Law No. 10511 was published on Friday, September 13, which reforms the Law on Patents and Invention, Designs, Industrial Models and Utility Models in Costa Rica.
In general, patents protect the exclusive right of an invention’s owner over it, preventing a third parties to manufacture, use, offer, sell, and dispose of such invention without their consent. This protection is granted to promote innovation and the recovery of your investment.
Prior to the issuance of this reform, the State had the power to grant such licenses in the following circumstances: (1) when a patent is not exploited within three years from its granting or four years, counted from its request, (2) when a company committed monopolistic practices such as price fixing, price discrimination, lack of supply under commercially reasonable conditions and commercial activities obstruction; as well as (3) public utility cases, regardless of whether the patent was exploited or not.
In the previous version of the rule, the owner’s remuneration was determined based on the particularities of the invention, the authorization’s economic value, and the sector’s average royalty rate. In the case of (1) disuse, the competent authority to determine the remuneration was the Industrial Property Registry, with respect to (2) monopolistic practices, the national competition authority (COPROCOM) and regarding (3) public utility licenses, its remuneration was defined in the contentious-administrative court.
This reform introduces the following changes:
- New cause:
- new cause to require a compulsory license is added to guarantee the availability of medicines and supply of the Costa Rican Social Security Fund (CCSS) even if the invention is exploited.
- Monopolistic behavior related licenses:
- COPROCOM, may grant compulsory licenses to third parties in respect of inventions of companies sanctioned from incurring in any anticompetitive conduct currently typified, broadening its scope.
- Invention owner’s remuneration:
- Remuneration will now generally be based on net sales, the value of the license, average royalty rates and, if applicable, humanitarian or public health factors, which may affect the final value.
- In case of monopolistic behavior, the remuneration may now be reduced or even suppressed.
- With respect to cases of public utility or CCSS’ medicines and supplies availability assurance, their compensation, previously determined by the courts, will be determined by the Executive Branch, which may grant them to said entity or third party of its designatation, even if there is no disuse.
Regulatory changes can affect development and innovation strategies. Being aware of these changes allows companies to adjust their plans and better protect their intellectual assets.
This reform reinforces the importance of companies adopting preventive measures in competition matters, to avoid, in addition to the penalties currently provided for, risks such as the loss of control over their patents without compensation. Thus, compliance programs’ implementation, audits, trainings and the establishment of clear policies, are essential to protect your innovations, operations and investments.
If you have any doubts about the scope of this regulatory change, data protection and competition law, feel free to contact us at This email address is being protected from spambots. You need JavaScript enabled to view it. and This email address is being protected from spambots. You need JavaScript enabled to view it..
By:
- Marco Lopez Volio
- Carolina Retana Herrera
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