Category Archives: Regulatory Affairs

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The representation at the general shareholders meeting of Spanish Limited Companies: The execution of a POA to manage all assets in Spain

Article 183 of the Spanish Corporate Enterprises Act (“Texto Refundido de la Ley de Sociedades de Capital”, hereinafter “LSC”) sets out the voluntary representation at the General Shareholder’s Meeting of the Limited Liability Company.

The article begins by listing who can represent the shareholder at the General Meeting. Specifically, the shareholders can be represented by another shareholder, the ascendant or descendant and by another member or person holding power of attorney granted in a public deed with powers to manage all the assets of the grantor/shareholder in Spain.

Said wording of the LSC anticipates as usual that Spanish Limited Companies are composed by a few shareholders, who in addition have family or friendship ties. Consequently, shareholders are not willing to let any person who is not part of their inner circle attend the General Shareholder’s Meeting.

In our opinion, this rule makes more difficult today’s common business practice for shareholders of Spanish Limited Companies, who are companies, to be represented by a third person employed in their internal corporate structure (v.gr. project manager, finance director, legal in house, etc.) or even by external lawyers. The reason why we think this legal provision is obsolete and should be removed is that the power of attorney to be granted to this representative natural person must be so wide as to allow the legal agent to manage all assets of the grantor in Spain. Even a general power of attorney for representation at Shareholder’s Meetings would not suffice for a valid representation of the Grantor.

Unfortunately, not only international trade is affected, but also domestic trade. In the event that a shareholder cannot attend a Shareholder’s Meeting and wants a third party to attend in on his behalf, and the requirements of article 183 LSC are not fulfilled, the agreements adopted may be null.

The discussion has supporters and detractors.

On the one hand, the General Directorate of Registries and Notaries (Dirección General de Registros y del Notariado, hereinafter, “DGRN”), has relaxed the abovementioned requirements, understanding that a power with broad faculties could be enough to attend and vote at Shareholder’s Meetings (RDGRN de 20 de octubre de 1992 [RJ 1992, 8575] y RDGRN de 10 de mayo de 1994 [RJ 1994, 4085]).

On the other hand, the case law has been inflexible and has defended the strict requirement of formality described (Judgement of the District Court (hereinafter, “SAP”) of La Coruña, Sec. 4ª, 26th october 2011; SAP Alicante, Sec. 8ª, 13th July 2005; SAP Barcelona, Sec. 15ª, 11th January 2008; SAP Madrid, Sec. 10ª, 17th October 2005).

Due to the split of views and interpretations, the Supreme Court has passed the Sentence of 15th April 2014, supporting the interpretation of the case law.

The truth is that this formal requirement is excessive and hampers business without reasonable cause, especially in a globalized and constantly changing world.

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2016: New year, new trademark system

We are set to witness a substantial trademark legislation reform in 2016. The EU Commission, the Council and the European Parliament are at a very advanced stage with their preparatory work in this area. If adopted, it will be the most significant trademark reform since the complete harmonization of national trademark systems and the introduction of a community trademark in the 90s.

The draft reform includes a new Trademark Directive to be implemented by Member States in the medium term, as well as a new Community Trademark Regulation, which would become applicable in the short term once adopted.

Among the most relevant modifications envisaged by the new regulatory package, we highlight the following:

  • Symbolically, the Community Trademark will be redubbed “European Union Trademark”. The OHIM will be redubbed European Union Intellectual Property Office (EUIPO).
  • The legal requirement for trademarks to be graphically represented will disappear, opening the gates for new forms of non-traditional trademarks.
  • The harmonization of national trademark systems will be consolidated. Member States will need to incorporate administrative proceedings for trademark cancellation in their respective national Offices. In Spain, the competence for trademark cancellation is currently attributed to Courts and Tribunals. Thus, the reform will reduce the cost of litigation to cancel trademarks.
  • The fees relating to Community Trademarks will be modified. Currently, a basic fee includes up to 3 classes of products and services. This system is inefficient in most cases, where applicants are only interested in registering trademarks for one or two classes of products and services. With the reform, we expect that each class of product or service will be paid separately. This is already the case for internal Spanish trademarks.
  • Renewal fees are substantially reduced.
  • The system of product and service designation will be modified as a result of the IP Translator case and the consequent modification of the class heading system.

To sum up, the reform is significant but not groundbreaking. The new regulatory system will seek to adapt and improve certain aspects that have proven inefficient or improvable over many years. We hope the work of the EU institutions will proceed as expected and will keep you informed as soon as the reform is adopted.

Stay tuned!

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Spain’s New Patent Act: The Key Points

On July 25th, the Spanish Official State Gazette (BOE) published the new Patent Act (“PA”) (“Ley 24/2015, de 24 de julio, de Patentes”), which will substitute the current legislation on April 1st, 2017. The main aim of the new Act is to simplify the patent protection of innovation and promote legal certainty by establishing a single method of patent granting, which requires a prior examination of novelty and inventive step.

The most evident change concerns the remodeling of the patent granting procedure. The new PA approaches the harmonization, as proposed in the Patent Law Treaty, by simplifying the requirements to obtain the filing date of the patent application. These requirements include the obligation of informing about the geographical origin or the source of origin of the biological material to which the invention refers. In order to avoid discrimination towards individuals who decide to file the application in Spain first, the Act introduces a major change by recognizing the internal priority, which will allow them to subsequently file improved or amended applications.

With regard to the grant procedure, the PA makes the most visible change by adopting the procedure integrating a preliminary or substantive examination of novelty and inventive step (non-obviousness) as the single system for granting patents. The conclusions drawn by the examiner upon technical evaluation will be reflected in a so-called “written opinion” and the interested party will be able to respond to the observations and objections that the examiner may have had and/or to continue the proceeding, carrying out a substantive. The substantive examination should prove whether the patent application and the invention fulfil the formal, technical and patentability requirements described on the PA. In order to accelerate the procedure, the new PA substitutes the former system of pre-registration opposition with a new system of post-registration opposition. However, the new procedure still allows for the observations of third parties, who will be able to make any observations regarding the patentability of the invention once the application is published. This new system provides the applicant with the necessary information to decide whether or not to amend or maintain the application and /or to patent abroad within the period of priority.

Although the changes on the application procedure are the most noticeable, the PA also modifies other aspects concerning patents, such as:

  • Regarding European Patents, the PA introduces the amendments adopted by the Act revising the European Patent Convention, by admitting the possibility of patenting known substances or compositions for their use as medicine or for new therapeutic applications.
  • With regard to claims for infringement of patent rights, the PA introduces coercive compensations to guarantee the cease of the infringing activity.
  • The new PA will allow the partial invalidity of a patent claim during the invalidity proceedings. Besides, the patentee can revoke or limit the scope of the patent by modifying its claims at any time during the patent’s legal lifetime.
  • A special feature is introduced concerning the procedural rules. The new PA adjusts the procedural deadlines due to the complexity of the patent disputes, the extraordinary importance of the expert opinions and the need of having them at one’s disposal and making use of them in order to guarantee the right of defense of the defendant. The general deadline for filing the statement of defense, formulate a counterclaim and or answer the latter, will be increased from the current twenty days to two months.

The new PA does not forget patent’s little sister -utility models- and adjusts its regulation aiming to adapt it to the present and to assimilate it to their situation in other European countries. The first relevant change is the levelling of the relevant State of the Art to the one required for patents, i.e. the innovation required for the concession of a utility model will be the same as the required for patents. Another relevant change is that the range of what can be protected as a utility model will be increased and, therefore, will include chemical products, substances or compositions, except for those involving biological materials and pharmaceutical substances and compositions. Finally, since utility models are granted without examination, owners aiming to enforce a utility model under the new law will have to provide for a search report on the State of the Art.

 

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Towards the Unified Patent Court

25 EU Member States have embarked on enhanced co-operation to implement unitary patent protection for their territories. The so-called “EU Patent Package” consists of two regulations: Regulation No 1257/2012 concerning the implementation of enhanced cooperation in the area of the creation of unitary patent protection and Regulation No 1260/2012 regarding the applicable translation arrangements. However, for the time being, Spain will not participate in this ambitious project.

Spain’s objections and the decision of the CJEU

Spain sought annulment of both regulations. Spain argued inter alia that the administrative procedure preceding the grant of the Patent defined by Regulation No 1257/2012, infringes the principle of effective judicial protection, since the procedure is not subject to a judicial review to ensure the correct and uniform application of EU law and the protection of fundamental rights. With regard to Regulation No 1260/2012, Spain claimed that it infringed the principle of non-discrimination on the ground of language since –according to Spain’s objections- the translation agreements discriminates individuals whose language is not one of the official languages of the European Patent Office (i.e. English, German and French).

Spain has not been alone in its battle against the Patent Package. Many opponents of the Unitary Patent Court have expressed their disapproval of the aforementioned regulations. Nevertheless, the Court of Justice of the European Union (CJEU) has recently rejected Spain’s objections to the Unitary Patent Package, effectively giving the green light to the project.

Considering that the regulations entered into force on 20 January 2013, supporters of the system consider Spain’s objections were the last stumbling block. However, the regulations will only apply from the date of entry into force of the Agreement on a Unified Patent Court. The Agreement will have to be ratified by at least 13 states, including France, Germany and the United Kingdom to enter into force; at the moment only 6 states –Austria, Belgium, Denmark, France, Malta and Sweden- have ratified the decision.

The unitary patent and Unified Patent Court

The application procedure, the examination of the procedure, and formalities of concession by European Patent Office will not change with the new regulation. The differences arise once a unitary patent is granted.

A unitary patent provides uniform protection with equal effect in all participating countries. Individuals requiring protection in a country that has not incorporated the unitary patent –for instance, Spain- will need to register the patent with their national authorities. In this case, to extend the effects of a unitary patent to Spain, the person seeking protection will need a license, a translation to Spanish and, in addition, will be subject to payment of a fee. Besides, Spanish courts will be the only competent judicial authorities.

The unitary patent offers protection through enforcement before a single court, as opposed to having to initiate proceedings in multiple national courts. The goal is to have a single trial rather than a wide range of resolutions by the courts of different countries. This will reduce both legal costs and the risk of diverging decisions, generally promoting legal certainty. The results are greater efficiency, swifter proceedings and a reduction in litigation expenses. Patents can nevertheless still be obtained from the national patent offices of each participating country; in such case the patent holder will be entitled to protection only at the national level.

The major goal of these regulations is to create an exclusive specialized jurisdiction for litigation relating to European patents. The Unitary Patent Court will be the single competent authority to hear disputes regarding the validity and infringement of the new unitary patent. An advantage of this will be the high level of specialization of the UPC, which will comprise a Court of First Instance (CFI), a Court of Appeal (CA, located in Luxembourg) and a Registry. The court shall base its decisions on EU law, the Agreement, the European Patent Convention (EPC), other international agreements applicable to patents which are binding on all the participating states (e.g. the TRIPs agreement and the PCT) and national law.

There will be a transitional period of at least seven years (which may be extended by another seven years), during which infringement and validity actions on European bundle patents may still be brought before national courts or other national competent authorities. Additionally, an owner of a European bundle patent will be able to opt out of the jurisdiction of the UPC on a patent by patent basis. In this case, the European bundle patent will remain in the jurisdiction of national courts. For example, if the owner of a European bundle patent valid in the UK chooses to opt out that patent, any litigation will be in the UK courts. Once a patent has been opted out of the UPC’s jurisdiction it can be opted back in at any time before the end of the transitional period, provided no action has already been brought before a national court.

The European Union has sought to achieve harmonization of patent law for almost 40 years. It is true that there are still some elements of uncertainty in the project and some aspects that need to be polished. In the meantime, however, the supporters of the new system are celebrating the CJEU’s decision.