Deceptively Easy? The Fast-Track Company Trademark Process

Further to a series of measures developed by the Portuguese government to simplify various aspects of citizenship and business, and pursuant to a protocol agreed between the Portuguese Industrial Property Institute (INPI) and the National Registry of Legal Entities (RNPC), the RNPC applied in February 2006 to register several hundred trademarks associated with identical firm names. A large proportion of these applications were granted by the INPI in June 2006 and the trademarks are now available to any person wishing to incorporate a company and register the company name as a trademark under a system dubbed Empresa e Marca na Hora (literally, 'a company and a trademark in an hour').

The advantages of this system in terms of time and cost are obvious. An interested party may very quickly choose a company name and an identical trademark, establish the company bylaws, incorporate the company and meet all the necessary publication requirements. However, from a legal and even a commercial standpoint, granting trademarks in this way poses several problems, two of which are particularly significant.

First, the use of a trademark is of paramount importance in maintaining its registration; a lack of serious use for a period of five years results in a lapse in registration. How, then, is it possible for the government - acting through the RNPC - to hold a portfolio of trademarks which may be used to identify products only if and when someone chooses the trademark as part of the process of incorporating a company? Decree-Law 129/2005, which came into force on June 29 2006, formally instituted this system some months after the protocol between the RNPC and the INPI had been agreed and the initial applications for registration had been filed by the RNPC. However, the decree-law sheds no light on the issue, as it contains no exceptional provisions to safeguard the interests of potential trademark holders. Therefore, a person choosing a company name and trademark from the RNPC's portfolio runs a serious risk that a third party may successfully object on the grounds of lack of use, leaving the trademark holder empty-handed.

Second, the lack of use provision is by no means the only reason that trademarks usually take a long time to become established. A third party may apply for the annulment of a registered trademark up to 10 years after its registration; during this time the right granted by registration is inherently weak.

Although these rules apply to all trademarks, not only those registered by the RNPC, the Empresa e Marca na Hora system does not alert the public to the legal risks inherent in the registration and use of trademarks. The very simplicity of the system may convey the notion that the registration of a trademark is immediately definitive, which is far from the case. The government's efforts to simplify procedures and eliminate unnecessary bureaucracy have been widely welcomed, but in this particular area the disadvantages of simplification may outweigh the advantages.

For further information on this topic please contact César Bessa Monteiro at Abreu Cardigos & Associados by telephone (+351 21 7231800) or by fax (+ 351 21 7231899) or by email (cesar.b.monteiro@abreucardigos.com).