Chile: Summary of Law

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Summary of Law No. 21,355

1. Introduction

This document consists of a summary of the main amendments incorporated by law No. 21,355 (hereinafter, the “Law“), which amends law No. 19,039, on Industrial Property (hereinafter, the “IP Act“) and law No. 20,254, which establishes the National Institute of Industrial Property (hereinafter, the “INAPI Act“).

The Law was enacted on June 22, 2021, and advertised in the Official Gazette on July 5, 2021. It will have a deferred validity subject to the advertisement in the Official Gazette of its regulations, pursuant to the eighth transitional provision of the Law.

The amendments are described as follows:

2. Amendments to the IP Act

 Procedure

As the first aspect to be reviewed, the Law modifies the service mechanism with respect to opposition petitions, which will be made to the applicant through electronic means defined by it in the application. In these cases, the service will be understood to be made with the attachment of a full copy of the opposition brief and its admissibility resolution. When, in addition to the opposition, substantive observations have been made to the application, said decision shall also be served by electronic means, together with the service of the opposition brief.

• Trademarks

• Concept; new categories; elimination of commercial and industrial establishments; elimination of registration prohibition.

The Law modifies the definition of trademark in the following terms:

“Article 19.- Under the denomination of trademark, any sign capable of distinguishing goods or services in the market is included. Such signs may consist of words, including personal names, letters, numbers, figurative elements such as images, graphics, symbols, combinations of colors, sounds, smells or three-dimensional shapes, as well as any combination of these signs. When the signs are not inherently distinctive, registration may be granted if they have acquired distinctiveness through use in the domestic market.”

Thus, the main modifications are the following:

• New categories are incorporated, namely, scent and three-dimensional trademarks.
• The categories of commercial and industrial establishment trademarks are eliminated.

In relation to the last point, and in accordance with the fourth transitional provision of the Law, commercial and industrial establishments shall be renewed as service marks for classes 35 and 40 respectively. This represents significant savings for the holders of prior registrations who will see a relevant reduction in the renewal fees.[1]

Likewise, a “Territorial Limitation Action” is incorporated for those commercial establishments that, upon becoming service marks, territorially overlap with an existing mark in class 35. Such action will be prosecuted before INAPI in accordance with the rules applicable to cancellation procedures with a statute of limitations term of 5 years counted as from the renewal of the renewed registration.

Finally, and consistent with the incorporation of three-dimensional trademarks to the concept of trademark, “the shape of the product” has been eliminated from the absolute grounds for refusal, maintaining, however, the prohibition of the color of the product.

• Renewal of registration.

The term for requesting the renewal of a mark registration has been modified. If prior to the Law it could be done at any time before its expiration and up to 30 days after such date, such term has been modified and the renewal may be requested only as from the 6 months prior to the expiration and will be extended up to 6 months after the expiration of the registration. The above, except in the case of sound, collective and certification trademarks, in which case, the maximum term to file the renewal application is 30 days after the expiration of the registration.[2]

Regarding the determination and payment of the renewal fee applicable to a mark, the Law modifies such procedure, and requires that the payment be made together with the renewal application, maintaining the grace period of 6 months, with a surcharge of 20% for each month or portion of a month determined according to the date of filing and payment and not the date of acceptance as it was previously done.

• Counterfeiting; imprisonment and statutory damages.

One of the most relevant amendments in trademark enforcement is related to the incorporation of the offense of counterfeiting, to which imprisonment is added as a penalty. In effect, the new article 28 bis punishes with ordinary imprisonment of a minimum to medium term[3]:

1. Whoever counterfeits a trademark already registered for the same goods or services.
2. Whoever manufactures, introduces into the country, or commercializes products including a counterfeited trademark already registered for the same goods or services, for profit and for commercial distribution.

Whoever has for sale or markets directly to the public goods or services bearing counterfeits of trademarks already registered for the same goods or services shall be punished with the penalty of ordinary imprisonment in its minimum degree.

Likewise, whoever obtains a favorable sentence for counterfeiting may request that the indemnity for damages be replaced by a single compensatory sum determined by the court in relation to the severity of the infringement, which may not exceed 2,000 UTM per infringement (roughly USD 130,000) at the judge’s discretion. This option must be exercised in the claim for damages.

• Regulation of collective and certification marks.

Prior to the Law, there was no express regulation of collective and certification marks, existing only a brief general mention to the regulation of use with respect to trademark registrations owned by more than one person. The new text incorporates express provisions on the definition, requirements and use of such signs.

Thus, a collective trademark is understood as any sign or combination of signs capable of distinguishing in the market the goods or services of the members of an association with respect to the goods or services of third parties. For these purposes, an association shall be understood as a group of producers, manufacturers, traders, or service providers that have legal personality.

On the other hand, a certification mark is understood as any sign or combination of signs capable of distinguishing in the market the goods or services of third parties, guaranteeing that they comply with common requirements and characteristics.

Both types of marks must be filed with a document containing the regulation of the use of such marks, the content of which must:

1. Contain the identification of the holder.
2. Individualize the products or services that will distinguish the collective mark or the products and services that will be the object of the certification.
3. Indicate the conditions and modalities for the use of the trademark.
4. Contain the reasons for which the use of the collective mark may be prohibited to a member of the association or to the person previously authorized in the case of the certification mark.
5. Contain other mentions established by the regulations of this law.

INAPI may object the proposed regulation if, in its opinion, legal or regulatory provisions are infringed, or if it contains provisions contrary to public order or that may mislead or confuse consumers.

• Non-Use Cancellation Action. Modalities, procedure, transitional rule.

One of the most notable amendments introduced by the Law is the incorporation of a Non-Use Cancellation action, which may proceed in any of the following scenarios:

• No actual use of the mark within Chile -either by the holder or an authorized third party-, during a period of 5 years counted from the registration, or if such use had been uninterruptedly suspended for the same period; or.
• If its holder has caused or tolerated a registered mark to become the usual designation of a good or service for which it is registered.

Regarding the second cause of action it will not be understood that the usual designation has been tolerated or caused if the holder has made use of the respective mark.

Regarding the burden of proof of the use of the mark, this will correspond to its holder. The effective use of the mark shall be proved by any evidence admitted by the IP Act (i.e., confessional evidence is discarded). In case of failure to prove the use, the mark will be cancelled. The action may only be filed by whoever has a legitimate interest in the non-use cancellation.

A noteworthy aspect is that the non-use cancellation action may be filed as a counterclaim to a claim for cancellation of registration or opposition, which will be prosecuted jointly in a single procedure before INAPI.

Regarding the scope of the non-use cancellation, it may be total or partial. In other words, the part of the coverage for which the mark was not cancelled will be maintained.

Finally, in application of the fifth transitory article of the Law, the term for filing a revocation action with respect to registrations granted prior to the date of entry into force of the Law will be counted as from the first renewal occurring after such date.

• Geographical indications and appellations of origin.

The Law incorporates new grounds for non-registrability of geographical indications and appellations of origin, provided:

(e) That they are graphically, phonetically, or conceptually similar, in such a way that they may be confused with other distinctive signs previously applied for or registered, in good faith, for identical or related products or services.

1. f) That they are graphically, phonetically or conceptually similar in such a way as to create confusion with a distinctive sign that is not registered, but which is actually and effectively being used prior to the application by a third party who would have a better right to obtain registration, provided that the indication or denomination has been applied for in respect of goods identical or related to the goods or services for which the distinctive sign has been used by the said third party.

(g) that constitute the total or partial reproduction, imitation, translation or transcription of a trademark, appellation of origin or geographical indication well known in Chile, in the relevant sector of the public, whether registered or not, and whatever the goods for which the sign is applied for, when its use, in relation to the required goods, is likely to cause confusion or to mislead or deceive as to the origin of the product, or there is a risk of associating the geographical indication or appellation of origin applied for with the holder of the trademark, appellation of origin or well-known geographical indication or constitutes an unfair exploitation of the reputation thereof, including the dilution of the distinctive force thereof, provided that such registration or its subsequent use is likely to harm the interests of the holder of the trademark, appellation of origin or well-known geographical indication.

The original text of the IP Act required applications for Chilean or foreign geographical indications or appellations of origin related to forestry, agricultural and agro-industrial goods, the issuance of a favorable report from the Ministry of Agriculture, within a term of 120 days counted as from the request.

The Law modifies the mandatory nature of this request and instead makes it optional for INAPI, making it possible to request at its discretion a report from other ministries or public services regarding any type of application for a geographical indication or appellation of origin, which must issue the respective report within 45 days.

The validity of term is also subject to a modification. The original text of the IP Act was limited to establishing that they would have an indefinite duration. The Law makes such duration subject to the maintenance of the conditions that gave rise to the grant of the geographical indication or appellation of origin.

Finally, any person may bring an action for cancellation on the grounds that the good has ceased to be produced in the protected area or that the conditions that justified its recognition have ceased to be fulfilled, without time limitation for filing such a cancellation action.

• Patents
• Provisional applications.

The possibility for a provisional application is granted for anyone who has an invention but cannot yet comply with all the requirements of a patent application for its filing, which INAPI will recognize for a term of twelve months, upon payment of the corresponding fee. A provisional application is exempted from including a claim set, as well as the declarations of novelty, non-obviousness, and industrial application.

If within the term of twelve months the applicant does not complete the application fulfilling all legal requirements according to the IP Act, the application will be deemed as not filed. Notwithstanding the aforementioned, the provisional application gives the applicant a priority date, and it is not possible to claim a previous application and therefore, it is not possible to broaden the scope of the invention. However, if the final application broadens said field, the modified contents will have for all legal effects the filing date of the final application.

• Deferral of filing fees; restoration of priority right.

With regards to the fees payment for filing any patent application[4], the applicant may request INAPI to defer such payment for up to 30 days, under penalty of having the application as not filed in the event of non-compliance with the payment.

Finally, the Law incorporates the possibility of restoring priority rights for those applications filed under the Paris Convention. Thus, the applicant may request the restoration of priority rights within two months counted as from the date of expiration of the priority term.

• Exceptions to the patent holder’s rights.

Firstly, the Bolar Exception is extended to chemical-agricultural or other products[5], in the following cases:

A patent does not confer the right to prevent third parties from importing, exporting, manufacturing, producing or using the subject matter protected by a patent with the sole purpose of obtaining the registration or sanitary authorization of a pharmaceutical, chemical-agricultural or other product. This does not entitle such products to be marketed without the authorization of the patent holder.

In turn, the Law incorporates a catalog of acts that limit the exclusionary right of the holder of a utility patent. These acts correspond to the following:

1. To acts performed privately and without commercial motives.
2. To the acts carried out for exclusively experimental reasons related to the object of the patented invention.
3. To the preparation of pharmaceutical products under medical prescription for individual cases.
4. To the use on board of vessels of other countries of means that constitute the object of the patent in the hull of the vessel, in the machines, apparatus and other accessories, when said vessels temporarily or accidentally enter Chilean territorial waters, with the reservation that said means are used exclusively for the needs of the vessel.
5. To the use of means that constitute the object of the patent in the construction or operation of air or land locomotion apparatus of other countries or of the accessories of such apparatus when they temporarily or accidentally enter Chilean territory.

Thus, the exceptions that operate as legal limitations to the exclusive rights of the holder of a patent are now:

1. Exhaustion of rights (article 49, fifth paragraph of the IP Act).
2. Bolar Exception (article 49, sixth paragraph of the IP Act)
3. New exceptions (article 49, final paragraph of the IP Act)
4. Compulsory licenses (article 51 et seq. of the IP Act)

• Usurpation action; elimination of grounds for nullity

Another relevant institution incorporated by the Law corresponds to the Usurpation action if the person who has obtained the patent is not legally entitled to it. The rightful holder will have the right to request the transfer of the registration and the corresponding compensation of damages. In view of the foregoing, one of the grounds for the cancellation of a patent is eliminated, that is, when the person who has obtained the patent is neither the inventor nor his assignee.

It should be noted at this point that the holders of one and the other action differ, thus, restricting the attacks to a granted patent.

• Work-for-hire provisions.

Regarding inventions arising from a service relationship (dependent or independent), the Law modifies the rules for the settlement of disputes, which used to be resolved by the Industrial Property Court. With the amendment, any dispute will be resolved by ordinary courts of justice, according to the general rules for abbreviated procedures.

• Fragmentation of payments; surcharge for excess of pages.

In its original text, the IP Act considered only one mechanism for the payment of maintenance fees for the second ten-year period of protection for patents. The Law modifies this mechanism, granting the holder two alternatives:

1. Annual and equal payments, starting from the expiration of the first ten-year period of 0.4 UTM per year (roughly USD 27).
2. One-time payment before the expiration of the first ten-year period of 4 UTM (roughly USD 270).

The above is equally applicable to utility models, industrial designs and drawings or layout designs or topographies of integrated circuits, in relation to the payment of the respective five-year periods.

On the other hand, a surcharge is applied to the applicant, if an application for a patent exceeds 80 sheets. In such case, the applicant must pay, together with the filing fee, an additional fee equivalent to 1 UTM (roughly USD 67.3) for each additional 20 sheets (or fraction thereof).

• Supplementary patent protection.

The IP Act used to allow applicants to request a supplementary patent protection (“SPP”) within a period of 6 months as from the grant of the patent or the pharmaceutical marketing approval, without establishing a limit to the term for which such protection could be granted. Pursuant to the Law an SPP may be requested only within 60 days as from the grant of the patent or the pharmaceutical marketing approval, and the period of an SPP may not, in any case, exceed of 5 years.

With respect to the “request for examination” as a milestone for the computation of the possible term of protection through SPP (a milestone which does not exist in Chile), the Law defines it and fixes it on the date of acceptance of the appointment of the expert who will conduct the examination.

The term to pay the fee associated with the grant of the SPP will be of 30 days as from the resolution that requires it, as opposed to what was established in the IP Act, which set the term within the six months preceding the expiration of the original term of the patent.

It should be noted that this amendment creates a degree of uncertainty, since there is currently no resolution requiring the payment of the fee for the SPP, leaving an open-ended term to proceed with the payment.

Finally, the third transitional provision of the Law establishes that the applications for SPPs which have not been decided by the Industrial Property Court by the term of entry into force of the Law, will be subject to the new amendments in what respects to the maximum term of extension and term of payment of the SPPs fees.

• Application reopening.

The IP Act offers the applicant of a patent application the right to request the reopening of the file, when a procedural requirement established in the IP Act has not been complied with and INAPI proceeds with the closing of the file. For such purposes, a term of 120 days is offered for the request for the reopening of the application.

The Law decreases the term of 120 days to 45 days, adding the obligation to pay a fee of 2 UTM (roughly USD 134.6). Such fee seems to be configured as a sanction to the applicant, unlike what happened with the IP Act, where the reopening was set as a right without any charge or imposition to the applicant.

However, and according to the history of the Law, this fee is justified on the basis of new income that INAPI would receive, and thus increase the efficiency of the system. This is clear from what was pointed out by Congressman Gustavo Sanhueza, who stated that:

“The collection of fees for reopening and for excess sheets in patent applications will imply an income for INAPI of more than 266 million pesos for excess sheets and 88 million pesos for reopening, which will allow achieving greater efficiency in the system“.

The Deputy Director of INAPI further pointed out that:

“The proposed wording reduces the applicable term from 120 to 45 days, which is in line with the international standard required by the Patent Law Treaty (PLT), which corresponds to two months, and provides for the payment of a fee of 2 UTM, a practice that is also common at a comparative level.”

• Response to written opinion or preliminary patentability report.

Regarding PCT international applications, in which INAPI has issued an international search report and written opinion acting as International Searching Authority or an international preliminary examination report as International Preliminary Examining Authority, the applicant may submit, together with the national phase filing, a written reply to the observations formulated in these reports and written opinion, which shall be considered for the purposes of its examination. In case of exercising this right, the applicant will have a 50% reduction of the examination fees.

• Industrial designs and drawings
• Increased term of protection.

The term of protection of these rights is increased from 10 to 15 years. In addition, the first transitional provision of the Law grants the right to those holders of industrial designs and drawings which have not yet completed the original ten years of protection, to extend for another five years of protection until fifteen years are completed, being able to pay for such five-year period according to the mechanism of letter a), section 2.3.6.

• Abbreviated procedure for obtaining a deposit certificate.

A particularity of the Law is the incorporation of a voluntary procedure for obtaining a Certificate of Deposit of Industrial Design. Such abbreviated procedure in practice allows for a deposit system and makes it possible to expedite the obtention of an industrial design, without requesting a substantive examination and, consequently, without affecting the rights conferred to privileges which have been granted in accordance with the general procedure (subject to examination).

The advantage of such Certificate is the granting of an effective date for the purpose of verifying, in an eventual substantive examination, the fulfillment of the substantive requirements required by law. The same holder or any interested party may request INAPI to carry out the substantive examination of the design upon infringement or alleged infringement.

Finally, the sixth transitional provision of the Law offers the possibility to applicants of industrial designs whose file has not yet had an expert appointed by the date of entry into force of the Law, to request INAPI that their applications be subject to the abbreviated procedure of obtaining a certificate of deposit referred to in this section.

• Trade Secrets (previously called Business Secrets)

The text of the IP Act defined this institution with reference to knowledge about products or industrial procedures, a definition that seemed to restrict its scope. The Law extends the definition to any undisclosed information that a person has under its control and that may be used in any productive, industrial, or commercial activity. It also incorporates requirements for the configuration of the trade secret, in that such information:

1. Is secret in the sense of not being, as a whole or in the precise configuration and gathering of its components, generally known or readily accessible to persons within the circles in which such information is normally used;
2. has a commercial value because it is secret; and
3. has been the subject of reasonable measures taken by its lawful possessor to keep it secret.

 

• Miscellaneous

With respect to recording assignments, licenses of use, pledges, changes of name and any other type of encumbrances that may affect an industrial property right, the registration fee must be paid together with the application, and not afterwards.

3. Amendments to the INAPI Law

The main amendment to the INAPI Law is that in appeals filed against final decisions issued in proceedings before the Institute, the latter will have the status of a party for all legal purposes.

[1] This is because industrial establishment registrations are subject to the payment of a renewal fee for each class of products manufactured by the establishment, while those of commercial establishments determine the fee for each class of marketed products and, in addition, according to their territorial extension.

[2] This, in accordance with Memorandum 96-2021 of INAPI, dated 11 March 2021.

[3] Starting from 61 days up to 3 years.

[4] Due to the fact that the referred provision is contained in the general rules of payment fees, there is no distinction between a provisional and final application.

[5] This reference may be directed to other products subjected to sanitary registration, such as cosmetic products and personal hygiene and odorization products.