Argentine Supreme Court of Justice ruling on industrial models and design registration system and nullity claims.
On June 28, 2016, the Argentine Supreme Court of Justice (the "Supreme Court") issued a ruling, following the Attorney General’s opinion, related to a nullity claim filed by the defendant in an lawsuit initiated by the plaintiff seeking damages for unauthorized use of an industrial model (in re "Industrias Aral S.R.L. vs. Fundemap S.A. and others re/ damages").
According the summary of the facts, the defendant was using an industrial model registered by the plaintiff for equipment that reduces compressed natural gas. The plaintiff filed a complaint for damages against the defendant due to the unauthorized use of the industrial model. The defendant answered the complaint and invoked, as defense, the cancellation of the industrial model due to the lack of requirements needed to obtain protection. The complaint was admitted by the First Instance Court (upheld by the Court of Appeal) and the defendant was condemned to pay damages to the plaintiff due to the unauthorized use of the industrial model.
In both instances, the judges rejected the argument of cancellation of the industrial model introduced by the plaintiff as a defense and argued that the cancellation of an industrial model can only be raised as a claim or counterclaim when answering a complaint. The defendant filed an extraordinary appeal with the Supreme Court, which was admitted.
The defendant alleged misinterpretation of sections 17 and 18 of Legislative Decree 6673/1963 (that regulates Industrial Models and Designs) by the lower courts and, therefore, did not analyze the cancellation introduced as a defense by the plaintiff. The defendant stated that cancellation of an industrial model can be introduced as a defense as sections 17 and 18 of Legislative Decree 6673/1963 does not indicates that the cancellation must only be filed as a claim or counterclaim, but just that it must be ordered at the request of a party. In addition, the defendant sustains its position based on section 1058 of the Civil Code (currently section 383 of the Civil and Commercial Code) that authorizes the cancellation request introduced as defense when answering a complaint.
The Supreme Court had to decide on whether the cancellation of an industrial model must be filed as a separate action, or as a counterclaim, or if it is sufficient to introduce the cancellation as a defense when answering a complaint.
At the Attorney General’s criteria (shared by the Supreme Court), the answer to this is given by characteristics of the industrial model and design registration system. In this registration system, the National Institute of Industrial Property (“INPI”) only conducts a formal examination of the industrial model, unlike what happens with trademarks or patents, where the INPI not only conducts a formal examination but also a substantive examination to verify compliance with the legal requirements to grant protection to inventions or distinctive signs. Thus, the registration system implemented for industrial model and designs is based on a deposit system where there is no substantive examination and the registration has only a declarative effect. In view of this, the Supreme Court has stated that the regime established for the industrial model and designs is essentially weak and does not consolidate any right in favor of who acts unlawfully.
Based on the special characteristics of the industrial model and design registration system and as sections 17 and 18 does not forbids it, the Supreme Court ruled that the cancellation of a industrial model can be introduced as a substantial defense when answering a complaint, revoked the Higher Court ruling and returned the case file to the First Instance Court to issue a new ruling considering the cancellation defense filed by the defendant.
This article contains information of general interest and it does not constitute a legal opinion on this matter.