From Law to Practice: The Non-Registrability of Trademarks on Grounds of Unfair Competition in Ecuador

Within the framework of the common industrial property regime of the Andean Community, of which Ecuador is a member state, Decision 486 establishes in Article 137 an important rule for national IP offices:

“When the competent national office has reasonable grounds to infer that a registration has been applied for in order to perpetrate, facilitate, or consolidate an act of unfair competition, it may refuse such registration.”

Among the scenarios that may constitute unfair competition is the following:

“Any act capable of creating confusion, by any means, with respect to the establishment, products, or industrial or commercial activity of a competitor.”

Although this provision has been in force since the year 2000, its application by the Ecuadorian IP Office (SENADI) has historically been limited. The authority has traditionally prioritized other grounds for refusal, such as lack of distinctiveness—whether inherent or acquired—or bad faith, especially where there was a prior relationship between the applicant and the rightful trademark owner.

For years, the grounds of unfair competition were dismissed and considered by some as a matter exclusively governed by antitrust or competition law, outside the scope of trademark registration. However, in recent years, there has been a gradual shift in the IP Office´s administrative interpretation of this provision.

Jurisprudential Evolution: The “CARMEX” Case

A significant illustration of this change is found in a recent decision rejecting the registration of the mark CARMEX for goods in Class 03, including bleaching preparations, soaps, cosmetics, and essential oils, among others.

The application, filed by an Ecuadorian citizen in 2020, was opposed by the owner of the CARMEX trademark in multiple foreign jurisdictions, including the US, UK, Brazil, Mexico, and China. The opposing party alleged that the application constituted an act of unfair competition and a breach of the principle of good faith.

In a decision issued in May 2025, the Ecuadorian IP Office ruled as follows:

  • The argument concerning foreign registrations was dismissed on the basis of the principle of territoriality, enshrined in trademark law.
  • The opposition was upheld, recognizing that the use of the applied-for mark constituted an act of unfair competition through imitation, considering the prior use of the CARMEX mark in other markets. This could potentially mislead consumers and unduly benefit from the opponent’s reputation.

The IP Office concluded that granting the registration would run contrary to the principles governing fair market competition. It emphasized that the intellectual property system must protect not only the trademark owner´s interests, but also those of consumers and market balance.

Legal Implications

This decision marks a significant shift in Ecuadorian administrative practice, as it effectively incorporates the analysis of unfair competition as an autonomous ground for refusal. It aligns with the principles of integrity in the industrial property system and commercial loyalty.

The resolution also reflects a more flexible interpretative approach, more consistent with the globalized nature of commerce, acknowledging that the principle of territoriality, though still valid, should not be rigidly applied when it results in the improper appropriation of well-known or widely used marks.

Final Reflection

The recognition of unfair competition as a legitimate ground for refusal of trademark registration is a meaningful step toward a more comprehensive application of trademark law. In a landscape where commercial practices evolve constantly, IP Offices must adopt dynamic criteria that provide effective protection against practices that distort the market and undermine legitimate rights.

Ecuador’s experience in this case sets a valuable precedent not only at the national level, but also as a regional reference for Andean countries and other jurisdictions facing similar challenges at the intersection of trademark law and competition law.

Such decisions -and any that help guarantee and uphold the rights of trademark owners- are a welcome development.

 

María Cecilia Romoleroux
Socia en CorralRosales
maria@corralrosales.com

 

Katherine González
Asociada senior en CorralRosales
katherine@corralrosales.com

TAX EFFECTS OF DONATIONS OF EQUIPMENT TO THE NATIONAL POLICE AND ARMED FORCES

 

Through Official Register No. 56, Sixth Supplement, dated June 11, 2025, the Law of National Solidarity was published. This law introduces financial, tax, and security reforms aimed at ensuring national economic stability and promoting economic recovery.

Regarding the tax regime, the law establishes a benefit consisting of a reduction of the generated income tax, equivalent to the value of new equipment and supply donations made in favor of the National Police and/or the Armed Forces. This reduction may not exceed 30% of the tax and is not subject to reimbursement.

I.e., the law allows taxpayers to pay up to 30% of the income tax due through donations to the National Police and/or Armed Forces. For reconciliation purposes, this reduction would result in a lower calculation base for the profit-sharing payments to employees, as illustrated in the following example:

This new benefit will apply starting from fiscal year 2026.

 

 

Andrea Moya, Socia en CorralRosales
amoya@corralrosales.com
+593 2 2544144

© CORRALROSALES 2024
NOTA: EL texto anterior ha sido elaborado con fines informativos. CorralRosales no es responsable de ninguna pérdida o daño ocasionado como consecuencia de haberse actuado o dejado de actuar en base a la información contenida en este documento. Cualquier situación determinada adicional requiere la opinión y concepto específico de la firma.

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Application by distributor rejected on grounds of bad faith and unfair competition

  • An application for GOLOKO was opposed based on the marks FOUR LOKO and the contractual relationship between the parties in Peru
  • While the Ecuadorian IP Office rejected the opposition, an action for industrial property rights infringement was upheld in Peru
  • The Ecuadorian IP Office overturned the first-instance decision, finding bad faith and unfair competition on the applicant’s part

Trademark registration is a key mechanism for protecting IP rights. However, this procedure is not always straightforward or legitimate, and there are cases where trademark applications may be rejected due to bad faith or unfair competition.

For example, trademark applications have been submitted by distributors which, in the absence of a trademark registration in Ecuador, have attempted to register the relevant trademark despite a distribution agreement confirming that ownership belonged to its legitimate owner, the grantor.

In a recent case, the Ecuadorian IP Office issued an interesting resolution denying the registration of a trademark on the ground that the application constituted an act of bad faith and unfair competition.

Background

Food For Life EIRL applied to register the trademark GOLOKO for goods in Class 33. This application was opposed by Phusion Projects LLC based on the marks FOUR LOKO, registered in Class 32, and the contractual relationship between the parties in Peru.

Phusion Projects and Food For Life maintained a contractual relationship, as the applicant had been an authorised distributor of FOUR LOKO-branded goods in Peru for several years. Therefore, at the time of the trademark application for GOLOKO, the applicant had full knowledge of the existence, ownership and recognition of the FOUR LOKO marks.

The IP Office rejected the opposition, considering that there were sufficient differences between the marks to avoid confusion among consumers. However, the contractual relationship between the parties was not analysed.

In parallel, a complaint for industrial property rights infringement was filed in Peru against Food For Life and its related company, Servicios Exal SAC, for manufacturing, marketing, distributing and promoting beverages under the GO LOKO marks. Injunction measures were requested against use of these marks, claiming that, in addition to the visual and aural similarities between the marks, the packaging of the contested goods was highly similar to that bearing the registered trademark.

The action was upheld in Peru, serving as primary evidence that the application filed in Ecuador constituted an act of unfair competition and bad faith.

Decision

The Ecuadorian IP Office, through Resolution OCDI-2025-167, overturned the first-instance decision, accepted the opposition filed by Phusion Projects and denied the registration of the GOLOKO trademark.
The main arguments for finding bad faith and unfair competition on the part of the applicant were as follows:

  • Food For Life intended to compete in the Ecuadorian market with a mark that could be confused with an already registered trademark; and
  • Food For Life, as a distributor of Phusion Projects in Peru, was aware of FOUR LOKO’s market penetration and recognition.
  • Food For Life intended to use this knowledge to its advantage by registering a confusingly similar mark.

Comment

With this resolution, the Ecuadorian IP Office set a groundbreaking precedent for the protection of trademarks which, due to their notoriety and market positioning resulting from their owners’ advertising efforts, are attractive to competitors seeking to obtain unfair benefits.

The rejection of trademark registrations on the ground of bad faith and unfair competition is an essential mechanism to ensure fairness in the market and protect IP rights. In cases where there is a distribution agreement between the applicant and the opponent, the evaluation of the application becomes even more crucial, as prior agreements between the parties play a significant role in determining the legitimacy of the registration. Companies and distributors must act transparently under commercial contracts
and intellectual property laws to avoid conflicts and ensure proper market competition.

 

Andrea Miño
Associated in CorralRosales
andrea@corralrosales.com 

MINISTERIAL AGREEMENT MDT-2025-053 REFORMS TO EMPLOYER’S OBLIGATIONS CONTROL AND INSPECTION PROCEDURES

 

On May 15, 2025, the “Ministerial Agreement MDT-2025-053 (hereinafter the “Agreement”)” was published in the fourth supplement of the Official Registry No. 39, it amends Ministerial Agreement MDT-2023-140 “General Rules Applicable to the Control of Employer’s Obligations and Inspection Procedures”. We highlight the following:

a) The Ministry of Labor; through the Single Labor System (hereinafter “SUT”); will generate a HASH code that will act as a digital fingerprint for any document that’s been registered, reported and/or approved in the SUT, in order to validate its authenticity.

 

b) Employers have 1 month from the beginning of the employment relationship, to register the employees’ required data.

 

c) Employers are required to keep in physical and/or digital format any document that’s has to be registered, approved and reported to the Ministry of Labor, in order to present them to the authorities when required.

 

d) Employers will have 15 days to complete the legalization process of termination minutes, which includes: (i) generating the termination minutes in the SUT, (ii) signing the document, (iii) making the payment, (iv) registering both the certificate and the payment in the system.

 

e) In the event that the former employees cannot be contacted or refuse to receive the settlement document, the employers will have 15 additional days to make the payment in the SUT.

 

f) Once the Internal Labor Regulations (RIT) are approved, employers will have 15 days to download the text and the resolution of approval, since after this period they will be deleted from the system.

 

g) Employers must deliver to their employees or former employees; either in original or as a certified copy; the documents derived from the contractual relationship (contracts, modification agreements, termination minutes, payment slips, among others).

 

h) Until May 2026, employers will be able to download in PDF the documents derived from the obligations registered, approved or reported in the SUT. This information will be automatically deleted once the established deadlines have been met.

 

Employers will be solely responsible for maintaining the information.

The Agreement stipulates that the corresponding ministry offices must take the necessary steps to update the SUT, as well as socialize the public on the use of the HASH code.

 

 

 

Edmundo Ramos, Socio en CorralRosales
eramos@corralrosales.com
+593 2 2544144

 

María Victoria Beltrán, Asociada Senior en CorralRosales
mbeltran@corralrosales.com
+593 2 2544144

 

© CORRALROSALES 2024
NOTA: EL texto anterior ha sido elaborado con fines informativos. CorralRosales no es responsable de ninguna pérdida o daño ocasionado como consecuencia de haberse actuado o dejado de actuar en base a la información contenida en este documento. Cualquier situación determinada adicional requiere la opinión y concepto específico de la firma.

CORRALROSALES

THE LIST OF SPECIAL TAXPAYERS AND WITHHOLDING AGENTS HAS BEEN UPDATED

 

Through Resolutions NAC-DGERCGC25-00000010 and NAC-DGERCGC25-00000011, the Internal Revenue Service (SRI) updated the lists of taxpayers designated as withholding agents and special taxpayers, respectively.

Taxpayers who have been included under either of these classifications must comply with the corresponding formal duties and tax obligations in accordance with the assigned status, starting June 1, 2025, and for as long as they retain such status.

Both taxpayers included and those excluded from the aforementioned categories are required to update their invoicing systems to reflect their new status by June 13, 2025.

 

 

Andrea Moya, Socia en CorralRosales
amoya@corralrosales.com
+593 2 2544144

© CORRALROSALES 2024
NOTA: EL texto anterior ha sido elaborado con fines informativos. CorralRosales no es responsable de ninguna pérdida o daño ocasionado como consecuencia de haberse actuado o dejado de actuar en base a la información contenida en este documento. Cualquier situación determinada adicional requiere la opinión y concepto específico de la firma.

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THE MINISTRY OF ENERGY AND MINES ISSUED THE GUIDELINES FOR THE LOADING, PACKAGING, TRANSPORTATION, AND UNLOADING OF COPPER MINERAL CONCENTRATE FROM MEDIUM-SCALE AND LARGE-SCALE MINING OPERATIONS

On May 19, 2025, through Ministerial Agreement No. MEM-MEM-2025-0012-AM, the Minister of the Ministry of Energy and Mines (“MEM”) issued the Guidelines for the Loading, Packaging, Transportation, and Unloading of Copper Mineral Concentrate from Medium-Scale and Large-Scale Mining Operations (hereinafter, the “Guidelines”).

 

The purpose of the Guidelines is to ensure comprehensive safety, environmental protection, and traceability in the handling of copper mineral concentrate, from mine to the final destination. Compliance is mandatory for all holders of mining rights under the medium- and large-scale mining regimes. The Guidelines apply to all stages of the process, including the loading of concentrate at mining facilities, packaging, transportation by any authorized means (road, rail, among others), and unloading at ports or final destination facilities.

 

One key provision of the Guidelines is the mandatory use of hermetically sealed containers that meet structural safety and tamper-proof sealing standards. These containers must be dry, clean, and properly certified to prevent any type of leakage. The Guidelines also explicitly prohibit intermediate transfers of concentrate at ports, except in exceptional cases for official sampling by competent authorities.

 

Cargo generators—that is, mining titleholders responsible for transporting the concentrate—must submit a technical transportation and unloading plan, which will be reviewed and approved by the Competent Administrative Unit of the MEM. Additionally, they are required to implement a real-time monitoring system to ensure visibility, traceability, and transparency of concentrate transportation, and to provide regulatory authorities with access to this information.

 

The MEM will oversee compliance with these regulations through its Zonal Coordinations, while the Mining Regulation and Control Agency will be responsible for conducting regular technical inspections, issuing compliance reports, and imposing sanctions in the event of non-compliance.

 

Cargo generators are also required to develop and implement an annual training plan on the technical and environmental handling of the concentrate, which must be submitted to the relevant authority by January 31 of each year.

 

The Guidelines also establish a sanctioning framework for non-compliance. Sanctions may include monetary penalties or the immediate suspension of operations in cases posing serious risks to health, the environment, or infrastructure. In all cases, sanctioning procedures must observe due process, and the guarantees established in the Constitution and applicable laws.

 

Furthermore, mining titleholders who are in the production phase and are transporting concentrate as of the publication date of the Guidelines will have a maximum period of 12 months to transition to hermetically sealed transportation systems.

 

Carlos Torres, Senior Associate at CorralRosales
ctorres@corralrosales.com
+593 2 2544144

 

© CORRALROSALES 2025
DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm in Quito/Guayaquil, Ecuador.

CORRALROSALES

ORGANIC AMENDMENT LAW ON DISCRIMINATION IN THE WORKPLACE

On May 14, 2025, the “Organic Law on Amendments Related to Age Discrimination in the Work Environment” (hereinafter the “Law”) was published in the seventh supplement of Official Register No. 38. We highlight the following:

  • The Law establishes that employers must provide training to employees to promote a better working environment, preventing and eradicating harassment, violence, and discrimination based on age.

This training must be at least 10 hours long, and employers must report compliance to the Ministry of Labor using the established procedures and channels.

 

  • Employers with 25 or more employees must include at least one employee over the age of 40 in their payroll.

Failure to comply with this obligation may result in a daily fine of USD 10 to USD 20.

  • If job applicants believe they are being discriminated against based on age, they may request a formal and reasonable response explaining the decision not to hire them.

 

  • Prohibited Practices Under the Law:

a. Discrimination, harassment, and violence based on age.

b. Including age restrictions in job advertisements.

c. Requiring private health, life, or critical illness insurance policies prior to employment.

d. Imposing age limits in training programs, promotions, or any situation that would result in improved employment conditions.

e. Terminating employment relationships based on age or by means of harassment or violence intended to induce resignation.

f.In institutions of higher education, requiring professors to retire, reduce their teaching hours, or change functions based on age.

Note: Before the publication of this Law, the Constitutional Court declared certain articles unconstitutional, prompting a presidential veto of the bill. Nevertheless, the National Assembly ordered its publication. The Law is currently in force.

 

We will inform you of any future developments.

 

Edmundo Ramos, Socio en CorralRosales
eramos@corralrosales.com
+593 2 2544144

 

María Victoria Beltrán, Asociada Senior en CorralRosales
mbeltran@corralrosales.com
+593 2 2544144

 

© CORRALROSALES 2024
NOTA: EL texto anterior ha sido elaborado con fines informativos. CorralRosales no es responsable de ninguna pérdida o daño ocasionado como consecuencia de haberse actuado o dejado de actuar en base a la información contenida en este documento. Cualquier situación determinada adicional requiere la opinión y concepto específico de la firma.

CORRALROSALES

ISD TAX RETURN FOR PAYMENTS ABROAD MADE THROUGH CREDIT AND DEBIT CARDS

 

Trough Resolution NAC-DGERCGC25-00000009, the Tax Authority amended the provisions related to the Outflow Tax (ISD) applicable to payments abroad made through the use of credit cards.

Taxpayers who exceed the annual exemption threshold (USD 5,188.26) for the use of credit or debit cards for purchases or cash withdrawals abroad, and who have not been subject to ISD withholding, must file and pay the tax during the month of April of the following year, based on the ninth digit of their tax ID (RUC). Prior to this amendment, such tax filings were required on a monthly cumulative basis.

Taxable transactions corresponding to the year 2025 must be declared and paid in 2026. Taxpayers who have not filed ISD for taxable operations exceeding the annual exemption threshold for the years 2022, 2023, and 2024 must pay the accrued tax on an annual cumulative basis using the multiple payment form by June 30, 2025. Once this payment is made, taxpayers will no longer be required to file cumulative annual declarations for those periods.

 

 

 

Andrea Moya, Socia en CorralRosales
amoya@corralrosales.com
+593 2 2544144

© CORRALROSALES 2024
NOTA: EL texto anterior ha sido elaborado con fines informativos. CorralRosales no es responsable de ninguna pérdida o daño ocasionado como consecuencia de haberse actuado o dejado de actuar en base a la información contenida en este documento. Cualquier situación determinada adicional requiere la opinión y concepto específico de la firma.

CORRALROSALES

MANDATORY YELLOW FEVER VACCINATION REQUIREMENT FOR ENTRY INTO ECUADOR

The Ministry of Public Health (MSP), through memorandum No. MSP-SVPCS-2025-1061-M dated April 29, 2025, has established a mandatory health requirement for Yellow Fever vaccination for entry into the country.

  1. Requirements

Starting Monday, May 12, 2025, presentation of the International Certificate of Vaccination against Yellow Fever will be mandatory in the following cases:

  • All travelers who are nationals or residents of Colombia, Peru, Bolivia, or Brazil (regardless of the length of stay).
  • Travelers of other nationalities who have stayed more than 10 days in any of these countries.
  • Ecuadorian citizens returning after visiting these countries must present the certificate or will be vaccinated upon entry and required to remain under home observation for 10 days.
  1. Important Considerations:
  • The certificate may be physical or digital.
  • It will be required at boarding points and may also be requested again upon entry into the country.
  • Persons over 60 years of age are exempt for clinical reasons.
  • The vaccine provides lifetime immunity with a single dose, effective 10 days after administration.
  1. Recommendations for Passenger Transport Companies:

It is recommended to establish pre-boarding controls and to notify passengers in a timely manner. Non-compliance may result in delays or entry restrictions.

 

Xavier Rosales, Partner at CorralRosales
xrosales@corralrosales.com
+593 2 2544144

 

© CORRALROSALES 2025
DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm in Quito/Guayaquil, Ecuador.

CORRALROSALES

AMENDMENTS TO THE REGULATIONS TO THE LAW ON PUBLIC PROCUREMENT

On April 11, 2025, Executive Decree No. 595 (the “Decree”) was issued, amending the Regulations to the Law on Public Procurement (“RGLOSNCP”). The Decree was published in Official Gazette Supplement No. 19 on April 14, 2025.

According to Article 3 of the Law on Public Procurement (“LOSNCP”), when public contracts are financed by multilateral credit organizations of which Ecuador is a member, international cooperation organizations, or through government-to-government financing, these contracts will primarily be governed by the terms of the respective contracts and financing agreements. The LOSNCP will apply secondarily.

Article 2 of the RGLOSNCP provides that the financing of these contracts may be either total or partial. The Decree amends this article to clarify that “partial financing” occurs when the foreign financing entity covers at least 51% of the total contract value, and the funds are directly allocated to the contract.

Additionally, the Decree requires the National Public Procurement Service to submit, by May 8, 2025, to the General Comptroller’s Office, all procedures carried out with the participation of an intermediary under Article 3 of the LOSNCP, for oversight purposes.

 

 

Hugo García Larriva, Socio en CorralRosales
hgarcia@corralrosales.com
+593 2 2567676

 

Mario Fernández, Asociado en CorralRosales
mfernandez@corralrosales.com
+593 2 2544144

© CORRALROSALES 2024
NOTA: EL texto anterior ha sido elaborado con fines informativos. CorralRosales no es responsable de ninguna pérdida o daño ocasionado como consecuencia de haberse actuado o dejado de actuar en base a la información contenida en este documento. Cualquier situación determinada adicional requiere la opinión y concepto específico de la firma en Quito / Guayaquil, Ecuador.

CORRALROSALES