International Business & Globalisation Of IP
Nowadays many businesses are global from day one.
Even though you may just operate out of a bedroom in your home, when you sell online, you are potentially doing business in every country worldwide. That’s because the Internet is borderless.
In contrast, IP laws are territorial. This means your rights only cover the country in which you register or otherwise acquire rights.
So, it’s essential for an online business to adopt a strategic approach to their domains and trademarks.
Resources are bound to be limited because when you start a company it’s difficult to know how successful you’ll be. It makes sense to keep costs down and overheads low.
The Name
Names are an important way in which the law protects a business, so make sure you choose a good one. The name is one of the most valuable IP assets your business has if it is successful, and the choice you make impacts upon the value of the business.
It’s essential not only to find out whether your proposed name is available to use in all your intended markets, but also whether the name is legally effective (that is, whether it can function as a trademark).
The principle of territoriality means that if you register a UK trademark you simply get a right to use the mark in the UK. If someone in another country uses the same name for a similar business you would not be within your rights to use your brand in their country.
The current international trademark system is designed for a very different business environment, one that’s more suited to the pockets of well-resourced, well-funded multinationals that gradually move into new markets. Nevertheless, if you want to be able to protect your business, using the same brand worldwide, then checking the trademark registers is essential. Then you should consider your strategic approach to registering a trademark, in other countries too.
What you don’t want is to have a local business use your brand to block you from selling to their local market by using their trademark rights against you.
International priority protection
Once you have checked out a name, the next step is to file a trademark. The base application would be filed in the country in which you are based. For UK ecommerce businesses this will typically be an EU registration, although some online businesses prefer to just file a UK trademark.
The way international protection of IP works is that it is possible to secure protection in other countries under the international registration system known as the Madrid system.
You get a priority right for up to six months from the date of the base application. This gives you up to six months to extend your trademark protection to other countries.
Although you can then extend protection to any Madrid Protocol country using a single application, the costs can be high as the official fees are significant. We have a calculator on our website which can give you an idea of the official fees.
A fictional case that illustrates the importance of filing trademark applications in other countries as your business begins to expand is outlined below.
Raxisia
This ecommerce site had been selling its products in the United States for more than 8 years without having registered a trademark there. A competitor then set up a bricks and mortar shop in the United States selling similar products and also called itself Raxisia.
The original Raxisia company was alerted to this when publicity surrounding the new shop was spotted by one of its existing customers who emailed to congratulate it on its new venture in California.
Raxisia was lucky that it had customers in the United States. So, it was able to prevent the local shop from trading off its goodwill. Using lawyers they filed a trademark application in the United States and after much correspondence, the other party decided to rebrand. The legal costs were hefty because among other things the lawyers had to contact the numerous customers that the company had in the United States and in California.
The company could have avoided the hefty legal fees if it had registered its mark in the United States as soon as it began selling its products there.
Domains
Once you’ve settled on a name, a related consideration is what domains to register and when to buy further domains. For example, a UK ecommerce business might typically start by registering a co.uk, .com, and .net. These will be relatively inexpensive. But should you register other CCTLDs – Country Code Top Level Domains? If say France is a market to which you will sell, should you also register a ‘.fr’ name, and if China is important to you should you buy a ‘.cn’ name, too?
As your business grows and you get customers in other countries you’ll need to consider whether to buy your name in other country codes.
There are more than 250 country code domain names. It would be expensive to buy your name in all of them. The strategic considerations will differ for every business. Typically, many wait until their business starts to take off before looking at more extensive domain registrations. The key is always to look at where you are doing business or might be doing business soon.
So, the priority should be to register in those markets in which you have customers or in which you think you will be selling in the near future.
Unlike the GTLDs — generic top-level domain names, – .com, .net, .org – where there’s a lot of uniformity, the rules for country codes are different in every country, as are the prices. Sometimes you need a trademark to get a registration. Other times you need a local business registration. And in some cases you may need a local presence or a local address. So, the CCTLDs usually cost more.
Cybersquatting
Some of the considerations with domains is what happens if someone in another country steals your name and registers your domain with the local CCTLD. This is called cybersquatting. What can you do about it?
It may be difficult to block another person from using your name in another country. So the strategy for registering domains needs to bear this in mind, and be combined with your trademark registration strategy.
You will need access to advice as to the remedies available for the individual CCTLDs. Sometimes your rights may depend on whether or not the name you are using is trademarked. It will also depend on the country’s dispute resolution policies. Each country has different dispute policies, and different procedures for granting relief.
For example, in the UK the dispute resolution body that deals with co.uk issues is Nominet. Nominet will typically consider whether you have trademark rights (which does not necessarily entail having a registered trademark), and whether the registration or the use of the domain name is in “bad faith”. That is, whether the person who registered it likely did it in order to resell it to the person who has the name or in order to divert revenue to themselves for economic gain.
The first step in these administrative style dispute procedures is to file a complaint. There is no court involved as it’s an arbitration. Once you’ve complained, the other party must answer the complaint and the arbiter then decides whether or not the person who you have complained against should be able to keep the domain name or should release the name into your ownership. The decision is purely based on the pleadings. You don’t have a day in court.
For other domains, such as .com the registry designate groups such as the World Intellectual Property Organization or WIPO or the National Arbitration Forum or other groups to decide the dispute.
These arbitration groups have a lot of experience and history in handling domain disputes.
So in conclusion, it’s essential to get advice, and to set a strategy to determine where you register domains. This will partly be dependent on the rules of the different countries. For example, if a local business registration is needed in order to register, you might decide the risk of cybersquatting is low risk, and perhaps just register a trademark.
Once you’ve taken all the issues on board you will end up with a priority list based on the intrinsic risks.
Temporary name?
As names involve legal complexity and potential costs it makes sense to have a strategy for the early days if you want to keep your expenses down.
One possibility is to choose a temporary, descriptive name that informs the market what your business does.
This can be useful in the early days when nobody knows you exist and could later become your tagline when you are ready to name the business.
Unless you already have a good understanding of your market and the gap you will fill in it, it could save precious resources in the early days to avoid the expense of naming, design and branding. You will be much better placed to differentiate your business and brand it once you’ve been in business for a while.
