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Overview

Restrictions

Are there any restrictions on the establishment of a business entity by a foreign licensor or a joint venture involving a foreign licensor and are there any restrictions against a foreign licensor entering into a licence agreement without establishing a subsidiary or branch office? Whether or not any such restrictions exist, is there any filing or regulatory review process required before a foreign licensor can establish a business entity or joint venture in your jurisdiction?

There are no restrictions on the establishment of a business entity by a foreign licensor or a joint venture involving a foreign licensor, nor are there any restrictions against a foreign licensor entering into a licence agreement without establishing a subsidiary or branch office.

In spite of this, and although there are no special requirements for this purpose, the general requirements established by Chilean laws to incorporate different kinds of companies must be complied with.

Kinds of licences

Forms of licence arrangement

Identify the different forms of licence arrangements that exist in your jurisdiction.

In Chilean law, the licence agreement is an unnamed contract, insofar as it has no specific legal regulation. Since they are not regulated by law, their effects will be governed by the stipulations of the parties and by the legal rules of legal acts and contracts in general. In the case of licence, freedom of contract is accepted in Chile. Therefore, licence agreements contain features of various different agreements. The different forms of licence arrangements are as follows:

  • software licensing and licensing of other copyright protected works, such as photographs, books, musical compositions and cinematographic works. The licence may only be granted on patrimonial rights; moral rights are only transferable by succession on death;
  • licensing of industrial property rights;
  • licence applications for registration of industrial property rights being processed;
  • non-voluntary licensing of patents for invention, regulated by article 51 of Law No. 19,039 on industrial property (the Industrial Property Law). These licences may be granted without or against the will of the owner, among other causes, when their granting is justified by the authority for reasons of anticompetitive acts of the owner; extreme urgency or public health;
  • licensing of pending or registered utility models;
  • licensing of pending or registered industrial designs and drawings; and
  • licensing of pending or registered designs or topographies of integrated circuits.

The licensing of industrial property rights must include at least a private document signed before a notary and recorded in an abstract in a marginal note of the respective record in the National Institute of Industrial Property (INAPI).

Licence applications for registration of industrial property rights being processed require a private document signed before a notary, which is recorded in the corresponding file in the INAPI.

Trademarks are indivisible and none of the elements of the distinctive sign covered by the title may be separately transferred.

The total or partial transfer of copyright must be made through a public or private instrument authorised by a notary and must be entered in the register of intellectual property within 60 days from the conclusion of the contract.

Law affecting international licensing

Creation of international licensing relationship

Does legislation directly govern the creation, or otherwise regulate the terms, of an international licensing relationship? Describe any such requirements.

Chilean law does not regulate in any special way the creation or terms of an international licensing relationship. There are no restrictions on royalty rates or on other rates.

Pre-contractual disclosure

What pre-contractual disclosure must a licensor make to prospective licensees? Are there any requirements to register a grant of international licensing rights with authorities in your jurisdiction?

The licensor has no obligation to provide information to the licensee prior to the conclusion of the international licence contract.

A licensor’s rights must be registered or have registration pending with the INAPI before a licence may be granted to a licensee in an agreement (eg, a trademark, a patent, etc). Such a registration requirement is not necessary when the object of a licence agreement is a copyrighted work (such as software, song, video, etc).

Registration

Are there any statutorily- or court-imposed implicit obligations in your jurisdiction that may affect an international licensing relationship, such as good faith or fair dealing obligations, the obligation to act reasonably in the exercise of rights or requiring good cause for termination or non-renewal?

Chilean law does not provide special rules regarding international licensing agreements. The contracts are governed by the autonomy of the contracting parties and the general principles of law, including that of good faith. Article 1,546 of the Chilean Civil Code states that contracts must be performed in good faith and that they bind not only what is stated in them but all things deriving from the nature of the obligation or pertaining to it by law or custom. Likewise, article 707 of the Chilean Civil Code states that good faith is presumed.

Chilean courts cannot rewrite contractual provisions. Article 1,545 of the Chilean Civil Code states that the contract is a law for the contracting parties that may only be voided by mutual consent or legal causes.

Intellectual property issues

Paris Convention

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. Chile is a party to the Paris Convention for the Protection of Industrial Property 1883, the Patent Cooperation Treaty 1970 and the Agreement on Trade-Related Aspects of Intellectual Property Rights 1994.

Contesting validity

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 may be prohibited from contesting the validity of a foreign licensor’s intellectual property rights or registrations.

Infringement of the clause containing the prohibition is punishable as breach of the contract, thereby creating the obligation to compensate damages resulting from the failure. In spite of this, the establishment of such a provision shall not prevent the intervention of the courts if it is required by the licensee.

Invalidity or expiry

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?

The declaration of invalidity or expiry of the registration of intellectual property rights will not affect per se the existence of a licensing agreement, or the obligation to pay royalties. However, the usual practice would be to include in licensing agreements a provision establishing that the loss of validity or expiry of the right that is the subject of the licensing agreement constitutes a breach of the agreement, whose consequence will be the termination of the agreement and of the obligation to pay royalties. If the licence does not remain in effect, the licensee could freely compete, subject to the Fair Competition Principles Act.

Requirements specific to foreigners

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?

There are no specific requirements to be fulfilled by foreign nationals prior to the registration of their intellectual or industrial property rights.

Industrial property rights are acquired by registration in the register of industrial property of the INAPI, regardless of the nationality of the holder of the right.

On the other hand, intellectual property rights are acquired by the mere fact of the creation of a work, regardless of its author’s nationality.

Unregistered rights

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

Intellectual property rights that are not registered can be licensed in Chile. However, the licensee will not have the legal protection of intellectual property laws, but only the protection of the agreement, until it is registered in accordance with the law, if the object of the licence agreement is an industrial property right. The registration is not necessary when the object of the licence agreement is a copyrighted work (such as software, song, video, etc).

Security interests

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

No. In Chile there is no requirement to take a security interest in intellectual property.

Proceedings against third parties

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?

The licensor or licensee may institute proceedings against a third party for infringement of intellectual property rights if it has thus been contractually established by the parties and pursuant to what the parties have stipulated in the agreement.

According to what has been stated, it is possible to contractually prohibit the licensee from instituting the proceedings. Infringement of the prohibition is punishable as a breach of the contract, thereby creating the obligation to compensate damages resulting from the failure. In spite of this, the establishment of such a provision shall not prevent the intervention of the courts if it is required by the licensee.

At present, the bill to reform the Industrial Property Law, Bulletin No. 8907-03 filed by the government by Message No. 060-361, dated 24 April 2013 (the Bill), recognises the right of the exclusive licensee to initiate legal proceedings in order to protect their rights as if they were the owner. On the other hand, the non-exclusive licensee requires authorisation from the licensor. However, the Bill is still in its first constitutional stage.

Sub-licensing

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 licensee’s right to sub-license the trademark will depend on what has been stipulated in the licence agreement. The right to sub-license must be established in the agreement as it is not warranted by law.

Jointly owned intellectual property

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?

The distinction between industrial property rights (ie, trademarks and patents) and copyright should be made first. Regarding trademarks, there are two scenarios:

  • if the co-owners register a regulation of use and control of the trademark; and
  • if the trademark is registered for collective use.

In the first point, the joint owners may register a regulation of use and control of the trademark before the INAPI, which sets the rules of use and control of the trademark by the owners. Such a regulation must comply with the Industrial Property Law; otherwise the INAPI can reject it. Breach of the regulation of use and control of trademark may imply the penalties set in the Industrial Property Law. In the second point, with the same procedure and effects, a trademark may be registered for collective use in order to guarantee the nature or quality of certain goods or services. In this case, the trademark may not be transferred to third parties. Aside from the previous cases (ie, if the joint owners do not register a regulation of use and control of the trademark or if the joint owners do not register the trademark for collective use, the co-owners are free to deal the trademark without the consent of the co-owners).

Regarding copyright, the faculties inherent to the patrimonial rights (economic rights) and the pecuniary benefits of the collaborative work, correspond to the whole of its co-authors. Any collaborator may request publication of the work. Those who disagree with the publication may only demand the exclusion of their name by maintaining their patrimonial rights. That is the restriction set by the Intellectual Property Law regarding co-owner of a copyrighted work.

First to file

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?

Chile is a ‘first to file’ jurisdiction. However, the law provides the possibility to cancel a patent when the party obtaining the patent is not its inventor or assignee.

Chilean law only permits the licensing of already registered patents or patents in the process of being registered.

The Bill includes the legal recognition of the inventor’s right to the patent. The Bill includes an action for patent infringement, through which the inventor is entitled to request the transfer of the application or registration without it losing its novelty.

Scope of patent protection

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

Software may not be protected by patents. It is protected by the Intellectual Property Law.

Business methods or processes may not be protected by patents as they are not considered inventions.

Plants and animals may not be protected by patents, except micro-organisms meeting general patentability conditions.

Plant varieties may not be protected by patents. However, the right of the breeder of a new plant variety is protected by Law No. 19,342 on rights of breeders of new plant varieties.

Trade secrets and know-how

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?

The Industrial Property Law defines trade secrets as all knowledge about products or industrial processes whose confidentiality constitutes an improvement, progress or competitive advantage for its owner. According to Chilean law, the requirements for a trade secret are:

  • being secret;
  • the information has a commercial value for being secret; and
  • reasonable measures to keep the information in secret.

Knowledge that could be protected as a trade secret, include:

  • plans;
  • schematics;
  • lists of suppliers or clients;
  • formulas;
  • systems; and
  • software.

The Bill includes a new definition of ‘trade secrets’ and establishes which acts constitute violation of a trade secret. Also, the Bill extends the definition from the industrial area to the productive and commercial area.

Infringement of a trade secret is punishable as a criminal violation and infringement of industrial property rights. Despite this, it is a matter of debate whether the trade secret regulation is of a restricted nature or if it is generally to be applied.

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?

According to our industrial property legislation, the acquisition, disclosure or exploitation of trade secrets without the holder’s authorisation, as well as disclosure of trade secrets by those parties who have had legitimate access to them but who have a duty of confidentiality, will constitute an infringement of the trade secret, provided the infringement has been made with the intention of obtaining benefit for the party itself or any other third party, or harming its owner.

In accordance with the above, it is possible to establish the restrictions in the agreement.

The question of whether the regulations should be generally applied in Chilean legislation is subject to current discussion.

No distinctions are made with respect to improvements to which the licensee may have contributed.

Copyright

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

The Intellectual Property Law protects the rights that the authors of intellectual works of the literary, artistic and scientific domain acquire through the sole fact of their creation, whatever their form of expression, and the neighbouring rights it establishes.

The following, among others, are especially protected:

  • books, brochures, articles and written documents, whatever their form and nature, including encyclopaedias, guidebooks, dictionaries, anthologies and compilations of all kinds;
  • conferences, speeches, lectures, memoirs, comments and works of the same kind, both in their oral as well as in their written or recorded versions;
  • dramatic, dramatic musical and theatrical work in general, and likewise choreographic and pantomimic works, whose development has been set down in writing or in another form;
  • musical compositions, with or without lyrics;
  • radio or television adaptations of any literary production, the works originally produced by radio or television, and also the corresponding librettos and scripts;
  • newspapers, magazines or other publications of the same kind;
  • photographs, engravings and lithography;
  • cinematographic works;
  • architectural projects, sketches and models, and mapping systems;
  • geographical or armillary spheres, and also plastic works related to geography, topography or any other science and, in general, audio-visual material;
  • paintings, drawings, illustrations and similar works;
  • sculptures and similar figurative works of art, even though they may be applied to industry, provided their artistic value may be assessed separately from the industrial character of the object to which they are incorporated;
  • scenographic sketches and the respective sceneries if the author is the sketch artist;
  • adaptations, translations and other transformations, if they have been authorised by the author of the original work if it does not belong to the public domain;
  • videograms and slide shows;
  • computer programs, whatever their mode or form of expression, and source programs or object programs, including their preparatory documents, technical descriptions and user’s manuals;
  • data collection or collection of other materials, in typewritten or any other form, which, owing to the selection or disposition of their contents, constitute creations of an intellectual nature. This protection does not include data or materials themselves and is to be understood despite any subsisting copyright regarding the data or material included in the collection; and
  • textile designs or models.

The law establishes a series of civil and criminal measures aimed at protecting intellectual property from infringements.

Within the framework of proceedings for copyright infringement, the court may, at the plaintiff’s request, decree one of the measures mentioned below.

Injunctions

The court may, at any stage during the proceedings, order the following injunctions:

  • to immediately suspend the sale, circulation, display, performance, representation or any other form of allegedly infringing exploitation;
  • to prohibit executing or performing any acts and contracts on certain properties, including the prohibition to advertise or promote the products or services that are the subject matter of the alleged infringement;
  • to retain allegedly unlawful copies;
  • to retain or seize any materials, machinery and implements that have been used for the production of allegedly unlawful copies or for the allegedly infringing activity, where necessary to prevent further infringement;
  • to remove or dispose of any devices used in the unauthorised public communication, unless the alleged infringer guarantees that he or she shall not resume the infringing activity;
  • to appoint one or more inspectors; and
  • to attach the product of recitation, representation, reproduction or performance, until reaching such applicable copyright amount as reasonably established by the court.

Damages

The court may order the infringer to pay damages.

Additional penalties

The court, upon making effective the payment for damages, may order, at the request of the affected party, the delivery, sale or destruction of the copies of the work that have been manufactured or put into circulation infringing his or her rights, as likewise that of the material that serves exclusively for the illegal manufacture of copies of the work and the seizure of the product of the recitation, representation, reproduction or performance.

Publication

The court may order, at the request of the affected party, the publication of the decision, with or without stating the grounds for it, in a newspaper of the affected party’s choice, at the expense of the infringer.

Criminal actions

Copyright infringement can also be pursued with criminal actions sanctioned with imprisonment and fines.

Software licensing

Perpetual software licences

Does the law in your jurisdiction recognise the validity of ‘perpetual’ software licences? If not, or if it is not advisable for other reasons, are there other means of addressing concerns relating to ‘perpetual’ licences?

Chilean law has not expressly recognised the validity of ‘perpetual’ software licences, but neither has it prohibited them. It is possible, therefore, to enter into licence agreements of a perpetual nature.

Legal requirements

Are there any legal requirements to be complied with prior to granting software licences, including import or export restrictions?

Chilean legislation does not include prerequisites for granting a software licence. There are no restrictions for software import or export.

Restrictions on users

Are there any legal restrictions in your jurisdiction with respect to the restrictions a licensor can put on users of its software in a licence agreement?

There are no legal restrictions in the Chilean jurisdiction with respect to software that, without the prior consent or knowledge of the user, interferes with user’s control of the device. In general, updates, upgrades, additional programs or features or functions or changes on the software are matters of regulation in the licence agreement between the parties. In fact, reverse engineering is a copyright exception contemplated in the Intellectual Property Law, under certain circumstances. Therefore, a contractual clause that prohibits reverse engineering may be null because is restricting an exception to a property right.

Royalties and other payments, currency conversion and taxes

Relevant legislation

Is there any legislation that governs the nature, amount or manner or frequency of payments of royalties or other fees or costs (including interest on late payments) in an international licensing relationship, or require regulatory approval of the royalty rate or other fees or costs (including interest on late payments) payable by a licensee in your jurisdiction?

Chilean legislation does not have laws specially regulating the nature, amount or frequency of payment of royalties or other fees in an international licence relationship.

Restrictions

Are there any restrictions on transfer and remittance of currency in your jurisdiction? Are there are any associated regulatory reporting requirements?

In Chile, there is freedom to transfer and remit currency. The formal exchange market entity through which the remittance is made must report it to the Chilean Central Bank in accordance with the Compendium of Foreign Exchange Regulation.

Taxation of foreign licensor

In what circumstances may a foreign licensor be taxed on its income in your jurisdiction?

Thirty per cent tax will be applied on the total amount paid, without any deduction, to individuals not domiciled or resident in the country, for the use, enjoyment or exploitation of trademarks, patents, formulae and other similar services, whether they consist of royalties or any other form of remuneration, excluding the amounts corresponding to the payment of tangible property placed in the country up to a generally accepted cost. However, the applicable tax rate will be reduced to 15 per cent concerning the amounts corresponding to use, enjoyment or exploitation of patents of invention, utility models, industrial drawings and designs, layout or topography designs of integrated circuits and new plant varieties, according to the definitions and specifications of the Industrial Property Law and the Law Regulating Rights of Breeders of New Plant Varieties, as appropriate. Likewise, a 15 per cent tax will be applied to amounts corresponding to the use, enjoyment or operation of computer programs, which include the set of instructions to be used directly or indirectly in a computer or processor in order to make or obtain a certain process or result, contained in cassette, floppy disk, disc, magnetic tape or any other material support or means, according to the definition or specifications mentioned in the Intellectual Property Law. In the event that certain royalties and consultancies are considered as unproductive or non-essential for the economic development of the country, the president of Chile, having previously received a report from the Chilean Corporation for Production Development and the Executive Committee of the Chilean Central Bank, may raise the tax to 80 per cent.

The local taxpayer obliged to withhold the tax must certify these circumstances and make an affidavit, in the manner and time set by the Internal Revenue Service through a resolution.

The amounts paid for the use of publishing rights or copyrights will be affected at a rate of 15 per cent.

International double taxation may be avoided through international conventions on double taxation. As stated, tax must be withheld by the licensee.

Competition law issues

Restrictions on trade

Are practices that potentially restrict trade prohibited or otherwise regulated in your jurisdiction?

Law No. 20,169 on unfair competition and Supreme Decree No. 211 of the Ministry of Economy, Development and Reconstruction on protection of free competition regulate, promote and defend free competition in markets, also prohibiting and penalising anticompetitive acts. Among the actions restricting free competition are agreements on pricing, production constraints, exclusion of competitors, acts affecting the outcome of bidding processes, assigning market shares, etc.

Legal restrictions

Are there any legal restrictions in respect of the following provisions in licence agreements: duration, exclusivity, internet sales prohibitions, non-competition restrictions and grant-back provisions?

See question 12. Besides the requirements, there are no other restrictions, and the parties may freely stipulate the provisions of the contract, in spite of the rights of the licensor and licensee.

There are no laws regulating non-compete agreements with the licensor.

IP-related court rulings

Have courts in your jurisdiction held that certain uses (or abuses) of intellectual property rights have been anticompetitive?

The Law No. 20.169 on Unfair Competition establishes that the scope of unfair competition conducts may extend to those regulated on the Intellectual Property Law (Law No. 17,336) and Industrial Property Law (Law No. 19,039). In that sense, according to the article 4 of Law No. 20,169, certain uses of intellectual property may be deemed as unfair competition. For example:

  • any acts that unduly exploits the goodwill of others, leading to confusion in services, products or trademarks of others; or
  • the use of trademarks or the dissemination of false statements that may lead to a confusion on the products or services.

In general, certain uses or abuses of intellectual property may be deemed as unfair competition according to the Chilean Unfair Competition Law. Pay for delay is not regulated in Chile.

Indemnification, disclaimers of liability, damages and limitation of damages

Indemnification provisions

Are indemnification provisions commonly used in your jurisdiction and, if so, are they generally enforceable? Is insurance coverage for the protection of a foreign licensor available in support of an indemnification provision?

Indemnification provisions are commonly used in Chilean laws and are enforceable.

There does not appear to be any special insurance for the protection of a foreign licensor, and it shall therefore be necessary to determine on a case-by-case basis whether insurance companies will provide insurance with the features.

Waivers and limitations

Can the parties contractually agree to waive or limit certain types of damages? Are disclaimers and limitations of liability generally enforceable? What are the exceptions, if any?

The parties may contractually waive or limit certain types of damages, and also establish limitations of liability that will generally be enforceable. In spite of this, wilful misconduct or gross negligence cannot be condoned in advance, or any damage arising from them. Any disclaimer and limitation of liability explicitly established in the contract may be enforceable in courts.

Termination

Right to terminate

Does the law impose conditions on, or otherwise limit, the right to terminate or not to renew an international licensing relationship; or require the payment of an indemnity or other form of compensation upon termination or non-renewal? More specifically, have courts in your jurisdiction extended to licensing relationships the application of commercial agency laws that contain such rights or remedies or provide such indemnities?

The law does not establish special conditions or limit the possibility to terminate or not to renew an international licensing relationship. Likewise, it does not require the payment of an indemnity for the termination or non-renewal of the contracts. Therefore, the termination of a licensing agreement will be subject to what has been agreed by the parties in the contract and to the general rules on the matter.

However, the licensor must be very careful about the expectations it creates or communicates to the licensee as they may lead the court to deem that an indemnification must be paid to the licensee in the event of the licensor terminating the agreement.

Impact of termination

What is the impact of the termination or expiration of a licence agreement on any sub-licence granted by the licensee, in the absence of any contractual provision addressing this issue? Would a contractual provision addressing this issue be enforceable, in either case?

Sub-licensing will terminate as the sub-licensor may not grant more rights than those it has. The sub-licensing contract may not remain in force beyond the term of the licensing agreement as it is accessory to the licensing agreement. A contractual provision addressing the termination or expiration of a licence may be enforceable in courts.

Bankruptcy

Impact of licensee bankruptcy

What is the impact of the bankruptcy of the licensee on the legal relationship with its licensor; and any sub-licence that the licensee may have granted? Can the licensor structure its international licence agreement to terminate it prior to the bankruptcy and remove the licensee’s rights?

The declaration of bankruptcy of the licensor will prevent it from meeting the obligations ensuing from the contracts signed by it, as the administration of its property will pass to a third party designated by the court. Therefore, the licensee must compete with the other creditors of the licensor to verify its claim in the bankruptcy of the licensor according to the priorities established by law.

The licensor’s bankruptcy will have effect upon the sub-licence the licensee has granted, because in a bankruptcy procedure, the owner (licensor) may eventually have to sell his or her intangible assets to a third party. In those cases, it is very important to establish a termination clause when one of the parties is in bankruptcy or in the beginning of a bankruptcy procedure. If the parties do not include a termination clause for the bankruptcy case, the licensee must compete with the other creditors of the licensor in the bankruptcy procedure.

Impact of licensor bankruptcy

What is the impact of the bankruptcy of the licensor on the legal relationship with its licensee; and any sub-licence the licensee has granted? Are there any steps a licensee can take to protect its interest if the licensor becomes bankrupt?

The declaration of bankruptcy of the licensee will prevent it from meeting the obligations ensuing from the contracts signed by it, as the administration of its property will pass to a third party designated by the court. Therefore, the licensor must compete with the other creditors of the licensee to verify its claim in the bankruptcy of the licensee according to the priorities established by law.

The licensor’s bankruptcy will have effect upon the sub-licence the licensee has granted, because in a bankruptcy procedure, the owner (licensor) may eventually have to sell his or her intangible assets to a third party. In those cases, is very important to establish a termination clause when one of the parties is in bankruptcy or in the beginning of a bankruptcy procedure. If the parties do not include a termination clause for bankruptcy case, the licensee must compete with the other creditors of the licensor in the bankruptcy procedure.

Governing law and dispute resolution

Restrictions on governing law

Are there any restrictions on an international licensing arrangement being governed by the laws of another jurisdiction chosen by the parties?

The parties are free to agree on the jurisdiction governing the agreement.

Contractual agreement to arbitration

Can the parties contractually agree to arbitration of their disputes instead of resorting to the courts of your jurisdiction? If so, must the arbitration proceedings be conducted in your jurisdiction or can they be held in another?

The parties are free to agree to arbitrate the resolution of disputes arising in relation to the contract. They may also decide whether the arbitration proceedings will be conducted in Chile or in a foreign jurisdiction.

Under Chilean law, arbitration is international if:

  • the parties have, at the time of entering into the arbitration agreement, their establishments or primary residence in different countries;
  • the place of arbitration is situated outside the country in which the parties have their establishments or primary residence;
  • the place of performance of a substantial part of the obligations or the place with which the object of the dispute is most closely connected are located outside the country in which the parties have their establishments or primary residence; or
  • the parties have agreed that the subject matter of the arbitration agreement relates to more than one country.

The class actions for consumer law in Chile are public order rules not subject to arbitration. Therefore, class actions in Chile are viewed by courts.

Enforceability

Would a court judgment or arbitral award from another jurisdiction be enforceable in your jurisdiction? Is your jurisdiction party to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards?

The judgment from a foreign court will have, in Chile, the enforceability granted by treaties existing on the subject. If there are no such treaties, it will have the enforceability that the countries acknowledge to judgments from Chilean courts. Thus, if in the country of origin of the judgment judgments of Chilean courts are not complied with, the judgment will not be applicable in Chile. In the event that the rules are not applicable, judgments dictated by foreign courts will be granted the same validity as if they had been dictated by Chilean courts, provided they are not contrary to Chilean law, do not oppose themselves to Chilean jurisdiction, that the party against whom the judgment is invoked has been notified of the action and that the judgment is enforceable in accordance with the laws of its country of origin.

The rules will apply to judgments pronounced by an arbitrator and their authenticity must be recorded through the approval issued by a superior court of the country where the judgment was issued.

Chile is party to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958.

Injunctive relief

Is injunctive relief available in your jurisdiction? May it be waived contractually? If so, what conditions must be met for a contractual waiver to be enforceable? May the parties waive their entitlement to claim specific categories of damages in an arbitration clause?

The Industrial Property Law allows for injunctive relief in article 112. On the other hand, the Intellectual Property Law contemplates the existence of injunctive relief in article 85D.

The parties may not contractually waive injunctive relief as, being procedure rules, they are considered public order rules that cannot be contractually waived in advance of the trial in which they must be decreed.