International v domestic US trademark registrations: pick your poison

The USPTO’s statistics for the year to date report that just 2.6% of international trademark applications (Madrid) are approved upon first action, compared to 34.1% of applications via TEAS Plus and 17% by TEAS. For applicants this creates a number of challenges, and begs the question of whether the direct route to registration is a better option.

To ascertain how atypical the US rate of first action approvals is, we contacted a few other offices to obtain a comparison. While OHIM were unable to provide a comparative breakdown due to the way applications are internally recorded, the Japanese office told us that, according to 2013 statistical data, approximately 60% of national trademark applications were approved upon first action, compared to approximately 40% of international trademark applications. So there is a difference, but not as marked as in the US data.

Nicholas D. Wells, Shareholder at Kirton McConkie, regards the different rates as a “significant concern," not least for the impact it has on international perceptions of the USPTO: “While I think that the procedures used by the USPTO are generally appropriate given the crowded US trademark register, the lack of a consistent application of formalities requirements, and the lack of understanding by those using the Madrid System to enter the US remains a serious concern, not least because it is viewed by some as mainly a political move. I have been told by European colleagues that they view the USPTO's high rate of rejection as done purposefully to ensure that US lawyers are engaged to do follow-up work. I feel this is entirely untrue, but this perception ought to be a real concern to government officials.”

For Lawrence E Apolzon, partner at Fross Zelnick Lehrman & Zissu, there are a number of contributing factors to the approval rates for international applicants, including issues related to inherent registrability, disclaimer requests, descriptions of logos and colour claims. However, a large number pertain to identification and classification issues. He notes: “It makes sense to ensure that an international registration (IR) extension satisfies the specificity standards set by the USPTO when the classification in the IR might not conform to the classification in the United States. Otherwise, those goods/services in the IR will be at risk.”

Turning to specifics, Apolzon notes that, because international registration applicants are required to have a bona fide intent to make use of the mark in the US on each of the goods and services cited in an incoming Madrid application, it is essential that the scope of goods and services is properly restricted. Another problem related to classification is that, in an IR extension, “goods and services cannot be transferred between classes in multiple-class applications, classification for goods and services cannot be changed, and adding a class is not possible. The only exception is upon the receipt of a correction from the International Bureau. But, here is where it can get interesting. If the identification of goods/services is definite, in accordance with USPTO policies at the time of the extension, the identification is then acceptable, regardless of the proper classification by the USPTO standards. However, if the goods/services are not specific enough at the time of the extension to satisfy the USPTO standards, they must be dropped or they must be limited so that they fall within the class specified. The bottom line is that you can end up with Madrid extensions where the goods/services are in a different class than if the application were filed directly in the United States or where crucial goods or services were misclassified and must be deleted”.

The picture is complicated by what Apolzon identifies as inconsistency in USPTO decision-making: “There is a lot of room for improvement both with respect to examining attorneys and higher up in the USPTO to make certain that everyone understands what the standards are.” The office does have a consistency initiative under which, where an applicant encounters a non-identification-related issue that is inconsistent with the treatment that it received on a registration it owns that issued within the last five years, the applicant can point out the inconsistent treatment.  Every filer can rely on that part of the Consistency Initiative.  However, Apolzon notes that another part of the initiative, which permits filers to point out inconsistent treatment as to identifications of goods and services, is not available to Madrid applicants.

As to what can be done going forward, Wells suggests: “I believe that increased efforts at consistency by the USPTO and increased efforts at education and training by WIPO could reduce the level of this problem significantly. Some might believe that US trademark procedures should be less stringent on formalities requirements, or even permit examiners to make ‘obvious’ needed modifications rather than issue an office action in every case, but I don't know that such a change is really feasible. But even given these thoughts, at a broader level I remain somewhat doubtful that such efforts will alleviate the problem because it is inherent in the examination procedures at the USPTO. Where applicants in many countries expect something of an automatic approval of applications that meet general formalities requirements, the USPTO model seems to anticipate a ‘conversation’ to adjust every application so that it meets all parts of a more rigorous set of formalities, and this makes it difficult for applicants to anticipate and resolve all possible formalities in advance.”

So what is an international applicant to do? Wells argues that “applicants are often much better served by direct filing in the US, but my view is based on the differences in how Madrid applications are treated under US law rather than the likelihood of initial refusals of Madrid applications. In sum, a Madrid-based application that designates the US will save little by way of fees and will have much less flexibility under the US trademark act as compared to a direct-filed application.”

For Apolzon, Madrid is a good route for non-US applicants as long as they understand that they are working within the confines of a rigid system. He concludes: “Ultimately we have a bit of a ‘choose your poison’ dilemma – the rigid but potentially cost-effective benefits of the centralised IR versus the greater flexibility available in the US to direct filers that can be more costly in the long run. But in either case, all filers get to experience the very fussy identification and classification requirements of the USPTO!”