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Free Trade Agreement with EU. Challenges for Colombia and Peru on Intellectual Property

Colombia and Peru have entered into a number of Free Trade Agreements with leading developed nations. They recently completed negotiations with the European Union, and a treaty is now in place in Peru and will soon become law in Colombia.

What are the challenges ahead?

From the Public Sector point of view

Colombia and Peru need to strengthen their IP systems by improving the effectiveness of the institutions responsible for protecting IP rights, particularly the Superintendency of Industry and Commerce and the INDECOPI and with regard to intellectual property rights (patents, utility models, industrial designs, trademarks, trade names).

Although these institutions have significantly improved their procedures and have cut study and granting times there is still room for improvement, particularly with regard to the patent area, where there is a pressing need to review policies for granting rights, which are still overly restrictive.

Likewise, the Colombian Congress recently approved the law enacting the Madrid Protocol (International Framework, Law 1455 of 2011), which has been in effect since 28 August 2012. This treaty simplifies procedures for obtaining trademarks abroad and reduces costs.

The legal system in the Intellectual Property area still needs to be improved to ensure that rights are upheld. Judges and other agents in the legal system need to acquire more expertise in this area.

From the private sector point of view

Generally speaking, the business sector in general has scant knowledge of the nature of Intellectual Property rights, their importance and management. It is not widely known that a company’s greatest value on the market are its intellectual property rights.

Companies should be prepared on 2 fronts: Exporters will take advantage of treaties to sell their products and services that have been negotiated to member countries and will enter these emerging markets with very low customs duties.

As a first measure within their business plans have to determine a strategy for protecting intellectual property, firstly by registering their product trademarks and protecting the knowledge applied to those products and services.

Failure to take such precautions may lead to serious problems such as entering without a protected trademark with the risk of using a sign already registered by another entrepreneur or a third party registering the trademark. Without a trademark it is practically impossible to compete.

Likewise, when products have an innovative component that represents an additional value that differentiates them from those existing, they must also be protected using a suitable method, whether this is a patent, utility model, industrial design or as a business secret.

Failure to take such steps leaves the door wide open to third parties to copy products and there is nothing that can be done to prevent this.

With a mere 2,500 valid patents in the Peruvian market, local companies are able to make unrestricted use of almost any technology. Products developed by foreign competitors are commonly copied and adapted.

However, when it comes to exports, things are different. There are more than two million valid patents in the world today, the majority of them in the most interesting markets.

The Colombian market is not far behind with almost 3,000 valid patents. That’s why when moving into new markets, companies must first ensure that they are not infringing any foreign patents. That’s why freedom-to-operate studies are performed.

The national market receiving these new participants also needs to take the necessary protective measures, by registering the trademarks of its products and carrying out market surveillance so it is aware when other identified or similar ones arrive.

In the same way as exporters, national companies have to protect the knowledge they apply to their products and services to take part in the protected market with the possibility of taking action against those who violate their rights.

National companies need to make technology surveillance part of their activities to anticipate the changes in products that their competitors will sell.

In this area, IP offers technology surveillance tools by using the information in patent banks around the world (primarily in the United States, the European Patent bank and those in countries such as Japan, Korea, India and China).

Finally, we must be ready for the change in the financial reporting system. The new system will have to follow international standards according to which financial statements must reflect what companies really have and are.

Carmen Sánchez-Puelles