/ Rodrigo Velasco: Summary of the most important last IP developments in Chile

May 14, 2013

Rodrigo Velasco S., IP director of Alessandri

1. Analysis of most relevant aspects of the Industrial Property Law related to trademarks

During 2012 a draft bill of a new Industrial Property Law, concluded by the National Institute of Industrial Property (INAPI) and the Ministry of Economy, was sent to the President for final revision. On April 29, 2013 the filing of the bill before the Senate took place. Approval by the National Congress is to be expected during 2013.

The bill includes new important institutions, such as trademark dilution, tridimensional and non-conventional trademarks, as well as the new possibility of cancelling trademarks due to non use and due to loss of distinctiveness.

a. The requirement of use of trademarks and cancellation on the grounds of non-use

Chile is one of the few countries in which there are no use requirements, not even for renewal purposes. This has been an ancient standard in our legislation in a way that Chilean trademark holders are not used to such use requirements.

The bill provides that any trademark registration shall expire if after a five year term counted as from the date of the registration, the trademark has not been the subject of a real and effective use within the country, by the owner or by a third party with his consent, to distinguish all or some of the products or services for which it was granted, or if such use has been suspended without interruption for the same period.

There are some exceptions accepted, such as (1) if the mark is being used or said use has been resumed when exercising the cancellation action; (2) if the holder of the mark proves that there are valid reasons based on the existence of obstacles to such use. The bill recognizes as valid reasons for non-use, circumstances arising independently of the will of the owner of the trademark, such as import restrictions or other government requirements for goods or services protected by the mark.

b. Cancellation of trademark registrations based on loss of distinctiveness

Cancellation will also be stated, either in whole or in part, if the owner of the trademark has caused or allowed it to become the common name of a product or service for which it is registered, in terms that in the course of business operations and in the general public use, the mark has lost its power or aptitude to distinguish the product or service to which it applies.

In return, the bill provides that, notwithstanding the above, it shall not be understood that the trademark holder has caused this transformation when has used in market the information that it is a registered trademark.

c. New protectable trademarks: tridimensional and non-conventional trademarks

Until date, signs that may be protected as trademarks must be able of graphic representation. In view of the above, besides word and figurative marks, sound marks may also be registered together with the corresponding pentagram. But there is a specific provision according to which the shape of goods or packages cannot be registered as trademarks.

The bill expressly mentions three-dimensional shapes as signs able to be registered as trademarks, as well as both smell and sound marks, without any requirement of graphical representation.

d. Protection against dilution of trademarks

The Chilean IP Law does not provide any specific provision for protection against trademark dilution; the word itself is even unknown throughout the text of the law. However, it can be said that at least some kind of protection against dilution is recognized when the law prohibits the registration of trademarks that may harm the interests of the owner of a well-known mark, or those that may lead to confusion or cause deception. But this is only an interpretation and certainly, in the best scenario, an indirect and implicit protection against dilution. But with regards to injunctive relief when trademark dilution occurs there is no special remedy in our law in force, but only provisions against trademark infringement.

Clearing all doubts and filling the gaps, the bill provides protection for trademarks against dilution in two ways: as prohibitions on registrations, and as injunctions against the unauthorized use of a mark in the market.

This new protection is provided to famous marks and therefore no linkage between products or services is required. In addition, the protection is sufficiently broad to encompass cases of “free riding”, since the provision prevents the registration of a mark when its use may cause likelihood of association or take “unfair advantage of the notoriety of the sign”.

As prohibition on registration, actual dilution is not required by the bill, but only likelihood of dilution. However, when dealing with injunctions against unauthorized use of a mark in the market, actual damage to a trademark is required, not merely potential.

2. TLT: Impacts after a year since its entry into force in Chile

In February 2012 came into force in Chile both the “Trademark Law Treaty” (TLT), approved by the Congress in 2010, and the Law 20,569 intended to standardize and improve the application process for trademarks and patents. The latter (herein called the “implementing law”) aimed to adapt Chilean legislation not only to the TLT but also to the “Patent Cooperation Treaty” (PCT), enacted in June 2009.

Some provisions included in the TLT have not been addressed by the implementing law. For instance, there is no regulation regarding errors incurred during the administrative proceedings, nor provisions referred to recordals of multiple trademark registrations. But the most disturbing point of this implementing law was the suppression of the authorization by a notary public as a formality of acts or contracts on industrial property rights. Since this matter is not included in the TLT, the amendment was criticized as unjustified by wide circles of experts.

Formalities required to POAs reflected different points of view. Although the TLT and the implementing law are consistent in not requiring any special formality to POAs, the National Institute of Industrial Property (INAPI) stated at the beginning, through decisions in administrative proceedings, that when the POA was granted by an entity, the authority of the signatory as the legal representative had to be demonstrated, usually through a certification issued by a notary public.

This last requirement was widely criticized because of its lack of support, until finally INAPI agreed to accept POAs without any other additional requirement, being sufficient the mention of the company’s name and its representative, as well as the corresponding signature.

Additionally, INAPI created a special registry where all POAs granted by patent or trademark holders must be recorded. This way, the applicants do not need to file the POA together with the trademark application, but only mentioning the recordal number of the POA.