In Peru, there are micro, small and medium-sized companies devoted to the sale of goods and/or services, which represent the 99.6%1 of the total business in the country. In addition, due to their representation in the economy, they provide employment to more than the 80% of the labor force.
It is necessary to point out that, although the production of these companies represents 47% of the GDP, not all of them have a registered trademark before the National Institute of Defense of Competition and protection of Intellectual Property (INDECOPI).
Therefore, this article will focus on information about the brand, the value and benefits thereof, the procedures to be carried out before the corresponding entity, and we will conclude showing examples of some successful cases, wherein the brand provides an important added value for progress and the permanence over the time of the companies, which today are known at national and/or international level.
Why a “trademark" is valued?
Firstly, the trademark1 identifies the goods and/or services that are going to be offered to the end consumers, this allows the holder to have an exclusive use of such trademark so as to differentiate it from his competitors. On the other hand, if a trademark is registered, which is the most recommended, before the Distinctive Signs Direction (DSD) as it is the administrative instance of the INDECOPI, whose function is to administer the rights over the trademark system, it would provide protection against possible copies or imitations of third parties that wish to take advantage of the prestige earned by this brand in the market.
It is public knowledge that the prestige of a brand is won with creativity, investment of time and money, amongst other factors that occur throughout the useful life of the company and the trademark. Therefore, this achieved prestige is safeguarded with an act as simple and at the same time as indispensable as the registration of the trademark. It should be noted that it is not mandatory but for legal and economic security it is recommended to register it to safeguard involved interests.
What benefits are obtained on registering a trademark?
The benefits obtained with the registration of a trademark is that the holder becomes the sole owner authorized for use it for a period of 10 years from the registration date, which period can be renewed 6 months before or after the said date. In addition, the competent entity shall not require evidence of use of the mark, so the renewal will be carried out under the same terms of the original registration and the holder will have the authority to reduce or limit the goods or services specified in the original registration, according to Article 153 of the Decision 486, Common Regime of the Andean Community. In this way, everything involved in the concept of brand is protected and thus persists over the time and in the market.
By registering a trademark, the holder thereof may exercise legal actions to protect against copies, imitations or third parties who are using the trademark without authorization and taking advantage of the prestige gained. Articles 146 and 147 of Decision 486 of the Common Regime on Industrial Property provide a legal mechanism allowing filing an opposition within a period of 30 working days counted from the publication date of the trademark. It should be noted that the holder of the trademark that is filing an opposition must prove real interest in the market of the country where the opposition is being lodged, i.e. that the trademark, in this case, must be registered in Peru. Thus, the basis for the opposition is that the brand to which it is opposing is identical or similar with respect to the goods and/or services it distinguishes, so that it may mislead the public consumer.
Another important aspect to be mentioned is the value the brand has, which is an intangible asset of the company and which is included in the accounts thereof. One of the advantages of having an intangible asset is that it makes profitable along the time, the company raises its possibilities of getting financing at low interest since the brand will assume the status of warranty or it also allows getting large profits in case deciding to perform the sale of the company.
What is the procedure to register a trademark?
The companies that have a registered trademark, being an intangible asset, have a high potential to increase its patrimonial value, in addition to improving its positioning in the market they operate.
To access these benefits the owner of the mark must follow the following steps:
A.- it is recommended to perform a search for antecedents. In this way, one can be aware if a registered identical trademark is registered or there are similarities with the mark intended to be registered so that there is no impediment for its registration.
B.- There are two types of search for antecedents:
B.1.-.- Phonetic.- On requesting this service the user is allowed to have knowledge of a listing of the brands that have been registered or requested and that may have similarity in the pronunciation with relation to the mark sought to be registered.
B.2.- Figurative.- Allows to know the marks that have been registered or requested and that may have similarity in the figure of the mark sought to be registered.
To make the search for antecedents a request should be filed at the reception desk of the National Institute for the Defense of Competition and Protection of Intellectual Property (INDECOPI), stating the following:
- The name or trade name of the applicant, if it is a natural person the number of National Identity Document (DNI) should be indicated, or if it is a juridical person the single tax registry (RUC), data of the holder of the mark sought to be registered, the name of the brand and the class of the goods or services that the mark is going to cover should be indicated, taking into account the International Classification.
It should be taken into account that the Nice Classification is intended to establish uniform criteria and to classify 45 classes, from which 34 distinguish products and 11 distinguish services. It should be noted, that its application with regard to the registration of marks is not only mandatory at the national level in the member countries of the Nice Agreement, but also for the international registration of marks that is performed by the European Intellectual Property Office (EUIPO), the African Intellectual Property Organization (OAPI), the Organization of Intellectual Property of the Benelux (BOIP), the International Bureau of the World Intellectual Property Organization (WIPO), and the African Regional Intellectual Property Organization (ARIPO).
After the search of antecedents, the registration of the mark is as follows:
First, a registration application should be filled in by detailing the data of the applicant, the brand, the classification and definition of the goods or services that are going to be registered, enclosing the payment of the corresponding fees.
After submitting the request, the Direction of Distinctive Signs has a term of 15 working days to carry out the formal examination.
After having fulfilled all requirements, a publication order will be issued, which must be submitted before the offices of the Official Gazette “El Peruano”. In this way, a request is made for the publication of the mark for once only within the non-extendable term of 30 working days after receiving the corresponding order.
It should be taken into account that after the publication, third parties have the right to file an opposition with regard to the registration of the mark, only if they have a legitimate interest and have evidence to support their position, on the contrary the competent national office shall proceed to carry out the examination of registrability according to Article 150° of Decision 486, Common Regime on Industrial Property.
Is the brand valuation always the same?
The valuation is not always the same and is delimited by the approaches to which we referred to at the beginning of this article. Peru is a country in which there is a greater amount of micro, small and medium-sized enterprises run by entrepreneurs with completely different thoughts with regard to the way of providing an added value to the trade since, in most cases, they think that the economy is dominated by tangible assets, that is to say that the added value to them would be the machines, a greater stock in products, amongst others.
At present, the concept is completely different in the rest of the world, since a 360 degree turn has occurred wherein the companies are focusing on intangible assets as the portfolio of customers, patents and trademarks.
Therefore, the brand is valuable because it is linked to the generation of value due to the fact that thanks to the distinctive sign consumers will relate the goods and/or services to the mark, since it identifies the company and it is a useful indicator to know the value thereof.
How a brand is valued?
The valuation of a brand is given in two scenarios:
Through the rankings criteria such as the presence of the brand globally and the financial transparency of the company can be measured.
To this end, valuation patterns have been developed through rankings such as the consulting firm Millward Brown, which for the fourth consecutive year ran the Ranking BRANDZ ™ Top 50 Most Valuable Brands of Latin America 2015. The ranking takes as a sample recognized brands in the market of Argentina, Brazil, Peru, Mexico, Chile and Colombia.
Another important ranking is Monitor Empresarial de Reputacion Corporativa (Merco) (Business Monitor of Corporate Reputation) that evaluates the reputation of companies from the year 2000 making six rankings which are defined as follows: Merco Empresas, Merco Lideres, Merco Responsabilidad and Gobierno Corporativo, Merco Talento, Merco Consumo and MRS). The ranking is performed taking as a sample the countries of Spain, Colombia, Argentina, Chile, Ecuador, Bolivia, Brazil, Mexico and Peru. In Peru, the main brands according to the ranking are Banco de Credito del Peru (BCP), Backus y Johnston, Interbank, Alicorp, Kimberly-Clark, Ferreyros, Graña y Monero, Gloria, Procter & Gamble, BBVA Continental and LATAM.
This market recognizes the value of intangibles through the stock exchange, increases in the bonus over the value of the stock market which in many cases were paid when there have been mergers or acquisitions.
In the case of Peru, the Bolsa de Valores de Lima S.A.A. is an entity having as main objective to facilitate the negotiation of registered securities providing a fair and competitive intermediation. The companies that are listed in the Bolsa de Valores de Lima are Banco de Credito del Peru (BCP), Banco de la Nacion, Alicorp S.A.A., Edelnor S.A.A., El Pacifico Vida Compañia de Seguros y Reaseguros S.A., Metalurgica Peruana S.A.- MEPSA, amongst others.
Comparing with the European Stock Exchange our Stock Exchange does not have a fluctuation as dynamic as that of Europe. The European Stock Market is very dynamic and their indexes tend to be low or high, according to the market behavior. Thus the recorded indexes have much connection with events that occur in the world and provide a broader perspective and defined on the quotation and the value of the shares as well as the fluctuation in the stock market.
It should be noted, that the news regarding the presidential elections, the sale or merger of companies, amongst other topics are related with the indexes of the Stock Exchange more important in the world, such as the Stock Exchanges of London, Paris, Frankfurt, Wall Street and Ibex 35 in Spain. The relationship between the events that happen in the world with the market price of shares in the Stock Exchange is that investors punish or benefit companies that will provide them with profits and not losses due to the economic or financial situations that a company or the economy of the country of origin of the same may experiment.
There are well-known cases at international level in which small businesses became known over the time, thus increasing the value of the brand, which is an important intangible asset in the accounting of companies:
Ingvar Kamprad is the founder of IKEA, an international company of Swedish origin currently leader in the market of the distribution of furniture and articles of decoration for home.
He started his company when he was 17 years old, devoting to the sale of boxes of matches that he delivered by bicycle. After five years, thanks to the business he had undertaken, he realized that the same business idea could be translated into selling furniture, buying cheap goods at wholesale prices, and selling them to have a margin of profit, until he decided to design and manufacture the products.
Steve Jobs started his company in a garage with the help of Steve Wozniak, by designing the first computers and was so receptive that after nine months of selling the first 100 Apple I models, they moved to their offices in Cupertino
In the case of Peru, we have some cases that allow us to better exemplify the importance of a brand and the prestige it can gain over the time, as well as the benefits it brings, as was the case with the following companies:
Erasmo Wong Chiang, started with a small grocery store in 1942 but founded his first Wong supermarket in 1983 and, two years later, opened two more stores located in different districts of our capital. The Wong Supermarket Group is characterized by its principles of customized service and excellence. After ten years, its growth was consolidated with the purchase and remodeling of new premises in more districts of Lima. In 2007, became part of Cencosud by venturing into the category of Shopping Centers.
Vilma Parra, at 8 years old began selling vegetables and at 14 years old she was able to buy her own sales stand. For family reasons, she had to sell all the goods she earned thanks to her work and started selling in the street but this time a person left her shoes on consignment and it was a successful business because she sold all the merchandise. For this reason, she formalized her business and opened a store in Jesus Maria, and now owns one of the largest shoe chains in Lima.
As described throughout the article, we conclude that registering a trademark provides the entrepreneur with many economic and legal benefits. In addition, it must be taken into account that people have different points of view when directing the useful life of the company, but in parallel it is possible to build a brand that will last over the time and help consumers to identify and relate the Brand with the company.
Author: Claudia Ibañez – IP Lawyer
Law firm: OMC Abogados & Consultores