TOPIC 1: Introduction to Commercial Law.

Evolution, concept and sources

I. Commercial Law: Historical evolution
Spanish private law has been historically divided between two disciplines, civil law and
commercial law. Two separate codes (Civil Code 1889 and Code of Commerce 1829.1885).

Origin of mercantile law as special system: The main source of commercial law arose through
the development of customs. Reason: inability of common rules (civil rules: roman+canonic
law) to face the need of merchants.

XIX: Codification. Mercantile Customs were defined and enacted as law. Code as systematized
body of mercantile rules

XX: “De-codification”0: Spread of mercantile rules without system outside Ccom.

Future trend: Reinforcement of autonomy of Mercantile discipline: The proposal of a new

Code of Commerce.

II. Commercial Law and Tourism Law. Subjects of tourism activity

Features of the “sources of the legal system”:
 On the one hand, source could describe public authorities empowered to adopt regulatory
actions on specific matters (State or regional or local authorities, parliament, ministries or
supervisory bodies).
 From a formal perspective: different forms that legislation and regulations may take (law,
regulation, ministerial order),
 From a more general perspective, political and socioeconomic phenomena able to give rise to
binding rules (hetero-regulation by means of enacted legislation, self-regulation by drafting
codes of conducts, generally observed practices in the market which become custom, by court
case-law).

Order of priority of the sources of the Spanish legal system (ART. 1 Civil Code).

Pursuant to art. 1 CC, sources of the Spanish legal system are ranked:
 LAW,
 CUSTOMS and
 GENERAL PRINCIPLES OF LAW.

Mercantile law is applicable on a subsidiary basis: (ART. 2 Code of Commerce)

-The mercantile law is special in relation to civil system and civil law has application on a
subsidiary basis. Article 2. “Acts of commerce, whether performed by business persons or not,
and whether or not they are specified in this Code, shall be governed by the provisions
thereof; failing that by the business practice generally observed in each city and, if not
covered by either of the rules, by those of ordinary Civil Law”.

Special order of priority in mercantile law: the “mercantile customs” prevail upon “civil law”
(art. 2 CCom) and as an exception to this rule: in “mercantile contracts” the common rules
prevail over the mercantile custom as a source (art. 50 CCom).

III. Sources of Commercial Law. Formal sources: A) Commercial legislation. B) The

uses of commerce. C) The european community law.
Regarding Commercial Law, we have: Code and special legislation

Code of commerce:
 Advantages: Systematization of commercial rules.
 Critics: Incomplete and obsolescent rules: even after the rise of industrial production the
merchant still remains the paradigmatic legal actor in the Code. The relevant legal subject in
place of the merchant is the enterprise and the entrepreneur.

Special legislation: Spanish commercial law has changed almost completely in the last 20
years: corporations, partnerships, competition and insolvency, all have new rules outside the
code of commerce. These rules are so-called special legislation.

Future: The Second Section of Commercial Law of the General Codification Commission
delivered to the Ministry of Justice, on 17 June 2013, the proposed Commercial Code in
substitution of the Code of Commerce in force. This would mean that special legislation will be
incorporated into the new Commercial Code. The draft commercial code is currently stopped.
The last known and published update is October 2016.

The Spanish Constitution and the power of the autonomous regions

The Spanish constitution drew a political and socioeconomic picture described as “a state of
autonomies” to recognize a certain extent of autonomy and self-government for diverse
territorial entities within the proclamation of the indissoluble unity of the Spanish nation (art.
2.) As far as private law matters are concerned, exclusive legislative power to regulate
mercantile matters is granted to the state in order to guarantee market unity and equal civil
rights of citizens within the entire national territory (art. 149.6.9.11).

The Autonomous Regions may assume competences in the following areas: Promotion and
management of tourism in their territorial scope. (art. 148.1.18 CE).

As a result: All Autonomous Regions have regulated tourism activity in their own territory. The
content of the different regional norms is quite similar to avoid imbalances and inequalities.
The norm in force in the community of Madrid is: Ley 1/1999, de 12 de marzo, of Tourism
Planning of the Community of Madrid (de Ordenación del Turismo de la Comunidad de
Madrid).

The region norms cannot (EVER) enter into aspects of the commercial regulation, therefore, all
the regulations regarding general contracting conditions, even in the case of affecting tourist
activity, are reserved for state legislative competence.

As per the SUBJECTS of TOURISM (Subjects of the tourist activity, ART 3 Law 1/1999), the
subjects of the tourist activity are:
 Administrations, agencies and public companies that develop activities related to tourism.
 Tourism companies and their establishments.
 The tourist professions.
 Non-business tourism entities.
 Users of tourist services.

Customs, uses and practices

Functions of commerce uses:
  Firstly, in the absence of applicable law, uses (usos normativos) are applied to fill the gaps and
regulate relevant situations as a pure source of law. This is custom as source of law.
 Secondly, when the statutory provision is too abstract, uses may help to concretize the legal
mandate.
 Thirdly, uses are called on to establish certain rules in a contract when the law as well as the
parties have remained silent thereon.
 Fourthly, uses are important interpretative tools likely to clear dispel doubts and clarify obscure
provisions (uso interpretativo). (art. 52 and 59 C Com).

- Art. 2 special order of priority for mercantile matters: Customs (mercantile) prevail over law
(civil):
 Law: Code of commerce and special legislation.
 Mercantile Customes : binding business practice generally observed in each city.
 Common law : Civil law has application on a subsidiary basis.

General principles: Accordingly to art. 1 Civil Code, in the absence of applicable legal
provisions or customary rules, general principles of law shall be applicable. Therefore, general
principles of law are set up as subsidiary sources of the legal system.

Jurisprudence: Court decisions are not among the sources of law. Jurisprudence is not
included among the listed sources of the Spanish legal system. Notwithstanding such a
revealing absence, art. 1.6 CC entrust the role of completing the legal system to the repeated
opinions of the Supreme courts when interpreting and applying law and costume. Therefore,
jurisprudence plays an very important role for the legal system, despite not being a real source
of law.

European Community and International law

Community Law
 Primary law: the main sources of primary law are the Treaties establishing the European Union.
These Treaties set out the distribution of competences between the Union and the Member
States and establishes the powers of the European institutions. Treaties determine the legal
framework within which the EU institutions implement European policies.
 Secondary law: Secondary sources are legal instruments based on the Treaties and include
unilateral secondary law (regulations, directives, decisions, opinions and recommendations)
and conventions and agreements.
 Supplementary law: This category includes Court of Justice case-law, international law and
general principles of law.

International Law

Defined as the conflict rules to be the main tool of international private law, for managing
international activity.

IV. The Commercial Courts. The tourist arbitration: general notions.

1. Commercial Courts: The Organic Judiciary Act 8/2003 LOPJ created commercial courts, and
granted them the responsibility of insolvency proceedings and other commercial matters, like
lawsuits relating to unfair competition, national or international transport, claims relating to
the implementation
of maritime law, collective actions provided for in the legislation on general conditions of
contract and the protection of consumers and users, as well as other civil issues related to
commercial issues.

2. Alternative Dispute Resolution (ADR): Alternative Dispute Resolution Systems are a real and
effective alternative to ordinary justice.

As alternative conflict resolution systems, two large groups can be distinguished; on the one
hand, the heterocomposive systems (being necessary in these a third person to put an end to
the conflict), and the autocompositive systems (the people themselves involved are those who
will voluntarily reach an agreement). ADR encompasses a private system de- signed to solve
controversial issues related to commercial relations outside the judicial system, characterized
by being speedy, professional, neutral, impartial and confidential.

The European Union launched the European Directive 2008/52/EC, of the European Parliament
and the Council, of 21 May, on certain aspects of mediation in civil and commercial matters, to
boost a trend towards the “extrajudicialization” of dispute resolution. The arbitration was
given reception by the Spanish legal system in the Law 60/2003, of 23 December.

Mediation was given reception by the Spanish legal system in the Law 5/2012, 6th of july,
about mediation in civil and commercial matters.

The Government, on the proposal of the Minister of Justice, approved on last January 11th, the
Draft Law on the Promotion of Mediation. With this new rule, still not in force, the final
implementation of mediation is intended as a complementary figure of the Administration of
Justice for the extrajudicial resolution of conflicts in the civil and commercial fields in a more
agile way and with a lower economic and personal cost for the parties.

The tourist arbitration: Arbitration is a free and extrajudicial procedure that the public
administration makes available to consumers and businessmen to resolve their consumer
disputes. It begins at the moment in which a user requests an arbitration with a company
under the consideration that the company has violated his rights.

If the request for arbitration of a consumer is related to the tourism activity, the resolution is
granted to Colegio Arbitral de Consumo, where the conflict can be solved with greater
knowledge and the necessary technical quality.

TOPIC 2 (I): The tourist entrepreneur. Commercial legal system

I.Concept of businessman in the mercantile legislation
First, some general concepts:

Economic definition of enterprise: Organized assemblage of capital and work focused in the
manufacturing or distributing goods or services.

Instrumental organization: Legal definition of enterprise: In commercial law, enterprise refers

to the single legal personality of each company or corporation. The enterprise, actually, results
from the creative and managing activity carried out by the entrepreneur: is an instrument
through which the entrepreneur achieves his/her goals.

Legal definition of entrepreneur: The Commercial Code contains the legal concept of
entrepreneur in its art. 1.1, referring Those who, having the legal capacity to engage in
business, do so on an ongoing basis.
So, from a legal perspective, what we need to be an entrepreneur is:

a) Legal personality: Person and personality, for the purposes of the legal system, refer to the
capacity of being subject to rights and duties. The entrepreneur has legal personality, as a
company (legal persona) o as a natural person.

An entrepreneur may be a natural person or a legal person.

 The natural person entails the legal acknowledgment of a natural reality.
 Legal person is created by the legal system to treat a collective phenomena.

This division between natural and legal person implies organizational duality of ways to
manage/run a business represented by, on the one hand, the sole traders, and on the other
hand, the corporations or companies.

Regarding the business companies, according the Article 122 CCom: As a general rule, business
companies shall be incorporated by adopting one of the following forms: 1º. General
partnership (regular colectiva), 2º. Limited or limited liability partnership (comanditaria simple
o por acciones), 3º. Public limited company; (Sociedad Anónima), 4º. Private Limited
Company”.(Limitada)

II. Characterizing notes: A) Legal capacity. B) Organizational activity. C) Professional

activity. D) Acting on own behalf
A) Legal capacity

According to art. 4 C Com, can be sole traders or a businessmen, those who are of legal age
and have free disposal of their assets (goods).

As per art. 315 Civil Code, legal age begins upon turning eighteen. Notwithstanding, art 5 C
Com. establishes an exception to the general rule, allowing minors to continue a business
inherited from a deceased person, through their tutors.

B) C) Organizational activity and Professional activity: Effective regular practice of business

An effective and regular practice of business activities is secondly required in order to become
a sole trader for the purposes of the Spanish Code of Commerce. According Art. 3 Code of
Commerce: There shall be the legal presumption of regular exercise of commerce when the
person intending to engage in business announces this by means of circulars, in the
newspapers, on posters, signs displayed to the public, or by any other means, an
establishment that has any business transaction as the object thereof.

THIS legal provision refers, with such requirement, to the present meaning of a professional
organization of business activity by combining efficient and orderly work and capital in order to
provide goods and service to the market.

D) To act on his/her own behalf

A third requirement (not mentioned by law but shaped by case law) must be added to the legal
definition: a sole trader has to act on his/her own behalf.

III. Classes of Entrepreneur. Individual entrepreneurs and social entrepreneurs

The individual entrepreneur is any natural person of a private nature who acts on his own
behalf or through others and performs a commercial, industrial or service activity in the
market.

The social entrepreneur arises when two or more people agree to put together money, goods
or work to exploit a commercial or industrial economic activity, in order to distribute among
themselves the profits they obtain.

For this purpose, they constitute a legal entity that will have the form of social entrepreneur.

The social entrepreneur can take various forms, that can be grouped within the so-called
personalist societies (for example, the collective society, the simple limited partnership or the
association of participatory accounts) or capitalists (such as the public limited company, the
company limited liability or limited partnership for shares).

Topic 2 (II): Responsibilities of the entrepreneur

Civil liability of the employer
GENERAL PRINCIPLES

UNIVERSAL PATRIMONIAL LIABILITY: A sole trader, as natural person, assumes unlimited

responsibility for acts when carrying out the business (art. 1911 CC, “The debtor is liable for
the performance of his obligations with all present and future property”).

By its virtue, every debtor, and therefore any entrepreneur, must be responsible for complying
with legal, contractual, quasi-contractual or extra-contractual obligations (art. 1,089 CC) with
all their present and future assets.

This principle, named “universal patrimonial responsibility of any debtor” must be qualified:
 On the one hand, because there are goods and rights that are unattachable, being subtracted
from any enforcement procedure.
 And on the other hand, because the employer's responsibility can be limited, either through
the corporate structures allowed in current legislation, or through the limitations of liability to
which the individual entrepreneur can benefit.

PARTICULAR CASES

1.- Partnership (sociedades personalistas): The partner has unlimited liability with the
company on a subsidiary basis. Unlimited liability (Article 127 Commercial Code): the
responsibility of all the partners in a general partnership, shall be bound both personally and
jointly and severally, with all their belongings, to the result of the operations on behalf of the
company.

On a subsidiary basis (Article 237 Ccom), the personal assets of the partners are responsible
only in case of lack of company assets to accomplish all the debts and patrimonial
commitments.

2.- Corporations: Shareholder in corporation has limited liability. Article 1 LSC. The capital in joint
stock companies, which shall be divided into shares, shall comprise the contributions made by all
shareholders, who shall not be held personally liable for company debt.
3.- Sole Proprietorship: A company formed by a single partner, be it a natural or legal person,
owner of all the shares or participations in which the share capital is divided. Art. 12 LSC
(1/2010, de 2 de Julio):

There are two classes of sole proprietorships (sociedad unipersonal: the one that belongs to
only one person, natural or legal), the one constituted by a single partner, whether a natural
or legal person (original sole proprietorship, in which there is only one partner from the
moment of its constitution), and the one constituted by two or more partners when all the
shares have become the property of a single partner (an unipersonality, initially constituted by
two or more partners, whose capital becomes the property of a single partner).

In the case of a sole proprietorship, when a partner acquires all the shares or shares, this
circumstance must be recorded in the Mercantile Registry during the next 6 monts from the
new status of sole proprietorship.

In the event that six months have elapsed without the registration the sole partner shall
respond personally, jointly and unlimitedly to all debts acquired in that period. Therefore,
the personal responsibility of the sole partner only exists when it fails to accomplish with the
compulsory registry.

4.- Jurisprudence: Lifting the corporate veil: The separation that occurs in capital companies,
including the sole proprietorship (duly registered, as indicated), between the assets of the
company and the personal assets of its members, usually generates more than is desirable, a
fraudulent or illegal use of the "limitation of liability".

Thanks to the doctrine of the lifting of the veil, it is made to respond in certain cases of the
debts of the company to those who have responsibility for administration or participation in
their capital, and use the limitation of liability to defraud or harm third parties. This doctrine
is a jurisprudential product of Anglo-Saxon origin that seeks to dispense with the form of the
legal person to reach the underlying interests in it, to the natural persons who form it and who
act in it.

The first application of the doctrine of the lifting of the veil in Spain occurs in the Supreme
Court Judgment of May 28, 1984, which empowers judges to deepen the societies or entities
with legal personality with which they can be endangered or harm private or public
interests, or those that are an instrument to commit fraud.

The objective is to prevent creating and using a legal entity for illicit purposes focused in
avoiding the principle of universal patrimonial responsibility, or other different
responsibilities, such as for example fiscal or harming the interests of third parties.

5.- Law 14/2013, of September 27, on support for entrepreneurs and their
internationalization (LAEI) introduces the figure of the limited liability entrepreneur.

Law 14/2013 allows any individual entrepreneur to limit his responsibility for third parties,
excluding his habitual house of responsibility against the debts with origin in his business or
professional activity.

Therefore, it would be a question of creating a patrimony that does not affect the exercise of
commerce, constituted by the habitual residence of the debtor.
The requirements of the LAEI establish the liability limitation are:
 being a natural person of legal age and with free disposition of their property,
 the value of the habitual residence cannot exceed 300,000 euros, valued according to to the
provisions of the tax base of the Tax on Patrimonial Transmissions and Documented Legal Acts
at the time of the registration of the limitation of liability in the Mercantile Registry,
 the debts come from the business activity,
 the liability limitation (”exempt habitual residence”) must be recorded in the Real Estate
Registry.

TYPES OF LIABILITY REGARDING ITS ORIGIN:

Contractual liability: Article 1101, persons who, in the performance of their obligations, are
guilty of willful misconduct, negligence or default, and those who in any way contravene the
content of the obligation, shall be subject to compensation for any damages caused.

Tort or extra contractual liability: Article 1902 CC, the person who, as a result of an action or
omission, causes damage to another by his fault or negligence shall be obliged to repair the
damaged caused.

CIVIL LIABILITY FOR DEFECTIVE GOODS OR SERVICES

This liability is provided for Act 1/2007 (LGDCU), and includes personal injury, including death,
and property damages, provided that they affect goods or services objectively intended for
private use or consumption (Art. 129 LGDCU).

Art. 130 LGDCU declares the ineffectiveness of any exemption or limitation clause of the
responsibility.

It is a quasi-objective and also joint and several liability in the event that a plurality of
responsible parties concur. The one who had responded to the injured party will have the right
to repeat in front of the other responsible parties, according to their participation in the cause
of the damage.

The action of which he would have paid the compensation against all others responsible for
the damage will prescribe within one year, from the day of payment.

It is considered a product "any movable property, even when it is attached or incorporated to

another movable or immovable property, as well as gas and electricity" (Art. 136 LGDCU), and
by defective product, it is understood as " that does not offer the security that could
legitimately be expected, taking into account all the circumstances and, especially, its
presentation, the reasonably foreseeable use thereof and the moment of its circulation. "

In any case, a product is defective if it does not offer the security normally offered by the other
copies of the same series.

A product may not be considered defective for the sole reason that such product is
subsequently put into circulation in a more perfected way or manner.

Regarding producers liability, on a regular basis, producers shall be liable for damages caused
by defects in the products that they manufacture or import. Legal concept of producer shall
include the manufacturers or importers into the European Union of finished products, any
components that are built into a finished product or raw materials.
Producers’ liability can be released if it they can prove:
 They did not put the product into circulation.
 The defect did not exist when they put the product into circulation.
 The product was not manufactured for sale.
 The defect is due to the fact that the product was made in accordance with existing mandatory
rules.
 The existence of the defect could not be perceived.

The producer of a built-in part of a finished product shall not be held liable if it can be proved
that the defect is attributable to the design of the product.

Injured parties shall have to prove the defect, the damage and the causal relationship
between the damage and its origin.

The action to repair the damages prescribes (finishes) after three years from the date on which
the injured party suffered the damage, provided the person responsible for the damage is well
known.

Topic 2 (III): Representation, establishment and obligations

Representation
Business activity implies an organizational activity: the entrepreneur organizes the work of a
group of people who, under their dependence, seek to produce the goods or services object of
the business activity.

In addition to the dependency relationships established between employer and workers,

there are another’s especially relevant to commercial law: the one´s established with certain
people chosen by the employer that allows to the representative to make statements or sign
agreements on behalf of the employer himself.

The commercial representation is the relationship established between the entrepreneur with
another (natural or legal) person (named representative), whose virtue, the representative
has, by the power granted, the necessary capacity to link the entrepreneur with third parties,
so that it will be the employer directly or indirectly responsible for the commitments made and
the relations established by the representative with third parties.

Representation can be legal, organic and voluntary.

In cases of legal representation, the source of the representative relationship is the law,
normally based on the incapacity or limitation in the ability to act on a subject, derived from
his or her minority or disability.

The organic representation applies in companies that need to use the administrative body to
be able to interact with third parties.

Finally, the voluntary representation is one in which the interested party freely designates
another person (proxy or representative) to act for him in the market.

The commercial establishment

The commercial establishment is the set of material, intangible and personal elements,
organized by the entrepreneur for the development of his business activity. This set of assets
creates a unit under economic reasons.

Establishment and company or corporations are not always equivalent terms, the company
can be a set of several establishments.

The establishments can be classified according to different criteria. Depending on its purpose,
there may be commercial, industrial or service establishments. If its main or secondary
character is considered, a distinction is made between the main establishment and the
branch. The main coincides with the professional address of the entrepreneur. Meanwhile, the
branch is an establishment that has the permanent representation of the Company.

The elements that can be part of the establishment are diverse, being able to include movable
and Real Estate property, rights (industrial property), goodwill, etc. Goodwill (fondo de
comercio) is an additional intangible value linked to factors such as customers, efficiency,
organization, credit, prestige, experience, etc., which allow the entrepreneur to obtain
profitability higher than expected by the simple sum of its accounting assets.

The accounting of entrepreneurs

Originally, accounting books were kept voluntarily by traders in order to know the status of
their business. Nowadays, keeping and fulfilling accounting books have become a legal
obligation. Its mission is the protection of different interests:
 The employer himself, who is the first to be interested in perform an orderly economic
management.
 The creditors, who need to know whether their claims will be satisfied, especially in the case of
limited liability companies.
 The partners, who need to know the financial position of the entrepreneurs to know the status
of your investment and benefits produced.
 The workers, who need to know the financial position employers.
 Public Administration, which requires knowing the situation patrimonial employers to lay and
collect taxes, compiled and be responsible for the smooth running of the national economy.
 Investors, who need to know the financial position of entrepreneurs to realize their investment
security.

GENERAL PRINCIPLES
Mandate to keep orderly account (art. 25 C Com)

All businesses must keep orderly accounts, in keeping with the activity of their business
activities that allows chronological monitoring of all their operations, as well as periodic
preparation of balance sheets and inventories. Notwithstanding the terms set forth in the
laws or special provisions, an inventories and annual accounts book and another daybook
must necessarily be kept.

Accountancy must be ordered, which subsequently required to impose the chronological

track of all the transactions and regular production and inventory balances and must be
appropriate to the activity of the enterprise, this implies although there are no differences in
the obligation to company accounts for their circumstances, if any, as to its contents, which
differ depending on the size or activity.
Companies:
 must also keep one or more “minutes books” (libro de actas) in which all the resolutions
adopted by the annual and special shareholders’ meetings and other associated bodies of the
company must be recorded.
 “Register book of nominative shares” (libro de acciones nominativas) in public limited
companies and share partnerships
 “Register book of shareholders” (libro de accionistas) of Private Limited Companies,

Bookkeeping requirements:
Formalities (Art, 29 C Com.).

All the accounting books and documents must be kept:

 with clarity, by order of dates, without blank spaces, interpolations, crossings out or erasures.
 As soon as errors or omissions suffered in the accounting annotations are noticed, they shall be
noted.
 No abbreviations or symbols whose meaning is not clear according to the Law, the Regulations
or generally applicable business practice may be used.

Legalization (Art. 27 Ccom).

 Businesspersons shall present the accountancy books they are obliged to keep at the Business
Registry of the place where they have their registered office, so that prior to their use, the
relevant certification required for the book may be placed on the first page, and the stamp of
the Registry on each sheet
 However, performance of entries and annotations by any appropriate certification on the loose
sheets that must later be bound to form the mandatory books shall be considered valid, these
being legalised before four months have elapsed from the business year end date.
 The same shall apply to the register book of nominative shares of public limited companies and
share partnerships and the register book of shareholders of Private Limited Companies, which
may be kept by computer means, according to the terms of the regulations.

Conservation (Art. 30 C Com)

Six years

Traders shall keep the books, correspondence, documentation and receipts related to their
business, duly ordered, for six years, as of the last entry made in the books, notwithstanding
what is established in the general or special provisions.

Should the trader cease in his activities, this shall not exonerate him of the duty referred to in
the preceding paragraph, and if deceased, this shall befall his heirs.

In the event of dissolution of companies, the liquidators shall be bound to fulfill the terms of
that paragraph.

CUESTIONS TO KEEP IN MIND

Consequences of violating the above obligations: Although there is no direct sanction for its
violations, there can be some indirect consequences under Art. 164.2 LC- if the work piece of
qualifying is opened will be treat as guilty-.

The value as evidence of the traders’ books and other accounting documents shall be
appreciated by the Courts according to the general rules of law.
The accounts of traders are secret. BUT in case of notification or general inspection of the
books, correspondence and other documents of traders may only be decreed, ex officio, or at
the instance of a party, in cases of universal succession, temporary receivership,
bankruptcies, liquidations of companies or business entities, redundancy proceedings, and
when the partners or legal representatives of the workers are entitled to examine these
directly. In any event, outside the cases set in the preceding paragraph, production of the
books and documents of traders at the instance of the party or ex officio may be decreed,
when the person to whom they belong has an interest or liability in the matter. The inspection
shall be limited exclusively to the points that are related to the matter concerned.

Annual accounts: ARE a comprehensive report on a company´s activities. Annual reports are
intended to give information about the entrepreneurial activities and financial performance.

The annual accounts must be drafted clearly and provide a true image of the assets, financial
situation and results of the company, pursuant to the legal provisions.

Components:
 Balance sheet (balance):
 The profit and loss account (pérdidas y ganancias):
 Annual report, or notes to the financial statements (memoria).
 Statement reflecting the changes in net assets or equity. (estado de cambios en patrimonio
neto) Cash flow statement (flujos de efectivo).

Principles of accountancy
1. GOING CONCERN, EMPRESA EN FUNCIONAMIENTO: A term for a company that has the resources
needed in order to continue to operate indefinitely. If a company is not a going concern, it means
has gone bankrupt. This refers to a company's ability to make enough money to stay afloat or avoid
bankruptcy.
2. ACCRUAL, DEVENGO: An accounting method that measures the performance and position of a
company by recognizing economic events regardless of when cash transactions occur.
3. ACQUISITION PRICE OF HISTORICAL COST: From an accountant's point of view, the term "cost"
refers to the amount spent (cash or the cash equivalent) when an item was originally obtained,
whether that purchase happened last year or thirty years ago. For this reason, the amounts shown
on financial statements are referred to as historical cost amounts.
4. PRUDENCE: If a situation arises where there are two acceptable alternatives for reporting an item,
conservatism directs the accountant to choose the alternative that will result in less net income
and/or less asset amount. Conservatism helps the accountant to "break a tie." It does not direct
accountants to be conservative.
5. MATERIALITY: An accountant might be allowed to violate another accounting principle if an
amount is insignificant. Professional judgement is needed to decide whether an amount is
insignificant or immaterial.

The Commercial Registry

The purpose of the COMMERCIAL Registry is the inscription of entrepreneur and some of their
activity, to legalize corporate books, the deposit and publicity of accounting documents and,
any other functions they are attributed by the Law ( ie: appointment of auditors).

The Business Registry shall have its seat in the capitals of provinces and in the towns where,
due to needs of the service, it is established according to the legal provisions in force.
A Central Business Registry shall also be established in Madrid. The functions of the Central
Registry are:
 Merely for informative purposes, the basic function of the Central Registry is to collect data
entries made in the various territorial Records.
 It is responsible for publishing the BORME.
 Keeping the Register relating to companies and entities that transferred their residence abroad
without loss of nationality Spanish.
 Keeping of section names. The name is component identification system enabling companies
differentiate one company from another. To be able to meet this objective efficiently the
company name must be unique. Is created for it in the Central business register of a section of
denominations, in which integrate the names of the companies and entities and designations
on whose use temporary reservation exists.

The commercial register has gradually expanded its scope of subjective application. Currently
the law allowed the registration of different types of entrepreneur, thus, they are registrable
subjects:
1. º Sole traders;
2. º Business companies;
3. º Lending and insurance companies, as well as reciprocal guarantee companies
4. º Collective investment institutions and pension funds;
5. º Any individuals or corporations, when so provided by law;
6. º Economic interest groupings;
7. º Civil Professional Companies incorporated subject to the requirements established in the
specific legislation for Professional Companies;

Objective applications: the purpose of the Business Registry is inscription of: 8.º The acts and
contracts established by law.
- The Business Registry is public.
- This publicity shall be made effective by:
 certification of the content of the entries issued by the Registrars. The certification shall be the
only means to provide authentic accreditation of the content of the entries at the Registry.
 or by simple informative note or copy of the entries and the documents deposited at the
Registry.
- Telematic publicity of the content of the Business Registries and Registries of Moveable
Assets shall be performed according to the principles set forth in the law.
- The content of the Registry is assumed to be exact and valid.
- -The entries of the Registry are under the safekeeping of the Courts and shall take their
effects while no registration of judicial declaration of their inexactness or nullity is
registered
- Registration does not endorse acts or contracts that are null pursuant to the Laws.
- The statement of inexactness or nullity shall not affect the rights of third parties in good
faith, legally acquired.

The tourist entrepreneur

The tourist entrepreneur, like any other entrepreneur, can be both an individual entrepreneur
and a social entrepreneur.

The main requirements that the administrative law imposes on the tourist entrepreneur in
general, are the following:
  legally required mandatory insurance, with the minimum coverage established by
regulation for each modality or tourist service,
 tourist establishments must have infrastructure, safety and quality requirements of the
services provided. The requirements depend on the type, group, modality and category of
service provided. They must also comply with the rules on accessibility to them of persons
with disabilities (regulations for the promotion of accessibility and removal of architectural
barriers),
 The prices of public services will be free, but they must be communicated or displayed to
the public in a visible place and legibly in the establishment itself and in its advertising.

Tourism intermediaries and especially travel agencies are subject to special requirements
regarding their constitution and activity. In particular:
 submit a responsible statement before the start of the activity stating that they meet the
requirements required to carry out the activity they carry out
 register in the Register of tourist companies
 keep the official complaints and claims book
 sign a civil liability insurance with which to strengthen the development of its activity
 register their distinctive signs in the Spanish Patent and Trademark Office
 have (with exceptions) an establishment open to the public and identified as a travel agency
 meet certain specific requirements if they have the status of “virtual” travel agencies.

TOPIC 3: Competition law and illegal advertising

Competition or Antitrust Law.- Legal framework: European and Spanish Laws
European
 Council Regulation (CE) No. 139/2004, of 20 January 2004, on the control of concentrations
between undertakings
 Restrictive competition conduct focused on the Council Regulation (CE) No. 1/2003, of 16
December 2002, on the implementation of the rules on competition laid down in Articles 81
and 82 of the Treaty

Spanish
 Art. 38 Spanish Constitution: GUARANTEES THE FREEDOM OF ENTREPRISE within the
framework of a market economy, ACCORDING with the NEEDS AND DEMANDINGS of the
economy
 COMPETITION ACT 15/2007 of 3rd July
 The Act 29/2009 rules the unfair competition regime in Spain

Objectives of antitrust regulation

To have a system that, without intervening unnecessarily in the free business decision-making, allows
and guarantee the good functioning of market processes.

To strengthen special mechanisms and provide them with the instruments and the optimum
institutional structure, to protect effective competition in the markets.

FORBIDDEN CONDUCTS UNDER COMPETITION LAW

1. Collusive conducts (Art. 1 ACT 15/2007): All agreements, collective decisions or

recommendations, or concerted or consciously parallel practices are prohibited, which
have (as their object), produce or may produce the effect of prevention, restriction or
 distortion of competition in all or part of the national market and, in particular, those
which consist of:
a) The direct or indirect fixing of prices or any other trading or service conditions.
b) The limitation or control of production, distribution, technical development or
investment.
c) The share-out of the market or sources of supply.
d) The application, in trading or service relationships, of dissimilar conditions to
equivalent transactions, thereby placing some competitors at a disadvantage
compared with others.
e) The subordination of the conclusion of contracts to acceptance of supplementary
obligations which, by their nature or according to commercial usage, have no
connection with the subject of these contracts.

The Law establishes some exceptions to the application of this prohibition, by virtue of:
- The beneficial nature of the practice (it will not apply to agreements that contribute to
improving the production or marketing and distribution of goods and services or to promoting
technical or economic progress).
- The existence of community authorization (for those agreements that comply with the
provisions established in the Community Regulations).
- And it provides for the possibility of the Government authorizing categories of specific acts.

2. Abuse of a dominant position:

 Any abuse by one or more undertakings of their dominant position in all or part of the national
market is prohibited.
 The abuse may, in particular, consist in:
a. The direct or indirect imposition of prices or other unfair trading or services
conditions.
b. The limitation of production, distribution or technical development to the unjustified
prejudice of undertakings or consumers.
c. The unjustified refusal to satisfy the demands of purchase of products or provision of
services.
d. The application, in trading or service relationships, of dissimilar conditions to
equivalent transactions, thereby placing some competitors at a disadvantage
compared with others.
e. The subordination of the conclusion of contracts to acceptance of supplementary
obligations which, by their nature or according to commercial usage, have no
connection with the subject of these contracts.

National Market Competition Commission: role

The National Markets and Competition Commission is a Public Law institution with its own
legal personality and full public and private capacity, attached to the Ministry of Economy and
Finance.

The National Competition Commission is responsible for preserving, guaranteeing and

promoting the existence of effective competition in national markets, and for ensuring the
coherent application of this Act by exercising the functions attributed to it in this Act.

UNFAIR COMPETITION
The unfair competition law can be defined as the set of legal rules that aim at determining
unfair acts and repression of them. The Act 29/2009 rules the unfair competition regime in
Spain.
The object of this Act is the protection of competition for the benefit of all those who
participate in the market and, to this end, it prohibits acts of unfair competition, including
unlawful advertising in the terms laid down in the General Advertising Act.

Extends to consumers the protection once afforded only to business, and its general clause
expands the range of conduct constituting unfair competitive practices, while at the same time
amending procedural questions, promoting codes of conduct, and clarifying what had formerly
been a source of confusion: the statute of limitations for claims of unfair competition.

Intellectual property can often be protected via unfair competition legislation.

Definition of unfair competition.

In relations between businesses or professionals and consumers, there are two requirements
for behavior to be deemed unfair:
- Behavior of the business or professional to be contrary to professional diligence (in breach of
professional diligence), and
- capable of significantly distorting the economic behavior of the average consumer. Whereas
the economic behaviour of consumers or users shall mean any decision taken by the latter to
act or refrain from acting having regard to:
a. The selection of an offer orofferor.
b. The engagement of a good or service and, if relevant, the way in which and
under what conditions it is engaged.
c. Payment of the price, total or partial, or any other form of payment.
d. The conservation of the good or service.
e. The exercise of contractual rights having regard to goods and services.

Scope of application
- The law of unfair competition is primarily comprised of torts that cause an economic injury to a
business through a deceptive or wrongful business practice.
- The law protects competing freedom of enterprise, and its limits are marked by loyalty.
Accordingly the law defines as unfair “any conduct objectively contrary to the demands of good
faith and fair dealing”.
- There must be two basic elements in determining that conflict:
 on the one hand that the conduct of an entrepreneur or professional must be contrary to
professional diligence, understood here as honest market practices for their evaluation and,
 on the other hand, for such conduct to “significantly or potentially distort the economic
behavior of the average consumer or an average member of the group targeted by the practice,
if a commercial practice is addressed to a specific consumer group”, in this case applying the
notion of ‘average consumer’ established by the European Community Court of Justice.
- Creates an unitary framework relative to the unfairness of aggressive and deceptive acts,
irrespective of whether aimed at a consumer or at an entrepreneur so that, in both cases, the
same level of correction is demanded, superseding “the traditional distinction between unfair
acts and the regulation of illicit unfair or deceptive advertising”.

Practices amounting to unfair competition: Unfair competition torts include:

- Acts of confusion, (art. 6 LCD) (Actos confusion).
- Misleading acts (acts of deception) and omissions (art. 5,7 LCD).(Actos de engaño, omisiones
engañosas)
- Aggressive acts (art. 8 LCD).(Practicas agresivas)
- Acts of denigration (art. 9 LCD).(Actos de denigracion)
 - Comparison (art. 10 LCD) .(Actos de comparacion)
- Imitation (art. 11 LCD).(Actos de imitacion)
- Exploitation of a third party’s reputation (art. 12 LCD).(Explotacion de la reputacion ajena)
- Violation of trade secrets (art. 13 LCD).(Violacion de secretos)
- Incitement to breach of contract (art. 14 LCD). (Induccion a la infraccion contratual)
- -Infringement of laws (art.15 LDC)(Infracción de normas)
- Discrimination and economic dependence (art. 16 LCD)(Discriminacion y dependencia
economica)
- Selling at a loss (art. 17 LCD). (Venta a pérdida)

Practices involving consumer or users, without prejudice to the General Consumer and User
Protection Act and other supplementary laws, only practices identified in the Unfair
Competition Act shall be considered unfair commercial practices to consumers and users:
- Misleading practices causing confusion among consumers (art. 20) (Prácticas engañosas por
confusion para consumidores)
- Misleading practices concerning codes of conduct or other quality marks (art. 21).(Prácticas
engañosas sobre código de conducta y otros distintivos de calidad)
- Bait advertising and misleading promotional practices (art. 22). )Prácticas señuelo y prácticas
promocionales engañosas).
- Misleading practices relating to the nature and properties of goods or services, their availability
and after-sales services (art. 23). (Practicas engañosas sobre la naturaleza y propiedades de los
bienes o servicios, su disponibilidad y los servicios posventa).
- Pyramid sales practices (art. 24). Prácticas de venta piramidal
- Misleading practices creating confusion (art. 25). Prácticas engañosas por confusión.
- Covert commercial practices (art. 26) Prácticas comerciales encubiertas.
- Other misleading practices (art. 27). Otras prácticas engañosas
- Aggressive practices using coercion (art. 28). Prácticas agresivas por coacción.
- Aggressive practices using harassment (art. 29) Prácticas agresivas por acoso
- Aggressive practices and minors (art. 30) Prácticas agresivas en relación con los menores.
- Other aggressive practices (art. 31). Otras prácticas agresivas

Actions against unfair practices

The following actions may be taken against acts of unfair competition, including unlawful
advertising:
- Declaratory action for bad faith. (accion declarativa)
- Injunction against the unfair conduct or prohibition of its continued practice. An injunction may
also be brought to forestall the practice before it occurs. The cessation of the unfair conduct:
includes actions for the cessation of unfair practices detrimental to the financial interests of
consumers and action against breach of Codes of Conduct mentioned above.(Accion de
cesacion y prohibición)
- Action to counter the effect produced by the unfair practice.(accion de remocion)
- Action to rectify misleading, incorrect or false information.(accion de rectificacion)
- Action to compensate damages sustained though unfair practice in the event of fraud or fault
on the part of the agent.(accion resarcimiento de daños)
- Action against unjust enrichment, which shall only apply when the unfair practice prejudices a
legal position protected by an exclusive right or some other of similar economic content.
(Accion enriquecimiento injusto)

TOPIC 4: DISTINCTIVE SIGNS OF THE BUSINESSMAN

FIRST, SOME BASIC NOTIONS
Intellectual property (copyright) in general, refers to creations of the mind, covers literary
works (such as novels, poems and plays), films, music, artistic works (e.g., drawings, paintings,
photographs and sculptures) and architectural design. Rights related to copyright include those
of performing artists in their performances, producers of phonograms in their recordings, and
broadcasters in their radio and television programs.

Industrial Property includes “patents” for inventions, “trademarks”, “industrial designs” and
“geographical indications”.

INDUSTRIAL PROPERTY LEGAL FRAMEWORK

- Patents: Ley 24/2015, de 24 de julio, de Patentes.
- -Law 11/1986 of March 20 on Patents and ancillary - regulations: Royal Decree 2245/1986 of
October 10, 1986.
- Trademarks: Law 17/2001 of December 7 on Trademarks and ancillary regulations: Royal
Decree 687/2002 of July 12.
- Industrial designs: Law 20/2003 of July 7 on Industrial Designs.
- Paris Convention for the Protection of Industrial Property, 1887
- Agreement Establishing the World Trade Organization (“WTO”) 1994.
- Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS Agreement).

Why promote and protect industrial property?

- First, BECAUSE OF the economic development.
- Second, in order to encourage the commitment of additional resources for further innovation.
- Third, based on the spurs economic growth, that creates new jobs and industries.
- And finally, because the industrial property rights reward creativity which fuel the progress of
economy.

Trade Marks
Trade Mark: any sign able to be represented graphically and used to distinguish in the market
the goods or services of one company from those of other companies. So,

As a concept, it is a sign eligible with a graphic representation.

Regarding its function, the trade mark allows to distinguish in the marketplace the goods or
services of one person or company, from identical or similar goods or services of another one
(person/company).

Trade Mark: Classification criteria

Depending on the sign,

(a) denominative (words or combined words), (b) graphic or emblematic (images, shapes,
symbols or graphics), (c) mixed (combining denominative and graphic signs), (d)
threedimensional (packaging, shape or appearance of a product), (e) sounds, and (f) any
combination of the above.

Depending on their function,

a) a) products or services, b) derivative (when there is a minor variation of another registered

trademark), c) collective (distinguishing in the marketplace products or services produced or
rendered either by the association of owners of the trademark itself, or by each of its
members), and d) warranty (certifying the common characteristics -source, quality and
composition- of products and services produced or rendered by people duly authorized and
controlled by the trademark owner: (Art. 68 LM)

Subjective requirements to obtain a trademark

i. Subjective requirements. Trademarks may be granted to both natural persons
and legal entities,
ii. with Spanish nationality, or
iii. with other nationalities, provided that such foreign persons or entities
1. ordinarily reside or have a fixed and operative industrial or
commercial establishment in Spain,
2. Are under the protection of the Paris Convention for the Protection
of Industrial Property,
3. are nationals of a WTO (Organización Mundial del Comercio)
member state, or
4. are nationals of a state which allows Spanish natural persons or legal
5. entities to be granted equivalent titles (Principio de reciprocidad).

Acquisition of the right upon a trade mark

- Valid registration in the Spanish Trademarks and Patents Office.

Art. 2: “The right of ownership in a trademark and a trade name shall be acquired by means of valid
registration in accordance with the provisions of this Law”.

- Notorious signs or unregistered signs: Spanish trademark law recognizes and protects
trademarks which, although not registered in the Spanish Patents and Trademarks Office, are
“wellknown” in Spain, in accordance with the Paris Convention (art. 6bis). Users of such “well-
known” trademarks may apply to the courts to invalidate a trademark registered for identical
or similar goods that might cause confusion with the well-known trademark. (art. 34. 5 LM)

Registration prohibitions

Absolute
- are unable to distinguish products or services, or
- are contrary to the law, public policy or accepted principles of morality;
- may mislead the public, particularly as to the nature, quality, characteristics or geographical
origin of the goods or services;
- consist exclusively of signs or indications that are either generic or have become customary or
usual when referring to the goods or services in everyday language or in bona fide established
trade practice.

Relative
- are identical to prior registered trademarks or trade names (and the designated products or
services);
- may be confused with prior registered distinctive signs (the signs or the designated products
and services are identical or similar);
- may damage the reputation of well-known signs.
- reproduce, imitate or transform works protected under copyright or by any other intellectual
property right.

General overview of the procedure for the granting of trademark .

The trademark registration procedure is as follows:
 - Fill application,
- An exofficio examination,
- The trademark application is published in Spain’s Official Gazette on Intellectual Property, so
that third parties (interested in some way in the trademark) file their oppositions to the
registration,
- Ex-officio examination,
- The final decision to reject or grant the registration of the trademark is published in Spain’s
Official Gazette on Intellectual Property.

Content of the trade mark right and limits

 Rights Conferred by the Trademark

- -Exclusive right to its use.
- -In particular may prevent any third party from undertaking, inter alia, the following actions
without his consent:
- affixing the trademark to the goods,
- offering the goods, or marketing or stocking them for that purpose, or offering or rendering services to a
third party under the trademark,
- importing or exporting the goods with the sign,
- using the sign in telecommunication networks or as a domain name, or affixing the sign to the packages,
labels or other means of identification of the product or service…
 Limits
- Valid for a period of 10 years. It can renewed indefinitely for 10-year terms.
- Exhaustion of Trademark Rights: The right conferred by trademark registration shall not enable
the trademark owner to prohibit its use by third parties for goods marketed in the European
Economic Area with said trademark by the owner or with his consent.

Actions to be taken in case of breach, by the trademark owner

I. the cessation of the acts infringing his right,
II. compensation for the damage and loss sustained,
III. that the necessary measures be adopted to prevent the infringement continuing, such as the
removal of any material in which the infringing sign appears in any form and the seizure or
destruction of the means principally used to commit the infringement,
IV. the destruction of the products or their assignment for humanitarian purposes, at the owner’s
choice and at the expense of the culpable party,
V. the assignment to the trademark owner of the products, materials and means seized by virtue
of the previsions of section (iii) above, and
VI. the publication of the decision at the expense of the culpable party, through announcements
and notifications to the persons concerned.

The Trademark as the Subject Matter of Property Rights

- A trademark or application therefor may belong pro indiviso (“joint ownership”) to two or more
Persons. Trademark applications and trademark registrations may be pledged or be the subject
of other real rights. If a trademark is mortgaged, the Spanish Patents and Trademarks Office
must be notified
- Transfer: The transfer of an enterprise as a whole shall entail the transfer of the enterprise’s
trademarks, unless agreed otherwise or where this is clear from the circumstances of the case.
- Licensing: Both an application and a trademark may be licensed for all or some of the goods
and services for which the trademark is registered and for all or part of Spanish territory. The
licenses may be exclusive or non-exclusive.

Transfers and licenses must be set out in writing and duly recorded in the Spanish Patents and
Trademark Office if they are to be enforced against third parties.
Lapse of a trademark (caducidad)

A trademark shall be declared lapsed and the registration thereof cancelled in case it:
a) has not been renewed;
b) has been withdrawn by its owner;
c) has not been used;
d) has become into the usual designation of a good or a service for which it is registered;
e) as a result of the use the trademark may mislead the public, and
f) no longer satisfies the requirements of Article 3 of the LM.

Other distinguishing signs (trade names and business signs):

Trade names: Sign that serves to identify a natural person or legal entity in the practice of its
business activity and distinguishes its activity from identical or similar ones.

In particular, the following may constitute trade names:

a) patronymic names, business names and the names of legal persons;
b) imaginary names;
c) names alluding to the subject matter of corporate activity;
d) anagrams and logotypes;
e) images, figures and drawings;
f) any combination of the signs mentioned non-limitatively in the preceding
g) subparagraphs.
- Rules relating to trademarks are applicable to trade names when they are not
incompatible with the inherent nature of trade names.
- Trade names may be registered at the Spanish Patent and Trademarks Office.
- The use of a trade name to distinguish goods or services to the detriment of a previous
trademark could be considered an infringement of the exclusive trademark right or an
act of unfair competition.

Other distinguishing signs (trade names an business signs):

Business signs: are the signs or names that serve to make a business known for the public and
to distinguish it from others which are focused in identical or similar activities. Before 2002,
business signs could be registered.

Under the transitional rules, the registration of a business sign may be renewed for a single
seven-year period by paying a renewal fee.

Business signs are excluded from the scope of the Spanish Trademark Law and are protected
by the general legal provisions on unfair competition.

Patents

A patent is an exclusive right granted for an invention – a product or process that provides a
new way of doing something, or that offers a new technical solution to a problem.

A patent provides patent owners with protection for their invention.

Protection is granted for a limited period of 20 years.

Patents provide incentives to individuals by recognizing their creativity and offering the
possibility of material reward for their marketable inventions.
Patents regulation: Ley 24/2015, de 24 de julio, de Patentes.

Obtaining a patent
Subjective requirements:

Patents may be granted to both natural persons and/or legal entities which are (i) of Spanish
nationality, or (ii) of another nationality provided that such foreign persons or entities:
a) ordinarily reside or have a specific and effective industrial or commercial establishment in
Spanish territory,
b) benefit from the Paris Convention for the Protection of Industrial Property, or
c) are nationals of a State which allows natural persons or legal entities of Spanish nationality to
be granted equivalent titles.

Patentability
Positive requirement. Inventions which are susceptible of industrial application, (aplicación
industrial) which are new (novedad) and which involve an inventive step (actividad inventiva)
shall be patentable.
I. New. An invention shall be considered to be new if it does not form part of the state of the art.
The state of the art shall be held to comprise everything made available to the public in Spain
or abroad by means of a written or oral description, by use, or by any other way, before the
date of filing of the patent application.
II. Inventive step. An invention shall be regarded as involving an inventive step when it does not
result from the state of the art in a manner obvious to a person skilled in the art.
III. Industrial application. An invention shall be regarded as susceptible of industrial application
when its object can be manufactured or used in any form of industry, including agriculture.

Negative requirement.

Shall not be regarded as inventions:

The following, in particular, shall not be regarded as inventions:

a) discoveries, scientific theories and mathematical methods;
b) literary or artistic works or any other esthetic creation, as well as scientific works;
c) schemes, rules and methods for performing mental acts, playing games or doing business and
programs for computers;
d) presentations of information.

Inventions that are not granted for patent:

The following may not be the subject matter of a patent:

a) inventions whose publication or working would be contrary to public order or morality (ie.
processes for cloning human beings; processes for modifying the germ line genetic identity of
human beings. (b) plant varieties coming under the protection of the Law of March 12, 1975, on
the Protection of Plant Varieties;
b) Plant varieties and animal breeds;
c) essentially biological processes for the production of plants or animals…..

Content and limits

Term: Patents have a fixed duration of 20 years. The patent takes effect from the date on
which its granting is published.
Effects: The patent gives its owner the right to prevent any third party who does not have his
consent (PRODUCT/METHOD/PRODUCT DIRECTLY OBTAINED BY PROCESS):
a) manufacturing, offering for sale, the commercial introduction or use of a product under patent
or importing or possession thereof for any of these purposes.
b) Using a method of the patent or offering of such use when the third party knows, or the
circumstances make clear that the use of the process is prohibited without the consent of the
patent.
c) offering for sale, the introduction in the market or use the product directly obtained by the
process of the patent or importing or possession of said product for any of these purposes.

Patents: Actions
The owner of a patent may bring the appropriate civil or criminal actions before the judicial
authorities against those who infringe his/her rights and may demand that those rights be
safeguarded.

In particular:
I. Termination or cessation (cesación) of the acts infringing its rights,
II. compensation (indemnizacion) for the damage and prejudicial consequences suffered,
III. seizure (embargo) of the objects produced or imported in breach of his rights, as well as any
means used exclusively for such production or for unlawfully carrying out the patented process,
IV. attribution of the ownership (transferencia titularidad) of the objects and the means seized,
V. adoption of the necessary (adopcion medidas) measures to prevent continued infringement of
the patent,
VI. publication of the judgment (publicacion de la sentencia) against the person infringing the
patent.

Patents: Ownership and Transfer

Contractual explotation rights: Both patent applications and patents may be the subject of
licenses covering the whole or part of the element constituting the exclusive right, for all or
part of the Spanish territory. Licenses may be exclusive or non-exclusive.

Licenses of right: They are full-fledged licenses resulting from a public offering of non-exclusive
contractual licenses, conducted by the patentee. If the holder of the patent offers ex-officio
licenses, declaring in writing to the Spanish Patent and Trademark Office is willing to authorize
the use of the invention to any interested party, as a licensee, will be reduced to half the
amount of annual patent fees accrued after receipt of the statement.

Compulsory licenses:The patentee is obliged to exploit the patented invention . Shall the
compulsory licensing of a patent determined when any of the following cases: a) No or
insufficient working of the patented invention, b) dependency of patents, or between patents
c) final administrative or judicial decision declared contrary to national or Community
legislation competition. d) existence of reasons of public interest for the award.e) Manufacture
of pharmaceutical products for export.

Utility Models
Utility models are a way to protect inventions that
i. are new,
ii. involve an inventive step, and
 iii. consist of conferring on an object a shape, structure or constitution which results in a
significant improvement in its use or manufacture.

With regard to utility models, like patents:

i. Is the body of existing knowledge in the particular field to be considered in order to determine
the novelty
ii. the inventive step requirement is less stringent than that required for patents: “very apparent
to one skilled in the art manner”
iii. The term of protection for utility models shall be ten years non-renewable, from the date of
filing of the application, and shall take effect from the publication of the mention of its grant in
the "Official Gazette of the Industrial property”.
iv. unless anybody opposes it, the procedure does not imply the drafting of the search report and
does not allow the previous examination of the requirements of utility model applications.

Industrial design
Regulated by Law 20/2003 of July 7 on Industrial Designs.

An industrial design refers to “the ornamental or aesthetic aspects of an article”.

A design may consist of three-dimensional features, such as the shape or surface of an article,
or two-dimensional features, such as patterns, lines or color.

Industrial designs are applied to a wide variety of industrial products and handicrafts: from
technical and medical instruments to watches, jewelry and other luxury items; from house
wares and electrical appliances to vehicles and architectural structures; from textile designs to
leisure goods.

To be protected under most national laws, an industrial design must be new or original and
nonfunctional. This means that an industrial design is primarily of an aesthetic nature, and any
technical features of the article to which it is applied are not protected by the design
registration.

Industrial designs are what make an article attractive and appealing; hence, they add to the
commercial value of a product and increase its marketability.