The Madrid Protocol may be soon implemented in Hong Kong, granting the local Intellectual Property Department access to the international registration of marks system (IR).
For nearly a decade, the Hong Kong government has been debating this issue, which would allow foreign trademark owners to apply for an IR with their office of origin and designate Hong Kong as an additional place where their marks are protected.
It also means that the Hong Kong trademark owners can file in Hong Kong and designate one or more of the 100+ member countries in which to register their marks.
Once the Madrid Protocol is implemented in Hong Kong, the local trademark landscape will change dramatically. However, since Hong Kong is neither a sovereign state nor a qualified inter-governmental organization, this could raise complicated questions.
On 18 April 2023, Hong Kong’s unicameral legislature was briefed on the legislative proposals to implement the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (the “Madrid Protocol”) in Hong Kong.
It is expected that the Chinese Central Government will approve by the end of this year the formal agreement to apply the Madrid Protocol in Hong Kong, “upon completion of all the necessary preparatory work”.
China has been a contracting party to the Madrid Protocol since 1995.
Trademark rights are granted by individual governmental authorities based on their own laws and practices. Generally, a trademark owner will have to apply individually with each of the countries/jurisdictions in which it wishes its mark to be protected.
The Madrid Protocol facilitates the registration and management of trademarks in multiple jurisdictions under one single application in the register of the International Bureau (IB) of the World Intellectual Property Organization (WIPO) in lieu of filing individual “national” applications in each of the jurisdictions.
A trademark owner only pays one set of filing fees and can also manage post-registration matters (renewal, assignment, or license recordal) in different designating contracting parties through a single procedural step with IB of the WIPO, saving costs and enhancing efficiency of trademark management.
For the first time, foreign companies will be allowed to apply for an IR with their office of origin and designate Hong Kong.
Two international treaties rule the Madrid System: the Madrid Agreement Concerning the International Registration of Marks (1891) and the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (1989).
The Madrid System is managed by the International Bureau (IB) of the World Intellectual Property Organization (WIPO), with headquarters in Geneva, Switzerland.
As of today, the Madrid Protocol has 114 contracting parties, covering 130 countries. These members represent more than 80% of world trade, with potential for expansion as membership grows.
Under the Madrid System, any natural person or legal entity of a contracting party, which Hong Kong will become through China’s membership, can file an international application (IA) through its home trademark office (Office of Origin) as long as it has a valid trademark application/registration with the Office of Origin (called the Basic Mark).
The interested party can designate on the IA one or more of the other contracting members where it wishes to register its mark and pay one set of filing fees with the Office of Origin.
Once all requirements have been met, the Office of Origin and the IB will register and publish the mark, which now becomes an International Registration (IR).
Subsequently, the IB informs each trademark office of the designated contracting parties chosen by the applicant, who evaluate the mark according to local laws and procedures and notify the IB of any refusal.
If no refusal is presented to the IB within a prescribed time limit, between 12 or 18 months, trademark protection will be granted in the designated country.
Despite the designation as an “international registration”, the Madrid System does not grant a universal right for trademark owners, nor does it provide global protection.
The main objective of the system is to allow owners to better manage their trademarks in multiple countries at a lower cost.
Once the Madrid System is approved in Hong Kong, Chinese nationals, natural persons/legal entities or businesses established in the region can apply for IA/IR with the Hong Kong Trademarks Registry.
The system will grant Hong Kong businesses access to a one-stop streamlined service, which will save them time and money managing international trademark portfolios.
Attorneys may not be necessary if IA/IR application process goes smoothly, and the designated offices raise no objection. This will give local businesses, particularly SMEs, an easier venue to expand overseas.
International businesses could consider having their intellectual property assets in Hong Kong, allowing them to take advantage of the comparatively low tax rates on intellectual property royalties, as well as solid legal, banking and finance infrastructures.
Due to the sheer number of trademark applications being filed in mainland China, the country’s first-to-file system and widespread trademark squatting, securing trademark registrations as Basic Marks for IAs/IRs can be difficult.
Filing IAs/IRs via Hong Kong could be a safer way to mitigate the risk posed by the five-year dependency period, during which if the Basic Mark in the home country ceases to have effect because it has been refused registration by the Office of Origin, or been successfully opposed or revoked, the entire IR and its designations will automatically be cancelled.
This five-year period is known as the “Dependency Period,” and attacking an IR by attacking its Basic Mark is known as the “Central Attack”.
A potential option for launching a Central Attack against IRs filed in Hong Kong would be filing non-use revocation against the Basic Mark in Hong Kong.
Under Hong Kong laws, a trademark registration may be removed from the Register if the mark has not been genuinely used in Hong Kong by its owner or with the owner’s consent for a continuous period of three years. During this time, the Basic Mark is vulnerable to a non-use challenge.
If the Basic Mark is revoked during this period, the entire IR and its national designations, which may have cost tens of thousands of dollars to file, will fail.
As Hong Kong is, comparatively speaking, a relatively small market and much of its business is outward-facing, trademark owners may, therefore, not have devoted resources to using trademarks locally or developing the local market.
This could be a potential risk, so trademark owners should pay special attention to local use in Hong Kong if they want to take advantage of the Madrid System.
Foreign applicants should note that an IR designating the China will not automatically apply to Hong Kong and vice versa.
Hong Kong is joining the Madrid System via special arrangements between the Chinese government and WIPO, whereby China and Hong Kong are treated as the same contracting party under the Madrid Protocol.
As the Madrid Protocol contains a provision prohibiting a contracting party from extending IR protection to its own Office of Origin, this creates a rather unique situation where Hong Kong IA/IR applicants cannot seek trademark protection in China via the Madrid System, and vice versa.
A Hong Kong trademark owner will still need to file a separate national trademark application with the Chinese Trademarks Office to be protected in mainland China.
Although the implementation of the Madrid Protocol will allow Hong Kong to benefit from its efficiencies, the IR system should not be treated as a “one-size-fits-all” solution.
Depending on the nature of the trademarks, the likelihood of the marks being challenged - particularly in the first five years-, the markets of interest, and timeline for launching the marks, the IR System might not necessarily be the most ideal option for your filing strategy.
To learn more about our services in China, contact our Head of Business Advisory - Ms. Kristina Koehler-Coluccia at firstname.lastname@example.org. DISCLAIMER: All information in this article is verified to the best of our ability and is assumed to be correct at time of release; however, Woodburn Accountants & Advisors does not accept responsibility for any losses arising from reliance on the information provided within. The information provided is for general guidance and does not replace specialized advice.