Trademark Trolls Overseas

A U.S. trademark registration allows companies to leverage their brand and prevent others from using their name or a confusingly similar name in the U.S.  However, even if a trademark is protected in the U.S., it is vulnerable to squatters or “trademark trolls” overseas.

Because of the global nature of business today, especially with online commerce and social media, it is important for companies looking to expand internationally to control their trademarks globally and prevent others from squatting on their rights.  The last thing a company wants to find out is that it is prevented from expanding its business overseas because it did not fully protect its trademark.

While brands are increasingly global, managing and protecting brands globally can be complex.  In the U.S., trademark rights are based on actual use.  By comparison, trademark rights in many other countries are based on filing.  The “first-to-file” system has allowed for a growing trend of “trademark trolls” – companies or individuals who strategically register trademarks belonging to others and then demand large sums of money to sell the trademark back to the original owner or bring an infringement action to enforce their rights as the lawful owner against the original owner.  This is exactly what happened to Tesla, Apple, and many others when they sought to expand into China.

Therefore, companies planning to expand overseas should consider filing registrations in other countries before someone else does.  Specifically, companies seeking further opportunities overseas and are looking to remain in the market long-term should ensure that their brand is protected internationally.  Ideally, promptly registering trademarks in a country should be undertaken before any products are sold or manufactured there.

However, this is not without complications.  Many “first-to-file” jurisdictions allow for the trademark registration to be canceled if not subsequently used in commerce within a certain time frame.  Therefore, it is important to identify and prioritize the key markets and understand the jurisdiction’s trademark laws.

Although it does take time and resources to register a trademark in different countries, the alternative of exporting goods to another country without a registered trademark leaves the brand unprotected and open to considerable risk.