A. FOREIGN INVESTMENT LAW

Foreign investors enjoy the same rights and have the same duties as domestic investors when investing in financial or productive activities.

Generally, Argentine Law does not set any restrictions or prohibitions on foreign investments. Where there are no restrictions, no prior government approval is required beyond that applicable to any domestic or foreign investor in each activity. Certain industries (e.g., banking, media) do require reciprocity as a condition for foreigners to invest. In certain other industries (publishing, internet and related) foreign companies cannot own more than 30% of the stock of a company. Rural land can be owned by foreigners although some restrictions and limitations apply for certain areas. Foreigners can own land in bordering zones subject to prior approval.

Investments may be made in the form of: (i) foreign currency; (ii) capital assets; (iii) profits from other investments; (iv) repatriable capital resulting from other investments made in the country; (v) capitalization of foreign credits; (vi) intangible assets; and (vii) other forms acceptable to the competent authorities.

B. TRANSFER OF TECHNOLOGY

1. Scope of the Transfer of Technology Law

The Transfer of Technology Law governs agreements that provide for the transfer, assignment or licensing of technology or trademarks by foreign-domiciled persons to Argentine-domiciled persons. Executive Order No. 580/81 defines "Technology" as patents, utility models and designs, and any technical knowledge applicable to the manufacture of a product or rendering of a service. The following could not be construed as technology:

  1. Acquisition of products
  2. Technical or consulting services, know-how licenses, including those pertaining to information, knowledge or application methods in financial, commercial, legal, marketing, or sales areas and, in general, any other delivery or rendering of service that does not evidence clearly and specifically the effective incorporation of technical knowledge directly applied to the productive activity of the local contractor
  3. License to use software or software updates
  4. Services involving repairs, supervision of repairs, maintenance, and setup of plants or machineries, excluding the local contractor's personnel training
  5. In general, all activities that directly represent the hiring of tasks related to the current operation of the local contractor.

2. Agreements Between Related Parties

License agreements executed by a domestic licensee and a related foreign licensor need not be approved by, and registered with, the Instituto Nacional de la Propiedad Industrial (National Institute of Industrial Property) (the "INPI"). However, failure to register them has adverse tax consequences (see chapter4).

These agreements must be entered into "regular or usual market practices between unrelated parties" and the consideration must be supported by a transfer pricing study.

3. Agreements Between Unrelated Parties

Agreements between unrelated parties are registered with the INPI only for statistical and tax purposes. No specific conditions are established for them.

4. Tax Treatment of Payments

Generally speaking, payments to foreign beneficiaries arising from transfer of technology agreements are considered as Argentine-source income and thus subject to Argentine taxation. The applicable rates may vary, depending on whether the agreement is registered with the INPI and on some other reasons (e.g., the way in which the service is being rendered or distributed).

The lack of registration of an agreement between related companies or unrelated parties with the INPI does not adversely affect its validity. However, if the agreement is not registered: (i) the licensee may not deduct the amount paid to the licensor for income tax purposes, and (ii) all payments made to the licensor deriving from a non-registered agreement are subject to a 31.5% income tax withholding. Conversely, registered agreements are subject to a lower rate, ranging from 21% to 28%, according to the kind of technology being transferred and the method used for estimating the remuneration or service. These rates may be substantially reduced if an agreement to avoid double taxation is applicable. Argentina has entered into these agreements with several countries (please see Section G, 5, (e), below).

C. INTELLECTUAL PROPERTY

1. Patents and Utility Models

Patents and Utility Models are protected by Argentine Law.

The salient points of the legislation are as follows:

  1. Any individual or legal entity, either national or foreign, is entitled to obtain patent and/or utility model certificates.
  2. "Invention" is defined as any patentable device or process created by an independent effort, capable of transforming matter or energy for the benefit of man.
  3. Inventions of products and processes are patentable if they are novel, involve an inventive activity and are capable of industrial application. While absolute novelty is required, the disclosure of the invention at an exhibition or in a publication or other means of communication within one year prior to the patent application date or priority date shall not affect its novelty.
  4. Patents are granted for a term of 20 years from the application filing date.
  5. The law grants a 10-year protection term for Utility Models from the application filing date, and such term may not be extended.
  6. Patents and Utility Models are subject to annuities.
  7. Pharmaceutical products are subject of protection effective October 2000.
  8. Inventions made by an employee in the course of his or her employment contract shall belong to the employer, provided the purpose of such contract or relationship involves inventive activities, either partially or totally.
  9. After 3 or 4 years, depending on the circumstances, any person is entitled to request from INPI an authorization to use the invention without the patentee's authorization (compulsory license) if it has never been used or if its use has been interrupted for more than one year, except in case of force majeure or lack of effective preliminary steps for using the patented invention.
  10. The law imposes civil and criminal penalties, such as fines and imprisonment, on anyone who infringes a patent or a patentee's rights, as well as remedies to stop the infringement, such as seizure, inventory and attachment of the forged objects.

2. Industrial Models and Designs

Industrial Models and Designs are ruled by Law No. 16,478, and refer to the shapes or configuration of elements given or applied to an industrial product that is substantially decorative or ornamental.

The protection term is five years, beginning from the date of deposit, which may be extended to two consecutive periods at the owner's request.

The law provides for the renewal and transfer of industrial designs, cancellation actions, and civil and criminal actions arising from infringement of owner's rights.

3. Trademarks

Law No. 22,362 protects both trademarks and service marks.

Ownership of a trademark and the right to its exclusive use are acquired by registration. A legitimate interest is only required to become the owner of a trademark and to exercise the right to use it.

Before registration, a trademark is published for purposes of opposition by third parties and is subject to an initial examination by the Trademark Office examiners.

The protection term of a registered trademark is 10 years from the date of registration. It may be renewed indefinitely for periods of 10 years, provided the trademark is used within the five years preceding each expiration date.

Prominent trademarks have been granted special protection by law and court decisions. A trademark is null and void when it is registered by anyone who, when applying for registration, knew or should have known that it belonged to a third party.

Trademark infringement is punishable with a fine or imprisonment.

The Law also prescribes provisional remedies or preliminary injunctions to investigate the infringement of a trademark and identify its authors.

4. Author's Right (Copyright)

Law No. 11,723, as amended, protects all scientific, literary, artistic or didactic works, expressly including computer software (source and object), data compilations and other materials irrespective of their means of reproduction.

Foreign works (works first published in foreign countries, regardless of the nationality of the author), when they are made in countries that recognize copyright, are protected.

As a general rule, copyright is for a term consisting of the life of the author, and 70 years from the first day of January subsequent to his or her death. The last rule also applies to posthumous work. For joint works, the term becomes effective from the first day of January of the year following the death of the last author. Anonymous works published by legal entities are protected for 50 years from their publication dates. With regard to cinematographic work, the copyright is protected for 50 years from the date of the last author's death. (The law considers the following individuals as authors unless otherwise agreed: scriptwriter, producer, director and soundtrack composer.) Copyrights to photographic work last 20 years from the date the work is first published.

The term of copyright protection for foreign works varies, depending on the international treaty to which both the country of origin of the foreign work and the Argentine Republic are parties. However, the applicable term will not be longer than the one granted by Argentine law.

All Argentine works must be registered with the Dirección Nacional del Derecho de Autor (National Copyright Office) the secure entitlement

Foreign works need not be registered in the Argentine Republic. However, to enjoy protection of Argentine law, they must comply with the formalities set forth in the international treaty to which both the Argentine Republic and the country of origin of the work are parties (i.e., if the Berne Convention is applicable, no formalities are required; if the Universal Convention is applicable, formalities have to be fulfilled if the work includes the © with the name of the copyright owner and the year of first publication). If no treaty is applicable, authors have to prove that they have complied with the formalities of the country of publication or that the said country does not require any formality.

Law No. 11,723 also provides for injunctions and criminal sanctions for copyright infringement.

Argentina is a member of both the World Intellectual Property Organization and the World Trade Organization. In addition, Argentina is a party to the most relevant international treaties concerning intellectual property:

5. Industrial and Trade Secrets

Law No. 24,766 establishes that, under certain conditions, any person who legitimately owns some information may bring legal action to prevent the disclosure of such information by any third party or to prevent it from being acquired and/or used by any third party, and to claim compensation for the damages caused.

Trade secrets are also protected by the provisions of the GATT/TRIPS Agreement, as approved by argentine law and by the Criminal Code.

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