Ecuador’s New IP Law: Key Changes and Provisions

The “Code for the Social Economy of Knowledge, Creativity and Innovation” was published on December 9, 2016 and repeals and replaces Ecuador’s previous national intellectual property law.

Background

As a member of the Andean Community, the relevant intellectual property provisions in Ecuador are Andean Decisions 345 (Plant Varieties), 351 (Copyright), 391 (Traditional Knowledge), and 486 (Intellectual Property). These Decisions, in addition to other treaties and international conventions on IP to which Ecuador adheres, take precedence over local law.

Below are the key changes and provisions of the new local law.

General Provisions

  • An applicant or owner of an IP registration who does not have an address in Ecuador must obtain an agent whose Power of Attorney is ample and sufficient and domiciled in the country.
  • The new law confirms that tax deductions from IP royalties require the recordal of a license agreement.

Scientific Research

  • The new law imposes a requirement that research activity and researchers must be registered and accredited in Ecuador.

Copyright

  • An owner of a work, including software created through employment, will be deemed the author, except in the case of an agreement to the contrary.
  • In the case of transfer of rights, the author of a work may exploit the work in a different form from that provided for by the contract; the creator of the work will enjoy equal remuneration for the use of the work. In relation to software, this right is not applicable.
  • The new law provides for more instances in which software may be used freely.
  • In the case of transfer of rights, it will be possible to agree upon a reasonable share of the revenue from the use of the work or a fixed value where feasible; if leading to disproportionate shares, it will be possible to request a review of the contract within ten years of the transfer.
  • Clauses that cede economic rights over works that a copyright owner might create in the future are considered void, unless specified in a contract and not exceeding five years.
  • Any stipulation that the copyright owner will not create further works in the future is considered void.
  • Licenses, exclusive or not, are non-transferable and sub-licenses may not be granted to third parties, except in the case of a stipulation to the contrary.
  • In the absence of an express stipulation, the license will be considered non-exclusive.
  • Introduces the concept of compulsory licenses for copyright.

Patents

  • Patentable material is limited, in that new forms of substances and the like will not be considered inventions.
  • Establishes subjective requirements for “inventiveness”, in stating that it must consist of a “significant technical contribution”.
  • Rights are granted to workers not contracted to exercise intellectual activity for inventions created under an employment relationship.
  • Provides that the following are not considered inventions: polymorphs, metabolites, pure forms, particle sizes and isomers, the uses or any new property or new use of a known substance, or used in a process or from a known machine or apparatus.
  • Provides that the following are non-patentable: The product of polymorphs, metabolites, pure forms, particle size and isomers and genetic resources that have not been investigated in Ecuador.
  • Workers contracted to carry out investigational works have the right to a share of the exploitation of the invention at no less than 25%.
  • The new law establishes absolute nullity of a patent under the following circumstances:
    • “If the patent does not divulge sufficiently the invention”
    • “If the claims included in the patent are not completely supported in the  description”.
  • It will be understood that experts are those persons skilled in the art with experience in the technical area of the invention.
  • An invention developed under contract belongs to the employer; however, the inventor is entitled to a percentage of the ownership of the patent no less than 25%.
  • In the case of claims for chemical-pharmaceutical products, the application will contain information on trials, so that it is possible to reproduce any form of production of the invention, unless evidence is filed that the same result would be achieved even if any compound of the claimed group is substituted.
  • The application date will be: a) for PCT applications, the filing date of the international application, b) for applications claiming priority, the filing date for the application from which priority is claimed. There will be no additional protection under any means that extends the protection.
  • Confirms that the failure to pay the annuity within the legal terms will lead to the absolute lapse of the patent.

Industrial Designs

  • An industrial design produced under contract belongs to the employer; however the designers are entitled to no less than 25% of the ownership.
  • Rights are granted to workers not contracted to exercise intellectual activity for designs created under an employment relationship.

Trademarks and Trade Names

  • When a right over a trade name is claimed, public, continuous and bona fide use must be proved for at least 6 months prior to said claim or filing.
  • A product ‘s trade dress—that is, the combination of colors, shape, appearance, form and characteristic designs—will be protectable.
  • An application to declare a trademark famous or well-known can be made during either an administrative action or litigation, accompanied by the respective official fee, which is currently set at US$10,000.

Plant Breeders’ Rights

  • Breeders’ rights developed under contract belong to the employer. However, the employee is entitled to a percentage of ownership no less than 25%.
  • Rights are granted to workers not contracted to exercise intellectual activity for breeders’ rights created under an employment relationship.
  • The term of the right of the breeder is reduced to 18 years in the case of vines, as well as forest, fruit and ornamental trees, and to 15 years for all other varieties.
  • Compulsory licenses may be granted for reasons of: a) public interest, b) emergency, or c) national security; on the basis of equitable compensation for the rights holder.

Miscellaneous

  • For the marketing approval of pharmaceuticals and agrochemicals that contain new chemical entities, information is required to demonstrate the safety and effectiveness of the product to be marketed.
  • When requested as a condition to approve pharmaceuticals or agrochemicals, the filing of evidence involves considerable effort; therefore, an exclusive period of five years is granted for their exploitation, from the date of the marketing approval.
  • New chemical entities are considered to be those that have not been previously approved in Ecuador.
  • The filing of evidence will not be necessary when the safety and effectiveness of the product can be demonstrated by other means.

Infringement Actions

  • It is established that, under extraordinary circumstances, at the request of a party, it will be possible to order the lifting or suspension of preliminary injunction measures.
  • Related counterclaims are admissible, and will be resolved at sentencing. Within the action, it is possible to request the nullity of the right which formed the basis of the action, as well as any other applicable actions against the IP right
  • In judicial processes, the competent judge will inspect and penalize infringements, provided that said infringing actions do not seek to safeguard the general public interest or the well-being of consumers.

Administrative Protection Measures

  • Preliminary injunctions may be granted at the start of the process, provided that the existence of an infringement is proved.
  • A bond or guarantee may be required in order to protect the interests of the defendant and avoid abuses.
  • The alleged infringer will be able to file their evidence and request a hearing.
  • The possibility to act against company or bank names that infringe trademarks is no longer available.

Civil Actions

  • Establishes the possibility for civil judges to act in an abbreviated procedure.
  • Judges will also have authority in the place where the infringement was committed, or the place of the resulting effects of the infringement.

Border Measures

  • The owner of a trademark registration or copyright that has knowledge of the import or export that impinges on its rights can request the suspension of the customs operation.
  • The competent national authority for IP rights can order the suspension of the customs operation.
  • The IP right holder can request the inspection of the merchandise to be imported or exported, notwithstanding that confidential information is protected.
  • Border measures will be lifted after 10 days if a principal action is not filed, or if the competent authority has not extended the suspension.
  • Principal actions are considered to be administrative protection measures, civil actions, or if applicable, a criminal action.

Legal Use and Abuse of Rights

  • It is provided that any person can file an action to find out about the legality of prior, current or future acts. The same would be lodged in relation to IP rights of a third party, with the exception of marks.
  • The competent authority will exercise inspections ex-officio or at the request of a party, in order to avoid the abuse of IP rights. The authority will be able to order the suspension of injunction measures, within the ambit of its respective power, by application from the interested party.

For damages claims, rights holders will not be able to claim damages as well as procedural costs. 

16th May 2017