Clients often call me with news that they’ve received internet inquiries from foreign customers who found the company online. While they are excited about the prospect of foreign sales, these clients are also worried about protecting future potential markets from competitors in foreign countries who want to sell under similar trade names. They want to be sure their trademark is protected “just in case” they want to later expand into that foreign country, and they are unsure how to proceed.
Small companies can learn from the practices of larger companies who are already active in the international arena. So, what are some of the trends and practices of the Global icons and Fortune 500 businesses? Let’s review some of the practices and see what insight it might give for your own small or mid-sized business.
Except for truly global brands, companies generally do not invest in trademark protection globally on a large scale. They generally have a strong presence in a few countries or a region (Western Europe, Latin America, etc.) and focus their trademark efforts in these specific countries or regions. That is not to suggest they don’t sell in other countries, but they may have such a small market share or sales revenue that the investment in legal protection is not cost beneficial.
The European market is generally considered easy for US products to penetrate because of similar regulatory environments. Language and culture similarities also help product acceptance in these new markets.
BRIC countries (Brazil, Russia, India and China) are high population markets with fast growing economies. However, trademark protection can be difficult and slow in these bureaucratic environments. Thus, these tend to be the last frontier for most companies, and these markets are entered only after foreign sales have been successful in other more developed markets such as Europe, Japan and Canada. Most businesses fear Chinese knockoffs and want to be proactive about protecting their assets in this new and unpredictable frontier. In China, Fortune 500 countries have engaged private investigators and partnered with government agencies to address brand knock-offs, counterfeiting, cybersquatting and other IP violations.
BRIC civil law countries have first-to-file systems rather than first-to-use trademark systems. Since use of the mark is not required for 3-5 years after the registration, the door is open for third party registrations and trademark-squatting behavior. Despite this reality, most companies find the cost-benefit to this defensive protection is dubious. Often a major company brands its product differently in each market (That is, the same product has a different identity in different markets). This overcomes some of the copycat attempts by local competitors.
When undertaking a trademark protection program, there are two strategies simultaneously undertaken by businesses: preventative strategies and defensive brand protection strategies. For preventative measures, in addition to registering marks of commercial value, most companies hire regular watch services to uncover problematic registration by competitors or other third parties. Companies also use “boots on the ground” investigation to identify knock-off, counterfeit, infringing, and gray market goods. Other efforts include internet policing, private investigators, working with customs and lobbying efforts.
The prospect of expanding into foreign markets can be challenging. As long as you are aware of the dynamics of the market you are entering and implement strategies to buffer against potential pitfalls, this prospect can also become exciting and lucrative.