Costa Rica’s Cannabis Trademark Applications

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On March 1st, 2022, Costa Rica legalized cannabis for medicinal use and commercialization of non-psychoactive hemp, under license. The law approved by the legislature excludes cultivation for personal and recreational use.

The country joins many other countries seeking to incentivize the booming industry of medical cannabis, and an influx of IP owners seeking trademark protection in this changing landscape is expected.

What are the implications for trademark owners?

There are no explicit guidelines by the Costa Rican Industrial Property Registry (“RPI“) for handling cannabis-related trademark applications. As of this writing, about 150 trademark applications have been filed for goods and services including “hemp”, “cannabis”, “THC”, “CBD” and related terms across the various classes encompassing the Nice Classification. Of these applications, 37 have been rejected and about two dozen others are currently pending. Most of the applications in this later category have faced misdescriptiveness, genericness or descriptiveness issues.

There are surely a fair number of other applications for trademarks that are meant to cover hemp or cannabis related items, but they do not explicitly include them in the specification. Traditionally, Costa Rican authorities have allowed broad descriptions of goods and services (often, the heading of the respective Nice class is allowed). However, even if allowed, such strategy is not without risks. A lot will depend on how directly related the good or service is to the plant or its psychoactive component. For instance, a trademark registration meant for consultancy services in the field, or for plant fertilizers, will not be as vulnerable as a registration for goods directly related to the substance.

In the specific case of pharmaceuticals, the Administrative Appeal Board (“Tribunal Registral Administrativo“) has ruled that broad descriptions, such as use of the class heading, are unenforceable for failure to identify the actual goods meant to be commercialized under the mark. While this interpretation has questionable legal grounding, it means that marks under these conditions may fail to be cited against a junior application for a similar mark that covers specific items. The trademark owner will not be notified under this particular scenario, leaving the onus on the IP owner to actively monitor filings.

This interpretation has also began seeping into other classes, as well. In particular, the Registry inconsistently requires applicants to specify the nature of goods or services commercialized under Class 35 to allow the registration to move forward. One can also imagine analogous cases for goods of different nature (for instance, chemicals for use in industry). With time, it is likely that the requirement of specificity will continue becoming more enshrined.

Trademarks related to hemp-based textile goods or clothing are unlikely to be scrutinized as zealously as, say, marks covering cosmetics or pharmaceuticals. A refusal based on the nature of the goods or services cannot be discarded, even despite the law. Examiners have considerable leeway in their examination powers. However, in these cases, an applicant may take shelter in Article 7 of the Paris Convention for the Protection of Industrial Property:

The nature of the goods to which a trademark is to be applied shall in no case form an obstacle to the registration of the mark.

This rule is mirrored in Article 15(4) of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The international nature of these instruments grant them it hierarchical superiority to even national law.

The law will come into effect once sanctioned by the Executive Body and published in the official Gazette.

Overview of Costa Rica Trademark Laws

This is a list of International conventions and treaties, laws and regulations in effect pertaining to trademark registration in Costa Rica as of 2021. It is outside of the scope of this article to discuss circulars or administrative resolutions pertaining to trademark prosecution, which alters (and sometimes changes) the scope of a particular provision.

Spanish is the official version of the respective legal texts. No official translation into any other language is provided.

Treaties and International Conventions

Under the Constitution of the Republic of Costa Rica, treaties and conventions have a hierarchy above regular law. However, in practice, often laws are not amended to implement the compromises undertaken by the country in the new treaty or convention or take steps to eliminate any discrepancies with internal legislation. In these cases, the administrative authorities often revert to applying the law, despite the contradiction. In such scenario, a party may be forced to seek judicial assistance to enforce the treaty or convention.

  • Convention Establishing the World Intellectual Property Organization (WIPO) (as of June 10, 1981)
  • The Uruguay Round (GATT, later succeeded by WTO) (as of November 2, 1989)
  • WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) (as of January 1, 1995)
  • Paris Convention for the Protection of Industrial Property(as of October 31, 1995)
  • WIPO Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks (as of March 28, 2008)
  • Trademark Law Treaty (as of October 17, 2008)
  • Lisbon Agreement for the Protection of Appellations of Origin (as of July 30, 1997)
  • The Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents (Apostille) (as of December 14, 2011)

Costa Rica is also a party to multilateral trade agreements, which define standards for protection of IP beyond other instruments (“TRIP Plus” provision). The two most notable ones are:

  • Costa Rica-México Free Trade Treaty (since 1994)
  • Dominican Republic – Central America – United States of America Free Trade Agreement (DR-CAFTA) (since November 21, 2007)

The Costa Rica-México Treaty is of particular interest. It contains provisions that may prove especially useful to trademark owners in case of litigation. For instance, the Treaty allows a party that first registered an identical or similar mark, for the identical or similar goods or services, in each of the respective countries to request annulment of the subsequent registration in the other country. In light of the most favored nation treatment principle governing international trade, this provision could have abroad-reaching effect in case of trademark squatting or bad-faith registration of trademarks.

Laws and Regulations

The laws and other legislation included in this section are the mayor and most relevant laws implemented by Costa Rica for the protection of trademarks, trade names and other distinctive signs. There are numerous other laws that include specific provisions that are relevant for certain industries (for instance, laws pertaining to the use of trademark for banks, insurance companies and financial institutions, or for identifying products or sanitary or regulatory interest):

  • Trademarks and Other Distinctive Signs Law (No. 7978 of January 6, 2000)
  • Regulations to the Trademarks and Other Distinctive Signs Law (Executive Decree No. 30233-J of February 20, 2002)
  • Observance Procedures of Intellectual Property Rights Law (No. 8033 of October 12, 2001)
  • Administrative Rules on Prosecution of Appeals before the Administrative Registration Court (of November 28, 2016)
  • Regulations to the Trademarks and Other Distinctive Signs Law Concerning Geographical Indications and Designations of Origin (Executive Decree No. 33743-J of March 14, 2007)
  • Administrative Rules on the Service of the Administrative Registration Court (Executive Decree No. 35456-J of March 30, 2009)
  • Administrative Rule DPI-0003-2019 on Recognition of Fame or Notoriety (of June 28, 2019)
  • Regulations to the Uniform Central American Customs Code (Recauca) (Executive Decree No. 42876 of January 28, 2021)
For an official updated version of the legal text, please visit SINALEVI, the National System for Legislation at http://www.pgrweb.go.cr/scij/

The following authorities also maintain their own databases of laws and regulations:

  • Trademark Office: Industrial Property Registry (Registro de la Propiedad Industrial) – Website: rnpdigital.com
  • Trademark Appeal Board: Tribunal Registral Administrativo – Website: tra.go.cr

Shareholder Affidavit of Company Ownership (“RTBF”)

Yearly Company Shareholder Declaration (“RTBF”).

 

Update as of April, 2022.

 

As of 2019, the Costa Rican government implemented the requirement for all legal entities, trusts, limited liability companies and corporations domiciled in Costa Rica, with some minor exceptions, of submitting a yearly affidavit pertaining to shareholders and beneficial ownership (more info here, in Spanish only).

The information submitted in the affidavit is is to be treated as confidential. It will only be used for internal tax purposes, such as controlling payment of capital gains taxes and anti-money laundering.

The filing is referred to in Spanish as the Declaración sobre Registro de Transparencia y Beneficiarios Finales (“RTBF”). There literal translation into English is “Declaration concerning Transparency Registry and Final Beneficiaries” and it is more commonly referred to as the “shareholder declaration” or “shareholder affidavit“.

The deadline for the 2022 filing is April 30th. The filing must be completed by the end of April every year thereafter or whenever there is a significant change of ownership. Failure to submit the affidavit by these deadlines carries hefty monetary penalties: up to 2% of the entity’s gross income, with a minimum of 3 so-called “base salaries” (each salary is roughly ~$1,000, for a total minimum fine of ~$3,000).

The filing must be done in a secured only platform implemented by the Costa Rican Central Bank (“BCCR”) (available here) by the company’s legal representative. The person that does the filing on behalf of the company must have a government-issued certificate of encryption of digital ID. Foreign nationals without legal residence in Costa Rica normally do not have access to this document.

All clients, especially those without a digital ID, are strongly suggested to contact us to coordinate completion of this requirement.

 

First published on January 15th, 2020.