In this article we discuss some of the basics of licensing a brand and trademark license agreements in Costa Rica; specifically, whether it is mandatory to register licenses before the Costa Rican Industrial Property Registry (“Registro de la Propiedad Industrial”).
Licensing can be a strategically effective way for a brand to enter the market, to enhance marketing, to protect the trademark through use in commerce and obtain additional revenue at the same time. However, the licensor and licensee must give due consideration to the issues that can come up, some of which are discussed herein.
In Costa Rica, a license over a trademark can be granted at any time; during the application phase or after registration. Registration is done mostly for security and publicity reasons.
At its very essence, the license agreement must cover the type of license (e.g. exclusive or non-exclusive; comprehensive of all the goods or services, etc.), the duration of the agreement and territory covered.
Unless otherwise noted in the license agreement, the following provisions take effect by operation of the law:
- The licensee may use the mark during the entire duration of the registration and any renewals thereof, in the entire territory of Costa Rica and in relation to any and all goods and services covered by the registration
- The licensee may not sub-license the mark
- If it is an exclusive license, the licensor may not grant other licenses to third parties over the mark or any of the goods/services. It may not use the mark by itself in the country in relation to those goods/services
If the parties desire to submit the license agreement for recordation, the same must be submitted to the Trademark Section of the Industrial Property Office, duly signed by the representatives of both parties and apostilled or legalized by the nearest Costa Rican Consulate. If not written in Spanish, a translation would be required.
Are registered user agreements required and, if so, is it mandatory to record the license at the Registry?
The basic answer is no. Registration of a license is not a condition for validity of the agreement or a condition for the licensee to assert rights over the mark. Still, as discussed below, a registered license can provide benefits over an un-registered license.
Is use by a licensee considered use of the mark? If so, must the license have been recorded in order for use by a licensee to be recognized?
Yes; use by licensee or authorized third party (i.e. a formal license is not required) will be deemed as use by the owner for the purpose of non-use. The license must not be recorded for use by a licensee to be recognized.
Must a license be recorded for the licensee to be able to enforce rights against third parties?
Caution! Unless otherwise specified in the agreement, the licensor of an exclusive license may not grant other licenses to third parties or use the mark by itself in Costa Rica.The Trademark Law does not directly specify whether a license must be recorded for the licensee to enforce rights against third parties. The Law literally states that registration is not required for the licensee to “assert rights over the mark” (without specifying “against third parties“).
The prevailing principle of Civil Law –which Costa Rica adheres to– is that a private contract that has not been registered is not enforceable against a third-party that are not privy to its existence. A strict interpretation of the provisions of Civil Law and the Trademark Law could lead diverging positions on whether the licensee can (or not!) bring action against third parties. Some might say that the un-registered license is indeed valid between licensor and licensee (and, hence, licensee can assert rights against the licensor), but that the license itself is not opposable to third parties. To avoid such a discussion, it would be advisable to register the license.
Additionally, it would be easier for a registered licensee to prove standing to sue or claim damages for infringement before the court. A private document that does not comply with the requirements for registration could be deemed invalid, ineffective, etc. Registration would not shield the license against contention in court, but would provide an added (albeit limited) layer of protection.
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