Por Dougliris Torres

Foreign investment (FI), put in simple words as the injection of capital by a foreign entity in another country, is a subject of paramount importance in any scenario associated with the growth of a nation or, international trade, and is also understood as a negotiation chip in any integration process.

Moreover, in the context of the 21st century, FI maintains its leading role in a reality where the creative or “orange” economy is experiencing great prominence, focused on creating the conditions to attract increasing flows of foreign capital, as part of the policy of each State to better manage the unstoppable process of globalization.

In this sense, Venezuela has been taking uncertain steps around this issue. On May 1, 2017, President Nicolás Maduro announced the call for the election of the National Constituent Assembly, which was blatantly unconstitutional as established in Article 347 of the 1999 Constitution, since the convocation to the National Constituent Assembly is an exclusive power of the people, through a consultative referendum called with the purpose of making the decision to go or not to this process.

Although the National Constituent Assembly approved a decree of coexistence with the five constituted Public Power Branches, including the National Assembly, its hegemony over the National Assembly has limited its margin of action, since it continues to function but only to carry out commission or work meetings, but it cannot legislate on economic, political or security issues, which allows us to say that the coexistence of both bodies has not occurred in a peaceful manner and its decisions have indeed implied the usurpation of the functions that according to the 1999 Constitution correspond to the National Assembly.

Since then, the National Constituent Assembly has issued various decisions, including the Productive Investment Law, which repealed the former Foreign Investment Law, and introduced several modifications to the legal treatment of foreign investments in Venezuela. This is just one of the many regulatory, legislative and institutional changes over the years in this matter.

The aforementioned law defines in Article 7 Foreign Investment as: “Any investments made through the contributions by foreign investors, consisting of tangible and intangible resources, intended to be part of the assets of the recipients of foreign investment in the National territory. Intangible asset means trademarks, product brands, patents, utility models, industrial designs and copyrights, as well as all the industrial and intellectual property rights set forth in the Constitution of the Bolivarian Republic of Venezuela and the laws that regulate this matter. Technical assistance and knowhow, understood as processes, procedures or methods of manufacturing products duly supported through the physical supply of technical documents and instruction manuals, are also included.

In light of this new law, the aforementioned intangible contributions will be considered as foreign investment when the following requirements are met:

1) The contribution of the intangible asset must be made through a transfer agreement, where the transferor transmits the ownership right over the intangible asset to the transferee; which excludes the license agreement as a foreign investment, since there must be an effective transfer to the recipient of the investment of ownership of the intangible assets transferred.

2) This contract cannot be concluded between companies that are directly or indirectly related to each other.

3) Additionally, it is required that this agreement be registered before the national competent body in intellectual property matters, currently the Autonomous Service of Intellectual Property (SAPI).

The Andean Community (CAN), through decisions Nos. 291 and 292 of the Commission of the Cartagena Agreement, approved Decree No. 1.103, which contained the Partial Regulations of the Common Regime for the Treatment of Foreign Capital and Trademarks, Patents, Licenses and Royalties, published in the Official Gazette of the Republic of Venezuela No. 34,548 dated September 7, 1990 and later Decree No. 2,095 published in the Official Gazette of the Republic of Venezuela No. 34,930 dated March 25, 1992, establishing that “Contracts planned to be executed by mixed and national companies, as well as public legal entities, on the import of technology and on the use and exploitation of patents and trademarks, whatever the modalities adopted, must be filed for registration before the Superintendence of Foreign Investment, for which an original copy signed by the parties will be sent to that body within sixty (60) consecutive days following its execution“. With the withdrawal of Venezuela from this regional organization, the regulation is no longer applicable.

However, in view of the non-application of the rules issued by the Andean Community (CAN) and upon construction of the Foreign Investment Law in force, it is important to clarify that it does not establish that the assignment agreement of intangible assets must be registered before the Body responsible for foreign investment for the purpose of having legal effects, so that the simple registration before the competent authority in the field of intellectual property makes it sufficient and effective against third parties, thus changing the legal criterion that had been applied in these cases.

There is no doubt that foreign investment in connection with intangible assets contributes to the development of alternative economic models based on knowledge, creativity and culture. However, we are waiting for the National Executive to issue the Regulations to this law, as well as to adapt the structure and functioning of the bodies and entities of the State that will oversee its compliance, which will give us a clearer vision of the spectrum of its application and its repercussions on the intellectual property economy.

Sources:

Productive Investment Law (Ley de Inversiones Productivas) published in Official Gazette No. 439,406 dated December 29, 2017.

Foreign Investment Law (Ley de Inversiones Extranjeras), published in Special Official Gazette No. 6,152 of the November 18, 2014.