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 the Spanish-American War (1898) where 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 trademark 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 on the island.
Around 2006, Puerto Rico's economy became stagnant and has had difficulty recovering. Moreover, due to certain natural disasters (Hurricanes Irma and María in 2017) Puerto Rico's economy suffered several economic setbacks. 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 has continuously defeated the odds with increasing development during the last eight 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 and foreign individuals willing to relocate through Act Nos. 20/22 of 2012, the increased availability of electronic transactions for government-related matters, the renovation of the Puerto Rico Trademark Office's (PRTO) electronic system making it more accessible and practical, as well as increased legislative activity within the intellectual property field throughout the past ten years.
In January 2018, the former 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. Furthermore, Puerto Rico's government has, in recent years, focused on the investment and development of areas which are certainly pertinent to intellectual property. Specifically, the government and private industry have invested in many projects within the capital city of San Juan which will make Puerto Rico stand out in the Caribbean. Some of these projects include the "District Live," which expects to attract media and entertainment spaces. Other projects which are expected to be developed in this area involve the construction of the biggest film production studios in the Caribbean, which will certainly turn Puerto Rico into a film production hub. These developments certainly create opportunities for the intellectual property industry, for which Puerto Rico is fertile ground.
The result of the growing intellectual property industry has also been reflected in the courts. Intellectual property litigation, including copyrights, trademarks, and patents, has significantly increased during recent years. The United States Patent and Trademark Office's ("USPTO") Performance and Accountability Report for the 2019 Fiscal Year confirms the growing intellectual property trend in Puerto Rico. The statistics reported by the USPTO reveal:
• A 24% increase in trademark applications filed by residents of Puerto Rico between fiscal years 2018 and 2019;
• A 50% increase in trademarks registered to residents of Puerto Rico between fiscal years 2018 and 2019;
• A 19% increase in patent applications filed by residents of Puerto Rico between fiscal years 2017 and 2018; and
• A 56% increase in patents issued to residents of Puerto Rico between fiscal years 2018 and 2019.
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, trademark 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 trademark infringement;
• Exclusive use of all registered trademarks within the Puerto Rican jurisdiction;
• The Certificate of Registration constitutes prima facie evidence of the validity of the registered trademark, the ownership of the person on record, and of the exclusive right to use the trademarks;
• The Certificate of Registration allows the registrant to request an automatic preliminary injunction for the unauthorised use of a trademark 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 trademark are infringed;
• It provides for costs and lawyer fees for all prevailing plaintiffs in every trademark infringement case; and
• The registered trademark will appear in trademark 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 trademarks. In addition to an advantageous trademark 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.