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Improved protection for IP owners in Latin America

Trademark holders will gain increased protection in Latin America and the Caribbean as a result of several international treaties. Alli Pyrah reports.

Countries in Latin America and the Caribbean are cracking down on trademark squatters, combating pirates with tougher border measures and expanding IP rights to bring them in line with those in more developed countries. In particular, well-known and famous brands are gaining increased protection in Latin America as a result of international agreements and precedents set by recent cases.

Many of the changes are the result of provisions in treaties such as the TRIPS agreement, the Madrid Protocol and the Central American-Dominican Republic Free Trade Agreement (CAFTA-DR). The treaties, and their effects on laws in various countries, will form part of the discussion at this morning’s session. The session is being moderated by Jorge Otamendi, a partner of G. Breuer in Argentina.

Otamendi will be discussing recent developments in Argentine law, including the evolving definition of what constitutes a well-known trademark and recent cases relating to trademark dilution. “The courts in Argentina have accepted that a well-known trademark is one that’s known by the public, whether they are consumers or not,” he says.

Similarly, the Argentine courts have concluded that an expression can acquire meaning as a generic description through widespread public use. In Cerealko v. Pepsico de Argentina, the court concluded that although the word “nachos” is not of Argentine origin, it had acquired the meaning of “small triangular toasts made of cornmeal, originally from Mexico, which are usually eaten with diverse sauces.”

In the December 2011 decision, Division 2 of the National Court of Appeals on Federal Civil and Commercial Matters reversed a decision by a lower court that had ordered PepsiCo de Argentina to cease using the expression DORITOS NACHOS to identify its brand of tortilla chips. The trademark NACHOS! had been registered in Argentina in 1999 by a company called Cerealko, which filed a lawsuit against PepsiCo alleging that the mark had been infringed.

The appellate court also cancelled the mark, saying that the Mexican word had acquired a generic meaning in Argentina through public use. As a result, the court concluded that Cerealko’s registration was invalid because the mark was not sufficiently distinctive from the generic description.

Otamendi says that although the distinctiveness of the mark “NACHOS!” was questionable, the case was complicated by the fact that the registration had existed without challenge for several years. “It’s interesting that although the use was proven before filing, it increased dramatically after that,” he says.

Thwarting trademark squatters in Chile

In Chile, a new bill being considered by the country’s Congress aims to increase protection for brand owners but may meet with objections on constitutional grounds. The Chilean Industrial Property Law, which was published in March 2005, would bring the country’s law into line with international treaties, including the TRIPS agreement. “This new law will change many very important aspects of the current law,” says Rodrigo Velasco Santelices of Alessandri & Compania in Chile, who will be focusing on the proposed legislation during today’s session.

The law would introduce use as a requirement for maintaining ownership of a trademark. At present, Chile is one of few countries which do not have this requirement. The new legislation would allow anyone to file a cancellation action against a trademark on the grounds of non-use. Velasco says this aspect of the law will have important consequences for brand owners, particularly in the pharmaceutical industry.

In Chile, it is common practice to register and not use a trademark. “This has also unfortunately helped trademark piracy,” says Velasco. “If you don’t have use requirements it’s very easy to obtain a trademark registration because the legitimate owner of that trademark can’t file a cancellation due to non-use. I think this amendment has the intention of fighting piracy.”

The practice of registering a trademark with no intent to use it in the foreseeable future was partly due to the fact that historically, it took a long time to register a trademark—as long as four to five years if appeals were filed.The law requires certain types of products, such as new drugs, to have a corresponding trademark registered before they are launched. As a result, pharmaceutical companies have many stock trademarks registered.

In recent years, the Chilean government has made efforts to improve the efficiency of the registration process. The Chilean trademark office has now been separated from other branches of the government and given more resources, and it is now possible to file trademark applications online. Velasco says that an application without objections is now typically granted within a year. In a few cases, he has seen a registration completed in as little as eight to 10 months from the filing date.

The new law would also allow marks that are not intrinsically distinctive to be registered if they have acquired distinctiveness through use in the Chilean market; boost protection for famous marks and allow certain nontraditional marks to be registered for the first time; and expand protections for geographic indications and designations of origin, which were previously limited to the wine industry.

In addition, it would allow brand owners to register 3D, color, smell and sound trademarks. At present, sound marks can only be registered if they can be represented graphically as a musical score. “If the new law is approved, people could obtain registrations for simple sounds such as the noise of a HARLEY DAVIDSON motorcycle, which is a trademark in the United States,” says Velasco. “Up until now, it wouldn’t have been possible to register that sound as a trademark in Chile.”

Fighting the pirates of the Caribbean

Similar changes are happening in various Caribbean nations as a result of treaties including CAFTA-DR.

CAFTA-DR is a treaty between Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and the United States. It came into effect between the United States and El Salvador in March 2006, then Honduras and Nicaragua in April 2006, Guatemala in July 2006, the Dominican Republic in March 2007 and Costa Rica in January 2009.

It included several provisions relating to intellectual property, which will be explained in today’s session by María del Pilar Troncoso of Troncoso Y Caceres in the Dominican Republic. Although she is based in the Dominican Republic, Troncoso will outline the key changes to IP law that are happening across the Caribbean. Some of the provisions are mandatory and some will be implemented on a “best effort” basis.

Troncoso will also discuss the challenges associated with harmonizing IP laws between the United States and the Caribbean countries which are signatories to CAFTA-DR. For example, varying policies on border measures will make harmonization more difficult. Some countries allow authorities to detain counterfeit merchandise on an ex-officio basis (without the action being requested by the holder of the trademark). Others, such as the Dominican Republic, require brand owners to obtain a court order if they wish to have the goods seized.

The new law will give Customs authorities in the Dominican Republic the ability to initiate ex-officio actions and detain the suspected counterfeit goods. Customs will then be required to notify the brand owner so that the brand owner can prosecute the infringer and obtain a court order confirming that the products should be retained. If the trademark holder fails to do so, Customs will have to release the goods. Enforcement the new provisions may also be an issue due to a lack of resources in many of the developing countries which are signatories to CAFTA-DR.

Other changes under the new law will include the recognition of geographical indications and designations of origin. If a trademark is already protected in a country then a geographical indication subsequently conflicts with that trademark, the prior rights of the trademark must be respected. And, importantly, CAFTA-DR provides that each party shall make reasonable efforts to accede to the Madrid Protocol.

In countries which have signed CAFTA-DR, license contracts for the use of trademarks will no longer need to be registered in order to have legal effect against third parties. Patent owners will also gain additional protection under the agreement. For example, a patent’s expiry date will be adjusted to compensate for unreasonable delays in granting, provided that the delays are not the applicant’s fault. Troncoso believes that most of the changes are for the better, though there remain concerns about patents. “We have more problems with the harmonization of patent and data protection laws than trademarks,” she says. “With trademarks, the majority of the provisions were already required by our laws, so there was not much change at least in the Dominican Republic.”

RW01 Regional Update: Latin America takes place from 10:15 am – 11:30 am today

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