Yearly Archives: 2022

CorralRosales > 2022

Payment facilities for the tourism sector due to COVID-19

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Edificio de cristal con el logo de CorralRosales
Trough Resolution C.D. 645 -published in the Official Gazette of April 13, 2022- the Board of Directors of the Ecuadorian Social Security Institute (hereinafter, “IESS” or “Social Authority”) issued the “Regulation of Payment Facilities for the Tourism Sector, in application of the Organic Law for Economic Development and Fiscal Sustainability after the COVID-19 Pandemic” (hereinafter, the “Regulation“).
  1. Scope of application

Employers registered in the National Tourism Registry shall be eligible for the benefits contemplated in the Regulation.

  1. Payment facilities

Employers that comply with the requirements and have not paid the obligations hold with the Social Authority during the period between January 2020 and December 2021, may submit to the Social Authority a request to pay the outstanding obligations within a term of up to 48 months. 

IESS will eliminated interest, fines and surcharges that were generated during the aforementioned period, provided that the employer complies on time with the payment of the installments. In case of non-compliance, interest, fines and surcharges will be paid in accordance with applicable regulations.

The debtor may request early payment of the debt to the Portfolio Management Units of  the Social Authority.

  1. Payment default

Breach on the payment agreement will be reflected on the certificate of compliance of the Social Authority.

  1. Documents that must be attached to the request
  • Inscription in the National Registry of Tourism.
  • The updated Single Annual License of Operation, granted by the Municipality in which the tourist establishment operates.
  • Titles of credit of the periods from January 2020 to December 2021 are unpaid.

Edmundo Ramos

Specialist in Labor Law
Edmundo Ramos, partner at CorralRosales
eramos@corralrosales.com
+593 2 2544144

Marta Villagómez

Specialist in Labor Law
Marta Villagómez, associate at  CorralRosales
mvillagomez@corralrosales.com
+593 2 2544144

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NOTE: The above text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a consequence of acting or not acting on the basis of the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm in Quito / Guayaquil, Ecuador.

CORRALROSALES

Neuro-Rights

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Pablo Dent y Rafael Serrano, asociados de CorralRosales, de Ecuador, y un edificio de cristal

With the development of Neuroscience in recent years, human beings can influence their own nervous system, especially the brain.[1] Neuroscience, the branch of science dedicated to the study of the nervous system, has developed a range of technology known as neurotechnology. Neurotechnology consists of all tools and processes used to understand the functioning of the brain, as well as control or repair its functions.[2] The development of this disruptive technology has opened doors to a subject that has been rather overlooked within legal spheres related to the possible effects that this technology could have on the rights of individuals.

The development of neurotechnology could pose major risks to the rights of individuals, namely privacy, free will, health, and personal data. Within this context, countries like Chile have determined the need to debate possible regulations that would limit the impact of neurotechnology, establishing ethical principles for its use and creating new rights. This constitutes the first steps toward the creation of neuro-rights, which are based on traditionally recognized rights, coupled with their impact on the neurological field.

This article aims to describe the bases and guidelines to, in the future, develop legal regulations on the subject. We begin with a theoretical explanation of the concept of neuroscience and then go on to discuss the rights involved and how they may be impacted. Reference will then be made to the new neuro-rights discussed in the literature, presenting the regulatory proposal in Chile alongside its respective criticisms. Finally, we conclude that it is necessary to regulate and create opportunities for analysis and debate on developing regulations on neurotechnology.

Neuroscience and Neurotechnology

Neuroscience studies different aspects of brain functioning and the nervous system. There are various branches of science that study neuroscience from different fields. Examples include genetics, cellular biology, anatomy, and physiology. Neurotechnology analyzes the application of various tools to study brain functioning. Such tools seek to solve physical and psychological problems that could come to affect normal brain functioning or the normal functioning of other bodily organs.

An example of neurotechnology’s application is the use of “BCI,” or Brain Computer Interface, which may help people who suffer from various types of paralysis. BCIs record brain waves, which are interpreted by a system and then a command is sent to a machine that performs the corresponding operation.[3] BCIs improve the lives of people who suffer certain types of disabilities. The use of this technology can improve memory functions or even improve the mobility of individuals with physical disabilities.[4]

Alongside the benefits, these tools also present great risks to certain individual rights. Their misuse may affect individual rights such as freedom, privacy, data protection, and proper societal development. According to Spanish neurobiologist Rafael Yuste,[5] within 10 years we will be using neurotechnology to read and record brain activity. As a result, using neurotechnology to change brain activity necessarily requires an ethical development of this technology. 

Neurotechnology and Rights

As already mentioned, the development of neurotechnology could bring major benefits to human beings. However, if used incorrectly, neurotechnology could affect their rights. The rights to privacy, freedom of thought, no discrimination, and the right to protect personal data could be affected by the incorrect use of neurotechnology.

The creation of devices and tools arising from neurotechnology could lead to the creation of new rights. Ieca and Adorno have presented four new rights applicable to neuroscience: mental privacy, cognitive liberty, mental integrity, and the right to psychological continuity.[6]

Mental privacy is defined[7] as the right to protect what we think and feel. Humans’ most private and intimate possessions are those that reside in theire brains. Science, applying technological tools, will soon come to know what people think and feel, and eventually, be able to analyze and modify these thoughts and feelings.

Cognitive liberty goes hand in hand with mental self-determination. This right is comprised of two elements, (i) an individual’s right to freely use new technologies and (ii) the protection of individuals against the mandatory use of said technologies. This right is based in the freedom of individuals to choose whether to use these technologies.

The right to mental integrity has a broader meaning that goes beyond the traditional guarantee of mental and physical integrity as an expression of adequate health. Within the framework of neuro-rights, this right, refers to those devices and tools not causing any damage to the brain or brain activity, where no unauthorized modification occurs.

Finally, the right to psychological continuity means that through neurotechnology, no type of abuse, threat, or alteration to the mental activity of a person occurs that may affect the personality or personal identity of an individual.

Chile and Neuro-Rights

Chile is a pioneer in the regulation of neurotechnology, promoting two bills on the matter, called “Neuro-Rights Bills.” The first is a constitutional reform establishing that scientific and technological development must be in the service of the people. This reform was introduced through Law No. 21.383[8] which modifies article 19.1 of the Political Constitution of the Republic of Chile with the following text:

“Scientific and technological research shall be at the service of the people and shall maintain respect for life and physical and psychological integrity. The law shall regulate the requirements, conditions, and restrictions for scientific and technological use in people, and shall especially safeguard brain activity, as well as the information derived from it.”

In the amendment, the protection and safeguarding of brain activity during technological development is expressly included, creating the need for a regulatory framework in the event that technology affects normal functioning.

Additionally, a draft bill on the protection of neuro-rights and mental integrity[9] (the “Bill”), as well as the development and investigation of neurotechnology was presented. The Bill is intended to protect physical and psychological integrity of the people in the face of development and advancement of neurotechnology.

It is important to note that the Bill recognizes the freedom of people to use any system or type of neurotechnology. To this effect, a persons consent must be free, prior, and informed, as well as provided explicitly in writing. It may be revoked at any time.

The proposed amendments have not been free of controversy. Authors such as Zuñiga, Villanvicencio, and Salas[10] have openly criticized the creation of neuro-rights, noting that the risks of neurotechnology are already regulated by existing rights (privacy, freedom, data protection). For these authors, new threats can easily be regulated by allowing for an evolution of said rights, and as such, the constitutional amendment would have no legal grounds.

Conclusions

The ongoing development of neuroscience, and especially neurotechnology, will benefit human beings. Some tools, instruments, and procedures for the development of neurotechnology could cause risks to constitutionally recognized rights and international treaties. For the time being, it cannot be irrefutably determined that these risks or impacts require specific regulation for the creation or recognition of new rights. In any case, an academic debate on the impact of this technology and the need for regulation is key. Prior to developing new rights, an ethical and legal framework for the future of neurotechnology needs to be created; this is essential to ensure respect and protection of the rights and freedoms currently recognized.

[1] Yuste, R.; Genser, J.; Hermann, S., It´s Time for Neuro-Rights (2021), Horizons. https://www.perseus-strategies.com/wp-content/uploads/2021/03/Neuro-Rights-Horizons-Winter-2021.pdf 

[2] N.A., (2019). Iberdrola. Neurotecnología. Recuperadoi de: https://www.iberdrola.com/innovacion/neurotecnologia

[3] N.A., (2021). NeuroTech Edu. Intro to BCI. Retrieved from: http://learn.neurotechedu.com/introtobci/

[4] Jamil, N.; Palmer, J. (2020). Frontiers in Neuroscience. Neural Tech. Retrieved from: https://www.frontiersin.org/articles/10.3389/fnins.2020.00692/full

[5] Arancibia, F., (2022). Rafael Yuste, neurobiólogo precursor del proyecto BRAIN: “Hay una línea roja que no se debe cruzar: el cerebro no se toca, es la esencia del ser humano” Retrieved from: https://interferencia.cl/articulos/rafael-yuste-neurobiologo-precursor-del-proyecto-brain-hay-una-linea-roja-que-no-se-debe

[6] Ienca, M. Y Andorno, R. (2021) Hacia nuevos derechos humanos en la era de la neurociencia y la neurotecnología.  Retrieved from: https://www.redalyc.org/journal/3400/340067606006/html/#redalyc_340067606006_ref12

[7] Maldonado, P., (2019), Neuroderechos: la discusión por la privacidad mental y el control del cerebro ya está aquí. Universidad de Chile. Retrieved from:  https://www.uchile.cl/noticias/156392/neuroderechos-la-discusion-por-la-privacidad-mental

[8] Law 21.383

[9] Senado República de Chile. Boletín 13828-19. Retrieved from: https://www.senado.cl/appsenado/templates/tramitacion/index.php?boletin_ini=13828-19

[10] Zuñiga, A; Villavicencio, L; Salas, R. (2020). ¿Neuroderechos? Razón para no legislar. Ciper. Retrieved from: https://www.ciperchile.cl/2020/12/11/neuroderechos-razones-para-no-legislar/

Pablo Dent y Rafael Serrano
Associates at CorralRosales
pdent@corralrosales.com – rserrano@corralrosales.com

The price of a barrel of crude oil continues above USD 100 – Teleamazonas

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Rafael Serrano, asociado senior de CorralRosales, entrevistado por una periodista de Teleamazonas para hablar sobre el precio del barril de crudo en Ecuador - Vídeo subido a YouTube

DETAILS

DATE: 12-04-2022

PROFESSIONALS IN THE NEWS:

-Rafael Serrano

MEDIA:

– Teleamazonas

In Ecuador, the increase in the price of oil leads to the fact that the income of resources to the Ecuadorian State remains in positive terms. The media Teleamazonas asks about this to our senior associate, Rafael Serrano, an expert lawyer in Energy issues, who considers that the trend of the international oil price will be maintained. Therefore, he believes it is important to consider other costs.

According to the Minister of Energy, Juan Carlos Bermeo, this does not mean that everything is income for the country, “because the increase in the price of oil means, in parallel, the increase in the price of fuels and what is required to import fuels, whether gasoline or diesel, is a greater amount of resources”.

Rafael Serrano, when asked about this matter, answers that “this for the country, obviously, will generate greater benefits, greater income, because a lower value was budgeted, but we also have to consider the increase in production costs in many areas: transportation costs, among others, which will make certain products more expensive”.

As a consequence of the above, the Government plans, among its future projects, a process of delegation to the private sector of the Esmeraldas Refinery. This is aimed at reducing the amount of waste and producing Euro 5 grade fuels. For this, the opinion of our expert is based on the fact that “seeking the help of the private sector through public-private alliances” is, in his opinion, “a very good mechanism to develop the Esmeraldas Refinery and to see alternatives that can be developed within the country to produce these derivatives here in Ecuador and thus make them cheaper”.

A greater use of associated gas is also expected for its use in electricity generation and industry, “cleaner and at a much lower cost”, adds the Minister.

If you want to see the full video, click here.

Protection period for Plant Varieties: Ecuador’s lack of compliance with community and international regulations

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Edificio de cristal con el logo de CorralRosales más una foto de Andrea Miño, asociada de la firma

Intellectual property law protects plant varieties under the rights of the plant breeder, which grants legal protection to individuals or corporations that obtain a plant variety through plant breeding procedures. For this to be applicable, the plant variety must be new and adhere to the technical requirements of “distinction,uniformity, and stability” (DUS).

A plant breeder´s rightis a recognition by the State of individuals or corporations that have discovered or created a new plant variety; this new variety is then set out in a plant breeder certificate granting the plant breeder the exclusive right to use said plant variety for growth and cultivation during a fixed period. Once that period ends, the plant variety becomes public domain.

Provisions relating to the requirements of protection, rights, and limitations on new plant varieties are detailed in the International Convention for the Protection of New Varieties of Plants (UPOV Convention, 1978). In the Andean Community, such regulations are set out in the Common Regime on the Protection of the Rights of Breeders of New Plant Varieties (Decision 345). Ecuador also has a specific legal body to govern such matters, which is the Organic Law of the Social Economy of Knowledge, Creativity, and Innovation and its corresponding Regulation.

The protection period granted depends mainly  on the group to which the plant variety belongs to.  To this end, two groups have been established: the first group includes vines, forest trees, and fruit trees (including their rootstock); and the second group includes all other species. The UPOV Convention, ratified by Ecuador in May 1997, provides that the protection of plant varieties is granted beginning on the date of approval and lasts at least  eighteen (18) years for species in the first group and fifteen (15) years for species in the second group.[1] Decision 345, meanwhile, grants protection for a period of twenty (20) to twenty-five (25) years for species in the first group and fifteen (15) to twenty (20) years for all other species. These terms are always counted from the date the plant variety is approved.[2]

Ecuador’s legislation has certain discrepancies relating to the type of protection and the time at which it is granted. Its Intellectual Property Law, which was repealed in 2016 but is applicable to all requests presented before this date, allows for a period of protection equal to that set out in the community regulation. However, it contradictorily determined that the protection granted would begin from the date plant variety is requested.[3] Current legislation corrected this error, providing protection from the date the right is granted. Nevertheless, the period itself is more restrictive, establishing eighteen (18) years for varieties in the first group, and fifteen (15) years for the second.[4]

To this effect, a plant breeder that protects a plant variety in the first group in Peru, Bolivia, or Colombia, will obtain a minimum protection of twenty (20) years for a variety belonging to the first group, while in Ecuador, the same variety will not be protected for more than eighteen (18) years, thereby contradicting the supranational regulation.

The Treaty Creating the Court of Justice of the Andean Community imposes upon member states the obligation to adopt measures to enforce the laws in its legal system and the commitment to avoid adopting measures that are contradictory or that could create obstacles to its application.[5] The bylaws of said Court considers infringing conduct to be the enactment of internal norms that contradict the Andean legal system.[6]

For this reason, the provisions of the Organic Law of Social Economy of Knowledge, Creativity, and Innovation, which contradict the community regulation, constitute an infringing conduct which could be considered lack of compliance by Ecuador. Consequently, the National Intellectual Rights Service should draft a bill to correct the aforementioned inconsistencies and send it to the National Assembly via Ecuador’s president for processing.

[1] International Convention for the Protection of New Varieties of Plants Varieties, Article 8 Duration of Protection, 1962

[2] Common Provisions on the Protection of the Rights of Breeders of New Plant Varieties; Chapter IV, Registration, Article 21.  

[3] Intellectual Property Law, Book III, Section II, Registration Procedure, Article 268.)

[4] Organic Law of the Social Economy of Knowledge, Creativity, and Innovation, Title IV; Plant Varieties; Section V, Rights and limitations, Article 485.

[5] The Andean Community Treaty Creating the Court of Justice, Article 4.

[6] Bylaws of the Andean Community Justice Tribunal, article 107, second paragraph.

Andrea Miño
Associate at CorralRosales
andrea@corralrosales.com

Living wage 2021

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Edificio de cristal con un montón de ventanas + el logo de CorralRosales

On March 18th, the Ministry of Labor – by Ministerial Agreement MDT-2021-087- set the living wage for 2021 and established the payment procedure.

  • Living wage

The value of the monthly living wage for 2021 was set at US$447.41.

  • Economic compensation calculation period

To calculate the economic compensation of the living wage, employer shall consider income received by the employee from January 1st to December 31st, 2021.

If employees worked for a shorter period than the aforementioned, calculation will be proportional to the time worked.

  • Procedure to calculate economic compensation

The economic compensation to which workers whose monthly income is not less than the living wage are entitled, is the difference between the living wage for the year 2021 and the monthly income that the worker received during 2021.

To calculate employee´s monthly income, the following amounts received during the calculation period must be added and divided by 12:

  • Salary
  • Thirteenth remuneration
  • Fourteenth remuneration
  • Commissions or incentives paid by the employer.
  • Profit sharing
  • Additional benefits paid in cash by the employer
  • Reserve funds

In the case of part-time employees, economic compensation will be calculated proportionally to the hours worked. The ordinary workday is 240 hours per month.

  • Payment deadline

The economic compensation shall be paid until March 31, 2022.

  • Registration before the Ministry of Labor

Once the employer registers the labor profit sharing form of year 2021, the Ministry of Labor’s platform will generate the payroll of the employees entitled to the economic compensation to reach the living wage.

Edmundo Ramos

Specialist in Labor Law
Edmundo Ramos, partner at CorralRosales
eramos@corralrosales.com
+593 2 2544144

Marta Villagómez

Specialist in Labor Law
Marta Villagómez, associate at  CorralRosales
mvillagomez@corralrosales.com
+593 2 2544144

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NOTE: The above text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a consequence of acting or not acting on the basis of the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm in Quito / Guayaquil, Ecuador.

CORRALROSALES

CorralRosales’ International Legal Alliance TAGLaw Named “Elite” by Chambers & Partners

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logo de la alianza legal internacional de CorralRosales, TAGLaw, y logo del reconocimiento de Chambers & Partners

CorralRosales’ international legal alliance, TAGLaw®, has again been recognized by Chambers & Partners as “Elite” for 2022—the highest ranking awarded to legal networks and alliances. This is the ninth time TAGLaw has received the distinguished “Elite” designation since Chambers & Partners began ranking legal networks and alliances in 2013.

TAGLaw was also invited provide the introduction to this year’s rankings guide: “GLOBAL LAW FIRM NETWORKS: An Introduction to Global Market Leaders”. In the introduction, TAGLaw discusses the challenges faced by law firms in 2021 and what the future holds for firms, alliances, and networks. 

“We are honored to be named an “Elite” international legal network/alliance for the ninth year and to contribute our thoughts to the annual introduction for the third time.” said Richard Attisha, President & CEO of TAGLaw and TAG Alliances. “Over the years, Chambers & Partners has continually acknowledged both the reputation of our global alliance and our individual member firms and their lawyers. This prestigious recognition is truly a testament to the quality of our member firms, illustrated by their prominence in their local markets and by their ability to deliver outstanding client service.”

In selecting networks and alliances for their “Elite” status, Chambers & Partners pays particular attention to the quality of the member firms, their global reach, and the value that the alliance provides to its member firms. TAGLaw, with a global footprint in over 90 countries, has over 160 leading firms providing legal services to companies ranging from the Fortune 5000 and leading SMEs to high-net-worth individuals. More than 100 of TAGLaw’s member firms have received individual rankings and award recognitions from Chambers & Partners. With expertise in dozens of practice areas and countless industry sectors, TAGLaw offers a substantial capability to its members’ clients. This capability is expanded by TAGLaw’s unique relationship with its sister alliances of accounting firms (TIAG®) and strategic partners (TAG-SP®), which together provide exceptional multidisciplinary service and a competitive advantage to businesses that cross geographical borders. 

About TAG Alliances®

TAG Alliances is comprised of three divisions: TAGLaw®, TIAG® (The International Accounting Group), and TAG-SP®. TAGLaw is an international alliance of more than 160 independent law firms. TIAG is an international alliance of more than 115 independent accounting firms. TAG-SP is a complementary association of strategic business partners. Collectively, TAG Alliances members provide legal, accounting, financial and business support services on a worldwide scale. With approximately 17,000 professionals in over 290 member firms, and more than 750 offices in over 105 countries, members of the TAG Alliances serve tens of thousands of clients from all industry and commercial sectors. TAG Alliances is consistently recognized as one of the Top 10 alliances of accounting & legal alliances in the world.

Learn more at www.TAGAlliances.com.

Ecuador: The National Intellectual Rights Service recognizes as a possible act of unfair competition the attempt to register a trademark identical to another that is already on the market

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Ecuador: El Servicio Nacional de Derechos Intelectuales reconoce como un posible acto de competencia desleal pretender el registro de una marca idéntica a otra que ya está en el mercado.

The National Intellectual Rights Service (hereinafter, “SENADI”), when deciding an opposition against the application for the mark DASH in class 11, considered that the applied-for mark was unregistrable since there was a risk of confusion for consumers due to the prior existence of the opposing party’s trademark DASH in Class 09.

SENADI also considered that attempting to register a mark identical to another that is already on the market could be considered an act of unfair competition. This argument is usually rejected in most cases, so its acceptance in in this case is a rare event and undoubtedly will serve as a reference for future cases.

Background:

On November 19, 2019, a natural person applied for the mark “DASH” intended to protect goods in international class No. 11, specifically: “Apparatus for lighting, heating, steam generating, cooking, refrigerating, drying, ventilating, water supply and sanitary purposes [1].”

PA-CO COMERCIAL E INDUSTRIAL S.A. filed an opposition based on trademark “DASH”, to protect the following goods in Class 09: “scientific, nautical, surveying, photographic, cinematographic, optical, weighing, measuring, signalling, control (inspection), life-saving and teaching apparatus and instruments; Apparatus for conducting, distributing, transforming, accumulating, regulating or controlling electricity; apparatus for recording, transmission, reproduction of sound or images; magnetic record carriers, recording discs; automatic vending machines and mechanisms for prepaid apparatus; cash registers, calculating machines, data processing equipment and computers; fire extinguishers.” The opposing party also argued the applicant’s unfair competition.

On July 10, 2020, the applicant answered the opposition, which was added to the file on January 31, 2022. 

Case resolution:

Through Resolution No. 2000009, issued on February 15, 2022, SENADI accepted the opposition filed, rejecting the registration of the applied-for mark. In the aforementioned resolution, SENADI considered that that the conflicting marks were identical as well as acknowledged the relationship between the conflicting classes. Therefore, it concluded that there was a risk of confusion or association for consumers, who could assume that the goods are related or have the same business origin.

Regarding the registrability of trademarks, Decision 486 of the Andean Community establishes that:

“Those signs whose use in commerce unduly affects a third party’s right may not be registered as trademarks, in particular when:

a) are identical or similar to a trademark previously applied for registration or registered by a third party, for the same products or services, or for products or services in respect of which the use of the trademark may cause a risk of confusion or association[2]; (…)”

When deciding the opposition, SENADI ruled on the argument of unfair competition -an uncommon fact – in the following terms:

“Given the above, it could be considered as an act of unfair competition, the fact that it is intended to register a mark that is identical to a trademark that is in the market, generating confusion among consumers, which is precisely what intellectual property should avoid.”

In this regard, Decision 486 of the Andean Community rules that:

“When the competent national office has reasonable indications that allow it to infer that a registration had been filed to perpetrate, facilitate, or consolidate an act of unfair competition, it may deny said registration.[3]; (…)”

With this decision, SENADI has taken a very positive step in the analysis of intellectual property matters, leaving aside purely formal aspects, by analyzing complex situations, protecting not only trademarks owners but also consumers.

[1] Proceeding No. SENADI-2019-82640.

[2] Article 136 of the Decision 486 of the Andean Community.

[3] Article 137 of the Decision 486 of the Andean Community.

Katherine González
Associate at CorralRosales
katherine@corralrosales.com

Controversial SENADI proceedings highlight need to fight corruption within the authority

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Bandera de Ecuador ondeando como foto principal del artículo publicado por la asociada de CorralRosales Katherine González en el medio online WTR

DETAILS

DATE: 24-02-2022

PROFESSIONALS IN THE NEWS:

-Katherine González

MEDIA:

– WTR

The National Intellectual Rights Service (SENADI hereinafter) in Ecuador is in the news for the questionable decision made when registering a trademark. Our associate Katherine González has written about this specific case for WTR, an article that we summarize below.

 On 10 June 2020, Quirovara Tax Company SA applied for the mark DON BENJA (and logo) in Class 31, specifically “bananas and Musaceae.” On the other hand, Arbelaez Valencia Hermanos Coffee Roaster Mejía SA filed an Andean opposition based on the trademark DON BENJA, which covers the following goods of Class 31: “agricultural, horticultural, forestry products and grains not included in other classes; live animals; fresh fruits and vegetables; natural plant and flower seeds; animal feed; malt.”

 In November, SENADI began its unusual registrability study: rejected the Andean opposition, and granted, to everyone’s surprise, the registration of DON BENJA trademark for class 31, in favor of Quirovara company. In its resolution, SENADI:

  • Accepted that the marks were similar;
  • Accepted that the marks protected the same goods;
  • Acting ex officio, and against the applicable Andean law, reviewed a webpage and used this information to determine the main economic activity of the opponent, ignoring the goods listed in the registration certificate that was the basis of the opposition; and
  • Accused the opponent of trying to arbitrarily extend the protection of its trademark in relation to its commercial activity, again ignoring the basis of the opposition and the protection granted by the trademark.

Regarding the registrability of trademarks, Article 136 of Decision 486 of the Andean Community establishes as follows:

“Those signs whose use in commerce unduly affects a third party’s right may not be registered as trademarks, in particular where:

  • They are identical or similar to a trademark previously applied for registration or registered by a third party, for the same products or services, or for products or services in respect of which the use of the trademark may cause a risk of confusion or association (…)“

SENADI´s resolution

“On 8 December 2021, SENADI issued a resolution stating that an adequate trademark comparison had not been carried out, and requested the highest administrative Authority, through an ex officio review procedure, to decide whether the applied-for mark should be granted. This request implies that the parties were denied appeal rights, as the appeal authority would already have issued a decision.” Katherine states.

Seven days later, SENADI annulled the office action as being “inadmissible”. It found that it contravened Article 76 of the Constitution. The next day, on December 16, 2021, through Resolution No SENADI-2021-RS-14973, accepted the voluntary cancellation of the trademark DON BENJA by Quirovara. The cancellation request had been filed only the day before. 

This situation is surprising, since, as mentioned by our associate, “Usually, the voluntary cancellation process takes between six and 12 months; however, in this case, this request was submitted and accepted within 24 hours.” She also adds that “It is noteworthy that the agent who filed the mark in dispute was the SENADI director deciding on the matter, who immediately resigned after the resolution became public.”

Conclusion

For González, this case highlights the urgent need for SENADI to:

  • Train its officials so that all actions are carried out in accordance with national and Andean regulations;
  • Strictly apply the legal norm requiring the processing of cases in a chronological order; and
  • Fight strongly against corruption.

“If these recommendations are applied, it is expected that the negative impact on users will decrease considerably, the quality of SENADI’s decisions will improve, and its reputation will recover”, she concludes.

If you want to read the complete news (under registration), click here

The ultra vires principle under Ecuador corporate law

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Edificio alto de cristal y foto de Milton Carrera, asociado de CorralRosales, firma de abogados de Ecuador

The Latin phrase ultra vires (abuse of power) is applied in corporate law when a company exceeds the activities determined in its corporate purpose. The ultra vires principle implies that the company lacks the capacity to perform acts or contracts that are outside the scope of the corporate purpose.

 The doctrine states that the determination of the ultra vires condition of an act or contract is given by an element alien to them: the purpose of the company. Consequently, ultra vires acts or contracts do not have defects in their conformation nor were executed by administrators without sufficient capacity to bind the company.

Likewise, the doctrine establishes that the ultra vires principle has a double purpose: (i) it is a protection mechanism for creditors who, based on a principle of determination of the corporate purpose, have full knowledge of the scope of the activities of the company with which they contracted; and (ii) an instrument for the protection of shareholders who invest in a company in which the scope of action for the development of its business is determined.

 Article 3 of the Law on Companies, applicable to stock corporations and limited liability companies, states in its pertinent part that:

 “The corporate purpose of a company may, in general, include one or several lawful economic activities, except for those that the Constitution or the law prohibits or reserves for other types of entities. The corporate purpose must be clearly established in its articles of association or incorporation document”

Morever, it provides that:

“The acts or contracts executed or entered into in violation of this article shall not bind the company, but the administrators who have executed or entered into them, or the partners or shareholders who have authorized them, shall be personally and jointly and severally liable before third parties in good faith, for the respective damages and losses.”

 Therefore, it is established that these acts or contracts do not bind the corporation, but the administrators who performed them, and even the shareholders who authorized them, must respond for the damages caused. The latter because the purpose of the doctrine is the protection of the third party in good faith that contracts with a company assuming that it does so within its corporate purpose.

However, some trends in modern corporate law deviate from the ultra vires principle by limiting the operational capacity of the company when what is sought is to allow companies to perform all lawful acts or acts permitted by law.  In this sense, the unnumbered article of the Law on Companies, titled “contents of the incorporation document”, paragraph 6, when referring to the simplified stock corporation, establishes that, among other requirements, it must include:

“a clear and complete statement of the activities foreseen in its corporate purpose, unless it is expressed that the company may perform any lawful commercial or civil activity”. 

In this way, the simplified stock corporation may opt for an undetermined corporate purpose, which means a radical change to the traditional corporate approach.

In conclusion, the ultra vires principle is currently applicable to stock corporations and limited liability companies, but not to simplified stock corporations, which have opted for an indeterminate object.  We do not find a valid argument why this flexibility recognized to the SAS has not been extended to stock corporations and limited liability companies.

Milton Carrera
Partner at CorralRosales
mcarrera@corralrosales.com

Investments in Ecuador: implications of Law of Economic Development and Fiscal Sustainability

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Inversiones en Ecuador - Implicaciones de la Ley de Desarrollo Económico y Sostenibilidad Fiscal - CorralRosales

DETAILS

DATE: 07-02-2022

PROFESSIONALS IN THE NEWS:

-Andrea Moya

MEDIA:

– LexLatin

The new article published by LexLatin, where you can read the interview to Andrea Moya, our partner and leader of the tax area of the firm, discusses investments in Ecuador: implications of the Law of Economic Development and Fiscal Sustainability.

Objective of the Law of Economic Development and Fiscal Sustainability

Moya explains that the main objective of this Law, which is the only project of the Lasso administration that is in force, is to provide the State with additional resources with which to reduce the fiscal deficit and organize public finances. She adds that “temporary wealth taxes were established, a tax regime was created to regularize assets abroad, the income tax that will affect the highest income earners was increased (…) and certain elements of the same tax were simplified. These elements include the elimination of tax incentives for investments in basic industries, prioritized sectors and public-private alliances that had been created in previous years”.

What are the main challenges of the Law of Economic Development and Fiscal Sustainability, considering that we still have to deal with the pandemic?

Our partner answers this question by placing special emphasis on the fact that “it is important to distinguish the medium- and long-term objectives proposed by the Law, such as the organization of public finances in the face of current issues such as the pandemic”. To this she adds that the reduction of the fiscal deficit, ”is expected to boost the economy with the creation of quality employment, which is the greatest need of Ecuador”.

What are the main regulatory changes in customs and foreign trade that are implemented with this Law?

For Moya, the key is the exclusion of the value of freight for the calculation of customs duties. This was done to reduce its impact on the cost of imported goods and to curb the effect of the significant increase in freight rates in the world market. In addition, this Law, “includes reforms to reduce the time of administrative processes in charge of the Customs Authority, implement technological systems for customs control and the implementation of advance consultations to provide security to the importer on the treatment that will be given to the goods.

In this same area, the Government is negotiating several trade agreements with the objective of facilitating access to international markets for exports.

If you want to read the full article, click here

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