El Salvador’s New IP Law: What EU SMEs Need to Know

Gergana Dimitrova

IP expert at the Latin America IP SME Helpdesk

El Salvador has been undergoing a wave of transformative changes recently, capturing global attention with initiatives like adopting Bitcoin as legal tender and investing in technological innovation. On August 8, 2024, El Salvador took a significant step toward strengthening its IP framework by passing a new Intellectual Property Law, replacing outdated regulations from 1993. For small and medium-sized enterprises (SMEs) from the European Union (EU) looking to expand into Latin America, this new law offers exciting opportunities and some important considerations.

If your business is eyeing expansion into Latin America, this could be the perfect time to explore El Salvador's evolving market.

Why El Salvador’s New IP Law Matters for European SMEs

The new law, which consolidates previous regulations into a more streamlined legal framework, is designed to simplify IP protection, encourage innovation, and support economic development. For European SMEs, this is particularly important as it provides a clear, straightforward process for registering and managing IP in El Salvador, aligning with international standards.

Why does this matter to you? As an EU-based business, expanding into the Latin American market means navigating different regulatory landscapes. El Salvador's new IP law offers simplified procedures that reduce the bureaucracy and costs typically associated with protecting IP in foreign markets. This makes it easier and more affordable for SMEs to protect their innovations, trade marks, and copyrights in a region that’s ripe for business expansion.

Key Changes in the New Intellectual Property Law

El Salvador’s new IP law introduces several changes that aim to modernize and strengthen the country’s IP protection system. Here is a breakdown of the most important updates for SMEs:

1. Consolidation of Existing Laws

Previously, El Salvador's IP framework was governed by multiple regulations, including the "Law of Trademarks and Other Distinctive Signs" and the "Law of Intellectual Property." The new law consolidates these into a single legal framework, making it easier for businesses to understand and navigate the system.

2. Discount on Fees for Micro and Small Enterprises

A key benefit of the new IP law is its 50% discount on registration fees for micro and small enterprises. Under this provision, both individuals and legal entities classified as micro or small businesses, in accordance with special laws, are eligible for this fee reduction. This applies to the registration of trade marks, patents, and copyrights.

For businesses entering a new market, this cost-saving measure can allow more resources to be directed toward growth and expansion.

3. Expansion of Trade mark Protection

One of the most notable updates is the expansion of the types of non-traditional trade marks that could be registered, including taste and texture marks (learn more about non-traditional trademarks in Latin America). This is particularly relevant for businesses in sectors like food and beverages or cosmetics, where sensory attributes are a key part of the brand identity. Additionally, trade names and advertising signs must now be renewed every 10 years, similar to traditional trade marks. Businesses will also need to provide evidence of trade name use when submitting a renewal request.

4. Updates on Patent Protection

If your SME relies on innovation or product development, the new law offers both opportunities and restrictions. For example:

• Prohibition on new uses for existing patents: You can no longer patent a product or process for a new use if it is already patented. This closes a loophole some businesses exploited to extend patent protection.
• Bolar Exception: This provision allows third parties to use a patented product for research purposes without infringing on the patent and its definition is now expressly included in the law. It is particularly relevant for pharmaceutical companies that want to prepare for the launch of generic drugs.
• Extended protection for industrial designs: The protection period for industrial designs is extended from 10 years to 15 years, with renewal fees paid every five years.

5. Copyright and Related Rights

The new law includes provisions aimed at supporting SMEs:

• Fee discounts for small businesses: In addition to the fee discounts mentioned above, Collective Management Organizations must offer at least a 50% discount on their fees as well. 
• Unique user payment: If multiple copyrights or related rights are involved, SMEs will now make a single payment, which will be distributed among all rights holders. This reduces the administrative burden.
• Accessibility exceptions: The law introduces exceptions that benefit individuals with disabilities, ensuring that copyrighted works are accessible to those who may otherwise struggle to use them.

6. Intellectual Property in the Digital Environment

In today’s digital world, IP protection is more complex than ever. The new law takes this into account by introducing provisions to protect distinctive signs and domain names in digital environments. For example, if your SME includes a domain name in your trade mark application, you will need to provide documentation justifying the use of that domain.

Additionally, the law strengthens protections against cybersquatting—a growing problem in the digital age where bad actors register domain names similar to established brands to exploit their reputation.

Introducing the Salvadoran Institute of Intellectual Property (ISPI)

A significant feature of the new law is the creation of the Salvadoran Institute of Intellectual Property (ISPI), a centralized body responsible for managing all aspects of intellectual property in the country. For European SMEs, ISPI simplifies the process of registering, renewing, and managing IP titles, thanks to a digital-first approach.

Here’s what ISPI does:

• Manages IP registrations: From trade marks to patents, ISPI handles all applications through an online system, reducing the time and paperwork needed to protect your IP.
• Manages IP contracts: If you need to transfer an IP right or license it to someone, the contract must be registered at the ISPI. 
• Resolves disputes: If there is a conflict over IP rights, ISPI serves as a mediator, offering an alternative to lengthy court processes.
• Streamlines processes: By eliminating unnecessary bureaucracy, ISPI allows businesses—especially SMEs—to focus on innovation rather than legal hurdles.

What Does This Mean for European SMEs Expanding into El Salvador?

For SMEs in the European Union looking to expand into El Salvador, the new IP law offers several key advantages:

• Lower costs: The 50% discount on IP registration fees for small businesses makes it more affordable to protect your intellectual property.
• Simplified processes: The consolidation of laws and the digital registration system make it easier to manage IP rights, even from overseas.
• Better protection in digital spaces: With the new focus on domain name protection and cybersquatting prevention, you can be sure your brand’s online presence is secure.

Practical Steps to Protect Your IP in El Salvador

Here are some steps you can take to ensure your intellectual property is protected under the new law:

1. Register your IP: Whether it is a trade mark, patent, or copyright, register it through ISPI's streamlined system.
2. Renew on time: Make sure to keep taps on any deadlines and renew your IP registrations on time. Remember, you will need to provide evidence of use for trade names.
3. Monitor your IP: Stay vigilant for cybersquatting and misuse of your IP online and offline, and take advantage of the law’s provisions for digital protection.

Looking Ahead: How the New Law Will Shape Business in El Salvador

As El Salvador continues to implement this new law, the country is expected to become a more attractive destination for foreign investment. With stronger IP protections, lower fees, and a digital-first approach, SMEs from Europe and around the world can look forward to a more straightforward process for protecting their intellectual property in the region.

Ultimately, El Salvador’s new IP law is a positive step for businesses seeking to innovate and expand in Latin America. Whether you’re looking to enter the market now or in the future, understanding the implications of this law will ensure you’re well-positioned to succeed.

Ready to Protect Your IP in El Salvador?

If you are an SME looking to expand into El Salvador or other Latin American markets, be sure to use resources like the Latin America IP SME Helpdesk for expert advice on navigating the region’s intellectual property landscape. Protecting your business has never been more important, and with the right knowledge and tools, you will be ready to grow with confidence. Use our Helpline for free, fast (maximum 3 working days) confidential first-line advice on IP in Latin America.