License agreements have become an important legal tool available for business partners located in the same or in different countries to appropriately secure their own economic interest and legal rights involved in their transactions. Given the growing importance of licensing of intellectual property rights (IPR) and particularly the value of trademarks in a world dominated by intangible assets, in this column we are going to tackle some of the most relevant factors to bear in mind when dealing with these sorts of agreements in Argentina, which may also include other agreements such as franchising, and distribution agreements. Although the terms of a license are mostly set up and binding for the parties who agree to it, we also will discuss some of the issues related to the agreement's enforcement against third parties that may be infringing those rights.
No Mandatory Formalities in Argentina
According to the Civil and Commercial Code (CCC) as well as Argentine trademark law No. 22,362 (TM law), the license of a trademark is an agreement "per se" and not subject to any specific formal requirement in order to be valid and binding for the parties. It is worth pointing out that the CCC became effective in August 2016 and has no provision similar to Article 1193 of the former Civil Code, which: (1) established that with regard to proving the validity of the agreement, agreements having a commercial value higher than $10,000 had to be solidified in writing, and (2) prohibited the use of witnesses in order to prove the existence of the agreement. Therefore, a current license agreement is binding for the parties as of the date of its execution without the need to comply with any other requirement in Argentina.
License of Unregistered Trademarks
In Argentina, as it happens in most other civil law jurisdictions, trademark rights are acquired based on the first-to-file system instead of the first-to-use system in place in the United States and other common law jurisdictions.
Unregistered or "de facto" marks, however, have been increasingly protected by federal judges for the past couple of decades but the scope of such protection varies according to the particular legal standards that are applied on a case by case basis. Thus, although licensing unregistered trademarks is an uncommon legal strategy, in certain cases, it may be an unexpected consequence imposed by business realities, especially considering today's exponential growth of commercial...