Daniel R Zuccherino August 18 2008 Amendment to Consumer Protection Law and its Effect on IP Rights Obligado & Cia | Intellectual Property - Argentina Daniel R Zuccherino Intellectual Property BackgroundAmendmentTrademark Owner’s LiabilityRecent Court Decision Concept of ‘Supplier’BackgroundThe Consumer Protection Law (Law 22,240) was originally enacted in 1993. It was the first complete piece of legislation in Argentina concerning consumer protection. The Consumer Protection Law is a public policy, which means that parties to a contract may not derogate from its provisions.AmendmentThe Consumer Protection Law was amended by Law 26,361 on March 12 2008. The amendment broadens the scope of application of the Consumer Protection Law by considerably expanding the concept of ‘consumer’ and modifying the scope of the so-called ‘consumption relationship’.The Consumer Protection Law applies only if the consumption relationship can be verified; otherwise, a different law (eg, commercial law or civil law) applies. As regards the concept of ‘consumer’, its expansion is based on three new elements: irrelevance of whether consideration is paid as a factor in establishing a consumption relationship (eg, the law also applies in cases where gifts are made); inclusion of the end acquirer or user who is not party to the consumption relationship; and inclusion of persons exposed to the consumption relationship (ie, ‘bystanders’).Trademark Owner’s LiabilityPursuant to both the previous and new laws, a trademark owner is liable if its activity falls within the scope of what the law calls ‘supplier’ or within the case set forth in Section 40 of the Consumer Protection Law (ie, the joint and several liability of the party providing the trademark in the case of injuries to consumers resulting from a defect in or risk presented by the product provided or service rendered). Recent Court Decision In a recent judgment the court ordered IVESS, the controlling entity of soda-siphon manufacturers, to pay damages jointly with the manufacturer for injuries caused to a consumer resulting from the explosion of two soda siphons. Although IVESS explained that it did not manufacture or market the products, the court found it to be liable under Section 40 of the Consumer Protection Law, which expressly refers to anyone providing the trademark for the product or service, regardless of its status as manufacturer. Furthermore, the court held that: “the fact that Soda Profesional SA [the manufacturing company] was expelled from the entity [IVESS] does not exempt the latter from its liability, since in any case the entity should have taken all necessary measures to prevent the improper use of the trademark from injuring consumer confidence or, at the least, it should have properly advertised its disengagement from the manufacturer.”The court determined that in order to be relieved of liability, a trademark owner must take all necessary measures to prevent improper use of the trademark by a third party, which could injure consumer confidence, or at the least properly to advertise the termination of the trademark use authorization.Concept of ‘Supplier’Under the amended law, the concept of ‘supplier’ has been expanded by virtue of Section 2 to include trademark use authorization to a third party. The amended Section 2 uses the expression ‘trademark grant’.It must be considered how judges will interpret the expression ‘trademark grant’, since it may be construed as including (i) only trademark licence agreements, or (ii) any situation containing an express or implied authorization that allows the use of a trademark. As regards this issue, the broad criterion adopted by the IVESS judgment should be taken into account.Section 2 also refers to ‘creation activities’. In this sense, it is important to consider how the position of a copyright owner, software creator or inventor will be judicially interpreted.The new legal system has clearly broadened the concept of ‘supplier’. Cases where such suppliers may be found liable are not restricted to cases of defects in or risks presented by products, but also extend, for example, to issues relating to the duty of information and advertising activities. IP rights owners must be particularly cautious as judges begin to interpret and enforce the amended law.For further information on this topic please contact Daniel R Zuccherino at Obligado & Cia by telephone (+54 11 4114 1100) or by fax (+54 11 4311 5675) or by email ([email protected]).