Pardini & Asociados Image Pardini & Asociados Image

IP Piracy and Enforcement in Panama

I. Introduction

By means of Law No. 23 of July 1997, published in Official Gazette No. 23,340 of July 26, 1997, Panama adopted the Marrakech Protocol, the Panamanian Accession Protocol with its annexes and the Panamanian list of commitments. This law also included new regulations and amendments to existing laws required for the Panamanian legislation to comply with the World Trade Organization (“WTO“) rules.

The Republic of Panama, as part of its WTO accession negotiations, agreed to implement the WTO Agreement on Trade Related to Intellectual Property Rights (TRIPS) and Services without a transition period.

Panama’s intellectual property legislation is compiled by Law No. 15 of 1994, which regulates copyrights, Law No. 35 of 1996 which regulates industrial property, Decree No. 123 of November 1996 and Decree No. 79 of August 1997 for the implementation of Law No. 35 in Colon Free Zone.

Since WTO accession, effective September 7, 1997, Panama has continued to implement new intellectual property legislation. By means of Law No. 12 of May 3, 1999, Panama adopted the CIPOV 1961, as revised in 1972 and 1978). In December 1998, by means of Law No. 92 and 93 of December 15, 1998 both published in Official Gazette No. 23,700 of December 28, 1998, Panama ratified the World Intellectual Property Organization (WIPO) Copyright Agreement and the Agreement on Performances and Phonograms.

II. Background

The international movements to provide Panama with world recognized legislation for protection of IP rights included the following:

In October 1996, the U.S. Trade Representative (“USTR“) initiated a review of Panama’s intellectual property rights regime under the Generalized System of Preference Program (“GSP“) and placed Panama on the Special Mention List.

On April 1997, the USTR elevated Panama to the Watch List and scheduled an out-of-cycle to assess Panama’s efforts to improve its intellectual property laws and their enforcement.

As a result of an out-of-cycle review in October 1997, the USTR decided to remove Panama from the Watch List, given visible progress made since its placement on that list. This decision recognized that Panamanian authorities had made a significant effort in the protection of intellectual property rights.

III. Applicable Regulations and Penalties for Piracy and Counterfeiting in Panama

Title VII of Law 35 of May 10, 1996 establishes the intellectual property rights protected in the Republic of Panama, to wit:

  1. Inventions
  2. Utility models
  3. Patterns and industrial drawings
  4. Industrial and commercial secrets
  5. Trademarks for products and services
  6. Indications of origin
  7. Denominations of origin
  8. Commercial names
  9. Signs and advertisement expressions

A. Intellectual Property

Law No. 15 of 1994 regulates copyrights and Law No. 35 of 1996 regulates industrial property. Law No. 15 of 1994 follows the WIPO model. It strengthens copyright protection, protects software as literary work, facilitates prosecution and makes copyright infringement a crime. Copyright infringement is punishable with fines and even imprisonment.

Law No. 35 of 1996 provides for a 20-years patent protection. It also provides for a 10-years trademark protection, plus simplifying the process of registering trademarks. It gives government agencies the authority to conduct ex officio investigations and to seize counterfeited material. In accordance with Law 35, rights for the registration of trademarks in the Republic of Panama are acquired by means of use. Rights for the exclusive use of trademarks are also acquired by means of registration. In order to oppose the use of a trademark, the same must be registered. It is not necessary to have the trademark registered in order to opposed the registration of the same or demand its annulment or cancellation, it will be necessary for the opponent to prove former use of the trademark.

B. Illegal Use of IP Rights

Title VII of Law 35, describes the types of conduct that will be considered unlawful use of intellectual property rights and copyrights in the Republic of Panama and establishes the legal responsibility of all persons that in one way or another participate in these acts, to wit:

1. The manufacturers of goods protected by a patent or a registered utility model, without the owner’s consent or without the required license.

2. The sellers of products protected by a patent or a registered utility model, that knows that the goods were manufactured or elaborated without the consent of the owner of the patent or registered utility model, or without the respective license.

3. The users of patented processes, without the consent of the owner of the patent, or without the respective license.

4. The sellers or persons that commercialize goods that result from the use of patented processes, knowing that the patented processes were used without the owner of the patent or without the respective license.

5. The counterfeiters of patterns or industrial drawings duly registered, without the consent of their registered owner or without the respective license.

6. The counterfeiters of a trademark or commercial denomination.

7. The parties that use in their products, trademarks, commercial denominations, labels and commercial signs, a name or commercial denomination, identical or substantially similar to one owned by another party.

8. The parties that in any way use trademarks, names or commercial denominations, clearly evidencing, their intention to imitate, in any concept, a trademark, name or commercial denomination, registered in favor of another party.

9. The persons who sell, offer for sale, consent to sell or distribute, goods or services with counterfeited trademarks or trademarks deceitfully applied, and the persons that distinguish their commercial or manufacturing establishment using signs, stationery and any other distinctive, with trademarks, names or commercial denominations that are counterfeited or deceitfully applied.

10. The persons that brand or make others brand goods with false designations or signs, in respect of their nature, quality, quantity, number, weight or size, or country of origin, or use the terms trademark or the equivalent initials TM or R (M.R. or R), when the trademark is not duly registered.

11. The sellers of goods or services with false indications as referred above.

12. The parties that, in any way, use a trademark reproducing in similar characteristics of other trademark, which goods or services are similar or identical, for the sole purpose to dilute or destroy the distinctive force or commercial value of the trademark, causing damages to its owner.

C. Legal Penalties for the Illegal Use of IP

The following penalties will be applied to persons or companies that incur in detriment of the Intellectual Property and Copyrights granted on behalf the lawful owners of the same by law:

1. A fine of US$10,000 up to US$200,000.00. According to the law, this fine can be applied to the direct transgressors as well as to their accomplices and conceivers.

For companies established in the Colon Free Zone, and other Free Zones or Export Processing Zones operating in the Republic of Panama, the applicable fine will be equivalent to 25% of the company’s monthly commercial turnover, but in no case it will be less than US$75,000.00.

2. Suspension of the rights to commercialize or engage in business for a period of three (3) months.

3. Suspension or cancellation of the operation license granted by the Colon Free Zone, or other existing Free Zones or Export Processing Zone in the Republic of Panama. In case of a suspension, the same will be applied for a minimum period of three (3) months.

In case of recurrence the sanctions described in sections 2 and 3 above will be applied for a period of one (1) year, and the penalty described in section 1 could be up to four (4) times the maximum penalty, of US$200,000.00 that is, up to US$800,000.00.

In all cases of illegal use of IP and copyrights, the goods and machinery used for the violation of the rights will be seized. The goods and machinery will be then donated for charitable purposes, free of any tax, by the corresponding institution, once the removal or elimination of distinctive symbols is completed. If the removal or elimination of distinctive symbols is not possible and if the owner of the protected right does not grant authorization for such donation, the goods and machinery will be destroyed by the competent authority in the presence of a representative of the owner of the protected intellectual property right.

Law 35 allows the registered owner of protected IP and copyright to file a judicial claim before the competent authority against any person that infringes his rights. The statute of limitations to file this action is six (6) years, counted from the last time the unlawful use of an IP right was undertaken and allows the plaintiff to seek indemnity for damages and losses as well as the suspension of the acts that infringe his rights.

For the calculation of the indemnity, the claimant can choose among the following alternatives:

The projected benefits that the owner of the protected right would have obtained, if the violation was not undertaken.

The benefits obtained by the counterfeiter as a result of the counterfeiting acts.

The price or royalty that the counterfeiter would have had to pay the owner of the protected right, if a contractual license was agreed by the parties, taking into consideration the commercial value of the counterfeited product, as well as commercial licenses previously granted in this regard.

IV. Recent Cases of Enforcement on the Ground

a. The Challenge Case: On September and October 1998, the Tenth District Attorney’s Office of Panama, conducted a series of raids at and around the Tocumen Airport which resulted in the seizure of over five million pirate CDs and CD-ROMs, along with pirate and counterfeit items. The seized amounts included 3.5 million, 450,000, 850,000, and 285,000 units, in four separate actions. A conservative estimate of the value of these seized CDs might be US$20 million.

In this case, the shipments were sent from Hong Kong, to Taipei, to Los Angeles, and then to Panama, where they were re-packed to continue on to Ciudad del Este, Montevideo, and Buenos Aires, with the final destination being Brazil.

As a part of the Challenge case, Colon Free Zone officials decided to revoke the operating licenses to the companies owned by the defendants, and these are now forbidden to conduct business in the Colon Free Zone.

b. The Nintendo Case: On October 26, 1994, at the request of Nintendo and in a joint effort with its local counsel, Panamanian officials simultaneously raided five warehouses and offices in the Colon Free Zone. Thousands of counterfeit Super NES and Game Boy cartridges were seized, in addition to counterfeit semiconductor chips, packaging materials and components to assemble the counterfeit games.

VI. Conclusions

Presently, Panama is not on any Watch List since 1998, but the USTR is devoting special attention to reducing production of unauthorized copies of “optical media“ products such as CDs, VCDs, DVDs, and CD-ROMs as well as other products in the region. As serious as the problem of optical media piracy is, the internet is even more problematic in that it has provided an efficient global distribution network for pirated products.

Pardini & Associates has a complete IP Legal Group with the expertise and know-how necessary to advise and support our multinational clientele. For any further assistance, please contact us.

Silka Niño

Ready to do Business in Panama?

Pardini & Asociados offers you the Guide to Doing Business in Panama 2023 completely FREE! Download here!

Get it now

Pardini & Asociados Image