• Bad news for Intellectual Property in Ecuador
  • October 29, 2012 | Authors: Alvaro Ramirez Bonilla; Eliana María Reyes Fernández
  • Law Firm: B&R Latin America IP LLC - Bogotá Office
  • The Ecuatorian PTO -the IEPI- and the Ecuatorian government have alarmed the Latin American IP community with recent decisions regarding IP procedures in this country. Two regulatory changes affecting the domestic PTO seem to reflect a change in perspective from governmental authorities on Intellectual Property issues, and are worrying trends for investors and IP attorneys.

    At B&R Latin America, while being respectful of the decisions that each domestic PTO takes in order to protect IP in their countries, we firmly reject any decision that may result damaging to a country’s innovation and research market. Indeed, we consider that Ecuador may be taking steps in a way that is neither convenient nor smart for their economic development.

    Higher official fees for IP procedures.

    As from October of 2012, most official fees for IP procedures in Ecuador were raised. In some cases, fees had as much as a tenfold increase.

    However, as explained below, this increase in fees won’t affect all applicants, and will be specially damaging for foreign corporations and multinational companies. This is especially worrying since over 99% of all patent applications and nearly 50% of all other IP applications in Ecuador are from non-resident applicants. Furthermore, given the small amount of R+D that is conducted in Ecuador (and in Latin America as a whole), increased fees will created an entry barrier for big corporations that will slow down technology transfer to the country.

    The IEPI states that the increased fees aim at “Providing equity to the fees that are currently charged in Ecuador and those charged worldwide”. However the new fees for annuities for patents go as high as:

     -2371% or 23 times higher than annuities in Colombia (From the 1st to the 20th year)

    -1417% or 14 times higher than annuities in the United States

    -505% or 5 times higher than annuities before the European Patent Office

    Therefore, there is no equity in the new schedule of fees of the Ecuadorian PTO, and they become real entry barriers for the Ecuadorian IP market. 

    These are the old and the new fees for the most common procedures:

     

    Patents

    -Patent application: Fees were raised from USD$404 to USD$2816

     

    -Official search for state of the art: Fees raised from USD$112 to USD$836,96

     

    -Patent examination: Fees raised from a range of USD$196 to USD$964 to a fixed fee of USD$1510,40

     

    -Patent Annuities (payable at the moment the patent application is filed):

    1st year (since the date of application) fees raised from USD$104 to USD$1143,42

    2nd year from USD$104 to USD$1331,89

    3rd year from USD$148 to USD$1551,43

    4th year from USD$148 to USD$1807,16

    5th year from USD$148 to USD$2105,05

    6th year from USD$148 to USD$2452,03

    7th year from USD$148 to USD$2856,21

    8th year from USD$228 to USD$3327,02

    9th year from USD$228 to USD$3875,43

    10th year from USD$228 to USD$4514,23

    11th year from USD$228 to USD$5258,34

    12th year from USD$320 to USD$6125,10

    13th year from USD$320 to USD$7134,73

    14th year from USD$320 to USD$8310,78

    15th year from USD$428 to USD$9680,69

    16th year from USD$428 to USD$11276,41

    17th year from USD$428 to USD$13135,16

    18th year from USD$572 to USD$15300,30

    19th year from USD$572 to USD$17822,33

    20th year from USD$572 to USD$20760,07

     

    -Changes in the patent registry: From USD$104 to USD$227,25

     

    Trademarks

    -Tri-dimensional Trademark application: Fees raised from USD$336 to USD$939,53

     

    Industrial Designs

    -Industrial Design applications: Fees raised from USD$108 to USD$526,46

     

    Plant-breeders rights

    -Plant-breeders rights application: Fees raised from a range between USD$560 and USD$200 to a fixed fee of USD$1240,19

    -Examination of the plant varieties (per year or cultivation cycle): Fees raised from a range between USD$152 and USD$6000 to a fixed fee of USD$3864,00

    -Annuities for Plant-breeder rights:

    1st year fees were raised from USD$100 to USD$1428,66

    20th year fees were raised from USD$550 to USD$24935,19

     

    *These are just two examples of annuity fees for plant-breeders rights

     

    The Ecuatorian PTO has furthermore included a discount of up to 90% on these official fees for the following categories of applicants:

    1. Small and median-sized companies (Mipymes)

    2. Universities

    3. Independent inventors

    4. Public institutions

    5. Small and median-sized farmers

    6. Cooperative companies

    Therefore, the applicants that will really be damaged will really be foreign companies, multinational corporations and big Ecuadorian companies. Given the fact that the research and development (R+D) that is required for a steady flow of innovation and patenting is not only expensive but also time-consuming, it is mostly big corporations and foreign companies the drivers of the patent (and other IP) applications in Latin American countries. The result, will probably be a dramatic drop in IP applications in Ecuador, and that large foreign companies will search for other attractive markets with lower entry barriers.

    However, this doesn’t mean that you should not file patent applications in Ecuador. The protection of the patent system is still highly valuable and not patenting could result in even higher losses than the official fees charged by the IEPI. Despite the existence of an entry barrier, the Ecuadorian IP market remains highly valuable and profitable.

    Restructuring of the Ecuadorian PTO

    Besides the increase in Official Fees, the Ecuadorian government has made profound changes to the Instituto Ecuatoriano para la Propiedad Intelectual, IEPI. As from October the 19th and through Executive Decree No. 1322, Ecuador’s president, Rafael Correa, has ordered:

    -That the Ecuadorian PTO, the IEPI, will now be attached to the National Secretary for Higher Education, Science, Technology and Innovation -SENECYT-. In practice, this means that the PTO will no longer be an independent entity, and its main goal of protection of IP rights will now be second to educational and scientific-development goals. However, this approach is misguided, since adequate protection (neither too much nor too little) of IP rights is necessary for “education, science and innovation”. Au contraire, a non-independent IP Office will likely result in isolation of the country from the international R+D and innovation flows and distrust in the decisions of the PTO.

    -Finally, the Directive Board of the PTO was modified.  The board will now be integrated by representatives from the presidency and by the ministries of Agriculture, Culture, Industries, Environment, and Health; and by the Secretary General for Planning and Development. The President of the IEPI will now have the title of “Executive Director” and will serve as secretary of the Directive Board, without the right to vote on the board’s decisions. Once again, this amounts to reduced independency of the PTO and more control from government authorities over its decisions.

    The right problem, the wrong solution.

    It is no secret that there are problems with the patent system on a worldwide scale, and that the excesses of the patent system can result highly damaging for a country’s development. However, establishing high entry barriers and isolating the country from the world IP market is clearly not the solution for solving these problems.

    As a law firm with a cross-border practice that holds the Ecuadorian IP market as very valuable for investors in Latin America, we expect the IEPI to take a more reasonable approach in the future. Furthermore, we expect the IEPI to remain impartial and fair in its decisions.