Romero Pineda & Asociados
El Salvador: IP Developments In The DR- CAFTA Countries
25 October 2006
Article by Jose R. Romero Esq and Marcela Mancia
As part of its long-term plan of creating a Free Trade Area of the Americas, the United States is building smaller trade blocs through bilateral and multilateral free trade agreements. The first such agreement was the North American Free Trade Agreement with Canada and Mexico, which came into force on January 1, 1994. Central America with its market of 35 million consumers, was the next logical step, not least because collectively the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua represent the second largest US export market, with annual trading figures of $16 billion a year. Although the United States’ primary concern is to protect the interest of US companies, the IP provisions included in the free trade agreements also benefit the local economies.
In 2001, almost ten years after the end of the civil war in El Salvador, the President at the time, Francisco Flores, sought closer trade relations with the United States. El Salvador’s "Trade Not Aid" campaign grew in strength and became the subject of interest from other Central American governments. The lobbying proved successful as on January 17, 2002, at the Annual Assembly of the Organization of American States, President Bush announced his intentions to negotiate a free trade agreement with the Central American countries.
True to its word, the United States, led by its trade representative (USTR), started negotiations with the Central American countries’ respective ministries of economy in Costa Rica in January 2003 on what later became known as the Central America Free Trade Agreement.
Towards the end of the negotiations, the Dominican Republic expressed its interest in joining the agreement. Its petition for accession was unanimously accepted and the agreement took on its current name of the Dominican Republic-Central America Free Trade Agreement with the United States (DR-CAFTA). It regulates a wide range of economic ad legal topics, including, among many other things, access to the market, technical obstacles to trade, cross-border services, customs management and trade facilitation, e-commerce and intellectual property.
Current State Of Play
Following the successful conclusion of the negotiation stage, the DR-CAFTA countries were faced with the difficult job of actually ratifying the agreement. The DR-CAFTA requires the member countries to implement certain other international treaties, including a number of IP-related accords, before it can come into effect. During 2004 and 2005, the governments of each DR-CAFTA country heavily lobbied their respective legislatures to ratify the agreement, with mixed results. El Salvador was quickest of the mark, ratifying the agreement by December 17, 2004. However, just when it seemed that the United States and El Salvador were set to implement the agreement, US Commerce Secretary Carlos Gutierrez announced that his government required additional amendments to local legislation in each country. El Salvador again took the lead by approving the amending 14 laws by December 2005, which were reviewed and accepted by the USTR in February 2006, allowing the DR-CAFTA to come into effect between the United States and El Salvador on March 1, 2006. Honduras and Nicaragua followed suit on April 1, 2006. On July 12, 2006 the USTR announced that Guatemala had complied with all the legislative changes to enable the DR-CAFTA to become effective.
The Agreement remains a work in progress for the other countries. The Dominican Republic will not be ready until late 2006 and no one is quite sure when Costa Rica will ratify, despite promises made by President Arias during his election campaign.
Importance Of Intellectual Property
Current figures regarding exports to the United States from the DR-CAFTA region stand at around $6.5 billion a year; this will grow to $8.5 billion once the DR-CAFTA becomes effective in all countries. A rise in trade brings with it a likely increase on abuse of IP rights, which goes some way to explaining why the IP negotiations were so important to the overall deal. Intellectual property has been a sensitive issue for the United States and the DR-CAFTA signatory countries for a number of years. For example, the USTR has been closely examining El Salvador’s IP developments since the early 1990s. During that time, El Salvador has taken a number of steps to upgrade its trademark, patent, copyright, design and trade secret protection. First, in 1994 it enacted a new IP Law and ratified the Paris Convention for the Protection of Industrial Property and the Berne Convention for the Protection of Literary and Artistic Works. A second upgrading step was the ratification of the World Trade Organization agreements, including the Agreement on Trade-Related Aspects of Intellectual Property Rights in 2000. Implementation of the DR-CAFTA marks a third step.
El Salvadoran Example
The DR-CAFTA has required numerous changes to the trademark laws participating countries. As a leading member of the DR-CAFTA, El Salvador has been quick to push through a number of key changes to its laws to comply with the agreement’s requirements.
It has updated the categories of mark that can be protected. Sound and certification marks now have mandatory protection, while smell marks are voluntary. Likelihood of olfactory confusion is a new rule to consider when examining an application or a search result. Sound marks will be examined under the existing rule regarding likelihood of ideological confusion.
The recordal of trademark license agreements is now voluntary rather than mandatory, as was the case previously. Recordal is recommended, however, as it will prove useful should a mark owner seek to demonstrate use of its mark through evidence of use by a licensee. Agreements that are duly legalized and translated into Spanish can be enforced against third parties, including authorities and infringers, even when they have not been recorded.
Changes in the rules concerning other types of agreement have also been made. For example, the registrar will accept a coexistence agreement as signed by the parties and will not examine it to assess whether it creates a likelihood of confusion.
Cancellation for non-use, which was previously abolished in 2002, has been reintroduced to allow total or partial cancellation of a mark not used during the preceding five years. A cancellation action can be filed only if five years have elapsed since the date of registration. A mark will be considered to be in use when the goods or services it covers are found in commerce, the goods are exported from El Salvador or the services are provided abroad but originated in El Salvador.
Additionally, "advertising of the mark through any means" will be considered use, "even if the goods or services covered are not actually traded" in El Salvador. This new rule allows foreign trademark owners to rely on advertising in magazines or newspapers, or on satellite or cable Television or the Internet.
Filing of a proof of use on a regular basis is not required.
Enforcement of rights has been extended through preliminary injunctions against goods in transit and seizure at the borders, which together with the existing prohibition to import and/or export infringing goods are suitable venues when planning legal action.
Criteria to calculate damages have been completely modified.
The statute of limitations has now been set in 5 years counted from the last infringement.
While Special Intellectual Property Courts are created, the competent courts will be those with jurisdiction in commercial matters and the criminal courts if the infringer has committed felonies.
The amended Trademark Law mandates SVNET, the registration entity for domain names, to adopt dispute resolution procedures based on WIPO Uniform Policy for Solving Domain Names Disputes for the ccTLD ".sv".
Turning to patents, the Patent Cooperation Treaty (PCT) was deposited May 17, 2006 and it became effective August 17, 2006. The patent section of the IP Law was amended to standardize 20 years protection period to all types of patents, counted from filing date. Publication of a patent must be done no longer than 18 months after filing date. The estimation of damages has been improved. Preliminary injunctions can be granted provided the plaintiff reasonably warranties any damage to the defendant, as long as the patent holder is not discouraged to pursue his action. Any definitive legal action must be filed 15 working days after preliminary injunctions are granted.
If the Registry of IP takes longer than 5 years to grant a patent, counted from filing date, or more than 3 years counted from the examination petition, a compensation period of 550 days can be requested to the Registry to cure the administrative delay; provided delay in granting the patent or examining it is shown to be responsibility of the patent office and not the applicant.
One of the most relevant changes is data protection granted for 5 years to pharmaceutical products and 10 years for agrochemical products. The Health and Agricultural Authorities are forbidden during these terms to rely on data protection information presented by one party when obtaining its sanitary registration, to support the sanitary registration of another party’s products. "This is a wise rule that will prevent the local copy cats from launching their "generic" version of new medical and chemical principles", says Carlos Castillo. A complementary rule according to Castillo is "requesting an affidavit, granted before a Salvadoran Notary Public, to applicants of sanitary registrations that rely on safety and efficacy data originally filed by another party or on evidence of prior approval on another country". Such affidavit must state that there is no current patent in El Salvador for such a product. In the event there is a patent, the affidavit must state that the applicant won’t enter the market while the patent is effective. If a patent exists, the applicant must present authorization from the patent holder. If these requirements were not complied, it would be impossible to obtain said sanitary registration.
The term for copyright protection has been extended to the life of the author plus 70 years after his death. A real novelty is providing that when copyrights are infringed using the Internet joint liability falls on the infringer and the Internet Service Provider (ISP) as long as he had knowledge of the infringement or had been warned about it. The formation of organizations grouping authors and composers has been clarified.
Honduras ratified the following International Treaties:
1. WIPO, Copyright Treaty (1996).
2. WIPO, Performances and Phonograms Treaty (1996).
3. (PCT) 1970.
4. Microorganisms Treaty (1980).
Nicaragua introduced amendments that became effective March 24, 2006, for the following laws:
1) Copyrights and Related Rights Law.
* Provides new forms for calculating indemnity caused by infringement and sets more rigorous fines.
* Seizure of infringing goods is now included as a venue when taking legal action.
* Provides the violation of the protection of information on management of rights.
* Crimes committed against Copyrights or Related Rights are prosecuted ex-parte, without the need of formal accusation by the copyright owner or interested party
* Documents issued by the organization of authors and composers for collecting the use of artistic, musical, literary, and/or scientist works constitute executive title.
2) Patents, Industrial Utility Models and Design Law.
* Patents will now be vulnerable of industrial application if they have specific, substantial and credible utility.
* Invalidity of a patent is included when the patent has been obtained by means of fraud or false representation.
* The Judge will be authorized to condemn the infringer on payment of costs and reasonable attorney fees.
* The constitution of the guarantee of costs must be reasonable and sufficient in opinion of the competent judge to protect the defendant and avoid abuses when executing preliminary injunctions.
* A refutable presumption of validity of the patent is now required for the application of preliminary injunctions.
* New Fees for the following matters are added: Issuance of the Certificate, priority documents, types of examinations made by internal experts of the Registry, Application of extension of deadlines and rehabilitation of patents.
3) Trademark Law.
* The definition for Geographical Indications is now extended.
* Smell marks are now protectable.
* The recordal of license agreements is no longer mandatory. License agreements are inscribed just for publicity purposes.
* Resources such as Revision, Replacement and Reformation have been introduced against resolutions dictated by the IP Registry.
* Measures against infringement of trademark rights were hardened and guarantees and conditions in case of preliminary injunctions have been established.
* Some articles regarding Appellations of Origin have been strengthened.
* Recordal of the registrant’s address change now generates a Fee.
* Seizure of infringing goods has been included among preliminary injunctions.
* The Judge will be authorized to condemn the infringer on payment of costs and reasonable attorney fees.
* The Registrar has to conduct mediations when an interested party requests it on all matters submitted to the Registry.
The Congress of Guatemala, reformed the Industrial Property Law, and Copyrights and Related Rights Law.
1) Industrial Property Law.
a) Definitions for Appellations of Origin, Geographical Indications and Trademarks have been extended
b) The sound marks, smell marks and certification marks are now protectable.
c) Notice for publication in the Official Gazette now required to list the goods and services protected.
d) Notices for publication will be also issued in the recordal of assignments, changes of name and/or domicile of the mark owner and License agreements.
e) The registration of a mark now may be done manually or electronically, thus opening doors to E-Government.
f) The recordal of license agreements is no longer mandatory.
g) The registration of trade names is not mandatory.
h) The State of Guatemala will be the only owner of National Appellations of Origin and it will grant the correspondent permits to those producers, manufacturers or craftsmen who conduct their activities in the place designated by the Appellation.
i) New preliminary injunctions are established.
2) Copyrights and Related Rights Law.
a) Definitions for Communication to the Public, Distribution to the public, fixation, phonograms, technological effective measures, producing of phonograms, publication, broadcasting, and reproduction have been extended.
b) Protection of patrimonial rights.
c) Terms granted for Related rights.
d) Terms granted for Copyrights.
e) Preliminary injunctions and criminal injunctions are provided against infringers of Copyrights and Related Rights.
Some of the amendments being considered by the Dominican Congress are the following:
a) The duration of the patrimonial rights are established for the life of the author plus 70 after his death.
b) The use of a play or work, interpretation or execution, or phonogram assigned, can only be individually transferred by the assignee to a third party under the same terms conferred by the actual owner in the assignment document.
c) Protection of reproduction and control of the figures cited in b).
d) Infringements caused by the use of decoders of signals without the proper authorization of the legitimate distributor; infringements and responsibility of the suppliers of Internet committed against the owners of the Copyrights and Related Rights through controlled systems of networks.
e) The attributions conferred to the Public Ministry and the National Author Office of Law will be exerted in accordance with the dispositions established in the Penal Procedural Code, the Constitution of the Dominican Republic and International Public Law in regard to a proper trial.
2) Industrial Property Law
a) Licenses will be granted when administrative silence exists (120 days elapse without resolution from proper authorities). These licenses will have all the effects of an administrative act and the same validity as if they were specifically dictated and approved by the proper authorities.
b) Fines have been increased in relation to injunction by charging the amount of 10 to 50 minimum wages in the following cases:
* To those who intentionally use in commerce a mark or trade name considered to be identical, a reproduction, a copy or a fraudulent imitation of a registered one without the consent of the owner;
* To those who use in commerce a false geographic indication or geographic indication susceptible to deceive the public on the origin of the product or service or on the identity of the producer, manufacturer or retailer of the product or service.
Finally, it is important to note that the treaty provides 2 years for the signatory countries to conclude ratification procedures, otherwise, those will be left out in detriment of their emerging economies and regional trade.