April 04, 2019
How Venezuelan Crisis Is Moving Forward Cryptocurrencies
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You have probably never heard about the Petro, a cryptocurrency launched in October 2018 by the government of Venezuela as a measure to fight against an out of control inflation of more than 1.000.000%.
The "Petro" was launched about a year after the "Rabbit Plan" didn't work out. The "Rabbit Plan" was a national campaign for people to raise rabbits in their houses so they could have access to animal protein, something very scarce in once the richest country of Latin America. The plan did not meet the expectations as most people were not capable of killing what became their furry pet.
Well, now Petro has become the payment method for official fees for foreign IP applicants, but there is more than a catch with this.
First, the Chavist Venezuelan government has never been a fan of Intellectual Property. In fact, they are against any private property and even more if it is an income producer private property.
For years the Venezuelan IP authority, the SAPI, became a black box were applications were filed but nothing happened. Not even a single patent was granted for many years.
One day, following the example of their socialist friends in Ecuador, they discovered that they could make a good amount of money charging incredible high official fees to foreign applicants.
The SAPI opened bank accounts in the US and later in Puerto Rico to receive payments from foreign applicants as it was not possible for them to pay in the local currency.
Later, as the Venezuela huge humanitarian, economic, social, political and international crisis became a regional problem, the US government started to impose sanctions against their regime.
The time when the SAPI was receiving thousands of dollars for a single patent annuity came to an end as their US-based bank accounts got closed.
On February 2nd, 2018, the Venezuelan Patent and Trademark Office (SAPI) advised the public to stop making registration related fee payments in foreign currency until the authorities could clarify the exchange rate to be applied. In fact, their official exchange rate is so distorted that if used applicants will end up paying pennies for their applications.
On August 23, 2018, the SAPI approved a new set of fees that represented a price increase of 142,000%, a move that sparked outrage among the IP community in Venezuela, with several of its leaders calling for the repeal of the measure.
On top of this, the SAPI entered back in low-activity mode, virtually halting the IP registration proceedings.
The situation did not change much until February 1st, 2019, when the SAPI published a new set of fees, which ended the year-long suspension of payments enacted on February 2018.
Not all was good news: according to the SAPI announcement, foreign applicants and right owners would have to make their payments in "Petros", the government-sponsored cryptocurrency.
Legal challenges have been announced against the measure, but their success is far from guaranteed.
The SAPI directive meant a new hurdle for US-based applicants, since on March 19th, 2018 the US government had issued an executive order effectively prohibiting any US person or within the US to provide financing for or otherwise deal in "any digital currency, digital coin, or digital token that was issued by, for, or on behalf of the Government of Venezuela on or after January 9, 2018."
So foreign applicants are now in a delicate situation if they do not use the Petros they might lose their IP rights in Venezuela. But if they use them to pay their fees they are at high risk of getting a sanction from the US.
Even though the "Petros" payment platform is not yet available for the general public, we recommend our clients to seek regulatory advice in their countries in order to avoid potential risks.
It may take a while but the future of IP payments will be related to the use of cryptocurrencies.
The only positive side of this story is that an IP office is willing to accept a cryptocurrency for official fees payments. It may take a while but the future of IP payments will be related to the use of cryptocurrencies. In this moment companies like ours, that manage portfolios in many countries, are always facing difficulties for paying official fees. You have to exchange currencies, make expensive wire transfers, sometimes even go to a bank and make a long line to pay an official fee.
As with everything now in Venezuela we are not sure what is going to happen. At least we know for sure that as the "rabbit plan" is no longer working we will not have to pay official fees with rabbits.
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