Risky regulation in Ecuador

The Ecuatorian PTO -the IEPI- and the Ecuatorian government have alarmed the Latin American IP community with recent decisions regarding IP procedures in this country. Two regulatory changes affecting the domestic PTO seem to reflect a change in perspective from governmental authorities on Intellectual Property issues, and are worrying trends for investors and IP attorneys.

At B&R Latin America, while being respectful of the decisions that each domestic PTO takes in order to protect IP in their countries, we firmly reject any decision that may result damaging to a country’s innovation and research market. Indeed, we consider that Ecuador may be taking steps in a way that is neither convenient nor smart for their economic development.

Higher official fees for IP procedures.

As from October of 2012, most official fees for IP procedures in Ecuador were raised. In some cases, fees had as much as a tenfold increase.

However, as explained below, this increase in fees won’t affect all applicants, and will be specially damaging for foreign corporations and multinational companies. This is especially worrying since over 99% of all patent applications and nearly 50% of all other IP applications in Ecuador are from non-resident applicants. Furthermore, given the small amount of R+D that is conducted in Ecuador (and in Latin America as a whole), increased fees will created an entry barrier for R+D big players that will slow down technology transfer to the country.

The IEPI states that the increased fees aim at “Providing equity to the fees that are currently charged in Ecuador and those charged worldwide”. However, for example, the new fees for annuities for patents go as high as:

-2371% or 23 times higher than annuities in Colombia (From the 1^st to the 20^th year)

-1417% or 14 times higher than annuities in the United States (From the 1^st to the 20^th year)

-505% or 5 times higher than annuities before the European Patent Office (From the 1^st to the 20^th year)

Therefore, there is no equity in the new schedule of fees of the Ecuadorian PTO, and they become real entry barriers for the Ecuadorian IP market.

These are the old and the new fees for the most common procedures:

Patents

Trademarks

Industrial Designs

Plant-breeders rights

The Ecuatorian PTO has furthermore included a discount of up to 90% on these official fees for the following categories of applicants:

1. Small and median-sized companies (Mipymes)

2. Universities

3. Independent inventors

4. Public institutions

5. Small and median-sized farmers

6. Cooperative companies

Therefore, the applicants that will really be damaged will really be foreign companies, multinational corporations and big Ecuadorian companies. Given the fact that the research and development (R+D) that is required for a steady flow of innovation and patenting is not only expensive but also time-consuming, it is mostly big corporations and foreign companies the drivers of the patent (and other IP) applications in Latin American countries. The result will probably be a dramatic drop in IP applications in Ecuador, and that large foreign companies will search for other attractive markets with lower entry barriers.

However, this doesn’t mean that you should not file patent applications in Ecuador. The protection of the patent system is still highly valuable and not patenting could result in even higher losses than the official fees charged by the IEPI. Despite the existence of an entry barrier, the Ecuadorian IP market remains highly valuable and profitable.

Restructuring of the Ecuadorian PTO

Besides the increase in Official Fees, the Ecuadorian government has made profound changes to the Instituto Ecuatoriano para la Propiedad Intelectual, IEPI. As from October the 19^th and through Executive Decree No. 1322, Ecuador’s president, Rafael Correa, has ordered:

-That the Ecuadorian PTO, the IEPI, will now be attached to the National Secretary for Higher Education, Science, Technology and Innovation –SENECYT-. In practice, this means that the PTO will no longer be an independent entity, and its main goal of protection of IP rights will now be second to educational and scientific-development goals. However, this approach is misguided, since adequate protection (neither too much nor too little) of IP rights is necessary for “education, science and innovation”. Au contraire, a non-independent IP Office will likely result in isolation of the country from the international R+D and innovation flows and distrust in the decisions of the PTO.

-Finally, the Directive Board of the PTO was modified.  The board will now be integrated by representatives from the presidency and by the ministries of Agriculture, Culture, Industries, Environment, and Health; and by the Secretary General for Planning and Development. The President of the IEPI will now have the title of “Executive Director” and will serve as secretary of the Directive Board, without the right to vote on the board’s decisions. Once again, this amounts to reduced independency of the PTO and more control from government authorities over its decisions.

The right problem, the wrong solution.

It is no secret that there are problems with the patent system on a worldwide scale, and that the excesses of the patent system can result highly damaging for a country’s development. However, establishing high entry barriers and isolating the country from the world IP market is clearly not the solution for solving these problems.

As a law firm with a cross-border practice that holds the Ecuadorian IP market as very valuable for investors in Latin America, we expect the IEPI to take a more reasonable approach in the future. Furthermore, we expect the IEPI to remain impartial and fair in its decisions.

For more information on Ecuatorian IP, follow this link to WIPO’s country statistics for Ecuador: http://www.wipo.int/ipstats/en/statistics/country_profile/countries/ec.html

PTO to PTO Cooperation

Latin American PTOs have spent several years working on two major cooperation agreements, designed to not only speed up procedures but also to increase the reliability of information and to avoid duplicated procedures, especially in patent examinations. The two projects, known as PROSUR and CADOPAT cover almost the entire continent, and have been the central topic of several high profile meetings between the heads of the Latin American PTOs.

PROSUR – Regional Cooperation System on Industrial Property

Nine South American countries belong to this project; namely: Argentina, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, Suriname and Uruguay. The system has been active since August 2011, and its main goal is to become a platform for sharing information from patent examinations between PTOs, therefore reducing the effort of examining the same patent application in several countries.

The project is aimed at easing procedures for creators, entrepreneurs and IP attorneys; and is being funded by the Inter-American Development Bank (IDB). Chile’s PTO, the INAPI, has assumed the presidency of the project. The success or failure of the project is still not clear, since the effects of the agreement will really be visible within the PTOs.

In the earlier stages of this project, possibilities for a regional trademark registry and deeper regional integration of procedures have been discussed. However, these proposals have not been very successful since a regional trademark registry without an integrated regional market would be of little use and could even be unadvisable, since the trademark registry would no longer reflect the reality of the marketplaces.

The project doesn’t look for legal harmonization, but it does create a common platform for systems integration. WIPO has agreed to act as a supervisor of the project, and the experience of the WIPO CASE and the e-PEC (From Brazil’s PTO) platforms is being used for the project.

CADOPAT – Support System for the Management of Patent Applications

This is a web portal created by the Mexican PTO, the Mexican Institute for Industrial Property. It basically shares the information from patent examinations with more than 9 countries from Central America, the Caribbean and Colombia. The Mexican PTO sends its information to Recipient Offices; this means that the information is shared in one direction only, unlike the PROSUR project. Indeed, the CADOPAT system is a unilateral project from the Mexican PTO. It also shares information on searches and other procedures but it is clear that this system has a lot of room for growth.

Current members of the CADOPAT system include Costa Rica, El Salvador, Guatemala, Honduras, Panama, Nicaragua, Dominican Republic, Cuba, Colombia.

WIPO CASE – The Centralized Access to Search and Examination system

The WIPO Centralized Access to Search and Examination (WIPO CASE) system is designed to facilitate the sharing of confidential search and examination information between IP offices, and to help enhance the quality and efficiency of search and examination and minimize unnecessary duplication of work. Using this platform, patent examiners from one group of participating offices can access the collection of patent search and examination reports shared by the office group. According to the Canadian PTO, the launch of the CASE is a significant advancement towards greater cooperation between IP offices in sharing the results of examination work. This will help reduce the time spent on processing duplicate applications filed in multiple offices. The duplication of work is a contributing factor to the growing patent backlog.

The platform is intended for use by groups of IP offices that mutually recognize their search and examination work. Patent documents and data shared though WIPO-CASE can either be hosted by WIPO or the digital libraries of national offices. Initially developed to support the work sharing efforts of the IP offices of Australia, Canada and the UK, WIPO-CASE is now being used or evaluated by other regional groupings of IP offices.

e-PEC – Electronic Platform for Collaborative Examination

Argentina and Brazil have created the e-PEC, which is a trilingual platform allowing the PTOs to exchange information on identical patent applications. The e-PEC aims at enabling patent examiners to perform collaborative examination of patent applications, without the need for physical proximity between the examiners. Thus, the system offers efficiency and quality technical examination which is made in all national institutes. However, to each country remains the ultimate decision on whether or not to grant the patent. Other countries that currently use the e-PEC platform include Chile, Ecuador, Colombia, Paraguay, Uruguay, Surinam and Peru.

Source: Wikimedia Commons

The Office of the United States Trade Representative has released it’s 2012 Special 301 Report.

This document is an annual review of the state of intellectual property rights, protection and enforcement in trading partners around the world. This report is a valuable guide to understand current issues in IP Law and to highlight positive and negative trends on emerging markets.

The report creates a list of priority issues on IP. This year’s  report has mentioned Capacity Building Efforts, focusing on the lack of prosecution and conviction on the ground of IP infringements. The ever growing trends in Trademark Counterfeiting and Copyright Piracy, warning that the markets of pirated and counterfeit goods will soon surpass the sales volume of the licit vendors, and commenting on new ways for transportation and selling of counterfeit products such as the separate shipping of labels and packaging in order to evade enforcement efforts. Piracy over the internet, demanding stronger actions to strengthen legal regimes and enhance enforcement in order to respond to the increased availability of broadband internet connections and the piracy in new mobile devices. The violation of trade secrets and forced technology transfer, expressing the dangers of trade-distortive policies designed to promote ‘indigenous innovation’ through the lack of enforcement of IP rights and the creating of market barriers based on IP disclosures laws. Finally, the report also highlights the government use of software, trademarks and DNS, implementation of WTO TRIPS agreements, WIPO treaties and issues on IP and health policy.

However, this report is notorious for it’s Country Reports, in which US trading partners are sorted into the “Priority Watch List” and the “Watch List”, depending on their progress on IP issues and the vulnerability for US’s IP rights owners in their markets.

As to Latin American countries, Argentina, Chile and Venezuela were listed on the Priority Watch List, alongside Ukraine, Thailand, China and India. Concerns on these countries include inefficiency in Argentina’s judicial system, lack of protection against unfair commercial use and growing copyright piracy on the internet; Chile’s inefficient system for addressing patent issues for pharmaceutical products, unfair commercial use, and to fulfill it’s commitments  under the US-Chile FTA; and Venezuela’s withdrawal from the Andean Community in 2006, and widespread piracy and counterfeiting.

On the watch list, Bolivia, Brazil, Colombia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Mexico and Peru are said to have progressed in protecting IP Rights, but issues on enforcement and internet piracy remain largely neglected.

Read the Full Report here.

Do you need to know how to issue POAs for your legal representation in trademark and patent issues in Latin American countries?

We have created a ABC Guide to POAs for Latin American Countries for you.

Learn about the requirements and procedures for a Power of Attorney in:

• Argentina

• Bolivia

• Chile

• Colombia

• Ecuador

• Mexico

• Panama

• Peru

• Venezuela

This is a summary of the current procedures for POAs:

Whenever you get one of our legal products, you will get special instructions for your POA, this Guide is intended for informational purposes only.

In Bogotá, Colombia march 16, 2012 the Culture ministers of the Andean Community countries agreed to start the Andean Plan for the Development of Cultural Industries 2012-2015 and gave precise guidelines to advance the proper management, enhancement and social appropriation of the Intangible Cultural material and Heritage.

These decisions were adopted at the First Meeting of the Andean Council of Ministers of Culture and Cultures, held on Friday March 16in Bogota, with the participation of the Ministers of Culture of Colombia, Ecuador and Peru, as well as the vice Minister Intercultural of the Ministry of Culture of Bolivia and vice Minister of Ecuador Heritage Coordinator.

http://www.comunidadandina.org/prensa/notas/np19-3-12.htm

The WIPO: International Patent Filings Set New Record in 2011

The past days (March, 5, 2012) was published by the World Intellectual Property Organization (WIPO) its annual audit of Patent Cooperation Treaty (PCT) filings from the last year. The principal date gave with this publication it is related with the growth of the volume of applications filed in the last year, that represents an increase of 10.7% over 2010 and the most important growth rate since 2005. “International patent filings under the WIPO-administered Patent Cooperation Treaty (PCT) set a new record in 2011 with 181,900 applications – a growth of 10.7“

The fastest growth in PCT applications are from China (+33.4%), Japan (+21%), Canada (+8.3%), the Republic of Korea (+8%) and the US (+8%). The United States remained the top PCT filer with 48,596 applications, but also there are a significant increases in applications originating from Japan and China (Japan and China filed 38,888 and 16,406 applications in 2011, respectively)

In Latin America the leader is Brazil with a 17.2% growth, but also have an important growth, countries like Mexico and Chile. In the next Graphic, we can see the international applications in latin American countries.

INTERNATIONAL APPLICATIONS BY LATIN AMERICAN COUNTRIES
Source: B&R Latina::Trademarks & Patents, elaborated with WIPO information

The Patent Cooperation Treaty (PCT), it is an international system for seeking patents on a global scale. This system was adopted through the subscription of a treaty done at Washington on June 19 of 1970 . Actually 144 countries belong to the union according to the WIPO publication of the World Intellectual Property Indicators . Between these States, we can found different Latin-American countries: like Colombia, Chile, Brazil, Cuba, Dominican Republic, Peru, Ecuador, Mexico, and Nicaragua.

The studied of the statistics available in the Wipos website can us say that since 2005, the sum of the number of PCT applications filed by this developing countries and transition economies has been increasing annually.