Monthly Archives: October 2020

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Protection of Test Data for Medicines and Agricultural Chemicals

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Test data is the necessary information required by the health Authority to approve the marketing of a medicine or agricultural chemical product in order to guarantee its safety and efficacy. This information is protected by intellectual property regulations to avoid possible unfair commercial use. Ecuador has signed several international instruments that impose the obligation to guarantee the protection of this data. Internal regulations have developed this protection.

When we talk about intellectual property, we usually think exclusively about patents, trademarks and copyrights, however, there are some other modalities that are also part of intellectual property, such as, for example, test data. The importance of its protection lies in avoiding the use, by unauthorized third parties, of valuable information about the research and development process of a novel product, activities that demand a considerable economic and human effort on the part of its creators.

Test data is often associated with patents; however, these are figures that, although both are closely related to the development of drugs and agrochemicals, the test data has independent protection.

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) established a minimum standard of protection to prevent unfair commercial use of test data[1]. Similarly, Decision 486 of the Andean Community provides for this special protection “against any disclosure, except when necessary to protect the public, or unless measures are adopted to guarantee data protection, against any unfair commercial use.[2]”

In the Trade Agreement between the European Union and its Members on one hand and Colombia, Peru and Ecuador on the other, the protection of undisclosed information is included within the intellectual property rights.[3]

In the aforementioned international instruments, although the protection of test data is established as an obligation for the Members, a specific period of time is not foreseen for its material protection, which is therefore regulated by each State. However, in the case of Ecuador, the Organic Code of the Social Economy of Knowledge, Creativity and Innovation establishes:

 “Article 508.- Test Data.- Test data or other undisclosed data on safety and efficacy of pharmaceutical products and agricultural chemical products, in accordance with the provisions of Article 27 number 7 of the Organic Law of Market Power Control, when the information contained in the data meets the following conditions:

  1. a) It is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known or easily accessible to people introduced in the circles in which the type of information in question is normally used;
  2. b) It has a commercial value because it is secret; and
  3. c) Has been subject to reasonable measures, in the circumstances, to keep it secret, taken by the person who legitimately controls it.

 Article 509.- Exclusivity of test data.- When the competent authority requires as a condition to approve the commercialization of pharmaceutical or agricultural chemical products that contain new chemical entities, the presentation of test data or other undisclosed information on safety and efficacy, whose elaboration demands a considerable effort, will be granted an exclusivity period of five years from the date of marketing approval for pharmaceutical products, and ten years for agricultural chemical products. “

Thus, Ecuador has provided a period of five and ten years of exclusivity for the protection of test data on drugs and agricultural chemicals, respectively.

The National Service for Intellectual Rights -SENADI- has reiterated that, although the Agency for Regulation and Control of Phytosanitary and Zoosanitary and the Agency for Regulation, Control and Sanitary Surveillance are the entities in charge of defining the requirement to submit test data prior to granting a marketing authorization and to define its deposit and safeguard procedures, the test data protection system remains in force and that said protection is without a doubt a modality of Intellectual Property.[4]

On August 21, 2020, the State Attorney General’s Office issued a statement regarding agrochemical products expressly stating that, since the Agency for the Regulation and Control of Phytosanitary and Animal Health – AGROCALIDAD- is the competent Authority to approve the commercialization of agricultural chemical products, it is also responsible for granting the period of exclusivity when it has required the submission of test data on their safety and efficacy.[5]

This protection system and the corresponding establishment of a period of time for the exclusivity of the test data guarantees that, at least during that period, any interested party who intends to market a medicine or agrochemical product with a new chemical entity, must carry out their own studies and trials that prove its effectiveness and efficacy. Thus, avoiding the use of test data that have already been developed by a third party. Hence, it is vitally important that the public entities called upon to intervene in this protection system work in an integrated manner to ensure compliance with these international and national provisions.

[1] “Article 39 (…) 3. Members, when they require, as a condition for approving the marketing of pharmaceutical products or agricultural chemical products that use new chemical entities, the submission of undisclosed tests or other data, the preparation of which requires considerable effort , will protect that data against any unfair commercial use. In addition, Members shall protect such data against disclosure, except where necessary to protect the public, or unless steps are taken to ensure the protection of data against unfair commercial use. ”

[2] “Article 266.- The Member Countries, when they require, as a condition to approve the commercialization of pharmaceutical products or agricultural chemical products that use new chemical entities, the presentation of undisclosed test data or other, whose elaboration involves a considerable effort, will protect those data against any unfair commercial use. In addition, Member Countries will protect this data against any disclosure, except when necessary to protect the public, or unless measures are adopted to guarantee the protection of the data, against any unfair commercial use. The Member Countries may take the measures to guarantee the protection enshrined in this article. ”

[3] “5. For the purposes of this Agreement, intellectual property rights include: (…)

  1. j) protection of undisclosed information. “

[4] Official Letter No. SENADI-DG-2019-0402-OFLetter

[5] Official Letter No. OF-PGE-09818

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

Advantages of Having an In-house Secondment Lawyer

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Why can having a secondment lawyer be advantageous for a company? The needs in the field of business have changed over time; having quality legal advice at the right time has become essential. Not all companies have an in-house legal team and, if they do, it is usually a small team that is very busy with the core business of their company; therefore, they usually look for one or more external firms to provide the necessary support when needed.

Sometimes unexpected needs arise, such as large projects or new lines of business that require specialized attention and special advice. It is then when a lawyer in secondment can be an excellent solution for the company.

This service consists of assigning the company a lawyer from a trusted firm to temporarily form part of the in-house legal team allowing said in-house team to focus on the core business and its internal client. Thus the qualified reinforcement, who also has all the usual support of the firm, can take on any special project; it could be M&A, a new line of business, any complex labor or intellectual property issues, among other options.

The decision to have an external lawyer within the team can result in great benefits for all types of companies, from start-ups, through medium-sized companies, or large multinationals that need quality legal solutions. In addition to having a full-time external lawyer dedicated to their matters, they will continue to have the support and experience of their own legal team.

In this way, the company receives a personalized, continuous service adapted to the specific situation and industry. The immediacy and development of the relationship with the lawyer from the trusted firm will redound to benefits for both parties.

What are the benefits of choosing an in-house service?

  • Integration: In every way: understanding the client’s needs first-hand and adapting to absolutely all aspects, such as, for example, reporting.
  • Immediacy: The fact that the lawyer works directly in the client company will speed up the advice and maintain a much more direct communication, which will also translate into very significant cost savings.
  • Experience: The client company will have a lawyer highly specialized in their sector, who will also benefit from an even more intensive knowledge of the company and its policies. In addition to this, our lawyer has the continuous support of the rest of the CorralRosales team.
  • Effectiveness: Starting from the very first day of the legal secondment, thanks to continuous collaboration and prior knowledge about the client and their industry.
  • Collaboration: The relationship between the law firm and the client company will be deepened allowing them to become true ‘partners’ focused on business.
  • Flexibility: There is a total adaptation to the specific needs that the company requires and all in real time.

In addition to being advantageous for the client company, this will provide greater tools to the lawyer who will become part of the in-house team temporarily. In this way, he will be at the center of the client’s business, deepening into the knowledge of the client’s day-to-day life and learning about their policies and ways of doing business. Once this period is over, the lawyer will get to know his client in depth and will bring this experience back to his usual team, generating benefits for all the parties involved.

Rafael Rosales
Partner at CorralRosales
rrosales@corralrosales.com

Notarial Acts and Contracts Through Electronic Means

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By legal provision, previously, acts and contracts had to be performed and granted before a Notary Public as a single act. Thus, all the deeds and some proceedings conclude with the famous phrase “before me, in my presence as a single act, to which I attest.-”

Ecuador had to wait for a pandemic that paralyzed a large part of the sectors to realize that technological-telematic means are useful and allied tools in all areas, which energize productive activities, including those who provide legal services.

Now, it is possible to hold mediation hearings by any technological means through the centers authorized by the Judiciary Council and to sign the corresponding minutes with electronic signatures. It is also allowed to hold judicial, arbitration and constitutional hearings by these means. However, certain regulations already did establish the appearance at proceedings and hearings through telematic means before confinement. Since the entry into force of the Organic Law of Humanitarian Support to Combat the Health Crisis Derived from Covid-19 on June 22, 2020, it is possible that certain acts, contracts and notarial proceedings be carried out by telematic, electronic or remote means . For this purpose, the Judiciary Council had to issue the corresponding regulations in which it determines the acts, contracts and proceedings that, because they require the physical intervention or the verification of the intervening parties, cannot be carried out with the appearance of the grantors or participants through the use of telematic, electronic or remote means.

Resolution 075-2020 of the Plenary of the Judiciary Council, issued on July 7, 2020, contains the Regulation for the Progressive Implementation of Acts, Contracts and Notarial Proceedings through the Use of Electronic Means and Reduction of Fees (hereinafter the “ Regulation ”). It established two phases. In the first one, article 3 of the aforementioned Regulation provides the following acts, contracts and proceedings that may be   carried out electronically:

  1. Protocolization of public or private instruments by court order or at the request of an interested party.
  2. Electronic certification of a dematerialized document.
  3. Electronic certification of original electronic document.
  4. Certification of the document materialized from the website or from any electronic support.
  5. Registration of lease contracts with the request electronically signed by the applicant.
  6. Electronic petitions to establish reasons and notes on the margin.
  7. Subscription of minutes of requirements for the constitution in arrears to the debtor party.
  8. Subscription of minutes for the fulfillment of the contract promise, as well as for the delivery of what is owed and the execution of obligations.
  9. Incorporation of companies, provided that the grantors have expressed their express will to grant the deed electronically and they have electronic signatures; and,
  10. Constitution of associations or consortia in matters of public procurement, provided that the grantors have expressed their express will to grant the deed electronically and they have electronic signatures.

All requests for voluntary jurisdiction that are presented before a notary public by grantors who have an electronic signature may be sent electronically. Likewise, notaries may receive the corresponding minutes submitted by the attorneys who require the service, provided they have an electronic signature.

In the second phase, it was established that the Council of the Judiciary will decide on the inclusion of new acts, contracts and notarial proceedings, once the corresponding budgetary allocations are in place. It should be noted that the Judiciary Council, aware of the technological difficulties, did not provide that these acts, contracts and proceedings be compulsorily executed by these means, which implies that it will be optional for users of the notarial system.

Resolution 083-2020 of the Plenary of the Judiciary Council dated July 28, 2020, approved the Operational Instructions for the Progressive Implementation of Acts, Contracts and Notarial Proceedings through the Use of Electronic Means. which made the operational scope of the acts, contracts and proceedings feasible by electronic means, as referred to above. However, so far phase two foreseen in the Regulation has not initiated.

In conclusion, the use of electronic means for notarizations is not a novelty, but the inclusion of other acts and contracts has been a significant advance in favor of the speed of business and in judicial and arbitration activity that have been seriously affected by the pandemic. However, the legislators and the Judiciary Council remain in debt. The former because it gave the Council the power to limit the acts, contracts and proceedings that could be entered by electronic means; and, the latter, because it limited them too much. Let us hope that the Judiciary Council includes other acts, contracts and necessary procedures in the execution of the planned phase two.

Ramón Paz y Miño
Senior Associate at CorralRosales
rpazymino@corralrosales.com

World Trademark Review – The fact that two marks cover different classes is not a determining criterion when examining the risk of confusion

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DATE: 30-09-2020

CORRALROSALES IN THE NEWS:

-Katherine González

MEDIA: World Trademark Review

Our associate Katherine González publishes an article in the specialized media World Trademark Review in which she comments on SENADI’s decision to reject Discovery’s opposition against the registration of the trademark DOKI MAS LOGOTIPO, based on its previous trademark DOKI. On appeal, the Intellectual Property Office ruled that the fact that two trademarks belong to different classes does not necessarily imply that there is no confusion between them and that there was a direct relationship between their goods and services.

In the text, González explains that, initially, SENADI granted the registration of the DOKI MAS LOGOTIPO brand for class 44 services; SENADI considered that there was no risk of confusion with the DOKI registered trademark, since the latter belonged to a different class. In the appeal to this registration, the Intellectual Property Office accepted the opponent’s arguments and established that the fact that two trademarks that belong to different classes is not a determining criterion to assess the risk of confusion between them.

“In the first instance, SENADI rejected the opposition and granted the registration because there was no risk of confusion or association for consumers. Despite the fact that the trademarks shared an identical word element, they covered products / services of different classes. Discovery appealed this decision presenting a clear and detailed list of the products and services in question and arguing that, despite the difference in classes, the trademarks were intended to protect the products and services that were directly related and complementary “, details our associate.

“The decision confirms the importance of carrying out a detailed and specific analysis in each case, in the event of possible trademark litigation,” adds González, who believes that this decision is very important due to the large number of products offered for sale online.

If you want to see the article (under registration), click here.

Teleamazonas – Veto to Health Code Does Not Affect the Cannabis Industry

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DATE: 30-09-2020

CORRALROSALES IN THE NEWS:

-Felipe Samaniego

MEDIA: Teleamazonas

The project of the Organic Health Code (COS) has been vetoed by the Executive affecting several sectors of Ecuador. One of those that has not been affected has been the cannabis sector; the news channel Teleamazonas interviewed our Partner and President of the Ecuadorian Association of Cannabis Industries Felipe Samaniego to provide his expert legal vision on this situation.

“This entire industry that is developing around cannabis and hemp definitely does not stop,” Samaniego said in this interview.

The Legal Secretary of Carondele Johana Pesántez argued the veto saying that the COS “contains an extensive development of technical issues in health matters that suffers from inaccuracies, erroneous definitions and an unclear health system structure in terms of competencies and responsibilities; it lacks a true update in terms of focus and content according to the requirements of society and the world “.

Last year, the National Assembly approved reforms to the COIP that allowed the production and distribution of products made from cannabis. This reform decriminalized the use of this plant for medicinal purposes, but the legal framework that allows its commercialization is still lacking.

With reference to this, Felipe Samaniego assures that there are two “authorities that must intervene. One for cultivation and the other for what is already the finished product. What the Ministry of Agriculture is doing is regulating what contains less than 1 % THC and the Ministry of Health must regulate what has 1% or more “, explains our Partner.

After the interview with Samaniego, the news published by Teleamazonas gathers the opinion of other experts who see in this veto an opportunity for the cannabis industry to continue growing. They also hope that this industry can advance with the production and generation of resources for Ecuador with the issuance of regulations with the respective legal framework.

If you want to see the video, click here

Tax regime for small businesses

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Resolution NAC-DGERCGC20-00000060 issued on September 29, 2020 and published in the Special Edition of the Official Registry 1100 on September 30, 2020, the Director of the Internal Revenue Service established the rules for applying the tax regime for small businesses.

1. Definitions

  1. Small business: It is a productive unit that has up to 9 workers and an annual revenue equal to or less than US$300,000.00. For classifying an enterprise as a small business, the amount of income will prevail over the number of workers.
  2. Main economic activity: The economic activity registered in the Tax Registry (RUC) which generates the higher amount of income during a fiscal year in comparison with the other activities.
  3. Commissioner: Individual, corporation or permanent establishment that habitually engages in the sale of goods, rights, or the provision of services in exchange for a commission.
  4. Capital gains: Profits derived from the placement of capital, shares, credits, and investments of any nature, as long as they do not involve productive processes, the provision of services or other work. For example, the lease of real estate.
  5. Self-employed individuals: Individuals who regularly performs an economic activity on his own account without a labor relationship and receives an income different from a salary or wage. Economic activities of liberal occupation are excluded.
  6. Professional services: Services provided by individuals who have a professional title and are directly related to that title. Including activities related to education, teaching and training related to the professional title.

2. Inclusion/exclusion from the microenterprise regime

The Internal Revenue Service will be able to include or exclude ex officio in the register of small businesses those taxpayers who fulfill or no longer fulfill the conditions to be considered as such. This registry will be published on the IRS website until September 30 of each year.

Taxpayers will be subject to this regime from the first day of the fiscal year following their inclusion of the registry.

The ex officio exclusion will be executed without the need for prior notice and will take effect from the first day of the fiscal year following that exclusion.

Taxpayers who have been subject to the regime for 5 years will cease to be part of it from the first day of the year following the date on which the maximum time was reached.

When taxpayers consider that their inclusion or exclusion from the regime is not appropriate, they are able to file a petition to have that decision reviewed in a term of 20 days counted from the publication of the registry.

3. Registration of new taxpayers

When obtaining the tax registry (RUC), the taxpayer must inform the Tax Authority all its economic activities, the income that might be derived from such activities and the number of workers.

If the taxpayer fulfills the conditions to be considered as a small business, it will be able to start its activity under the small business regime. Otherwise, he will begin its activity subject to the general regime and the authority is able to include the taxpayer in the regime ex officio.

4. Limitations to the regime for microenterprises

Taxpayers who exclusively develop one or more of the following activities will not be subject to the small business regime:

  1. Those taxpayers who are subject to the Simplified Tax Regime for Ecuador (RISE) and Simplified Tax Regime for the Organizations of the Popular and Solidarity Economy.
  2. International organizations, multilateral organizations, specialized international agencies, non-governmental organizations, government institutions and public enterprises.
  3. The financial institutions subject to the control of the Superintendence of Banks, and the organizations of the popular and solidary financial sector, subject to the control of the Superintendence of Popular and Solidary Economy.
  4. Those taxpayers who exclusively develop construction and urbanization activities.
  5. Those taxpayers who exclusively develop activities of liberal occupation, as well as individuals whose economic activity is the provision of professional services, notaries, and registrars.
  6. Those taxpayers who provide public transport services to passengers, as well as the services of commercial transport.
  7. Those taxpayers who exclusively obtain income from a labor relationship.
  8. Those taxpayers who exclusively obtain income subject to single income tax.
  9. Those taxpayers that exclusively obtain capital gains, including holding companies.
  10. Those taxpayers that carry out exploration, exploitation and/or transportation activities of non-renewable natural resources.
  11. Those taxpayers that receive income from international transport of passengers, cargo, express airlines, or couriers incorporated under foreign laws and that operate in the country through branches, permanent establishments, agents, or representatives.
  12. Distributors of hydrocarbon derivatives, liquefied petroleum gas, natural gas, and biofuels.

5. Taxpayer’s obligations

Taxpayers subject to the small business regime must comply with the formal and material obligations set forth in the law, including the following:

  1. Entities are required to keep accounting books in accordance with the regulations established by the controlling authorities. In the case of individuals, if they are required to keep accounting books, they must follow the International Financial Reporting Standards for SMEs.
  2. Taxpayers are required to issue invoices and withholding receipts and complementary documents in applicable cases. The documents must contain the caption “Small Business Taxpayer”.
  3. Taxpayers are required to file value added tax (VAT), excise tax (ICE) and income tax returns on a semester basis, in the months of July (first semester) and January (second semester).
    However, taxpayers may file the VAT and ICE tax return on a monthly basis, during the entire fiscal year.
  4. Taxpayers must file an annual income tax return, in addition to the semi-annual income tax returns in the following cases:
    • Entities and permanent establishments in all cases.
    • Individuals who receive income from sources different form the activities subject to the small business regime.
    • Individuals who request the reimbursement of income tax.
  5. Taxpayers who are required to file the Simplified Transaction Annex (ATS) must file it every six months. If they choose to file the VAT return on a monthly basis, the ATS must also be filed on a monthly basis.
  6.  Taxpayers who are required to file the excise tax annex must file it every six months. If they choose to file the excise tax return on a monthly basis, the annex must also be filed on a monthly basis.

6. Withholding taxes

Taxpayers subject to the small business regime are not required to withhold income tax or VAT, except if they are qualified by the IRS as special taxpayers or withholding agents and in other cases established by law.

<p style="text-align: justify;">However, taxpayers under the regime will be subject to income tax and VAT withholding. In the case of income tax, the withholding tax percentage will be 1.75% over the income derived from the business activities subject to the regime. If the taxpayer obtains revenue from sources other than the business activity subject to the regime, such revenue will be subject to the withholding percentages provided in the current tax regulations.

If taxpayers subject to the regime have made withholdings, they must declare and pay them as follows:

  1. Value added tax withholdings on a monthly or semi-annual basis, depending on the periodicity of the VAT return.
  2. Income tax withholdings on a semi-annual basis, in the months of July -first semester- and January -second semester-.
  3. If the taxpayer did not make any withholdings, the return must not be filed.

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DISCLAIMER: The preceding text has been prepared for general information purposes only. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any given situation requires the specific opinion and view of the firm in Quito / Guayaquil, Ecuador.

CORRALROSALES