Enforcing rights in Chile
In Chile, intellectual property issues are generally dealt with in two separate pieces of legislation: Law Nº19.039, hereinafter the Industrial Property Law, governs patents, trademarks and designs and Law Nº17.336, hereinafter the Copyright Law, governs copyrights.
In terms of enforcement, the Industrial Property Law only contemplates criminal actions, while the Copyright Law contemplates both criminal and civil actions. Therefore the vast majority of patent, trademark and design, and a substantive part of copyright infringement cases, are prosecuted before the criminal courts
Criminal infringement actions
The criminal proceeding has two stages the ‘sumario’ and the ‘plenario’. Within the sumario, parties have little participation and the court directly conducts the investigation in secrecy, with a view to determining the existence of the crime and those responsible. The plaintiff can cooperate by suggesting investigation measures and providing information that may serve to demonstrate the infringement. Moreover, the court is not bound by any special term and in practice can take the time it deems appropriate to conclude its work.
The case will enter the plenario, only if the court is convinced that there are good grounds to suspect the existence of the infringement and those responsible for it. The court’s findings, which can be joined by the plaintiff, are served on the defendant, who will be given a term to answer. After the evidence is assessed, a final decision will be rendered. This final decision can be appealed to the Court of Appeals.
Full prosecution of a criminal infringement case can be fairly long, often taking three years before a final decision, and at least an additional year if the case is appealed.
However, criminal infringement cases are rarely fully prosecuted and normally terminate before, either because during the sumario the court is persuaded by the plaintiff to decree an impoundment or another precautionary measure over the infringing products, which typically prompts a settlement, or because, after investigating the matter, the court is not convinced about the existence of the crime and so closes the proceedings.
Civil infringement actions in Copyright Law
The Copyright Law provides for a special abbreviated civil
proceeding, and it is possible to obtain a definitive decision approximately
within a year and a half. This proceeding is the most convenient if the main
goal is to recover damages. However, if the goal is simply to stop the infringement,
due to the availability of preliminary impoundments, the criminal proceeding might be preferable.
The cost of taking a case through the courts
Costs are not significant in criminal infringement litigation, since the proceeding is devoid of formalities and the investigation measures commanded by the court are performed at no charge by public institutions such as state laboratories and police squads. Moreover, neither the criminal complaint nor the court’s resolutions during the sumario are to be served to the parties.
Costs will increase if the infringement complaint is supported by technical tests and scientific reports on the infringing products, which is recommended in those cases where the infringement is not apparent, typically patent and design cases. If these tests and reports are performed locally they may involve costs in the range of US$5,000 for a scientific report analysing the structure of the accused product and US$2,000 for a technical study of the features of the accused design.
Specialisation of the courts
There are no specialised courts for IP matters in Chile and in practice this is one of the most inconvenient features of the system. Indeed, the ever-increasing complexity of these matters requires not only a thorough knowledge of the applicable laws and international treaties, but a basic understanding of the technologies protected by the IP rights. Almost all the courts lack this education, which often, particularly in patent cases, is directly detrimental to the IP owner.
Moreover even if the Industrial Property Law states that the court should hear the opinion of the Chilean Patent and Trademark Office before rendering a final decision, this Office typically avoids giving any substantive guidance concerning the scope of protection of the IP right at stake, and whenever possible, restricts its opinions exclusively to formal aspects, such as who is the registered owner or its current status.
The validity of a patent, a trademark or a design, cannot be challenged before the courts but must be discussed before the Chilean Patent and Trademark Office in a separate proceeding. This, without prejudice to the practical inconveniences it involves, prevents a deeper study of the IP matters by the courts.
Finally, the court of second instance, the Court of Appeals, is divided into several chambers, none of which is specialised in IP matters. In practice, appeals in IP cases can be heard by any of these chambers, which also hinders a sort of de facto specialisation that may occur if one particular chamber was to hear all these cases.
Attitude of the courts to IP rights
Largely because of the lack of effective civil infringement
proceedings, most litigation is conducted under the rules of the criminal
proceeding and before the criminal courts. These courts tend to view IP conflicts
as business disputes rather than as real crimes, and accordingly it is hard
to convince them that the defendant has committed a
crime by trading an infringing product. This does not imply that the criminal court will not investigate and eventually decree an impoundment or other precautionary measure. However, it will rarely render a final condemnatory decision.
Civil courts, precisely because they do not have to establish criminal responsibility in order to render a decision recognising the infringement, tend to have a more favourable view with respect to the exclusive rights of IP owners and several final decisions in this direction have been rendered both by the courts and the Court of Appeals. Regrettably, since effective civil proceedings are only available in the Copyright Law, all these decisions have been rendered in this field.
Remedies available to rights owners
The Industrial Property Law considers patent, design and trademark infringements as a crime. The criminal penalties it sets out consist of fines which are paid to the state and range from approximately US$5,000 to US$25,000. These fines can be doubled where the defendant is reoffending. No imprisonment is available under this law.
Notwithstanding the low amount of the fines and the
lack of imprisonment penalties, the Law specifically provides for the impoundment of the infringing products and in the case of trademark infringement, for the disposition and eventual destruction of the equipment used to produce the infringing products.
The Law also enables the criminal court to grant impoundment from the outset and even ex parte. An impoundment constitutes the main target in the majority of the infringement cases in Chile. Indeed, few IP owners will continue with the infringement suit once the infringing products are off of the market.
Additionally, this law also enables the criminal court to grant other precautionary measures that may effectively prevent the continued commission of the infringement, as for example a sales prohibition over the infringing products. This measure can also be granted ex parte.
The Copyright Law contemplates criminal civil infringement actions. It is to be noted that there are no special categorisations of infringements and the same behaviours may be pursued either civilly or criminally.
Copyright infringement can qualify as a crime punishable by a fine of up to US$2,500 or up to 540 days imprisonment. The imprisonment can go up to three years in cases where the defendant is reoffending. As with patent and trademark cases, the criminal court can grant impoundment or other precautionary measures from the outset, even on an ex parte basis, to prevent the further commercialisation of the infringing products.
Within civil copyright litigation, the court is entitled to order a series of interlocutory precautionary measures before the final decision, for example, the suspension of the sales or distribution of the infringing products, and also the suspension of public performances and displays of infringing works.
The court can also order the publication of the final decision at the expense of the defeated defendant. The civil judge is entitled to decree an impoundment of infringing materials, but only as a measure to facilitate the payment of damages previously awarded to the plaintiff.
Key points to be aware of when enforcing rights
The Industrial Property Law establishes that trademarked and patented products must be marked with the legal indications. Failure to proceed with this marking will not result in invalidity of the corresponding registration, but will deprive the owner of the right to the infringement actions contemplated in this Law. Therefore, it is necessary to proceed with this marking on products that use patented technologies or bear the trademarks that will be involved in litigation.
The Copyright Law does not impose any notice obligation as a condition to the valid exercise of the exclusive rights stemming from a copyright. However affixing the copyright notice is advisable to destroy pleadings of innocent infringement.
Registration is a requirement in order to enforce the exclusive rights stemming from a trademark. It is not possible to base an infringement complaint solely upon the basis of a pending trademark application and/or simply upon the earlier use of the trademark in the market.
However, it is possible to initiate infringement actions upon the basis of a pending patent and/or design application in order to prevent malicious imitations. Even though the efficacy of these rules is questionable, since courts are reluctant to decree interlocutory measures until the patent or design is granted, the sole fact that enforcement litigation is readily available, is per se an important deterrent to infringements.
On the other side, the Copyright Law establishes that the copyright over a work of authorship is immediately acquired from the creation of the work and no formalities are needed to enforce its exclusive rights. Notwithstanding, the registration of a work of authorship with the Chilean Intellectual Property Department is advisable, for such registration is very simple and non-expensive and grants the registrant with a legal presumption of ownership.
Cease and desist letters though not mandatory, are generally recommended in order to destroy pleas of innocent infringement.
The availability of damages
Damages are available both in copyright and patent, design
and trademark infringement litigation. The only damages that can be recovered
by the IP owner are those that
are a direct consequence of the infringement. Punitive or trebled damages in cases of wilful infringement are not contemplated in either of these laws.
Attorneys’ fees and costs can be recovered, however, these are assessed by the courts and normally are much lower than the expenses actually incurred by the prevailing party.
Finally, there are no specific rules for the assessment of damages in any of these laws, thus, in principle, the IP owner should be entitled to recover either, actual damages or alternatively, the profits received by the defendant, which are a direct result of the infringement.
Alternatives to litigation
Arbitration and mediation have not been used as alternative tools to solve IP infringement conflicts in Chile.
Irrespective of the above, an IP owner who does not wish to commit personally to litigation, may choose simply to file an infringement notice with the Police Department, detailing the infringement and providing as much information as possible concerning the infringement. The police are legally obliged to move forward, notifying the competent court about the infringement notice, and await the resolution of this court authorising them to investigate the crime. The court’s investigation order may be broad enough so as to include the possibility of impoundment of the infringing products.
This line of action is feasible under the criminal infringement rules of both the Industrial Property and the Copyright Law.
The Chilean Congress is in the process of implementing TRIPS, and the Industrial Property Law will be amended accordingly by the end of this year. From the enforcement perspective, the most remarkable changes that are expected in this law are the following:
• A civil abbreviated infringement proceeding similar to the one already available in the Copyright Law will be included.
• Actual damages, the profits of the defendant, and reasonable royalty, will be valid parameters for the assessment of damages.
• Courts in civil infringement litigation will have the faculty to reverse the burden of proof in process patent infringements.
• The protection of a process patent will be extended to the product obtained directly through it.
• Pre-trial precautionary measures will be included. These measures will allow the IP owner to require immediate and ex parte injunctions, under the condition of filing the infringement complaint within a 30-day term.
• Rules for the protection of undisclosed information will be included.