Use by non-registered licensee defeats cancellation claim

The Colombian Trademark Office has held in a legal opinion that the owner of a registered trademark may rely on the use made by a non-registered licensee to avoid the cancellation of the trademark for non-use. In this opinion, the office interpreted the provisions of Andean Community Decision 486 on a Common Industrial Property Regime on the registration of trademark licensing agreements and cancellation actions for non-use.

The office had initially adopted this position following the issuance of Resolution 159 by the General Secretariat of the Andean Community in 1998, which concerned the previously applicable IP regime (ie, Andean Community Decision 344). Resolution 159 stated that a trademark owner could rely on the use of a trademark by a non-registered licensee to avoid the cancellation of a trademark. This position was consistent with the former regime, which established that trademark licensing agreements should be registered, but contained no specific penalties for failure to register (Article 117 of Decision 344).

However, it is surprising that the office continued to follow this approach under the current regime, as it is contrary to Article 162 of Decision 486, which states that in the absence of registration, a licensing agreement shall be "invalid with respect to third parties".

This provision clearly applies to the cancellation of a trademark based on lack of use by its owner in the absence of a registered licensee. According to Article 162, the applicant in a cancellation action is entitled to assume that there is no licensing agreement or that, if there is one, it cannot be validly used against it during the cancellation proceedings.

Therefore, the position adopted by the office contradicts the current regime on the registration of licensing agreements. Pursuant to the office's approach, the only applicable rules are those that specifically regulate cancellation actions for non-use, namely:

• Article 165, which provides that a trademark is in use "when the products or services that it distinguishes are in circulation or are available on the market under that trademark"; and
  
  
• Article 166, which states that a trademark shall be cancelled "when, without justification, it has not been used in at least one of the member countries by its owner, a licensee or other authorized person during the three consecutive years preceding the date on which the cancellation action was filed".

The office is of the opinion that the only issue to be established in a cancellation action for non-use is the effective use of the trademark. Moreover, a trademark cannot be cancelled if it has been used by its owner, a licensee or other authorized person, whether the trademark is registered or not.

It remains to be seen whether the Court of Justice of the Andean Community will share this opinion. If this is the case, the role of the licence registration system established by Decision 486 would be called into question. If failure to register a licensing agreement is not penalized, the registration requirement becomes redundant. Arguably, the obligation to register licensing agreements should thus be abolished.

Fernando Triana, Triana Uribe & Michelsen, Bogota