Ecuadorian IP Office deals blow to parasitic trademark applications

• Well-known cosmetics brand Huda Beauty opposed an application for an identical mark based on Paris Convention priority
• The IP Office rejected the application, reviewing the online WIPO trademark database with regard to the opponent’s country of origin right and accepting the online entry as evidence of this
• The decision represents a relaxing of evidential requirements and demonstrates a proactiveness rarely seen from the IP Office

A recent case involving an opposition to a bad-faith trademark application suggests that the tide in Ecuador may be turning in favour of holders of famous marks and big brands generally.

Pitfalls of a first-to-file trademark system

Ecuador’s trademark system is based on the first-to-file principle. This means that simply using a mark in Ecuador confers few or no rights. The problems faced by brand owners in Ecuador that fail to secure registration of their trademark rights is compounded by the fact that the authorities have been slow to recognise even famous marks that are not yet in use in the country. The country is a signatory to the Paris Convention, but enforcing Article 6 bis has proved difficult; even after overcoming the onerous evidential requirements of legalisation and translation, the threshold for well-known status almost always proved insurmountable.

In addition, even once a mark is on the register, there is a definite leaning towards presumption of validity, while registration is also a defence to infringement. In fact, there are a significant number of Ecuadorian registrations that are arguably entirely descriptive, relating to erroneous examination dating back several years, but it has proved difficult to remove them from the register given such presumptions of validity.

Therefore, when opportunists come along looking to register famous marks for which the client and brand owner holds no Ecuadorian or Andean registration, alarm bells ring, particularly given that bad-faith provisions are so narrow in Ecuador; bad faith will not be made out unless it can be shown that there is or was a relationship between the entities or that the applicant is in the habit of registering marks for financial gain.

A new approach?

There are suggestions that the tide is turning in favour of holders of famous marks and big brands generally. Over the last two years or so we have seen more willingness from both the courts and the administrative authorities to act in anti-counterfeiting and infringement actions brought by the overseas owners of large brands. In a recent case involving the cosmetics brand Huda Beauty, the applicant, a Chinese entity, tried to register a variation of the HUDA BEAUTY house mark, essentially an identical mark. Huda Beauty itself did not have any relevant local rights on which to base the opposition. However, in this instance it was able to base the opposition on a new application in Ecuador claiming convention priority from a Brazilian application. While the case was considered sound, the opposition decision itself was somewhat surprising.

The IP Office incorrectly failed to acknowledge the priority claim and proceeded to reject the opportunistic application on the basis of Article 6 quinquies of the Paris Convention. More importantly, the IP Office took it upon itself to review the online WIPO trademark database with regard to the opponent’s country of origin right and to accept the online entry as evidence of this right. The office’s approach – and its proactiveness – is surprising given its willingness to override evidential requirements. The decision should also be read alongside another recent case in which the IP Office accepted a notarial verification of a web page as evidence of prior Andean rights rather than the physical legalised certificates of registration typically demanded by the authorities (for further information please see 'Ecuador IP office accepts notarial verification of webpage as valid evidence in Andean opposition').

Comment

Whether this decision is further evidence of an overall willingness to protect big brand owners is hard to say. However, it would not be surprising if it were, given the recent change in political direction within Ecuador. Evidential requirements are often prohibitive to trademark enforcement in Ecuador, as the country opens its doors to investors (at least when compared to the previous government) – recent agreements with the European Union and the International Monetary Fund require that Ecuador is seen as more friendly to investors and outside interests, with the EU agreement in particular providing for protection of around 100 EU geographical indications in Ecuador. The current president is also seen as someone very much ready to embrace such a change of direction.