Ecuador: the current conundrum of registered trade names that are not in use

trade-names-not-use-intellectual-property-katherine-gonzalez

Rights in trade names are acquired through their use; therefore, the registration of these before the Ecuadorian IP Office, or SENADI according to its official name and acronym, is merely declarative. There is currently a tendency to deny trademark registration based on already registered trade names, even if their use has not been demonstrated. This practice forces the applicant to file administrative or judicial challenges to try to remedy the situation.

A trade name is any sign capable of identifying a person or business establishment in the exercise of its economic activity. Trade names are independent of the corporate name or commercial name. They can be the same or different. In any case they can coexist.

While trade names and trademarks both relate to a distinctive type of sign, trade names have some important differences compared to the latter. These differences and their treatment by the IP Office are those that eventually cause practical inconveniences that will be examined in this article. Among the most relevant differences are:

  • The rights to trade names are acquired through use; thus, the Andean and national regulations expressly state, “The exclusive right over a trade name will be acquired with its first use in commerce.” On the other hand, rights over trademarks are acquired only upon registration with the IP Office.
  • The registration of a trade name with the IP Office is only declarative, since the right arises only with the use, regardless of whether it is registered or not.
  • The rights to a trade name end once its use ceases or the activities of the person or company that uses it cease. In contrast, rights to a trademark will remain as long as renewed or not cancelled or invalidated.
  • Trademarks protect products or services, while a trade name identifies a commercial activity.

For the protection and defense of trade names, as with trademarks, there is the right of opposition against applications for signs that, among other grounds for refusal, are capable of creating confusion or association in consumers.

Article 416 of the Law of the Social Economy of Knowledge, Creativity and Innovation (hereinafter, Ingenuity Law) provides that: Declaratory registration of the Trade Name (…) In any case in which the exclusive right over a trade name is alleged or claimed, its public use must be proven, such use being continuous and in good faith, at least within six months prior to said claim or allegation. The proof of use will correspond to the owner of the trade name. For the purposes set forth in this subsection, if the holder is not a party to the respective procedure, he will be notified ex officio.” (emphasis added)

Therefore, if there is a trade name (registered or not) that is in use, its holder may file an opposition, in which case he will have to prove the use of the trade name, and the IP Office will decide on the granting or refusal of the applied-for mark.

The problem arises when a trademark similar to a registered trade name is applied for, and the owner of the trade name did not file opposition or, despite having done so, did not demonstrate the use of the trade name, which is essential to prove the existence of the right.

According to the Ecuadorian IP Office database there are about 30,000 registered trade names, which, depending on the validity of the registration, are potential obstacles to the registration of a mark even though many of them are not in use. The use of trade names is the prerequisite necessary for their validity and existence to comply with the Andean and national regulations.

As a consequence of the foregoing, the Ecuadorian IP Office currently tends to deny the registration of trademarks ex officio because they are similar to already registered trade names even without proving proper use of the latter.

The problem arises from the fact that the IP Office accepts applications for registration of trade names without requiring proof of use, as well as from the non-application of Article 416 of the “Ingenuity Law” regarding the obligation to require proof of use of trade names when they are invoked as the basis for the refusal of a trademark application. Conversely, the IP Office, despite not requesting proof of use in the two cases above mentioned, does so at the time of renewing the registration of the trade name.

To circumvent the problems derived from this practice, the Authority should apply the previously mentioned Article 416, notifying the holder of the trade name registration of its obligation to demonstrate its use; only when evidence of use is filed should the authority assess whether there is sufficient legal basis to prevent the registration of a third party’s mark.

In conclusion: only when certain as to the existence of the rights over the trade name should the Authority rule on an opposition or a refusal ex officio. Unfortunately, this does not happen in most cases, although the highest administrative authority has repeatedly expressed that a registered trade name whose use has not been proven should not prevent the registration of a trademark.

This would avoid numerous problems for users who are forced to incur unnecessary expenses and to further extend the time to obtain the registration of their mark by trying to remedy the situation through administrative and judicial challenges, which can take several years.

Some specialists in the area see a solution in the possibility of filing cancellation actions for lack of use against registered trade names. SENADI has not maintained a unanimous approach on this issue, since, although there are cases in which these actions have been accepted (Resolution of August 25, 2010 procedure No. 08-973-AC-RR. Trade name “Compacalza Leopard ”), the most common approach of the IP Office is to declare the inappropriateness of these actions due to the legal nature of trade name registrations and their declarative nature (for example, resolution No. 121-2013-CPI-1S issued in the process 07-050-AC-2S on March 5, 2013 of the trade name “Natusal”).

In order to eliminate the problems examined in this article, the IP Office could incorporate into the relevant trademarks regulations – the draft of which they are currently working on – a norm that reiterates the correct application of Article 416 of the “Ingenuity Law.”

Katherine González
Associate at CorralRosales
katherine@corralrosales.com

Ecuadorian IP Office Overturns Problematic Lower Instance Decision on Recognition of English Language Terms

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The territory of the Republic of Ecuador is predominantly Spanish speaking. Amerindian languages are also widely spoken, particularly provincially, but their use is gradually diminishing. Despite the dominance of Spanish in Ecuador, the English language is everywhere, and its influence could be said to be growing. This poses certain interesting questions from a trademark law perspective, since the general approach of the Ecuadorian IP Office is to consider terms in foreign languages as “fantasy terms”. That is, foreign language terms will not be considered as being understood by the general public, except in the case of the most commonly known words.

The stated position is more complex in practice when one considers that due to the continued encroachment of the English language throughout the American Hispanic region, generally accepted as even more marked than in the case of the Iberian-Hispanic world, the list of well-known English words is growing and therefore not a fixed concept. In addition, what is or is not a “well-known English word” is largely subjective, with such an assessment often being reduced simply to the personal experiences of the examiner in question. It should also be pointed out that levels of English competence vary greatly among Ecuadoreans, producing somewhat of a lottery in the application of this doctrine.

An interesting case arose a several years back in relation to DISCOVERY COMMUNICATIONS, LLC’s enforcement of its ANIMAL PLANET mark for its well-known television series and documentaries about wild animals and domestic pets. Specifically, CENTRO DE RADIO Y TELEVISION CRATEL C.A., the company behind a national television channel in Ecuador, applied to register MUNDO ANIMAL in Classes 35, 38 and 41 (‘mundo’ means ‘world or ‘earth’). DISCOVERY opposed the applications on the basis of their Ecuadorian registrations for ANIMAL PLANET in Classes 38 and 41.

The oppositions were initially refused, following which all cases were appealed. Upon appeal before the IP Committee in Class 35, the authorities referred to studies as to the penetration of the English language in various countries around the world, saying that it would be incorrect to state that English had penetrated Ecuadorian culture. From there the reasoning was somewhat confused, but it was understood that the authorities considered the terms ‘animal’ and ‘planet’ as not easily understood by the general Ecuadorian public. This was quite an astonishing finding given that the the word ‘animal’ is the same in Spanish as in English, and that the Spanish for ‘planet’ is ‘planeta’. Clearly, this was the wrong starting point for deciding the cases.

It should be pointed out though that above Committee level decision contained a dissenting judgement from one of the Committee members, setting out in no uncertain terms that ANIMAL PLANET would be easily understood by Spanish speakers. The Committee is made up of three members, therefore the opposition was still rejected by 2 to 1. Nevertheless, dissenting judgements are rarely seen within such decisions, and needless to say the dissenting voice was encouraging for DISCOVERY, who decided to further appeal.

A reconsideration motion was filed against the mentioned decision, which is a request for the relevant authority to review its prior finding. Within such action, in contrast to the previous instance the authorities acknowledged that the meaning behind the mark ANIMAL PLANET would be easily understood by general Ecuadorian public, given the Spanish translation of the same is essentially identical except for the addition of the extra letter ‘a’ within the Spanish word ‘planeta’. The Office then went to conclude that the terms MUNDO and PLANET relate to an identical concept, and therefore that there was a risk that consumers would be confused. This reasoning was then followed within the related matters in Classes 38 and 41.

While the Ecuadorian trademark authorities’ acceptance that the meaning of ANIMAL PLANET can be deciphered by the average Ecuadorian consumer represents a welcome return to common sense, the Office’s position as a whole is interesting since the respective marks are being used on television programmes for content relating to animals. That is, in terms of inherent distinctiveness, the marks are towards the lower end of the spectrum. In addition, ‘mundo’ is not in fact a translation of ‘planet’, but rather means ‘world’ or ‘earth’. Therefore, the decision highlights that even in the case of non-literal translations, a conceptual link can still be inferred and be sufficient for a finding of confusing similarity. CorralRosales agrees with the decision, since it reflects the reality in that translations themselves are not always literal or direct.

A similar article was published in WTR on January 16th. Click to read it.

Ian Wall
Associate at CorralRosales
ian@corralrosales.com

IPWatchdog – Ecuador May Soon Reap the Benefits of the Patent Prosecution Highway

prosecution-highway-patents-ipwatchdog-Francisco-Gallegos

DETAILS

DATE: 2-11-19

TEAM MEMBERS IN THE NEWS:

-Francisco Gallegos

MEDIA: IPWatchDog

Ecuador has been participating in a pilot program of the Patent Prosecution Highway (PPH) since 2016 but has as of yet failed to implement the system for a number of reasons. However, with the announcement in July that Ecuador may join the Pacific Alliance next year under its new President, Lenin Moreno, and a general market-friendly shift in government, it is expected that the PPH could soon become effective.

If you want to read more, press here

The suspension of the administrative act on Intellectual Property

administrative-act-intellectual-property-ruth-holguin

The suspension of the execution of an administrative act is an exceptional provision that can be issued by an administrative or judicial authority. It is a precautionary measure that proceeds only when the execution of the administrative act produces unrecoverable or very difficult remediation losses due to the violation of the rights of the entity being administered. The suspension means that the administrative act does not apply until there is a final resolution.

This figure has limited application in the area of ​​Intellectual Property, since to obtain the suspension of the administrative act in judicial headquarters; the entities being administered must demonstrate that, for example, the registration of a trademark or patent violates their rights; or, that the registration of a trademark was improperly canceled due to lack of use.

A more detailed analysis:

  1. An opposition to a trademark or patent application might be provided by law for the following reasons: lack of distinctiveness, risk of confusion or association, not meeting the requirements of patentability, etc.
  2. The Ecuadorian Intellectual Property Office denies the opposition and gives way to registration, so that the affected party can challenge that decision before the Contentious Administrative Court, requesting, in addition, the suspension of the act, because the affected party considers that its execution would violate its rights in an irreparable way.
  3. If the request is granted, registration of the trademark or patent is suspended. After the judicial process, which has a minimum duration of three years, the sentence is issued. For the purpose of this analysis, we assume that the administrative resolution is ratified, granting the registration and denying the opposition.

In this scenario, did leaving the applicant without the ownership of his registration for three years violate his rights?

This would be the main conflict that could cause the suspension of the execution of an administrative act in Intellectual Property.

What happens in practice?

The judicial authority generally does not accept the request for suspension of the administrative act because, although the existence of irremediable loss caused by the execution of the act can be demonstrated, the rights of the person who obtained the registration of the trademark or the patent are also at risk.

It must be considered that most conflicts over Intellectual Property derive from trilateral administrative procedures, in which the administrative authority and two interested or administered parties intervene. Therefore, the suspension of the administrative act in this branch is especially controversial and unusual.

In summary, the substance of the dispute is that the contentious-administrative judge must assess whether or not the suspension of the decision of the administrative authority applies, taking into account the losses that could be suffered by both; the party that achieved the registration of the trademark or patent and the other party that considers their rights affected by that registration as well. There will always be an important degree of subjectivity, but the judge must receive comprehensive and true information from the parties in conflict to form his or her judgment.

Additionally, the judge that resolves the suspension of the administrative act, until there is a final decision on the conflict, should have the possibility of requiring sufficient guarantees to respond for the losses that may arise from the suspension if the final decision ratifies the resolution of the administrative authority. A reform to improve the application of the law would be to demand that enough guarantee´s be determined – the judge himself should set its amount – to grant the suspension of the administrative act.

Ruth Holguín
Asociada Senior en CorralRosales
ruth@corralrosales.com

Ecuadorian Intellectual Property office upholds the distinctiveness of the three-dimensional trademark registered by Crocs, INC.

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Through Resolution No. OCDI-2019-0618[1], the Ecuadorian Intellectual Property Office confirmed that the design of CROCS footwear is capable of being recognized by consumers, and also allows consumers to differentiate it from the products of competitors, since it has its own special elements that give the product a different appearance, and is not common or ordinary.

With this decision, the distinctiveness of the three-dimensional design of CROCS footwear in Ecuador was upheld, and it is confirmed that only CROCS, INC. may market goods under such design, having the exclusive right to prevent third parties from using and marketing the same or similar goods.

In 2015, CROCS, INC. obtained the registration of the mark THREE-DIMENSIONAL DESIGN (3D BAYA SHOE DESIGN) to protect “footwear”.

The three-dimensional mark has its own characteristics, which differentiate it from the traditional denominative, figurative and mixed mark, since with this specific type of marks, an object that occupies a volume in space is protected; that is, it is the shape of a product or its packaging. Therefore, the distinctiveness of this type of marks rests in the shape and relief as a whole, among other distinctive elements that are added into its configuration.

In 2017, JHON ALBERTO FIGUEROA VIVANCO applied to the Ecuadorian Intellectual Property Office for the nullity of the mentioned registration, claiming that it was a generic shape for footwear and therefore not for exclusive appropriation by one entity. Additionally, the claimant pointed out that the design granted a functional or technical advantage to the product, and so could not be protected as a trademark according to the law.

Article 135 of Decision 486 of the Andean Community establishes that the following signs cannot be registered as trademark:

“(…)

  1. those that lack distinctiveness;
  2. those that consist exclusively of usual forms of the products or their packaging, or of shapes or characteristics imposed by the nature or the function of the product or service in question;
  3. those that consist exclusively of a shape or other elements that give a functional or technical advantage to the product or service to which they apply; (…) ”

During the proceedings, CROCS, INC. was able to show that the contested registration did meet the requirements to be considered a three-dimensional design, even filing evidence of registrations obtained over the same design in several other countries, in which, as in Ecuador, the distinctiveness of their unique designs had been recognized.

With regard to the functional advantage claimed by the plaintiff, the IP Office determined that the arbitrary elements of the design are not dictated by function, since the exclusion of such shapes, reliefs, crevices and holes does not prevent the natural use of the product.

Katherine González H.
Associate at CorralRosales
katherine@corralrosales.com


[1] Proceeding No. 17-1679-RV-2S dated 18 July 2019.