Clifford Chance

A preliminary draft Act amending the laws governing Spanish patents, trademarks, and industrial designs - Law 24/2015 of 24 July on Patents, Law 17/2001 of 7 December on Trademarks, and Law 20/2003 of 7 July on the Protection of Industrial Designs ("Preliminary Draft Amendment") - was published on 20 October 2021. 

The Preliminary Draft Amendment is currently in the initial stages of the approval procedure and may therefore be subject to substantive modifications. That being said, it still provides insight into certain changes that may be introduced to the laws governing Spanish patents, trademarks and designs in the near future.

I. Amendments to the Spanish Trademark Act

Of the three laws affected by the Preliminary Draft Amendment, Law 17/2001 of 7 December on Trademarks ("Trademark Act") is the one that has most recently been subject to substantial modification. It was amended at the end of 2018 to incorporate Directive (EU) 2015/2436 of the European Parliament and of the Council of 16 December 2015 to approximate the laws of the Member States relating to trademarks ("Directive 2015/2436").

Nevertheless, the explanatory memorandum to the Preliminary Draft Amendment recognises the need to introduce certain "adjustments" to provide more "coherence and precision". The main adjustments are as follows:

• Revocation of distinctive signs in the context of insolvency proceedings. A provision is introduced (Article 55.2 of the Trademark Act) enabling the court that is hearing insolvency proceedings to order the Spanish Patent and Trademark Office ("SPTO") to refrain from revoking distinctive signs that have not been renewed and are affected by insolvency proceedings until those proceedings have been concluded. 
• Compensation for damages if the trademark proprietor has acted in bad faith. The Preliminary Draft Amendment modifies Article 60.3 of the Trademark Act, which states that the retroactive effect of a trademark's invalidity or revocation will not extend to (i) decisions on the trademark's infringement that have become res judicata and have been enforced before the declaration of invalidity or revocation, and (ii) agreements that have been formalised and executed before such declaration. Notwithstanding the above, it will be possible to claim damages from the proprietor of the trademark in those cases where they have acted in bad faith. In this regard, the Preliminary Draft Amendment clarifies that such damages must be decided and awarded by the courts and not during the course of administrative proceedings. This clarification has been deemed necessary because the 2018 amendment of the Trademark Act recognised that the SPTO will have jurisdiction to hear and decide invalidity and revocation actions as of 14 January 2023.
• Trade names. The requirement for trade names to be susceptible of "graphical representation" is eliminated (Article 87.1 of the Trademark Act), thus aligning the provision with the amendments already made in this respect for trademarks in 2018. 

Other amendments involve (i) modifying certain provisions on formal requirements for registration proceedings, (ii) recognising the possibility of suspending trademark invalidity proceedings in cases where the granting of the earlier sign used for questioning the validity is pending, and (iii) clarifying that certain provisions of the Trademark Act will also apply to international and EU trademarks. 

II. Amendments to the Spanish Design Act

National industrial designs are governed by Law 20/2003 of 7 July on Industrial Designs ("Design Act"). According to the explanatory memorandum, the Preliminary Draft Amendment seeks to align the Design Act with the "international context", clarify several provisions and enhance legal certainty. The main amendments include:

• "Proof of use" requirement. Section f) of Article 13 of the Design Act, which governs causes for refusal of a design, is amended to introduce the "proof of use" requirement in line with Article 21 of the Trademark Act. This provision establishes that, at the applicant's request (in this case, the design applicant), the proprietor of the earlier distinctive sign - registered for at least five years - must furnish proof of the use of such sign during the five-year period preceding the application date or priority date of the sign in question (in this case, the design), or provide justified reasons for it not having been used.
• Protection of the proprietor of a later design in proceedings regarding trademark or design infringement. A new provision is introduced (Article 33bis) setting out that the proprietor of a trademark or design bringing an infringement action will not be entitled to prohibit the use of a design registered subsequently unless such design can be declared invalid further to the Design Act or Regulation (EU) 2017/1001, on the EU trademark. In turn, if the use of the later design cannot be prohibited, the proprietor thereof will not be entitled to prohibit the use of the earlier trademark or design within an infringement action. This provision essentially mirrors Article 41bis of the Trademark Act, introduced by the 2018 amendment of such regulation.
• Damages. Provisions governing liability and criteria for quantifying damages in the Design Act are aligned with corresponding provisions in the Patent Act and the Trademark Act. As regards liability for damages, instead of requiring the infringer to have been warned in a way ensuring there is an official record of the contents of the communication, the receipt and the date of receipt, the Preliminary Draft Amendment modifies Article 54.2 of the Design Act to require that the person carrying out unauthorised acts be warned "sufficiently" (as set out in the Trademark Act). In relation to criteria for quantifying damages, the notional royalty criterion is modified to a lump sum comprising at least such notional royalty (as set out both by the Patent Act and the Trademark Act).
• Advertising licences. The Preliminary Draft Amendment introduces "advertising licences" in a new provision, Article 62bis of the Design Act. This provision recognises the right of a proprietor of a registered design to offer an advertising licence by filing a written declaration with the SPTO, which will be published in the design registry. Such licence will be contractual, free, temporary, and non-exclusive and will allow any interested party acting as the licensee to use the design privately or commercially, either totally, partially or in modified form, provided that the authorship of the original creation is included in all the designs and, where applicable, in the commercial and advertising information. 

Further envisaged changes in the Design Act include (i) introducing greater flexibility in certain provisions governing the application for registration of a design (for example, by allowing the substitution of a graphical representation of the design with the incorporation by reference of an earlier utility model, design or distinctive sign), (ii) recognising the possibility of dividing the design application into two or more divisional applications, and (iii) establishing the non-revocation of designs for unpaid renewal fees until the conclusion of any ongoing insolvency proceedings.

III. Amendments to the Spanish Patent Act

The Preliminary Draft Amendment finds it necessary to modify procedural and substantive aspects of the Patent Act to enhance clarity, legal certainty and coherence, correct deficiencies detected in its application since it entered into force in 2017 and adapt Spanish regulations to changes in interpretation that have taken place internationally (at the EPO and EU). Substantial amendments include:

• Suspension of court proceedings when there are ongoing opposition, limitation or revocation proceedings. The Preliminary Draft Amendment introduces a new provision, Article 120bis, establishing the possibility for the court (after hearing both parties) to order the suspension of national court proceedings in those cases where parallel ongoing opposition, limitation or revocation proceedings are being conducted before the SPTO or the European Patent Office until such time as those proceedings have been concluded. This possibility is not expressly contemplated in the Patent Act currently in force.
• Utility models. The Preliminary Draft Amendment eliminates the prohibition on protecting inventions concerning "pharmaceutical substances and compositions" as utility models (Article 137 of the Patent Act). A new Article 147bis introduces the concept of "derivative utility models" (which already exist in Germany) into the Spanish legal system, with the purpose of improving companies' ability to adopt measures against any infringement of their exclusive rights. The Preliminary Draft Amendment introduces changes in the provision governing the search report that must be requested before the SPTO when filing actions to enforce utility models (Article 148 of the Patent Act); it specifies that the report can be requested by the proprietor or by a "third party", and that when the petitioner is the proprietor it will be entitled to make allegations or "modify the claims" in view of the report. 
• Exceptions to patentability: Animals or plants exclusively obtained by essentially biological processes are introduced onto the list of patentability exceptions, which expressly contemplates only the essentially biological processes themselves (Article 5.3 of the Patent Act).
• Provisional applications: The Preliminary Draft Amendment introduces the possibility of filing a provisional application to safeguard a filing date for inventions that may not be fully developed. It is only envisaged for public universities and research centres, but the Preliminary Draft Amendment contemplates extending the possibility to other applicants in the future. According to new Articles 51bis, 51ter and 51quater, the provisional application has a duration of twelve months, a period in which the applicant must decide whether it is interested in pursuing an ordinary application for a patent or utility model. 

The Preliminary Draft Amendment includes some further modifications, such as (i) eliminating the requirement for "biological sequences" to be incorporated into the application, (ii) specifying that the jurisdiction for declaring the nullity of the SPC will correspond to the SPTO if the nullity cause is that the basic patent has been declared invalid or revoked, (iii) recognising the possibility of suspending proceedings before the SPTO in certain cases, (iv) adding references to insolvency proceedings in certain provisions governing revocation due to unpaid renewal fees, and (v) clarifying provisions governing deadlines within court proceedings.

In conclusion, the Preliminary Draft Amendment is not an extensive, paradigm-shifting modification of the Patent, Trademark and Design Acts, but it does entail certain relevant changes in each of the three laws that should be taken into consideration. More light will be shed on the exact scope and terms of those amendments as the approval process, still in the very early stages, progresses.