Trademark property issues in PR's liquor industry

The term tangible property is literally everything that can be touch and includes real property and personal property; this is the definition also for law (Cheeseman, 2010). The U.S. economy is based on the freedom of ownership of property.  Real estate and personal property are tangible properties, but there is also the intellectual property rights have value to any business or individual.  The trade secrets makes any business different from their competitors, trade secrets includes formulas, patterns, designs, data, customers lists and business secrets. The state laws impose civil damages and criminal penalties against persons who misappropriate trade secrets.  

Federal laws provide protection for intellectual property rights, patterns, copyrights or trademarks.   The owner is obliged to take precautions to prevent that secret to be discovered by others.  If the owner doesn’t protect the trade secret, the secret is no longer subject to protection under state law. The precautions to protect the trade secret may include fences in buildings, locks on doors and hiring security for the protection.  The owner of a trade secret can bring a lawsuit against anyone who obtains the trade secret by theft, bribery or industrial espionage.  If the owner of trade secret wins they can recover the profits made by the offender for the use of the trade secret, and prohibit the offender of divulging and using the trade secret.

The Bacardi Corporation filled a lawsuit against French spirit maker Pernod Ricard over the use of the Havana Club trademark in the American market.  It was a two decade fight in court for the trademark. The case began in 1994 when Bacardi applied for a U.S. trademark for Havana Club after they purchased the rights to the brand from the Arechabales family, a family that make rum in Cuba and sold Havana Club in the United States in 1930.  The Arechabales family went in exile and the registration lapsed in 1973,   Cuba export registers the Havana Club mark in 1976. Cuba export suit Bacardi when they tried to register the mark to decades after they register.   After a long battle in court of two decades they took the case to the Supreme Court, the decision of the Supreme Court was not to intervene in the trademark dispute.   After the Supreme Court decision Mr. Pernod announced a new trademark Havanista, that he had register.    Registering Havanista trademark was for him to have an opportunity to distribute premium Cuban rum one day.

Trademark property rights for the liquor industry

The government, through the camera projects, protects the rights of brand liquor industry. For example, years ago, they worked with the Law no. 265 of September 4, 1998 - To amend the “Revenue Code of Puerto Rico Internal Revenue Code of 1994" and to repeal the "Alcoholic Beverages Act of Puerto Rico " (P. de la C. 1422) Act 265, 1998.

This law was created to repeal Act No. 143 of June 30, 1969, as amended, known as the “Beverage of Puerto Rico" in order to adjust the Alcoholic Beverages Act of Puerto Rico with the new changes in trade world, and give the Treasury Department the flexibility to attend and oversee agile development liquor trade.

It is common knowledge that the Alcoholic Beverages Act of Puerto Rico responded to an original scheme of an amended law in 1969. From then until the present, there have been developments in the liquor industry that warrant significant changes to promote better movement of alcoholic beverage products supervised by the Department of Finance. This Act, with the changes proposed today, must upgrade the consumption patterns of alcoholic beverage products within Puerto Rican society, free trade of these and adequate oversight by the Treasury Department. To achieve these purposes this Act was amended. Here are the sections that apply to the protection of trademark rights in the liquor industry:

·         Section 4051 - . Formula for Alcoholic Beverages
No person shall manufacture and package liquor for commercial purposes without first obtaining the approval of the Secretary of the formulas of the products , and demand from the Secretary , submit samples thereof.

·         Section 4052 - . Denatured Alcohol
(a) Formulas - . No person shall manufacture denatured spirits or specially denatured alcohol for industrial or commercial purposes, including the rubbing alcohol and goods made from denatured alcohol, unless the formula for making the same has been approved by the Secretary. Those persons shall submit samples of products when required by the Secretary.

·         Section 4054 - . Rum Puerto Rico
All rum label use in the phrase " Ron de Puerto Rico " and " Puerto Rican Rum " should be manufactured and aged for a minimum of twelve (12) months under the control of the government of Puerto Rico and meet the requirements for rum in this subtitle, and the quality requirements established by the Secretary of the Treasury by regulation to that effect.
All were to be shipped or exported from Puerto Rico must be produced and aged under government control and meet the requirements for rum in this Subtitle , and quality requirements established by the Secretary by regulation to that effect. Distilled spirits shall be not less than twelve (12) months of age at the time of being removed from the bonded warehouse where it’s aged.

·         Section 4072 - . They will use packaging with No Last Name, Trade Name or Brand Factory of Another Firm
No holder of a permit issued in accordance with the provisions of this subtitle or any other law, use or permit to be used in any way shape or any container, bottle or container bearing the name, trade mark, trade name or corporate belonging to or used by another permittee entitled thereto, without the consent of the owner.

A trademark is any word, name, symbol or device or any combination thereof that: identifies and distinguishes the good of a person, including a unique product, from those manufactured or sold by others and to indicate the source of goods even if that source is unknown.  In Puerto Rico the protection of trademark law is enshrined in the Trade Marks Act of the Commonwealth of Puerto Rico, Act No. 63 of August 14, 1991 10 LPRA sec. 171 et seq. Under this law, a trademark is “any sign or device used to distinguish market products or services of a person, product or services of another person ", 10 LPRA sec. 171.

This allows us to determine who has a better right to a trademark: a company that first registered Trademark of the Department of State of the Commonwealth but has not used it, or subsequent federal registrant, who first before the used commercially in the United States and Puerto Rico.

For example, if the Company X requests the Patent and Trademark Office U.S. registration of certain brand and the request is made with the bona fide intention to use the mark in a certain industry. Start using the product in interstate commerce of the United States with the application date in February and obtained registration of the mark in June of that same year.

In May, another company M asked the State Department of Puerto Rico that would record in his favor certain brand and same product line above company. The application for registration is made without the use of the mark in commerce previously, but with the intention of using it. After some steps, the State Department finally registered the trademark.

In August, the company X expands the use of the brand to Puerto Rico. Company X submitted to the State Department a request for cancellation of the trademark registration of the company M. In his petition, said that he had registered the same mark for the same type of product, in the Federal Register of the Patent and Trademark Office. 

He said that of allowing the coexistence of both brands, consumers would be confused and could acquire the company product M.  In Puerto Rico the protection of trademark law is enshrined in the Trade Marks Act of the Commonwealth of Puerto Rico, Act No. 63 of August 14, 1991 10 LPRA sec. 171 et seq. (hereinafter Trademark Law). Through this section the existence of a trademark owner following the registration of the Trademarks in the State Department recognized. However, that right is conditional on the registration to be made validly and also succumb to the timely claim by having a better right over the trademark for having used before.

Our Trademark Act, therefore, combines "the right born for use with the right set up with the record." Joint Committees of Cooperatives, Commerce and Industrial Development and the Judiciary Report P. S. 995 of June 19, 1991. However, by registering a trademark with or without use, the applicant must meet several requirements. The quoted Section 4 of the Trademark Act of Puerto Rico 10 LPRA sec. 171b includes the formal requirements to apply for registration.  The Section 5 10 LPRA sec. 171c, on the other hand, lists a number of prohibitions that affect the register process of a mark.

Under that section, you cannot register, including: a mark that is identical to a mark already registered or known, belonging to another and used in products or services of the same descriptive properties or both resemble the another mark that is likely to cause confusion or mistake in the mind of the public or lead to deception of purchasers 10 LPRA sec. 171c (a) (7).  However, even when you've already made the registration of a mark, it can be subject to a cancellation request. To this end, Article 19 of the Trademark Act of Puerto Rico 10 LPRA sec. 171q provides that a person aggrieved by the registration of a trademark may request cancellation by submitting a letter to the Secretary.

If at the time of filing more than five (5) years have elapsed since the registration of the mark, the cancellation will proceed only if present one of the basics outlined in Article 19, supra, as follows:

·         Abandonment of the mark,

·         A search conducted in violation of the provisions of the law,

·         The advent of the generic brand name product or service for which it is used

·         Use of registration or permission of the registered owner so that cause confusion about the nature, quality, characteristics or geographical origin of the product or service for which it is used

·         A record obtained by deceit.

Actions managers may take to protect the trademark property rights

      There are laws in both the United States and Puerto Rico that protect and establish rights in the mark or service mark based on the use made of the mark. Although it is not required to register the mark, it is highly recommended as it provides distinct advantages.  Registration of a mark is prima facie evidence of ownership. Remedies such as actions for damages or seizure orders are some of the actions that infringers could be exposed.

      The trademarks used in interstate commerce of Puerto Rico may be protected if registered in the US Patent and Trademark Office. However, to extend the reach in the protection in situations of intrastate commerce, local registration is recommended to protect the trademark.

      The process to register a trademark in Puerto Rico begins by filling an application that sets the mark and the goods or services that are used. This request is submitted to the Secretary of State along with a sworn statement on the right to use the mark, facsimiles of the mark as used or proposed to be used, and payment of a fee of $150.00 (Franchise, 2013).  The renewal of registration must be made within the term of 10 years. The brand owner has to file a sworn declaration of continuous use accompanied by a sample of the use of the mark before the term expires.   During the fifth year after the application filing date, a similar declaration of continuing use must be filed otherwise the registration lapses (Franchise, 2013).

      Act No. 80 of 2011 of Puerto Rico, known as the “Ley para la Protección de Secretos Comerciales e Industriales de Puerto Rico”, provides protection for know-how. The Trade Secrets Act covers all information that is not generally known or accessible and provides its owner with an economic value or advantage ("Act No. 80 of 2011 - Ley para la Protección de Secretos Comerciales e Industriales de Puerto Rico, "2011). To be protected under this law owner must take steps to ensure the confidentiality of its information.

      The "Act No. 80 of 2011 - Ley para la Protección de Secretos Comerciales e Industriales de Puerto Rico" (2011) provide a list of reasonable measures that must be taken such as:

·         restricting the number of persons authorized to access certain information;

·         requiring employees to sign a non-disclosure agreement;

·         formally classifying information as confidential; and

·         implementing technological restrictions on the transmission or use of information.

      The "Act No. 80 of 2011 - Ley para la Protección de Secretos Comerciales e Industriales de Puerto Rico,” (2011) creates new causes of action against any person that:

·         acquires from another person a trade secret that was acquired by improper means; or

·         discloses a trade secret without the consent of the secret’s owner, if the disclosing party knew or should have known the trade secret was obtained illicitly.

      This law also attempts to protect the confidentiality of the information through measures that ensure the integrity of the trade secrets in cutting processes. The most common remedies under the Trade Secrets Act are damages and injunctive relief, attorneys' fees or royalty payments.

      In addition to the Trade Secrets Act, the general Tort and Property Law of Puerto Rico as well as the unfair competition statutes and regulations may be used to protect trade secrets. Furthermore, rule 513 of the Puerto Rico Rules of Evidence declares trade secrets to be privileged information and rule 23.2(g) of the Puerto Rico Rules of Civil Procedure allows protective orders to prevent disclosure of trade secrets (Franchise, 2013). 

In the success of a trademark exist some factors, there's no a miracle formula to the existence of the trademark. ''No matter what market place you operate in; no matter size and scope of your firm; registered  trade mark is simply a must for your business. It will serve to protect differentiate and add-value to what you do and therefore make your business stand out in the crow’’ (Elms, 2013). There can be procedure and laws that protected the trademarks but everything relapse in the managers and employees who follow the rules in order to keep the positive work done correctly and preventing that others company’s take the ideas.

The managers are the ones that have to take some action and educate the employees correctly, so all of them can protect the organization’s property rights. We have to know that not only the competitors will pay attention to every movement that your company do, also you are going to find internal persons in your own company that are taking some of your ideas.

What managers will do to protect from the competitors: (Internal)

·         Educate employees awareness training can be effective.

·         If information is confidential to your company, the manager put a banner or label on it that says so.

·         Lock all the rooms where sensitive data is stored it would be digital or physical.

• Protect the passwords in the area that you have your system
• Install anti-virus software and keep it up to date.

·         Prevent unauthorized users from hacking into your system

•  Always have a back up for your work

·         Send people to inspect the physical premises, find out what kind of     access people have to key systems.

·         Always maintain an original copy of source code.

You have to be aware to what people did you trust because your ideas can be tell to the wrong people, so you have to take some action before them to protect the ideas. Is very important that you keep everything in the IP rights, this will help you against time-consuming and expensive.For this kind of problems exist the Lanham Act (15 U.S.C.A. § 1051 et seq., ch. 540, 60 Stat. 427 [1988 & Supp. V 1993] that granted you protection of a federally registered mark against of the use of similar marks.

This Act specifically will protect you against trademark infringement, trademark dilution, and false advertising. This Law also expands the types of trademarks and creates legal procedures to help trademarks enforce their rights. Remember “Don’t focus on the competition; they’ll never give you money.” (Laja, 2013).

References

Cheeseman, Henry R. (2010) Business Law, Legal Environment, Online Commerce,

Business Ethics, and International Issues, Seventh Edition Chapter 1, Pearson

Education, Inc., publishing as Prentice-Hall     

Elms, Jonathan (2013), Intellectual Property Office Trademarks: Quick Facts

Retrieved from http://www.ipo.gov.uk/tm-quickfacts.pdf, Retrieved on February 12, 2014

Franchise (2013). Getting the Deal Through, Retrieved from http://www.franchise.org

Laja, Peep (2013), Stop copying your competitors, Retrieved from

http://conversionxl.com/stop-copying-your-competitors-they-dont-know-what-theyre-doing-either/# , Retrieved on February 12, 2014

Lanham Act (15 U.S.C.A. § 1051 et seq., chap. 540, 60 Stat. 427 [1988 & Supp. V

1993]

Law no. 80 year 2011- Ley para la Protección de Secretos Comerciales e Industriales de Puerto Rico. (2011). LexJuris, Puerto Rico, Retrieved from http://www.lexjuris.com/lexlex/Leyes2011/lexl2011080.htm

Law no. 265 of September 4, 1998 - To amend the “Revenue Code Puerto Rico Internal

Revenue Code of 1994 " and to repeal the " Alcoholic Beverages Act of Puerto

Rico " (P. de la C. 1422) Act 265, 1998 - Section 4051 - . Formula for Alcoholic Beverages

Law no. 265 of September 4, 1998 - To amend the “Revenue Code Puerto Rico Internal Revenue Code of 1994 " and to repeal the " Alcoholic Beverages Act of Puerto Rico " (P. de la C. 1422) Act 265, 1998 - Section 4052 - . Denatured Alcohol

Law no. 265 of September 4, 1998 - To amend the “Revenue Code Puerto Rico Internal Revenue Code of 1994 " and to repeal the " Alcoholic Beverages Act of Puerto Rico " (P. de la C. 1422) Act 265, 1998 - Section 4054 - . Rum of Puerto Rico

Law no. 265 of September 4, 1998 - To amend the “Revenue Code Puerto Rico Internal Revenue Code of 1994 " and to repeal the " Alcoholic Beverages Act of Puerto Rico " (P. de la C. 1422) Act 265, 1998 - Section 4072 - . No Glass Containers will be used with Name, Trade Name or Brand Factory of another Firm

Pernod Ricard USA, LLC v. Bacardi USA, Inc. 702 F. Supp. 2d 238 (D. Del. 2010)

Decided April 6, 2010

Trade Marks Act of the Commonwealth of Puerto Rico, Act No. 63 of August 14, 1991 10 LPRA sec. 171 et seq.