Joyce Tan highlights the differences between the “first-to-file” and “first-to-use” principles which affect trademark strategy.
To determine who has the rights to use and register a trademark, countries worldwide follow one of these two principles to govern how trademark rights are established: “first-to-file” or “first-to-use”. These principles identify who holds the rights to a trademark – whether ownership is based on the date of filing of the trademark application or the date of actual commercial use of the trademark. Therefore, it is important to understand the legal framework of trademarks in both the home country of your business as well as abroad to ensure effective and proper brand protection at both domestic and global levels.
First-to-File Principle
The first-to-file principle establishes that the rights to a trademark belong to the applicant which first files a trademark application with the national intellectual property office. This applies regardless of whether the applicant has used the trademark in commerce or if any other party has used the trademark before the applicant. As a result, the date of filing is crucial in countries that adopt this principle.
Most countries around the world follow this principle primarily because it is easier to administer and encourages prompt trademark registration. However, a significant drawback of this principle is that it inadvertently encourages “trademark squatters” to register potentially lucrative and valuable trademarks – often for famous or well-known brands – solely to hold them hostage and later seek to sell the trademark registrations back to the original or rightful owners at a profit, without any intention of using the trademarks in commerce themselves.
Examples of major countries which adopt the first-to-file principle: China, Indonesia, Thailand, Japan, European Union, Japan, South Korea, United Kingdom, Philippines, Qatar and Vietnam.
First-to-Use Principle
On the contrary, the first-to-use principle grants trademark rights to the first person who uses the trademark in commerce. This is regardless of whether they have registered the trademark with the national intellectual property office at the time of use. As long as proof of use can be demonstrated, the rights to register a trademark belong to the person who first used the trademark in commerce. While trademark registration is important for legal protection, the date of first use of the trademark carries significant weight in countries that adopt this principle.
This principle emphasises the importance of actual trademark use in commerce for establishing rights. It acknowledges the efforts and investments made in building the goodwill and reputation of the trademark through commercial activities in the market, even if the trademark has not been formally registered. Additionally, this principle allows new businesses to develop their brand and explore the market before seeking registration, which can be beneficial if the business does not ultimately succeed. However, one of the main disadvantages of this principle is the uncertainty surrounding trademark ownership and the burdensome proof requirements needed to determine who used the trademark first.
Examples of major countries which adopt the first-to-use principle: United States of America, Canada, Australia, Hong Kong, Brunei, India, New Zealand, Singapore, Malaysia and South Africa.
Exceptions to the Principles
It is important to acknowledge that the answer is not always straightforward. Some countries may have exceptions to the standard principles.
In the United Kingdom, which follows the first-to-file principle, there is the common law tort of passing off which grants certain rights to unregistered trademark owners over registered ones. This means that despite being a first-to-file country, there is an exception to the principle where unregistered trademark owners may challenge an earlier filed trademark based on the goodwill of its trademark acquired through earlier commercial use.
Conclusion
Since trademark rights are territorial and only effective in the countries where protection has been sought and obtained, brand owners should not only seek protection in their home country but also consider protecting their trademarks in other countries where they may have interest in or intent to expand their business to. Before they do so however, it is important to consider whether the country is a “first-to-file” or a “first-to-use” country. Below are some practices to consider:
- Conduct thorough and proper research: Businesses should research the specific trademark laws and practices in all countries they have interest in, along with any exceptions, to create an effective and comprehensive trademark protection strategy.
- Trademark protection: Understanding local trademark laws and requirements is crucial to help businesses to prioritise between filing early for registration or establishing use in commerce for securing rights in the target countries. Ensure that your trademark is registered in first-to-file countries before you begin doing business there and where first-to-use countries are concerned, keeping business records and evidence of first use of your trademark is essential.
- Monitor trademark registrations: Regularly monitor your trademark in key countries of interest to identify and avoid potential infringement.
In conclusion, the distinction between first-to-file and first-to-use trademark principles can greatly influence your strategy for trademark protection globally. Understanding these systems is essential for effectively managing and developing your business’s intellectual property portfolio, preserving and protecting your brand, and maintaining a competitive edge in the global marketplace.
Joyce is a Senior Associate at Wong Jin Nee & Teo. Her practice is focused on trademark prosecution and she is vastly experienced in worldwide trademark coordination.