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Licensing 101: A Paradox of Piracy for Licensing Business Part 5

27 March 2015

Remembering my note that I am not a lawyer and this blog should in no way substitute for any readers taking their own legal advice on matters related to I.P., for starters, there is something called the Madrid System or “Madrid Convention” ( )  to which most countries are signatories which states that if you hold the trademark in one market , subject to any pre-existing conflict, you have a basis to press your claim to it in all markets.

This is a useful and valid starting point, but as mentioned, in the interest of thoroughness and to counter countries that use trademarks or lack thereof as barriers to entry and/or basically money-spinning rackets, you will also need to hold trademarks in at least some strategic classes in all markets in which you intend to license. 

In certain markets, licensees will expect you to hold the trademark in that market for the particular class of product you’re licensing to them. 

Indeed, in certain countries – like China – the piracy was so bad at a certain point that things swung so far in the other direction and now you can’t issue a license for a product UNLESS you hold the trademark for that class in China (or rather I should say you can issue the license, but you have no way to enforce licensee compliance on payment unless the trademark is secured or applied for).  So each market requires some trademark protections and you’ll have to go country by country, but generally speaking, after securing all materials classes in its home market most licensors will follow a strategy of doing trademark registrations over time, as the revenue opportunities present themselves.

So, after that little detour into trademarks and coming back to counterfeit product, your ability to take local action against pirated product may or may not depend on you holding the trademark for that particular class in that market.  As one might expect, there is an unfortunate correlation between the amount of counterfeit product in a market and the cost and trouble associated with combatting it.

Examples of this in the next installment!