Instagram fined 405 million euros for violating the privacy of children and adolescents

Foto de los asociados de CorralRosales, Rafael Serrano y Christian Razza y una foto de un edificio y el logo de CorralRosales

The Irish Data Protection Commission (DPC) has fined Meta-owned social media platform Instagram €405 million for breaches of the European Union’s (EU) General Data Protection Regulation (GDPR).[1]

The sanction was imposed following a two-year investigation by the DPC, which found that Instagram had allowed users between the ages of 13 and 17 to operate business accounts on the platform that displayed users’ phone numbers and email addresses. This led the authority to conclude that Meta had been processing the personal data of children and adolescents illegally without a legal basis under the GDPR.

The DPC also found that the platform had operated a user registration system whereby the accounts of users aged 13 to 17 were set to “public” by default, thereby also making their social network content public.  The fine, which is the second highest under the GDPR, following only a €746 million sanction against Amazon, is the third imposed by the Irish authority on a Meta-owned company.[2] In addition to the fine, the DPC decided to admonish Meta and require it to adopt a series of specific corrective measures to comply with the proper data processing.

In December 2021, the DPC presented a draft decision to all EU counterpart regulators, also known as Competent Supervisory Authorities, as provided under Article 60 of the GDPR. Six of these national regulators raised objections to the DPC’s draft decision. The DPC was unable to reach a consensus with the regulators on the issue of objections and therefore referred the case to the European Data Protection Committee (EDPC), pursuant to article 65 of the GDPR.

On July 28, 2022, the EDPC issued its binding decision,[3] under which it required the DPC to modify its draft decision to the effect that it included having found an infraction of article 6(1) of the GDPR and to reassess the proposed administrative fines arising from said additional infraction.[4] After including these considerations in the text, the DPC rendered its final decision on September 2, 2022,[5] and on September 15, 2022, confirmed the conclusions from the investigation into Instagram and the fine of 405 million euros.[6] The DPC has at least six other ongoing investigations involving companies owned by Meta.[7]

Irish state-owned station RTE quoted a Meta spokesman as saying that they will appeal the fine, because this investigation was based on old configurations that they apparently updated over a year ago. Since then, they have implemented a number of new features to help keep teens safe and their information private. Such updates include a setting in which accounts belonging to users under 18 years of age are automatically configured as “private” when they register on Instagram.[8]

This is a major sanction, since it is the first fine imposed in relation to the personal data of children and adolescents, and a sign that financial sanctions for non-compliance with the GDPR are being imposed with ever-increasing values. This could be a sneak preview of the investigations and fines that the future Personal Data Protection Authority of Ecuador could well initiate and impose when the sanctioning regime set out in the Organic Law on Personal Data Protection (LOPDP) goes into force on May 26, 2023.

Personal data is any information that allows a person to be identified and requires special care when it comes to children’s personal data in a digital environment like social networks. The LOPDP will have a greater impact on individuals and legal entitiesthat process the personal data of children and adolescents, since their data is categorized in said regulations as special data, which implies additional obligations for the person in charge and the person responsible for processing such data. Such additional responsibilities include impact assessments and granting additional rights to data owners.[9] In this sense, the personal data of children and adolescents will receive reinforced and specific protection, especial when such data is used  for marketing, profiling, and the collection of these through services offered directly to minors, as happens on social media.

Since 20202, Ecuador has had a public policy aimed at guaranteeing internet safety for children and adolescents,[10] focused on protecting the dignity and physical, psychological, emotional, and sexual integrity of children and adolescents and enhancing the opportunities and skills offered by digital technologies in their lives and comprehensive development. Now, under the LOPDP, companies must be vigilant to ensure they comply with this rule, otherwise they will be penalized with the respective sanctions.

Although the DPC sanction applies in the EU, Meta will need to rectify this problem and adopt the corrective measures not only in that jurisdiction, but also change the default configuration of the commercial accounts of children and adolescents in Latin America, since currently, Instagram business accounts are set to “public” by default. Otherwise, the Latin American data protection authorities will have some work to do.

[1] BBC. (September 5, 2022). Instagram fined €405m over children’s data privacy. https://www.bbc.com/news/technology-62800884

[2] The penalty is currently the highest for a Meta-owned company, coming on the heels of a 225 million euro fine against WhatsApp and one for 17 million euros against Facebook.

[3] The EDPC published its decision on September 15, 2022.

[4] EDPC. (September 15, 2022). Binding Decision 2/2022. https://edpb.europa.eu/system/files/2022-09/edpb_bindingdecision_20222_ie_sa_instagramchildusers_en.pdf

CPD: (September 2, 2022). Decision of the Data Protection Commission made pursuant to Section 111 of the Data Protection Act, 2018 and Article 60 of the General Data Protection Regulation, DPC Inquiry IN-20-7-4. https://edpb.europa.eu/system/files/2022-09/in-20-7-4_final_decision_-_redacted.pdf

[6] Irish Data Protection Commission. (September 15, 2022). Data Protection Commission announces decision in Instagram Inquiry. https://dataprotection.ie/en/news-media/press-releases/data-protection-commission-announces-decision-instagram-inquiry

[7] Independent. (September 5, 2022). Instagram fined €405m by Irish regulator for breaching children’s privacy rights. https://www.independent.ie/business/technology/instagram-fined-405m-by-irish-regulator-for-breaching-childrens-privacy-rights-41962706.html

[8] Le Monde. (September 5, 2022). Irish data watchdog fines Instagram €405 million over children’s privacy. https://www.lemonde.fr/en/pixels/article/2022/09/05/irish-data-watchdog-fines-instagram-405-million-euros-over-children-s-privacy_5995936_13.html

[9] Under article 21 of the LOPDP, in addition to the right of children and adolescents not to be the subject of a decision based solely or partially on automated assessments, sensitive data or data of children and adolescents cannot be processed except with the express authorization of the data owner or their legal guardian.

[10] National Council for Intergenerational Equality. (2020). Public policy for a safe internet for children and adolescents. https://www.igualdad.gob.ec/wp-content/uploads/downloads/2020/09/política_publica_internet_segura.pdf

Rafael Serrano and Christian Razza
Associates at CorralRosales
rserrano@corralrosales.com

The settlement of differences, a fast-track tax assessment

Foto de Andrea Moya con el titular de su último artículo "La liquidación de diferencias, un procedimiento de determinación tributaria abreviado" + logo de CorralRosales + foto de edificio de cristal

The process for settling differences provided for in the Internal Tax Regime Law is a fast-track tax assessment that should only be activated when the conditions established in the law are met and, if activated, the principles that regulate administrative procedures and the taxpayer’s rights should be respected.

Article 68 of the Tax Code defines the assessment capability of the Tax Authority as the act or set of regulated acts carried out to establish the existence of the taxable event, the taxpayer, the taxable base, and the amount of the tax.

Articles 107-A and following of the Internal Tax Regime Law establish that the Internal Revenue Service (IRS) has the power to notify the taxpayer of any differences detected in its tax returns and which generate amounts payable to the Treasury. If the taxpayer does not make the payment or justify the differences within 20 days, the IRS issues a Payment Settlement for Differences in the Tax Return, which implies a collection order for the exercise of the coercive action. 

The acts of notification and subsequent settlement of differences contemplated in the aforementioned articles are tax assessment acts, since the Tax Authority determines the existence of the taxable event, the taxable base and the amount of the tax. The process for settling differences is a fast-track assessment process; therefore, it is only applicable when the Tax Administration finds differences in the taxpayer’s returns.

According to the dictionary of the Royal Academy of the Spanish Language, difference is: “that quality or accident by which something is distinguished from something else”. Therefore, the Tax Authority can only apply the fast-track assessment process when it reaches the conclusion that there is a difference when comparing the data provided by the taxpayer in its tax returns or those declared by third parties in relation to the same taxpayer.

For example, the Tax Authority could identify a difference if the taxpayer has not applied a deductibility limit established by law in its income tax return; or, if the value declared and paid for withholding tax does not coincide with the values provided by third parties. And only if the evidence filed by the taxpayer is not sufficient to disprove such difference, the corresponding settlement may be issued.

However, there are cases in which the Tax Authority has exceeded its faculties. For example, when issuing settlements of differences based on presumptions, i.e., the Internal Revenue Service has presumed the existence of differences in the Value Added Tax rate applied to certain services, based on the activities registered by the taxpayer in the Single Taxpayer Registry.

The Internal Tax Regime Law does not allow the Tax Authority to establish differences by presumption and could not do so since it would be contrary to the nature of a direct and abbreviated assessment procedure. Therefore, the question arises, a settlement of differences issued based on presumptions made by the Tax Authority is valid? Does the Tax Authority have the power to issue a settlement of differences when the difference is presumed?  The answer is no.

The initiation of a fast-track assessment procedure without having complied with the conditions set forth in the law, breaches the principle of prohibition of arbitrariness provided in the Administrative Code and violates the taxpayer’s rights to due process and defense, recognized in the Constitution and in the Tax Code.

Faced with this circumstance, the taxpayer may exercise its right to appeal the assessment procedure – the liquidation of differences – through an administrative claim or a judicial challenge. However, within these processes the taxpayer will be obliged to rebut the presumption of legitimacy applicable to the administrative tax acts.

In conclusion, although the legislator has provided that the Tax Authority may initiate fast-track assessment procedures against taxpayers, these procedures of liquidation of differences may only be initiated when the Authority effectively determines the existence of differences, otherwise the Authority would be acting arbitrarily and, consequently, violating the taxpayer’s rights, especially his right to defense.

Andrea Moya
Partner at CorralRosales
amoya@corralrosales.com

Expiration applied to administrative lawsuits filed by the Office of the Comptroller General to determine liabilities

Foto de Ricardo Mancheno, asociado de CorralRosales, más la foto de un edificio de cristal y el logo de CorralRosales

In general terms, doctrine tends to define expiration as “(…) the period that produces the termination of a thing or a right,” or as “the loss of force and effect of a power upon expiration of the term for its execution.

In the field of administrative law, an adequate doctrinal definition would be: “Expiration of a lawsuit constitutes an abnormal mode of termination thereof resulting from expiration of the maximum term established by law without the competent government body having issued any express resolution.”

Ecuadorian administrative law refers to expiration, particularly in the Law of the Office of the Comptroller General (hereinafter “LOCGE,” from its Spanish acronym), as analyzed in this article.

Article 71 of the LOCGE provides for the Office of the Comptroller General’s power to issue orders related to government activities and actions by persons subject to said law, also establishing its power to determine liabilities. This power expires seven years after the date in which such activities were carried out.

Other than the above, articles 26 and 56 of the LOCGE provide for two special types of expiration:

  • Article 26 provides that government audit reports, whatever their type or modality, must be conducted in a maximum and unextendible term of one hundred eighty days from the time the audit work order is issued until the final report is approved; this includes a 30-day period that the Comptroller General has to issue its approval.

The legal consequence of the report not being approved within said unextendible period is that the authority loses its power to continue with the audit process.

  • Article 56 of LOCGE provides that the resolution determining civil liability for negligence must be issued within a 180-day term counted from the business day following notification of the initial determination.

Failure to do so within the indicated period results in expiration of the Comptroller’s power on the matter. As a result, the Comptroller shall not issue a resolution confirming or eliminating the fines determined within the special audit.

 The expiration set out in the LOCGE occurs ipso jure, by operation of law, and results in the Comptroller losing its power to issue a resolution, which must be formally ratified and certified by the Comptroller itself as required under article 72 of the LOCGE, in accordance with the rules of due process set out in the Constitution of the Republic of Ecuador (hereinafter, the “Constitution”) and the administrative principles of the Organic Administrative Code.

Consequently, the lack of competence of the Comptroller’s Office on the grounds of expiration of the term, leads to absolute and irremediable nullity of everything performed outside of the established term. This means that any actions, decisions, or issue of determinations or fines within the special audit must be subject to the deadlines and unextendible terms set out in articles 26, 56, and 71 of LOCGE.

Turning to the expiration provided for in articles 26 and 56 of the LOCGE, the Plenary Session of the National Court of Justice issued Resolutions Nos. 10-2021 and 12-2021, dated September 29 and October 25, 2021, respectively. Through these, and by virtue of a judicial ruling repeated on three occasions in reference to application of expiration set out in the abovementioned laws, mandatory jurisprudential precedents were established, as follows:

“… HEREBY RESOLVES: … Art.- 3. Declare the point of law that contains the following rule to become MANDATORY JURISPRUDENTIAL PRECEDENT: “Article 26 of the Organic Law of the Comptroller General of the State establishes a deadline or term, as appropriate, which is mandatory for the control entity. After said time period, said office’s power to exercise control expires, and the government audit report’s approval becomes completely null and void because the public official approving it loses all of its power due to the passage of time. As a result, the Office of the Comptroller General, whether through an administrative procedure, or Contentious Administrative Courts, as the case may be, are required to declare it to be as such, whether ex officio or at the request of one of the parties, applying the guarantee of expiration of a legal right and the principle of legal certainty.”

“… HEREBY RESOLVES: Art. 1.- Declare the following point of law to be mandatory jurisprudential precedent: The one hundred eighty-day term set out in Article 56 of the Organic Law of the Office of the Comptroller General is a mandatory deadline that establishes expiration of the Office of the Comptroller General’s power to make determinations regarding civil liability for negligence. As a result, if it issues resolutions after said deadline has passed, the procedure becomes null and void, as does the resulting administrative act. To this effect, once the abovementioned deadline has passed, the Office of the Comptroller General, whether through an administrative procedure or the Contentious Administrative courts, either ex officio or at the request of one of the parties, must declare expiration of the Office of the Comptroller General’s power to issue determinations. This is consistent with safeguarding the principles of legality and legal certainty set out in Articles 226 and 82 of Ecuador’s Constitution.”

In conclusion, the rules and principles that govern administrative procedures require that all public officials act with valid jurisdictional power, defined as the extent to which the Constitution and the law enable a government body to act and fulfill their mandate, whether based on the subject matter, territory, term, or level. Doing so without having the due jurisdictional power negatively affects the constitutional rights of due process and legal certainty, both set out in the Constitution.

Ricardo Mancheno
Associate at CorralRosales
rmancheno@corralrosales.com

Changes in acceptable evidence that demonstrate use when renewing a trade name

Andrea Machicado

A trade name, as defined in the Decision 486 of the Andean Community, Common Intellectual Property Regime (Decision 486) is any sign that identifies an economic activity, a business or commercial establishment. It is an official name under which an establishment conducts its business.

Article 191 of Decision 486 states that: “Exclusive right to a trade name is acquired through use by a legal person for the first time in commercial activities and ends when the use of the name or activities of the business or establishment using that trade name cease to exist.”

As with a trademark, a renewal for a trade name can be filed six months prior to the expiration date. A six -month grace period after the mentioned date is also available. Unlike a trademark, when filing a renewal for a trade name, proof of use is required by the IP Office.

Decision 486 allows National IP Offices to decide if they will request proof of use when renewing a trade name. In Ecuador, to renew a trade name, use must be proven as stated in article 420 of the IP National Law and article 256 of its Regulation.

Before the IP Law’s Regulation, which came into force on November 20, 2020, the local IP Office was restrictive in its requirements to be able to prove use of a trade name. Only certified copies of invoices that showed the trade name as how it was registered before the IP Office were accepted as evidence of use, as long as there have not been substantial changes. At least one invoice for each of the six months prior to the renewal application had to be submitted.

Now, the Regulation expressly determines which documents can be accepted as evidence of use. The local IP Office has expanded what they consider as suitable evidence of use such as :

  • Invoices
  • Accounting documents or audit certifications
  • Operating permits
  • Notarial downloads of web pages, social networks
  • Digital or written press
  • Advertisements

In this regard, the Court of Justice of the Andean Community has established the type of evidence that proves the real and effective use of the trade name in the market:

“1.1. However, among the criteria to be taken into account to demonstrate the real and effective use in the market of the trade name are commercial invoices, accounting documents, or audit certifications that demonstrate the regularity and quantity of the commercialization of the services identified with the trade name, among others.

1.2. Likewise, the following acts, among others, shall constitute use of a sign in commerce: introducing in commerce, selling, offering for sale or distributing products or services with that sign; importing, exporting, storing or transporting products with that sign; or, using the sign in advertising, publications, commercial documents or written or oral communications, regardless of the means of communication used and without prejudice to the rules on advertising that may be applicable.” [1]

Now that the IP Office has expanded its requirements and is abiding but what the laws and regulations state, it is possible for brand owners to continue to protect their trade names through renewals and maintain rights. The local IP Office has broken the paradigms it has maintained for decades broadening its perspective in reference to the valid and effective evidence that proves the use of a trade name in accordance with jurisprudence of the Andean Community.

[1] Court of Justice of the Andean Community. Proceeding 55-IP- 2020 June 21, 2021

Andrea Machicado
Associate at CorralRosales
formalities@corralrosales.com

The intersection between IP and blockchain

Edgar Bustamante, asociado de CorralRosales, más una imagen de unos edificios y el logo de CorralRosales

Blockchain and other technologies related to distributed databases have been an issue subject to considerable discussion. Today, there are several industries looking into its related possibilities and new uses for blockchain are found every day. However, a question still remains: how could these technologies be used in the context of current Intellectual Property law and practice?

  1. What is blockchain?

A blockchain is similar to a digital version of a ledger. This chain consists of several “blocks” of information linked through cryptography, meaning that it is protected against any intrusion or modification. One of its main features is decentralization, since it does not reside on a single computer nor is it managed by a particular organization. Rather, the system is made up of multiple computers around the world that verify the data entered and look for inconsistencies so that the system works optimally and independently.

One of the main functions of a blockchain is to provide traceability for a certain product. Traceability refers to the ability to monitor the evolution of a product in its different stages. This ability is of great interest to industries that require strong Intellectual Property protection, including the pharmaceutical, automotive, and luxury goods sectors. Additionally, this technology allows the creation of what are known as Non-Fungible Tokens (NFTs), which can be defined as a digital version of a certificate of authenticity embedded in the blockchain that can represent almost any real or intangible property, including works of art, music, videos, etc.

Initially, blockchain technology was created for the financial sector to track massive amounts of transactions. However, its application has spread to many areas, including copyrights. Here, we can imagine a cinematographic work that has several elements that are also are essential parts of a particular chain (script, production, credits, distribution, etc.). Usually, this information would be stored on shelves, but through blockchain, it can immediately and securely be recorded in your system. This makes it possible to verify exploitation rights in real time through an unalterable and immutable seal. In the case of, for example, a song, with its music and lyrics, the authorship of its components would not be lost despite any merging.

For all of these reasons, blockchain has become a tool with a major potential for protecting works and proving their authorship. However, national legislation neither recognizes nor regulates this technology, which is why any certificate generated through it is invalid in any public procedure, especially considering that digital certificates in Ecuador must be granted by an “Information Certification Entity” controlled by the National Telecommunications Council. This very fact runs contrary to the nature of blockchain, given that its main characteristic is decentralization, which means that its own users manage it and there is no government control (with the exception of what are known as “institutional blockchains,” which have not been addressed in this article).

Given the above, blockchain cannot be used in procedures with Ecuadorian public agencies in which on-site interactions and a lack of standardization make procedures slow and oftentimes prone to corruption. For blockchain to be used, laws need to be updated in way that recognizes new technologies, especially those that provide security and speediness when administering data and certificates.

2. Intellectual Property Rights and blockchain

According to commonly accepted legal principles, a blockchain-based product can be classified as intangible or incorporeal property, meaning that, while this asset cannot be discerned by the senses, it does have, regardless, a certain value.  A buyer can acquire Intellectual Property rights that are separate from those pertaining to the creator of the underlying work. This is exactly what happens with the purchase of a painting, a book, or a music CD: the buyer becomes the owner of a specific version without exercising any copyright.

This begs the question of who owns the copyright in the underlying work of the blockchain. The short answer is that the creator owns the rights to their work, unless otherwise agreed. For example, when someone buys a painting from an art gallery for their home, they are purchasing the physical painting itself. While they may put this work on display, they do not hold the underlying rights to reproduce, make derivative works of, or distribute copies of that painting.

In the United States, for example, the parties are free to agree on the terms and conditions that govern a transfer of rights to a product connected to the blockchain. However, it is common practice to find adhesion contracts that usually limit the annual income that the buyer can obtain from said asset (for example, the NBA’s “Top Shot” platform). In other cases, some companies will tend to agree to restrictive terms and conditions that prohibit any type of exploitation of the asset linked to the blockchain.

This brings us to address whether we can obtain patent protection when it comes to blockchain-supported products.

Regardless of the legal system, “machines” are usually patentable, while “abstract theorems” are not (understanding this to mean mathematical principles that do not provide a technical contribution). This is due to the fact that machines are usually specific products that improve our quality of life, while theorems tend to be scientific principles belonging to the collective. As such, it is understood that they cannot be subject to control or monopolization.

Under our system (Ecuador), any blockchain-supported product is considered a non-patentable idea provided that is governed by code and software. This is the usual form of operation, because for an idea to be patentable, there must be material elements  involved. Along these lines, Article 15.e from Andean Community Decision 486 expressly states that computer programs or software are not considered to be inventions. However, Article 4 of Decision 351, also from the Andean Community, provides that computer programs can be protected under copyright, and covers both the source code (human readable instructions) and object code (binaries) of programs. Accordingly, in Ecuador, a blockchain-supported product could be protected under copyright; however, it would not be patentable.

In contrast, the Anglo-Saxon legal system brings together both copyright and industrial property under the concept of Intellectual Property, which implies greater flexibility when it comes to negotiating rights. As a result, the owner of a work can lose control of it by giving up their copyright, since moral rights are not exercised together with economic rights. In other words, there are no limits to exploiting a work, unlike the copyright system (applicable in Ecuador), which is based on protecting the moral right of the work.

Walmart, for example, registered a patent in the United States on a blockchain-based online shopping optimization algorithm. This is an integrated payment system that helps the buyer to choose their products in greater detail. It also automatically distributes payments on the blockchain among Walmart employees or vendors who worked on a certain process. Under this example, a computer program can be protected as it has been proven to provide added value to a specific process whose results are perceptible to the outside world.

Another example of program protection that produces a noticeable technical effect is Bank of America’s patent No. 10,643,202, which involves a real-time transaction processing system based on blockchain. This system reduces the previously known time per transaction and its adoption could greatly enhance electronic commerce, especially for tools such as Apple Pay or Google Pay.

Consequently, most of the applications filed on blockchain patents come from the Anglo-Saxon system, especially from countries such as the United States, Canada, and England. Regardless, it is not easy to prove that a blockchain system is not part of common scientific knowledge, as there are several research papers and countless articles that explain the bases of its algorithm, including a publication by Satoshi Nakamoto, the presumed pseudonymous person or persons who is (are) recognized as having developed Bitcoin. Even so, numerous patents have been accepted in cases where the filed application directly links the code to a machine’s operation, presenting this set as an invention that improves existing technical qualities and solves a specific problem in an innovative way. This makes it possible to obtain greater probabilities of patenting a technological invention, unlike what occurs in Ecuador, where software is expressly excluded from patentability.

Conclusion

In conclusion, the task at hand is to review an outdated Andean standard that does not recognize new fields and opportunities arising from the digital environment. It would also be advisable to replace references to “computer programs” with “information technology programs” in order to clearly include mobile applications (apps) or Dapps (applications that run within a blockchain) within the scope of said standard.

Further, it seems like the absolute impossibility of patenting computer programs is inappropriate under certain circumstances. While such programs are automatically copyright-protected from the moment of their creation, certain programs do require patenting since an innovative solution is brought to the table.

Edgar Bustamante
Associate at CorralRosales
ebustamante@corralrosales.com

Neuro-Rights

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.comrserrano@corralrosales.com

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

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

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

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

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

The ultra vires principle under Ecuador corporate law

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