An extract from The Intellectual Property Review, 9th Edition

Enforcement of rights

One of the most important innovations of the last amendment of the Industrial Property Law was the inclusion for the first time of the possibility to file civil actions for breaches of rights protected by the Industrial Property Law. In fact, the last two laws on industrial property, the first dating back to 1931, originally only established the possibility of filing criminal proceedings that proved to be ineffective for the type of problems arising from the field of industrial property. This happened in part as a result of the drafting of the legal provision as well as of the lack of interest and sophistication of the courts in dealing with these cases. The provisions on the matter were further weakened by the modification introduced by Law 19,039 of 1991 that imposed on the claimant the obligation to prove the breach itself and also the fraud incurred by the defendant, which unnecessarily hindered the possibility of an effective proceeding.

If these matters were less important in the 1930s, when the above first law was promulgated, the development of the industrial and commercial activities in recent years urgently required more efficient legal provisions for the enforcement of industrial property rights.

The provisions of the new law represent evident progress in this field and the practical application thereof should result in the more effective protection of industrial property rights in relation to the increased number of infringements.

The legal framework established by the new law is discussed below.

i Civil actions

In case of infringements to industrial property law rights, according to Article 106 of the new law, holders of these rights shall be entitled to file a civil complaint requesting:

  1. cessation of the acts that breach their rights;
  2. recovery of damages; and
  3. the adoption of necessary measures to avoid the continuance of the breach.

The legislator included a complete array of measures to provide a solution to the problems resulting from a breach. In this respect, the possibility to claim damages is established, which in the past was impossible unless the defendant had first been convicted or at least indicted after a long criminal proceeding.

To improve the effectiveness of these actions, in Article 107 of the new law the legislator provided that these actions will follow the rules of a 'summary proceeding' stipulated in the Code of Civil Procedure that is submitted to substantially shorter terms than those of an ordinary proceeding, and whereby results would be obtained within a reasonable time. This aspect is especially relevant when considering that breaches are normally related to economic or commercial activities, when a late decision, even if it is favourable, can become completely useless.

Regarding compensation of damages, Article 108 of the new law entitles the claimant to elect one out of three possible systems for determining its amount, namely:

  1. the profits that the claimant has ceased to receive as a consequence of the breach;
  2. the profits obtained by the infringing party as a consequence of the breach; or
  3. the price that the infringing party would have had to pay to the holder of the right by the granting of a licence, considering the commercial value of the infringed right and the contractual licences that could already have been granted.

The new law also contemplates the possibility of obtaining all kinds of precautionary measures in these proceedings; this involves a clear signal regarding the importance the legislator attaches to this matter that should serve as a support to the courts. The law especially refers to five precautionary measures:

  1. order for the immediate cessation of the acts constituting the alleged breach;
  2. seizure of the product that is the object of the alleged breach and the materials and means used to commit it. In the case of trademarks, this measure would comprise the seizure of packaging, labels and advertising material containing the trademark that is the object of the alleged breach;
  3. appointment of one or more auditors;
  4. prohibition to advertise or promote the products that are the cause of the alleged breach in any manner; and
  5. retention by a loan institution or a third party designated by the court of the assets, funds or securities originating in the sale or marketing of the products that are the cause of the alleged breach.

The precautionary measures can be required within the framework of the same breach proceeding or as prejudicial measures; in addition, with the same character and by express decision of the law the measures set forth in the Code of Civil Procedure can be applied for.

This set of provisions, which is entirely new in the industrial property legislation, constitutes a sound basis for ensuring the observance of rights regulated by this law and its practical application is expected to demonstrate its effectiveness.

ii Criminal actions

Following the model of the previous laws, the new law also provides rules for a criminal action in case of infringement of property law rights.

As in Law 19,039, the application of these provisions requires in most cases the existence of fraud or the intention to defraud on the part of the assumed infringing party as a circumstance that the holder of the infringed right should first prove, in addition to the breach itself.

As has been mentioned, it is difficult to imagine cases of infringement of industrial property rights, especially patents and trademarks, wherein the assumed transgressor is not clearly aware that his or her action constitutes a breach of a third party's right.

In addition to the above situation, it is pertinent to state that the fines being contemplated, which can be between approximately US$1,700 to US$57,000, are virtually symbolic in the business and industrial world, even if the court applies the highest stipulated bracket.

Notwithstanding the foregoing, the new law includes some additional provisions that improve those previously existing and that, in view of their strictness, the absence of exceptions and material consequences could have some dissuasive effect in these cases. There is an express provision in the hypothesis of a breach of patents, whereby the objects illegally produced shall be destroyed and, assuming infringement of a trademark, the objects bearing the forged trademark shall also be destroyed.

However, as already pointed out, the introduction of the possibility to file a civil action and an immediate claim of damages in cases of breaches of industrial property rights are likely to limit the application of the above-described penal actions to cases of a criminal nature.