Spring 2005-18 Bill proposes new agency to handle all intellectual property matters

Number 59
Spring 2005

Bill proposes new agency to handle all intellectual property matters

Puerto Rico House Bill number 958 proposes to create an agency in charge or all intellectual property matters, including the following currently handled by the Office of Trademarks of the State Department:

trademarks, currently governed by the Marks Act (10 P.R. Laws Ann. § 171),

trade names, covered by the Trade Name Act (10 P.R. Laws Ann. § 225) and

copyrights, object of the Copyright Act (31 P.R. Laws Ann. § 1401).

Governance

The agency would be part of the Department of Economic Development. It would be managed by a governing board of 11 members: the Secretary of Economic Development, the Executive Director of the Intellectual Property Office, the Director of the Science and Technology Office of the Industrial Development Company, two representatives of the private sector appointed by the Governor, and one representative designated by each of the Secretary of the Treasury, the Secretary of State, the Secretary of the Department of Natural Resources, the Secretary of Education, the Secretary of Labor and the University of Puerto Rico.

Assistance in registering patents

According to its statement of motives and the text of the bill itself, the bill intends, among other things, to accelerate the economic growth of Puerto Rico by promoting the invention, innovation and creativity in patents by Puerto Rican inventors and developers, assisting the exploitation of the information available in Puerto Rico regarding intellectual property, and promoting the interest of Puerto Rico over its intellectual property.

For such purpose, the bill provides for assistance by the Intellectual Office to individuals and entities who wish to register patents in the U.S. Patent and Trademark Office and in foreign countries. In this respect, the bill states that participants in this program must either assign their rights to such patents to the Commonwealth, or grant an exclusive license (with a right to sub-license) to the Commonwealth. The Bill then provides that the Intellectual Office can, at its discretion and consistent with the public interest, grant the inventor an exclusive or non-exclusive license in exchange for royalties. The Commonwealth would retain the right to terminate the license if the inventor does not achieve an effective dissemination of the invention in a three years. The inventor must demonstrate his technical and financial capacity to commercialize the patent; if not, the Commonwealth would be able to commercialize it and license the invention to third parties.

Distribution of income

The income generated by the royalties of the inventions or other intellectual property promoted by the Intellectual Office would be distributed annually as follows:

Fifteen percent of gross revenues would be used to defray the operational costs of the office. The costs incurred by the office to obtain registration of intellectual property would be deducted. These costs include filing fees, attorney’s fees, maintenance fees, marketing fees and others.

Three fourths of the adjusted royalty income would be distributed to the inventors.

The remaining 25% would be assigned to the “General Fund for the Investigation and Development of the Commonwealth,” created by the bill.

Exceptions

Not all patents or other intellectual property rights presented to the Intellectual Office would be accepted and promoted. For example, the office would not handle inventions that are not commercially attractive, even when they may be intellectually meritorious. In this respect, the office would investigate the market for the technology, identify third parties to commercialize the intellectual property and negotiate the licenses to such persons, distributing the royalties to the inventors and authors. When deemed appropriate, the Commonwealth would also accept an equity interest instead of money for the royalties, or a combination of both, upon approval of the governing board.

Employees

The bill provides that all intellectual property created or invented by a government employee would belong to the Commonwealth, and that the Commonwealth would develop and commercialize the same.

Registration

Finally, any license agreement between a mark owner and a third party would need to be registered in the registry to be created for such purposes, in order for the license to be effective against third parties.

© 2005 Goldman Antonetti