Before the International Centre for Settlement of Investment Disputes

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BEFORE THE INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES

Philip Morris Brands Sàrl, Philip Morris Products S.A., and Abal Hermanos S.A.,

Claimants

Oriental Republic of Uruguay,

Respondent

ICSID Case No. ARB/10/7

Expert Rebuttal Opinion by Professor Gustavo Fischer

______

I. Introduction and Summary of Key Conclusions

1. In this Opinion, I respond to each of the issues and arguments raised by Professor Andrea Barrios Kübler in her report, dated October 2, 2014 (“Barrios Report”) and explain their lack of merit.

2. In Section II, I discuss the right of trademark owners to use their trademarks in Uruguay. First , I discuss the right to use trademarks under Uruguayan law. Second , I explain that trademarks are considered property under Uruguayan law; as such, owners of trademarks are entitled to their “enjoyment” which includes the right to use the marks.

3. In Section III, I address Claimants’ trademarks. First , I explain that trademark owners are entitled to protection under Uruguayan law even if the trademark in use differs from the registered trademark in non-essential features that do not affect the distinctive character of the trademark. Second , I compare the trademarks as used and as registered by Claimants, noting that all of Claimants’ product variants that use Claimants’ trademarks in commerce fall within the scope of protection of Claimants’ registered trademark rights.

4. For the reasons that I explain below in this Opinion, I conclude that:

• A trademark owner in Uruguay has an affirmative right to use his or her trademark under Uruguayan law.

• International agreements applicable in Uruguay (including the Protocol on Harmonization of Intellectual Property Regulations in Mercosur for Trademarks, Indications of Source and Appellations of Origin, approved by Law No. 17,052 of December 14, 1998 (hereinafter, “the Protocol”)) recognize that trademark owners have a right to use their marks.

• Intellectual property rights are property rights under Uruguayan law and, therefore, owners of such property are entitled to its use.

• Uruguayan law treats intellectual property rights as property rights.

• The right to enjoy and use property (including intellectual property) is protected under Uruguayan law.

• A trademark owner is entitled to protections under Uruguayan law even if the trademark in use differs from the registered trademark so long as the differences do not affect the trademark’s distinctive character.

• The scope of a trademark right in Uruguay encompasses both the right to use the trademark exactly as registered, as well as the right to use the trademark in a form that maintains its distinctive character.

• Claimants’ trademarks as used in commerce do not differ in distinctive character from Claimants’ trademarks as registered; therefore, Claimants have a right to use those marks.

II. Right to Use

5. In my First Opinion, I explained that the registration of a trademark with the Uruguayan Patent and Trademark Office (“DNPI”) grants both a positive right to use the trademark and a negative right to exclude others from using the trademark. I noted that Uruguayan Trademark Law No. 17,011 (the “Trademark Law”) as well as Law No. 17,052 that incorporated into Uruguayan law the Mercosur Harmonization of Intellectual Property Regulations Protocol (the “Protocol”) expressly refer to “the right to use” trademarks, in addition to the right to exclude others from using them. 1 I also noted that Uruguayan law treats

1 See Law Concerning Trademarks, Law No. 17,011, dated September 25, 1998, Art. 70 [Exhibit C-135]; see also id. at Art. 58 (expressly referring to the “ right of use, in whole or in part, of a registered trademark ”) [Exhibit C- 135]; Law No. 17,052 dated December 14, 1998, approving the MERCOSUR Harmonization of Intellectual Property Regulations Protocol [Exhibit AB-22]. See Expert Opinion of Professor Gustavo Fischer, February 28, 2014 (“First Fischer Opinion”), at paras. 28-37 [Exhibit CWS-012]. 2

intellectual property rights as property rights, the “enjoyment” of which is protected under the Constitution and Civil Code. 2

6. Respondent’s Uruguayan expert on intellectual property, Professor Andrea Barrios Kübler, disagrees. According to Professor Barrios, there is no right to use under Uruguayan law, either on the basis of international law or domestic law. Professor Barrios’s allegations are without merit. In the sections that follow, I respond to each of the issues raised by Professor Barrios in her report. First , I discuss the right to use trademarks under Uruguayan law, including under international agreements applicable in Uruguay. Second , I explain that trademarks are considered property under Uruguayan law; as such, owners of trademarks are entitled to their “enjoyment” which includes the right to use the marks.

A. The Right to Use Trademarks under Uruguayan Law

1. International Agreements Applicable in Uruguay Recognize that Trademark Owners Have a Right to Use their Marks

a. The Mercosur Protocol Provides a Right to Use

7. As I explained in my First Opinion, Article 11 of the Protocol on Harmonization of Intellectual Property Regulations in Mercosur for Trademarks, Indications of Source and Appellations of Origin, approved by Law No. 17,052 of December 14, 1998 (hereinafter, “the Protocol”), leaves no doubt that a trademark registration grants both a positive right to use and a negative right to exclude others. Article 11 expressly provides that:

[t]he registration of a trademark shall grant the owner the exclusive right to use , and the right to prevent any person from performing, without the patentee’s consent, the following acts, among others: the use, in commerce, of a sign identical or similar to the trademark, for any products or services, when said use may cause confusion or a risk of association with the holder of the registration, or unjust economic or commercial damage, caused by a dilution of the distinctive force or the commercial value of the trademark, or a risk of an improper use of the prestige of the trademark or of its owner. 3

8. Although Professor Barrios recognizes in her report that “various international [treaties] were taken into account” during the parliamentary debate regarding Uruguay’s

2 Uruguayan Constitution, 1967 Article 7 [Exhibit C-259]; see also Uruguayan Civil Code, Arts. 486 and 487 [Exhibit C-266] . See First Fischer Opinion at paras. 7, 31-33 [Exhibit CWS-012]. 3 MERCOSUR Harmonization of Intellectual Property Regulations Protocol, Article 11 (emphasis added) [Exhibit C-155]. 3

Trademark Law, 4 according to Professor Barrios, there is no right to use provided in those treaties. Professor Barrios, however, deliberately omits the Mercosur Protocol from her list of intellectual property treaties that were considered during the Parliamentary debate on Uruguay’s Trademark Law. 5

9. According to the legislative history on which she relies, not only was the Protocol among the sources considered for Uruguay’s 1998 Trademark Law, but the Uruguayan Legislature debated the Protocol the very same day that it debated the Trademark Law No. 17,011. For example, when debating the Trademark Law on April 15, 1998, the Uruguayan Legislature stated:

[W]ith the approval of [the Trademark Law] . . . we will have an adequate legal framework fundamentally in the region and, in particular, with relation to MERCOSUR. 6

* * *

Article 11 [of the Protocol] establishes the rights that are conferred. The same expresses that the registration of a trademark shall confer to its owner the right of exclusive use and shall impede a third party from realizing, without his consent, certain acts. 7

10. Professor Barrios argues that the Mercosur Protocol is irrelevant because it is only in force between Uruguay and Paraguay and has no force of law domestically. 8 This is incorrect. In fact, the Protocol is directly applicable as Law in Uruguay. The Protocol, signed by the Mercosur member countries through Decision 8/95 of the Common Market Council on August 5, 1995, was effectively approved by Uruguay in Law 17,052 of December 14, 1998. The Protocol is law in Uruguay, and is an integral part of the body of laws currently in effect in Uruguay on trademark matters, as of January 18, 1999, 10 days after its publication.

4 Expert Opinion of Professor Andrea Barrios Kübler, October 2, 2014 (“Barrios Opinion”), at para. 6 n. 1 [Exhibit REX-004]. 5 See Barrios Opinion at para. 6 n. 1 (stating that “the parliamentary debate of Law No. 17,011 show[s] that various international sources were taken into account, including: [listing a number of IP treaties but omitting the MERCOSUR Protocol]” (citing Uruguayan Senate, Minutes of Sessions , No. 228, Vol. 387 (April 15, 1998), pp. 319, 322, 333 [Exhibit R-141])) [Exhibit REX-004]. 6 Uruguayan Senate, Minutes of Sessions , No. 228, Vol. 387 (April 15, 1998) English Translated Excerpts p. 336 [Exhibit C-364]. 7 Uruguayan Senate, Minutes of Sessions , No. 228, Vol. 387 (April 15, 1998) English Translated Excerpts p. 377 (emphasis added) [Exhibit C-364]. 8 See Barrios Opinion at para. 8 [Exhibit REX-004]. 4

11. Professor Barrios contends that an International Convention that contains provisions on trademarks, even if it has been approved by Law in Uruguay, would lack legislative force and value within the country. 9 That is incorrect. The argument that Professor Barrios makes is a point that has already been debated and resolved in Uruguay, contrary to what Professor Barrios contends. It was resolved in the past when the force and value of the Paris Convention for the Protection of Industrial Property was analyzed, which Convention was approved by the Uruguayan legislature in Decree Law No. 14,910, dated July 19, 1979. 10

12. In Uruguay, treaties that have complied with the approval mechanism established in the Constitution, pursuant to the legal system of Uruguay, constitute rules of law directly applicable to the national territory. 11 Thus, it is not necessary for laws to be enacted for them to take effect, and they govern the juridical relationships provided for therein without further formalities. This is affirmed by Professor Rippe, an Uruguayan expert in Commercial Law. 12 As Professor Rippe explains, the treaties entered into by Uruguay, once their constitutional cycle is complete, form part of the system of laws of Uruguay and are binding on Uruguayan courts and government agencies. He concludes with the emphatic assertion that “ the regulations of the Paris Convention constitute a source of law of industrial property in Uruguay ”. Treaties approved by law in Uruguay function as if they were regulations issued by the State itself. From the moment they enter into force, they have, with respect to the legal system of Uruguay, a hierarchy that is, at minimum, equivalent to that of a law and they repeal any laws that have been established prior to their entry into force insofar as they are incompatible with the same. 13

9 See Barrios Opinion at para. 8 [Exhibit REX-004]. 10 Law No. 14,910 (Referred to as Decree Law by Law No. 15,738), dated July 19, 1979 [Exhibit C-258]. The Paris Convention was originally approved by Law No. 13,497 of September 22, 1996 and Decree No. 588/967 of September 7, 1997 [Exhibit C-348]. 11 RIPPE, Siegbert, comment on the “Applicability of the Paris Convention in Domestic Law,” in “La Propiedad Industrial en el Uruguay” [Industrial Property in Uruguay], ed. FCU, 1992 (“RIPPE”), p. 83 et seq. [Exhibit CLA- 319] 12 See RIPPE at pages 83 et seq. [Exhibit CLA-319] 13 BERMUDEZ, Víctor Hugo, VI° Congress of the International Association of High Administrative Courts, “The application of International law by Administrative Judges. Definition of Interpretation of the International Rules by the Judge,” in La Justicia Uruguaya (LJU) [Uruguayan Justice], Volume 118. Bermúdez (prestigious Judge of the Administrative Court of Uruguay from 1996 to 2003) states that the treaties that have complied with the steps provided for in the Constitution “ are RULES OF LAW DIRECTLY APPLICABLE IN THE NATIONAL TERRITORY, and as a result, they do not require legislative regulations to become effective; they are (“self-executing”) ” (emphasis original) [Exhibit CLA-320]. 5

13. Uruguayan case law unanimously holds that the Protocol is a provision of Positive Law, in effect and applicable in the system of domestic laws on trademarks in Uruguay. No decision has denied the value and force of the Protocol as part of domestic law in Uruguay.

14. In their decisions, the Judges have established that the Protocol has the legal value, at minimum, of a law, and that its provisions have full legal force and value, even to repeal provisions of Trademark Law No. 17,011. 14 In the case of the Administrative Court (the highest court on Administrative Justice matters in Uruguay, also referred to as the “TCA”) the Court unambiguously included the Protocol among the regulations with legal force and value that it used as a basis for its decisions (as it did in the cases that I cited in my First Opinion, for example, Decision No. 111, dated March 12, 2013, Agfa-Gevaert NV & Co. Kg c/Estado, Ministry of Industry, Energy and Mining, Action for Nullification). 15 In the case of the Judicial Branch, the Judges of Uruguay have determined that the Protocol is prevailing law in Uruguay and as such is directly applicable to any trademark dispute, and has legal force to repeal any provisions of Trademark Law No. 17,011 that contradict the Protocol.

15. Thus, for example, in Decision No. 116/2013 of November 8, 2013, Societe des Produits Nestle S.A. v. Maestros Cafeteros S.A., Damages, the 7 th Court of Civil Appeals

14 In my first Opinion dated February 28, 2014, I cited multiple decisions of the Administrative Court of Uruguay in which the Protocol is applied as a rule of Positive Law in force for trademark matters in Uruguay, together with Law No. 17,011. Professor Barrios seeks to disregard the value of these decisions issued by the highest court for matters of Administrative Justice in Uruguay, arguing that no “exclusive” reference is made in said decisions to the Protocol as a source of law for the ruling. See Barrios Opinion at para. 10, n. 17 [Exhibit REX-004]. The significance of that observation is not understood, as it does not lessen the value of the decisions in any way. In fact, the current system of laws on trademarks in Uruguay is comprised of several legal instruments (Decree Law No. 14,910, Paris Convention [Exhibit C-258]; Law No. 16,671, dated December 13, 1994 [Exhibit C-471]; ADPIC [Exhibit C-359]; Law No. 17,011, Trademark Law [Exhibit C-135]; and Law No. 17,052, the Protocol [Exhibit C-364]. The fact that there is more than one legal provision on trademarks does not in any way diminish the value of recognizing the Protocol as part of the Positive Domestic Law of Uruguay. It is neither necessary nor reasonable to content that a decision cites or refers exclusively to a single legal provision in order for the same to be recognized as a source of law in Uruguay. Multiple decisions of the Judicial Branch also clearly and categorically recognize that the protocol is part of the system of domestic laws of Uruguay and that it has force of law. For example, decisions of the Courts of Civil Appeal of the Judicial Branch of Uruguay: Court of Civil Appeals of the 5 th Circuit. Decision No. 711/2011 of November 16, 2011 [Exhibit C-365]; Court of Civil Appeals of the 7 th Circuit, Decisions No. 12/2012, of July 27, 2012 and No. 116/2013 of November 8, 2013 [Exhibit C-366]. In all of these cases, the Courts determined the Protocol to be a valid provision of Positive Law with force of law in Uruguay, and with power to repeal Law No. 17,011 where applicable. 15 See TCA Decision No. 111, March 12, 2013 [Exhibit C-267]. In this decision, the Court states that: “Reputation is also included in the Paris Convention for the Protection of Industrial Property (Art. 6, bis 1) and in Article 9 of the Protocol for the Harmonization of Rules on Intellectual Property in Mercosur, approved by Law No. 17,052 ” (emphasis added). 6

establishes that: “Law No. 17,052 of 12/14/1998 (in turn, subsequent to Law 17,011), confirmed that the ‘ Protocol on Harmonization of Intellectual Property Regulations for Trademarks, Indications of Source and Appellations of Origin’ of MERCOSUR has force of law. The Court added that the Protocol, ratified by Law 17,052 “ would repeal ‘ratione temporis’ Article 89 para. 1 of Law No. 17.011… ”. The Decision clearly demonstrates the application of the Protocol as a regulation within the domestic system of laws of Uruguay and that it has force of law.

16. Even if the Mercosur Protocol were not part of Uruguayan law (it is) and, thus, as Professor Barrios alleges, it only covers relationships between the two countries that have ratified the Protocol—that is, Uruguay and Paraguay—the rights provided under the Protocol would still protect foreign investors, such as Claimants in this case. Uruguay is a party to the Agreement on Trade-Related Aspects of Intellectual Property Rights (the “TRIPS Agreement”), which was incorporated into Uruguayan law on December 13, 1998 through Law No. 16,671. 16 Under Article 4 of the TRIPS Agreement, Uruguay must “accord[] immediately and unconditionally” to trademark owners any “advantage, favor, privilege or immunity granted by a Member to the nationals of any other country.” 17 Thus, under the TRIPS Agreement, Uruguay is bound to extend any benefits that it grants to Paraguayan trademark holders to trademark holders from other WTO Members, including Swiss trademark holders.

b. The Montevideo Treaty Provides a Right to Use

17. In any case, the provision of Article 11 of the Protocol that expressly establishes an exclusive right to use the trademark is not something new for Uruguay. A similar provision has been in effect in Uruguay since the 19 th century in the Treaty on Trademarks and Manufacturer’s Trademarks, entered into on January 16, 1889 in Montevideo, approved by Uruguay in Law No. 2,207 of October 1, 1892 (the “Montevideo Treaty”).

18. The Montevideo Treaty is law that is currently in effect in Uruguay and has not been repealed. The Montevideo Treaty has, for purposes of Uruguayan law, the character of a self-executing law, thus is directly applicable under domestic law, as it creates rights in favor of

16 See Law 16,671, dated December 13, 1994 [Exhibit C-471]. 17 Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS Agreement”), Art. 4 [Exhibit C- 359]. 7

its beneficiaries and obligations for the entities having subject-matter jurisdiction (Executive Branch, Judicial Branch, Administrative Court). 18

19. Articles 1 and 2 of the Montevideo Treaty expressly and unequivocally refer to the right to exclusive use of the holder of a trademark. Specifically, Article 2 classifies the right to the trademark as a right of “ownership of a trademark,” and stipulates that such right includes “the right to use it , transmit it or transfer it.” 19

Art. 2. Ownership of a trademark or a trade name includes the right to use it, transmit it, or transfer it. 20

20. It is clear that international agreements applicable to Uruguay (including the Protocol) include provisions that protect a trademark owner’s right to use.

2. The Trademark Law Provides a Right to Use

21. In my First Opinion, I stated, among other things, that Uruguay’s Trademark Law provides an affirmative right to use a registered trademark. For example, I noted that Article 58 of the Trademark Law provides that a trademark license transfers “a right of use, in whole or in part, of a registered trademark,” and that Article 70 refers to “the right to use [the] trademark” following the sale of an establishment. 21

22. Professor Barrios disagrees. According to Professor Barrios, Uruguay’s Trademark Law makes no mention of a right to use, except with respect to licensees and purchasers of companies. Thus, Professor Barrios writes, “[W]e must bear in mind that both licensees and purchasers of commercial establishments are considered ‘ third parties ’ in relation to the trademark holder; which means they would be excluded by the exclusive rights granted by the Law, and this is the reason why both Articles 58 and 70 [of the Trademark Law] make clear

18 FISCHER, Gustavo, “Notes on revalidation patents, the Treaty on patents of Montevideo of 1889”, in Anuario de Propiedad Intelectual [Annual Journal on Intellectual Property] 2004, ed. Universidad de Montevideo, 2004, p. 63 et seq. [Exhibit CLA-328]. Mutatis mutandi , in reference to the Treaty on patents, approved by Uruguay together with the Montevideo Treaty on Trademarks, also through Law No. 2,207. 19 Treaty on Trademarks and Manufacturer’s Trademarks, entered into on January 16, 1889 in Montevideo, approved by Uruguay in Law No. 2,207 of October 1, 1892, Article 2 (emphasis added) [Exhibit C-367]. 20 Treaty on Trademarks and Manufacturer’s Trademarks, entered into on January 16, 1889 in Montevideo, approved by Uruguay in Law No. 2,207 of October 1, 1892, Article 2 [Exhibit C-367] 21 See First Fischer Opinion at paras. 29-30 [Exhibit CWS-012]. 8

reference to the use of the trademark, expressly establishing an exception to the exclusive rights granted to the trademark holder.” 22

23. However, if the Trademark Law intended only “not to exclude” third-party purchasers/licensees from using the trademarks, the Trademark Law would have stated that. Instead, Article 58 expressly states that a licensee may grant “a right of use . . . of a registered trademark,” and Article 70 states that an assignee “shall have the right to use such trademark . . . in the same manner as the assignor.” 23 As Professor Barrios concedes, “[T]he holder of a trademark could hardly transfer, via a license or the sale of a commercial establishment, a right that was not granted to it by the Law,” 24 thus Articles 58 and 70 show that the Trademark Law does indeed grant the holder a right to use the trademark.

3. Uruguayan Courts Recognize a Right to Use

24. Professor Barrios argues that Uruguayan court precedents state that there is no right to use trademarks. 25 However, Professor Barrios misreads the case law on which she relies to support her assertion. In fact, the TCA has ruled that the right to a trademark comprises a “positive right” to use the trademark. Thus, there is no support for Professor Barrios’s assertion. Uruguayan court precedent applicable to the right to use trademarks is discussed below.

25. The primary case on which Professor Barrios relies, The Royal Bank of Scotland Group PLC v. The Ministry of Industry, Energy and Mining , confirms that there is a right to use a trademark under Uruguayan law. In that case, the DNPI had refused to register the plaintiff’s trademark, “RBS The Royal Bank of Scotland,” because Article 3 of Law 15,322 prohibits the use of the word “Bank” by companies that Uruguay’s Central Bank has not authorized to engage in banking. The plaintiff argued that there was no reason to assume that it would engage in financial services in Uruguay without authorization from the Central Bank simply because it

22 Barrios Opinion at para. 62 (emphasis original) [Exhibit REX-004]. 23 Trademark Law No. 17,011, Arts. 58 and 70: “Article 58: For the purposes of this law, a license is an accessory contract to the trademark registration, by which is granted a right to use, in whole or in part, of a registered trademark or of pending registration, for a given period of time, in an exclusive or non-exclusive form. Article 70: The assignment or sale of an establishment shall include the assignment or sale of the trademark, unless otherwise agreed, and the assignee shall have the right to use such trademark even if nominal, in the same manner as the assignor without further restriction other than as expressly set out in the contract of sale or assignment.” [Exhibit C- 135]. 24 Barrios Opinion at para. 62 [Exhibit REX-004]. 25 See e.g. , Barrios Opinion at paras. 37, 51 [Exhibit REX-004]. 9

registered its trademark. The TCA agreed. The TCA stated that it could not assume that the trademark would be used in the financial services industry, such that the plaintiff would be in violation of Article 3 of Law 15,322. 26 The TCA could not make such an assumption because the plaintiff did “not conduct financial activities in Uruguay” and had not been licensed to do so by Uruguay’s Central Bank. 27 It was undisputed that the plaintiff would have to obtain a license from the Central Bank if it wanted to operate as a Uruguayan bank.

26. The TCA confirmed, however, that a trademark registration did confer on the plaintiff the right to use the trademark—that is, a right “to include [the trademark] in its name.” 28 The TCA’s reasoning was consistent with the Uruguayan government’s argument in the case that “the [trademark] registration authorizes [but did not obligate] the holder thereof to differentiate its products or services with its trademark.” 29 The mere fact that such a positive right to use is not absolute but can be limited by other legislation ( e.g ., the requirement to obtain a license from the Central Bank to engage in the banking business) does not mean that such a right does not exist. In fact, as noted above, such a right does exist under Uruguayan law.

27. I must also correct a mistranslation of the decision in The Royal Bank of Scotland Group PLC that appears twice in Professor Barrios’s Opinion and once in Respondent’s Counter-Memorial. 30 Professor Barrios claims that the TCA made “a clear distinction between the registration of a trademark and the ability to commercialize it” in the following passage from its decision: “Domestic and international rules independently and separately govern the requirements for trademark registration and the effective use of a trademark for a specific good or service.” 31 But, the TCA actually stated: “Domestic and international rules independently and separately govern the requirements for trademark registration and the effective use of a

26 The Royal Bank of Scotland Group PLC v. The Ministry of Industry, Energy and Mining , TCA Decision 933, November 11, 2010, p. 6 [Exhibit RL-211]. 27 See The Royal Bank of Scotland Group PLC v. The Ministry of Industry, Energy and Mining , TCA Decision 933, November 11, 2010, p. 1 [Exhibit RL-211]. 28 The Royal Bank of Scotland Group PLC v. The Ministry of Industry, Energy and Mining , TCA Decision 933, November 11, 2010, p. 5 (emphasis added) [Exhibit RL-211]. 29 The Royal Bank of Scotland Group PLC v. The Ministry of Industry, Energy and Mining , TCA Decision 933, November 11, 2010, p. 2 (emphasis added) [Exhibit RL-211]. 30 See Barrios Opinion at paras. 37, 51 [Exhibit REX-004]; Respondent’s Counter-Memorial on the Merits, October 13, 2014 (“Respondent’s Counter-Memorial”), at para. 9.26. 31 Barrios Opinion at para. 51 (emphasis added) (quoting The Royal Bank of Scotland Group PLC v. The Ministry of Industry, Energy and Mining , TCA Decision 933, November 11, 2010, p. 5 [Exhibit RL-211]) [Exhibit REX-004]. 10

trademark for a specific product or service.” 32 The issue before the TCA was not whether the plaintiff would have a right to use the trademark in question, but whether the plaintiff would be required to use the trademark, such that it would violate Article 3 of Law 15,322. The obligation to use a trademark is a completely separate issue that Professor Barrios conflates with the right to use a trademark. 33 Thus, Professor Barrios’s reliance on this case is misplaced.

28. The TCA also expressly recognizes an affirmative right of the trademark owner to use the trademark in Marcelo Lopez, Alejandro Ignacio v. The Ministry of Industry, Energy and Mining . In this decision, the TCA explicitly affirms that there is a right to use the trademark under Uruguayan law. 34 Citing Uruguayan scholar Beatriz Bugallo, the TCA describes the rights of the trademark owner as having a negative facet and a positive facet. With regard to the “positive facet,” the TCA quotes Bugallo, who says that “it consists of the actual use—in commerce—of the mark within the scope of its associated business objectives. Such exploitation comes with an area reserved to the trademark owner as a consequence of the exclusive rights that the law grants.” 35 This decision of the TCA is subsequent to the one that Professor Barrios cites, The Royal Bank of Scotland Group PLC , and it refers clearly, directly and explicitly to the “affirmative right” of the trademark owner to use the trademark.

29. The decision by the Supreme Court resulting from the litigation in which Abal challenged the 80/80 regulation also supports the understanding that trademark owners have a

32 The Royal Bank of Scotland Group PLC v. The Ministry of Industry, Energy and Mining , TCA Decision 933, November 11, 2010, p. 5-6 (emphasis added) [Exhibit RL-211]) [Exhibit REX-004]. 33 The requirement of obligatory use of registered trademarks in Uruguay was established by Law No. 19,149 of October 24, 2013, effective as of January 1, 2014; it did not exist at the time of The Royal Bank of Scotland Group PLC .v The Ministry of Industry, Energy and Mining , TCA Decision 933, November 11, 2010, p. 6 [Exhibit RL- 211] 34 See Administrative Court, Marcelo Lopez, Alejandro Ignacio v. The Ministry of Industry, Energy and Mining , Decision No. 189/2012, March 15, 2012 [Exhibit C-370]. 35 Bugallo Montaño, Beatriz; “Propiedad Intelectual,” FCU, 2008 (“Bugallo”), p. 178 [Exhibit CLA-180]. Professor Barrios attempts to minimize the fact that Uruguayan scholar Beatriz Bugallo has written that a trademark holder has both “positive” and “negative” rights. See Barrios Opinion at para. 59 [Exhibit REX-004]. Although Professor Barrios repeatedly relies on Dr. Bugallo’s work elsewhere in her opinion, see Barrios Opinion at footnotes 11, 30, 38, 49, 85, 110 [Exhibit REX-004], she criticizes Dr. Bugallo’s distinction between positive and negative trademark rights as “nothing more than a simplification without any legal basis.” Barrios Opinion at para. 59 [Exhibit REX- 004]. According to Professor Barrios, Dr. Bugallo’s “so-called positive facet [of trademark rights merely] seeks to explain the consequence of the exercise of the exclusive rights.” Barrios Opinion at para. 60 [Exhibit REX-004]. But Professor Barrios misreads Dr. Bugallo’s clear assertions. Dr. Bugallo unequivocally states that there is a positive right to use, which refers to the “exteriorization of the exercise of the right that the holder of the trademark has, its equivalent modern expression would be ‘exploitation’ of the trademark.” Bugallo at p. 180 [Exhibit CLA- 180]. 11

right to use them under Uruguayan law. Uruguay’s Legislature argued before the Supreme Court that Article 9 of Law 18,256 could not be interpreted as allowing the Ministry of Public Health (“MPH”) to issue “a decree establishing a [graphic health warning] percentage such that the surface area affected with the health warnings would prevent the effective use of trademarks .” 36 In so stating, Uruguay’s Legislature conceded that such an interpretation of Article 9 of Law 18,256 would violate the Constitution. 37 This is because it would constitute an impermissible delegation of the power to limit rights of individuals (including property rights) from the Legislative Branch to the Executive.

30. It would also be unconstitutional because it would be a delegation of powers to the Executive to increase graphic health warning (“GHW”) over 50% without imposing any limit. Uruguay’s Legislature concluded in its answer to Abal’s complaint that nothing in the anti-tobacco legislation allows the law to be interpreted to mean that the Executive Branch has the power to decide the size of the health warning labels, including that the size should be increased to cover more than 50% of the package surface. 38 The Legislature stated that even under the hypothesis that the law permits the Executive to increase the percentage of the health warning on the surface of the package, such an increase could never be of 100% or even near 100%. 39 This is because Article 8, paragraph 2 of Law 18,256 guarantees space on the surface of the package for the correct identification of the product through trademarks or through a message to consumers regarding the product.40

31. The Legislature added that, in the event that it were to rule that the GHW should occupy 100% of the total surface of the packs, assuming that were permissible, such a decree would exceed the enabling legal framework. The law clearly establishes that GHW shall occupy no less than 50% of the space they share with trademarks. Trademarks, however, are legally regulated and are guaranteed space on the package by law. Therefore, the Uruguayan

36 Legislature’s Answer to Abal’s Unconstitutionality Action of Law 18,256, November 10, 2009 (“Legislature’s Answer”), at para. 3.15 [Exhibit C-046] 37 Legislature’s Answer, at para. 3.15 [Exhibit C-046]. See also id. at paras. 3.13-3.15 (explaining “the principle of interpretation of the law in keeping with the Constitution,” according to which “when there [are] two possible interpretations of a legal text, one that tends to affirm its constitutionality and another that [renders it] unconstitutional[ ], the first one should be preferred”) [Exhibit C-046]. 38 Legislature’s Answer at para. 3.15 [Exhibit C-046]. 39 Legislature’s Answer at para. 3.15 [Exhibit C-046]. 40 Legislature’s Answer at para. 3.14 [Exhibit C-046]. 12

Legislature asserted that the Executive branch could not validly issue a decree whereby it established such a percentage of GHW affecting the surface of the package that it would prevent the effective use of trademarks, since trademarks are also regulated by law and accordingly cannot “disappear.” 41

32. In stating that “trademarks . . . cannot ‘disappear’” from the package under Uruguayan law, the Legislature was quoting the expert opinion that I had submitted to the Supreme Court. 42 As I explained there: “If the trademark cannot be perceived . . . in connection with the products for which it was conceived, then effectively becomes a ‘non-trademark,’ disappears, and no longer functions as a trademark because it has lost its essence and raison d’être . Should this happen, the trademark (and the right to ownership thereof would be) . . . is destroyed and would disappear.” 43 The Uruguayan Legislature quoted this excerpt of my opinion with approval. 44 The Supreme Court agreed with the Legislature and therefore interpreted Article 9 of Law 18,256 as limiting the delegation of power to the MPH to require GHWs covering no more than 50% of the front and back of the package—i.e. , in order to maintain protection of “the effective use of trademarks.” Thus, judicial precedent in Uruguay does support an affirmative right to use trademarks.

4. The Right to Use under Uruguayan Law Is Not Limited by Parliament’s Authority to Legislate Matters of Public Health

33. Professor Barrios argues that the Uruguayan Parliament has broad authority to legislate in matters of public health. 45 That is irrelevant to the question of whether there is a right to use trademarks. Virtually all rights can be limited by legislation, and the mere fact that a right can be limited by legislation does not mean that it does not exist in the first place. Even property rights, which Professor Barrios describes as “absolute,” 46 can be limited through, for

41 Legislature’s Answer at para. 3.15 [Exhibit C-046]. 42 Legislature’s Answer at para. 3.15 [Exhibit C-046]. 43 Expert Opinion of Dr. Gustavo Fischer, July 28, 2009, submitted with Abal’s Complaint to the Supreme Court Challenging Art. 9 of Law 18,256 (emphasis added) [Exhibit C-368]. 44 See Legislature’s Answer at para. 3.15 [Exhibit C-046]. 45 See Barrios Opinion at para. 5 [Exhibit REX-004]. See also id. at paras. 66-87 [Exhibit REX-004]. 46 Barrios Opinion at para. 27 [Exhibit REX-004]. 13

example, zoning restrictions, eminent domain, etc. 4748 In such cases, compensation may still be due in the event the restrictions amount to an expropriation.

34. Based on the above, it is clear that trademark owners have an affirmative right to use their marks under Uruguayan law.

B. Intellectual Property Rights Are Property Rights under Uruguayan Law and, therefore, Owners of Such Property Are Entitled to Its Use

35. In my First Opinion, I stated that Uruguayan law treats intellectual property rights as property rights. As such, the enjoyment of those rights is protected under the Uruguayan Constitution and Civil Code. The Constitution and the Civil Code, in turn, provide that the right to enjoy such property includes the right to use it. 49 Professor Barrios disagrees. Specifically, Professor Barrios argues that intellectual property rights are not property rights and, therefore, the protections afforded to property owners under the Constitution and the Civil Code in Uruguay do not apply. 50 For the reasons stated below, Professor Barrios’s arguments are without merit.

1. Uruguayan Law Treats Intellectual Property Rights as Property Rights

36. According to Professor Barrios, Uruguay’s Trademark Law does not “define the rights granted by trademarks as a property right” but rather refers to the concept of “Industrial Property.” 51 Professor Barrios’s allegations are incorrect. As I noted in my First Opinion, Uruguay’s Trademark Law specifically refers to the right of a person over a registered trademark

47 JIIMENEZ DE ARECHAGA, Justino, “La Constitucional Nacional”, Montevideo, Editorial Organización Medina, Vol. II, 1946, p. 145 et seq. [Exhibit CLA-265]; DELPIAZZO, Carlos, “Acerca del derecho de propiedad en la Constitución” [Concerning Property Rights in the Constitution], in Rev. CADE de Doctrina y Jurisprudencia [CADE Review of Law and Jurisprudence] (Montevideo, 2010), Vol. VIII, p. 29 et seq. [Exhibit CLA-321]; DEL CAMPO, Francisco, “Bienes” [Property], Vol. I, ed. FCU, p. 57 et seq. [Exhibit CLA-329]. 48 MARIÑO LOPEZ, Andrés, “Código Civil de la República Oriental del Uruguay,” [Civil Code of Uruguay] with comments and annotations by Andrés Mariño López, with the participation of Santiago Mirande, Marcelo Plada, Hugo S. Díaz and José L. Nicola, 2009, p. 308-310 [Exhibit CLA-322]. Mariño points out that ownership of property “is not an absolute right”; it is limited by law, as is the case, for example, with laws concerning land-use regulation, which provide territorial obligations for owners of buildings related to the environment, cultural heritage, use of land, etc. 49 See, e.g., First Fischer Opinion at para. 33 [Exhibit CWS-012]. 50 Barrios Opinion at para. 34 [Exhibit REX-004]. 51 Barrios Opinion at para. 34 [Exhibit REX-004]. 14

as a property right. 52 Thus, for example, Article 16 of the Trademark Law provides that “[o]wnership of a trademark may be inherited and may be transferred.” In discussing how ownership of a trademark may be transferred, Article 16 expressly refers to a “property right over the trademark.” 53 In any case, it makes no sense to argue that “Industrial Property” is not property.

37. Professor Barrios also argues that intellectual property rights are not property rights, “because the right attributed to the [intellectual property] owners lack the absolute nature of ownership or property.” 54 It is simply not true that Uruguayan property rights must be absolute. On the contrary, at present, property rights are not considered to be absolute or unrestricted, since there is unanimity in the most authoritative doctrinal sources in Uruguay that such rights are subject to limitation. 55 For example, legal limitations (such as estate taxes) or administrative limitations (in the area of construction and urban planning, land use, height limitations, building set-backs and alignments), etc. Even the source that Professor Barrios cites for the proposition that property rights are “absolute” 56 states that Uruguayan property rights have “various limitations”—and indeed that “every positive right [has] important limitations.” 57

52 First Fischer Opinion at para. 31 [Exhibit CWS-012]. 53 Law 17,011 Establishing Provisions on Trademarks, September 25, 1998, Art. 16 (emphasis added) [Exhibit C- 135]. Article 16 states in full: “La propiedad de una marca pasa a los herederos y puede ser transferida por acto entre vivos. por disposición de última voluntad, por ejecución forzada o por la acción de reivindicación. La transferencia total o parcial del derecho de propiedad de la marca podrá hacerse por instrumento público o privado. Para que surta efecto frente a terceros, deberá inscribirse en la Dirección de la Propiedad Industrial y publicarse en el Boletín de la Propiedad Industrial que se crea por el artículo 80 de la presente ley.” (Ownership of a trademark may be inherited and may be transferred inter vivos , by testamentary provision, by writ of execution, or by action of replevin. The total or partial transfer of the property right over the trademark may be by public or private instrument. Transfer in whole or in part of the property right in a trademark may be effected by public or private instrument. To be effective against third parties, the transfer must be registered with the National Directorate of Industrial Property and be published in the Industrial Property Bulletin to be established by Article 80 of this Law). 54 Barrios Opinion at para. 27 (emphasis added) [Exhibit REX-004]. 55 JIMENEZ DE ARECHAGA, Justino, “La Constitucional Nacional”, Montevideo, Editorial Organización Medina, Vol. II, 1946, p. 145 et seq. [Exhibit CLA-265]; DELPIAZZO, Carlos, “Acerca del derecho de propiedad en la Constitución”[Concerning Property Rights in the Constitution], in Rev. CADE de Doctrina y Jurisprudencia [CADE Review of Law and Jurisprudence] (Montevideo, 2010), Vol. VIII, p. 29 et seq. [Exhibit CLA-321]; DEL CAMPO, Francisco, “Bienes” [Property], Vol. I, ed. FCU, p. 57 et seq. [Exhibit CLA-329]. See also MARIÑO LOPEZ, Andrés, “Código Civil de la República Oriental del Uruguay,” [Civil Code of Uruguay] with comments and annotations by Andrés Mariño López, with the participation of Santiago Mirande, Marcelo Plada, Hugo S. Díaz and José L. Nicola, 2009, p. 308-310 [Exhibit CLA-322]. 56 Barrios Opinion at para. 26 (quoting Ferrando de Calvo, Zulema - Ramírez, Juan Andrés, “Course in Civil Law I - Property” Volume I, 1989, p. 68 [Exhibit AB-12]) [Exhibit REX-004]. 57 Ferrando de Calvo, Zulema - Ramírez, Juan Andrés, “Course in Civil Law I - Property” Volume I, 1989, p. 69 [Exhibit AB-12] 15

38. Not only does Uruguayan law treat intellectual property as property, but Uruguayan legal authorities also recognize this right as well. Néstor Valetti, for example, states that the concept of Intellectual Property “[e]ncompasses all those intangible assets that are the product of human intellect, that possess some measure of proprietary value and that, as such, can be the subject of rights in rem and, in their ultimate expression of ‘domain,’ of property rights and of division of the ‘domain,’ that is, of subsidiary rights in rem .” Mr. Valetti adds that, traditionally, “assets include everything that has a measure of value and can be the subject of ownership rights and that may be tangible or intangible, as provided in Art. 460 of the Civil Code.” 58

39. José Ferro Astray, a renowned Uruguayan professor of Commercial Law, examines the nature of the law of trademarks in Uruguay and whether this is a matter of property rights. 59 He concludes that the most accepted thesis is that “the right to the trademark is an ownership right, without the need to resort to new institutions to explain the right that a businessman or manufacturer has to the exclusive use of a given trademark.” 60

40. In sum, there is no support for Professor Barrios’s argument that intellectual property rights, including trademark rights, are not considered as property under Uruguayan law.

2. The Right to Enjoy and Use Property (Including Intellectual Property) Is Protected under Uruguayan Law

41. In my First Opinion, I wrote that the Uruguayan Civil Code establishes in matters of property that the owner of property has the power to use and enjoy the property owned. In support of this argument, I referred to two provisions in the Civil Code: Articles 486 and 487. Article 486 of the Civil Code provides that a property right includes the “right to enjoy and

58 VALETTI, Néstor, “Los Derechos de Propiedad Intelectual en el Uruguay – Su protección jurídica. Ambito normativo y Criterios Jurisprudenciales”, [Intellectual Property Rights in Uruguay – Legal protection. Regulatory Aspects and Case Law] Document prepared by Mr. Néstor Valetti Rodríguez, Appellate Judge, Rivera Branch, Courts of Montevideo, in “Revista de la Propiedad Industrial”[“Industrial Property Review”] from the Uruguayan National Office of Industrial Property, No. 9, April 2004, p. 71 et seq. [Exhibit CLA-323]. 59 FERRO ASTRAY, José, ed. ROCCA, Miguel U, “Casa de comercio; Marcas de Fábrica; Bolsas de comercio, etc.”[House of Commerce; Trademarks; Stock Exchanges, etc.], p. 103 et seq, [Exhibit CLA-324]. 60 FERRO ASTRAY, José, ed. ROCCA, Miguel U, “Casa de comercio; Marcas de Fábrica; Bolsas de comercio, etc.”, p. 105 et seq. [Exhibit CLA-324.] 16

arbitrarily dispose of a thing.” In turn, Article 487 provides that the right to enjoy and dispose of something includes the right to “us[e] such property.” 61

42. In an attempt to refute the aforementioned arguments, Professor Barrios tries to identify various reasons why the Civil Code provisions cited above do not apply to intellectual property and, in particular, to trademark rights. Professor Barrios’s attempts, however, are without merit.

43. First , Professor Barrios argues that the Constitution only protects property and ownership rights that existed prior to the Constitution. According to Professor Barrios, Articles 7 and 32 of the Constitution recognize that rights such as the right to property existed prior to the Constitution. Because trademark rights were only conceived with the Constitution and because under the Constitution they are sui generis , rules regarding the right to property do not apply them. 62

44. Professor Barrios’s assumption that rights concerning trademarks did not exist until the Uruguayan Constitution came into force is not correct. Intellectual property rights, including rights related to trademarks, existed in Uruguay well before the 1934 Constitution. In fact, Intellectual Property has a long historical evolution. Uruguay’s first Law of Patents No. 325 dates from 1853, its first Law of Trademarks No. 1,325 dates from 1877, and its first law of Literary and Artistic Property No. 3,965 dates from 1912; and, as mentioned in Section II, the aforementioned Montevideo Treaty dates from 1889. 63 Thus, there is no support for Professor Barrios’s argument.

45. Second , Professor Barrios argues that the Civil Code does not apply because trademarks are governed by special laws, not general provisions in the Civil Code. 64 This is not true. The existence of specific laws relating to Intellectual Property does not alter its status as “property”; nor does it affect the applicability of the provisions of the Constitution (Articles 7, 32

61 Uruguayan Civil Code, Articles 486-487 [Exhibit C-266]. 62 See Barrios Opinion at paras. 16, 23 [Exhibit REX-004]. 63 CAPUTO, Alfredo, “Reseña de la evolución histórica de la Propiedad Intelectual en el Uruguay en el contexto Nacional e Internacional,” [Review of the Historical Evolution of Intellectual Property in Uruguay in the National and International Contexts] en “Revista de la Propiedad Industrial,” [Review of Industrial Property] Ed. National Directorate of Industrial Property, No.º 10. October, 2004. DNPI – MIEM, P. 37 [Exhibit CLA-325]. 64 See Barrios Opinion at para. 24 [Exhibit REX-004]. 17

and 33), and of the Civil Code (Articles 486 and 487), in all matters that are not otherwise expressly regulated.

46. Cajarville, a distinguished Uruguayan professor of Administrative Law, teaches that the opposite interpretation is not valid if the special law establishes, as in this case, the same result as the general provision. That is, if a special law and a general law establish the same result, both laws apply. Cajarville adds that, if a law governs a specific area, this only means that areas not governed by that law are not governed by that law; that does not mean that those areas are necessarily governed by a contrary law. And, to the extent the special law does not apply, the general law applies. 65

47. Professor Barrios cites in support of her argument that intellectual property is only governed by special laws an excerpt from the commentary on the Civil Code by Orestes Araújo, Oscar Arias Barbé, Saul Cestau and Manuel López which states that “[t]rademark ownership is governed by a special law, which means that the provisions of the Civil Code cannot be applied.” 66 Professor Barrios’s reliance on this text in support of her argument is misplaced. The language cited by Professor Barrios is only part of the relevant text and is taken out of context. 67

48. Significantly, the sentence that Professor Barrios cites goes on to say that the language cited only applies when a trademark has not yet been registered – that is, when the owner of a trademark has only applied to have his or her mark registered. When a trademark has been registered, the paragraph that precedes the paragraph cited by Professor Barrios provides that: “When a trademark has been registered by the Executive, after all the legal requirements concerning publicity have been met and after extensive periods have passed without any objection put forward, those registering have obtained full ownership of the trademark —Art.; 10 of the relevant law—with all the rights of disposal and defense that are laid down in Arts. 486

65 CAJARVILLE PELUFFO, Juan Pablo, “Recursos Administrativos,” [Administrative Remedies] Ed. FCU, 3rd. ed, 2000, p. 32 [Exhibit CLA-326]. 66 Annotated Civil Code by Orestes Araujo, Oscar Arias Barbé, Saul Cestau and Manuel López, Volume Two, Library of Official Publications of the School of Law and Social Sciences of the University of the Republic, Montevideo, 1950, p. 70 [Exhibit CLA-327]; see also Barrios Opinion at para. 24, n. 25 [Exhibit REX-004]. 67 See Barrios Opinion at para. 24, n. 25 [Exhibit REX-004]. 18

and 487 of the Civil Code. ”68 Thus, once registered, a trademark does receive the protections afforded to intellectual property under the Civil Code.

49. For the reasons stated above, it is clear and incontrovertible that, in Uruguay, rights in a mark constitute property rights and a property right includes the right to the “enjoyment” of this property, and, thus, the right to “use” such property as well. Professor Barrios’s attempts to argue otherwise fail.

III. Claimants’ Trademarks

50. According to Uruguay and Professor Barrios, “Under Uruguayan law, the protection that comes with the registration of a trademark covers only the marks exactly as registered,” and “[a]ny variance between the trademark as registered and an item in commerce renders the protection afforded by the registration inapplicable.” 69 This is incorrect and inconsistent with legislation, case law and trademark practice in Uruguay, as discussed below.

A. There Is No Support for Professor Barrios’s Assertion that Trademark Protections Cover Only Marks Exactly As Registered

1. The Sources Professor Barrios Cites in Her Opinion Do Not Support Her Assertions

51. Professor Barrios argues that “the scope of trademark rights is limited to the signs ‘precisely as ’ they were granted.” 70 In support, she cites only Article 6 quinquies of the Paris Convention and Article 13 of Uruguay’s Trademark Law. 71 However, these sources are irrelevant and do not support Professor Barrios’s argument. In fact, Article 6 quinquies supports the opposite—that trademark owners are entitled to protections so long as differences in the trademarks do not affect the trademark’s distinctive character.

52. The purpose of Article 6 quinquies of the Paris Convention is to regulate the possibility of registration of marks registered in one country to which the Convention applies (members of the “Union”) in another country of the Union. Hence the express title of the

68 Annotated Civil Code by Orestes Araujo, Oscar Arias Barbé, Saul Cestau and Manuel López, Volume Two, Library of Official Publications of the School of Law and Social Sciences of the University of the Republic, Montevideo, 1950, p. 70 [Exhibit CLA-327] (emphasis added). 69 Respondent’s Counter-Memorial at para. 9.53 (citing Barrios Opinion at paras. 29, 92, 96 [Exhibit REX-004]). 70 Barrios Opinion at para. 92 (emphasis added) [Exhibit REX-004]. 71 Barrios Opinion at para. 92 n.107 [Exhibit REX-004]. 19

Article: “Marks: Protection of Marks Registered in One Country of the Union in the Other Countries of the Union,” and of its paragraph A(1): “Every trademark duly registered in the country of origin shall be accepted for filing and protected as is in the other countries of the Union, subject to the reservations indicated in this Article.” Article 6 quinquies has nothing to do with the effects of registration or the scope of the rights conferred upon the owner of the mark. This is outside the scope of this provision of the Paris Convention. Professor Barrios’s statement that “the protection that comes with the registration of a trademark covers only the marks ‘as is’ or exactly as registered without variation” has no basis and is not supported by the Convention.

53. Not only is Article 6 quinquies unrelated to the effects of registration and the scope of the registered trademark owner’s rights, but its content also contradicts Professor Barrios’s argument. In fact, Article 6 quinquies C(2) provides: “No trademark shall be refused in the other countries . . . for the sole reason that it differs from the mark protected in the country of origin only in respect of elements that do not alter its distinctive character and do not affect its identity in the form in which it has been registered in the said country of origin.” Thus, according to Article 6 quinquies , it is not true that the scope of protection of the trademark is limited to the trademark “exactly” as it was registered and without any variation. On the contrary, it is clear that the trademark is protected as long as its core distinctive character remains intact .

54. In addition, Article 5 C(2) of the Paris Convention states that the “[u]se of a trademark by the proprietor in a form differing in elements which do not alter the distinctive character of the mark in the form in which it was registered in one of the countries . . . shall not entail invalidation of the registration and shall not diminish the protection granted to the mark .” 72 The official commentary for the Paris Convention explains that differences of form in the trademark “will not entail invalidation of the registration” nor “diminish the protection granted to the mark, which means . . . that the mark, in the form in which it is registered cannot be considered as not being used.” 73 Here, again, contrary to Professor Barrios’s assertion, the

72 Paris Convention on the Protection of Industrial Property, at Article 5C(2) (emphasis added) [Exhibit AB-04]. 73 Professor G. H. C. Bodenhausen, Guide to the Application of the Paris Convention for the Protection of Industrial Property, As Revised at Stockholm In 1967 (1969, reprinted by WIPO 2007), Comments (h)-(i) to Article 5, Section C [Exhibit CLA-299]. See also World Intellectual Property Organization, Intellectual Property Handbook , 2004 (“WIPO Handbook”) [Exhibit C-279]. 20

Paris Convention recognizes that differences in form of a trademark may exist and be protected so long as any differing elements do not “alter the distinctive character of the mark in the form in which it was registered.”

55. In her opinion, Professor Barrios also cites Article 13 of Law 17,011 which states: “When registration of a mark is granted, its owner acquires the protection it confers and may not request a new registration for an identical mark and with regard to the same classes, in full or in part, without previously or simultaneously relinquishing the prior registration, in full or in part, as applicable.” This provision is irrelevant, and Barrios does not attempt to explain how it supports her argument.

2. The Documents Uruguay Produced in Document Production Do Not Support Professor Barrios’s Assertions

56. Claimants and Professor Barrios produced additional documents in response to Claimants’ counsel’s document production requests, none of which support Professor Barrios’s assertions. Claimants’ counsel requested “[d]ocuments that Respondent and Prof. Andrea Barrios Kübler considered and/or relied upon for the assertion that Uruguayan trademark protection “covers only marks ‘precisely as’ they are registered and do [sic] not include variations or derivations [of the registered trademark].” 74 Uruguay produced the following four documents in response to this request:

• An explanatory pamphlet on trademark registration in Uruguay. • The Guide to the application of the Paris Convention. • A WTO appeals case regarding US Section 211 of the Omnibus Appropriations Act of 1998 and the obligations it imposes under the Paris Convention. • The civil appeals Tribunal decision in Biberberg y Saul v. Odaler et al .

Uruguay also cited exhibits AB-04 (the Paris Convention) and AB-21 (the Trademark Law) already on the record as responsive to Claimants’ request. None of the documents produced by Uruguay supports Professor Barrios’s assertion that in Uruguay trademark protection would only be afforded to marks “precisely as” (or “exactly as it was registered”).

74 Procedural Order No. 2, dated January 13, 2015, Request No. 17 (quoting Barrios Expert Report at para. 29 [Exhibit REX-004]). 21

57. Explanatory Pamphlet on Trademark Registration in Uruguay : The most relevant discussion in this document provides as follows:

“Is it compulsory to register any modification, slight as it may be, that is performed on the trademark?”

Many trademarks, including some of the most famous, have slightly changed over the years in order to modernize the image of a company or adapt to new advertising media. In such case this trademark as modified must be registered as a new trademark in order to enjoy the protection provided by legislation”. 75

58. This document is a pamphlet published by the Uruguayan Trademark Office as an informative flyer for small and medium sized companies. Its purpose is to provide basic information. It is not intended, as a disclaimer on the pamphlet states, to constitute legal advice. Nor is the pamphlet binding in any way: It is not a rule, statute, regulation or resolution. Rather, it is the Uruguayan Trademark Office’s own non-binding interpretation.

59. Guide to the Application of the Paris Convention : Respondent produced a partial copy of the Guide to the Application of the Paris Convention by Professor Bodenhausen. Again, this document does not provide support for Professor Barrios’s assertion that Uruguayan trademark protection “covers only marks ‘precisely as’ they are registered and do not include variations or derivations [of the registered trademark].”

60. As already mentioned herein, Article 6 quinquies of the Paris Convention does not support Professor Barrios’s allegation. The excerpt of Professor Bodenhausen’s Guide produced by Respondent is an explanation of Section A of Article 6 quinquies of the Paris Convention. Article 6 quinquies is unrelated to the effects of registration and the scope of the registered trademark owner’s rights. Thus, it is irrelevant to Professor Barrios’s assertion and does not provide any support for her argument.

61. US Section 211 of the Omnibus Appropriations Act of 1998 : Respondent produced a copy of a decision issued by the WTO appellate body in a case regarding US Section 211 of the Omnibus Appropriations Act of 1998 and the obligations it imposes under the Paris

75 Trademark Registration Pamphlet " El Secreto está en la Marca " [Exhibit C-503]. 22

Convention. 76 This decision only deals with Article 6 quinquies , paragraph A (1) of the Paris Convention, and – for the reasons that have already been dealt with above in this Opinion – it does not provide support for Professor Barrios’s assertion that Uruguayan trademark protection “covers only marks ‘precisely as’ they are registered and do not include variations or derivations [of the registered trademark].”

62. Biberberg y Saul v. Odaler Decision : Respondent produced a copy of Judgment No. 98 dated May 26, 2010, issued by the Civil Court of Appeals of the 6 th Circuit, in an unfair competition case. 77 This case does not provide grounds or support for Professor Barrios’s assertion that Uruguayan trademark protection “covers only marks ‘precisely as’ they are registered and do not include variations or derivations [of the registered trademark].”

63. The facts of the case are as follows. Biberberg y Saúl S.R.L. (“Plaintiff”) is the owner of trademark COTTONFLOR (wordmark), registered in 2005. Plaintiff was a supplier of the retail store chain Odaler S.A. (“Defendant”), for goods identified with trademark COTTONFLOR. Defendant registered in 2005 trademark COTTON LIFE (wordmark). Plaintiff claimed that Defendant used trademark COTTON LIFE, as part of a label that would cause confusion with the label used by Plaintiff, with the purpose of causing unfair competition.

64. In its reasoning when analyzing a risk of confusion, the Court of Appeals took into consideration, in particular, the existence of dominant distinctive elements and quoted a Spanish Supreme Court Ruling of July 22, 2009. It is clear from this ruling that the scope of trademark protection includes not only the mark as registered, but also variations, where distinctive dominant elements are present. And that protection of the trademark is afforded, even if it differs from the mark as registered, as long as the core distinctive character of the mark remains unaltered. This decision not only does not support Professor Barrios’s assertion, it undermines it.

65. I discuss below the trademarks registered by Claimants and the trademarks used at the time the SPR and 80/80 regulations were enacted. As noted, although there may be slight

76 United States– Section 211 Omnibus Appropriations Act of 1998 , Report of the Appellate Body., AB-2001-7, WT/DS176/AB/R (2001) [Exhibit CLA-301]. 77 Decision of the Civil Court of Appeal of the 6 th Circuit, Biberberg and Saúl S.R.L. v. Odaler S.A. et al., IUE 2‐58.125/2008, dated May 26, 2010. [Exhibit C-491]. 23

differences in the images as used versus the images as registered, any such differences do not alter the registered trademark’s distinctive character. Accordingly, all of the protections afforded to the registered trademarks flow to the trademarks in use.

B. No Changes in the Trademarks Used by Claimants and the Registered Trademarks Alter the Registered Trademark’s Distinctive Character

66. Before 2009, Claimant Abal sold thirteen variants within its six brand families, including Marlboro (a trademark family comprised of Marlboro Red, Marlboro Gold, Marlboro Blue and Marlboro Fresh Mint ); Fiesta (a trademark family comprised of Fiesta , Fiesta Blue, and Fiesta 50 50); Philip Morris (a trademark family comprised of Philip Morris and Philip Morris Blue); Premier (a trademark family comprised of Premier and Premier Extra); Galaxy (comprised of only one product, Galaxy ); and Casino (comprised of only one product, Casino ). 78

67. As for the Marlboro trademark family, its four variants were sold in the following packages 79

78 See Claimants’ Memorial on the Merits, March 3, 2014 (“Claimants’ Memorial on the Merits”), at para. 75. 79 See Claimants’ Memorial on the Merits at para. 76. 24

68. When Respondent imposed the Single Presentation Requirement (“SPR”), Abal needed to select which of the brand variants it wanted to keep and which, therefore, it needed to stop using. The chart below shows Claimants’ variants banned by the SPR: 80

69. In regard to Claimants’ trademarks, Professor Barrios contends that Claimants have no trademark rights to the brands they sold given that the signs that identified those products differ from the trademarks “exactly as” registered with the Uruguayan Trademark Office. 81 Professor Barrios’s contention and analysis are incorrect.

70. The product variants as used in the market fall within the scope of protection of Claimants’ registered trademark rights, because they maintain the essential distinctive features of the trademark families and only differ slightly from the registered trademarks with respect to non-essential elements. As discussed in Section III above, variations in secondary, non-essential elements of trademarks neither invalidate the registration nor diminish the protection granted to the trademarks.

80 See Claimants’ Memorial on the Merits at para. 96. 81 See Barrios Opinion at paras. 88 and 89 [Exhibit REX-004]. 25

Marlboro Gold

71. Before the SPR regulation came into force, Abal used the following variant of its Marlboro trademark family (referred to as Marlboro Gold): 82

72. Professor Barrios concedes that “[t]he presentation adopted by the Marlboro Gold trademark is similar to that claimed in the trademark title corresponding to the Marlboro Lights trademark.” 83 In fact, the Marlboro Gold variant of the Marlboro trademark family is substantially identical to the registered Marlboro Lights trademark (Reg. No. 335,632):

82 Professor Barrios mistakenly bases her assertion that Claimants lack trademark rights over Marlboro Gold on the allegation that the wordmark “Marlboro Gold” was never requested as such, as indicated in a negative certificate for “Marlboro Gold” issued by the DNPI showing that no trademark was registered under such name. (A “negative certificate” is a certificate issued by the Trademark Office at the request of any third party to determine whether a given trademark is registered). Professor Barrios is addressing the wrong question. She is erroneously relying on how the marks are internally referred to by the Claimant’s internal identification purposes (“Marlboro Gold”). Whereas, the correct issue and question to ask is whether the presentation of the variant Marlboro Gold is protected under Claimants’ trademark rights, which, in fact, it is. 83 See Barrios Opinion at para. 101 [Exhibit REX-004]. 26

73. Core distinctive elements of the Marlboro brand family are present both in the Marlboro Gold variant and in Reg. No. 335,632, including the characteristic chevron or “rooftop” design, the coat of arms, and the word Marlboro written in a distinctive typeface.

Registered Trademark 84 Trademark as Used

74. As to the term “lights,” it is not distinctive. It is common in the tobacco industry and constitutes a non-essential element. Claimants’ Marlboro Gold variant is protected by the Marlboro Lights trademark registration Reg. No. 335,632.

75. It is worth noting that, as described in Reg. No. 335.632, the registration covers the mark without claim to colors , thus providing protection for any color variant under which the distinctive elements of the trademark may be presented.

84 DNPI, Mark Details for “Marlboro Lights,” File No. 335632, available at http://www.dnpi.gub.uy (last visited 25 June 2014) [Exhibit R-328]. 27

Marlboro Blue

76. Similar to her contention in the case of Marlboro Gold, Professor Barrios asserts that Claimants lack trademark rights for the Marlboro Blue variant of the Marlboro trademark family. 85 Her allegation is incorrect. Below is Claimants’ registration for trademark Reg. No. 368,717 ( Marlboro Mild Flavor):

Reg. No. 368,717

85 Barrios Opinion at para. 103 [Exhibit REX-004]. 28

77. It is evident from the comparison below that the core distinctive elements of the Marlboro brand family are present in both the Marlboro Blue variant and in Reg. No. 368,717, including the characteristic chevron or “rooftop” design, the color blue, the coat of arms, and the word Marlboro written in a distinctive typeface.

Registered Trademark 86 Trademark as Used

78. As to the term “mild flavor,” it is not distinctive. In fact, the phrase is common in the tobacco industry and constitutes a non-essential element.

86 DNPI, Mark Details for “Marlboro Mild Flavor,” File No. 368717, available at http://www.dnpi.gub.uy (last visited 25 June 2014) [Exhibit R-342]. 29

Marlboro Fresh Mint

79. In regard to this variant of Claimants’ Marlboro trademark, Professor Barrios concedes that it is identical to Reg. No. 395,718.

Registered Trademark 87 Trademark as Used

80. Professor Barrios only implies (without further elaboration) that since the trademark was applied for on September 5, 2008 (before the SPR entered into force), but was granted on November 23, 2011 (after the SPR took effect), it could not have been affected by the SPR. 88 That is not correct.

81. The filing of a trademark application gives the applicant a right of preference, pursuant to Article 30 of the Trademark Law. 89 A right of preference grants a trademark applicant with the right to have his trademark application considered before trademark applications that may have been filed by third parties, after the filing of his application. Therefore, in the event that two identical or similar trademarks have been applied for, he who filed first is in principle vested with the right of preference. Thus, the issuance and entry into

87 The trademark registrations associated with the products Abal sold in Uruguay immediately prior to the single presentation regulation [Exhibit C-158]. 88 Barrios Opinion at para. 106 [Exhibit REX-004]. 89 Trademark Law No. 17.011at Article 30: “The preference for registration shall be given by the date and time of filing of the application concerned.”[Exhibit C-135]. 30

force of the SPR caused direct damage to Claimants, who had a right of preference and a legitimate interest in the trademark application for Marlboro Fresh Mint, the registration of which was duly granted by the DNPI, and of which Claimants have been ultimately deprived by virtue of the SPR. The continuation of the SPR forbids Claimants’ enjoyment of their property rights under their 395,718 trademark registration.

Fiesta Blue and Fiesta 50 50

82. Before the SPR came into force, Claimants marketed three variants of its Fiesta trademark: Fiesta, Fiesta Blue, and Fiesta 50 50. 90 As a consequence of the SPR, the Fiesta Blue and Fiesta 50 50 variants of the Fiesta trademark family were banned. 91

Fiesta Blue variant. 92 Fiesta 50 50 variant. 93

83. As clearly shown below as regards the Fiesta Blue variant and the Fiesta 50 50 variant, both fall within the scope of protection of Claimants’ trademark rights.

90 Again, Professor Barrios mistakenly grounds her assertion that Claimants lack trademark rights over Fiesta Blue and Fiesta 50 50 on the allegation that the wordmarks “Fiesta Blue” or “Fiesta 50 50” were never requested. Once more, Professor Barrios is addressing the wrong question. The correct issue is whether the presentation of the variants Fiesta Blue and Fiesta 50 50 are protected under Claimants’ trademark rights, which in fact they are. 91 See Claimants’ Memorial on the Merits at para. 96. 92 DNPI, Mark Details for “Fiesta Milds,” File No. 340730, available at http://www.dnpi.gub.uy (last visited 25 June 2014) [Exhibit R-326]. 93 DNPI, Mark Details for “Fiesta 50 50 PM,” File No. 388400, available at http://www.dnpi.gub.uy (last visited 25 June 2014) [Exhibit R-323]. 31

84. In regard to the Fiesta Blue variant:

Registered Trademark 94 Trademark as Used

85. As in the cases analyzed earlier in my opinion, it is evident from the comparison above that the core distinctive elements are present both in the Fiesta Blue variant and in Reg. No. 340,730, including the characteristic blue ribbon design, the coat of arms, and the word Fiesta written in the same distinctive typeface. As noted above, the word “Milds” is not distinctive. It is common in the tobacco industry and constitutes a non-essential element.

94 DNPI, Mark Details for “Fiesta Milds,” File No. 340730, available at http://www.dnpi.gub.uy (last visited 25 June 2014) [Exhibit R-326]. 32

86. In regard to the Fiesta 50 50 variant:

Registered Trademark 95 Trademark as Used

87. The variant and the existing registration are substantially identical and similar to the previous cases that have been analyzed. 96 It is evident that the core distinctive elements are present in both the Fiesta 50 50 variant and in Reg. No. 388,400. It is worth noting that Reg. No. 388.400 covers the mark without claim to colors , thus providing protection for any color variant under which the distinctive elements of the trademark may be presented.

95 DNPI, Mark Details for “Fiesta 50 50 PM,” File No. 388,400, available at http://www.dnpi.gub.uy (last visited 25 June 2014) [Exhibit R-323] 96 Application 388,400 was filed on February 1, 2008, from which date Claimants had a right of preference. The registration was granted on June 1, 2009. 33

Philip Morris Blue

88. Before the SPR came into force, Claimants used the following variant of their Philip Morris trademark (referred to as Philip Morris Blue): 97

Philip Morris Blue variant. 98

89. As a consequence of the SPR, the Philip Morris Blue variant of the Philip Morris trademark family was banned. 99

97 Once more, Barrios mistakenly grounds her assertion that Claimants lack trademark rights over Philip Morris Blue on the allegation that the word mark “Philip Morris Blue” was never requested. Once more, Barrios is addressing the wrong question. The correct issue is whether the presentation of the variant Philip Morris Blue is protected under Claimants’ trademark rights, which in fact it is. 98 DNPI, Mark Details for “Philip Morris,” File No. 336029, available at http://www.dnpi.gub.uy (last visited 25 June 2014) [Exhibit R-332]. 99 See Claimants’ Memorial on the Merits at para. 96. 34

90. As shown below as regards the Philip Morris Blue variant, it clearly falls within the scope of protection of Claimants’ trademark rights.

Registered Trademark 100 Trademark as Used

91. The variant and the existing registration are substantially identical, and, similar to the previous cases that have been analyzed, it is evident that the core distinctive elements are present in both the Philip Morris Blue variant and in Reg. No. 336,029, including the characteristic coat of arms, the design, and the word Philip Morris written in the same distinctive typeface.

92. It is relevant again to note here that Reg. No. 336.029 covers the mark without claim to colors , thus providing protection for any color variant under which the distinctive elements of the trademark may be presented (as is the case with Philip Morris Blue). V. Conclusion

93. For the reasons that I have explained in this Opinion, I conclude that:

• A trademark owner in Uruguay has an affirmative right to use his or her trademark under Uruguayan law.

• International agreements applicable in Uruguay (including the Protocol on Harmonization of Intellectual Property Regulations in Mercosur for Trademarks, Indications of Source and Appellations of Origin, approved by Law No. 17,052 of December 14, 1998) recognize that trademark owners have a right to use their marks.

100 DNPI, Mark Details for “Philip Morris,” File No. 336029, available at http://www.dnpi.gub.uy (last visited 25 June 2014) [Exhibit R-332]. 35

• The Protocol was approved by Uruguay by Law No. 17,052 of December 14, 1998; it is a law in Uruguay; and it is an integral part of the current legal system of Uruguay.

• Article 11 of Law No. 17,052 that approved the Protocol in Uruguay leaves no doubt that a trademark registration grants a right to use a Trademark.

• The Montevideo Treaty – in force in Uruguay – expressly and unequivocally enshrines in Articles 1 and 2 thereof the right of a trademark owner to its exclusive use and describes the rights in the mark as a “trademark property” right.

• Intellectual property rights are property rights under Uruguayan law and, therefore, owners of such property are entitled to its use.

• Uruguayan law treats intellectual property rights as property rights.

• The right to enjoy and use property (including intellectual property) is protected under Uruguayan law.

• Claimants’ trademarks as used in commerce do not differ in distinctive character from Claimants’ trademarks as registered.

• All of the trademarks on which Claimants base their claims are protected as Claimants’ registered trademark property.