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Necessary IP reform in Chile

January 2019  |  SPECIAL REPORT: INTELLECTUAL PROPERTY

Financier Worldwide Magazine

January 2019 Issue


The existing Chilean intellectual property (IP) law regulates trademarks, patent for inventions, utility models, industrial designs and industrial secrets, among other IP privileges.

The law entered into force in 1991 and there is a consensus forming which suggests that the law does not fully meet international standards. Critics say it is outdated, fails to cover some important privileges and maintain registrations, and its enforcement processes are slow and cumbersome.

The legal text of the law is also quite complicated, as it has been modified on many occasions. Rules have been intercalated, changes have been made and some portions eliminated, as a consequence of all the IP-related treaties to which Chile has been party since 1991, such as The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the Economic Association with the EU and the free trade agreement with the US, among others, which have obliged Chile to adapt its legislation, a task which has not yet been completed.

Users of the system agree that the law should be changed by introducing modifications to simplify and adapt it to modern times and the current Chilean IP reality.

In 2013, the Chilean government sent a draft law to congress aiming not just to modify IP legislation, but to completely replace it. This proposed law, however, was too ambitious and became stuck in parliament a few months after its introduction.

In light of this, and convinced that urgent changes are required, the government is preparing a new proposal, known as the ‘Short Law’ or Ley Corta. This law calls for the reintroduction of the previous proposal but with a few key changes.

The draft aims to strengthen IP laws in Chile, offering greater and new types of protection, improving procedures and strengthening enforcement measures. As a result, it contains substantive norms and organic and procedural rules on observance and infringement.

In the area of substantive rules, the draft recognises tri-dimensional and olfactory trademarks, as well as holograms and moving brands. It also modernises the rules relating to collective and certification trademarks. Previously, these have been seldom used in Chile due to the lack of protection under the existing regulation.

Another relevant change is the proposed establishment of the use requirement for registered trademarks. Until now, there have been no consequences if the trademark owner, or someone authorised by the owner, did not use the registered trademark. A non-used trademark may even be renewed indefinitely.

There are other proposed rule changes covering industrial secrets. These would govern their definition and improve the scope of existing legislation, embracing all relevant secrets in the industrial, productive and commercial areas.

A long-anticipated rule governing patent usurpation will also be introduced. Currently, there is no mechanism for claiming ownership of previously undisclosed inventions, which means that if the real creator files an opposition and it is upheld, the patent invention is rejected, but this means the invention can be freely used by anyone. As a result, the inventor’s rights mean nothing as the novelty was destroyed by the usurper’s filing. The proposal states that if the creator’s action is upheld and his or her opposition is accepted, the pending application will be considered as being filed by the inventor. The same occurs in the event that an already-granted patent is cancelled.

New limits and exceptions to the infringement of patents have also been proposed, such as private and non-commercial acts, the use of a patented product or process for experimentation, preparation of prescribed medications for individual use, and use of a patent in the construction or operation of air, sea and land locomotion devices, when these temporarily or accidentally enter Chilean territory.

The proposal also contains the possibility of obtaining ‘provisional patents’, and extends the term of industrial designs and drawings from 10 to 15 years. Unfortunately, the proposal contained in the 2013 draft to simplify and cheapen the process for obtaining patents for utility models and industrial designs was not included in the new draft, which is clearly an error in countries such as Chile, where there are many more designers than inventors.

The draft also contains some new rules establishing quicker, cheaper processes for obtaining the registration of a trademark, patent or other privilege, but unfortunately not in the depth and systematisation seen in the previous draft.

Regarding infringement, it has been suggested that sanctions should consist not only of fines but also imprisonment, when dealing with distinctive signs, such as trademarks, geographical indications, denominations of origin, and so on. Unfortunately, no equivalent provision is devised for patents.

There is hope that this newly amended draft will quickly win approval in a parliament, which, to date, has been reluctant to take matters relating to innovation and protection of intangible rights seriously.

Furthermore, there must be an assessment of whether Chile is willing to meet all of the commitments contained within the international treaties it has signed. For example, under the free trade agreement signed with the US in 2003 and in force since 2004, Chile committed itself to ratifying the 1991 version of the International Union for the Protection of New Varieties of Plants (UPOV) before 1 January 2009.

Since 1994, Chile has been a member of the 1978 UPOV. Hence, in order to comply with the obligation imposed by the free trade agreement with the US, the first government of president Bachelet sent a draft to congress in December 2008, which led to a law that adopted the 1991 version of the UPOV. The draft was discussed for a long time in parliament and, following modifications, was finally approved.

In 2014, during the second government of president Bachelet, the bill was withdrawn from congress, and since then nothing has happened. In this particular matter, there has been pressure from environmentalist groups and politicians which, unfortunately, often repeat slogans without a full comprehension of the matters involved.

This leads to the conclusion that Chile, and perhaps other developing countries, do not currently analyse and take seriously the obligations of negotiating free trade agreements.

 

Rodrigo Cooper is a partner at Cooper & Cia. He can be contacted on +56 2 222 457 171 or by email: cooper@cooper.cl.

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