Q&A: key IP issues affecting licensing agreements in Spain

Intellectual property issues

Is your jurisdiction party to the Paris Convention for the Protection of Industrial Property? The Patent Cooperation Treaty (PCT)? The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs)?

Yes. In detail:

• Spain signed the Paris Convention for the Protection of Industrial Property 1883 on 20 March 1883; ratification took place on 6 June 1884 and it entered into force in Spain on 7 July 1884;
• Spain became bound by the Patent Cooperation Treaty 1970 on 16 November 1989; and
• the Agreement on Trade-Related Aspects of Intellectual Property Rights 1994 has been in force since 1 January 1995 in Spain.

Can the licensee be contractually prohibited from contesting the validity of a foreign licensor’s intellectual property rights or registrations in your jurisdiction?

The licensee can contractually agree not to contest the validity of a foreign licensor’s intellectual property rights (IPRs) or registrations in Spain while the contract is in force. However, this could give rise to antitrust issues. To achieve a similar result, it might be advisable to draft it as a right of the licensor to cancel the licence should the licensee effectively contest the validity of the licensor’s IPRs.

We are not aware of any case where a clause such as the one in the question has had to be enforced in our jurisdiction.

What is the effect of the invalidity or expiry of registration of an intellectual property right on a related licence agreement in your jurisdiction? If the licence remains in effect, can royalties continue to be levied? If the licence does not remain in effect, can the licensee freely compete?

Following the European Court of Justice's decision of 7 July 2016 on the C-567/14 (Genentech) case, the invalidity or expiration of an IPR does not affect the validity of a licence agreement. According to this decision, provided that licensee is able to terminate the agreement by giving reasonable notice, an IPR licensing agreement will still be in force regardless of the validity of the right.

If the licence agreement involves additional rights, the contract would remain effective in respect of said additional rights, but the royalties would have to be renegotiated and previous amounts would not be refunded (as the right that has been invalidated or has expired was in force at the time) unless otherwise agreed.

Last but not least, should the licence expire for any of the circumstances referred to above, the licensee and third parties would freely use the relevant rights without paying any royalties.

Is an original registration or evidence of use in the jurisdiction of origin, or any other requirements unique to foreigners, necessary prior to the registration of intellectual property in your jurisdiction?

Foreign nationals can freely apply for the registration of trademarks, patents, utility models, designs, plant varieties and copyrights. There are no requirements unique to foreign nationals in Spain. However, it should be noted that since Paris Convention priority applies in Spain, those claiming such priority must provide evidence of their original right.

Can unregistered trademarks, or other intellectual property rights that are not registered, be licensed in your jurisdiction?

Unregistered IPRs can be licensed. However, unregistered trademarks are alien to the Spanish Trademark Act, where acquisition of rights by registration is the general rule. Copyright and unregistered designs and know-how are protected without registration. In any event, as the licensee’s position would be somewhat weak, the contract should contain some information on warranties as to the peaceful enjoyment of the rights.

Are there particular requirements in your jurisdiction to take a security interest in intellectual property?

The Spanish Chattel Mortgage and Non-Possessory Pledge Act of 16 December 1954 establishes the conditions to be met to take out a chattel mortgage (not a security interest) over IPRs; in particular, in Chapter VI of the said Act.

First, article 45 sets object and subject limitations. The ability to create a chattel mortgage is only provided to the owner of the rights and to licensees enabled to assign their position as licensee of the IPRs at issue. Chattel mortgages cannot be granted over IPRs that are recordable but not registered, excluding therefore non-registered industrial designs, non-transferable rights, rights lacking patrimonial value and, in general, those not subject to individual appropriation. 

There are two main requirements to be met to take a chattel mortgage on IPRs in Spain:

• its constitution by means of a public deed; and
• its registration before section 4 of the Movable Assets Registry.

For any pledge to be effective regarding third parties in Spain, it must be entered in the aforementioned Registry.Regarding the constitution of a public deed, this shall contain, in addition to the requirements demanded to any chattel mortgage, as per article 47:

• nature, kind and any other characteristics of the rights affected;
• date and number of registration, renewal, reinstatement or extension of the IPR in its correspondent register;
• licences, authorisations or concessions granted by its owner to any third party over the right; and
• proof of payment of the correspondent register fees and taxes fees, where applicable.

Requirements of the final two points above can be met with the file certificate to be issued by the Spanish Patent and Trademark Office (SPTO) or the Copyright Register.

Once the public deed is duly recorded before the Registry of Movable Goods, the registrar will automatically submit certification of its content to the SPTO or to the Copyright Register. Record of a chattel mortgage directly before the SPTO or the Copyright Register is simply not feasible unless it has first complied with the exposed procedure.

Can a foreign owner or licensor of intellectual property institute proceedings against a third party for infringement in your jurisdiction without joining the licensee from your jurisdiction as a party to the proceedings? Can an intellectual property licensee in your jurisdiction institute proceedings against an infringer of the licensed intellectual property without the consent of the owner or licensor? Can the licensee be contractually prohibited from doing so?

Generally, the owner or licensor of the IP can institute proceedings for infringement in Spain independently, without joining the licensee.

However, this could be adjusted via the conditions outlined in the licence agreement, in which the parties can provide that:

• both parties shall institute proceedings jointly;
• only the licensor shall institute proceedings; or
• the licensee shall be entitled to institute proceedings on its own. Actually, it is not required to register a license for an EU trademark for the licensee to be able to bring proceedings for infringement (Judgment of the Court of Justice of 4 February 2016, Hassan (C-163/15).

In fact, it is important to note the different perspectives of an exclusive licensee and a non-exclusive licensee.

Exclusive licensees of IPRs can freely institute proceedings for infringement unless otherwise provided in the licence agreement.

Non-exclusive licensees, however, would always require the owner’s prior consent. However, if the licensor is the only one entitled to institute proceedings and fails to do so following the request of the licensee, and by doing so causes harm to the licensee, the latter would be entitled to bring action against the third party that is infringing the IPR.

Can a trademark or service mark licensee in your jurisdiction sub-license use of the mark to a third party? If so, does the right to sub-license exist statutorily or must it be granted contractually? If it exists statutorily, can the licensee validly waive its right to sub-license?

The Trademark Act expressly indicates that a licensee cannot sub-license the use of a trademark or service mark to a third party unless the parties have expressly agreed to this in the licence agreement. Thus, the right to sub-license must be granted contractually.

If intellectual property in your jurisdiction is jointly owned, is each co-owner free to deal with that intellectual property as it wishes without the consent of the other co-owners? Are co-owners of intellectual property rights able to change this position in a contract?

Regarding the co-ownership of an exclusive right, it differs depending on the IPR in question. Although patents, trademarks and copyrights are regulated in three different legal instruments, there is a very similar regulatory framework for this specific topic.

On the one hand, the Trademark Act when dealing with the exclusive right as the subject matter of property rights says that a trademark right or application may belong pro indiviso to two or more persons. The resulting common property shall be governed by the terms of the agreement between the parties, failing that by the provisions of article 46.1 of Spanish Trademark Act, Law No. 17/2001 and, in the final instance, by the provisions of the Spanish Civil Code on common ownership of property.

The granting of licences and the independent use of the trademark by each participant shall be agreed in accordance with jus commune standards. Thus, each participant may take civil and criminal action on his or her own accord to protect a trademark but shall make appropriate notification to the other joint owners so that they may be a party to such action and contribute to the payment of the expenses incurred.

In the case of a transfer of a trademark or a share, a participant may exercise his or her right of prior purchase within a period of one month from the time when he or she was notified of the purpose and conditions for the implementation of the transfer. Where prior notification is not given or if a transfer is made in a manner different from the one indicated in such notification, a participant may exercise his or her right to withhold his or her share, within the same period from the time of publication of the recording of the transfer in the Register of Trademarks. Such absolute and unjustified opposition of a participant to the use of a trademark as might cause the trademark to be declared lapsed shall be deemed, for all purposes, to constitute renunciation of his or her right.

On the other hand, when dealing with patents, Spanish Patent Act, Law No. 24/2015, establishes some differences in relation to those stated in the Trademark Act. This Act states that each party acting alone may freely dispose of the portion corresponding to him or her, notifying the other joint owners that they can exercise the rights of first refusal and pre-emption. The right of first refusal can be exercised within two months from the sending of the notification, and the right of pre-emption shall be exercised within one month from the entry of the sale in the Patent Register.

Each owner can also exploit the invention after notifying the other joint owners, perform such acts as may be necessary to preserve the application or patent, bring civil or criminal proceedings against any third party infringing in any way the rights deriving from the jointly owned application or patent. This party bringing such action is obliged to notify the other joint owners of the action brought so that they may join in the action.

A licence to a third party for the exploitation of the invention must be granted jointly by all the joint owners, unless the court authorises one of them to do so for reasons of equity in view of the circumstances of the case.

Both jointly owned trademarks and patents are considered as a community of assets as regulated in the Civil Code. Article 400 of the Civil Code states that an agreement regarding the maintenance of these kinds of communities cannot exceed a 10-year term. Therefore, regardless of the terms legally granted to mentioned IPRs, any co-ownership agreement affecting such rights cannot surpass the 10-year duration, even though it might be renewed in order to cover the totality of the life of the right. Although this interpretation of the Civil Code has not been confirmed by the case law on trademark and patents, it has been acknowledged by the courts in other issues.

Last, the Copyright Act distinguishes between ‘works of joint authorship’ and ‘collective works’.

When regulating the works of joint authorship, the Copyright Act, Law No. 1/1996, affirms that those are the works obtained as the unitary result of the collaboration of two or more authors, which shall belong to all of them, in the proportions determined by them all. Any alteration of the work shall require the consent of all the co-authors. If there is a lack of agreement among the owners, the court of law shall decide. Every co-owner in this case may exploit their contribution separately insofar as the joint exploitation is not thereby prejudiced.

The Copyright Act distinguishes the above-mentioned from collective works, which are those created on the initiative and under the direction of an individual or legal person, who edits it and publishes it under his or her name, and where it consists of the combination of contributions by various authors whose personal contributions are so integrated in the single, autonomous creation for which they have been conceived that it is not possible to ascribe any one of them a separate right in the whole work so created.

In the absence of an agreement in this regard, the rights in the collective work shall vest in the person who publishes it and discloses it in his or her name.

Is your jurisdiction a ‘first to file’ or ‘first to invent’ jurisdiction? Can a foreign licensor license the use of an invention subject to a patent application but in respect of which the patent has not been issued in your jurisdiction?

Spain is a ‘first to file’ jurisdiction.

Patent applications are rights in themselves that can be subject to contractual operations, including licence agreements. However, in this case, the parties should be careful as regards the scope of the licence, warranties as to the suitability and the free exploitation of the invention.

Can the following be protected by patents in your jurisdiction: software; business processes or methods; living organisms?

Software could be protected by patents if and when it is part of a software-implemented invention. Software as such cannot be protected by patents but by copyrights and, eventually as part of trade secret.

Business processes or methods cannot be protected by patents as such, but as a method incorporated into an invention in order to implement same, they could be somewhat protected.

Living organisms can be protected by patents, but animal and plant varieties cannot be subject to a patent. Also, neither essentially biological processes to produce plants or animals, nor methods of surgical or therapeutic treatment of the human or animal body, nor the human body in the different stages of its constitution and development, nor a simple deoxyribonucleic acid (DNA) sequence with no indication of biological function can be protected by patents.

Is there specific legislation in your jurisdiction that governs trade secrets or know-how? If so, is there a legal definition of trade secrets or know-how? In either case, how are trade secrets and know-how treated by the courts?

Yes, indeed. Law 1/2019 of 20 February, on Trade Secrets, which transposes into Spanish law Directive (EU) 2016/943 of the European Parliament and of the Council on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure.

The law defines as trade secret any information or material contained in a document, including technological, scientific, industrial, commercial, organisational or financial knowledge that meets the following conditions:

• to be secret, meaning that, as a whole or in the precise configuration and assembly of its components is not generally known to, or easily accessible by, persons belonging to circles in which the type of information or knowledge in question is normally used;
• to have a business value, whether actual or potential, precisely because it is secret; and
• having been subject of reasonable measures by its owner to be maintained in secretive.

The treatment by the courts differs, as these cases are usually difficult to demonstrate because evidence is scarce.

Does the law allow a licensor to restrict disclosure or use of trade secrets and know-how by the licensee or third parties in your jurisdiction, both during and after the term of the licence agreement? Is there any distinction to be made with respect to improvements to which the licensee may have contributed?

Yes. It must be borne in mind that trade secrets and know-how can become part of the public domain during and after the term of the licence agreement. Under Law 1/2019 of 20 February, on Trade Secrets (Article 2), obtaining the information constituting the trade secret is legal when the discovery is either: (i) independent; (ii) the result of a process of observation or study of a product or object that is part of the public domain; (iii) the result of the exercise of the right of workers and its representatives to be informed and consulted; or (iv) the result of any other action that is made In accordance with fair commercial practices, including the transfer or assignment, and the contractual license of the trade secret. In the previous cases, the licensee would be free to disclose the same.

Improvements made by the licensee belong to same, and so restrictions on disclosure would not be allowed, to the extent that the licensor’s core trade secrets as such are not disclosed. Such a restriction could have an antitrust impact and should be avoided. However, the parties, under the freedom of contract, could agree on other terms (ie, the parties could regulate the acquisition by the licensor of the improvements by the licensee).

What constitutes copyright in your jurisdiction and how can it be protected?

Spain is an ‘author’s rights’ jurisdiction, which means that it is part of the European legal tradition that focuses both on exploitation rights and moral rights.

All literary, artistic, or scientific creations expressed in any medium are protected works under Spanish law, and they include:

• books, pamphlets, writings, addresses, lectures, judicial reports, and other works of the same nature;
• musical compositions with or without words;
• dramatic and dramatic-musical works, choreographies, mime and theatrical works in general;
• cinematographic works and any other audio-visual works;
• sculptures, drawings, paintings, engravings, lithographs, cartoons, and comics, as well as their preparatory work and any other physical work;
• projects, plans, models, and designs of architectural and engineering work;
• graphs, maps, and pictures relating to topography, geography, and science in general;
• photographs and analogous works;
• computer programs;
• derived works (translations and adaptations, revisions, updates and notes, compilations, abstracts and extracts, musical arrangements, and any other transformation of a work);
• databases; and
• collections of works (anthologies).

Cinematographic works, other audio-visual works and computer programs are subject to a slightly different treatment from other types of work.

Original works are granted protection by the mere act of creation, regardless of the nationality of the author or the place of publication. Registration is not required and does not constitute rights; it only creates evidence as to the existence, content, and ownership of the work at a certain time. This evidence can be contested at any time by registered and unregistered works. Notarial deposits serve the same purpose and are used by rightsholders as well, but they lack the publicity factor of a public register.

Law stated date

Give the date on which the information above is accurate.

5 February 2021