- An application for GOLOKO was opposed based on the marks FOUR LOKO and the contractual relationship between the parties in Peru
- While the Ecuadorian IP Office rejected the opposition, an action for industrial property rights infringement was upheld in Peru
- The Ecuadorian IP Office overturned the first-instance decision, finding bad faith and unfair competition on theapplicant’s part
Trademark registration is a key mechanism for protecting IP rights. However, this procedure is not always straightforward or legitimate, and there are cases where trademark applications may be rejected due to bad faith or unfair competition. For example, trademark applications have been submitted by distributors which, in the absence of a trademark registration in Ecuador, have attempted to register the relevant trademark despite a distribution agreement confirming that ownership belonged to its legitimate owner, the grantor. In a recent case, the Ecuadorian IP Office issued an interesting resolution denying the registration of a trademark on the ground that the application constituted an act of bad faith and unfair competition.
Background
Food For Life EIRL applied to register the trademark GOLOKO for goods in Class 33. This application was opposed by Phusion Projects LLC based on the marks FOUR LOKO, registered in Class 32, and the contractual relationship between the parties in Peru.
Phusion Projects and Food For Life maintained a contractual relationship, as the applicant had been an authorised distributor of FOUR LOKO-branded goods in Peru for several years. Therefore, at the time of the trademark application for GOLOKO, the applicant had full knowledge of the existence, ownership and recognition of the FOUR LOKO marks.
The IP Office rejected the opposition, considering that there were sufficient differences between the marks to avoid confusionamong consumers. However, the contractual relationship between the parties was not analysed.
In parallel, a complaint for industrial property rights infringement was filed in Peru against Food For Life and its related company, Servicios Exal SAC, for manufacturing, marketing, distributing and promoting beverages under the GO LOKO marks. Injunction measures were requested against use of these marks, claiming that, in addition to the visual and aural similarities between the marks, the packaging of the contested goods was highly similar to that bearing the registered trademark.
The action was upheld in Peru, serving as primary evidence that the application filed in Ecuador constituted an act of unfair competition and bad faith.
Decision
The Ecuadorian IP Office, through Resolution OCDI-2025-167, overturned the first-instance decision, accepted the opposition filed by Phusion Projects and denied the registration of the GOLOKO trademark.
The main arguments for finding bad faith and unfair competition on the part of the applicant were as follows:
- Food For Life intended to compete in the Ecuadorian market with a mark that could be confused with an already registered trademark; and
- Food For Life, as a distributor of Phusion Projects in Peru, was aware of FOUR LOKO’s market penetration and recognition.
- Food For Life intended to use this knowledge to its advantage by registering a confusingly similar mark.
Comment
With this resolution, the Ecuadorian IP Office set a groundbreaking precedent for the protection of trademarks which, due to their notoriety and market positioning resulting from their owners’ advertising efforts, are attractive to competitors seeking to obtain unfair benefits.
The rejection of trademark registrations on the ground of bad faith and unfair competition is an essential mechanism to ensure fairness in the market and protect IP rights. In cases where there is a distribution agreement between the applicant and the opponent, the evaluation of the application becomes even more crucial, as prior agreements between the parties play a significant role in determining the legitimacy of the registration. Companies and distributors must act transparently under commercial contracts
and intellectual property laws to avoid conflicts and ensure proper market competition.
Andrea Miño Moncayo
CorralRosales
20 March 2025
