Latin American countries have varying positions with respect to parallel imports (i.e., branded goods that are imported into a market and sold there without the consent of the owner of the trademark in that market). Members of the Andean Community of Nations—Colombia, Peru, Ecuador and Bolivia—have regulated the issue under Decision 486 of the Andean Community, which supports the concept of international exhaustion of trademark rights and allows parallel imports when the product in question has not been modified or altered in the course of trade. International exhaustion regimes allow for trademarked goods that have been sold by the IP right holders in a particular jurisdiction to be resold in regions other than the country or region of origin. However, certain internal regulations of individual countries establish limitations to the types of parallel imports that may enter.
Some countries in Latin America and the Caribbean do not regulate parallel imports. Venezuela recently struck down its more modern IP law in favor of adopting its previous law, passed in 1955, which favors the national exhaustion of rights. Brazil expressly establishes the national exhaustion of rights, with some exceptions. One of the exceptions refers to the “local manufacture obligation” provided by the Brazilian legislation. If the exploitation of the patent (and use of the trademark) is made through importation of the product, third parties are allowed to import such product that has been placed in the “market.” In this case, parallel imports are admitted.
Like the Andean Community, other countries in Latin America allow for parallel imports and apply an international exhaustion regime, such as Argentina, Chile, Costa Rica, El Salvador, Guatemala, Mexico, Netherlands Antilles and Uruguay. However, as with the Andean countries, national IP laws limit the types of parallel imports allowed. The Law of Competition of Argentina limits parallel imports when the products are of bad quality. The Income Tax Law prohibits parallel imports when taxes are not paid before being imported into Argentina and the Consumer Protection Law of Argentina also prohibits the entrance of products that are of bad quality. Chile requires the information on a particular label to be verifiable, so trademark owners can initiate actions against some parallel import products that fail to meet this requirement.
In Mexico, an international exhaustion regime applies. Mexico’s Industrial Property Law also clearly indicates that a trademark registration shall not be enforceable against any person marketing, selling and distributing products bearing a trademark after such products have been legally introduced within the Mexican territory. There have been at least three attempts to modify or reform the current Mexican Customs Law; these were ultimately rejected by the Congress. During the 8th Amendment to the 2011 Foreign Trade Resolution, the Mexican Customs Authority created a “Trademark Owners Database,” which contemplates the possibility of providing more attention and surveillance for the brands registered there. However, trademark owners have no obligation to register their trademarks in this database, there are no sanctions and the Customs Authority has no legal right to pursue any trademark infringement.
In 1995, the MERCOSUR member countries—Argentina, Brazil, Paraguay, Uruguay and Venezuela—signed the “Protocol on Harmonization of Intellectual Property Norms in MERCOSUR in the Field of Trademarks, Indications of Source & Appellations of Origin”(MERCOSUR/CMC/Decision No. 8/95), which included a provision that could be interpreted as sustaining the principle of international exhaustion. Indeed, Article13 of the Protocol provides that “The registration of a trademark shall not prevent the free circulation of the trademarked products, legally introduced into commerce by the owner or with his authorization. The Party States undertake to include in their respective legislations measures that provide for the exhaustion of the right granted by the registration.” Only Paraguay and Uruguay have ratified this Protocol.
In conformity with this Protocol, Paraguay has included a provision in its Trademark Law No. 1294/1998 that adopts the principle of international exhaustion, which sets forth that “free circulation of products bearing marks, lawfully introduced into the market in any country by the owner or with his authorization, based on registration of the mark, may not be prevented, provided that the products, together with their containers and packaging, have not been altered, modified or damaged.”
Although no immediate changes to legislation in the region are being discussed at this time, the Committee is hopeful that the newly adopted INTA Board Resolution on parallel imports titled, “A ‘Material Differences’ Standard for International Exhaustion of Trademark Rights
,” will open the door for those countries not willing to make radical changes to their international exhaustion regimes. INTA’s resolution allows for the option to restrict entrance to those products with “material differences,” which includes any difference (physical and non-physical) between the parallel import and the original product that may defeat the consumer’s legitimate interests.
To read more about the Board Resolution, which was passed during the 137th Annual Meeting in San Diego, visit the Policy and Advocacy section of INTA.org, under Board Resolutions
Although every effort has been made to verify the accuracy of items in the INTA Bulletin, readers are urged to check independently on matters of specific concern or interest.
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