Registrations invulnerable to cancellation for non-use

A trademark is a sign that distinguishes the goods and services offered in the market by a particular manufacturer or trader. Its main function is to be able to distinguish goods and services of the same kind in the market. When the trademark does not comply with this function, a cancellation action for non-use can be filed against it. Thus, exclusive right in the trademark is lost when the trademark is not really and effectively used in the market, as it would not be complying with its main function.

Accordingly, law establishes that the Trademark Office shall, at the request of an interested party, cancel a trademark registration when without any valid reason, the trademark has not been used in any Member Country of the Andean Community, by the owner, a licensee or other authorized person, for three consecutive years immediately before the filing date of the petition for cancellation. The cancellation of a registration for non-use of the trademark can be also petitioned as defense in an opposition proceeding filed on the basis of the unused trademark (Article 165 of Decision 486).

Furthermore, law establishes that no cancellation action shall be commenced until three years after the date of notification of the final decision on the registration of the respective trademark in the administrative proceeding, and that the person obtaining a favorable decision shall have preferential right to register the trademark. Said right may be invoked from the filing date of the petition for cancellation, until maximum three months after the date of the final cancellation decision in the administrative proceeding.

In this way, the logic of law has sense. A trademark grants its owner the exclusive right to use it but if the trademark is not really and effectively used in the market, the owner can lose this right since the trademark would not be complying with its essential function of identifying a certain good or service in the market. In turn, a third party interested in using the trademark can obtain its cancellation and then register it in its favor. But the trademark owner must be given at least a three year period as from the registration date to use its trademark in the market.

Although the abovementioned provisions are crystal clear, in the case of Peru, the Trademark Office is generating the existence of registrations invulnerable to cancellation actions for non-use. In fact, it usually happens that, when a trademark is granted without having been opposed, the Trademark Office waits until applicant comes to the Trademark Office to obtain the notification of the final decision on the registration of the respective trademark instead of sending the notification of the decision granting the trademark registration to the applicant’s address.

This failure to send the notification of the decision granting the trademark registration causes that, in practice, there exists a large number of decisions granting trademark registrations that have not been notified nor picked up by the trademark owner, which in turn prevents that the three-year term counted as from the date of notification of the decision granting registration of the respective trademark starts to run in order to allow filing the petition for cancellation based on the non-use of said trademark. Given these circumstances, when a interested party seeks to file the petition to cancel the trademark registration, said petition is declared inadmissible by the Trademark Office on the pretext that the three-year term counted as from the notification date of the decision granting the registration has not passed and, forced by the circumstances the Trademark Office sends notification of said decision to the applicant of the trademark registration so that said term starts to run.

The cancellation action is declared inadmissible despite being the Trademark Office which, by negligently failing to notify applicant of the decision granting the registration, causes this irregular situation. In practice, the result of this irregularity is the appearance of registrations permanently invulnerable to cancellation actions based on non-use, which is evidently incongruous and a violation of the ratio legis of the existence of the non-use cancellation action as a penalty imposed on the trademark owner for not really and effectively using it, not allowing that the trademark complies with its essential function in the market.

The Asociación Peruana de Propiedad Industrial y Derechos de Autor (APPI) –Peruvian Association of Industrial Property and Copyrights- has expressed its concern about the problems caused by this situation. The Trademark Office has taken due note of this observation and has offered to regularize the service of process of decisions granting trademark registrations which are not picked up by applicants. This process has already begun but progress is slow. For this reason, it is expected that since a new System of notifications of administrative acts and other notices issued in administrative proceedings by the Trademark Office (Rule Nº 001-2013/TRI-INDECOPI) has been approved, said rule will contribute to accelerate the process, for example, ordering the mass notification by edict published in the official gazette “El Peruano”, thus making feasible that registrations invulnerable to non-use cancellation actions disappear in the shortest term.