BILL ON BREACH OF TRADEMARK ACT SUPPLEMENTARY TO TRADEMARK ACT

The Senate and the House of Representatives, etc...

SECTION 1: The first paragraph of section 31 of Act No. 22,362 is hereby amended, which shall read as follows:

“Section 31: A penalty of (6) six months to (6) years imprisonment shall be imposed. In addition, a fine ranging from $15,000 (Fifteen Thousand Pesos Argentine currency) to $250,000 (Two Hundred and Fifty Thousand Pesos Argentine currency) may also be applied”

SECTION 2: In the case of business organizations, whether they have been formed pursuant to legal requirements or not, the criminal liability for the breach of Act No. 22,362, typified under section 31 of the aforementioned statute is extended to all such persons who have direct participation in the offence, either as managers, administrators or in any other capacity, regardless of the involvement inherent to those named as legal representatives.

SECTION 3: For the purposes of establishing the infringement, it shall be understood, pursuant to section 16 provided by the TRIPs Agreement, that there is a juris et de jure legal presumption that the use of identical or similar signs for goods or services identical or similar to those for which a trademark has been registered, during the course of commercial transactions, gives rise to confusion, entitling to the commencement of the appropriate criminal action.

SECTION 4: Once it has been proved that, in order to conceal the liability mentioned in section 2 herein, persons other than the real owners have been used to obtain corporate intent, both the minimum and maximum values for the fines set forth by section 31 of Act No. 22,362 shall be doubled.

SECTION 5: Natural or artificial persons are jointly and severally liable with their employees and/or the persons held responsible in accordance with section 2 herein, for the infringements they might incur into while on duty or during the course of their functions.

SECTION 6: In the event an artificial person were the beneficiary of the proceeds, in any of the cases provided for in section 31 of Act No. 22,362, its unlimitedly liable directors, administrators and partners shall be jointly and severally liable for the fines imposed and for the damages arising from their actions.

SECTION 7: In the same sense, in the case of business organizations, whether they have been formed pursuant to legal requirements or not, or whether they constitute de facto business organizations, where the beneficiary of the offence is the artificial person instead of its agent directly, the Title XII of Book One of the Criminal Code, “Probation”, shall not be applicable.

SECTION 8: All those persons who enable or facilitate the commission of this offence, by giving authorization or supplying a plot of land intended to market infringed products, at a commercial level, comprising the installation of an indefinite number of business premises or stands, shall be considered to have incurred in this breach.

SECTION 9: In all the proceedings filed or pending on account of the breach of Act No. 22,362, it shall be mandatory from the first time to notify the Public Revenues Federal Authority, which shall decide whether to become an ad-hoc party in the proceedings, as an auxiliary agent to the Attorney General’s Office.

SECTION 10: Notwithstanding the provisions mentioned hereinbefore, the Public Revenues Federal Authority is empowered, pursuant to the Anti-Evasion Act, to seize from the person charged with the offense all the goods lacking the necessary documentation that constitutes proof of its lawful possession.

SECTION 11: Adjustment of the fine set forth in section 31 of Act No. 22,362 is hereby ordered, being said adjustment updated according to the monthly domestic wholesale price index established by the National Statistics and Census Bureau. This fine shall be applied by the judge hearing the case, should the Executive Branch not have effectively carried out the ordered updated adjustment.

SECTION 12: When, in order to justify their liability in the offence, the person or persons held responsible for such offense intended to use documentation unrelated to the products counterfeited or fraudulently copied, or unlawfully manufactured or marketed, or failed to fulfill the obligation established in section 39 of Act No. 22,362, the section 298 bis, added to the Criminal Code pursuant to Act No. 24,760, shall also be applicable.

SECTION 13: The National Registry of Trademarks at the Customs is hereby created, within the scope of the Public Revenues Federal Authority, reporting to the National Customs Administration.

SECTION 14: All owners of trademarks, both national and foreign, shall be entitled to register their trademark with the National Registry of Trademarks in Customs, submitting with the application the corresponding certificate issued by the National Industrial Property Bureau. Each application shall comprise only one trademark title.

SECTION 15: Parallel to registration, the trademark owner shall constitute domicile in the country and offer evidence of having sufficient financial guarantees to answer for the possible damages that may derive from this registration.

SECTION 16: The mere registration shall constitute, for the brand owner, acceptance of the Argentine federal justice system’s venue and jurisdiction to decide on any conflict related to the subject matter of this law.

SECTION 17: The rights arising from the registration with the National Registry of Trademarks at the Customs and renewals thereof shall be in force for three (3) years as from said registration, provided that the term of the trademark title is not shorter, in which case the rights shall be limited to this term.

SECTION 18: The due registration of trademarks before the National Registry of Trademarks at the Customs shall empower their owners to hinder the entry or exit of goods bearing their trademark or of goods of identical characteristics.

SECTION 19: In every import or export destination, importers or exporters shall register a statement before the Customs service, which shall reveal the trademark or trademarks displayed on their goods or visible on packs or packaging. If applicable, they shall declare that there are no trademarks.
The sworn statement shall include the importer or exporter's name and address, the tariff item number pertaining to the good; the number of units; the country of shipment; the country of origin or, if applicable, the statement that this information is unknown; the seller’s, carrier’s and customs agent’s names and addresses; the identification of the means of transport and the purchase or sale price.

SECTION 20: In the case of goods corresponding to a tariff item number in relation to which there is at least one trademark registration in effect before the National Registry of Trademarks at the Customs, the statement mentioned in the section hereinabove shall be made at least ten working days before the importation or exportation is completed, unless the importer or exporter is the owner of the trademark identifying the products or a person authorized by them. Therefore, the Customs service shall not authorize the release and clearance of goods into the market, their exit from the customs port of entry or from the primary customs area, as appropriate, before the tenth working day after the registration of the statement.

SECTION 21: The Public Revenues Federal Authority (National Customs Administration) shall inform the owner of the registered trademark about the existence of the aforesaid sworn statement, connected with a shipment, prior to inward or outward clearance, without prejudice to the Public Revenues Federal Authority’s inherent power to ban the entry or exit of forged or counterfeited goods pursuant to the provisions contained in the Anti-Evasion Act.

SECTION 22: Should the trademark owner object to the entry or exit of goods, such owner shall start the appropriate legal proceedings within 10 working days, being also bound to give notice to the National Registry of Trademarks at the Customs.

SECTION 23: Section 6 of Act No. 25,246 is hereby amended, adding the following as subsection “h”: Crimes associated with the breach of section 31 of Trademark Act No. 22,362.

SECTION 24: Be it reported to the National Executive Branch.-

GROUNDS

Mr. President:

The spirit of Act No. 22,362 is imbued with the principle of preventing trademark infringement, not only for the benefit of trademark owners but also in favor of consumers, local manufacturers, and trade in general, defending the broadest range of rights and guarantees, like for example, the right of property, the right of free trade, and so forth. However, this statute, which dates back to the year 1980, has been superseded by the rapid growing outburst that the trademark infringement crime has undergone worldwide at the expense of globalization and the development of the media.
This scenario encouraged nations to reach consensus and, by means of the TRIPs agreement, express the need for adjusting the legislations of the different countries after realizing that local laws had become outdated on account of this phenomenon and had not succeeded in guaranteeing either property rights or the right of third parties to be protected against fraud;
The Republic of Argentina, aware of the flaws existing in Act No. 22,362, signed the TRIPs Agreement, which was validated through Act No. 24,425 undertaking to pass a legislative remedy, the enactment of which is still pending; hence, it is imperative to have a more updated legislation that would act as the recipient of the approach used in other parts of the world, such as the WCO (World Custom Organization), regarding the joint work conducted with the Customs from the early stages while holding counterfeited or infringed goods, concerning both their entry to and exit from each particular country.

The scourge of trademark infringement is not just limited to this offense, but rather it is extended to its proceeds which, by means of the already known money-laundering scheme, inflict harm to all the financial system of a country, affecting lawful trade activities, impairing the development of the economy and financing terrorist activities, which not only endanger the security of the world but particularly Argentina’s security as well.

The fact that Argentina has been acknowledged as a country that poses such a high risk in the trademark infringement criminal arena, discourages both foreign investment and local commercial development, in addition to implying that the Public Revenues Federal Authority (AFIP) policies are being clearly undermined, by striking at the very foundations of trade and fostering smuggling and black or informal activity. The same holds true with clandestine workshops where not only monetary exchange is at stake but also citizens' lives are drastically affected. Not to mention the fact that this unfair competition discourages those merchants that employ their largest efforts to do business in line with the rules of the market, while generating important damages to the detriment of the national industry.

For all these reasons, it is considered to be of extreme necessity, as suggested by the foregoing TRIPs or ADPIC agreement - as it is also known – in its section 51, to draft a rule that would eliminate from its very origin, that is to say, from the Customs itself, the possibility of infringing all that is preserved by Act No. 22,362, in other words, trademark infringement, in tune with the recent provisions set forth by the anti-evasion package II. To this end, it would be useful to receive the assistance of trademark owners’ themselves, who would be the parties concerned for this safeguard, with the aim of protecting their trademarks as well as creating a system interrelated to the State’s own activity, yielding benefits to both parties. Trademark owners’ themselves should be the ones in charge of disseminating all over the world this law and such particular efforts undertaken by the Republic of Argentina, disclosing this leading edge statute proposed by our country to all the trademark owners across the globe.

In order to account for the real interaction this act must arouse, trademark owners will not merely register their trademarks, but will commit themselves to join their efforts to the actions conducted by the Republic of Argentina, and if required, submit themselves to our country’s venue and jurisdiction. Thus, there is no doubt that it is necessary to create a trademark registry of voluntary access as well as the full incorporation of the trademark into the country. Likewise, it is essential to optimize the current law governing the matter, since experience has shown that legally conceived types of business organizations are being used to avoid responsibility. The result of this methodology is that, at the end of the day, the company that has incurred in the crime reaps important profits from its unlawful activities, and said responsibility is dodged simply by naming individuals other than the company’s legitimate responsible officers as well as invoking the benefit of probation. So far this mechanism not only contributes to the ongoing mutation of the authors of the infringement leading to the recurrence and/or continuation of the crime, but also makes it impossible to punish the actual offenders.

It is, therefore, necessary to introduce the changes included in this law, highlighting, among them, the essential active participation by the Public Revenues Federal Authority as party to this type of processes, because experience has shown that the crime of infringing or fraudulently copying trademarks is never an independent offence. Much to the contrary, it always generates further criminal offenses, such as tax evasion, adulteration of documents, informal labor, smuggling, etc.

We have yet to comply with the conditions set out in Act No. 24,425, which includes the provisions of section 61 in the TRIPs Agreement, in relation to the need to establish criminal procedures and sanctions, at least for the cases of fraudulent trademark infringement at a commercial level, that allow for the possibility of imposing prison sentences and sufficiently deterring fines consistent with the severity of the sanctions applied in similarly severe crimes. This bill finally establishes common criteria for all the cases of piracy which until now had allowed for important differences in sanctions and situations, considering, for instance, CDs counterfeiting more serious than the counterfeiting of medicines and imposing more rigorous sanctions. This bill tackles situations which our country has recently been forced to face, such as slave labor or the notorious fairs where this crime thrives on and flourishes, offering solutions to this issue.

Finally, let us not forget that all over the world this crime is used to raise funds that enable perpetrating terrorist acts. This is why we consider the inclusion - within the framework of Act No. 25,246, - of powers that enable the Financial Information Unit to investigate this crime extremely useful, should the characteristics of the case deserve it.

For all the reasons above stated, I request my peers to pass this Bill.