Latin American Intellectual Property Report 2009-20101
We are very happy to continue our practice of publishing a brief overview of the most relevant IP news that has arisen in Latin America during the last year up to September 2010 as well as the most expected trends that are likely to unfold in the near future.
1. The impact of the economic crisis in the region.
In our opinion, it is impossible to start this analysis without mentioning the impact of the global economic crisis on our region as well as its effects on the practice of intellectual property law.
According to statistics published by the World Bank, “…Countries in Latin America and the Caribbean entered a strong cyclical rebound during the second half of 2009, benefiting from a robust rebound in external demand, renewed capital inflows, higher commodity prices, the turn in inventory cycle, and a boost to domestic demand from substantial monetary and fiscal stimulus. GDP in the region, after contracting by 2.3 percent in 2009, is projected by 4.5, 4.1 and 4.2.percent over the 2010…”2
While established international companies have started to deeply focus on this region, there are still many potential opportunities here for small and medium enterprises (“SMEs”) from the United States, Europe and Asia. Of course, in order to capitalize on these opportunities, many obstacles must be overcome such as a lack of credit and effective official support from their home countries.
Likewise, there are important cultural and legal differences between Latin American and those other regions, which may result in effective barriers to entry if not handled properly. Differences in the IP systems of those regions should be particularly borne in mind.
2. Developments regarding IP in the broadest scenario
2.1. Activities at WIPO regarding “IP for Development”.
There has been increasing activity at WIPO on the IP Development Agenda, which was established by that arm of the United Nations in October 2007 as a result of a proposal submitted by 14 developing countries known as “Group of Friends of Development” led by Argentina and Brazil that includes many Latin American countries such as Bolivia, Cuba, Dominican Republic, Ecuador, Peru and Venezuela.
Some of the ongoing projects unfolding under the umbrella of the “Development Agenda” relate to areas like technical assistance and capacity building, flexibilities of international regulations to expand the scope of the public domain (except in the areas of genetic resources, traditional knowledge and folklore where developing countries are seeking more effective protection) as well as transfer of technology and access to information.
Regardless of the way in which the final outcomes of these projects will affect the daily work and practice related to IP, it is worth keeping in mind that these sorts of initiatives signal the views and concerns held by most government officials (and some private sectors) in Latin America and other developing countries.
Yet, it remains to be seen if the current economic growth experienced by some of these countries (especially Argentina, Brazil and Peru) and the flourishing of local companies going international will cause major shifts in the path of the Development Agenda.
2.2. Brazil suspended until 2012 the “cross retaliation” against IP rights owned by U.S. nationals.
Finally, in June 2010 the Brazilian Senate approved the suspension of what would have been the first time when “cross-retaliatory” measures against IP assets applied under WTO Regulations.3
Both countries signed a Memorandum of Understanding establishing a fund of US$ 147 million to support Brazilian cotton producers and a maximum cap for government expenditures and subsidies to US cotton producers.
Yet, diplomatic tensions and the possibility of imposing such cross-retaliatory measures may arise if the terms and conditions of the agreement are not fulfilled so it is worth keeping an eye on this case.
2.3. Brazil continues to fight at the WTO: a new dispute was initiated against the European Union for the seizure of generic pharmaceuticals in transit.
This May, Brazil filed a complaint at the WTO (using its dispute mechanism) against the EU and the Netherlands for the seizures of the product Losartan® Potassium at the Rotterdam Port while the batches were in transit between India (the place of manufacturing) and Brazil (the country of destination).4
According to press briefs, the seizures occurred in 2008 and 2009 and were handled by Dutch authorities based on existing patents in Europe despite the fact that in both, Brazil and India, there are no patent rights in force.
This dispute is very relevant given that the minimum standards imposed by TRIPs in relation to the scope of the rights of patentees to be protected at local or regional borders fall short of the European standards set forth in Regulation 1383, which has been characterized as containing TRIPs-Plus standards.
Moreover, the outcome of this dispute may affect similar transactions carried out by companies in other Latin American countries like Argentina, Colombia and Peru5, or at least such transactions will have to be conducted avoiding European territory whenever possible.
Due to its relevance, we will be monitoring any news that arises in these cases and the same is advised for all interested parties.
3. Regional developments related to patents.
The following are the most important regional patent news and developments that have taken place in the last year:
3.1 Clarification on the scope of the Chilean grace period that applies to industrial models, utility models and patents in Chile after joining the PCT.
In February 2010, the Chilean PTO (INAPI) issued Notice 001 bringing light on the scope of the grace period after receiving many request of clarification by applicants and their advisors, most of which were prompted by the fact that the PCT entered in force in June 2009.
Those doubts arose from the legislative changes in Chilean IP Law that occurred between 2005 with the enactment of the current National IP Law No. 19.9966 and 2007 with its amendment by Law No. 20.160, and their regulations issued thereinafter by the Executive Branch.
That last amendment to Chilean IP Law (i.e. Law No. 20.160) modified article 42, which sets forth the current grace period of 12 months prior to the filing date during which certain disclosures do not affect the novelty of the invention nor the application of the non-obviousness standard.
Moreover, Notice 001 describes in greater detail how the grace period works and applies to PCT applications, among other issues tackled.
3.2. Argentina PTO limits the filing of voluntary divisional applications
In July 2010, the Argentine PTO (INPI) issued Resolution No. 147/2010 restricting the possibility of filing divisional patent applications voluntarily.
Thus, after the entrance in force of that Resolution, applicants may only file divisional patent applications if they are requested by the examiner in charge of the substantive examination through the issuance of an official action. Let us recall that the failure to comply with such requests results in the abandonment of the application.
This Resolution modifies prior administrative practice of INPI and has raised many concerns about its legality given that it may restrict the rights of patentees in an unlawful way.
3.3. The Mexican PTO (IMPI) does not include formulation patents on the Official Gazette composing the local Linkage system.
In August 2010, IMPI published the bi-annual Official Gazette listing existing patents on active ingredients for pharmaceuticals but did not include patents on formulations as it was expected after the Supreme Court Decision issued in January of this year. That judicial decision held that “…patents for […] medicines or their claims that do not represent production processes or formulation of drugs processes and which in their pharmaceutical composition include an active ingredient, substance or principle…” shall be included in the Official Gazette.
Let us recall that this publication is the essential tool composing the Mexican system enacted in 2003 linking IMPI and COFEPRIS (the Mexican Health Authority) that is the authority in charge of granting marketing approval to commercialize pharmaceuticals.
Under the Mexican legal system and for this particular case, both of those administrative authorities are not obliged to follow the prior ruling of the Supreme Court.
The narrow scope used in the last Gazette by IMPI has been criticized by many and it may be challenged in courts soon.
3.4. Mexico amends its IP Law
In April 2010, the Mexican Congress approved certain amendments to the local IP Law that were implemented through regulations issued by the Executive Power in June 2010.
These amendments generated a lot of debates within government bodies and also among different sectors representing private companies like internationally-based versus locals and those related to the pharma generic industry versus the companies investing in R&D, among others.
Given that the changes to the former IP Law are many and very important, we are to only list a few of them here: i) the standard of industrial application an invention is refined; ii) the possibilities for third parties to file “non binding”or “informal” oppositions against published applications and granted patents are established; iii) the procedures for granting preliminary measures such as injunctions are modified including the ability for an infringer to post a bond 40% higher than the one offered by the right holder in order to continue using or commercializing the invention; vi) criminalization of certain activities are detailed as well as the measures for penalizing them,; v) the requirements related to proving the Power of Attorney are detailed. Filing a POA is no longer required in case of trademark filings & renewals as well as in cases of registration of TM license agreement and assignments.
4. Regional developments related to trademarks.
4.1. Puerto Rico enacts new trademark Law.
In December 2009, the Governor of the Commonwealth of Puerto Rico enacted the new Trademark Law No. 169/2009, which is a compilation of the former Puerto Rican TM Law, the Lanham Act and the Model State Trademark Act (U.S.).
The main purpose of this new legal provision, which abolished the prior TM Law No. 63 enacted in 1991, is to update the local TM regulations to the needs of the modern market place.
Some of the new features worth mentioning are: i) defines certain standards like “dilution”, “trade dress” and “secondary meaning”; ii) establishes the need to file a statement of continued use by and during the 5th as well as at the time of renewal; iii) abolishes the former alternative of obtaining a Puerto Rico TM registration based on an U.S. registration; iv) provides grounds for famous marks to file legal action based on likelihood of dilution, v) tackles the problem of cyber-squatting; vi) sets forth that conflicts between marks based on “intent-to-use” and junior used marks are to be decided by the local PTO.7
4.2. Number of trademark filings using digital means continues to grow in Brazil.
According to a statement issued by the Brazilian PTO, the number of TM applications filed using the local digital system, “E-Marcas”, reached the highest peak during the first semester of 2010, as they represented 72% of all the filings. During that period, the number of TM applications was 57.912, which suggests the likelihood that the total number of filings for the whole 2010 may be higher than for the year 2010 when that number was 111.724.
Let us recall that digital systems to handle the work received by the local PTOs had started to be implemented in the early years following 1990 in very few Latin American countries. As the years went by, the number of countries adopting such systems increased but many problems remain unsolved regarding their quality.
By now, digital systems for handling filings and prosecution of TMs have been implemented in most Latin American countries and their quality is improving relatively quick. However, serious and reliable statistics about their use and the numbers of filings (and specially trademarks in force in each country) are not available in most of the region yet.
Overall, the use of digital systems by the local PTOs, right holders and interested parties is, undoubtedly, going to greatly improve the management of the workflow therein as well as provide greater efficiencies for all those interested in trademark matters.
It is clear that the level of general awareness seen in the region about the relevance of the legal protection of intangible assets continues to rise not only among government officials and local IP experts but also among the public in general.
In our opinion, it is this growing social interest in IP matters what is leading all the legislative changes mentioned above, which signals a relevant difference with what had happened during the implementation of TRIPs and the other WTO Trade Agreements after 1994.
Legislative changes are the most important steps to improve and fine-tune the legal protection of intangible assets because almost all Latin American countries (most exceptions are found in the Caribbean) follow the “Civil Law” tradition implemented by the former European Empires, as opposed to the “Common Law” tradition followed in the U.S. and other Anglo-Saxon countries.
Yet, there are other very important legislative changes expected by many but not likely to happen anytime soon due to multiple complex reasons. One of them is the adoption of the PCT in those few countries that are not already members (Argentina, Bolivia, Panama, Paraguay, Uruguay and Venezuela, which are all members of the Paris Convention). The other is the entrance in force of the Madrid System in the region.
The timing for all of this could not be better given the very important role that Latin American emerging economies are expected to play in the near future.
Last but not least, it is worth mentioning that the optimal level of legal protection of intangible assets depends not only on the measures taken by legislative bodies but also by the effectiveness of right holders in designing the strategies to protect and enforce them.
Notes: 1 (c) Moeller IP Advisors; September 2010. Author: Mariano Municoy, Argentine lawyer at Moeller IP Advisors (www.moellerip.com), WIPO Neutral. LLM International Intellectual Property from Chicago-Kent College of Law, U.S. (graduated in 2004) and LLM Law & Economics Torcuato Di Tella University, Argentina, (graduated in 2009). Comments are welcome at email@example.com
2Prospects Fiscal Headwinds and Recovery. Regional Appendix: Latin America and the Caribbean available in August 2010 at: http://siteresources.worldbank.org/INTGEP2010/Resources/GEP2010Summer2010-LACAnnex.pdf
3Those measures were related to the “WTO cotton dispute” between the U.S. and Brazil, which we commented on our website.
4Under WTO Regulations, the parties of the dispute are to initiate Consultations and if no amicable solution is reached then a panel will be set.
5 Let us recall that, as we informed on our website, in May this year Colombia set forth a mechanism within the National Health Authority (INVIMA) to facilitate parallel importations while “controlling” the quality of the products.
6 That Law modified the prior IP Law No. 19,035 enacted in 1991.
7 An extended analysis of the New TM Law is available on our we