World Intellectual Property Organization

INDECOPI (Peru): The Promotion of Marks and Other Distinctive Signs to Compete in the Market

The National Institute for the Defense of Competition and Intellectual Property (INDECOPI) has played an important part in the promotion of the use of distinctive signs (especially collective marks and appellations of origin) by groups of SMEs through training and also by publicizing the various mechanisms for the registration and promotion of intellectual property.

In this connection the SME assistance service goes beyond guidance on the registration of distinctive signs: it means guidance also, and assistance, in organizing the system and writing the rules of use of the distinctive signs.

An account of some practical experiences of associations of SMEs in Peru is given below.

A. Dairy By-products

Cajamarca is a department of Peru located more than 3,000 meters above sea level. Owing to its geographical location and natural attributes it has been able to carry on an important production activity with its livestock. It is well known for its cheeses, yogurt, blancmanges, butter and other products. The name Cajamarca is associated with that activity.

The problem that arises is that the production is in the hands of small farmers and livestock breeders who have a limited corporate vision. The products are sold in the area, in the city, in mini-markets and through travelers, and yet many of the products are of very high quality and have an established reputation.

That reputation is causing producers from other cities in the country to make use of the Cajamarca name to market products of their own, thereby improperly making use of the reputation of the genuine Cajamarca products, and in many cases detracting from the associations of the name when the products are of very poor quality.

Following an intense campaign in the area it has been possible to bring together 80 producers of milk derivatives whose common objectives are the following:

  • to be able to launch their product in Lima (the ideal market) and to market it in Wong, the main distribution network;
  • one day, to be able to export;
  • to preserve the quality associated with the origin (Cajamarca) and to prevent others from taking advantage of the name.

The strategy adopted was to operate under the collective mark scheme. Eventually 37 producers registered the collective mark as an association of producers, and they are now working on the marketing aspects of the product launch.

The interesting thing is that they have already realized how much industrial property has helped them, as they have involved themselves in the subject and the strategy that they have adopted is making them work together on quality and homogenization matters.

B. Chirimoya Cumbe - The Value of a Name*

Matildo Pérez, one of a village community in the heights of Lima, decided one fine day to apply personally to INDECOPI for registration of the trademark "Chirimoya Cumbe."# He filed his application and, in spite of the unusual circumstances of the case, it followed its course, like any of the 45,000 filings that INDECOPI handles every year.

His application was refused, however, owing to the fact that quite simply no exclusive rights in generic names can be granted to a single person. Since then Don Matildo has reappeared, this time with a delegation headed by the Deputy Mayor of Cumbe, seeking an appointment with the Head of the Distinctive Signs Office of INDECOPI.

The people of Cumbe, gathered together on the main square, had empowered Don Matildo Pérez to register the trademark; the community had understood fully that securing registration for the mark gave them exclusive rights in the use of the Cumbe name. However, as the official told them, "Chirimoya Cumbe" is in fact an appellation of origin in Peru, because the valley of Cumbe is a geographical area that gives certain distinctive properties to the Chirimoya. At the outset they were delighted with this idea, and went back to their village.

The following week, however, they were once again at the office, saying that they did not want an appellation of origin; the village had rejected the proposal, saying that with appellations of origin the State is the owner, and it is the State that authorizes use; they did not want the State to be the owner of the "Cumbe" name, because they had been working with it for a great many years. The Head of the Distinctive Signs Office then suggested that what should be registered was a "collective mark", the owners of which would be the village of Cumbe, and which would be used according to rules that they themselves would lay down.

Today the name "Chirimoya Cumbe" has its own characteristic logo and, more importantly, is registered in the name of the village of Cumbe (in Class 31 of the International Classification), and the latter are working to gain a competitive edge over their rivals in Lima's Wholesale Fruit Market. In that way, thanks to the persistence and drive of Don Matildo, and his ability to make use of the intellectual property protection system, his village has increased the value of its individuality, its knowledge and its tradition of excellence.

C. Export Olives

Peru produces a very special variety of olive for which there is a high level of international demand.

The problem that the Peruvian producers have is that their olive variety is ordered under the name of a type of olive produced in another country which is different in terms of quality.

After an investigation was made to determine causes of action, the possibility of using an appellation of origin was envisaged. The proposal is now being considered.

Nevertheless, the collective mark scheme has been adopted for the time being, and a common trademark for Peruvian olives has been launched on the domestic and international markets.

The strategy focuses on the following aspects:

  • common characteristics of the launching of the product abroad; standardization of the exportable range;
  • preservation of the quality-origin;
  • linking Peruvian olives to a common name;
  • controlling the exportable range with a view to protecting the external market.

D. Plastic Tubing

The case of the plastic tubing (for housing construction) also meant adopting a collective mark strategy. Nine producers, representing 60 per cent of the national market, have been assembled.

Their problem is the pirating of their products, with its adverse effect on the reputation of their trademarks as a result of quality problems. There is a gray market which produces tubing of very poor quality because it is not made to established technical standards, and yet the products illegally bear the known trademarks.

The collective mark adopted is in the nature of a hologram, and it is being used as a means of detecting goods of dubious origin, and for unmasking the pirates. The collective mark is used in conjunction with the individual trademarks of the companies, and is in effect a "seal of quality."

For the consumer, what the collective mark stands for is: "conformity to technical standards," "security," "guarantee" and "confidence."

E. Andean Products

A group of Peruvian businessmen in Cuzco are producing food specialities based on Andean products or ingredients; these include "snacks" (giant maize from Cuzco), breakfast cereals (kiwicha, quinoa) condiments for foods (chillies, peppers), and preserves and dessert ingredients (goldenberries, elderberries).

The common characteristic is that the products involved are Andean, and many of them specific to the Peruvian Sierra. How is the consumer to be made aware that behind these products there is a thousand-year tradition, a history in its own right?

Proposals have now been made for work to be done on a collective mark under which producers who make foodstuffs based on Andean ingredients are grouped, with hygiene and quality aspects being likewise provided for.

The Collective Mark

Collective use of the mark:

  • Need to form and association or group for the supply of common goods or the rendering of common services.
  • Tool for learning to work together to achieve common aims and objectives ("associability").
  • Private organizational scheme with rules laid down by the members of the association or group themselves.
  • Systems for verification and control subject to common levels and conditions
  • System of sanctions for failure to comply

Rules of use:

  • Internal standards, as a basis for the achievement of common objectives (quality, uniformity, etc.)
  • Rules to unify/standardize the product or service to be offered.
  • A system of self-control evolves
  • The State does not participate directly in the system.

Need to position the mark:

  • The effectiveness of what is to be achieved with the mark (information on characteristics of the product or service) requires that the consuming public be previously informed of what it represents.

What is there behind the mark?

  • The work of positioning is in the hands of the members of the association or group; it is a joint task.

Advantages of using a collective mark

  • The market is faced by the group as a whole, which is obliged to devise a common strategy.
  • The mark is exploited and promoted by a group of enterprises.
  • The common use of a mark obliges the group to harmonize the quality and characteristics of the goods or services for which it is used. The product or service is "standardized" on the basis of quality criteria.
  • Tool for the development of regions or localities. Regional marks.
  • The use of a collective mark does not rule out the use of individual or personal marks.

Conclusion

The inclusion of collective marks in corporate strategy has not only made it possible for smaller entrepreneurs to reduce their costs, but also lent them greater competitiveness on the market. With this machinery, such businesses have been able to protect and differentiate their goods at less cost, taking advantage of economies of scale and at the same time increasing client confidence.

In view of the fact that the investment in the development of a mark, including marketing and advertising campaigns, can be costly for an SME, collective marks have become a device that allows costs to be saved at the same time as products originating in Peru are distinguished, with emphasis on characteristics specific to the areas in which the products are made.

Part of the strategy consists in developing a common concept and image which identifies the SMEs or the goods produced by them, and the establishment of "quality pacts" between them which they implement by reference to rules for the use of the marks.

For more information on the activities of INDECOPI in connection with the promotion of distinctive signs, please approach Luis Alonso García Muñoz-Nájar: Igarcia@indecopi.gob.pe

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Taken from: Cuidadano Peruano Protagonista de la Transformación del Mercado. Internal Memorandum 1992-1999, INDECOPI

Chirimoya is a fruit that grows in the Andean region of Peru and Ecuador. Cumbe is the name of a valley in Peru where the chirimoya grows.

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