Food labelling vs Trademarks in Chile: a conflict not yet settled

Diego José Acuña Domínguez
Associate lawyer at Beuchat, Barros & Pfenniger, Abogados

When two constitutional rights are at odds, it is always a difficult conflict to solve, not only for the Government authorities but also for the Courts of Justice, which are often responsible for settling the dispute.

This is precisely the current situation in Chile, which has taken the decision to go further than the rest of the countries in terms of food labelling. Chile has, indeed, decided to implement a legislation that restricts both the nutritional composition of the same, as well as the way to advertise and offer them to the consumer of the relevant market, especially in those cases where aimed at minors.

The Government is basing its decision on the need to protect public health, due to the obesity pandemic that has been afflicting Chile for a decade now and which is causing 1 in 11 deaths in Chile. In fact, according to national studies, one person dies every hour from obesity and 5 out of 10 children are overweight.

The problem is under the spotlight because of the new Health regulation. The new regulation establishes that no manufacturer can disseminate “advertising” aimed at attracting the attention of children under 14 years old regarding products whose nutritional composition includes concentrations of nutrients that exceed the established limits, and which ultimately is an indicator of high levels of sodium, saturated fats or sugars.

In turn, companies manufacturing, distributing and marketing this type of products claim that their industrial property rights regarding the trademarks used on their packaging is being restricted, without previous expropriation or compensation by virtue of such limitation.

The conflict has escalated and has eventually reached the Civil Courts of Justice. The claims were filed by the affected companies against the administrative decisions of the Ministry of Health (under which fines have already been filed against these manufacturers of foodstuffs), requesting for these fines to be waived and to be authorized to use their figurative marks on the packaging of their products.

One of the arguments put forward by these private companies refers to the fact that they are complying with the current legislation on food labelling. They have done so by incorporating the so-called “HIGH IN” warning disclaimers on the packaging of their products in compliance with the “daily food guide”.

They also point out that they have terminated their involvement in the “advertising” activity aimed at children under 14 linked to the “HIGH IN” products, calories, saturated fat, sugars or sodium. Currently, these figurative elements are only used on the packaging of the products and in retail outlets, but not in mass media such as television, newspapers or similar media.

The main argument is that the registered figurative trademarks used on their products cannot be consider as “advertising” directly targeting children under 14, since Trademarks are used to identify or distinguish their products on the market from the ones of their competitors. In other words, the main use for trademarks is to provide distinctiveness, not for advertising purposes.

According to them, the concepts of “brand” and “advertising” are not synonyms; they have a different nature. The main function of a trademark is to “distinguish” products (emanating from the very definition in the Industrial Property Act), not to “advertise” them. The main purpose of advertising is to “promote the consumption of a given product”.

There, the use of the mark on the packaging is for distinguishing purposes, not advertising (mark cannot be placed on the food product itself). It is this distinctive function that allows the consumer in the relevant national market to associate or identify a certain product with the figurative mark that represents it (such as Nike’s check or Apple’s chewed apple), and the quality associated with the product and the producer.

They also pointed out that, according to previous statements from the administrative authority trademarks would not be affected by the new legislation when used for identification purposes. However, it appears that there has been a unilateral change of criterion.

This new interpretative criterion produces effects similar to an expropriation. It prevents the use of an industrial property right, who was previously granted registration by the trademark authority, and which, is now being denied the use, which is at the very essence of the exclusivity granted by IPR (as established in the Chilean Intellectual Property Act and in the TRIPS agreements). On this regard, companies point out that limitations based on public health reasons must be established by law, in compliance with the Constitutional principle of legal reserve regarding limitations on dominance (as is the case, for example, with tobacco, where the law expressly refers to trademarks), a requirement that is not met in this case.

Finally, they claim that the use of the marks complies with the authorization granted through registration by the Trademark Office, and only for distinguishing purposes of the protected goods in accordance with the International Classification. Therefore, there would be no legal ground for the prohibition.

On the other hand, the Chilean Government relies on the preventive nature of the legislation regarding the fight against obesity in Chile and the need to transform the current environment into a healthier one that protects the population.

One of the option to achieve this purpose is by providing clearer and more comprehensible information to the consumer through the “HIGH IN” warning discs. These labels indicate that the foods bearing them contain high levels of sodium, saturated fats or sugars, therefore exceeding the limits established by the Ministry of Health. Another option is to protect children under 14 from overexposure to food “advertising” exceeding health limits established by the Ministry of Health. In this sense, advertising should be understood as any form of promotion, communication, recommendation, propaganda, information or action aimed at promoting the consumption of a given product.

The Food Health Regulations prohibit all kinds of advertising directed to children under 14 “regardless of where it is carried out”. They consider that some elements lead to the conclusion that this age group is the main target of the advertising campaign: “characters and or childish figures, animations, cartoons, toys, children’s music, if it contemplates the presence of people or animals that attract the interest of children under 14”. Furthermore, the legislation also prohibits offering or delivering these products free.

Thus, and even though it is true that trademarks have a distinguishing purpose, it is nonetheless also true that they fulfil multiple functions. One of them is advertising, which allows to position the distinguished product or service and thereby facilitate its promotion, influencing the purchase decision of the final consumer (catchy trademarks are more likely to attract the interest of consumers).

The Government also claims that industrial property rights are not absolute, they do admit limitations. According to the Doha Declaration on TRIPS and Public Health itself, IP rights do not and should not prevent Member States from taking measures to protect public health.

In addition, the definition of “advertising” given by the Food Labelling Act and the Health Regulations is broad enough and does not distinguish whether or not a figure constitutes a trademark. Otherwise, registration as a trademark would be enough to escape the application of the rules set out by the regulation.

Finally, they assert that if these products were to adjust their ingredients and composition to the tables drawn up by the Ministry of Health, they would be free to use the figurative elements on their packaging, even for advertising purposes directly directed to children under 14.

This is an ongoing discussion and both sides have already exposed their arguments. For now, all that remains is to wait for the outcome of these cases and the opinion of the Chilean Courts of Justice. Regardless of the outcome of the claims, the real impact of this legislative change is to be seen on the long term (one or two decades), after which Chile must analyze whether or not they had the intended effect: is there a reduction in obesity rates? Has physical inactivity decrease?

Meanwhile, Chilean consumers are getting used to a new packaging, where classic figurative elements that used to accompany them have disappeared (such as Tony the Tiger on the Frosted Flakes or the colorful M&M’s). The packages are now “plain” and the predominant element is the word mark.

Nuestro interés por patentar en el extranjero

Maximiliano Santa Cruz Scantlebury
National Director of the National Institute of Industrial Property – INAPI

Han pasado poco más de dos años desde que el Instituto Nacional de Propiedad Industrial, INAPI, empezara a operar como Administración encargada de búsqueda y examen preliminar internacional (ISA/IPEA) del Tratado de Cooperación en materia de Patentes (PCT), tanto para los solicitantes chilenos como para aquellos pertenecientes a los países de Latinoamérica y el Caribe, miembros de PCT.

El sistema PCT es la columna vertebral del registro de patentes internacionales. Es el Tratado más importante en materia de tramitación de patentes. Chile ingresó a este Tratado en 2009, y actualmente 148 países son miembros, y de ésos solamente 21 son ISA/IPEA (Autoridades de búsqueda y examen preliminar internacional), una categoría que habilita a emitir una opinión que puede ser utilizada por las oficinas de patentes de los restantes países miembros del tratado. Una de esas 21 oficinas es el INAPI, lo que la hace la segunda en la región en conjunto con la oficina de Brasil y la segunda en tener como idioma de trabajo el español, junto a la oficina Española.

Durante el primer año que INAPI ha funcionado como ISA/IPEA, desde el 22 de octubre de 2014 a diciembre de 2015, se presentaron 169 solicitudes internacionales PCT que designaron a INAPI como ISA, de las cuales 123 fueron chilenas y el resto de países latinoamericanos, quienes eligieron y confiaron en INAPI para realizar búsquedas internacionales.

Al respecto, debo destacar que de las solicitudes que nos han designaron como ISA/IPEA en ese periodo, 44 corresponden a universidades chilenas (más 5 extranjeras). Ese número es muy alto, y reafirma las cifras que se tuvieron durante ese período como Oficina Receptora, en donde 22 solicitudes de un total de 90 que se recibieron (equivalente a un 24,4%) fueron de universidades nacionales. Estos números superan claramente en forma porcentual las cifras globales respecto del patentamiento de universidades en PCT y, por otra parte, confirma el acierto de INAPI de fijar tasas diferenciadas y de menor valor para las casas de estudios superiores, como una manera de facilitar y promover la acción de las universidades en la innovación. Ello queda demostrado con las solicitudes presentadas por universidades con menos experiencia en el patentamiento de sus innovaciones, como la Universidad de Talca, la Universidad Andrés Bello y la Universidad del Biobío, las que se unen a otras ya más consolidadas como la Pontificia Universidad Católica de Chile, la Universidad de Concepción y la Universidad de Santiago.

Las universidades son la fuente primaria de la mayoría de las innovaciones tecnológicas y son el puente perfecto para establecer un intercambio de doble vía entre la investigación por un lado y los negocios y la comercialización por el otro. En Chile las universidades están haciendo un buen esfuerzo en patentar y que deberían seguir haciendo y promoviendo.

La generación de nuevo conocimiento a través de la actividad científica de las universidades es un instrumento fundamental para llegar al desarrollo económico, social y cultural. Chile posee una tradición científica que lo sitúa en posiciones de vanguardia en términos de productividad a nivel latinoamericano y eso es lo que reflejan estas cifras.

Quiero decir que en INAPI estamos muy satisfechos con el número de solicitudes que nos han designado durante dicho período como ISA/IPEA de PCT, ya que ello da cuenta de la alta confianza que despierta INAPI en la comunidad de la Propiedad Industrial tanto chilena como de la región y a la vez nos genera una enorme responsabilidad con aquellos solicitantes que confiaron en nosotros para prestarles un servicio de búsqueda de calidad y eficiente.

Radiografía (rápida) de la propiedad industrial en Chile durante el primer año de INAPI como Autoridad ISA/IPEA

Fundación Empresarial

Cuarenta de las 155 solicitudes de patentes internacionales que ha gestionado INAPI en su primer año como organismo encargado de Búsqueda y Examen Preliminar Internacional corresponden a casas de estudios superiores.

De Chile, América Latina y el Caribe pueden provenir las solicitudes que desde hace un año puede gestionar el Instituto Nacional de Propiedad Industrial de Chile, INAPI, como Autoridad ISA/IPEA. Bajo este estatus realiza análisis preliminares, como identificar documentos publicados que puedan influir en la patentabilidad de una invención y emitir una opinión acerca del cumplimiento de los requisitos.

En el primer año de funcionamiento con este nuevo rol, INAPI recibió 155 solicitudes internacionales de patentes, de las cuales 40 fueron de universidades chilenas. “Hoy en día INAPI es la puerta de entrada al sistema internacional de patentes”, afirmó al respecto el director nacional del organismo, Maximiliano Santa Cruz, en una columna publicada por el sitio web de INAPI.

A nivel regional, el instituto es la segunda oficina en tener esta categoría después de Brasil, y a nivel global es la segunda de habla hispana, luego de España.

A estas cifras se le suman las generadas este año en materia de registro de marcas, las que a septiembre llegan a 31.047. Los datos muestran un positivo panorama para la propiedad intelectual en Chile. El año pasado el país se ubicó en el lugar 24 del ranking IPRI (International Property Rights Index), elaborado por Property Rights Alliance, lo que lo sitúa en el primer lugar en la región.

Dado el panorama internacional de una creciente globalización comercial, la propiedad intelectual se ha convertido en un tema central para los principales mercados. En este contexto, INAPI, junto con la Fundación Empresarial Eurochile, son socios del proyecto Latin America IPR Helpdesk, que depende de la Dirección General Investigación e Innovación (programa COSME) de la Comunidad Europea. Esta iniciativa busca “facilitar la expansión de las pymes europeas interesadas en operar en América Latina, a través del aumento de conocimiento del uso y reforzamiento del sistema de propiedad intelectual y de los derechos de propiedad intelectual”.

“El fortalecimiento actual de la propiedad intelectual, sumado al hecho de que las pymes puedan aprender a utilizarlos de manera estratégica en sus negocios en la región, redundará en mejores condiciones para que empresas europeas puedan instalarse en nuestros países, lo que trae innumerables beneficios tanto en generación de empleo e innovación, como en intercambio de conocimientos y tecnología”, asegura Ivonne Palma, experta en propiedad intelectual de Eurochile.

Ventajas de las patentes

El registro de patentes constituye un fuerte incentivo para las personas e instituciones que han invertido esfuerzos en invención. Las patentes significan un reconocimiento por su creatividad y recompensas materiales por sus invenciones comercializables.

En Chile, la ley reconoce que el dueño de una patente goza de exclusividad territorial, para producir, vender o comercializar y explotar de cualquier manera el invento protegido. El titular de la patente tiene el derecho de decidir quién puede utilizar la invención patentada durante el período de protección, concertando permiso de licencia a terceros, según términos establecidos de mutuo acuerdo.

La norma también establece que en caso de que terceros comercialicen la invención protegida sin un consentimiento, el titular podrá ejercer acciones legales, incluso por el período de tramitación del derecho.

Datos de noviembre de 2015.

Gold Medal for Chile

Maximiliano Santa Cruz Scantlebury
National Director of the National Institute of Industrial Property – INAPI

In 1986 the world heard the breaking news on the field of medicine. The Food and Drug Administration (FDA) announced the approval of the first recombinant vaccine, product developed to fight the Hepatitis B virus, a potentially mortal infection.

The Chilean biochemist Pablo Valenzuela Valdés was behind this historic scientific achievement. He became a referent of the genetic engineering as well as a pioneer on the technology transfer at the University of California, San Francisco.

The invention was patented and then licensed to pharmaceutical firms who were responsible for distributing the vaccine to dozens of countries. The license agreement has become the most prolific in term of economic results for the University of California, San Francisco in almost two decades, allowing funding new discoveries and further technology development.

Later the protection of industrial property on the vaccine, based on research about yeast, produced a number of tests which transformed the blood banks in a safer source.

Dr. Valenzuela´s contribution still gathers praise. On last October 22nd he became the first Chilean scientist to be awarded with the Gold Medal for Inventors, given by the World Intellectual Property Organization (WIPO). The award was promoted by The National Institute of Industrial Property of Chile (INAPI), due to Valenzuela significant contribution to the creation of new knowledge and its appropriation, which has meant a truly entrepreneurship engine for development.

The award had a special meaning for the patent system, as was given at the first anniversary since INAPI began operations as International Searching and Preliminary Examining Authority (ISA/IPEA) under the Patent Cooperation Treaty (PCT). This new role, reserved only for 21 national agencies in the world, has meant a stimulus for Chilean universities and inventors in order to globalize their inventions and reach bigger markets.

During this year, 11 countries from Latin America and the Caribbean, which are PCT members, have designated the Chilean office as the mandated office to search and conduct the preliminary examination on patents.

Thus, the Chilean agency of industrial property provides services beyond their borders as well as Chile paves the way for the proliferation of new inventors who might impact the world with their technological developments as Pablo Valenzuela did almost three decades ago. He is the undisputed winner of the WIPO Gold Medal.

PCT: The backbone of the international patent system

Maximiliano Santa Cruz Scantlebury
National Director of the National Institute of Industrial Property – INAPI

It has been over six years from the entry of Chile to one of the most important and successful agreements of intellectual property. The 2nd of June of 2009 our country was incorporated into the 148 member nations of the Patent Cooperation Treatment (known as PCT), managed by the World Intellectual Property Organization (WIPO) and which saw the light over 40 years ago, in 1970.

Practically all of our major commercial partners like United States, the European Union, Brazil and China are PCT members. In addition, it can be highlighted that countries with very different economic developments such as Australia, Mexico, Canada, South Africa, Japan, Malaysia and India are members as well. This proves the trust put in this international agreement, which also foster innovation and technology transfer, through the free and efficient access to an enormous database of technology information on patents.

The incorporation of Chile to the PCT has completed a triad of significant events that have strongly impacted on the intellectual property system in our country. Besides the implementation in Chile of the intellectual property agreement from the World Trade Organization´s (WTO), during 2005, as well as the signing of a couple of free trade agreements, remarkably the one with United States, the PCT has closed a cycle of important transformations within our intellectual property system.

The PCT is a strategic tool in two aspects. On one hand, facilitates the patenting of our nationals overseas; as counterpart the foreigners obtain a much more easy access to patent in Chile. On the other hand, expedites the work of industrial property offices and improves the quality on granted patents.

This agreement concentrates a large interest from the Chilean innovators, expressed on the 48 patent applications at INAPI during the very first year of the enactment entry. Such figure is one of the highest at the Latin American level, during the first year of the enactment of this treaty.

Before this agreement, Chileans should make the patent application on every single country where they wanted to have protection, immediately after the first 12 months to its application in Chile; in that form, the invention still was considered a novelty, and if they would intend to use the PCT, Chileans should associate or find administrative loopholes.

Nowadays Chile is part of the PCT and national innovators can simply apply with an only solicitude at the National Institute of Industrial Property (INAPI), which will be considered as simultaneously applied in each of the 148 country members of this treaty.

This allows saving costs, because they are not required to make multiple translations on the application, nor undergo to diverse procedures and neither make payments on multiple currencies according to where they would like to protect. Today they can apply in Spanish, in a single procedure to be paid in Chilean pesos.

The PCT is a good example of globalization and internationalization of the intellectual property system. Its virtue resides in the enhancement of the international patenting and the cooperation of the industrial property offices, and at the same time it does it respecting the whole sovereignty of the member countries which can freely determine the patentability conditions and deciding whether an invention is finally patentable.

The PCT is a crucial tool to achieve the goals of the Ministry of Economy in Chile, about strengthening the institutional framework for intellectual and industrial protection, promoting the invention as well as patenting among Chilean scientists and entrepreneurs.

If the WTO intellectual property agreement in 1994, known as TRIPS or ADPIC, was probably the most transcendent milestone of the past century for substantive harmonization, the PCT was the equivalent on the matter of cooperation and infrastructure on the global patent system. So much so that Francis Gurry, current WIPO Director General, has called it the “backbone of the international patent system”.