PANAMANIAN INTELLECTUAL PROPERTY LEGISLATION APPLIED IN THE COLON FREE ZONE
By: Irene Fernández
Quijano & Associates, Panamá

Panama has proved to be a significant strategic market, full of business opportunities, albeit it’s apparently reduced population.
Characteristics such as the US dollar as legal tender, the Canal of Panama, the presence of the most important financial centre in Latin America, the Colon Free Zone, and others give Panama an outstanding economic and commercial profile.
It is a well-known fact that the disappearance of borders and a marked increase in international trade concerning mainly goods manufactured under trademark protection have caused countries with highly trade-related economies to upgrade their legislation in this field.
As a member of the World Trade Organization (WTO) and a current negotiator of free trade agreements, Panama has addressed the issue of intellectual property protection as a priority.
In contrast with other countries, the registration of a trademark is a trouble-free proceeding in Panama. The regular time taken from the date of filing an application until the granting of a registration is between eight and twelve months.

The expenses incurred when registering a trademark in Panama are relatively low and the benefits received upon registration include the protection of such trademarks from counterfeit and piracy. Law Nr. 35 of 10 May 1996 provides for trademark protection for a ten year period. It gives government agencies the authority to conduct ex officio investigations and to seize counterfeited material.

In accordance with Law Nr. 35, rights for the registration of trademarks in the Republic of Panama are acquired by means of use. Rights for the exclusive use of trademarks are also acquired by means of registration.

Panama has the second largest free zone in the world, after Hong Kong, located in the Atlantic entrance of the Panama Canal: the Colon Free Zone. The exceptional geographical position of Panama has traditionally allowed the Colon Free Zone to serve as an important logistic distribution center. Products from the Far East are imported by companies in the Colon Free Zone and re-exported to other countries.
Therefore, the creation of an intellectual property protection organization proved indispensable. The creation of the department of intellectual property in the Colon Free Zone administration is indicative of the will of the Panamanian government to provide effective protection of intellectual property rights. It has established mechanisms to prevent the use of Free Zone facilities for the distribution of counterfeit goods or any that may prejudice legally acquired protection through proper registration.

The intellectual property department in the Colon Free Zone has been operating for six years now. It has endeavored to carry out its duties quite efficiently, and constantly adjusting to required changes as trade becomes more sophisticated and its activities expand.
For the purpose of controlling the traffic of counterfeit products into and from the Colon Free Zone, custom control measures have been instituted by the Panamanian government. These control measures allow the Colon Free Zone and customs authorities to carry out ex officio inspections and retentions of goods or merchandise suspected to be illegal as a precautionary action, with a view to suspend the circulation of such merchandise immediately. These actions are performed with great care so they will not impair legitimate commerce. Up until now, these inspections and retentions of allegedly falsified products have been carried out as a routine operation by a competent authority, acting by right of office and upon complaints filed by the affected parties.
The Colon Free Zone works in coordination with other key governmental agencies in adopting measures and implementing guidelines to improve the protection of and to promote the awareness about intellectual property rights. In the light of new developments, it recommends new legislations.
Furthermore, the department of intellectual property of the Free Zone has been promoting awareness about the convenience of legitimate commercialization and distribution of goods from the Colon Free Zone and organizing conferences directed to companies with the purpose of fostering the protection of intellectual property rights between the users of the Free Zone.
The Free Zone acts according to verifiable information and, since June 2001, maintains close connections with the Directorate General of Industrial Property in order to constantly update pertinent data regarding registered trademarks and related information.
In addition, it has been coordinating with personnel in charge of regional customs administration and circuit prosecutors with jurisdiction in the Colon Free Zone to achieve effective action against piracy of intellectual property rights.
Persons or companies that incur in detriment of the Intellectual Property and Copyrights granted on behalf of the lawful owners of the same by law shall pay a penalty or fine when they are proved direct transgressors.

· For companies established in the Colon Free Zone, and other Free Zones or Export Processing Zones operating in the Republic of Panama, the applicable fine will be equivalent to 25% of the company’s monthly commercial turnover

· Suspension of the rights to commercialize or engage in business for a period of three (3) months

· Suspension or cancellation of the operation license granted by the Colon Free Zone, or other existing Free Zones or Export Processing Zone in the Republic of Panama. In case of a suspension, the same will be applied for a minimum period of three (3) months

· In case of recurrence the sanctions described in sections 2 and 3 above will be applied for a period of one (1) year, and the penalty described in section 1 could be up to four (4) times the maximum penalty, of US$200,000.00 that is, up to US$800,000.00.