VENEZUELA: GUIDELINES FOR THE ENFORCEMENT OF INTELLECTUAL PROPERTY RIGHTS
Cástor González-Escobar – castor@grlexamericas.com
1.- OVERVIEW
One of the principal activities of GR LEX is the protection of Intellectual Property Rights and the customized development of anti-counterfeiting and anti-piracy strategies. In this context it is vital to understand that simply obtaining an exclusive right such as a trademark, patent or copyright registration is not enough in itself and effectively enforcing the right, is the most important issue whenever a counterfeiting or piracy problem arises.
Counterfeiting and piracy is a global problem and Venezuela is not an exception. Because of its geographical location, our country is an ideal hub for distributing infringing goods to South America, where after a deep economic and political crisis the usual high consumption rate of its citizens also makes it a tempting market for forgeries. Luxury goods, apparel, sport shoes, makeup and toys, are the most commonly forged items.
Since Venezuela is not a manufacturing country for counterfeit and pirated goods, discovering the shipping routes used by importers is an essential element to planning any anti-counterfeiting strategy. These shipping routes are constantly changing and we invest a great deal of time and effort to obtain the information which allows us to identify the methods the counterfeiters use to import.
We have conducted IP Enforcement operations for many years and found that secrecy is a vital ingredient to combat corruption and maximize efficiency. We adopt a very hand on approach to these operations, limiting the number of people involved in any raid to the bare minimum to avoid the danger of information leaks, which explains our success rate.
GR LEX has earned an excellent reputation in the field of combating anti- counterfeiting because our Firm has the trust of the relevant authorities regarding the information which we provide in our statements due to the fact that we have a track record of providing them with reliable and detailed information. Consequently, this minimizes the number of people involved in verification procedures.
The Venezuelan legal system allows us to enforce IP rights, either with administrative, civil or criminal procedures. Theoretically, Venezuelan substantive IP laws are strong and grant unambiguous rights to IP owners; however, in practice they are difficult to enforce. This is precisely where GR LEX aims to help.
2.- SUBSTANTIVE REGULATIONS FOR PROTECTION OF IPRs
As mentioned above, Venezuelan substantive IP laws are strong enough, recognizing rights to IP owners. There is an entire framework including the International Agreements to which Venezuela is a party and local legislation, starting with the National Constitution and specific laws for Industrial Property and Copyrights, as well as the inclusion of IP violations as prohibited activities in Customs as will described below.
2.1: INTERNATIONAL AGREEMENTS
Venezuela is a Signatory to the most important International Intellectual Property Rights international agreements, such as:
- Paris Convention for the Protection of Industrial Property;
- Berne Convention for the Protection of Literary and Artistic Works;
- Trade-Related Aspects of Intellectual Property Rights (WTO-TRIPS)
With regard to the above agreements, it is important to emphasize that the vast majority of their provisions have been included in Venezuelan laws, creating a practical environment for the enforcement of IP rights.
2.2: VENEZUELAN CONSTITUTION
IP rights are enshrined in the Constitution, specifically article 98, which provides that the State has the obligation to recognize and protect the Intellectual Property over scientific, literary and artistic works, inventions, innovations and trademarks, according to the national law and the international Treaties signed by the Republic.
2.3: INDUSTRIAL PROPERTY LAW
Dated 1956, the Venezuelan Industrial Property Law is a highly criticized piece of legislation because it is totally out of date. However, it does contain provisions which punish as a felony with 1-12 months of imprisonment for the counterfeiting of trademarks and the infringement of patents.
The Industrial Property law does not contain any provision for initiating Civil Actions. Thus, civil procedures are based on the civil responsibility principle contained in the Civil Code, according to which any conduct which infringes a right, even if it has been granted by another piece of legislation, can be remedied under the Code.
2.4: COPYRIGHT LAW
The Venezuelan Copyright Law 1993, contains detailed provisions for the protection of copyrights over:
- Literary, scientific and artistic works
- Software, audiovisual works
- Radio, TV and satellite broadcasting
- Rights of artistic performers
- Rights of record producers
From the perspective of Civil Litigation, Copyright Law contains provisions for prosecuting any infringement, including preliminary and/or definitive injunctions to cease the illegal activity and award compensation; where the preliminary injunctions procedure is often applied invoking analogy in trademark infringement cases, because of the lack of provisions contained in the trademark legislation.
From a criminal perspective, Copyright Law contains provisions punishing criminal offenses violating copyrights with 1-4 years imprisonment.
2.5: CRIMINAL CODE
The Venezuelan Criminal Code, contains provisions punishing criminal offenses against IP rights (trademarks and copyrights) with 1-12 months of imprisonment.
It is interesting to note that in contrast to the Industrial Property Law and the Copyright Law where the interest protected is the IP owner rights while the Criminal Code protects the public interest and the good faith of the consumer.
2.6: CUSTOMS REGULATIONS (TARIFF CODE, ANTI-CONTRABAND LAW, AND PROVIDENCE 915 SENIAT)
The possibility of seizing counterfeit and pirated goods at the national point of entry through the intervention of Customs Authorities is based on the general prohibition stated in the Venezuelan General Tariff Code (article 33) which, in its substantive chapter, declares the merchandise violating IP rights as being import, re-export and transit prohibited. As a consequence, and according to the Anti-Contraband Law (article 7), any attempt to import IP infringing products results in a criminal offense punished by 4-8 years of imprisonment, plus the seizure of the prohibited goods.
Providence N° 915 (SENIAT) authorizes the intervention of Customs Officers at different levels, including control during the importation process, in Tax Free Areas, Free Zones, Customs Warehouses. It also authorizes post-control activities, such as the power to conduct inspections and seize infringing products, even after they have left the primary zone.
Despite that as noted above, there are strong sanctions for the import of counterfeit and pirate goods, there is not an official customs registry of IPRs, thus, as in any administrative petition, the details of existing rights plus a general warning of suspicious imports affecting such rights must be filed first with the Federal customs authority (SENIAT), followed by specific filings at the local customs office where is suspected that the infringing goods are being imported.
2.7: CYBERCRIME LAW
The Venezuelan Cybercrime Law contains provisions punishing criminal offenses for unauthorized copying, modifying, misusing or distributing software using information technologies, with 1-5 years imprisonment.
2.8: ANTI-MONOPOLY LAW
The Venezuelan Anti-monopoly Law contains provisions prohibiting and punishing unfair competition acts, consisting on misleading, false or deceptive advertising; and the imitation capable of causing risk of confusion with the original source of a product.
3.- MEASURES TO COMBAT COUNTERFEITING AND PIRACY
No matter what substantive regulations recognizing IP rights exist in any law, such provisions are useless, unless effective measures to enforce them exists. Consequently, below are described the different options available to IPRs owners in order to enforce their rights against an infringer in Venezuela.
3.1: INVESTIGATIONS
We employ a specialized team of private investigators who are permanently monitoring the market at wholesale, retail, street and online levels. Our investigation team can also be tasked to pursue special projects involving different geographical areas or specific locations.
Detailed monthly investigation reports for all of our clients are a standard procedure and they include identification of infringer’s locations, estimated quantities of available infringing goods for seizure, assessment of the overall scale of the illegal market, identification of the companies running the operation and of the individuals representing them.
3.2: CIVIL REMEDIES
Civil actions for combating IP infringements are based on the provisions of the Venezuelan Industrial Property Law and the Civil Code. However, we do not recommend using the civil procedure since the Civil Courts are extremely slow to authorize seizures and, as is well known, getting a swift reaction from the authorities is vital to the success of any enforcement program.
Exceptionally, when the infringer/target is a well-known company with fully identified assets, proceeding via a civil procedure is strongly recommended because of the possibility of obtaining a compensation for damages.
In copyright cases, anticipated measures can be taken in order to seize infringing goods, followed by a civil suit; while in trademark or patent cases, anticipated measures are not allowed. However, conducting a Judicial Inspection, in order to secure evidence is highly recommended before proceeding.
It should be noted that a civil action is always the most expensive route since it is mandatory to provide a Bond to the Court before the issuance of an injunction and/or seizure order.
3.3: CRIMINAL LITIGATION
In our experience initiating a criminal action to enforce IP rights is the most effective measure in Venezuela, for the following reasons:
We have specialized institutions such as the Special Prosecutor Office which covers criminal IP violations nationally, where they count with an internal body for executing raids and seizure of infringing goods. There is also a specialist police task force COMANPI (Anti-piracy Command) which is part of the Organized Crime Division of the Venezuelan Scientific Police (CICPC). This means that we are always dealing with better trained personnel than those in charge of civil actions and this naturally results in quicker and more effective action against the counterfeiters. It is important to point out that seizures are always authorized in approximately two weeks to one month after the statement is filed at the Prosecutor Office. Despite the drawbacks, initiating criminal prosecution remains the most effective way of combating counterfeiting in Venezuela and we are always working closely with the authorities to speed up the post raid judicial process.
The Venezuelan Criminal Code and the Industrial Property Law only allows for punishment of between 1-12 months of imprisonment for any person importing/selling/distributing counterfeit and/or imitation goods. Furthermore, the law provides alternative punishments (which are the usual Court choices) in lieu of a sentence of imprisonment sentence, namely probation or the payment of a Bond. Thus, seizure of fake goods is the principal deterrent in our arsenal.
Initiating a criminal prosecution based on the Criminal Code is the normal course of action but since is designed to protect the public interest, compensation agreements are not allowed. Furthermore, it limits the involvement of the IP right owner for participating in the entire judicial process, considering that the Prosecutor Office has the responsibility of prosecuting the case, whether or not the victim participates. Proceeding this way has of course its advantages and disadvantages. The main plus factor would be that the time invested in pursuing the case is limited to filing the statement and the post raid confirmation that the products seized are counterfeit. From that point onwards, the participation IP right owner’s participation is unnecessary unless requested by any judicial authority. However, the disadvantage is that the IP right owner is not considered as a Party in the process and as a consequence their participation is limited and even access to files and searches is restricted. This means, in the final analysis, the results of the entire process are in hands of the Prosecutor Office.
The alternative course of action, which we recommend, is instead of initiating a procedure under the provisions of the Criminal Code, is to base the process on the Industrial Property Law rules, where the IPR owner is the one protected. In this case, the participation of the IPR owner is imperative in the entire process – from the filing of the complaint directly with the Criminal Court through the entire judicial phases. This enables the complainant to access every detail of the case, thereby assuming control. The most important implication of this course of action is that a cash settlement is allowed at any stage of the process.
A criminal procedure to enforce IP rights in Venezuela by either of the above courses of action involves the following steps:
– Filing a statement at the Prosecutor Office or a Complaint at the Criminal Court specifying the facts and identifying the offender. Such statement must include the identification of the affected company (victim) and must be supported by the trademark and/or other violated IP rights registrations on which the petition is based. We also file with our statement, samples of counterfeit goods purchased at the stores involved in the case and invoices. For a new client, we also file some samples of authentic goods, catalogues and any other material which might be useful to distinguish the authentic products from the fakes.
– After receiving the statement or the complaint, either the Prosecutor or the Court, immediately orders the opening of the police investigation by the specialist police task force (COMANPI).
– COMANPI starts the investigation and confirms the information provided in the statement. They then ask the Prosecutor Office to apply for a seizure order from the Criminal Court. Once the seizure order is granted the police proceed to execute the raid.
– At the same time as the Prosecutor’s application to the Court, we organize the raid logistics, liaise with the COMANPI regarding the number and composition of the police team and attend to all other details necessary to ensure the successful completion of the raids.
– The day after the raid is executed, the offenders must attend to the police authorities delegation to make an initial declaration as offenders and provide all documentation related to the importation and/or purchasing of the fake goods as well as the documents of incorporation of the company and its relevant trading permits.
– The Judicial Police laboratory will then proceed with an expert examination of the seized goods in order to determine if they are fakes or counterfeited. They will compare the seized goods with the relevant characteristics of the authentic ones.
– Once the investigation is completed, the police authorities submit the file to the Prosecutor Office to prepare the prosecution at the Criminal Court of the persons involved. It is important to note that when the IPR owner proceeds in the capacity of complainant, he will also receive access to the files/searches to prepare an independent prosecution against the offender.
– Following a decision of the Criminal Court that determines the criminal responsibility of the offender, the destruction of the goods seized during the raids is then authorized.
– It is critical to note that if the case is initiated based on the Industrial Property Law provisions, then at any point during the procedure a compensation agreement can be signed with any of the offenders.
3.4: BORDER MEASURES
Despite Customs having complete authority to seize counterfeit or pirated goods at national borders, apprehending a suspect container presents a major challenge. The procedure is authorized by Providence N° 915 issued by Tax and Customs Authority (SENIAT), based on the consideration that any possible import of merchandise which violates IP rights is prohibited. Furthermore, on March 25, 2013 was published in the Venezuelan Official Gazette a new Customs Tariff Code, which in its regulation part (article 33), prohibits the import and/or re-export of any product which violates Intellectual Property Rights duly recognized.
The key to success for border control is the existence of Customs records for IP rights that detail the practical information vital in identifying counterfeit or pirated goods. Since there is no formal procedure to file IPR details at all Customs point of entry, in practice we do the same filing notices, providing as much information as possible regarding the salient features of the authentic products, regular shipping routes, authorized importers, possible targets and sources of fakes. This enables Customs to identify arrivals of infringing goods.
We also provide regular training workshops for the identification of counterfeit goods at the main Venezuelan ports and airports to the competent officers (SENIAT and National Guard).
According to the above-mentioned Providence N° 915, an IPR owner may apply for preventive withholding actions of the Venezuelan Tax and Customs Entity or respective Custom office, bearing in mind that it is necessary to comply with the Border Measures for Intellectual Property Rights enforcement provided by TRIPS.
Based on the IPR owner request and in order to prove the legality of merchandise believed to be infringing Intellectual Property rights, Custom authority may request from the importer an authorization issued by the owner of the right, such as assignment of rights, distribution agreement, or sale contracts. In the absence of such documentation, Customs officers may seize or retain the goods and must notify the right owner the next working day after the seizure is executed, to confirm the authenticity of the product. The IPR owner is then obligated to file a legal action, whether civil or criminal, within the next 10 days to substantiate the seizure. Even if the IPR owner does not file any legal action, the imported goods may be considered contraband and the importer may be criminally prosecuted. In this event, the prosecution is entirely in the hands of the Prosecutor Office and the IPR owner loses all control over the process.
It should be noted that with the volume of imports into Venezuela, the identification and seizure of contraband violating IP rights is for all practical purposes a lottery. The way to win the lottery is to know how to maintain the IPR at the forefront of the Customs personnel’s awareness. It is for this reason that training workshops, the continual updating of the practical details of IPR owner’s goods and the creation of profiles of potential counterfeiters, enable us to achieve a success rate well above the average. Persistence is also vital to maintain the interest and attention of the individuals who are at the cutting edge at the points of entry. Finally, consistency is also important in providing frequent updates of the identities of potential infringers.
3.5 ONLINE BRAND AND/OR COPYRIGHT PROTECTION
While there are very important companies providing global brand and copyright protection services, based on our experience, many of them lack of the local knowledge of the LATAM region. As a result, we developed a strong alliance with one of the main service providers of OBP in Asia, combining the use of their technology and cost-effectiveness for taking care of the taking down of infringing posts, while we take care of analyzing what only can be understood locally, as well as providing services for test purchase of suspicious counterfeit/pirate products.
3.6: ANCILLARY MEASURES
In terms of cost-effectiveness and scale, the ancillary measures have their place in an overall campaign against counterfeiters. It must be emphasized that their effectiveness is dependent upon their use in the context of a strategy that includes all of the above described weapons in the unending war against counterfeiters. Consequently, we use our imagination, initiative and experience to devise the most dissuasive approaches whenever an official authority is not involved, such as in the process of drafting and serving cease and desist letter, where the follow-up putting pressure on the infringer is the key.
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