On November 9th, 2022, the Resolution No. 01-2022-DG-NT-SENADI was published in Supplement No. 185 of the Official Gazette, containing the Technical Regulations for the Registration of Plant Varieties License Contracts, hereinafter the “Resolution”.
In the Resolution, the Ecuadorian National Service of Intellectual Rights (SENADI) establishes that it´s mandatory to register any license contract for the exploitation of new plant varieties and establishes the requirements (of form and substance) that these contracts must have in order to be registered by SENADI. It establishes that this type of contract becomes effective (takes effect) only with its registration.
This completely disregards the right to free contracting between private parties, conditioning the effectiveness of an agreement between the parties to the provisions of an institution. The result of this regulation is that a person cannot give another person a variety exploitation license without a prior supervision of that contract by SENADI, which also charges a fee of approximately $500 for doing so.
The Resolution is based on articles 99 and 493 of the Organic Code of the Social Economy of Knowledge, Creativity and Innovation (COESCI)[1], but these regulations are contradictory to international conventions[2], which makes them inapplicable due to the hierarchy of regulations established by the Constitution[3].
The effect of these rules is that SENADI does not adequately protect the rights of the holders of plant varieties in certain cases, since the institution could refuse to pursue the necessary actions for the protection – guardianship – of the intellectual property rights when the contract is not registered, leaving the holder of the rights unprotected.
In other words, SENADI now has attributions similar to those of the Property Registry, an institution where the transfer of ownership contracts in real estate must be registered in order for them to take effect between the parties.
The Resolution, besides being contrary to the aforementioned international treaties, creates an antinomy with articles 66.1. and 169 of the Constitution of the Republic of Ecuador and articles 1561 and 1740 of the Civil Code[4]. The granting of an exploitation license is nothing more than the purchase and sale of the exploitation rights of the varieties owned by the breeder. Consequently, the contract should become effective for the parties only with their consent.
This antinomy can be resolved by taking into account the hierarchy of the norm. As hierarchically superior norms, the provisions of international treaties or conventions and the Constitution take precedence[5]. However, in practice, there is still a problem, since no authority has ruled that the norms do not apply, on the contrary, a Resolution was issued to regulate their implementation.
So, can anything be done about it? Yes. An adequate way to challenge the COESCI norms and the Resolution is to file an action of unconstitutionality before the Constitutional Court. This agency can verify that the regulation issued by SENADI does not comply with international conventions, the Constitution, or other laws. In case of getting a favorable sentence, the norms will not be considered valid in the points contested.
| [1] | Article 99. COESCI – “Obligation of registration – Any transfer, authorization of use or license on any intellectual property right or application in process, shall be registered before the relevant national authority for intellectual rights. Transfers, authorizations of use or licenses on industrial property shall become effective as from their registration before the corresponding national authority on intellectual rights”. Article 493 COESCI – “Transfer or license of the application for breeder’s right: A breeder’s right or an application in process may be the subject of a transfer or license for the exploitation of the variety. Any transfer, authorization of use or license of a plant breeder’s right or an application in process of concession shall be recorded in writing and registered with the corresponding authority on intellectual rights and shall be effective from the date of its registration. Any interested party may request the registration of a transfer or license”. |
| [2] | The International Convention for the Protection of New Varieties of Plants (hereinafter “UPOV”), a supranational multilateral standard in force in Ecuador that prevails over the domestic legal provisions of our country, permits the limitation of the exercise of breeders’ rights solely and exclusively for reasons of public interest (1978 Act of the International Convention for the Protection of New Varieties of Plants, Article 9). On the other hand, Decision 486 of the Andean Community of Nations establishes that contracts must be registered only for them to be effective against third parties (article 106). |
| [3] | Article 425 CRE.- The hierarchical order for the application of regulations shall be as follows: The Constitution; international treaties and conventions; organic laws; ordinary laws; regional rules and district ordinances; decrees and regulations; ordinances; agreements and resolutions; and other acts and decisions of the public authorities. In case of conflict between norms of different hierarchies, the Constitutional Court, judges, administrative authorities and public servants will resolve it by applying the superior hierarchical norm. |
| [4] | Article 66 CRE.- “The right to freedom of contract shall be recognized and guaranteed to persons: […] 16.” Article 169 CRE.- “The procedural system is a means for the achievement of justice. Procedural rules shall enshrine the principles of simplification, uniformity, efficiency, immediacy, promptness and procedural economy, and shall give effect to the due process guarantees. Justice shall not be sacrificed by the mere omission of formalities”. Article 1561 CC.- “Every contract legally celebrated is a law for the contracting parties, and cannot be invalidated except by their mutual consent or by legal causes”. Article 1740 CC.- “The sale is deemed concluded as soon as the parties have agreed on the object and the price […]”. |
| [5] | Article 425 CRE. Already cited. |
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This article contains information of general interest and does not constitute legal advice about specific matters. Any particular analysis will require the Firm’s legal advice.
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