The extraordinary appeal for review provided for in the Organic Administrative Code, against the decisions issued by the National Service of Intellectual Rights

The extraordinary appeal for review provided for in the Organic Administrative Code, against the decisions issued by the National Service of Intellectual Rights - CorralRosales - Lawyers Ecuador

The Organic Administrative Code (“COA”) provides that, against the decisions issued by the public administration, there are two kinds of appeals: ordinary appeal and extraordinary appeal for review. The first seeks to have the authority re-analyze the merits of the case with a view on modifying its decision. The extraordinary appeal for review, on the other hand, is possible only when any of the specific grounds provided for in the COA are met – it does not constitute a third instance – hence its extraordinary nature. In recent years, a common practice has been to file an extraordinary appeal for review against final decisions denying or granting the registration of a trademark, against which the ordinary appeal has already been lodged -or it was not filed in due course- in order for the National Service for Intellectual Rights (“SENADI”) to change its criteria regarding the risk of confusion or association between the conflicting marks. Although the SENADI prima facie gives way to this type of procedure, it has stated that “The extraordinary appeal for review constitutes a legal remedy aimed at correcting an error in the formation of the administrative will, or any illegality in the issuance of the decision, with the interested party having the ordinary remedies to disagree with the criteria of the judge, in this case, with the comparative analysis of the confronted marks.[1]

In this regard, Article 232 of the COA provides that “The interested individual may file an extraordinary appeal for review of the final administrative act when any of the following circumstances are verified:

1. That when issuing them, an obvious and manifest factual error has been incurred in, which affects the merits of the case, provided that the factual error results from the documents incorporated into the file.

2. That when issuing them, an obvious and manifest error of law has been incurred in, which affects the merits of the case. (…) The extraordinary appeal for review shall be filed, in the case of cause 1, within a period of one year following the date of notification of the contested decision (…)”.

It derives from the aforementioned provision that, unlike the ordinary appeal, the extraordinary appeal for review is not intended to review the legal arguments relied on by the authority in its decision but is aimed at reviewing and remedying, if necessary, defects in the processing of the administrative proceeding.

Unfortunately, nowadays, many users have chosen to file extraordinary appeals for review when what they are really requesting is to review the existence or not of the risk of confusion between two trademarks. And this is usually done as a way of demonstrating dissatisfaction with the decision issued through second instance decisions. An example of this can be found in case No. SENADI-2016-92900, in which SENADI admitted to process an extraordinary appeal for review against a decision denying an appeal in which the opposition filed was accepted, and the registration of a trademark was rejected. Within the aforementioned extraordinary appeal for review, the arguments used to request the revocation of the decision were:

  • Comparison between the confronted trademarks and the supposed absence of risk of confusion.
  • Absence of spelling and phonetic similarities between the conflicting marks.
  • Lack of competitive connection between the protected goods.

It is evident that the grounds for the aforementioned extraordinary appeal for review are not related to those provided for in Article 232 of the COA and what the applicant is seeking is to review again a decision that has already exhausted all administrative instances.

We will have to wait for the final decision of SENADI to have a clearer vision of its criteria in this matter. However, it is to be expected that the authority will reiterate the aforementioned criterion, rejecting the extraordinary appeal for review at the time of issuing the final decision (although it should have done it at the admissibility stage), thus putting an end to this practice. If so, with this precedent, SENADI should not admit to process these kinds of appeals in the future, since it is extremely important that the extraordinary nature of the appeal for review is respected in order to safeguard legal certainty and avoid its use as a kind of third instance by the interested parties.

[1] Decision OCDI-2021-230 from March 30, 2021. Proceeding 15-1516-RV-2S-RR-2018.

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

LexLatin – Acquisitions in Ecuador: the most important operations so far this year

LexLatin - Acquisitions in Ecuador: the most important operations so far this year - CorralRosales - Lawyers Ecuador

DETAILS

DATE: 29-09-2021

CORRALROSALES IN THE NEWS:

Xavier Rosales

Andrea Moya

MEDIA: LexLatin

Ágora, a tool that systematizes and orders data on acquisitions, outputs, and financing in Latin America, published the number of operations completed during January and August of this same year: 14, which translates into 3,836 million dollars, an amount that is 3,348 million dollars more than the accumulated during the same months of 2020.

Our partner, Xavier Rosales, participated in the most important operation in the first two quarters in Ecuador: the purchase of the Lumen business in Latin America by Stonepeak Partners. Countries such as the United States, Australia, Venezuela, Uruguay, Peru, Mexico, Costa Rica, Colombia, Argentina, Brazil, and Panama were also part of this operation.

“We have the pleasure of advising Lumen for several years,” said Rosales for the medium. He also emphasizes that CorralRosales “has participated in different operations related to change of ownership and business focus, adjusting to the needs of the business sector mainly served by Lumen”.

Without a doubt, working on this operation from Ecuador is a challenge since the transactions are subject to regulatory authorizations. Our partner points out that “the advantage is that the regulations applicable to these authorizations are clear, which allows adequate planning and predictability”, making it possible to obtain permits in the shortest possible time.

Andrea Moya, a partner at CorralRosales also participated in the transaction. She believes that “there are three key elements in the current Ecuadorian situation: the adverse effects generated by the pandemic on the liquidity of companies, which have forced many of them to seek foreign investors; the change of government, which meant a shift towards a favorable environment for investors, and last but not least, the success of the vaccination plan, which has allowed the reactivation of the economy”.

CorralRosales Operations

Our firm currently has 3 operations with $ 3,160,000,000 in total transactions.

Regarding the position in which CorralRosales finds itself, Moya explains that the number of clients has grown significantly. “We see it as a rebound from the pandemic and due to the need to adapt to a new reality. We also see it as an effect of the favorable environment that the new government has generated for business development”, he adds.

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The right to effective judicial protection

The right to effective judicial protection - CorralRosales - Lawyers Ecuador - Latam - Ramón Paz y Miño

The concept of guarantee of rights has undergone fundamental transformations in the last century, which have contributed to the development of the protection and safeguarding of rights in the Constitutions. To all this, the abandonment of “the romantic pretension, derived from the French Revolution, whereby it was sufficient to enshrine human rights in the political constitution, for them to be respected by authorities and citizens” also contributed to this regard (Jimenez, 2000, pg.549).

The current constitutional text, in force since 2008, broadens and strengthens the complex and concept of guarantees and rights, increasing the instruments of defense and developing the content of the guarantees already existing in the previous Constitution (Storini, 2010, pg. 287).

In order to understand the right to effective judicial protection, it is important to highlight the purpose of legal proceedings.

The progress of society compels to restrict the private defense of rights in case of conflict, to the extent of reaching the current conception of jurisdiction, as the exclusive power of the State, to intervene in any conflict that actually or eventually disturbs social peace. (Becerra, 1977, pg. 22).

In this context, each citizen – paraphrasing Rousseau – surrendered part of its freedom to the State, so that the latter exclusively provides the tools to enforce rights through the judiciary branch, which is shielded with autonomy in the application of the Constitution and the law. Therefore, “the final purpose of procedural law is the regulation of the process, currently carried out by the jurisdictional organ exclusively”. (Becerra, 1977, pg. 23).

The State “in the legal field, not only complies with the creation and establishment of legal norms, but legal protection implies integrating the regulatory role with another, complementary, second-degree role. To the task of dictating norms this other role is added with the objective of conserving the legal order when it is unknown and the individual claims protection, which is the jurisdictional function”. (Véscovi, 1984, pg.7)

This leads us to conclude that procedural law “regulates this complex of acts in order to obtain jurisdictional protection” (Becerra, 1977, pg. 23).

The right to effective judicial protection is a complex right that “acts as an umbrella that reinforces the protection of other guarantees of a procedural nature, in case they do not have constitutional coverage”. (Aguirre, 2010, pg.12). Therefore, it constitutes a paramount cornerstone in the conception and development of a process, which is complex and is related to several elements that compose it.

For several decades, several international instruments[1] have established effective judicial protection as a right of utmost importance; however, our legal system remained silent until the enactment of the 1998 Constitution.

Currently, the Constitutional Court (hereinafter, the “Court”) has established that effective judicial protection constitutes the right of every individual to resort to the courts to obtain a well-founded judgment[2], which also involves the duty of the judge to adapt the proceedings to the specific case to be resolved, as follows:

“(…) specifies that the right to effective judicial protection does not exclusively entail the right of citizens to have access to the courts, but also involves the duty of the jurisdictional authorities to adapt their actions to the nature of the case brought before them in accordance with the provisions of the legal system”. (Constitutional Court of Ecuador, Judgment 133-17-SEP-CC, Case 0288-12-EP)[3]

The Court established three aspects in the content of this right: (i) access to justice, (ii) development of the proceedings in compliance with the Constitution and the law, in a reasonable time, and (iii) enforcement of the judgement[4].

Additionally, the Court established important cornerstones to distinguish effective judicial protection as an autonomous right in its content and nature, and determined that the right to judicial, impartial, and expeditious protection consists of the right to resort to the jurisdictional bodies in order to obtain a resolution regarding any legal conflict. Such resolution shall be based on law and must have been dictated after the process has been substantiated, observing and respecting the procedural guarantees established in the Constitution. (Constitutional Court of Ecuador, Ruling 254-18-SEP-C, Case 0952-EP) [5]

The foregoing is a clear definition of what is meant by effective protection, which can be summarized as the right of every individual to access a jurisdictional body, so that it may hear his or her claim through a proceeding in which the judge and the parties respect the basic guarantees, as well as the right to obtain decisions by the courts which are in accordance with the Constitution and the law and enforced.

Subsequently, the Court established the three instances of effective judicial protection, as follows:

  1. Access to justice.- (…) implies that the State as a whole, and more specifically, the justice administrative bodies in the country, allow people to access the justice system with their petitions, without establishing overbearing obstacles that make it impossible for them to do so (…) in order to obtain from the administration of justice the recognition of their rights before the State and before individuals (…)
  2. The development of the process in strict observance of the principle of due diligence – refers to the prompt and diligent performance by the jurisdictional authorities; that is, within a reasonable time and processing the case in accordance with the constitutional and legal regulations, in order to effectively protect the rights and interests of the parties (…)
  3. Enforcement of the decision. (Constitutional Court of Ecuador, Judgment 254-18-SEP-C, Case 0952-EP)

It was positive to introduce the principles of responsibility enshrined in Article 11 of the Constitution, Article 15 of the Organic Code of the Judicial Function and the principle of due diligence contained in Article 172 of the Constitution; due diligence implies the fulfillment of the duty of care in the substantiation of the proceedings, observing the constitutional and legal provisions provided for resolution of disputes in the law brought to the attention of the courts. The latter further broadened the spectrum of the protection of the right to effective protection, including the implications and connotations that its non-observance would bring to the judges themselves and to the State.

It has been discussed whether or not arbitrators should ensure the right to effective judicial protection, since according to some criteria, this would be reserved only for judges and ordinary courts. If we call the right “effective judicial protection”, does this mean that arbitrators must protect this right? The obvious answer is yes, and if we want to call it effective arbitral protection, as a type, there is no difficulty. However, for the avoidance of doubt or contrary criteria, it is appropriate to refer to the right to the effective protection of justice (Martín Diz, 2014) [6] as the evolution of effective judicial protection, since it encompasses the rest of the mechanisms, including extra procedural or extrajudicial mechanisms recognized in legal systems. And, in Ecuador, arbitration is constitutionally recognized as a mean of dispute resolution.

In conclusion, effective protection has had an important and very positive development since the 2008 Constitution came into force, as the Court has worked to clarify and expand its elements. However, the system and understanding of complex law is not as expected, since there are important gaps to be solved, such as preparing judges, training them to issue better judgments and at the same time freeing them from “models”, “formulas”, “formats”, “evaluations by quantity” that prevent a true legal development and make it impossible to effectively apply the effective protection of justice.

References

Aguirre, V. (2010). El derecho a la tutela judicial efectiva: una aproximación a su aplicación a los tribunales ecuatorianos. Foro. Revista de Derecho No 14, 5-43.

Becerra , J. (1977). Introducción al Estudio del Derecho Procesal Civil. México: Cárdenas Editor y Distribuidor.

Jiménez, E. (2000). Derecho Constitucional Argentino, Tomo II, Sociedad Anónima editora, comercial, industrial y financiera. Ediar.

Martín Diz, F. (2014). Del derecho a la tutela judicial efectiva hacia el derecho a una tutela efectiva de la justicia. Revista Europea de Derechos Fundamentales, 161-176.

Narváez Aguirre, L. (abril de 2014). Tesis de grado: Facultades de los árbitros de suspender los efectos de los actos. Quito.

Storini, C. (2010). Las Garantías Constitucionales de los Derechos Fundamentales en la Constitución Ecuatoriana de 2008. Quito: Corporación Editora Nacional.

Véscovi, E. (1984). Teoría General del Proceso. Bogotá: TEMIS .

[1] The International Declaration of Human Rights (art. 10), the International Covenant on Civil and Political Rights (art. 14), the American Convention on Human Rights (art. 8), the Declaration of Basic Principles of Justice for Victims of Crime and Abuse of Power.

[2] Constitutional Court of Ecuador, Judgment 364-16- SEP-CC, Case 1470-14-EP

[3] Constitutional Court Ecuador, Judgment 133-17-SEP-CC, Case 0288-12-EP, 10/05/17.

[4] The Plenary of the Body in judgment No. 050-15-SEP-CC issued in case No. 1887-12-EP, the existence of three aspects in the essential content of the right to legal protection, which cannot be overlooked, as follows ‘(…) the first related to access to justice; the second with the development of the proceedings in strict compliance with the Constitution and the law and in a reasonable time, and the third in relation to the enforcement of the decision. (Constitutional Court of Ecuador, Judgment 133-17-SEP-CC, Case 0288-12-EP

[5] Constitutional Court of Ecuador, Judgment 254-18-SEP-C, Case 0952-EP, 11/07/18, p 10

[6] Fernando Martín Diz, “DEL DERECHO A LA TUTELA JUDICIAL EFECTIVA HACIA EL DERECHO A UNA TUTELA EFECTIVA DE LA JUSTICIA”.

Ramón Paz y Miño
Asocciate at CorralRosales
rpazymino@corralrosales.com

LexLatin – CorralRosales Participates in The Purchase of Lumen in Latin America by Stonepeak Partners

LexLatin - CorralRosales Participates in The Purchase of Lumen in Latin America by Stonepeak Partners - CorralRosales - Lawyers Ecuador

DETAILS

DATE: 26-08-2021

CORRALROSALES IN THE NEWS:

Xavier Rosales

Ana Samudio

Milton Carrera

MEDIA: LexLatin

In August, the US alternative investment company specialized in infrastructure, Stonepeak Partners, bought Lumen Technologies, a US fiber-optic provider and data operator.

The $ 2,700 million purchase was carried out with the participation of the AustralianSuper pension fund and with the help of CorralRosales in Ecuador. Our team of experts advised Level 3 Communications, Lumen’s Ecuadorian subsidiary, on Regulatory Law.

In addition to CorralRosales, the following firms also took part in the transaction:

  • Stonepeak Partners LP Advisors:
    • Simpson Thacher & Bartlett – United States (New York and Palo Alto)
    • Marval O’Farrell Mairal (Buenos Aires)
    • Gómez-Pinzón Abogados (Bogotá)
    • Consortium Legal – Costa Rica (San José de Costa Rica)
    • Rebaza, Alcázar & De las Casas Abogados (Lima)
    • Travieso Evans Arria Rengel & Paz (Caracas)
    • Creel, García-Cuéllar, Aiza y Enríquez, SC (Mexico City)
    • Pérez Bustamante & Ponce (Quito)
    • Mattos Filho, Veiga Filho, Marrey Jr. and Quiroga Advogados (São Paulo)
    • Barros & Errázuriz (Santiago de Chile)
    • Arias, Fábrega & Fábrega – ARIFA (Panama City
    • Guyer & Regules (Montevideo)
  • Advisors of Level 3 Communications, Inc .:
    • CorralRosales (Quito)
  • Advisors to AustralianSuper:
    • Skadden, Arps, Slate, Meagher & Flom – United States (Los Angeles, New York and Washington, DC)
  • Advisers to Lumen Technologies, Inc .:
    • Jones Walker LLP (New Orleans and Baton Rouge):

If you want to read more, click here

Teleamazonas – The Government promotes a new mining policy to attract more investment

Teleamazonas - The Government promotes a new mining policy to attract more investment - CorralRosales - Lawyers Ecuador

DETAILS

DATE: 24-08-2021

CORRALROSALES IN THE NEWS:

Rafael Serrano

MEDIA: Teleamazonas

Ecuador launched a new mining policy. From 2018 to 2020, this sector paid USD 1,300 million in taxes. So far, in 2021, it has paid USD 421 million, with a projection of up to USD 1,600 million. Teleamazonas invited our experienced senior associate Rafael Serrano, a specialist in Environmental Law, to discuss this new policy.

“A fundamental rule for the development of the sector demonstrates the will of the Government and that of the Ecuadorian State to promote this industry that, if administered correctly, can bring great benefits,” adds Serrano.

The National Government, through decree 151, ordered to issue “the Action Plan for the Mining Sector of Ecuador.” Article 2 adds that “the State will be the generator and coordinator of public policies that promote the development of the mining sector, national and foreign investment, and the increase in exports of mining products.” For experts in the topic, this is a big step within the mining sector.

Serrano adds that “the objective is the development of environmentally and socially responsible mining, which protects investment, both national and foreign.” And, to conclude, he adds that what is needed is “stability and clear rules of the game so that investors know where to invest. These are investments of hundreds of millions of dollars ”.

If you want to see the video of the news, click here

Teleamazonas – CNT suffered a “highly sophisticated” cyberattack

Teleamazonas - CNT suffered a "highly sophisticated" cyberattack - CorralRosales - Lawyers Ecuador

DETAILS

DATE: 16-08-2021

CORRALROSALES IN THE NEWS:

Rafael Serrano

MEDIA: Teleamazonas

In July, CNT (National Telecommunications Corporation) was the victim of a cyberattack, the intentions of which are still unknown. Nevertheless, the attack puts the cybersecurity policies that all companies and institutions must have under scrutiny, and the topic became a talking point in Ecuador.

Teleamazonas wanted to have the opinion of our senior associate, an expert in new technologies and information security, Rafael Serrano, to offer a vision of what changes should be made to avoid future attacks.

Serrano affirms that “CNT and all public institutions must begin to have cybersecurity policies” since no one is exempt from risk, and besides, there are ways to prevent it.

After the situation and the CNT having been declared in emergency, decisions will be made regarding the equipment, given that, according to Byron Zapata, CNT’s surrogate manager, there are resources available.

“The right thing to do is to have different systems that can secure and diversify the information,” says Serrano. He also adds that “in this way, if someone has an attack or finds a problem, they have a backup in other systems, and the entire State continues to function.”

To conclude the interview, Serrano affirms that “according to Ransomware, it is only an attack, an attempt. So, therefore, they can’t take the appropriate measures unless they identify what happened or what the attackers are asking for.”

All the information that has been violated is not yet known in detail.

If you want to see the video of the news, click here

Joint Ventures in Ecuador

Joint Ventures in Ecuador - CorralRosales - Lawyers in Ecuador

The term Joint Venture appeared in the United States of America and has been widely accepted worldwide. It is a concept with a very broad meaning, which, in essence refers to agreements executed between individuals or companies in order to undertake a joint project, in which the rules that will be applied to its operation are determined.

The main characteristic of the Joint Venture is its contractual nature. This figure is used to designate different forms of cooperation between individuals or legal entities in order to achieve a common objective through the contribution of resources, without the parties losing their legal autonomy. The application of this type of contract is wide; contracts for marketing, manufacturing, supply, sales, technology, exploitation of natural resources, among others.

The doctrine mainly distinguishes between two types of Joint Ventures: i) Joint Venture Corporation and ii) Joint Venture Agreement. The difference between these figures is that the former has the purpose of incorporating a company different from its members, while the latter excludes any type of corporate relationship.

Notwithstanding the type of Joint Venture chosen, an essential element is its duration. This means that it must necessarily be a contract of a consecutive nature – not of instantaneous enforcement – since this duration is the one that allows the parties to venture jointly.

In Ecuador, the Joint Venture is regulated by the “EIGHTH TITLE of BUSINESS COLLABORATION” of the new Commercial Code (“Cc”) that came into force in 2019. It provides for two figures: the “Joint Venture” (Articles 585 to 600) and the “Commercial Consortium” (Articles 601 to 607).

Article 585 of the Cc defines the Joint Venture as:

A contract of associative nature, by means of which two or more persons, whether natural or legal, agree to operate a business in common for a specified period of time, agreeing to participate in the profits resulting from it, as well as to be liable for the obligations undertaken and for the losses incurred.”

 The following elements are worth highlighting:

  1. Contractual nature
  2. Associative nature
  3. Two or more individuals or legal entities
  4. Common business
  5. Determined period of time
  6. The parties participate in the profits and are liable for the obligations and losses.

It should be noted that the Cc only regulates the Joint Venture Agreement and does not refer to the Joint Venture Corporation or other types of Joint Venture. According to the provisions of the Cc the contract must be executed in writing, without the need for a public deed. Its termination must be carried out in the same way its constitution was executed. The instrument evidencing the termination decision shall detail the outstanding obligations and pending credits and the way in which the parties will be liable for them.

The contract must mainly establish:

  1. The business purpose and the term of duration.
  2. The internal rules regarding control and management, establishing the way in which the members will manage their interests.
  3. The form of profit sharing.
  4. The rules concerning the representation of the Joint Venture (i.e. whether a special attorney-in-fact will be appointed or whether the associates will represent it directly).
  5. The way in which the parties will respond vis-à-vis third parties, for example, if the liability is joint and several or proportional to the contributions, or certain quotas.
  6. How relationships between participants will be managed.
  7. The rules concerning dispute resolution.

If the parties do not provide for or do not agree on any of the elements mentioned above, the contract will be governed by the provisions established in Cc. For example, in the event of failure to indicate the party’s liability vis-à-vis- third parties, they will be jointly and severally liable or, as the case may be, will act as joint and several co-creditors.

The specific difference between a company and a Joint Venture is that the latter is not a legal person. Since it is not a company with limited liability, but an association, the liability  towards third parties is not limited to their capital contributions, but depends on what its members agree. In addition, the completion of the Joint Venture occurs with the consent of the parties in a written document and is not subject to any additional formality, nor to the control of the Superintendence of Companies.

Although the Cc does not regulate other types of Joint Venture, this does not imply that other types of Joint Venture are not allowed in Ecuador, such as:

  • Joint Venture Corporation through a new company: Two (or more) parties participate as shareholders with specific roles. In this case, with the creation of a new company, the liability via-a-vis third parties depends on the type of company adopted for this purpose, but in general the liability is limited to capital contributions.
  • Joint Venture Corporation through an existing company: The company of one of the parties is used to develop the business and internal accounting is kept per business unit for internal control. The liability to third parties follows the rules expressed in point i) above.
  • International Joint Venture: A figure characterized by individuals or companies from different countries. The legal figure that they adopt will depend on the agreements between the parties.

From a tax standpoint, even if the Joint Venture does not have a legal personality, it must comply with its tax obligations in accordance with the scope of its contract. Thus, article 98 of the Internal Tax Regime Law (Ley Orgánica de Régimen Tributario Interno) stipulates that -for tax purposes- the Joint Venture Agreement is considered as a company, so it must be registered in the Single Taxpayer Registry (Registro Único de Contribuyentes (RUC)). In the case of a Joint Venture Corporation, tax obligations go hand in hand with the type of company adopted.

In the antitrust field, it shall be noted that the Joint Venture is subject to antitrust legislation, since its creation may require prior authorization by the antitrust authority or be sanctioned pursuant to the provisions of the Organic Law for the Control of Market Power (Ley Orgánica de Control de Poder de Mercado) and its Regulation.

In conclusion, the Joint Venture should be conceived as a useful legal figure that can provide solutions at a time when it is necessary to be practical, dynamic, and creative with resources. Although its practicality is high, it is essential to carry out a legal analysis, case by case, in order to determine if it is the best legal instrument for the business. In any case, careful planning and communication, reflected in a contract that adequately captures the parties’ will, is key.

María Isabel Torres
Asocciate at CorralRosales
mtorres@corralrosales.com

WTR World Trademark Review – Foreign Companies as Intellectual Property Holders in Ecuador

DETAILS

DATE: 14-07-2021

PROFESSIONALS IN THE NEWS:

Andrea Miño Moncayo

On July 14, 2021, World Trademark Review (WTR), the media specialized in Intellectual Property, published an article written by Andrea Miño Moncayo.  In her article, our associate comments on a pervasive problem in Ecuador regarding the appropriation of internationally recognized brands by third parties.

The appropriation is usually done through registration applications with the relevant authority and even by marketing products under these brands without proper authorization.

The arguments of the offenders are varied, and they particularly emphasize that the foreign companies in question are not domiciled in the country. Therefore, they could not carry out activities or defend their intellectual property rights in this particular case.

Miño Moncayo emphasizes in the article that, “to try to justify this (blatantly illegal) conduct, some lawyers have resorted to wrongly allege before the courts that the doctrine of the Superintendency of Companies will be applied, according to which a company established outside the country must be domiciled in Ecuador to be able to carry out activities in the country. “

Miño Moncayo then goes through international and local regulations applicable in this case, including the hierarchy of each of them, to demonstrate that the appropriation and use of these marks are illegal and are not justified within the Ecuadorian legal system.

She concludes by highlighting that “it is essential that the preliminary decisions issued by the Court of Justice of the Andean Community in these cases are specific and clear, to avoid erroneous arguments causing damage to the rights of foreign companies not domiciled in Ecuador.”

To see the full article (under registration), click here.

Latin Lawyer – Multiple Firms Help Dutch Paint Company Expand in Latin America.

DETAILS

DATE: 16-07-2021

PROFESSIONALS IN THE NEWS:

Partners: Xavier Rosales and Andrea Moya

Associates in Quito: Milton Carrera, Ana Samudio, Marta Villagómez, Rafael Serrano, Maria Isabel Torres, Jimmy Rodríguez, Darío Escobar and Sofía Rosales

Associates in Guayaquil: Ramón Paz y Miño and Edgar Bustamante 

MEDIA: Latin Lawyer

On July 16, 2021, Latin Lawyer, the international media dedicated to the legal sector, shared the transaction involving the Dutch company AkzoNobel; this company specializes in decorative and industrial paint and chemical products. CorralRosales acted as a legal advisor in Ecuador.

Through this multinational transaction closed on June 29, AkzoNobel acquired the Orbis Group, a Colombian business conglomerate with several subsidiary companies dedicated to manufacturing paint and derived chemical products. This conglomerate operates in 16 Latin American countries.

The transaction is still pending regulatory approval in several countries and is expected to be finalized by the end of this year.

In addition to having the advice of CorralRosales in Ecuador, the following firms also contributed to the transaction:

AkzoNobel advisers: Baker McKenzie in Colombia, Arias in Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama.

Grupo Orbis Advisors: Posse Herrera Ruiz in Colombia, BLP in Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, and Robalino Law in Ecuador.

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

Changes in Border Measures and Criminalization of IP.

Intellectual Property regulatory corrections; border measures and penalization - CorralRosales - Lawyers Ecuador

The Congress gave way to the partial objection issued by the Executive Branch, thus approving the “Law that Reforms Various laws to Reinforce the Prevention and Combat of Illicit Commerce in order to Strengthen the National Industry and Promote Electronic Commerce.” In addition, the law foresees reforms in intellectual property matters.

In particular, this reform includes provisions regarding (i) intellectual property crimes, their punishment and handling, expanding the punishable acts, and (ii) the border measures proceedingds

I. Intellectual Property Crimes

The Executive Branch veto sought to correct certain inconsistencies and drafting errors in the text approved by the Assembly. As a result, it details criminal conducts in a much better way, the conditions that must be taken into account to assess the existence of the crime and how these crimes are to be treated and judged.

The reform of the criminal law establishes that, for these behaviors to be considered crimes, they must include several elements that would differentiate it from a “simple” infringement of intellectual property rights as it conditions its sanction to the infringement happening in knowledge, that it has a lucrative purpose, and that it is on a commercial scale.

These conditions include criminal offense and penalizing whoever manufactures, commercializes, or stores labels, stamps, or containers containing trademarks or denominations of origin registered in the country.

It also sanctions whoever separates, starts, replaces, or uses labels, stamps, or containers that contain registered trademarks in the country to use them in goods of different origin, fills containers identified with trademarks belonging to a third party with spurious goods; stores, manufactures, uses, offers for sale, sells, imports or exports goods covered by apatent, utility model, industrial design, a plant variety (including its material for reproduction, propagation or multiplication) or a layout design.

It also includes possible infringements -which from our experience, will make up the vast majority of intellectual property criminal actions- against whoever stores, manufactures, uses, offers for sale, sells, imports or exports a product or service that uses an unregistered trademark identical or similar to one registered in the country; the competitive connection between the infringing goods or services and those identified by the registered trademarks must be clear.

In addition, the law eliminates the condition of a minimum amount to constitute a crime, clarifying that to consider the offending conduct a crime (on a commercial scale), the magnitude, economic value, quantity, and impact on the market must be considered. It also specifies that in foreign trade cases, it is regarded as a crime when the goods are valued at more than 50 unified basic salaries (SBU) – US $ 20,000 to date – stating that the cost of the original product must be taken into account for this appraisal.

Regarding the sanctions, the law establishes an incarceration sentence of 6 months to 1 year, confiscation (of the seized goods), and a fine of 8 to 300 SBU (US $ 3,200 to US $ 120,000 to date). In addition, the following are reinstated as an aggravating factor for the criminal offense: (i) having received a warning of the offense; (ii) that health-related goods cause damage to health; and (iii) that the crime is committed concerning unpublished works.

Regarding copyright, the same conditions described before apply. In addition, the following actions are sanctioned with the penalty mentioned in the previous paragraph: alteration or mutilation of a piece of work; the registration, publication, distribution, communication, or reproduction of a foreign work as one’s own; unauthorized reproduction or in a number greater than the authorized number of the work, provided that the damage is greater than 50 SBU (US $ 20,000 to date); public communication of works or phonograms; introduction to the country, storage, offering for sale, sale, lease or circulation of illicit reproductions of works, by any means; unauthorized retransmission of radio broadcasting, television and in general any signal that is transmitted through the radioelectric spectrum; manufacture, import, export, sale or lease of devices, systems or software that allow deciphering an encrypted satellite signal carrying programs or telecommunications in general.

The reform makes an essential clarification about certain conditions on the crime, such as the precise meaning of the term “commercial scale” and how to assess the appraisal of the goods.

The law also includes provisions on the destination of the seized goods, which may be considered donations to cover social needs by the State or destroyed. An expert report issued by an expert duly accredited by the Judicial Council is needed. The expert has to establish whether the goods must be destroyed or render useless.

Finally, the law includes conciliation as a dispute resolution mechanism.

In conclusion, the reform is positive because it seeks greater agility in processing and prosecuting intellectual property crimes.

II. Border Measures

After almost five years of a legal vacuum in this matter, the Executive Branch veto, also corrected the inadequate text approved by the Legislature returning the “mixed” system to the country for the execution of border measures. It allows the National Customs Service of Ecuador (SENAE) to be the first filter of infringing goods entering or exiting the country, suspending the customs process provisionally, which has to be confirmed by the local intellectual property office.

The reform empowers SENAE to: (i) suspend the customs procedure for goods that, in any way, violate intellectual property rights, (ii) alert the holders of these rights, and (iii) provide adequate information to act in these cases.

The suspension of the customs process will initially be five days. During these five days, this suspension must be communicated to the importer, the right holder, and the local intellectual property office. After that, it will have three days to decide on a resolution.

The law maintains the obligation to provide sufficient information to the intellectual property authority about the infringing goods and the conditions of the infringement, and the possibility of inspecting the goods involved.

The authority may sanction the offender with a cash penalty ranging between 1.5 and 142 SBU (US $ 600 to 56,800 to date).

Per the regulations of the Andean Community, the reform provides that the right holder may bring either an administrative, civil, or criminal action when the adoption of the border measure has been confirmed. Although there is a contradiction with the Andean supranational norm regarding the term to bring it (10 days), the Andean Law prevails. The holders of intellectual property rights will have a predominant performance in these cases since they must participate actively, both in the criminal proceedings and in the cases of border measures, accompanying the authorities through all the steps.

The law maintains the possibility of requiring the person requesting the adoption of a border measure to provide a guarantee that will be proportional to the possible economic and commercial impact generated by the suspension to protect the importer or exporter from a possible case of abuse of rights.

This reform corrects elements that have caused a notable increase in intellectual property infringements in Ecuador and led to actions against retailers or small merchants. Unfortunately, these elements were leaving importers or wholesalers who are the primary beneficiaries of the illicit trade unpunished.

The reforms will come into force after its publication in the Official Registry.*

*This reform is in force since August 27, 2021.

Eduardo Ríos
Asocciate at CorralRosales
eduardo@corralrosales.com