1 September 2013Jurisdiction reports

Modifications to Chile's trademark law

Chile is a small but relatively successful country, which has enjoyed commercial stability and growth over the past 30 years, since it implemented the free market economy at the beginning of the 1980s.

Although the market is not large, it works well, and a large selection of products and services from across the world can be found in the country.

The trademark law was passed in 1991, and since then has undergone three relevant modifications, intended to adapt it to international agreements, such as TRIPS, economic association with the EU, a free trade agreement with the US, the Patent Cooperation Treaty and Trademark Law Treaty.

"Following the Chilean practice, the protection of well-known trademarks is enhanced, strengthening the actions available against applications made in bad faith or against consumer interests."

In short, the modifications have come in patches, and the Chilean government has realised the need to develop new rules based on a global vision in accordance with Chilean interests and not just based on compliance with different, and in some cases independent, agreements.

Last May, the government sent a bill to Congress aimed at completely replacing the Industrial Property Law, making important changes to all kinds of privileges, and especially in connection with trademarks.

The bill proposes relevant modifications both to substantive and procedural rules. As mentioned by government, the purpose of the new law is to adapt to reality through four areas:

•  Increased coverage of rights over all type of creations and improve enforcement actions;

•  Quicker and simpler administrative procedures;

•  Lower costs, in order to increase applications for all types of industrial property; and

•  Improved legal certainty for IP owners as well as third parties.

As far as trademarks are concerned, the bill proposes a new definition of a trademark, including three-dimensional trademarks and other non-conventional trademarks, such as smell marks. Slogans are strengthened, and acquire independence from the trademarks to which they are associated.

Regulations are introduced for collective and certification trademarks and the treatment of geographic indications and denominations of origin is improved. Also, in compliance with the Paris Convention, for the first time trade names are recognised. These will not require registration.

The most important modifications are related to the requirement of use of registered trademarks. Until now, Chile is one of the very few countries in the world where the non-use of a registered trademark does not affect its validity.

In accordance with the proposed bill, the lack of use of a registration for a period of five years may give rise for an action for cancellation for non-use. In a more controversial matter, the bill proposes that a registered trademark may also be cancelled when its owner has tolerated its loss of distinctiveness and the expression has fallen into common use.

Another relevant proposal is the elimination of two special classes, additional to the 45 of the Nice Classification, that exist in Chile as a remnant of the previous law: for the name of a commercial establishment or store, and for the name of an industrial establishment or factory.

Following Chilean practice, the protection of well-known trademarks is enhanced, strengthening the actions available against applications made in bad faith or against consumer interests.

For the first time, the law expressly recognises dilution. This was not previously considered in our law and practice, but the new law prohibits registration of signs that may cause dilution of well-known trademarks.

One of the major criticisms of the Chilean trademark system is the low efficiency of enforcement. In this matter, the proposed bill establishes a public legal action to prosecute crimes of trademark counterfeiting, geographical indications and denominations of origin.

The current law sanctions counterfeiting only with fines, which are considered low. The new proposal increases the penalties and includes the possibility of infringers being condemned to jail, because the conduct not only affects the trademark owner, but also the good faith which governs commercial relations.

Another matter that the bill tries to resolve is the difficulty under our general legal system of proving effective damages when claiming compensation. The bill establishes statutory damages in the case of trademark infringement.

Many other modifications are proposed, to trademarks and all IP privileges, but there is not enough space to address them in detail here.

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