Breaking down the barriers

A lot can change in five years. There was palpable optimism in Latin America back in 2010, when World Trademark Review sounded out sentiment on the Madrid Protocol across the region. The response was overwhelmingly positive, with many countries appearing to be taking steps towards accession. But today, it is evident that the predictions of wholesale take-up turned out to be wide of the mark.

This is not to say that expansion of the protocol has ground to a halt: elsewhere, it continues to be embraced with enthusiasm. In late 2014, for example, the World Intellectual Property Organisation (WIPO) announced that the 17 member states of the African Intellectual Property Organisation and Zimbabwe would become part of the system from March 2015. Canada is due to accede later this year; and several member states of the Association of Southeast Asian Nations have also agreed to conclude preparatory works to join.

But in Latin America, talk of Madrid has been decidedly muted of late; and the front runners tipped for accession back in 2010 – Brazil and Argentina – remain outside the system. In the end, they were pipped to the post by Colombia, which broke new ground as the first mainland Latin American country to join in 2012.

The Colombian experience

Colombia was also the first Spanish-speaking country to sign up since Spanish was introduced as a working language of the Madrid Protocol in 2004 – a move heralded as a potential catalyst “for the expansion and consolidation of the Madrid system in the Latin American region”. The expectation was that where Colombia led, its neighbours would soon follow. In announcing its accession, WIPO head Francis Gurry said: “I am hopeful that other countries in the region will follow Colombia’s example. The greater the geographical coverage of the Madrid system, the greater the benefits it offers to brand owners the world over.”

In the two and a half years since the system became available, a total of 8,200 Madrid applications have selected Colombia as a designated contracting party. Of the 23,000 total trademark applications filed in Colombia in 2013 – the first full year of implementation – some 3,100 (13%) were Madrid filings.

Juan Pablo Cadena and Valentina Montero Peñaloza, respectively a partner and associate at Bogota-based firm Brigard & Castro, report that while filings across the board may have dropped by some 30% since the system became operative, this has been offset by other related instructions: “Madrid has increased our workload in terms of defences, oppositions and trademark availability searches in order to identify and address potential problems before investing in filing and prosecution costs.”

In fact, they would go so far as to say that Madrid has transformed the shape of their core business, with routine prosecution superseded by a more sophisticated strategic offering: “Nowadays, our international clients are not only seeking to register their trademarks, but also want comprehensive, complete advice in order to protect their intangible assets. We are also frequently contacted by other international companies – different from our clients – that are seeking our advice in order to avoid rejections to their Madrid trademark applications being issued by the Colombian Trademark Office. In this sense, our legal practice has migrated from trademark prosecution to strategic advice.”

David Muls, WIPO

However, while international companies have proved keen to tap the opportunities that Madrid has opened up in Colombia, take-up among local enterprises has been considerably less enthusiastic. Only 50 marks filed using the Madrid System have Colombia as the country of origin thus far; for its part, Brigard & Castro has received just one request for a national filing through the system. WIPO’s senior director of the Madrid Registry, David Muls, suggests that this is purely down to a lack of awareness of the system among the Colombian business community – a “transitional situation” which he believes “should improve over time. Part of the solution is for WIPO to work together with the national authorities to promote the system locally”.

Positive steps in Mexico

Six months after Colombia’s accession, it appeared that the Madrid Protocol was gaining momentum across the region when WIPO announced that Mexico would be next to join. As the agreement was inked, Mexican Secretary of Economy Bruno Ferrari voiced his confidence that other countries would follow suit: “Mexico has one of the largest networks of trade agreements in the world and it is also seeking to increase and diversify its trade associations. In this framework, the Madrid Protocol is a logical component which will strengthen the expanding trade policies implemented by the Mexican government. Since this extended network of trade agreements includes many Latin American countries, Mexico trusts that many more countries of the region will soon join this very useful tool; particularly as a means to foster regional and global economic growth.”

The statistics reveal that since accession, 14,500 Madrid applications have selected Mexico as a designated contracting party. Of the 99,000 trademark applications filed in Mexico in 2013, 5,700 (5%) were Madrid filings. As in Colombia, domestic enterprises have been slower to avail of the new route: to date, fewer than 100 Madrid applications have Mexico as the country of origin.

Alonso Camargo, a partner at Olivares in Mexico City, says that his experience of Madrid has been largely positive. Like his colleagues in Bogota, he suggests that the firm now enjoys “a better balance” of trademark work: “At the beginning, when Madrid was first introduced, filings decreased a lot. But this has been compensated by provisional refusals, as the Mexican trademark office is handing out a lot more provisional refusals than ever before from Mexican designations through the Madrid system. So yes, we have less filing work; but there is a lot more provisional refusal work derived from the Madrid system.”

The Madrid Protocol currently has 94 Contracting Parties, with Canada due to accede later in 2015

Camargo would also agree with his Colombian colleagues that the legal market has become more sophisticated since the advent of Madrid: “Before Mexico joined the Madrid system, most local firms acted mainly as trademark agencies. When the Madrid system was implemented, the practice changed, with the effect that we have adapted and become law firms rather than just agencies. That is one of the key changes that will impact all IP firms in any Latin American country that chooses to implement the Madrid Protocol. It is also a big advantage for firms in Mexico and Colombia; joining the Madrid system earlier means that we will be better prepared when other Latin American countries inevitably join.”

On the downside, Camargo notes that Madrid has had a negative impact on registration timeframes. Previously, the registration process in Mexico was relatively short, with unopposed applications progressing to grant within four to six months – something of a USP for filing in Mexico. Since accession, however, this timeframe has increased to between seven and 10 months for unopposed national applications and between 12 and 18 months for Madrid filings.

Santiago R O’Conor, a partner at O’Conor Power in Argentina, suggests that the delays at the Mexican IP office are due not only to the challenges of getting to grips with a new system, but also to the language barrier. “A significant number of applications are submitted in a different language than Spanish and WIPO makes the necessary translation for examiners”, he explains, which often results in “descriptions that are confusing and make no sense”.

Meanwhile, the extended registration times mean that in some cases national trademarks are now being filed and granted within the seven to 10-month window, only for an earlier filing lodged through the Madrid System to be discovered thereafter. In such cases the Madrid applicant must challenge the validity of the nationally registered trademark – a scenario which is creating new headaches for brand owners (but more work for Mexican lawyers).

Outside looking in

While the first-hand reports we received from practitioners on the ground in Colombia and Mexico were largely positive, the teething problems which others have observed as the new system is rolled out have fuelled scepticism towards the system across the region. Diana Leandro, an attorney at Benedetti & Benedetti in Panama, bluntly sums up the consensus: “Madrid is not popular in Latin America.”

“The feedback from colleagues in those countries is not good,” she continues. “The information I have heard confirms what Latin American countries feared would happen if they joined the Protocol. If our colleagues in countries with industries and large economies such as Mexico and Colombia have felt that joining Madrid has considerably hurt their business, nothing good can be expected for smaller countries such as Panama.”

One major issue flagged by numerous practitioners in the region concerns the constitutionality of the protocol. In Chile, for example, Estudio Villaseca’s Sergio Amenábar points out that this has been a crucial sticking point in the debate: “One of the consequences of introducing the Madrid System would be that foreign trademarks would be seen by examiners before national trademarks. This means that, in theory, it would be easier for someone outside Chile to obtain a trademark than for a Chilean to obtain a trademark in Chile. This goes against the country’s constitution.”

This same issue was raised both in Colombia and in Mexico shortly after accession, but Muls confirms that the judiciaries in both countries have since weighed down in favour of Madrid: “When Mexico and Colombia joined, certain people questioned the constitutionality of accession in those countries. Of course, when such lawsuits are pending, it is understandable that this can cast a cloud of doubt over the system in the eyes of those who are following these developments. Now that the constitutional courts in both countries have rejected those claims, a major reason for hesitation has been removed.”

But while practitioners across the continent may still view Madrid with some scepticism, they are also aware that accession may ultimately be inevitable. “I know, like any other IP attorney in Panama, that whether we like it or not, Madrid is coming,” acknowledges Leandro. “The question is when it is going to be ratified. When this happens, we will have to find a way to deal with it and adapt, like our colleagues in other countries.”

Associations weigh in

Until then, however, it appears that the Madrid Protocol is not really featuring on the radars of practitioners or legislators across the region. In a reflection of the prevailing trends, there was little talk of Madrid when the Asociación Interamericana de la Propiedad Intelectual (ASIPI) gathered for its annual congress in Mexico City last November. Amenábar, a former ASIPI president, told World Trademark Review at the event that, in principle, the “traditional ASIPI view” is that it is “against the protocol”, because it “has a different approach to the trademark world that the European, North American and Asian countries do, and thinks the local management of trademarks is substantially important to develop the IP culture in our countries”.

Juan E Vanrell, ASIPI

Current ASIPI President Juan E Vanrell suggested that this position has evolved of late: “ASIPI has a resolution of 1992 that is contrary to the protocol, but the current vision is to be positive and see what is done when the protocol is adopted, and not fight against it. ASIPI has members that support the protocol and others that do not. Therefore, we do not have a closed position contrary to the protocol.”

Mei-Lan Stark, INTA

At the international level, by contrast, support for Madrid is unqualified, with proponents quick to point out the advantages that wholesale take-up would bring to the region. The International Trademark Association remains a “a big advocate” of the protocol, says 2014 president Mei-Lan Stark, because it offers the “predictability and efficiency” that brand owners need from a trademark system. “A lot of economies in Latin America have huge communities of small and medium-sized enterprises, and Madrid really helps those businesses that want to grow and expand internationally, which obviously feeds back into their local economy,” she continues.

Stark acknowledges some of the concerns that trademark counsel in Latin America have expressed over the potential impact on instructions, but counters: “There is no reason why both the Madrid and traditional national trademark systems can’t co-exist. You may not need a local firm for the initial filing; but as you’re going through the examination process – certainly if you have any objections or end up in a contested proceeding – you’re going to need local counsel help. I can understand the concern, but I think there will be plenty of work left for national law firms.”

Unsurprisingly, as the administrator of the system, WIPO remains a vocal champion of expansion in Latin America. “We are aware of active discussion between countries in the region regarding accession and between potential members and WIPO, particularly to clarify and build deeper understanding of the benefits and practicalities of joining the Madrid System,” it said in a statement to World Trademark Review. “WIPO is optimistic that Madrid System membership will continue to grow over the next few years, benefiting trademark owners the world over.”

Muls subsequently clarified that Southeast Asia will most likely be the next major area of expansion and emphasised that WIPO is keen to let Latin American countries come round to the idea of Madrid in their own time: “The last thing we want to do is to push them too hard – it is very important that they decide for themselves if and when it is in their interests to join the Madrid system. WIPO’s role is to give them the necessary support and advice during this process.”

To this end, WIPO has at least two seminars dedicated to the protocol planned for 2015. The first, in March, is an interregional seminar hosted jointly with the Mexican Institute of Industrial Property. Government officials from a number of countries – including Brazil, Chile, Colombia and Costa Rica – have confirmed their attendance. A second sub-regional meeting, focused on Central America, is scheduled for later in the year. “The Madrid Protocol is on the agenda of several governments in Latin America,” insists Muls; “the question is how quickly the agenda will move forward.”

Doubts about a domino effect

While this remains an open question, the consensus seems to be that expansion across Latin America would be considerably accelerated if Brazil and Argentina were to sign up. “That would definitely have a domino effect, for Uruguay and the rest of the region,” suggests Montevideo-based Mark Teuten of Cervieri Monsuarez & Associates.

However, Brazilian commentators are sceptical that the country will be the first domino to trigger take-up across the continent. “The primary market for Brazilian companies outside of Brazil is South America,” observes Ricardo Pinho of Guerra IP. “The fact that no relevant trade partners of Brazil in the region have already adopted the Madrid Protocol does not encourage Brazil to adopt it.”

Pinho goes on to note that the predicted domino effect has not been observed with other similar agreements: for example, Brazil is a member of the Paris Convention, while many Andean countries are not. “Economic and trade multilateral or bilateral agreements would have more influence on Latin American countries’ decision to adopt the Madrid Protocol,” he concludes.

Ultimately, suggests Camargo, the expansion issue boils down to a matter of choice: the more Latin American countries that join Madrid, the more options it offers to trademark practitioners in protecting the interests of brand owners across the continent. “It will certainly be a positive if most, if not all, Latin American countries join Madrid, as that will give us the opportunity to decide which way we should protect our clients’ trademarks in the region,” he concludes. “We will have the chance to decide which way would be better on a country-by-country basis. In some cases it would still be better to file nationally, especially depending on the nature of the filing; but the current situation means there is no choice.”