Intellectual Property, International Harmonization, and the Role of Customs: The Philco Case as a Warning for Export-Oriented Companies

The protection of intellectual property rights has ceased to be a matter of exclusively domestic concern. In an interconnected world, where cross-border operations proliferate under OEM (Original Equipment Manufacturer) schemes, cross-licensing, or contract manufacturing, it is essential to understand that while trademark rights are territorial, their enforcement demands a global perspective.

In Ecuador, as in most countries, registering a trademark with the national intellectual property office —such as SENADI in Ecuador— grants the holder exclusive rights of use. This principle is enshrined in international instruments such as the Paris Convention for the Protection of Industrial Property and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), applicable to all World Trade Organization (WTO) member states.

Additionally, forums such as APEC (Asia-Pacific Economic Cooperation) have promoted the international harmonization of standards, encouraging efficient procedures for the recognition, protection, and enforcement of intellectual property rights at the border.

Articles 51–60 of the TRIPS Agreement require States to implement border measures allowing for the suspension of imports and exports involving goods that infringe intellectual property rights.

While in many jurisdictions this faculty is fully operational —such as in Brazil, where customs act in coordination with the judiciary— in Ecuador, enforcement relies heavily on the rights holder’s initiative, who must file complaints before SENAE and SENADI, and support the claim with documentary evidence.

One of the most common and complex scenarios in international trade practice involves the registration of the same mark by different owners in different countries.

Although each registration is valid within its own territory, the use of the mark during manufacturing or export may infringe the rights of the local holder, even when the goods are destined for another country.

This issue is particularly sensitive in contract manufacturing or maquila contexts. A company may hold a legitimate trademark registration in Argentina, but if it manufactures products in Brazil without authorization from the Brazilian trademark holder, it will infringe local rights —which may lead to sanctions or even customs seizure of the goods.

A paradigmatic example is the Philco case in Brazil, in which Mueller Eletrodomésticos manufactured appliances bearing the Philco trademark at its plant in Santa Catarina, for export to Argentina, where the mark is owned by Newsan S.A.

The problem arose because in Brazil, the Philco trademark is owned by Britânia, which did not authorize Mueller to use the mark within Brazilian territory. Although the goods were never intended for sale in Brazil, the Court of Justice of the State of Paraná issued a preliminary injunction prohibiting the export, ruling that the infringing act —the unauthorized use of the mark during manufacturing— occurred within Brazil.

The legal action was successfully led by Dr. Eduardo Ribeiro Augusto, a Brazilian attorney and partner at Siqueira Castro Advogados, who demonstrated that unauthorized territorial use activates local protection, even when the end consumer is located abroad.

The Philco case clearly shows that holding a trademark registration in the destination country is not sufficient. Companies must:

1. Verify the legal status of the mark in the country of manufacture, even if no local sales are intended.
   2. Avoid using trademarks without a valid license from the local rights holder.
   3. Engage specialized legal counsel to prevent cross-jurisdictional conflicts.
   4. Consider border measures as a preventive or defensive legal tool.

Thanks to treaties such as TRIPS and the efforts of regional blocs such as APEC, the principles of trademark protection are increasingly uniform. However, practical enforcement still depends on each national legal system.

That is why local legal counsel is indispensable to avoid having a seemingly lawful operation in one country trigger serious legal conflicts in another. Borders are no longer merely geographical—they are critical legal checkpoints in the era of global trade.

From Quevedo & Ponce Law Firm, based in Quito, we express our recognition to our colleagues at Siqueira Castro Advogados in Brazil, especially to Dr. Eduardo Ribeiro Augusto, for his key role in a case that underscores the importance of acting with precision, strategy, and international vision when protecting trademark rights.