Morgan & Morgan
  May 30, 2013 - Panama

Panama Redefines its Concept of Use for Trademarks
  by María Eugenia Brenes Tovar, LL.M., Associate

As Panama became part of a number of industrial property related treaties, our internal laws have become more territorial; the use of a trademark is territorial again and registration becomes imperative for protection.

Use as a Basis for Protection

In Panama, as happens in most of the countries around the world, the right to register a trademark is acquired by its first use in commerce. Following that principle, trademark owners had the right to contest other trademark applications and registrations, basing their actions on previous use and registration of their marks. However in Panama and effective since the Panamanian Trademark Law was enacted back in 1996, a rather peculiar definition or interpretation of use, in the sense that it was not territorial, was introduced. As follows the definition contained in said legal body: “By use of a mark it is understood, the production, manufacture, processing or preparation of goods, products or merchandise, and the rendering of services covered by such mark, followed by placing them in the national or international commerce” (Article 101, Law 35, 1996). 

The scope of the above quoted definition of use, was even broadened by the regulation of Law No. 35 which reads: “By use of a mark it is understood, the placement in the local market or international market, of products or goods labeled with said trademark, whether the same products have been manufactured, produced, processed or prepared in the Republic of Panama or abroad…” (Article 79 of Executive Decree No. 7 of 1998).

By allowing evidence of use abroad and consider it a valid by the Panamanian Courts, it was very easy for foreign trademark owners to protect their brands. For more than 15 years, such owners were not even required to apply for a trademark registration in Panama to protect their trademark rights. Therefore foreign trademark owners were only required to evidence that their trademarks have been used anywhere in the world, without needing a trademark registration, nor use of the same in our country, to successfully oppose and prevent third party registrations in Panama.

This particular non-territorial definition of use became in effect because Panama´s rather small market for foreign brands was not attractive per se, and therefore foreign trademark owners usually did not register their brands in Panama; nonetheless Panama´s geographical location, The Colon Free Zone, the Panama Canal and that the country is generally a merchandise transit hub; but Panama was a market for avid merchants who use to register trademarks identical or similar to those foreign trademarks not protected. Then, back in 1996 Panama adopted the non-territorial use definition in order to enable foreign trademark protection to their rightful owners, and decreasing the chances of trademark piracy in the region.

After many years, since Panama´s market has become attractive not only to high-end trademark owners, the country has become a huge distribution and logistics center for all Latin America as well and the rightful trademark owners are using their trademarks in the territory of Panama, recent legislative initiative amending Panama´s Trademark Law, by means of Law 61 of 2012, changed the definition of use, as in most countries, based on territorial use.

Use in Panama is now based on territoriality

Panama´s use definition is currently as follows “By use of a trademark it is understood to be the placement in local commerce of the products identified with the trademark, whether these have been produced, manufactured, processed or prepared in the Republic of Panama or abroad. By use of a service mark it is understood to be the rendering of the services covered by said mark in the local market. Also shall be considered use of a trademark the use thereof in relation with products for the exportation from our territory, or in relation to the services rendered abroad from our territory.” (Article 101 of Law 35 of 1996, amended by Article 43 of Law No. 61 of 2012).

The immediate consequence that the change of said definition has brought for trademark owners is that in order to acquire the right to register a trademark, the use in Panama of the trademark shall occur; therefore local use is essential for foreign trademark owners, if planning to have their trademarks protected.

Why register

The protection of Intellectual Property rights is a fundamental key for the development of businesses and to preclude people taking advantage of someone else IP rights. 
In order to protect trademark owners against counterfeiters, registration of their trademarks is imperative in Panama. With this principle in mind, to protect and defend a trademark in Panama it is necessary to use and also to register it.

If a trademark, whether well – known or not, is not registered in Panama, there is little possibility of actions against counterfeits products circulating or transiting our country. Having that in mind and considering that Panama is a key place to protect IP assets (with the now territoriality principle involved in the definitions of use), the most efficient way to protect a trademark is to register it in our country.

Panama recently enacted several international treaties related to Trademarks, such as Trademark Law Treaty, allowing multiclass registrations in our country, which is beneficial for trademark owners that seek to reduce costs in registrations.

Because local use is now imperative to obtain the right to register a trademark, having a registered trademark in Panama means that evidence of use shall exist in Panama, otherwise a trademark registration can be contested if the brand has not been in use, locally, for a period of five consecutive years before the claim of “non – use” might be brought to our courts.

Based on the above mentioned definition of use, the placement of products in Panamanian Market or rendering the services in our territory will be required in Panama; hence trademark owners shall consider the option to have minimal use policies enacted to assure that the trademark registrations remain in force in our territory.

It is certain that Latin America is an emerging market very appealing to producers in Asia, North America and Europe, whose branded products are flooding to Latin America growing markets; seeking to increase their economies after the well-known financial crisis in the usual strong countries. Most of the products reaching the Latin America market today pass through The Panama Canal, The Panamanian Ports, or the Panama´s Colon Free Zone. So, whether planning to protect a Trademark, by having it registered in Panama, for later use in the country or region, or because Panama´s is the door to the rest of the Latin America´s emerging market, Panama shall always must be in the list of countries to register and use a trademark for its key location, its canal, ports for the transshipment of goods, making Panama a strategic point to attach and process counterfeits merchandise.