India to join Madrid System of trademarks in one year, SMEs may lose out

India’s top Patent officer, the Controller General of Patents PH Kurian has announced that India will join the Madrid System of Trademarks within one year, setting off a warning to Indian companies to ‘register it, or lose it’ as far as their brand names are concerned.

India had been negotiating with the World Intellectual Property Organization (WIPO) to join the System for several years, but has never officially confirmed its decision to join. Once India joins the System, foreign companies who have registered a trademark can force Indian companies — most of which never register their trademarks — to stop offering products and services that have names similar to theirs.

Kurian said there are several cases already of Indian companies being forced out of the market after foreign firms register a similar sounding brand name in India. However, unlike so far, from next year onwards, foreign firms will not have to even register their trademarks in India separately, as the Madrid System will extend their existing registration to India as well.

Speaking on the sidelines of a conference, Kurien said Indian companies don’t have a culture of registering trademarks and may have to pay heavily for this habit.

“I have a list of companies who lost out their business just because of trademark. The foreign firm comes to India, registers their trade-mark and the next day, they file an infringement notice,” he points out.

If the Indian firm has not registered its trademark, the company will have to start selling under a new brand not resembling the existing one. If the Indian firm too has registered, the Courts will decide on the matter depending on who can prove the earliest use of the trademark.

“The problem is especially relevant to small businesses.. The foreign company starts off a big round of litigation which cannot be countered by small companies.. In the end, many have been forced to become outsourced manufacturers for the new owners of the trademark,” he pointed out. He adds that chances of conflict are high after the Madrid System comes into effect as the same words and names are often used by companies in different countries.

Against an estimate of upto 100 lakh SMEs in India — each owning multiple trademarks — only around 12-13 lakh trademarks have been registered in India, including those by big firms. The largest number of trademarks in India are with the Reliance groups, around 4,000; followed by the Tatas with around 2,000.

He said small Indian companies trying to keep as far away from the government as possible, but they must get over their “revulsion” in this case. “They must file as soon as possible mentioning the earliest use of the trademark that they can prove,” he said.