Chambers Latin America Guide 2019: Online Overview
PUERTO RICO: An Introduction to Intellectual Property Contributed by Ferraiuoli, LLC
Located in the Caribbean region, between North and South America, Europe and Africa, Puerto Rico has always had a very rich, competitive, and dynamic economy. It was a Spanish colony until 1898 and after the Spanish-American War it became a territory of the United States of America. However, because it is not a State of the Union, Puerto Rico still retains limited fiscal autonomy with respect to the United States. This factor has always been a major tool that has allowed different government administrations to develop tax-related incentives for certain industries, such as the manufacturing and service sectors of the economy.
Puerto Rico's economy is deeply rooted by its political relationship with the United States. The Island is part of the U.S. Free Trade Zones and Customs systems, which provide it competitive leverage over other countries in the region, and has the largest non-contiguous Foreign Trade Zone project in the United States. Its leading economic industry is manufacturing, which is composed of pharmaceuticals, textiles, petrochemicals, processed foods, clothing and electronics. The second-leading economic driver is the services industry, composed mainly of tourism, real estate, finance and insurance.
Puerto Rico's legal system is a hybrid between the civil law legal system implemented in Spain and the common law legal system used in the United States. It falls within the U.S. federal system and is subject to both U.S. federal law, including federal trade mark law, and local law. However, just like in any other State of the Union, the Federal Courts have final authority over the Commonwealth's affairs. Due to its territorial status, Puerto Rico and the U.S. are intertwined in political and economic matters and, as such, what happens in the United States greatly influences what happens locally in the Island.
Around 2006, Puerto Rico's economy became stagnant and has not been able to recover since. However, in times of fiscal crisis, many Puerto Ricans have stepped up in the search of new and innovative ways to be successful. Creative industries, such as telecommunications, arts, design, urbanism, architecture, media, web design and development and others have risen in search of new opportunities, making this sector an important growing part of the economy. Ordinarily, an ongoing fiscal and economic crisis would directly affect potential investments in the island's market and, consequently, hinder innovation that leads to intellectual property development. However, the intellectual property environment is defeating the odds with a continuously increasing development during the last six years.
Puerto Rico has had many initiatives promoting start-ups and business incubators which, in recent years, have created spaces for local and foreign businesses to develop and create intellectual property. This certainly reaffirms a growing innovation trend. The government, at the same time, has also been trying to encourage investment and innovation. Examples of some government actions to promote this include the creation of tax incentives for corporations through Act No. 20 of 2012, the increased availability of electronic transactions for government-related matters, the Puerto Rico Trademark Office (PRTO) has renovated its electronic system and made it more accessible and practical, as well as increased legislative activity within the intellectual property field throughout the past eight years.
In 2017, The Senate of Puerto Rico approved Senate Resolution No. 24 to study and analyse patent patterns in Puerto Rico and their potential of commercialisation. This Senate Resolution officially recognised that providing citizens with the necessary tools to turn intellectual capital into liquid capital is one of the key areas to focus on for the development of the Island's economy. As such, Resolution No. 24 for the government to identify local intellectual and academic initiatives and grant them the resources they need to patent their results and ideas. Additionally, in January 2018, the Governor of Puerto Rico, Ricardo Rosselló, signed a Memorandum of Understanding with the University of Puerto Rico, the Science, Technology and Research Trust of Puerto Rico and the Department of Commercial and Economic Development, through which these last two entities agreed to serve as middlemen between the University of Puerto Rico and the USPTO, to facilitate the process of transferring technology and commercialisation of all the intellectual property developed by the University in order to increase the number of patents issued to the University. These are just some examples of how Puerto Rico's public policy has been promoting intellectual property initiatives in the past years.
The result of the growing intellectual property industry has also been reflected in the courts. Intellectual property litigation, including copyrights, trade marks, and patents, has significantly increased during recent years. The United States Patent and Trademark Office's ("USPTO") Performance and Accountability Report for the 2017 Fiscal Year confirms the growing intellectual property trend in Puerto Rico. The statistics reported by the USPTO reveal:
• A 17% increase in trade mark applications filed by residents of Puerto Rico in the past three years.
• A 37% increase in trade marks registered to residents of Puerto Rico in the past three years.
• A 35% increase in patent applications filed by residents of Puerto Rico in the past five years.
• A 28% increase in patents issued to residents of Puerto Rico in the past three years.
The Puerto Rico Trademark Act is subject to the Federal Trademark Act of 1946, also known as the Lanham Act, and all its applicable provisions. As such, trade mark rights in Puerto Rico can be acquired through both the federal system of the United States and/or through local registration in the Puerto Rico Trademark Office. However, registration in Puerto Rico has several attractive advantages, including:
• Statutory damages for trade mark infringement
• Exclusive use of all registered trade marks within the Puerto Rican jurisdiction
• The Certificate of Registration constitutes prima facie evidence of the validity of the registered trade mark, the ownership of the person on record, and of the exclusive right to use the trade marks
• The Certificate of Registration allows the registrant to request an automatic preliminary injunction for the unauthorised use of a trade mark by a third party, without the need of posting bail
• Local law provides clear guidelines for the computation of damages when the owner's rights over the registered trade mark are infringed
• It provides for costs and lawyer fees for all prevailing plaintiffs in every trade mark infringement case
• The registered trade mark will appear in trade mark searches made by third parties.
Furthermore, the Puerto Rico Trademark Act provides for a deposit of all federal certificates of registration issued by the USPTO, which in turn gives publicity and protection in Puerto Rico to all federally registered trade marks. In addition to an advantageous trade mark law, Puerto Rico has other important intellectual property protections: the Moral Rights Act; the Right of Publicity Act, and the Trade Secrets Act.
Despite challenging economic trends, the intellectual property industry in Puerto Rico has been experiencing continued and unparalleled growth. Puerto Rico has used the economic struggle to innovate and repurpose its economy. Accordingly, Puerto Rico certainly offers an appealing and growing market in the intellectual property industry, attracting companies and individuals to do business on the Island.