Yearly Archives: 2024

CorralRosales > 2024

Bitter victory: Delayed justice in the patent system in Ecuador

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Delayed Justice…

The Administrative Litigation Court ruled in our favor in a patent proceeding, correcting a mistake made by the local IP Office; we achieved protection, a victory, no doubt, but a bittersweet one.

This patent application was filed on January 23, 2006, under a political regime acting against patentability.

In the first instance, and within the absurdly long period it takes for the local IP Office to resolve a patent, patent protection was denied on February 9, 2012, to which we filed an administrative appeal with a new set of claims.

Contrary to the law and ignoring jurisprudential provisions, the IP Office considered that a new claim set could not be submitted in this instance and again denied protection using the same previous arguments, taking almost seven additional years.

We appealed judicially, trusting that the existing illegalities would be sufficient to correct the error and grant protection. This happened because we were fortunate enough to have competent Judges in the Court.

Unfortunately, the favorable ruling was issued when only three days of protection remained for the invention sought to be patented.

The question then arises: Is the justice obtained fair? Obviously not.

The need to press for the application of the accelerated patent system is now becoming imperative. Without patents, there is no development or investment. Once and for all, it is necessary to adopt the solutions already in the Law or compensate with additional protection time patents that, as in this case, have obtained protection three days before their expiration due to the absolute irresponsibility of the State. State that has also charged annuities for a non-existent right and the highest fees in Latin America for examination.

I consider this ruling a professional achievement. Reversing patent decisions in courts is not easy, but it is a failure of our country’s patent system. If we do not take these types of facts seriously and seek a correction that solves these problems at the root, we will continue, at best, obtaining unfair justice.

 

Eduardo Ríos
Partner at CorralRosales
eduardo@corralrosales.com

Amendments to the Public Procurement Law Regulations

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Through Executive Decree 333 of July 12, 2024, published in the Third Supplement of the Official Registry 600 on July 15, 2024, the Public Procurement Law Regulations (the “Regulations“) were amended.

The key amendments are summarized below:

  1. The contracting of Ecuador’s tourism promotion is included as a special regime. Under this regime, the following may be contracted: (i) supply and demand studies; (ii) advertising; (iii) organization, logistics, and assistance for events and fairs; (iv) creation of tourism promotion campaigns; and (v) promotion and positioning of the country brand (Marca País).
  2. A legal entity with its main office in the canton, province, or region where the contract will be executed is considered a local supplier.
  3. If the contractor is an obligated subject before the Financial and Economic Analysis Unit (UAFE), it must hold a Certificate of Compliance from the UAFE during the contractual execution phase.
  4. The study of technological disaggregation in works applies only when the reference budget is equal to or exceeds the amount resulting from multiplying the coefficient 0.00003 by the State’s initial budget for the corresponding fiscal year. For 2024, such amount is US$998,904.59.
  5. Public entities may acquire domestic and international airline tickets under any of the following mechanisms:
  6. Direct purchase from airlines.
  7. Direct purchase from airlines using business or corporate plans.
  8. Direct purchase through online ticket platforms.

Through travel agencies, if deemed appropriate for technical and operational reasons.

 

Mario Fernández, Associate at CorralRosales
mfernandez@corralrosales.com
+593 2 2544144

© CORRALROSALES 2024
DISCLAIMER: The previous text has been prepared for informational purposes. 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 additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

Circular Economy

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The circular economy system seeks to keep materials in supply chains for as long as possible, in order to minimize product waste, promote sustainable use of natural resources, revalue waste and regenerate nature.

The circular economy emerges to replace the linear economy (take-make-waste), which is a production model that extracts virgin raw materials to manufacture products that eventually end up as waste.

Since 2021, Ecuador has enacted the Inclusive Circular Economy Law. This legislation establishes mechanisms for transitioning from a linear economy to an inclusive circular economy. It recognizes waste as a potential economic resource and aims to economically integrate waste pickers.

The transition to a circular economy is led by the Secretariats of Production and Environment through the National Inclusive Circular Economy System.

Extended producer responsibility

Extended Producer Responsibility (EPR) is a policy requiring producers or importers to manage a product throughout its entire life cycle, including the post-consumer stage. The Inclusive Circular Economy Law mandates the implementation of EPR schemes for designated priority products.

The collection, classification and recycling processes of EPR contribute significantly to material circularity, making it a pivotal tool that serves as a cornerstone of the circular economy.

In Ecuador, this policy has been implemented for over 10 years for specific products such as tires, batteries, electronic waste, medication waste, among others. The National Inclusive Circular Economy System must determine the priority products for the extended producer responsibility scheme.

 

Verónica Manrique, Junior Associate Lawyer at CorralRosales
veronica@corralrosales.com
+593 2 2544144

Felipe-Samaniego-abogados-ecuador

Felipe Samaniego, Partner at CorralRosales
felipe@corralrosales.com
+593 2 2544144

© CORRALROSALES 2024
DISCLAIMER: The previous text has been prepared for informational purposes. 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 additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

Income Tax for Sports Betting Operators

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The Executive Decree 313 issued June 27, 2024, by the President of the Republic of Ecuador regulates the Unique Income Tax for Sports Betting Operators. Below are the key points summarized:

  1. Assessment and payment of the tax: Taxpayers parties must declare and pay the tax monthly. Sports operators with tax residence in Ecuador must file an annual tax form consolidating the amounts declared monthly.
  2. Taxable Base: It is equal to the total income generated, including commissions, minus total paid prizes, provided that 15% tax was withheld from these prizes at the time of payment.
  3. Tax Rate: A flat rate of 15% applies to the taxable base.
  4. Withholding: Prizes paid by resident and non-resident operators are subject to a 15% withholding. The prize is the amount the player is entitled to when their prediction is correct, excluding the accrued forecast, i.e., the amount wagered by the player.
  5. Receipts: Resident or non-resident operators must issue sales receipts. One sales receipt per player per sporting event may be issued. Regarding withholding, one withholding receipt may be issued for all prizes awarded to the same player during the month.
  6. Implementation Period: Operators have 6 months to adjust their systems and implement the necessary mechanisms to comply with the applicable formal obligations.
  7. Non-resident Operators: Non-resident operators must obtain their Unique Taxpayer Registry (RUC). Obtaining a tax ID in Ecuador does not imply that operators have a permanent establishment in the country. However, the Ecuadorian representative must retain supporting information for 7 years.

 

Andrea-Moya-abogados-ecuador

Andre Moya, Partner at CorralRosales
amoya@corralrosales.com
+593 2 2544144

© CORRALROSALES 2024
DISCLAIMER: The previous text has been prepared for informational purposes. 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 additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

The National Intellectual Property Rights Service (SENADI) has nullified the registration of a trademark requested in bad faith

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Good faith, as a fundamental principle of the legal system, governs all areas of law, including trademark law. Under this precept, the actions of individuals are presumed to be carried out with the conviction of not harming third parties and within the framework of the law.

The registration of the trademark SAVOY TORONTO in class 30 (edible decorations for pastry and bakery products, cocoa-based beverages, chocolate-based beverages, chocolate bonbons, peanut (confectionery products based on), peanuts (confectionery products based on), cocoa, cocoa (beverages based on), cocoa (products based on), chocolate, chocolate (beverages based on), sweets, milk (cocoa with), milk (chocolate with) [drink]), was granted in 2021 under the presumption of being a good faith application, in favor of a natural person in Ecuador engaged in the marketing of food products.

The trademark was registered having fulfilled all necessary steps until the issuance of the registration certificate. However, it was not analyzed in a timely manner by the intellectual property authority, as the SAVOY TORONTO brand is one of the emblematic brands of Societé des Produits Nestlé in some countries of the region. At the time the trademark was requested, Nestlé did not have its trademark registration in Ecuador and therefore did not oppose it.

In 2022, Nestlé filed a nullity action against the SAVOY TORONTO trademark, claiming to be the legitimate creator and owner of the trademark rights, so the registration obtained by the applicant in Ecuador was made to perpetrate an act of bad faith and unfair competition, as the applicant was fully aware that it was a third party’s trademark and sought to take advantage of its fame and level of recognition among consumers.

In the nullity action, Nestlé demonstrated with convincing evidence that the request was made in bad faith, as it was practically impossible for the coincidence in the name of the trademark and the confronted products to occur as a mere coincidence, especially considering: (i) the high level of recognition of Nestlé’s brands; and (ii) that the applicant marketed products under the conflicting brands before applying for their registration in Ecuador.

Based on these grounds, by resolution No. OCDI-2024-202 of March 26, 2024, the National Intellectual Property Rights Service established that “It seems highly improbable that two different persons would have devised a distinctive sign with exactly the same terms to protect the same products, and whose registration in the Andean territory dates back to the year 2005.” and nullified the registration of the SAVOY TORONTO trademark. This resolution constitutes progress in the comprehensive protection of intellectual property rights, as the applicant’s intention in the trademark registration request was considered, not only the objective elements. The competent authority has made a correct assessment of the specific circumstances of this particular case.

 

Katherine González
Senior Associate at CorralRosales
katherine@corralrosales.com

Penalties for failure to deliver and transmit sales receipts

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Resolution NAC-DGERCGC24-00000022 issued by the Internal Revenue Service (SRI) on June 6, 2024, and published in the Official Gazette 575 on June 10, 2024, regulates the penalties applicable for failure to deliver and transmit sales receipts.

It is the taxpayer’s obligation to issue sales receipts and transmit them at the time of issuance or within a maximum period of 72 hours. Non-compliance with these obligations is subject to the following penalties:

Characteristics of the taxpayer (as of the date of the offense) Failure to deliver sales receipts (RBU = US$460 for 2024) Failure to transmit electronic sales receipts to the SRI (RBU US$460 for 2024) Large taxpayer and large estates 20 RBU (US$9,200) 30 RBU (US$13,800) Special taxpayer 10 RBU (US$4,600) 15 RBU (US$6,900) Entities other than non-profits, indivisible estates, and individuals required to keep accounting 7 RBU (US$3,220) 10 RBU (US$4,600) Non-profit entities 4 RBU (US$1,840) 5 RBU (US$2,300) Indivisible estates and individuals not required to keep accounting 4 RBU (US$1,840) 5 RBU (US$2,300) Taxpayers considered small businesses subject to RIMPE regime 1 RBU (US$460) 1 RBU (US$460) Non-registered taxpayers 1 RBU (US$460) 1 RBU (US$460)

A sales receipt is considered not delivered when:

  1. The taxpayer delivers a physical receipt with an expired authorization at the time of issuance.
  2. The taxpayer delivers an electronic receipt without being authorized for issuing it.
  3. Receipts belonging to another taxpayer are delivered.
  4. Unauthorized receipts are delivered.

The transmission of electronic receipts is considered verified when:

  1. The transmission to the SRI is made within the 72-hour period.
  2. The receipts have met all the validations established for successful transmission and reception in the SRI systems.
  3. The sales receipts include the information and values of the transaction carried out.

 

Andrea-Moya-abogados-ecuador

Andrea Moya, partner at CorralRosales
amoya@corralrosales.com
+593 2 2544144

© CORRALROSALES 2024
DISCLAIMER: The previous text has been prepared for informational purposes. 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 additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

The resolution adopted in Ordinary Session No. 062 – 2024 of the Judiciary Council on May 30, 2024, does not modify the expiration of terms

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The Judiciary Council, in the resolution adopted in Ordinary Session No. 062 – 2024 on May 30, 2024, extended the hours of service for the submission of requests and documents through the Electronic Judicial Management Office, to seven days a week, 24 hours a day.

While the resolution modified the hours of operation of the Electronic Judicial Management Office, it does not change the moment when judicial terms expire, as explained below: Article 77 of the General Organic Code of Processes provides:

Art. 77.-Beginning and expiration of the term. The term begins to run in a common manner, with respect to all parties, from the working day following the last summons or notification. Its expiration occurs at the last working moment of the workday.

That is, terms expire at the last working moment of the workday, which is consistent with Article 78 of the same legal body, which states that working hours are those established by the Judiciary Council.

According to Article 100 of the Organic Code of the Judicial Function, it is the obligation of all judicial function servers to fulfill the forty-hour workweek in eight-hour daily shifts. Furthermore, the workday established by the Judiciary Council is from 08:00 to 17:00 from Monday to Friday, which is consistent with Article 78 of the General Organic Code of Processes.

In conclusion, the extension of the hours of service of the Electronic Judicial Management Office optimizes judicial management in the submission of documents and requests, but does not modify the expiration of terms, which will continue to be until 17:00 on the last day.

Arguing that the expiration of terms occurs at 24:00 on the last day lacks legal and factual support, as substantiated.

 

Mateo Zavala
Senior associate at  CorralRosales
mzavala@corralrosales.com

Refund of VAT Paid in Real Estate Projects

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Regulation NAC-DGERCGC24-00000019 issued on May 28, 2024, the Internal Revenue Service (SRI) established the procedure for requesting the refund of VAT paid in real estate projects.

Below, we summarize the most important points:

  1. Who can request a refund?

Those companies and individuals who have paid VAT on local acquisitions or imports of goods and services for the construction of real estate projects.

  1.  What is the amount subject to refund?

The VAT generated, declared, and paid as of January 1, 2024, which does not generate the right to a tax credit, is subject to refund.

In the case of housing projects developed for sale to third parties, the refund amount may not exceed 6.5% of the total reference cost of the project registered with the Ministry of Urban Development and Housing (MIDUVI) or SRI.

In the case of housing projects executed by individuals for their use, the refund amount may not exceed 7% of the reference cost of the real estate project, that may not exceed US$105,340 (229 SBU) per dwelling.

  1.  What is the process to obtain the refund?

The beneficiary must:

  1. Perform a pre-validation of the request in the SRI’s web system.
  2. A request must be submitted per month and per project, to which the following must be attached:

i. Certificate of registration of the real estate project with MIDUVI or with SRI.
ii. Construction enabling title granted by the Municipal Government.
iii. Pre-validation report obtained in the SRI’s web system.
iv. List of the physical and electronic sales receipts supporting the total value of VAT paid in the local acquisition or import of goods and services, directly used in the real estate project.

 

Andrea-Moya-abogados-ecuador

Andre Moya, partner at CorralRosales
amoya@corralrosales.com
+593 2 2544144

© CORRALROSALES 2024
DISCLAIMER: The previous text has been prepared for informational purposes. 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 additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

Protecting IP rights through criminal actions: insights from a recent court ruling

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DETAILS

DATE: 12-04-2024

PROFESSIONALS INVOLVED IN THE ARTICLE:

–Maria Cecilia Romoleroux

MEDIA:

– WTR

  • In a recent case, counterfeit goods were released and the prosecutor ordered to close the investigation 
  • An expert was asked to assess the infringing goods pursuant to the principle of evidentiary freedom
  • Based on the expert’s report, the judge rejected the prosecutor’s request to close the case

Background 

In August 2021 a reform to the Criminal Law corrected several errors which, in practice, made it impossible to prosecute and sanction IP crimes. The minimum appraisal of seized goods was reformed (except for foreign trade cases) and a penalty of imprisonment (of up to one year) was reintroduced.

The reform also clarified several aspects to be considered in a crime (eg, the appraisal of the goods based on the price of the genuine goods and the possibility of reaching an agreement between the parties), which put an end to litigations.

Recent court ruling

In practice, although these provisions are regulated by law, certain prosecutors and judges have unfortunately not proceeded as expected. For example, in a recent case, an infringer appeared before a judge of constitutional guarantees, arguing a violation of the principle of legal certainty due to an alleged late notification by Customs, which resulted in the release of the counterfeit goods. The prosecutor hearing the case ordered that the investigation be closed, arguing that, with the release of the goods, there was no crime to prosecute.

IP crimes should be prosecuted following the criminal justice principles established in the Criminal Law. One of these principles is that of “evidentiary freedom”, which allows the parties to provide elements that may be considered as evidence, which will be subsequently assessed as to their relevance and usefulness. In other words, based on this principle, a wide range of opportunities are open to lawyers to prove that a crime has been committed – in this case, an IP crime.

Based on the principle of evidentiary freedom, an expert was requested to assess the infringing goods based on the documents and pictures in the official records. The expert’s assessment concluded that the released goods were counterfeit, which proved that a crime had been committed and should therefore be investigated.

The expert’s report was submitted to the judge, who reviewed all the documentation submitted, and rejected the prosecutor’s request to close the case. The judge also ordered that the case be brought to the attention of a higher authority within the Attorney General’s Office, stating that the investigation of a possible crime should be prioritised. 

A new prosecutor must now be appointed so that the investigation may continue and sanctions may be imposed (including a term of imprisonment of up to one year and a fine of up to $138,000).

Comment

This court ruling is important as it shows that, despite limitations in training, a lack of specialised IP knowledge and the abuse of constitutional actions, it is possible to obtain an adequate outcome by submitting documents demonstrating the mistakes made by the authorities, and by providing the judges with tools to support their decisions. 

The protection of IP rights can be achieved by using all the available mechanisms and principles established by the Criminal Law for all types of crime, as IP crimes cannot be considered as minor crimes. 

Read the article in WTR here.

This article first appeared in WTR Daily, part of World Trademark Review, in (April 2024). For further information, please go to www.worldtrademarkreview.com.

Division of the Agency for Regulation and Control of Energy and Non-Renewable Natural Resources

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By Presidential Decree No. 256 dated on May 8, 2024, the Agency for Regulation and Control of Energy and Non-Renewable Natural Resources (“ARCERNNR”) was ordered to be split into three new agencies:

  1. Mining Regulation and Control Agency (“ARCOM”).
  2. Electricity Regulation and Control Agency (“ARCONEL”).
  3. Hydrocarbons Regulation and Control Agency (“ARCH”).

ARCOM, ARCONEL, and ARCH will be attached to the Ministry of Energy and Mines and will regulate and control the mining, electricity, and hydrocarbon sectors, respectively.

The attributions, functions, programs, projects, and delegations established in laws, regulations, decrees, and other applicable regulations that corresponded to ARCERNNR will be assumed by ARCOM, ARCONEL, and ARCH, according to their respective sectors.

Each agency will have a board of directors consisting of: (i) the minister in charge of the sector or their permanent delegate, who will preside over it; (ii) a permanent delegate of the President of the Republic; and (iii) the national planning secretary or their permanent delegate (the “Board”).

The Board will appoint the executive director of each agency, who will exercise its legal, judicial, and extrajudicial representation.

The rights and obligations acquired by ARCERNNR will be transferred to the new agencies according to their respective sectors. In the case of contractual obligations, if it is not possible to identify the specific sector, they will be transferred to ARCONEL.

The split of ARCERNNR must be completed by August 8, 2024.

 

carlos-torres

Carlos Torres, senior associate at CorralRosales
ctorres@corralrosales.com
+593 2 2544144

DISCLAIMER: The previous text has been prepared for informational purposes. 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 additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

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