12 Dec
2019

Litigation procedures and strategies: Peru

BARLAW – Barrera & Asociados

Legislative framework and causes of action

Trademark law, rules and regulations

Peruvian legislation for trademark-related matters is ruled by:

  • Decision 486 of the Andean Community Common Intellectual Property Regime;
  • Legislative Decree 1075, on Approval of the Supplementary Provisions of Decision 486 of the Andean Community Commission Establishing the Common Regime on Industrial Property; and
  • the Criminal Code.

Peru has also ratified a number of international conventions, including:

  • the Pan-American Convention of Washington (1929);
  • the World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights (since 1 January 1995);
  • the Paris Convention for the Protection of Industrial Property;
  • the Stockholm Act (since 11 April 1995);
  • the Trademark Law Treaty (since 6 November 2009); and
  • the Singapore Treaty on the Law of Trademarks (27 December 2018).

Causes of action

In Peruvian legislation, trademarks are subject to cancellation and nullity. They are also the basis for trademark oppositions, infringement actions and criminal actions.

In Peru, a trademark infringement action can be filed before the Peruvian Trademark Office (PTO), which issues an administrative resolution that can, among other things:

  • impose a fine;
  • order the definite seizure and destruction of the goods; and
  • order the payment of legal fees and expenses.

It is therefore possible to have an infringement case and goods seized without going to the civil court.

Moreover, an infringement can also be filed as a criminal action before the IP prosecutor, based on the fact that an identical or similar sign to a registered trademark is used in the market to create a likelihood of confusion.

Peruvian legislation permits opposing a trademark when the application is identical or confusingly similar to the applied-for trademark. The basis of this opposition can be an existing trademark or a prior trademark application.

Based on Andean Decision 486, a registered trademark or prior application in any of the Andean member countries (ie, Colombia, Ecuador and Bolivia) can be a basis for an opposition in another member country.

According to Andean Community Trademark Statute Decision 486, there are two ways to eliminate a trademark from the registry:

  • requesting the cancellation of the registration; and
  • requesting the nullity of the registration.

With respect to the cancellation action, Andean Decision 486 includes:

  • cancellation for non-use; and
  • cancellation due to loss of distinctiveness (eg, the vulgarisation of a trademark).

According to Article 165° of the decision, a cancellation action cannot be started before the completion of a three-year term, as from the date of notification of the resolution that grants the registration of the trademark.

The purpose of the non-use cancellation is to prove that the trademark has not been used during three consecutive years; whereas, in a cancellation proceeding, due to the vulgarisation of the trademark, it must be demonstrated that the mark has become a common or generic sign.

With respect to nullity, according to Article 172°, a trademark can be nullified if it was granted in breach of absolute grounds for prohibition (as stated in Articles 134°(1) and 135°) (eg, lack of distinctiveness, deceptive or generic trademarks). It can also be nullified if the trademark was registered in bad faith and in breach of relative grounds for prohibition (Article 136°). In such cases, the term to request nullity lapses on the fifth year, counted from the registration date.

Alternative dispute resolution

Settlements

In Peru, the usual and effective alternative method to dispute resolution is an amicable settlement. The PTO, the Civil Courts and the Criminal Court allow and encourage parties to reach settlements that bring the dispute to a close.

Parties can always have an extra judicial agreement, which can be presented before the authority at any time during the case to stop the dispute. Most of the time, this agreement involves payment of professional fees and expenses, a penalty in case of future infringements and a decision regarding the destination of the goods seized.

Mediation and arbitration

The main legislations regarding alternative dispute resolution, focusing on conciliation and arbitration processes, are:

  • Law 26872 (the Conciliation Law);
  • Supreme Decree 004-2005-JUS (which regulates the Conciliation Law); and
  • Legislative Decree 1071 (which regulates arbitration).

However, this legislation is not commonly used to solve disputes related to intellectual property.

Litigation venue and formats

The court system and litigation venues explained

The Peruvian legal system allows three types of action in relation to trademark litigation:

  • administrative action;
  • criminal action; and
  • civil action.

Administrative action: Any trademark owner may file an administrative claim before the PTO against any third party that is infringing its IP rights.

When detecting an infringement (eg, elaboration, commercialisation, import and/or export of goods), the trademark owner has two ways of proceeding:

  • file a trademark infringement action before the PTO requesting an inspection (usually when the owner is positive of the infringement); or
  • file an inspection request before the PTO in order to verify products, obtain samples or pictures – after verification the owner can decide whether to file for trademark infringement.

In both cases, the PTO could order the seizure or immobilisation of the infringing goods as precautionary measures.

Goods seized remain at a private warehouse as long as the procedure lasts and at trademark owner’s expense.

The administrative procedure for infringement against IP rights could last from 12 to 18 months. When the parties reach a conciliation agreement, it could last around six months.

Decisions can always be appealed before the Administrative Court of Appeals, which usually issues a resolution within nine to 12 months, or longer, depending on the complexity of the case. At this stage, parties can request oral hearings to present their arguments.

The destination of the goods could include the following:

  • If the parties have not reached a conciliation agreement, the PTO will issue a resolution and order:
    • the donation of the goods to charity; or
    • the destruction of toxic and forbidden goods.
  • If the parties reach a conciliation agreement, the goods remain with the trademark owner, usually for destruction or as agreed with the other party.

Criminal action: The crime against IP rights is stated in the Criminal Code. It can be started with a criminal claim from a trademark owner before the prosecutor, the police specialised in IP matters or with an ex officio raid. A criminal case may last around two to three years.

The trademark owner may request an inspection, in coordination with the police and prosecutor specialised in IP matters, at the location where the fake goods are being developed or commercialised, or where the seizure or immobilisation of the goods has been ordered.

After this, the prosecutor will investigate the case and, depending on the evidence filed, the prosecutor will then decide to file a claim before the Criminal Court. As the criminal case is a public action, the trademark owner participates in this process only as a third party.

The punishment is imprisonment of up to five years (which is not effective) and a fine.

Decisions can always be appealed before the Criminal Court of Appeals, which usually issues a resolution within 18 to 24 months. At this stage, an oral hearing is presented

The goods seized remain at the IP police or prosecutor warehouse for as long as the procedure lasts. Seized goods are donated or destroyed (particularly toxic goods) at the end of the proceedings.

Civil action: Although civil action is stipulated in trademark legislation, it is not used to initiate infringement action, as there are no specialised authorities in this arena.

However, after an administrative procedure has concluded (eg, cancellation, nullity and infringement claims), the civil courts are reached by requesting nullity before the civil judge of the second-instance resolution. This process is stated in Law 27584 (the Law of Administrative Contentious Matters) which regulates the whole procedure.

What can be highlighted in this procedure is that the civil claim is filed against the Administrative Court of Appeals, which issued the contested resolution. It is mandatory for the Civil Court of Appeals to request from the Andean Community an interpretation of the legislation which has supported the administrative stage.

Forum shopping

When the need arises for Peruvian trademark owners to file an action against the unlawful use of their trademark, they can go to either the PTO or the Criminal Prosecutor, which are independent and parallel actions.

Advantages of the PTO, which is the administrative authority, are as follows:

  • An administrative action does not exclude other civil or criminal actions, meaning that depending on the importance of the case, the trademark owner could request an indemnity or file a criminal claim against the infringer.
  • Such action is helpful for imported products, since Customs and the PTO have an efficient communication system in order to stop the import of fake goods.
  • The goods are almost always taken to a private warehouse until the end of the procedure.
  • The parties could settle – in a settlement the trademark owner may decide if it prefers the donation or destruction of the goods in question.

Disadvantages of the PTO are as follows:

  • Infringers do not always pay the fines imposed by the PTO, as there is no crime involved.
  • The PTO does not always conduct big raids at important or clandestine factories, since it must request police assistance in such matters.

Advantages of the criminal authority include the following:

  • Criminal authority support, with the assistance of police officers, is advisable for large raids.
  • Criminal authority support is advisable for investigating clandestine factories that are continuously changing premises. In such cases, police officers usually verify the intelligence, conduct the intelligence work (ie, investigations) and carry out the raid immediately when goods are being manufactured, printed or copied.

Disadvantages of the criminal authority include the following:

  • Imprisonment is not usually effective when after three or four years in jail the criminal is released from the charges and is ordered to pay a small fine.
  • Proceedings are long and tedious and the trademark owner is only a third party. The prosecutor is the party that files the claim before the judge.

Jury versus bench

The Peruvian trademark litigation system does not include jury trials. The administrative, criminal and civil procedures have a structure similar to a bench trial.

Damages and remedies

Available remedies

From an administrative perspective, a trademark owner could request the competent authority to order the payment of a fine up to S150 (approximately $197,000).

Penalties vary depending on the amount of goods seized, the infringer’s behaviour and the value of the goods, among other things.

Besides the monetary fine, the authority can order the following remedies when issuing a resolution in a case:

  • cessation of all acts that constitute infringement;
  • compensation for damages;
  • withdrawal from the commercial channels of all products resulting from the infringement (including packaging, wrapping, labels, printed materials or advertising, together with materials and implements, the predominant use of which has been the commission of the infringement);
  • prohibition against the import or export of the products, materials or implements used in the infringement;
  • adjudication of the ownership of the products, materials or implements, the value of which will be charged at the amount of compensation due for damages;
  • adoption of the necessary measures to avoid continuation or repetition of the infringement (including destruction of the products, materials or implements, or the temporary or definitive closure of the business belonging to the defendant or the accused); or
  • publication of the guilty verdict and notification of interested parties at the infringer’s expense.

Even though Andean Community legislation states the compensation for damages within the administrative resolution, National Decree 1075 establishes that the trademark owner can request before the Civil Court the compensation for damages only with a consented resolution at the administrative stage.

Moreover, the trademark owner can request the payment of legal fees and expenses derived from the case.

From the criminal side, the Criminal Court can order as remedies derived from a crime against intellectual property, imprisonment of up to five years, when the person involved is not a repeated offender, as well as a 60 to 365-day fine and disqualification, taking into consideration the seriousness of the crime and the value of the damages.

Injunctive relief

In Peru, for both criminal and administrative cases, preliminary injunctions are available, making it helpful for the trademark owner as an immediate response is given to an actual infringement.

In most cases, when there is an infringement action or crime, depending on the legislation applied, the trademark owner requires the infringement or crime to cease at the earliest stage. Precautionary measures thus become one of the most important tools in the fight against counterfeit goods and infringement.

In both administrative and criminal cases, the basis for sustaining the request of a precautionary measure is directly involved with the accreditation of the lawful right to act and the existence of the infringing right, by supporting the request with precise evidence.

In administrative legislation, for a provisional measure in respect of particular goods, the applicant should supply the necessary information and a sufficiently detailed and precise description, so that the allegedly infringing goods can be identified.

Evidencing the case

Investigations and first steps

Investigations in Peru are mostly related to criminal cases, as the first stage of a criminal case begins with an investigation by the IP prosecutor. Once the IP prosecutor has completed the investigation (which takes around 12 to 18 months), he or she decides whether to close the investigation with no grounds or file a claim before the IP criminal judge. Only then does the criminal case begin.

The IP prosecutor’s investigation is one of the most difficult and important parts of a criminal case, as it defines and sets the basis for the ensuing criminal case.

Even though there is usually no investigation carried out by the authority at the administrative stage, in order to present a case before the PTO, the trademark owner must carry out an investigation before presenting the case in order to have all evidence and information available to submit to the PTO. The information may include a test purchase, along with notary public, surveys and documented evidence.

Survey evidence

Surveys are used in Peru but usually at the administrative stage, and generally only:

  • for cancellation;
  • for nullity-related cases; or
  • when the trademark owner seeks to prove secondary meaning.

Surveys are one of the most important types of evidence accepted by the PTO, and are often the evidence that defines the success of the case.

Surveys should include the minimum requirements regarding information and all measurements that must be taken into consideration by the PTO.

Use of expert witnesses

The use of expert witnesses or technical experts is usual for both administrative and criminal cases, as the authorities consider the input of expert witnesses to be defining for the case.

During the investigation of the criminal stage conducted by the specialised IP prosecutors, an expert opinion from the trademark owner is necessary if the prosecutor deems it so. The prosecutor may also use investigations conducted by the police as further expert opinion.

Moreover, IP prosecutors require an expert opinion from the PTO, but usually request general information about the registered trademarks in question.

At the administrative stage, the use of technical experts is mostly done from the side of the trademark owner, but it is rarely required.

Available defences

According to Articles 157 and following of Decision 486, there are certain specific situations for defence of the use of a trademark which would not be considered infringement, including the following:

  • Third parties may use their own names, addresses, geographical names or any indication concerning kind, quality, amount, purpose, value, origin or time of production of their goods, among other things, when use is in good faith.
  • Third parties may use a trademark to announce or advertise brand comparisons, among other things, when use is merely informative.
  • Where there is another identical registration for the same trademark in another member country of the Andean Community, in the name of a different trademark owner, both can coexist in the market.
  • Where the trademark consists of a geographical name, the product may not be marketed without bearing a visible and clearly legible identification of its place of manufacture.

Appeals process

Peru has a double-instance process, meaning that at all stages the possibility to contest a first-instance resolution before the Court of Appeals, both at the administrative or criminal stages, is available.

At both stages, the parties have five days to file an appeal, which is filed before the first-instance court and elevated to the second instance.

Trademark owners can contest an administrative resolution that they do not agree with at the civil courts. They can also file an appeal with the Civil Court of Appeals when they disagree with the first-instance resolution.

BARLAW – Barrera & Asociados

Avenue El Polo 401

Office 610 Santiago de Surco

Lima 33

Peru

Tel 51 171 399 60

Fax 511 718 4000

Web http://www.barlaw.com.pe

Adriana Barrera

Managing partner

[email protected]

Adriana Barrera, founder and managing partner of BARLAW, is a recognised IP lawyer with 22 years’ experience in advising global corporations, preparing integral brand-protection strategies, litigation, enforcement, unfair competition, copyrights, trademarks and data privacy. She graduated from Universidad de Lima with a JD in 1997 and received her LLM from the University of New Hampshire, School of Law in 2001. She has also taken postgraduate courses at Universidad de Salamanca (1999) and the PAD School of Business Management, Universidad Piura (2017). Ms Barrera was president of the IP Commission of the American Chamber of Commerce in Peru from 2017 to 2018. She actively participates in working committees in international associations.

Maria Ines Herrera

Partner

[email protected]

Maria Ines Herrera is a founding partner of BARLAW, with 16 years in practice and considerable expertise in IP counselling and litigation. She has broad experience in handling the IP portfolios of international corporations and preparing brand-protection strategies. Ms Herrera has handled complex trademark and copyright infringement cases, as well as complex contentious prosecution matters. She graduated from Universidad de Lima with a JD in 2005, and received her LLM from the University of New Hampshire, School of Law in 2012. She also studied at the Peruvian Institute of Advertising in 1998. Ms Herrera is a member of many international associations and actively participates in different working committees.