Uruguay: Trademarks and the right to practise

To be, or not to be, a bank

The National Directorate of Industrial Property (DNPI) refused the registration because it contained the term ‘bank’ and the applicant, The Royal Bank of Scotland (RBS) was not authorised to operate as a financial agent. According to Article 3 of law Nº 15.322, to operate as a financial agent in Uruguay a company must first obtain authorisation to do so from the Uruguayan Central Bank.

DNPI argued that RBS’s trademark application was forbidden under the rules of unfair competition in the Paris Convention. An article of this convention says that the following acts should be forbidden:

“Indications or allegations the use of which in the course of trade is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity, of the goods.”

DNPI argued that a trademark containing the term bank would lead consumers to believe its owner to be a legitimate and authorised bank. DNPI rejected RBS’s trademark application on the grounds of unfair competition prohibitions.

RBS appealed against this decision on the ground that the use of a trademark is not a requirement for registration under Uruguayan trademark law, and since it was not operating as a fi nancial agent in Uruguay or planning to do so, the rejection had to be overruled. It is a well established principle in Uruguay that trademarks do not have to be used.

The unfair competition argument was also attacked by RBS. It said its main function was to provide banking services as a bank, which was evidenced by the fact that it operates as a bank in financial sectors in other countries. Therefore, RBS argued, nobody would be confused if RBS used the term bank, because they would already associate it with the financial section and banking.

"RefeRRIng To THe facT THaT In uRuguay a TRaDemaRk RegIsTRaTIon Does noT ImPly ITs use, DnPI aRgueD THaT THe PaRIs convenTIon aRTIcle Is a bRoaD one."

RBS also disputed whether DNPI had the power to interfere with trademark applicants which included the term bank in their applications based on their operational status. The operational status of a financial agent, according to Uruguayan law, is under the exclusive jurisdiction of the Uruguayan Central Bank. Therefore, DNPI should not perform this function or seek to verify trademark applications that include the term bank, or similar terms, as legitimate and authorised agents.

Finally, RBS argued that when it applied for the trademark RBS The Royal Bank of Scotland, it was trying to protect its brand heritage.

The CAC agreed with RBS’s arguments and reversed DNPI’s decision to reject the trademark. The court said that the need to be authorised by the Uruguayan Central Bank to use the term bank or similar terms stipulates that entities must be performing financial activities in Uruguay to require authorisation. Since RBS was not performing any activities that required authorisation from the Uruguayan Central Bank, the requirement did not apply.

Furthermore, the court upheld RBS’s argument that said that DNPI did not have the power to control the authorisation to operate as a bank in Uruguay, as this faculty is trusted exclusively to the Uruguayan Central Bank.

Implications of this decision

International banks are able to apply for and obtain trademarks that contain the term bank or something similar in Uruguay. This is not reliant on them operating in the Uruguayan market, so every international bank would be able to protect its brand in Uruguay.

However, these kinds of applications may be rejected at the DNPI level, because the office is not obliged to follow decisions issued by the CAC. Despite this, we believe that DNPI will act according to the court’s practice in this matter.

University could learn from bank

After 2006, DNPI began requesting that applicants for trademarks that contain the term universidad, university and other similar terms comply with a requirement of law that says: “The use of the term ‘Universidad’ or similar terms … is reserved to the private institutions who are authorised to operate as such in accordance with the current laws.”

Failure to comply with this requirement could cause DNPI to reject the trademark application.

Again, DNPI based its decision to reject trademark applications that include the term university on the Paris Convention article concerning unfair competition. DNPI argued that by using the term university, consumers would be led to think (incorrectly) that the trademark applicant is officially recognised under law as a university.

Referring to the fact that in Uruguay a trademark registration does not imply its use, DNPI argued that the Paris Convention article is a broad one and it refers not only to a present deception but also to the possibility of misleading consumers in the future.

Following this understanding, DNPI rejected the trademark Laureate Internacional Universities in June 2007; the trademark University of Southern California in June 2009; and the trademark University of Phoenix in December 2010.

"Having a trademark granted does not mean that clearance is given to the trademark applicant to begin commercialising certain kinds of products that are identified within the application."

Nevertheless, and contrary to what happened in the bank case, these cases were not appealed against at the superior administrative court of Uruguay, the CAC. Taking into account the similarities between the bank and university cases, if the university cases had been appealed against, the superior court would have overruled DNPI’s decision to reject the university trademarks, if those rejections were based on a lack of authorisation to operate in Uruguay.

In the bank case, the court ruled that Uruguay’s lack of use requirement means that it is incorrect to demand that a trademark applicant has authorisation to operate in a particular market. The court added that authorisation should be required only when a trademark is used in Uruguay and not before.

It is clear that the court would come to a similar conclusion in the university cases as it did it in the bank case and would allow the university trademark applications to be granted.

The flip side

In the same way that the court ruled that DNPI does not have the ability to oversee and require use, there are situations in which having a trademark granted does not mean that clearance is given to the trademark applicant to begin commercialising certain kinds of products that are identified within the application.

This is what happens with packaged foods. In order to avoid deceiving consumers on the quality and characteristics of packaged foods, the national office in charge of issuing the authorisation to sell these products in Uruguay requires the product concerned to comply with technical regulations on packaged food labelling.

The regulations say that packaged food should not be described or presented by any label that:

a) Features words, signs, denominations, symbols, emblems, illustrations or any other graphic devices that might make the information contained false, incorrect or insufficient, or make it misleading, confusing or deceptive regarding the true nature, composition, origin, class, quality, quantity, duration, yield or mode of use of the food; and, or

b) States effects or properties that the product does not have, or that cannot be demonstrated.

Under these regulations, packaged food labels that contain the word ‘fresh’ cannot be authorised if the products that they are attached to contain artificial preservatives. The fact that a trademark is granted has no bearing and authorisations are rejected.