Uruguay is a stable country in terms of legislation protecting intellectual property rights and combatting counterfeits. The National Constitution provides that “intellectual work, copyrights, and the inventor’s or artist’s work” shall be recognized and protected by law”.
Regarding trademark protection, Law No. 17.011, (Trademark Law) confers to the owner of a registered trademark the right of ownership and exclusive use thereof, and the possibility of preventing - before the competent authorities - unauthorized third parties from using “(...) an unregistered trademark, identical or similar to their own”. Chapter XIV of said law, entitled “Civil and Criminal Actions”, provides in articles 81 to 83, the criminal conducts defined by the legislator, and the corresponding punishment foreseen for those who commit such acts.
Among the latest amendments introduced is the one made by the Law No. 19355, Article 84, that introduces two important innovations: firstly, the admissibility of expert opinions as technical expertise; and, secondly, the possibility for the judge to order the destruction or donation before the sentence.
1 . Criminal prosecution & civil enforcement
1.1. Criminal prosecution
Article 88 of the Trademark Law provides that “The owners of registered trademarks may claim before the Judiciary the prohibition of the use of a non-registered trademark, identical or similar to theirs”, granting them the possibility of initiating criminal and/or civil actions for such purpose.
In Uruguay, there are no specialized Courts or Prosecutors, instead the jurisdiction to deal with this type of crime is currently granted to authorities dealing with other crimes. As far as the police authority is concerned - including the National Customs Directorate - there are departments, divisions and/or areas dedicated to the investigation of crimes against intellectual property, for example: Special Crimes Division (Interpol), Illicit Cargo Department, Customs Response and Intelligence Group (Customs), among others.
Regarding criminal actions, articles 81 to 83 describe the criminal conducts within the framework of trademark protection.
To summarise, article 81 includes those conducts that imply a material misrepresentation of the trademark, while article 83 applies to the product in which the trademark is materialized and punishes whoever manufactures, stores, distributes or introduces it into the market. Unlike the previous ones, the conduct described in article 82 refers to the activity carried out on packages containing the trademark, without the authorization of its owner.
With respect to the trademark owner, both the Trademark Law and the Code of Criminal Procedure provide that those crimes against intellectual property may be prosecuted at the request of a party. This means that, in the event of a seemingly criminal act of this nature, the trademark holder will be required to file a complaint, proving its standing, before the competent authorities so that the events may be investigated and the stipulated sentences may be imposed. Notwithstanding the above, in the current Uruguayan criminal system, the Public Prosecutor’s Office will be the holder of the criminal action, which will represent the trademark holder as complainant and/or victim, and will investigate and accuse the alleged infringer before the Judiciary.
In trademark offenses, the criminal proceeding begins with the aforementioned instance of the party that takes place within the framework of the preliminary inquiry - administrative stage - in charge of the Public Prosecutor’s Office. This instance may be preceded by a proceeding carried out by the police authority, or by the previous action of the same, in the performance of their assigned duties.
Once the evidence of the existence of the crime has been gathered, the Prosecutor may request the completion of the investigation and subjection of the accused to the criminal process, thus beginning the ordinary accusatory criminal process.
With the entry into force of the new criminal procedure, trademark offenses may be subject to an abbreviated criminal procedure, if the conditions legally established by article 272 of the Code of Criminal Procedure are met. That is, the accused, being aware of the acts attributed to him/her and the background of the investigation, expressly accepts them and expresses his/her conformity with the application of the abbreviated structure. In such a case, the Public Prosecutor's Office may request the judge to reduce the sentence by up to one third of the sentence that would be applicable to the specific case if this simplified method were not chosen.
Another of the options provided by the current accusatory system are the alternative means of conflict resolution, namely: extra procedural mediation (article 382) and reparatory agreements.
Extra-procedural mediation is applicable when dealing with a seemingly criminal conduct that is not of a severe nature. In such a case, the Public Prosecutor’s Office may refer the case to extra procedural means of conflict resolution, the Judiciary being competent for this task.
Regarding reparatory agreements, article 393 of the mentioned Code confers the possibility to the accused and the victim (in this case the trademark holder) to sign a material or symbolic reparatory agreement that will be submitted to the consideration of the Judge involved in the case in a hearing, with the intervention of the Public Ministry, provided that there is no public interest in the prosecution and there is no objection due to the seriousness of the guilt
In terms of case law, it is important to highlight cases where the cooperation between the Public Prosecutor’s Office, the police authority and the trademark holder enabled the seizure and destruction of counterfeit merchandise, and the conviction of those responsible for such illicit activity.
Case 1: Seizure of counterfeit clothing and conviction of its owners to 18 months imprisonment.
On 16 September 2021, as part of a control operation, officers of the National Highway Police stopped a van in the city of San José de Mayo, under the suspicion that it might be transporting narcotics. Once the vehicle was inspected, several packages containing sportswear of Argentine origin were identified, containing a total of more than 5,000 items of clothing in alleged customs infringement and, presumably, also in violation of the intellectual property rights of the trademark holders. The agents immediately informed the competent authorities, who ordered the seizure of the merchandise, as well as the vehicle, and the arrest of the driver of the vehicle and his/her passenger.
Notified of the events, the legal representatives of the trademark holders proceeded to inspect the seized merchandise, finding the existence of infringing clothing, therefore, they filed the corresponding request before the Prosecutor’s Office for an alleged crime under articles 81 and 83 of the Trademark Law. On 17 November 2021, the Public Prosecutor of the city of San José, 2nd rotation, requested that the defendants were charged for the crime of smuggling (article 258 of the Customs Code) and a crime of infringement of article 83 of law 17.011, in concurrence of crimes.
In judgment No. 59/2021 dated 17 November 2021, the Judge of First Instance of San José, 1st Rotation, found the defendants criminally responsible for the crime of smuggling, in concurrence with the crime of violation of article 83 of the Trademark Law 17.011, and sentenced them to 18 months imprisonment. Likewise, the seized merchandise was ordered to be confiscated and destroyed.
Case 2: Conviction of Instagram users for the commercialization of counterfeit merchandise.
In 2019, the Special Crimes Department of the National Directorate for the Fight against Organized Crime and Interpol, carried out an investigation regarding an Instagram user for allegedly commercializing products in trademark infringement. Based on the information gathered, it was possible to identify the physical operating location of the user. Following a court order, the place was raided and large quantities of counterfeit merchandise, notebooks with information on sales, stock, and so on were seized. The products sold by the user came from China and Colombia, and entered the country by air on commercial flights, evading customs controls.
Following the results of the seizure, it was determined that the offender had business relations with another Instagram user who acted as his supplier. In light of this, Interpol performed a second raid on the supplier’s home, which resulted in the seizure of more infringing merchandise and the identification of a business premises owned by the supplier in the city of Montevideo.
Finally, the Criminal Court of the 33rd Rotation, condemned the offenders for a continuous crime of smuggling in concurrence with a crime of storage, distribution and commercialization of merchandise with apocryphal trademarks to the penalty of 24 months imprisonment and the destruction of all the seized merchandise.
1.2. Civil enforcement
In order to understand the process followed in Uruguay when facing an intellectual property infringement, we must first focus on the legal framework involved, referring to law number 17.011, (Trademark Law), number 9.739 (Copyright Law) and number 17.164 (Invention Patents, Utility Models, and Industrial Designs).
As regards civil actions, the holder of a trademark right, in the event of a possible infringement, has the right to take action by different mechanisms. Article 87 of the Trademark law authorizes the subject whose rights have been infringed to bring an action for damages against the authors and co-authors of the intellectual property infringement.
On the other hand, article 88 of the aforementioned law additionally enables the subject whose trademarks are registered to bring an action against whoever intends to use a trademark identical or similar to the registered one, by filing a lawsuit before the Judiciary, requesting the prohibition of the use of the unregistered trademark.
Both proceedings, damages and the cease and desist and prohibition of use of the trademark, are filed before the Civil Courts.
Uruguayan legislation also provides extrajudicial solutions to intellectual property infringements. Article 2161 of the Uruguayan Civil Code enables the parties to sign an out-of-court agreement, on which they intend to put an end to the conflict existing between them, granting them the authority of res judicata by the signature of the agreement.
Regarding damages compensation in cases of infringement of industrial property rights, the Uruguayan legislation provides two options, an out of court option and a judicial option.
As for the out of court option, as aforementioned, the Civil Code provides the possibility for the parties to reach an agreement, which may include a reparation clause in order to reimburse the expenses incurred by the owner of the trademark, patent or copyright.
On the other hand, at the judicial level, article 87 of law 17.011, enables the injured party to “...exercise the actions for damages against the authors and co-authors of the criminally punishable acts”. In addition, Law 17164, in its articles 100 et seq. provides that: “Those who commercialize or distribute products in infringement shall only be liable for the damages caused...”. The same is provided by Law 9.739 for Copyright in its articles 21, 32 and 51.
Case law. In 2015, several stores in Montevideo were found to be selling perfumes using unauthorized trademarks and imitating the packaging and general appearance of the original products. As a result, the owners of the trademarks filed a Civil Suit for trademark and trade dress infringement and unfair competition, requesting the payment of damages. In September 2017, the Judge of First Instance in Civil Matters of 20th rotation issued the first instance judgment where the defendants were condemned to cease the use of the individualized trademarks and/or respective trade dress, and to compensate the damages caused to the claimant companies. The judgment was not appealed by the defendant. In the same, it is indicated that the amount to be paid for damages by the infringers will be based on the estimate consisting of a percentage of the sales made by the infringer with which it unlawfully benefited at the expense of the plaintiff. In this case, the Judge ordered the defendants to pay approximately USD 576,671 plus adjustments and interest.
1.3. Grey market and counterfeit goods
In Uruguay, there are no specific regulations governing the commercialization and distribution of products in the grey market (the sale of original products in channels or territories not authorized by the manufacturer and/or trademark holder). An unauthorized channel may be an online platform, social networks or even a physical territory where the person marketing and/or distributing the product is not authorized to do so. It often happens that a product is manufactured in a certain country due to a production cost issue, or even in a place where safety standards are lower, with less strict labelling requirements, and its commercialization in certain regions or countries is not legal. Therefore, if these products are distributed there, it could be considered a grey market sale.
Notwithstanding the lack of regulation in the country on the subject, it has been possible to initiate actions, relating the sale of products in the grey market with other conducts such as smuggling, unfair competition, use of trademark without authorization, regulatory infringements to sanitary regulations, among others.
Regarding smuggling, the illegal entry of original merchandise across the borders and its subsequent commercialization and distribution in the country is common practice, a customs infringement and affects the trademark’s reputation. In many cases, the conditions of entry are detrimental to the product and in these cases the manufacturer cannot guarantee its quality or correct use. Therefore, in these situations, the brand owners file a complaint before the Customs Courts, in order to report the situation and request the destruction of the goods, thus avoiding the return of those products to the local market and causing damage to consumers. This situation occurs mainly in the case of hygiene and personal consumption products, which may directly affect the health of consumers.
As regards unfair competition, although there is no specific law in Uruguay, article 10bis of the Paris Convention is applicable. Manufacturers and trademark holders pursue certain commercial standards when offering a product; they seek strategic locations by qualifying the markets they wish to reach and establish themselves in, and by choosing who will be their distributors when placing their products on the market. The fact that a product is being offered outside the established parameters may constitute an act of unfair competition, for which the trademark holder may initiate legal actions to stabilize such situation, such as an out-of-court notification or a civil judicial action.
Notwithstanding the non-existence of a counterfeit product in these cases, it is possible that the grey market products are being offered where the trademark, image and reputation of a company are used without its due authorization. For example, trademark owners use registrable intangible goods such as trademarks to distinguish themselves from the rest, as well as create catalogs of images of their products to offer them to the public. The fact of using a trademark and/or images -protected by copyright- without the due authorization of its owner constitutes an infringement of intellectual and industrial property rights, regulated by the Trademark Law -above described- and the Copyright Law No. 9,739 as amended by Law No. 17,616.
1.4. Criminal v. civil enforcement
The benefits and challenges of criminal or civil enforcement are as follows:
|Seizure of goods before the beginning of the trial without the need for counter-guarantee.||In order to seize the merchandise in infringement it is required a counter - guarantee.|
|The trademark holder is not part of the criminal proceeding, but as complainant/victim it may assist the Public Prosecutor’s Office in the investigation, provide evidence, oppose resolutions that affect him/her, etc. The holder of the action is the Public Prosecutor’s Office.||The trademark holder is the claimant in the process and participates actively.|
|This action is prima facie successful in the seizure of the counterfeit goods -removal of the products from the market- and their destruction once the expertise has been carried out, notwithstanding the fact that the process may take several years if there are various defendants.||It may take longer than the criminal process. The counter-guarantee is maintained until the culmination of the process and the destruction will take place once there is a final judgment in the first instance or second instance (in case of appeal).|
|Criminal conviction: imprisonment/penitentiary sentence.||Civil conviction: cease of the infringement and damages.|
Ultimately, the most appropriate remedy in Uruguay is the criminal one, leaving the civil remedy as an alternative or concomitant remedy to the criminal one, for the claim of damages.
2 . Border enforcement
In Uruguay, the National Customs Directorate plays a key role in controlling the entry and transit of counterfeit goods into the country. It is empowered to adopt administrative measures to suspend the entry and/or transit of goods suspected of trademark infringement
Uruguay has ratified the TRIPS agreement which establishes in its article 51 that the procedure for border measures is initiated at the request of the right holder, with the filing of the corresponding complaint.
This implies that, although the customs authorities may, while performing their duties, adopt a provisional measure, it will always be necessary for the holder of the right, i.e., the trademark holder, to file the corresponding complaint. The authorities will not be able to seize counterfeit goods ex officio, unless it is further determined that a customs infringement, such as smuggling, has been committed. Therefore, the withholding of the merchandise in presumed trademark infringement is considered a provisional measure at the beginning of a criminal proceeding, subject to the request of the trademark holder.
With regard to goods in transit, Uruguay stands out in the region for admitting in case law the seizure of counterfeit goods that, although not destined for Uruguayan territory, are in transit through the country and are therefore subject to the criminal laws in force.
Relevant Case. During the COVID 19 pandemic, customs officials at the Port of Montevideo stopped a container coming from China with destination Ciudad del Este, Paraguay. They identified boxes containing wallets and watches bearing trademarks, all of which were suspected of trademark infringement.
The corresponding complaint was filed before the Criminal Prosecutor’s Office for Narcotic Drugs of the 1st Rotation for an alleged crime. Finally, on 22 October 2021, the destruction was ordered.
Regarding the costs associated with the stop, seizure, handling and storage of the merchandise, customarily the trademark holder does not assume them, but, by court order, the merchandise is seized and kept in the customs premises until its final destination is established by court order.
The new wording of article 84 of the Trademark Law has simplified the time required for the storage, allowing that as soon as the counterfeit nature of the merchandise is confirmed by the corresponding technical expertise, it may be ordered to be destroyed - at the expense of the complainant - or assigned to charitable institutions. This avoids the need to go through a long criminal conviction process to obtain the final destination of the merchandise.
The other border measure to be highlighted is the current system of registration of trademarks in customs. It is incited to “(...) Maintain updated the Voluntary Register of Trademarks that have requested the National Customs Directorate to protect them in the national territory”.
Subsequently, the authority to update such registers was transferred to the Risk Control and Management Area, being essential requirements for registration/renewal: power of attorney granted by the trademark holder, certificate of registered trademarks and complementary information on the company and/or how to identify counterfeit products (optional).
2.2. Recent trends and COVID-19
Although the COVID-19 pandemic had an impact on the way of working, it did not significantly affect the controls carried out by the Uruguayan authorities, but increased them in other parts of the country, namely land borders and airports.
The commercialization of counterfeit merchandise coming from abroad through social networks and the Internet has grown dramatically. In this regard, Customs has strategically developed controls at the main border points where thousands and thousands of counterfeit products are seized every month and are destined to be distributed throughout the country in different fairs.
The number of small packages of counterfeit goods arriving at Carrasco Airport, mainly from China, increased weekly, to the point that hundreds of electronic products, sportswear and luxury goods were seized. Most of the purchases were made on e-commerce platforms abroad and the merchandise was destined to be sold on social networks.
3 . Online anti-counterfeiting enforcement strategies
As far as online enforcement is concerned, the same rules apply as for offline enforcement as mentioned above. Accordingly, the Trademark Law No. 17011 applies in the same way, and the same criminal and civil actions may be brought as in the offline case.
Regarding the measures related to technological devices, Article 46 of the Copyright Law, within the chapter on penalties, states that the same penalties are applied in case of manufacture, import, sell, lease and other actions related to evade, eliminate, or elude the technical devices that the owners have arranged to protect their rights.
The penalty referred to is from three months of imprisonment to three years of penitentiary arrest, in addition to the destruction of the infringing devices.
As a rule, the platforms and social networks that provide a space to commercialize merchandise are not liable for such sales. Although most of them have a policy that warns that infringing merchandise should not be sold, in fact there is nothing established. They limit themselves to remove the infringing publications, when requested by the affected company.
There is no specific legislation on the online sale of counterfeit goods. Trademark and copyright laws are applied, since infringements are defined there, regardless of whether they are committed online or not.
In the event that the online seller has an identified store, the corresponding complaint is filed so that the procedure is carried out in the physical store, and then the online page is deleted.
In case there are suspicions that the seller has a store, the corresponding request for investigation and search is submitted to the competent body. The investigation does not depend on the on the quantities or type of merchandise. The results obtained are not measured by the quantity of goods seized, but by the information obtained by them (origin of the goods, import data, transport).
3.1. Domain names
Regarding disputes between domain names, the procedure is also governed by an arbitration process created for .UY domain names, and the arbitration rules of the Conciliation and Arbitration Center, the Mercosur International Arbitration Court and the Uruguayan Stock Exchange.
In the event of a domain name dispute in these cases will be composed of one or three arbitrators, depending on the criteria agreed by the parties.
Article 12 (paragraph 2) of the Rules determines that the process begins with the notice to the Secretary General of the Center. The Center will then proceed to summon both parties to submit an arbitration agreement within a maximum period of 15 days.
Should the conciliation result be unsuccessful, the plaintiff shall be entitled to file a claim before the arbitration court. Requirements are set forth in Articles 14 et seq. of the rules of procedure.
Once the claim has been contested and the evidence has been examined, the tribunal shall proceed to summon the parties to hear the award to be rendered, thus concluding the proceeding.
If the domain name violates an industrial property right, the owner of the trademark may, if appropriate, initiate actions for unauthorized use of the trademark.
3.2. Social media
In recent years, we have witnessed an increase in the number of infringements committed over the Internet.
The commercialization of products that infringe intellectual property rights has become a daily affair, finding daily infringements committed on online platforms such as Facebook, Instagram, Mercado Libre, among others.
The increase in the Internet world has resulted in an increase in advertising on different social networks, which has inevitably led to an increase in the use of digital marketing. Within this context, new infringements such as phishing have become more and more relevant.
Currently, the firm is preparing for a new digital era, which will undoubtedly bring with it new challenges in terms of trademark and intellectual property rights protection.
It is worth mentioning that in the Metaverse the same rules apply to trademark or copyright.
4 . Additional information
5 . Frequently asked questions