After many years of expectations, effective as of September 1, 2010, Israel will finally join the Madrid Protocol.

The Israeli trademark legislation has been amended already back in 2003 to enable the implementation of the Madrid Protocol. However, the technical launch of a new computerized system in the Israeli Trademark Office has been extremely slow and caused a significant delay in the implementation of the Protocol in Israel. On May 31, 2010, Mr. Francis Gurry (WIPO's Director General) visited Israel and received the governmental decision of the Israeli government in this regard, which constitutes the final step towards the implementation of the protocol. The due date for full implementation of the Protocol in Israel was set for September 1, 2010.

What is the Madrid Protocol? - The Madrid Protocol is an international system (operated by WIPO) which enables trademark owners to file trademark applications in an international centralized manner, thereby reducing costs of filing and subsequent maintenance of trademark registrations. Unless a trademark application faces a refusal by a local Trademark Office in one of the designated countries, the trademark owner is not required to appoint a local agent in each jurisdiction. This fact can potentially save much of the costs for the trademark owner.

How does it work? – An applicant files a trademark application in its home country. Subsequently, it may file an international trademark application based on the national application, provided that it meets the criteria of entitlement (either it has a commercial establishment, domicile or nationality in the country of the Trademark Office in which the international application is filed). Shortly thereafter, the Israeli Trademark Office reviews the application form to ascertain that it corresponds to the national application/registration, and transmits it to WIPO. Subsequently, WIPO checks whether the application meets various formalities (entitlement, classification, lists of goods and services, etc.). If it does, WIPO publishes the international application in its Gazette, the international registration takes place and WIPO notifies the designated Trademark Offices in the jurisdictions where the applicant seeks protection.

The application then undergoes substantial examination under the law and practice of each jurisdiction in the local Trademark Office in each designated country. This examination must conclude within either 12, 18 or "18+" months, as declared by that country when it joined the Protocol. Israel shall apply the "18+" period, whereby the examination will conclude within 18 months, but there will still be a possibility of a third party opposition within an additional period of 3 months thereafter.

Costs - The official fees paid in connection with an international application are as follows: WIPO charges "Basic fees" at the amount of CHF (Swiss Francs) 653 for a black and white mark, or CHF 903 for a mark in color. Additional fees are charged for designating each country, and their extent depend on the number and the identity of countries involved. In many countries, the designation fees are quite similar to the fees charged for national applications. There may also be additional fees for each class covered by the application. These fees depend on the number of classes and the jurisdictions in which protection is sought. An Israeli applicant will be required to pay all the international filing fees directly to WIPO. In addition, the Israeli Trademark Office shall charge the Israeli applicant processing fees at the amount of NIS 516 per application, payable to the Israeli Trademark Office upon filing the international application.

Dependency - The international registration is dependent on the basic application/registration (i.e. the national application filed in the Trademark Office where the international application is filed, which is usually the home country of the applicant) for a period of 5 years of the international application date. If the basic registration is revoked within a period of 5 years, the international registration is revoked as well. In addition, if the Registrar orders the revocation of a registered trademark in cancellation proceedings that commenced before the end of the 5 years period, the revocation shall be effective to the international registration as well under the dependency rule. In case of revocation of the basic registration, within 2 months the trademark owner may request the specific Trademark Offices in the designated countries to transform the international registration to a national one. This may cause the trademark owners to incur national official and related fees.

Subsequent designations - An owner of an international registration may, at any time, file a request for subsequent designations, thereby adding additional countries in which it seeks protection. Once the examination (both on the international and national level) of such subsequent designation is complete, the mark will be protected in these additional jurisdictions. The advantage of this option is the centralized management of a worldwide trademark portfolio, even if the application was filed in some countries at a later stage.

What is going to be changed in the Israeli trademark system in September 1, 2010?  Following are the main changes in the Israeli Trademark system which shall come into effect on September 1, 2010:

• Multi-class applications- Currently, the Israeli trademark system allows only mono-class trademark applications. From September 1, 2010, it will be possible to file multi-class applications, as is customary in most modern countries worldwide. The official fees for the first class shall be NIS 1,490, and for each additional class NIS 1,119.
A multi-class application shall be treated as "one package" in the sense that a refusal for one class prevents acceptance and registration of the entire application. Therefore, in case an applicant believes that it is likely to incur difficulties in registering its mark in some classes, it may be worthwhile (and even cost-effective) to file separate applications for different classes in the first place. Nonetheless, if an applicant faces a refusal for some of the classes, it may be possible to request the Trademark Office to divide the application to several separate applications (subject to payment of official fees, which are yet unknown). Each such separate application shall enjoy the same original filing date. Once all separate applications are registered, it will be possible to join them back to one registration in the future, as set forth below.

• Renewal term – From September 1, 2010, the renewal term shall be 10 years, instead of 14 years. Proprietors of trademark registrations which are about to expire in the next few months are encouraged to take advantage of this period to renew their registrations before September 1, 2010, so that the renewal shall be for 14 years instead of 10 years.

• Joining existing registrations/applications – Existing registrations or applications may be joined, provided that they are all owned by the same owner, cover the same mark and were filed on the same day. As the Israeli trademark system currently allows only mono-class applications, this option shall be highly important for proprietors of large trademark portfolios consisting of marks registered in many classes. Such entities may wish to use this option to consolidate their large portfolios to a few multi-class registrations, thereby making their maintenance simpler, and saving future renewal costs. The official fees for renewal shall be: NIS 2,655 for the first class, and NIS 2,241 for each additional class in the same registration.

• Maximum duration of examination - The duration of the examination shall not exceed two years from commencement of the examination. Starting in November, 2010, the Trademark Office shall start sending notices to proprietors of applications whose examination commenced 22 months ago, advising them that the application will be considered abandoned, unless the applicant requests an ex-parte hearing before the Registrar.
• Section 37 of the Trademark Ordinance (allowing minor changes in a registered mark) shall be cancelled.

• Attorney on record - International applications which will reach examination in Israel (within 18 months from September) will not reference an attorney on record, and absent refusals by the Israeli Trademark Office, the marks may be registered without an indication of a local attorney on record. However, there are some advantages in having a local attorney on record for Israeli registration. For instance, the Customs Authorities check the Israeli Trademark Register when they wish to notify the trademark owner about incoming shipments of suspected infringing goods. Therefore, it will still be recommended to appoint a local attorney on record, even for registrations obtained under an international registration. The TMO is expected to enable such appointments of local agents.

What are the pros and cons of using the Madrid Protocol?

Advantages:

• Costs. The more countries are designated, the larger the savings by using the Madrid Protocol.

• Simpler management and maintenance of international trademark portfolios:
o One attorney in charge of the entire portfolio;
o Recordals of all changes, including assignments and registered user, are centralized;
o One renewal process for all jurisdictions;
o No need to abide by the requirements of local POA's and other formalities that exist in various jurisdictions.

Disadvantages:

• The entitlement requirements – as explained above, the applicant of an international application must have either a commercial establishment, domicile or nationality in the country of the Trademark Office in which the international application is filed.

• An international registration cannot be assigned to a party who does not have either a commercial establishment, domicile or nationality in a country which is a member of the Madrid Protocol.

• The international registration must be identical to the basic application. Therefore, if the basic application is limited for some reason (for instance – in the US, USPTO requirements regarding the lists of goods and services are very strict), the international registration cannot be broader. In addition, Israeli applicants sometimes file trademark applications for a mark consisting of both the English and Hebrew versions of a word mark. However, for foreign filings, in most cases only the mark in English is relevant. Therefore, in such cases, using the Madrid system may be problematic.

• The dependency on the basic registration.

• Duration of the registration process - The registration process of an international application (which does not face refusals) can take around 1-2 years from the filing of the international applications. While in some jurisdictions this may represent a reasonable period compared to the national process, in major western jurisdictions such as the US and the EU, a national straight forward registration process is much quicker. Therefore, if the time of obtaining protection is significant to the applicant, this may represent a disadvantage in the Madrid system.

In any event, the Madrid Protocol may serve as a great opportunity for Israeli start-up companies to expand their trademark portfolios worldwide for relatively affordable costs.