Ecuador: Anti-counterfeiting in the Republic of Ecuador

Last Updated: 5 October 2004
Article by Amani Harrison Esq

Originally published August 2004

BACKGROUND

Despite the existence of national and Andean Community legislation protecting intellectual property rights as well as the adhesion by Ecuador to key international conventions on intellectual and industrial property rights, such as the Agreement on Trade-Related aspects of Intellectual Property (the TRIPS Agreement), Ecuador remains one of the countries in the region with the most prolific rates of piracy. Counterfeiting occurs across a variety of industry sectors including motion pictures and sound recording, alcoholic beverages, pharmaceutical products and consumer goods such as shampoos, batteries and toys. In March of this year, the video rental chain Blockbuster was forced to liquidate its franchise in Ecuador. According to news reports at the time of the franchise closure, Blockbuster’s sales had experienced a decline of approximately sixty percent since 2002. This decline was, reportedly, in large part due to the fact that while the chain rented movies at US$3.50, counterfeiters freely sold the same movies or movies still showing in theaters, on the streets of major cities at an average price of US$1.00. The index of piracy in the country is about ninety percent of all goods in the market.

In 2003, the United States Trade Representative once again placed Ecuador on its Watch List after having removed the country. According to the USTR, the principal motive for this is the lack of enforcement by governmental authorities of existing legislation. Ecuador, along with several other Andean nations, has not implemented Article 39.3 of the TRIPS Agreement, which requires that member countries of the World Trade Organization protect test data submitted by drug companies to health authorities from disclosure and unfair commercial use. The USTR alleges that number of copy products continues to increase due to the absence of linkage between the health and patent agencies.

REGIONAL & COUNTRY INITIATIVES–

Recently, the Ecuadorian government has instituted measures to combat piracy. Such measures include an information campaign, aimed at educating the consumer public against the harms caused by music piracy. Additionally, in April of this year, the government of Ecuador destroyed some sixty thousand counterfeit audio and video disks, part of the one hundred forty thousand seized as part of a campaign against piracy. However, this number is miniscule in comparison to the millions of such disks that are produced and sold domestically within in Ecuador and exported regionally to other countries such as Peru. Furthermore, the government has made little or no effort to investigate the source of duplication and distribution of such disks.

LEGAL REGIME

Anti-counterfeiting measures in the Republic of Ecuador are undertaken pursuant to the following legislative provisions:

  • Decision 486 of the Andean Community Commission (Common Industrial Property Regime). This legislation entered into effect as of December 2000 and applies to all Andean Community member nations, that is, Bolivia, Colombia, Ecuador, Peru and Venezuela. Titles VI through XIII define trade and service marks as well as actions that constitute counterfeiting. Title XV, Actions for Infraction of Rights, delimits the civil actions that may be taken by rights holders or the government, either ex oficio or at the request of rights holders.
  • Agreement on Trade-Related aspects of Intellectual Property.
  • The Paris Convention.
  • Intellectual Property Law, Law No. 83, published in May 1998 and its Regulation. This is the internal Ecuadorian legislation which supplements the community law, Decision 486. Decision 486 at Article 257 states that criminal measures are left to the domestic legislation of the Andean Community member countries. The Intellectual Property Law, at Book IV, Title I, Chapter III, stipulates the crimes against intellectual property rights as well as the applicable sanctions. The Intellectual Property Law also briefly outlines some of the measures that may be taken by Customs authorities in order to prevent either importation or exportation of counterfeit goods.
  • Ecuadorian Criminal Code – Chapter II of Title III of Book I.
  • Ecuadorian Civil Procedure Code. The Civil Procedure Code supplements the Intellectual Property Law with respect to civil procedure to be followed with respect to enforcement actions. The Intellectual Property Law is also supplemented by the Statute for the Juridical Administrative Regime for the Executive Branch as regards administrative agency actions.
  • The Organic Customs Law.

BARRIERS TO ENFORCEMENT

Before the passage of the Intellectual Property Law in 1998 and Decision 486 in 2000, there were no anti-counterfeiting measures available to private parties or law enforcement agencies. However, now that such legislation exists, Ecuador is still a focal point for piracy and counterfeiting within Latin America. And, the principal reason for the proliferation of counterfeiting within the Republic of Ecuador is lack of enforcement. Counterfeit goods are sold freely by merchants on the street with little fear of police or administrative action. Government authorities do not enforce the law due to the following reasons:

  • Corruption. There has been some indication that government authorities themselves, in some instances congressional representatives, are involved in the trade and distribution of counterfeit goods. Also, local companies may use their influence or bribe officials not to enforce the law.
  • Lack of internal regulations. Administrative authorities lack clear regulations on ways to conduct enforcement actions, and there is a dearth of resources to undertake such actions, including the absence of facilities in which to keep confiscated goods. Therefore, in many instances, counterfeiters themselves are appointed by administrative authorities as depositories of "confiscated" goods. Additionally, although the intellectual property office may order that fines be imposed, they do not pursue payment of such fines, and so there is little disincentive to produce or distribute counterfeit materials.
  • Failure to create intellectual property judges. Although the Intellectual Property Law provided for the creation of judges especially mandated to resolve intellectual property cases, such action never occurred. Therefore, parties must file infringement actions before general civil judges who are unfamiliar with intellectual property issues and already are experiencing a backlog due to the lack of economic resources within the Ecuadorian judicial system.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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