the Madrid Protocol.  “A person who has a link (through nationality, domicile or establishment) with a country party to one or both of these treaties may, on the basis of a registration or application with the trademark office of that country, obtain an international registration having effect in some or all of the other countries of the Madrid Union”.

Multinationals should be vigilant in comprehensively protecting their intellectual property portfolio, especially in countries that are prone to counterfeiters.  A few registrations can mitigate disruptions in a multinational’s supply chain and potentially save the company from losing a lot of profit from product counterfeiters just waiting to stamp their mark on a multinationals product and sell it.


image by kromkrathog

Leave your comment


Comments on 'How to Avoid Trademark Troubles in Foreign Countries' (0)