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Differences between United States and Foreign Intellectual Property Laws

Fall 1996

Our International Practice Group would be happy to assist you with any questions relating to this article.

Historically, a successful business underwent three distinct phases in its development: First, it marketed its products on a local level; then expanded nationally; and, finally, expanded internationally. In today’s market, businesses routinely confront international competition more and more quickly. One of the most effective ways to secure and protect local, national and foreign market share is through the use of patents and trademarks. Yet, the rules for securing these rights in the United States frequently differ, sometimes dramatically, from those of foreign nations. This article is intended to identify briefly notable differences between United States and foreign patent and trademark laws.

PATENTS

A United States patent is issued to the first person to invent a new, useful and non-obvious product or process. The inventor can publicly disclose or offer to sell the product to others up to one year prior to filing a patent application. Once the patent issues, the owner can prevent all others from making, using or selling the invention in the U.S., even if the owner does not make or sell the patented product itself.

If a company intends to capitalize on the fruits of its research and development internationally, it should understand a few basic differences between United States and international patent law.

First, a United States patent is not enforceable in any other country. A separate patent must be obtained in each country in which patent protection is desired. The cost of filing a patent application and the main-tainance of an issued patent differs from country to country: e.g., Compared to the United States, Canada is relatively inexpensive while Japan and Saudi Arabia are substantially more expensive.

Second, industrialized nations (other than the United States) award patents to the first person or company to file an application for a novel invention. If two companies are developing similar products, the first company to file the patent application will be awarded the monopoly rights to the new product, even if the other company was the first to conceive the product and/or develop a working prototype. Therefore, if a company is competing internationally, it may be important to file a United States patent application before the product is fully developed. Under the Paris Convention and/or the Patent Cooperation Treaty, industrialized countries (except Taiwan) recognize the filing date of the United States patent as being the priority date of filing in their country, provided a patent application is eventually filed in their country within the specific time limits set by these treaties.

Third, industrialized nations (other than the United States) do not permit an inventor to disclose publicly or offer to sell an invention prior to filing a patent application. Such a prior disclosure or offer to sell would invalidate any patent that may issue in their country.

Fourth, most countries require the patent owner to meet the market demand for the patented product in their country, or the owner could be compelled to license others to make or sell the patented product. This can be a significant issue if the owner obtains a patent in several countries during a short period of time and cannot establish production facilities and marketing channels as quickly.

Finally, in many Pacific Rim countries, a company that obtains a patent for an improvement to a patented product has the right to make and sell the improved product. The owner of the broader pioneer patent must grant a license to the owner of the improvement patent. This may in part explain why countries like Japan are so prolific in filing patent applications.

TRADEMARKS

In the United States, trademark rights are awarded to the first person to actually use a mark in a given geographical area. The filing date of a federal trademark application is considered the date of effective use throughout the United States. During the first five years after the issuance of a registration, the registration owner has a right to exclusive use of the mark, but third parties may contest the ownership based on prior use of a similar mark or based on the descriptive nature of the mark. After a mark has been federally registered for five years, the registration owner has an incontestible and exclusive right to use the mark throughout the United States. A registration owner may license others to use its mark, but this license need not be recorded with the United States Patent and Trademark Office.

If a company intends to sell or actually sells its goods or services internationally, it should be aware of several significant differences between United States and international trademark law. First, similar to patent law, most other nations award trademark rights on a first-to-file basis. Actual use of a mark is not necessary, even for several years after a registration issues. This can cause a problem if an agent, distributor or licensee of a United States company, or a trademark pirate, files a trademark application in a foreign country on its own behalf prior to the U.S. company filing a trademark application in that country. The United States company must then negotiate with the agent, distributor, licensee or pirate to use its own U.S. mark in the foreign country.

Second, although a registration may be granted prior to a company’s actual use of the mark in the foreign country, a third party can file a petition to cancel the mark if it is not used within a prescribed time (usually three to five years after issuance of the registration). Indeed, many countries require the registration owner to file a declaration of use every few years to maintain his registration.

Finally, if a company is relying on its licensee's use of its mark in the foreign country for the purpose of maintaining the registration, the licensing agreement may need to be recorded in the foreign country.

Media Contact 

If you have a media request or need an attorney with particular knowledge for comment, please contact Susan Steberl, Director of Marketing, at 414.287.9556 or ssteberl@gklaw.com.

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