Spain: Technology Protection in Spain

Spain is a party to the main international conventions concerning intellectual property rights, and the protection granted by these rights, as well as the different ways in which they can be obtained, are generally similar to those available in any other European country.

This article is a brief overview of the types of protection available in Spain for software, and for other types of technology, such as inventions and know-how. It also looks at how antitrust considerations apply to technology transfer agreements.

Software:

The patentability of software has been one of the hot discussion topics in recent years, but how the law will evolve in this area remains to be seen. Spain is a member of the European Patent Convention and, although Article 52 (2) and (3) of the European Patent Convention exclude computer programs "as such" from patentability, it is well known that the European Patent Office (EPO) position has evolved in favor of allowing software patents.

The position of the EPO’s Technical Board of Appeals, to exclude patentability for programs "as such", means that patentability may be allowed for some computer programs. For example, programs with a "technical character" may be considered patentable inventions; if a program has a technical purpose, such as solving a technical problem, this could be understood as having a technical character.

The European Commission intends to introduce a Directive proposal aimed at harmonizing Member States legislation on patentability of computer programs, and there are also proposals to amend Article 52 of the European Patent Convention to remove the exception of "computer programs as such" from patentability.

For copyright protection, a work must be the result of human intervention, and it must be original. The "originality" requirement is generally interpreted as meaning the work must be different from previous works; the fact that it is original for the creator is not enough, if somebody else has already created it). However, this general principle does not apply to software.

The level of originality required for software is minimal, as it is believed that programming is subject to certain technical rules, and computer programs are conceived to achieve a certain result. The choices a programmer makes in developing a certain program may depend more on the technical ability, rather than the personality, of the programmer.

Generally, in the copyright area, it is not the idea or principle behind the work or the program that is protected, but the expression of the idea; the form in which the program is written. With computer programs, the protection extends to the source and object code, as well as to user manuals, and preparatory and technical documentation such as functional and organic analysis, and flow charts.

Under art. 5.2 of the Bern Convention, intellectual property (IP) rights on a work arise out of creating the work, and formal requirements, such as registration, are not necessary. However, registration provides certain advantages and triggers a legal presumption that the registered work is original and that it belongs to the registered holder; (thus, in the event of litigation, this shifts the burden of proof to the other party). The work, as well as the contracts concerning IP rights in the work, may be registered at the Intellectual Property Registry..

Unlike other types of works that are usually registered, this is not the case for software, as registration only covers the source code (and often only part of the source code).The object code and other preparatory materials cannot be registered, even if theseose codes and documents are required to prove a violation of rights. For this reason, it is very often held in escrow, either with an escrow agent or with a notary public notary.

In principle, intellectual property rights belong to the author. The author, understood to be the individual who creates the work, has economic as well as moral rights in the work. Economic rights include the right to copy, distribute (sell or rent), communicate the work publicly, and transform the work; moral rights include the right of integrity, authorship, and the right to modify or withdraw the work. Economic rights may be licensed (on an exclusive or a non-exclusive basis), unlike moral rights, which cannot be transferred or waived.

Although the economic rights belong to the author, in certain cases the law provides for a presumption that the rights have been assigned; for example, in works created by employees in an employment relationship or the collective works (works created by several individuals under the initiative and coordination of an individual or company that publishes the work). It is important to note that, except for those cases provided for by the law, transfer of rights requires express consent from the author or rightholder, a matter that is very often forgotten by companies hiring programmers to developthe development of a computer program.

The law imposes certain limits on software protection:those rights. In particular:

• Unless specifically forbidden by the contract, the user is allowed to copy or transform the program, and correct errors in the program, when necessary for the purpose of the program;
• The user may also make a back- up copy;.
• The user may study the program to determine the underlying principles or ideas;
• The user may carry out reverse engineering of on the program, if required to make the program interface with an independently created program, provided that this information has not been made easily available to the user.

Patents and utility models protect inventions.

Patents

Patent protection in Spain is similar to patent protection in other European countries. Areas of uncertainty that can be found in the general patent community (such as applying the "equivalents doctrine" or the scope of the experimental defense in the field of pharmaceutical products) can also be found in the Spanish legal system.

Inventions must meet three requirements to be patented:

• Novelty (must not have been disclosedmade public either in Spain or worldwide);
• iInventive step (must not benon obvious for to an expert in the field); and
• Industrial application (must be capable of being applied).

The patent is protected for 20 years from the date of application and the patent holder is entitled to prevent the subject of the patent from being used, manufactured or distributed (either a product, a proceeding, or the product directly resulting from that patented proceeding). Spanish law recognizes that these rights can be exhausted for products put on the market by the patent holder or with its consent.

If patent rights are violated, civil and criminal actions are available, as well as interim remedies in both cases. In this situation, the patent holder may:

• Request that the violating party ceases to infringe the patent;
• Take measures to prevent the violation from continuing; for example, destruction of the items manufactured or imported, which are violating the patent rights;
• Publish the court decision; and
• Be indemnified for damages.

Indemnity for damages includes the damages caused as well as lost profits, calculated using the patent holders’ choice from three criteria: 1) profits that would have been obtained by the patent holder if the violation had not occurred; 2) profits actually obtained by the violator; and 3) license fee that the violator should have paid to carry out its actions legitimately.

In an infringement proceeding, the defendant is entitled to raise the defense that the patent is void.

Work on the Community patent has been reinitiated, and there is a political will to enforce it by the end of next year; however, unlike the Community trademark, there is still no Community patent valid in the entire European Union. There are international conventions that facilitate obtaining patents in Spain, such as the European Patent Convention or the Patent Cooperation Treaty, but the European patent is in fact a bundle of national patents, subject to national judicial review.

Utility Models

Inventions may also be protected by utility models. These are for small inventions, in which the level of inventiveness step required is lower than for patents. The novelty required for utility models concerns only disclosures in Spain and not abroad. Also, the duration of the right is shorter: 20 years from application foron patents and 10 years from application for utility models.

The protection given to utility models is similar to the protection given to patents.

Designs

Under Spanish law, designs may be protected by copyright and, if registered, they may also be protected as industrial models or drawings. Designs are protected for 10 years and can be renewed for a further 10 years.

Pursuant to the European Directive dated October 13, 1998 (not yet implemented in Spain), designs may also be protected if they are new (not identical to others) and singular (causing a different impression from others). Protection will not exceed 25 years as from the date of the application.

In Spain, the relevant provisions for know-how protection in this respect are:

• Unfair Competition Act: art 13 considers unfair competition to be (i) the exploitation or dissemination of trade secrets without the owner’s authorization or (ii) illegally obtaining such secrets, provided that said behaviors are made with the intention to obtainof obtaining a benefit or to harming the secrets’ owner of the secrets.
• Criminal Code (arts. 278 ff.): it is a crime to take documents, data, software or any other object with the purpose of obtaining trade secrets, as well as to disseminate, reveal or give these secrets to third parties . It is also a crime for a party to reveal, disseminate or give trade secrets to third parties if that party is legally or contractually bound to keep them secret.
• LabourLabor law: employees have the duty to keep the company’s secrets, both during employment as well as and after the employment relationship is terminated.

This brief overview will conclude with a discussion of the antitrust issues that arise for technology transfer agreements.

Under EU regulations, technology transfers between companies may fall under Article 85 of the Treaty of Rome,which prohibits agreements between companies that may affect become involved in commerce between member States and whose effect is to that prevent or limit the competition within the common market. Article 85.3 of the Treaty, however, allows the European Commission to exempt exclude certain categories of agreements from this prohibition so that, if the agreement meets the criteria in the corresponding Exemption Regulation, an individual will not have to notify the European authorities to obtain an authorization.

Regulation 240/96 provides an exemption for transfer of technology agreements effective in the common market, provided they meet certain requirements. According to Article 5 of thisregulation, it does not apply to licensing agreements between a company and its joint venture subsidiary, unless the product's under license, and the other products of participating companies that the user may consider interchangeable, do not represent, in the common market: a) more than 20% of the entirewhole market for theose products, if the license concerns only production; or b) 10% if it concerns production and distribution.

The regulation provides exemptions for a number of restrictions in on technology transfer agreements:

1. Restrictions on the licensor:. Licensor may agree not to any other party in the licensee’s territory and not to exploit the technology itself:

• in the case of patent licenses, to the extent and for as long as the licensed product is protected by parallel patents in the concerned territories;
• in the case of pure know-how licenses, for a period of 10 years as from when the first putting of the product is put on the common market by a licensee;.
• In the case of mixed licenses, 10 years from a licensee first puts the product on the market, or longer if protected by necessary patents.

2. Restrictions on the licensee: licensee may agree, subject to similar time constraints as those mentioned for the licensor:

• not to manufacture or use the licensed products in territories reserved for other licensees;
• not to exploit the technology in the licensor’s territory of the licensor within the Community;
• not to actively market the products in other licensees’ territories within the Community .

3. Licensee may also agree under certain conditions, and subject to time constraints (it which should not exceed five years from the date any licensee has marketed the products for the first time in the Community), not to market the products, even passively (unsolicited purchase orders), the products in other licensees’the territories of other licensees.
4. Also, in certain cases, licensee may be bound to: (i) use licensor’s trademark or get up, provided the licensee is not prevented from identifying itself as the manufacturer of the product under license; and (ii) to limit the production or sales of the product under license to the quantities needed to satisfy the requirements for its own products, provided the licensee freely determines the quantity of thesesaid products.
5. The Regulation also contains a list of clauses that do not normally restrict competition, but are exempt if they do, such as: (a) the obligation of licensee not to reveal know-how of licensor; (b) or an obligation on the licensee to cease using the technology upon termination of the agreement provided the know-how remains secret and the patents are still in force; or (c) the obligation of licensee to license back the improvements on the technology provided that, if they can be separated from licensor’s technology, said license is non- exclusive and that the licensor undertakes also to grant a license to licensee on its own improvements; or (d) a right to terminate the license if licensee challenges the validity of patents or contests the secrecy of the know-how.
6. Finally, the Regulation contains a black list, thatwhich is a list of restrictions that may only be exempted by an individual exemption:

• Restrictions on determining prices, components of the prices or discounts;.
• If one party is restricted from competing with the other in research and development, or in the field of production or use of competing products; (however, if this happens, the licensor may terminate the exclusivity and cease giving improvements ).
• Restrictions that could make impossible or difficult parallel imports within the Community (e.g. refusing to sell in licensee’s territory to resellers that will resell the products abroad);.
• Restrictions on quantities manufactured or sold (unless permitted by other clauses of the Regulation);.
• Licensee’s obligation to assign to licensor all or part of its rights on improvements or new applications of the technology granted;.
• Any obligation on licensor or licensee that provides for territorial protection or restrictions for periods longer than those set out by the Regulation.

Licensing agreements containing restrictions not expressly permitted by the Regulation, but which do not fall under the black list, may still be permissible if the Commission is notified and it does not oppose such exemption within four months.

Despite these e Regulation clauses, the Commission may withdraw the exemption if it concludes that the effect of the agreement, or the parties’ behavior, causes an unjustified restriction on competition, which is contrary to Article 85 of the Treaty.