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PROJECT OF THE ORGANIC LAW OF THE SOCIAL ECONOMY OF KNOWLEDGE, CREATIVITY AND INNOVATION PREAMBLE The Project of the Organic Law of the Social Economy of Knowledge, Creativity and Innovation constitutes a normative instrument which aims to radically modify the existing paradigms in the generation, use, exploitation and distribution of the asset knowledge, which is of public interest, through the implementation of legal rules that make fair relationships feasible between the various stakeholders, as well as, providing the necessary conditions for the balanced access to the benefits of this asset to achieve the highest possible level of satisfaction of needs and the full exercise of human and nature rights. To contextualize the objectives of this body of law, we must explain the current state of the development of science, research, technology, innovation and the protection of traditional knowledge in our country; thus, from this diagnosis the statements, directives and guideless of the Organic Law shall be understood clearer. The low endogenous development of knowledge in the country, for example, is a difficult condition to overlook when we analyze our System of Science, Technology and Innovation, and Traditional Knowledge. In fact, indicators such as the number of patents submitted by national stakeholders; the almost non-existent innovation generated by Ecuadorian companies; as well as, the expense on science, technology and innovation compared to the GDP, are figures that openly reveal the profile of our cognitive matrix, which shall influence determinedly on the composition of the productive matrix. In this context, our cognitive and technological matrix has been largely dependent on activities and assets produced in and by “developed” countries. These features, as explained below, have resulted in the absence of a system per se, as our society has not considered knowledge – with the exception of the modalities of intellectual property – as an asset; then, historically there has been very little added value from the use and exploitation of knowledge, as is the insufficient funding for its production and management. The causes of this discouraging state are diverse, but without a doubt, one of the main causes is the lack of interaction between the Higher Education System and the System of Science, Technology and Innovation. If we focus on the historical development and operation of these systems, we find that the legal institutions that comprise either are outdated or far from the national reality or, otherwise, have been openly nonexistent. With the support of the Government of the Citizen`s Revolution, these conditions have begun to change; thus, on October 12, 2010, in the Official Gazette No. 298, the Organic Law on Higher Education was enacted, this law implements the transformation of the Higher Education System with the modernization of its institutions, the development of governing principles and the regulation of the rights of the stakeholders. Nevertheless, until the date of enactment of the Organic Law of Knowledge, Creativity and Innovation, the National System of Science, Technology and Innovation, enshrined in article 385 of the Constitution of the Republic – fundamental base for the development of research, technology and national production – this shall continue without an appropriate regulatory framework. In this vein, the project of the Organic Law proposes a profound interaction between the two aforementioned systems, with other systems such as: the National Education System, the National Culture System, and the Productive System, among others. Another cause worth mentioning is the existence of the Intellectual Property Law enacted on

1998, that for almost 20 years, through a hyper-privatizing system of knowledge, has only benefited the holders/traders of intellectual property corresponding to few transnational monopolies, which has limited the possibility to innovate, and has not attracted any foreign investment. The normative vision used in the art, however, cannot go awry. The time lost so far demands that the new regulatory framework allows democratization in the use and enjoyment of the benefits of knowledge. It also requires the greatest possible efficiency in coordinating activities to avoid duplication of efforts. The current technological gap in the core countries needs to be shortened, for it is essential that matching technological processes and knowledge transfer, inter alia, have the necessary conditions to consolidate the System; in short, the Project of the Organic Law determines a new institutional framework which, within the international legal system, promotes the generation of knowledge under an open, social, democratic, inclusive system, focused on human beings, in the development of their ability and exercise their rights within a framework of respect for the rights of others and nature. At this point, it is essential to emphasize the plural condition of the noun knowledge within the name of the Organic Law. Indeed, the Ecuadorian Government holds a historical debt through its republican life: its institutions have persistently used a Eurocentric worldview, thus not considering any manifestation of knowledge or culture that does not fall within the western and positivist models. The loss due to this shortsightedness is immeasurable. In response to this debt, the Organic Law proposes the recognition, protection and encouragement of development not only of western knowledge, but traditional knowledge and any type of knowledge that contributes to national development. The preliminary Title of the Organic Law of the Social Economy of Knowledge, Creativity and Innovation presents its objectives, purposes and principles. Through its articles the conceptual field in which it was created is demarcated. The first claim made in this text is the declaration of the public interest of the asset knowledge, thought as an answer to the lack of System in Ecuador and to the regent cognitive capitalist model in the international trading context. This declaration is not innocuous; in that, on one hand it considers knowledge as a fundamental activity inside society for the achievement of the Good Living, in so, that the State shall be able to protect and develop knowledge through its public policies, programs, projects and actions in coordination with the private sector, and with stakeholders of popular and solidary economy. On the other hand, the posed claim also contains an alternative for the hyper-privatization of knowledge, the current imposed models on the management and protection of these assets do not apply to the current state of scientific and technological development in which we find ourselves in; therefore, the prevailing legal system not only does not contribute to our development, but often directly obstructs it. It is necessary, therefore, that the State may, in the cases provided for by law and respecting the constitutional rights of the people, intervene in those unjust situations, where the distribution of knowledge is not only desirable but essential to achieving a collective well-being. The First Book of the Organic Law of the Social Economy of Knowledge, Creativity and Innovation, defines the institutional operation of the System, which has been conceptualized in a decentralized, inclusive and participatory manner. In this Book we find the bodies and stakeholders that Govern, Control, Manage and Generate knowledge, as well as the consultant bodies of the System. The articles of this Book lay the groundwork so that the institutional framework is coordinated, effective and efficient; it is designed as the fundamental organic leverage so that the activities of the social economy of knowledge, creativity and innovation can be developed and consolidated. In this Book, in addition, knowledge spaces are created and regulated: places dedicated to the production, transference, and exploitation of the goods

and intensive services in the use of knowledge. In the same manner, inside the mentioned Book, we find a chapter concerning the transversal elements of the Social Economy of Knowledge, these are: Strengthening of Human Talent, Participation in the Productive Sector, Lifelong Learning, Access and Sovereignty of Knowledge in Digital Environments. These elements, due to their influence, projection and strategic sensitivity are high priority; its regulation has been raised to establish the conditions for its sustained and sovereign development. The Second Book of the Organic Law of the Social Economy of Knowledge, Creativity and Innovation establishes the Titles of responsible research and social innovation. The former guarantees freedom of research as a base of any scientific activity, in such manner that these activities are based on respect to ethics, nature, the environment and rescue, exploitation and strengthening of the ancestral and local knowledge. In the same sense, and given the special characteristics that human talent has when it is destined to scientific activities, this Book also establishes the certification and career of the scientific researcher, so that the working needs of the investigators may be dealt by an appropriate regulatory framework. Ecuador stands strongly as one of the countries with more biodiversity in the world; consequently, the Organic Law discusses widely on research on biodiversity with a dual purpose: first to preserve the natural and ancestral heritage on which researches shall be conducted; and second, use this source of wealth that contains the information of our biological and genetic resources, ensuring that the benefits of this research are shared fairly. In the Second Title of the Second Book, regarding the social innovation, it is defined as the creative and collaboration process through which a new and improved good, service or process is introduced with an aggregated value, that modifies and incorporates new social behaviors for problem solving, increase on individual or collective capacities, satisfying the needs of society and the effective practice of rights. This definition, without a doubt, represents a qualitative jump in the concept of innovation; and, to an extent, it is the main base to conceptualize a system of inclusive innovation, focused on people and the endogenous development. Within this context, transference and technological disaggregation is regulated as fundamental tools to shorten the technological gap with developed countries; likewise, an accreditation of the stakeholders of the process of innovation is established so that they comply with the quality standards of their work. Book III of the Organic Law of the Social Economy of Knowledge, Creativity and Innovation establishes a new knowledge management model to replace the current Intellectual Property Law. This new model develops the plurality of forms of property enshrined in the Constitution of the Republic and provides a balance between the rights of the holders of intellectual property rights, whether creators or trades and users, competitors and citizens, to achieve a greater democratization of the benefits and opportunities of knowledge. By creating a typology of assets it proposes to give a different treatment to certain assets, those which stand out are those destined for the satisfaction of fundamental rights, those framed in the strategic areas and those associated to biodiversity and ancestral knowledge, thus using knowledge strategically for the development of Ecuador and the welfare of all. The Fourth Book of the Organic Law of the Social Economy of Knowledge, Creativity and Innovation corresponds to the financing of the System and the incentives for the social economy of knowledge, creativity and innovation. The Constitution of the Republic, in its article 298, provides the creation of an earmarking budget for research, science, technology and innovation, in this regard, the Organic Law complies with this constitutional provision, thus, it creates the aforementioned earmarking and further notes its funding sources. The

participation of the private, mixed, popular and solidarity sectors is essential for the consolidation of the activities of the economy of knowledge; therefore this Book establishes a series of financial, administrative and tax incentives which aim to encourage greater private sector participation in the activities of science, technology and innovation, to build an ecosystem which articulates all stakeholders to build a country which founds its economy on knowledge, creativity and innovation.

THE NATIONAL ASSEMBLY ACCOUNTING: That article 276 of the Constitution provides that the development structure shall have as objectives, among others, to improve the quality of life and life expectancy, and enhance the capacities and potential of the population within the framework of the principles and rights provided for by the Constitution; to build a fair, democratic, productive, mutually supportive and sustainable economic system based on the egalitarian distribution of the benefits of development and the means of production, and on the creation of decent, stable employment; and to guarantee national sovereignty, promote Latin American integration and boost strategic insertion into the global context;

That article 387 of the Constitution provides that it shall be the Stateâ&#x20AC;&#x2122;s responsibility to facilitate and promote incorporation into the knowledge society to achieve the objectives of the development system; promote the generation and production of knowledge, to foster scientific and technological research, and to upgrade ancestral wisdom to thus contribute to the achievement of the Good Way of Living; ensure dissemination of and access to scientific and technological knowledge, the usufruct of discoveries and findings in the framework of what was established in the Constitution and the law; guarantee the liberty of creation and research in the framework of respect for ethics, nature, the environment, and restoration of ancestral knowledge; and, recognize the status of researcher in accordance with the law; That article 283 of the Constitution of the Republic establishes that the economic system is socially oriented and mutually supportive; it recognizes the human being as a subject and an end; it tends towards a dynamic, balanced relationship among society, State and the market, in harmony with nature; and its objective is to ensure the production and reproduction of the material and immaterial conditions that can bring about the Good Living; That article 284 of the Constitution of the Republic establishes the objectives of the economic policy, where we find: ensure an adequate distribution of the countryâ&#x20AC;&#x2122;s revenues and wealth; encourage national production, systemic productivity and competitiveness, the accumulation of scientific and technological knowledge, strategic insertion into the world economy, and complementary productive activities within regional integration; and, uphold economic buoyancy, understood as the maximum sustainable level of production and employment over time That articles 385 and 386 of the Constitution provide that the national system of science, technology, innovation and ancestral knowledge, in the framework of respect for the environment, nature, life, cultures and sovereignty, shall have as its end purpose generate, adapt, and disseminate scientific and technological knowledge; restore, strengthen and upgrade ancestral knowledge; develop technologies and innovations that promote national production, raise efficiency and productivity, improve the quality of life and contribution to the

achievement of the Good Living; That article 277 of the Constitution provides that the general duties of the State in order to achieve the Good Living shall be to promote and bolster science and technology, the arts, ancestral knowledge and, in general, activities resulting from the creative initiative of communities, associations, cooperatives and the private sector; That article 388 of the Constitution provides that the State shall allocate the resources needed for scientific research, technological development, innovation, scientific training, restoration and development of ancestral wisdom, and the dissemination of knowledge. A percentage of these resources shall be earmarked for funding projects by means of competitive funds. Organizations that receive public funding shall be subject to accountability and the respective state control; That article 25 of the Constitution establishes that the people have the right to enjoy the benefits and applications of scientific progress and ancestral knowledge; That letter d) of numeral 3 of article 66 of the Constitution recognizes and guarantees people the right to personal well-being, which includes prohibition of the use of genetic material and scientific experimentation that undermines human rights; That article 322 of the Constitution recognizes the intellectual property pursuant to the conditions provided for by law and forbids any form of appropriation of collective knowledge, in the fields of science, technology and ancestral knowledge and the appropriation of genetic resources contained in biological diversity and agricultural biodiversity; That article 402 of the Constitution forbids the granting of rights, including intellectual property rights, to byproducts or synthetics obtained from collective knowledge associated with national biodiversity That numeral 12 of article 57 of the Constitution recognizes and guarantees to uphold, protect and develop collective knowledge; their science, technologies and ancestral wisdom; the genetic resources that contain biological diversity and agricultural biodiversity; their medicine and traditional medical practices, with the inclusion of the right to restore, promote, and protect ritual and holy places, as well as plants, animals, minerals and ecosystems in their territories; and knowledge about the resources and properties of fauna and flora; That it is essential to create a system of protection of traditional knowledge for the benefit of communities in their capacity as legitimate holders; That article 22 of the Constitution provides the right to people to benefit from the protection of moral and heritage rights that pertain to them as a result of the scientific, literary or artistic productions of which they are the authors; That The Intellectual Property Law enacted in the 1998 is not harmonized with the rights and guarantees established in the Constitution of the Republic of Ecuador, and provides a legal system whose central point if private rights and an essentially mercantilist approach to the rights of intellectual property; That it is necessary to make strategic use of the intellectual property rights to promote technology transfer, generation of science, technology, innovation and a change of the productive matrix in the country;

That article 133 of the Constitution provides that organic laws regulate the organization and functioning of the institutions established by the Constitution and the exercise of constitutional rights and guarantees as the statements in the former considerations; That article 298 of the Constitution provides that earmarked budget allocations shall be destined, among other sectors, to the education sector and higher education, for research, science, technology and innovation, in the terms provided for by law; That the Minister of Finance in accordance with article 74 number 15 of the Organic Law of Planning and Public Finance, through official letter No. DM-0314 MINFIN of June 2, 2015, issued a favorable opinion of the Proposal of the Organic Law of the Social Economy of Knowledge, Creativity and Innovation By exercising its constitutional and legal rights, issues the following: â&#x20AC;&#x153;ORGANIC LAW OF THE SOCIAL ECONOMY OF KNOWLEDGE, CREATIVITY AND INNOVATIONâ&#x20AC;?

PRELIMINARY TITLE OF THE COMMON PROVISIONS OF THE SOCIAL ECONOMY OF KNOWLEDGE, CREATIVITY AND INNOVATION

Article 1.- Objective.- This Organic Law aims to regulate the National System of Science, Technology, Innovation and Ancestral Knowledge, and its coordination mainly with the National Education System, Higher Education System, and the National System of Culture, in order to create a legal framework in which the social economy of knowledge, creativity and innovation. Article 2.- Scope.- By this Organic Law all natural person and legal entities and other forms of association that develop activities related to the social economy of knowledge, creativity and innovation are governed. Activities related to the social economy of knowledge, creativity and innovation are those focused on creating value from the intensive use of the generation, transmission, management and exploitation of the asset knowledge of public interest, including traditional knowledge; promoting in all productive sectors collaboration and empowerment of the individual social skills, democratization, fair distribution, and efficient use of resources in harmony with nature, aimed to obtaining the Good Living. Article 3.- Purpose.- This Organic Law has, as main purposes the following: 1. Generate instruments for promoting an economic model that democratize the production, transmission and appropriation of knowledge as an asset of public interest, thus, ensuring the accumulation and redistribution in a fair and sustainable manner and in harmony with nature; 2. Promote the development of science, technology, innovation and creativity to meet the needs and make effective the exercise of rights of individuals, peoples and nature; 3. Encourage the production of knowledge in a democratic, collaborative and solidary manner;

4. Encourage national and regional circulation and transfer of knowledge and available technology though the creation of social innovation networks, to increase them from a complementary and solidary practice; 5. Build a pluralistic and inclusive vision in the use of knowledge, giving supremacy to the use value over exchange value; 6. Develop forms of ownership of knowledge compatible with the Good Living, these being: public, private, community, state, associative and mixed; 7. Encourage the disaggregation and technology transfer through mechanisms that allow the generation of research, technology development and innovation with a high degree of national component; 8. To promote the fair and equitable sharing of benefits arising out of activities related to the generation, transmission, management, use and exploitation of knowledge, technology, innovation and traditional knowledge, as well as the efficient use of social factors of production to increase the stock of knowledge and innovation 9. Establish funding sources and incentives for the development of the activities of the social economy of knowledge, creativity and innovation; 10. Encourage the development of the information and knowledge society as a fundamental principle for increasing productivity in production factors and intensive working activities in knowledge; and, 11. Promote the protection of biodiversity as a heritage of the State, through the rules that guarantee its sovereign and sustainable use, safeguard the rights of communities, peoples and nations over their traditional knowledge related to biodiversity; and prevent misappropriation of biodiversity and traditional knowledge associated with this. Article 4.- Principles.- For the application of the provisions in this Organic Law, the following principles shall be observed: 1. Knowledge is an asset of public interest, its access shall be free and shall not have other restrictions than those established herein, the Constitution, treaties and international instrument and the Law and, its distribution shall be made in a fair, equitable and democratic manner; 2. Intellectual property rights are tools for an appropriate knowledge management. The acquisition and exercise of intellectual property rights shall ensure a balance between owners and users. In addition to the limitations and exceptions provided herein, the State may take the necessary measures to ensure health, nutrition, education, culture, scientific and technological development, innovation and technology transfer and technology dissemination as vital sectors for socio-economic and technological development in the country. None of the provisions herein shall be interpreted as contrary to the principles, rights and obligations established under the Agreement on Trade-Related Aspects of Intellectual Property Rights -TRIPS- as an integral part of our legal system; 3. The formation of human talent is the primary factor of a social economy based on knowledge, creativity and innovation, reason why it must be of excellence and distributed democratically; 4. Knowledge shall be developed in a collaborative and jointly responsible manner; 5. The generation, transmission, management, use and exploitation of knowledge, creativity, technology, innovation and traditional knowledge shall be geared towards the realization of the Good Living, seeking the satisfaction of the needs of the population, the effective exercise of rights and biophysically sustainable exploitation of the country's resources, in the context of ensuring the reproduction of life; 6. Sovereignty over knowledge is a strategic objective of the State to guarantee the people the generation, transmission, management, use and exploitation of knowledge, technology and innovation and thus materialize the Good Living;

7. Academic education and scientific research must contribute to the attainment of the objectives of the National Development Plan; 8. The generation, transmission, management, use and exploitation of knowledge, technology, innovation and traditional knowledge should primarily promote social cohesion and inclusion of all citizens; 9. Activities related to the social economy of knowledge, creativity and innovation shall be developed within a framework of equal opportunities, coordination, transparency, quality, performance evaluation and accountability; 10. In the operation of the social economy of knowledge, creativity and innovation, mechanisms of relevant decentralization shall be established, enabling efficient management and close to territory; 11. Ethics in science, technology and innovation must be aimed to satisfying needs and preservation of human dignity and its applications must be rational, pluralistic and fair; 12. The research processes and technology and innovation generators must safeguard the physical and psychological integrity of persons involved in them. Any risk or involvement on the rights of people or nature must be legitimate, proportionate and necessary. In relevant cases, it must have a free consent, prior and informed of possible affectations; 13. Freedom of research and technological development in the regulation framework and limitations for reasons of safety, health and ethics, or any other public interest determined by Law is guaranteed; 14. Creativity is inherent to the people and represents a crucial element for the social economy of knowledge, creativity and innovation. The State shall recognize, protect and encourage creativity as a key mechanism for problem solving, meeting the needs of society and individual fulfillment in interaction with responsible investigation, social innovation and traditional knowledge; 15. The State shall provide a favorable environment for expansion and strengthening of artistic and cultural activities, encouraging mainly free creation; research in arts and culture, with a focus on gender equality and non-discrimination; as well as their interaction with other activities of the social economy based on knowledge, creativity and innovation; 16. Biodiversity and genetic heritage are State property and are inalienable, imprescriptible and un-seizable; this cannot be privatized and their access, use and exploitation shall be made strategically seeking the generation of endogenous knowledge and national technological development; 17. The public space shall contribute to the generation and dissemination of knowledge, especially for cultural and artistic creations. The State shall provide all facilities for the public space to be used for the benefit of creators and users; 18. The dialogue of knowledge is recognized as the process of generation, transmission and exchange of scientific knowledge and traditional knowledge for the realization of the Multinational and Intercultural State; and, 19. Because of its magnitude and economic, social and political impact, the State shall promote in a pressing manner research activities and technological development in the so-called economic sectors as basic industries.

BOOK I Of the National System of Science, Technology, Innovation and Traditional Knowledge Title I General Regulations Article 5.- National System of Science, Technology, Innovation and Traditional Knowledge.Comprises the coordinated and correlated ensemble of regulations, policies, instruments, process, institutions, organizations, bodies, entities and individuals that are involved in the social economy of knowledge, creativity and innovation, to generate science, technology, innovation, and to rescue and strengthen traditional knowledge as fundamental elements to generate value and wealth for society. The Executive Branch shall coordinate between the different Systems that affect the social economy of knowledge, creativity and innovation for the joint issuance of public policy by the Secretariat for Superior Education, Science, Technology and Innovation. Article 6.- Structure.- The National System of Science, Technology, Innovation and Traditional knowledge shall be integrated by the following institutions, bodies and entities: 1. Governing bodies and organizations that define, control and evaluate policies: a) The governing body of the National System of Science, Technology, Innovation and Traditional knowledge; and, b) The Decentralized Autonomous Governments (GADs), within their scope. 2. Competent authority on intellectual rights. 3. Consultant Entities for Public Policy Planning: a) Regional Consultant Committees for Planning of Higher Education, Science, Technology, Innovation and Traditional Knowledge. 4. a) b) c) d) e)

Stakeholders that Generate and Manage Knowledge: Decentralized Autonomous Governments, within their scope; Institutions of higher education; Entities of Scientific Investigation; Academies of science; Natural persons and legal entities and other types of associations related to the activities of the social economy of knowledge, creativity and innovation in all economic sectors, including the productive sector and the popular and solidary economic sector; f) Communities, towns, indigenous nationalities, through their input of traditional knowledge; and, g) Public institutions, public companies and other entities related to the responsible investigation, strengthening of human talent, management of knowledge, science and technology, social innovation, traditional knowledge and creativity, in a central and decentralized level. 5. Organizations that Ensure an Ethical Scientific Investigation: a) National Organization for Scientific Investigation; and, b) Institutional Bodies of Ethics.

Title I Bodies and Organizations of the National System of Science, Technology, Innovation and Traditional Knowledge Chapter I Governing Body of the National System of Science, Technology, Innovation and Traditional Knowledge Article 7.- Governing Body of the National System of Science, Technology, Innovation and Traditional Knowledge.- The Secretariat for Higher Education, Science, Technology and Innovation, traditional knowledge is part of the Executive Branch, and is steward of the national public policy in the subjects regulated herein, as well as coordinator between the public sector, the private sector, the popular and solidarity sector, the institutions of the Higher Education System and other systems, organisms and entities that are part of the social economy of knowledge, creativity and innovation. The governing body has regulatory capacity, punitive power and coercive jurisdiction, in accordance with the provisions herein and in the applied regulatory framework. It is the responsibility of the Secretary or of the Secretariat for Higher Education, Science, Technology and Innovation Article 8.- Duties and responsibilities of the governing body of the National System of Science, Technology, Innovation and Traditional Knowledge.- The governing body of the National System of Science, Technology, Innovation and Traditional Knowledge, has the following responsibilities and duties: 1. Define, implement and evaluate national public policy of the National System of Science, Technology, Innovation and Traditional Knowledge for the social economy of knowledge, creativity and innovation, especially regarding research, innovation, transfer, monitoring, dissemination of knowledge, technological development, intellectual property and traditional knowledge; 2. Safeguard compliance of the objectives of the public policy of the National System of Science, Technology, Innovation and Traditional Knowledge; 3. Develop the National Plan of the Social Economy of Knowledge, Creativity, Innovation and Traditional Knowledge in accordance with the objectives of the Country; 4. Issue the regulations, manuals, instructions, guidelines and other regulatory instruments that shall be binding to all stakeholders in the system; 5. Dictate the rules for the registration, accreditation and categorization of natural person and legal entities making responsible investigation and social innovation according to the following standards and criteria, such as: quality, safety, scientific production, open technology, infrastructure, management of human talent and social transfer of the results of the processes; 6. Issue the rules for accrediting, approving and monitoring incentives for the promotion of activities related to the social economy of knowledge, creativity and innovation;

7. Set priorities and criteria for the allocation and distribution of resources that comprise the pre allocation for research, science, technology and innovation, as provided herein; 8. Coordinate with regulatory entities the Monetary and Financial System, as well as financing policies of value and security regimes directed to activities related to the social economy of knowledge, creativity and innovation; 9. Coordinate with all the entities, institutions and bodies of the National System of Science, Technology, Innovation and Traditional Knowledge the application and implementation of public policy in the scope hereof; 10. Encourage the strengthening of human talent in order to fulfill the purposes of this Organic Law; 11. Dictate the guidelines for the creation, accreditation, operation and control of the areas of knowledge; 12. Coordinate with the Decentralized Autonomous Governments the decentralized exercise of the competencies related to the National System of Science, Technology, Innovation and Traditional Knowledge based on the objectives outlined in the National Plan of Social Economy of Knowledge, Creativity, Innovation and Traditional Knowledge; 13. Propose guidelines and strategies for the Stateâ&#x20AC;&#x2122;s participation in international organizations and regional integration bodies in subjects of science, technology, innovation, intellectual property and traditional knowledge; 14. Participate and advise on national regulatory proposals and international treaties, that have an impact on the National System of Science, Technology, Innovation and Traditional Knowledge in a national level; 15. Design, implement, manage and coordinate the National System of Science, Technology, Innovation, Traditional Knowledge of Ecuador articulated to the National System of Higher Education of Ecuador; 16. Promote the flow of information and technology transfer between the stakeholders of the National System of Science, Technology, Innovation and Ancestral Knowledge; 17. Grant, modify or revoke the authorization of the areas of operation for the development of knowledge and innovation pursuant to this Organic Law, its regulations and other applicable norms; 18. Encourage and promote programs or projects focused on the production, transfer and management of science, technology and innovation, training of human talent or job skills, among others, in certain economic sectors as basic industries; 19. Issue binding opinion after the establishment of Special Areas of Economic Technological Development; 20. Coordinate and manage, in cooperation with research institutes, institutions of higher education, and other entities that form part of the social economy of knowledge, creativity and innovation, and have processes of technology demand and monitoring;

21. Coordinate and evaluate the management of intellectual property rights; 22. Develop an international mapping system, mainly on scientific-academic publications and on applications for registration or deposit of intellectual property rights that could infringe collective rights of legitimate owners who live in the national territory; among others; 23. Advise and support ex ante and ex post the legitimate holders at negotiations made with interested third parties in the subscription of contracts for access, use and exploitation of their traditional knowledge; 24. Appoint the technical advisers accompanying the permanent representation before international organizations that are linked with the National Science, Technology, Innovation and Ancestral Knowledge; 25. Issue guidelines for the generation, management and dissemination of knowledge of the activities related to research, technological development and innovation of national interest, as well as define the conditions for access, use and exploitation of knowledge resulting from biodiversity, in coordination with the national environmental authority in the area of competence, and traditional knowledge; 26. Prepare and submit to the competent authorities the project of reform of the norm on subjects that regulate this Organic Law. Should these projects relate to the management of knowledge, it must be done in coordination with the competent authority in matters of intellectual rights; 27. Grant the necessary permissions for investigations related to biodiversity in coordination with the National Environmental Authority; 28. Issue the necessary regulations and public policy for the signing of contracts of access, use and exploitation of genetic resources associated to biodiversity or traditional knowledge, in coordination with the National Environmental Authority; and, 29. Other responsibilities and duties established herein. Article 9.- National Plan of the Social Economy of Knowledge, Creativity, Innovation and Traditional Knowledge.- It is the set of public guidelines, whose actions lead to ensure an economic model that generate value, democratizes knowledge, and is sustainable with the environment. It shall have a territorial approach; shall be geared to the creation of cultural and social innovation networks, and to the free, social and solidary reproduction and transference of knowledge. For its design and evaluation it should feedback from the information provided by the stakeholders in the System.

CHAPTER II Responsible organization of the protection of intellectual rights Article 10.- Competent authority in the matter of intellectual rights.- It is the technical body assigned to the Secretariat for Higher education, Science, technology and Innovation and is mainly responsible of registration, granting and observation of the intellectual property rights, as the protection of traditional knowledge. Besides the inherent functions of its responsibilities, it shall be the main body in charge of executing public policies that come from

the governing body in matters of management, control and dissemination of knowledge. Article 11.- Duties of the Organization responsible for the management of intellectual property and protection of traditional knowledge.- The following are the responsibilities of the organization in charge of regulating, controlling and managing intellectual property and of the protection of the traditional knowledge: 1.

Protect and defend intellectual rights, recognized herein and in the international instruments of mandatory compliance; organize and manage the information of all registrations of all kind of intellectual property rights articulated to the National system of Information of Science, Technology, Innovation and Traditional knowledge of Ecuador;

2. Substantiate procedures and decide on the grant or refusal of registration of industrial property rights of invention patents; utility models; industrial designs; brands; slogans; trade names, trade dress; geographical indications; layout designs of semiconductor circuits, topography and other forms established in the relevant legislation, as well as register the works and traditional knowledge; 3. Substantiate the procedures for granting and registration of rights on new plant varieties and administer the deposit of live specimens; 4. Process and decide statements of objection on the registration of intellectual property rights if they are presented; 5. Decide and process requests, complaints and administrative appeals submitted to the Organization and in accordance with the established power herein regarding intellectual property and of traditional knowledge; 6. Process all observational processes of intellectual property rights, of traditional knowledge in the administrative area; 7. Monitor continuously the collective rights of the legitimate holders of traditional knowledge and if direct or indirect violation of these collective rights is suspected, immediately notify the legitimate holders of traditional knowledge and initiate ex officio the appropriate action as needed; 8. Set rates and fees for the services provided by the organization responsible for the management of intellectual property rights of traditional knowledge; 9. Implement public policy issued by the Secretariat for Higher Education, Science, Technology and Innovation; 10. Exercise coercive jurisdiction for the collection of claims and any type of obligations on their behalf, it shall be exercised by the legal representative of such organization; and, 11. All other established herein.

CHAPTER III CONSULTANT ENTITIES FOR PUBLIC POLICY PLANNING Article 12.- Regional Consultant Committees for Planning Higher Education, Science, Technology, Innovation and Traditional Knowledge.- The Regional Consultant Committees for Planning Higher Education, Science, Technology, Innovation and Traditional Knowledge, without prejudice of the established functions in the Organic Law on Higher Education, shall have the following: 1.

Propose planning policies in science, technology, innovation, and traditional knowledge at a regional level;

Propose modalities of joint coordination between the institutions of the National System of Science, Technology, Innovation and Traditional Knowledge and the Executive Branch; and,

Propose modalities of joint coordination between the institution of the National System of Science, Technology, Innovation and Traditional Knowledge and the social, productive and private sectors at a national and regional level. CHAPTER IV STAKEHOLDERS THAT GENERATE AND MANAGE KNOWLEDGE

Article 13.- Entities of Scientific Investigation.- Those public organizations, legal entities, associations, private or mixed, accredited according to the guidelines issued by the governing body of the System, which dedicate its activities to scientific investigation, technological development, or provide related services. The Secretariat for Higher Education, Science, Technology and Innovation, through the corresponding regulations, shall determine those services that are related to scientific research or technological development. Article 14.- Science Academies.- Nonprofit private legal entities aimed at promoting science; and to facilitate the linking of public policy with the needs of the scientific and academic community. Within the scope of its functions there may be stages of advice to public and private organizations that require their advice. The relevant regulations issued by the Secretariat for Higher Education, Science, Technology and Innovation, regulate their conformation, accreditation, performance and incentives.

CHAPTER V ORGANIZATIONS THAT ENSURE AN ETHICAL SCIENTIFIC INVESTIGATION Article 15.- National Organization for Ethical Scientific Investigation.- Is the organization that ensures ethics on a national level, whose responsibilities are:

1. Establish the principles and values on ethics in science, technology, innovation, traditional knowledge as well as its applications; 2. Issue the National Code of Ethics; 3. Solve in last and final instance public or private conflicts arising in relation to ethics in science, technology, innovation, traditional knowledge and its applications; 4. Accredit and register the institutional organizations of ethics; and, 5. All other responsibilities established by the Law. Its structure and operation are governed by the regulations established by the Secretariat for Higher Education, Science, Technology and Innovation. Article 16.- Institutional Bodies of Ethics.- In each public or private institution undertaking activities related to science, technology, innovation, traditional knowledge or with their applications, there shall be an institutional body of ethics. It is responsible for approving the ethical protocols for different investigations and to be the instance of connection and coordination between the respective institutions and the National Organization for Ethical Scientific Investigation. Title III THE SPACES FOR THE DEVELOPMENT OF THE NATIONAL SYSTEM OF SCIENCE, TECHNOLOGY, INNOVATION AND TRADITIONAL KNOWLEDGE Article 17.- The spaces for the development of knowledge and of ecosystems of innovation.They are geographically defined areas where public and private necessary services concentrate to democratize the generation, transmission, management and use of knowledge, in which the stakeholders of the System interact and cooperate, aimed at facilitating social innovation. In these areas, of national or regional impact, collaborative flows of knowledge and technology shall be stimulated and managed between the stakeholders of the social economy of knowledge, creativity and innovation that promote matching and technological transfer, generation of social capabilities for the creation and growth of innovative enterprises with a technological base between its member and other stakeholders. These spaces for the development of knowledge and of ecosystems of innovation are: 1. 2. 3. 4. 5. 6.

The special areas of economic technological development; The cities oriented towards investigation and knowledge; The scientific-technological parks; The techno-industrial parks; The centers of technological transfer; and, Other spaces that were necessarily created for the full implementation and achievement of the purposes of the System.

The corresponding regulation establishes the rules and conditions applicable to each of the areas described in the preceding paragraph

Notwithstanding the foregoing, other spaces for the development of knowledge and ecosystems of innovation may arise spontaneously, which must be duly accredited under the regulations herein to access financing from state funds. Article 18.- Special Areas of Economic Technological Development.- Special Areas of Economic Technological Development â&#x20AC;&#x201C; ZEDES- could be built, under the Organic Law of Production, Commerce and Investment, to carry out scientific activities of transfer, development and technological manufacturing and innovation. These spaces shall aim to encourage, create and develop innovative and technology-based enterprises and shall be regulated by the governing body of the System in Coordination with the governing authority of the productive policy. Article 19.- Territory oriented to investigation and knowledge.- The territories oriented to investigation, technological development and knowledge are established as exclusive and strategic areas of the State, created by Law, once it has met all the requirements established in the regulations issued for this purpose by the Secretariat for Higher Education, Science, Technology and Innovation. Such territories shall be constituted in delimited and self-sustained spaces, dedicated to carry out activities of investigation, experimental development, technological transference and manufacturing aimed to the promotion, strengthening and development of basic and higher education, science, technology, innovation and creativity, composed of a scientific, academic, residential and productive complex. When management of responsibilities is authorized in favor of the cantonal Decentralized Autonomous Governments, in which a city of knowledge were to be found, according to rulings in the Organic Law of Territorial Organization, Autonomy and Decentralization, a collegiate organization shall be created whose structure, attributions and functioning shall be established in the corresponding bylaw. Article 20.- Scientific-technological parks.- They are defined and planned spaces, to ensure the presence of human talent, supporting infrastructure, technological assets, public and private services, and financial tools necessary to execute activities in basic and applied research, experimental development, technology transfer and innovation. These parks are designed to develop technology-based enterprises whose results strengthen the social economy of knowledge, creativity and innovation and development of science. Article 21.- Industrial technological parks.- They are defined and planned spaces that have a support infrastructure, public and private services and the financial tools necessary to carry out industrial manufacturing activities related to the production of goods and knowledge-intensive services. Article 22.- Centers for technological transfer.- They are strategic areas of public, private or mixed use created by research centers, public enterprises or higher education institutions, among others, to maintain scientific research activities oriented towards the reception and practical use of scientific knowledge, the disaggregation and the technology transfer in any form, mainly for the manufacture or development of a product or service, new or similar in preliminary phase or final prototype.

TITLE IV THE NATIONAL SYSTEM OF INFORMATION OF SCIENCE, TECHNOLOGY, INNOVATION AND TRADITIONAL KNOWLEDGE Article 23.- National System of Information of Science, Technology, Innovation and Traditional Knowledge.- The National System of Information of Science, Technology, Innovation and Traditional Knowledge shall collect, purge and organize the information about the stakeholders and activities of the social Economy of knowledge, creativity and innovation, with the purpose of developing technical tools that allow the formulation, monitoring and evaluation of public policy, as well as the dissemination of the results of the procedures of responsible investigation and social innovation, and transference and learning of the procedures generated from the incentives of the social economy of knowledge, creativity and innovation. This System shall coordinate with the National System of Information. The National System of Information of Science, Technology, Innovation and Traditional Knowledge, in order to comply with purposes and objectives defined herein, shall coordinate such actions with the governing body of statistics and censuses in the scope of their competences. The Secretariat for Higher Education, Science, Technology and Innovation, through the corresponding regulations shall determine the mechanisms and conditions of this Information System Article 24.- Providing Information to the Governing Body of the System.- Stakeholders accredited by the National System of Science, Technology, Innovation and Ancestral Knowledge, are obliged to provide to the Secretariat for Higher Education, Science, Technology and Innovation all the required information. TITLE V TRANSVERSAL ELEMENTS OF THE SOCIAL ECONOMY OF KNOWLEDGE, CREATIVITY AND INNOVATION CHAPTER I STRENGTHENING HUMAN TALENT AND ITS RELATIONSHIP WITH THE ACTIVITIES OF THE SOCIAL ECONOMY OF KNOWLEDGE, CREATIVITY AND INNOVATION

Article 25.- Strengthening human talent to accomplish the objectives of the social economy of knowledge, creativity and innovation.- The Secretariat for Higher Education, Science, Technology and Innovation, in coordination with relevant government agencies, shall formulate public policy to consolidate human talent as a key factor in the social economy based on knowledge, creativity and innovation through their continued strengthening. Section I Mechanisms for Educating and Training Human Talent Article 26.- Priority of the education and training of human talent.- It shall be a priority of the State to encourage, develop, monitor and implement programs, projects and actions to continuously educate and train citizens in order to achieve the production of knowledge in a

collaborative, democratic and supportive manner. To this end there shall be scholarships, financial aid and student loans. Article 27.- Scholarships.- It is the total or partial subsidy granted by institutions of higher education, the Secretariat for Higher Education, Science, Technology and Innovation, the operating entity of scholarships and financial aid, foreign organizations or bodies created or empowered, for natural persons so that they can carry out their studies of higher education, academic activities in higher education institutions, academic mobility, training, including dual education, improvement, professional qualification, research, dissemination and others defined by the Secretariat for Higher Education, Science, Technology and Innovation The Secretariat for Higher Education, Science, Technology and Innovation, through the corresponding regulations, mechanisms, requirements and other conditions for the development and implementation of programs or scholarship projects. These guidelines shall be mandatory when public resources are used as funding. Public administration is not obliged to request guarantees to the scholarship holders. If deemed necessary to guarantee the use of public resources the requested guaranteed cannot constitute a barrier so that the beneficiary can access the scholarship. Those students who are beneficiaries of the quota policy issued by the Secretariat for Higher Education, Science, Technology and Innovation shall enter an institution of higher education through the National System of Leveling and Admission. Institutions of higher education, both public and private, may not demand other requirement than those established by the National System of Leveling and Admission. Article 28.- Student loans.- Student loans are considered reimbursable financial resources that authorized financial institutions grant natural persons to finance fully or partially the costs required for the development of their academic activities, academic mobility, training, improvement, professional qualifications, research, dissemination, and others defined by the Secretariat for Higher Education, Science, Technology and Innovation. The Secretariat for Higher Education, Science, Technology and Innovation, in coordination with relevant public bodies, shall define through the corresponding regulation the mechanisms and guidelines for the granting, guarantee and repayment of these loans. The conditions of student loans shall be preferred, both the rate as the term and grace period. Article 29.- Financial Aid.- It is an exceptional non-refundable grant, given by the Secretariat for Higher Education, Science, Technology and Innovation, institutions of higher education, the operating entity of scholarships and financial aid, international organizations or bodies created and empowered for that purpose, to natural persons who do not have sufficient financial resources or are in vulnerable situations, to cover specific items inherent in studies of higher education, academic mobility, developing research programs, training, professional training and others defining Secretariat for Higher Education, Science, Technology, Innovation. The Secretariat for Higher Education, Science, Technology and Innovation shall define, through the corresponding regulations, mechanisms, requirements and other conditions for the formulation and implementation of programs and projects of economic aid. These guidelines shall be mandatory when public resources are used in funding. Public administration is not obliged to request guarantees to beneficiaries.

In any case the requested guarantees cannot constitute a barrier to the beneficiary to access financial aid. Section II The participation of the productive sector in the formation of human talent Article 30.- Participation of the productive sector in the formation of human talent.- It involves introducing students in real work processes which complement their formal training with practical application. The parties involved in these participatory processes of formation of human talent, shall be: 1. Receiving entities: could be any natural person or legal entities, private, public, of mixed economy, or of popular and solidary economy belonging to the productive sector, that shall be duly certified by the Secretariat for Higher Education, Science, Technology and Innovation or by the competent authority. These entities if such is the case must have accredited tutors linked to this entity that have sufficient knowledge and experience in one or more productive processes or services to transmit their practical knowledge to the students through their practical training in such entity; and, 2. Human talent: are those students of all levels of higher education, oriented to the development of skills and abilities of expertise. For linking these students to the receiving entities, the main consideration shall be the curriculum studied by them. While the student is in the process of this kind of learning, at all levels of training, there shall be no labor relationship between the student and the receiving entity. However, the student may be compensated by the receiving entity when its practical training activities are met. The compensation shall be fair, equitable and proportionate. The social security system shall be differentiated, according to the resolution issued by the Directive Council of the Ecuadorian Social Security Institute Article 31.- National System of Skilled Labor.- It is the coordinated set of plans, programs, instruments, institutions and stakeholders whose purpose is to plan, design, implement and evaluate the processes of qualification and certification of labor competencies. The competent authority designed by the Executive Branch, through the corresponding regulations, shall regulate the institutional operation, mechanisms and conditions of this System of Skilled Labor. Article 32.- National Training Plan.- Shall contain the guidelines for training of labor competencies, articulating with national planning and development, the productive policies of human talent, social and territorial; shall be responsibility of the competent body. Article 33.- National Catalogue of Skilled Labor.- It is the technical instrument that has families and professional profiles identified within the framework of vocational qualification, depending on the necessary skills to exercise a profession, art or craft skills. The National Catalogue of Skilled Labor shall be a benchmark for the offer of training and professional education. Article 34.- Skilled labor certification.- Certification of skilled labor is the public recognition of knowledge and skills acquired by people in formal or informal manner, after due process of

evaluation. The governing authority of the labor area shall establish the obligation of the skilled labor certification, and the academic purposes shall be defined in coordination with the governing bodies of each level of education. All entities that are duly accredited by the rules established herein and rules governing the Ecuadorian Quality System are eligible for granting this certification. The competent authority shall keep a public record of skilled labor certifications issued by accredited entities. These entities must notify the competent authority the list of certifications issued as determined by the corresponding regulation. The governing body of higher education shall issue the corresponding regulations to achieve standardization mechanisms of the acquired training and education for the job that allow the transition of formal levels of higher education. Article 35.- Monitor, Control and Evaluation of the National System of Skilled Labor.- The governing body of the National System of Skilled Labor shall implement mechanism to monitor, control and evaluate the results and impact of the developed actions from the National Catalogue of Skilled Labor, for which an articulation between the knowledge and productive sector should be made. CHAPTER II ACCESS AND SOVEREIGNTY OF KNOWLEDGE IN DIGITAL AND COMPUTER ENVIRONMENTS Article 36.- Universal, free and safe access to knowledge in digital environments.- The free and safe access to knowledge in digital and computing environments, through technologies of information and communication developed on compatible platforms; and the deployment in telecommunications infrastructure, the development of digital content and digital applications and the appropriation of technologies, constitute a transverse element of the social economy of knowledge, creativity and innovation and is essential for the satisfaction of needs and the full enjoyment of rights. Universal, free and safe access to knowledge in digital environments is a right of citizens. The State shall create the necessary conditions to progressively ensure universal access to technologies of information and knowledge, prioritizing the use of free technology, under the principles of: technology sovereignty, security, net neutrality, free access and unrestricted information and safeguarding privacy. These conditions shall be respected without prejudice from the service provider. The competent control organization shall monitor compliance with these conditions. The State shall direct and execute the corresponding actions to safeguard the collaborative and participatory nature of technologies of information and communication, and shall promote the development of community networks; and, strengthen the number and diversity of its members. Article 37.- Internet Access.- Internet access is a universal basic service that answers to the principles of obligation, generality, consistency, efficiency, accountability, universality, accessibility, regularity, continuity and international quality. The competent organisms shall control that the price of this service is equitable, and shall establish appropriate control and

regulation mechanisms. Universities and Technological Institutes shall provide to the academic community free and wireless Internet access in the entire area of their campus and extensions. Decentralized Autonomous Governments shall give the citizenship free wireless Internet access in public spaces of massive gathering destined for leisure and entertainment, according to the conditions established by the corresponding regulation.

BOOK II RESPONSIBLE RESEARCH AND SOCIAL INNOVATION TITLE I GUARANTEE OF FREEDOM OF RESEARCH AND OF THE EXERCISE OF RESPONSIBLE RESEARCH CHAPTER I GUARANTEE OF FREEDOM OF RESEARCH Article 38.- Freedom of Research.- Freedom of Research is guaranteed in the framework of respect to ethics, nature, environment and the recovery, use and strengthening of traditional knowledge. The public policy, the programs, the projects and the actions taken by the State in the framework hereof shall not affect the freedom of research, without prejudice to the regulation or restrictions which due to security, health or ethical grounds may determine the provisions of the legal system. In the exercise of responsible research, the stakeholders of the National System of Science, Technology, Innovation and Traditional Knowledge shall maintain cooperative and coresponsible relations. Their activities shall be governed by the principles of solidarity, equity, social responsibility, transparency, veracity, objectivity and quality. CHAPTER II EXERCISE OF RESPONSIBLE RESEARCH

Article 39.- Responsible Research.- It comprises the research processes aiming to obtain results intended for the increase of productivity, the productive diversification, the satisfaction of needs or the effective exercise of the rights of the persons, the communities, the peoples, the nationalities and nature. Article 40.- Exercise of Responsible Research.- the responsible research exercised by the stakeholders of the National System of Science, Technology, Innovation and Traditional Knowledge shall subject to the following parameters: 1. Research in all stages shall respect the rights of the persons, the communities, the peoples, the nationalities and nature; 2. All research processes shall guarantee the integrity and dignity of the persons, mainly when they are part of some kind of experiment;

3. All stakeholders involved in a research that infringes any right shall be jointly responsible for such involvement in the extent of their participation; and, 4. The research shall submit to the regulations provided for in this Organic Law. Article 41.- Record of the Stakeholders Related to Research.- Every natural or legal person or any other associative, public, private or mixed entities performing technological research and development activities or both activities jointly, can register in the Secretariat for Higher Education, Science, Technology and Innovation pursuant to the regulations to be dictated for such purpose. The Secretariat for Higher Education, Science, Technology and Innovation shall manage this record in accordance with the principles and rules set forth in the Title of the National Information System of Science, Technology, Innovation and Traditional Knowledge provided for in this Organic Law. The registration act shall generate the rights provided for herein. Article 42.- Required Permits to Perform Scientific Research Activities.- Notwithstanding the legislation of each sector to obtain the required permits in order to develop scientific research activities determined within the priority areas, the stakeholder or stakeholders who are going to perform such activities are required to be registered in the Secretariat for Higher Education, Science, Technology and Innovation. The Secretariat for Higher Education, Science, Technology and Innovation shall determine the priority areas in which the accreditation of the stakeholders that are going to execute scientific research activities is mandatory to obtain the corresponding permits. Article 43.- Accreditation of Scientific Research Entities.- The scientific research entities and laboratories must be accredited to access the benefits and incentives provided for in this Organic Law, pursuant to the regulations to be dictated by the Secretariat for Higher Education, Science, Technology and Innovation. Article 44.- Safety in Scientific Research.- The Secretariat for Higher Education, Science, Technology and Innovation shall be responsible for establishing, through the appropriate legal and technical instruments, principles and regulations aimed at ensuring safety in the scientific research processes in order to protect human life and nature. CHAPTER III RECOGNITION AND REGULATION OF HUMAN TALENT ENGAGED IN SCIENTIFIC RESEARCH Article 45.- Accreditation of Scientific Researchers.- The accreditation is a validation process conducted by the Secretariat for Higher Education, Science, Technology and Innovation to certify the quality of the scientific researcher, both national and foreign who may perform their activities in Ecuador, based on the compliance with the requirements and a rigorous evaluation of quality standards and criteria at international level. The certification shall last five years and shall be renewed for equal periods, prior to having complied with the formalities accordingly. The accreditation is a requirement to enter the research career in public institutions as well as to access benefits and incentives provided for herein. Article 46.- Minimum Requirements for the Accreditation of Scientific Researchers.- For accreditation of scientific researchers, the Secretariat for Higher Education, Science, Technology and Innovation shall demand at least the following requirements:

1. To have a master's degree or its equivalent pursuant to the Organic Law on Higher Education; The title of medical specialty shall be valid for Medical professionals, in all cases recognized or registered in the Secretariat for Higher Education, Science, Technology and Innovation; 2. To be the author or co-author of a relevant work or innovation, an indexed article, or having made a protected invention under the industrial property regime. The characteristics of the relevance of the indexed works and articles shall be defined in the respective regulations; and, 3. Prove one year of participation in scientific research processes. The Secretariat for Higher Education, Science, Technology and Innovation shall establish in the corresponding regulations further requirements and procedures for accreditation. Article 47. Suspension and Loss of Accreditation of Scientific Researchers.- Determining the grounds for suspension and loss of accreditation as well as the sanctions applicable procedure shall be established in the regulation issued by the Secretariat for Higher Education, Science, Technology and Innovation, notwithstanding the enforcement of the Public Service Organic Law, the regulations issued by the Council of Higher Education, Code of Ethics and more rules to be applied in each case. Article 48.- Categorization of the Scientific Researcher.- The Secretariat for Higher Education, Science, Technology and Innovation shall categorize the scientific researchers accredited through the assessment of their academic training, scientific production and merits. To this effect, the Secretariat for Higher Education, Science, Technology and Innovation shall dictate the respective regulation, in coordination with the governing body of human resources and remuneration of the public sector. Article 49.- Career of the Scientific Researcher.- The scientific researchers of public entities, whose main functions may be related to scientific research activities, are public servants who are to be governed by the Regulations for the Career and Professional Levels of the Scientific Researcher, in relation to income, advancements, evaluations, development and promotions. In research organizations financed entirely with private funds, the provisions of this Organic Law, the Labor Code or the Civil Code shall be observed, as the case may be. The Career and Professional Levels of the Scientific Researcher excludes the administrative, technical and professional support staff of public institutions whose main duties are related to scientific research, and who abide by the applicable law depending on the sector in which they perform. The academic staff of the Higher Education System shall be governed by the Organic Law on Higher Education and their respective regulations. Article 50.- Admission to the Scientific Researcherâ&#x20AC;&#x2122;s Career.- The scientific researchers who enter a career shall meet the following minimum requirements: 1. Being accredited by the Secretariat for Higher Education, Science, Technology, Innovation as Scientific Researcher; 2. Comply with the requirements set out in subparagraphs a), b), c), e), f), g), h) and i) of

Article 5 of the Public Service Organic Law and Article 3 of its General Regulations; and 3. Further requirements shall be established in the Regulations for Career and Professional Levels of the Scientific Researcher, which shall be issued by the Secretariat for Higher Education, Science, Technology and Innovation in cooperation with the governing body of human resources and remuneration of the public sector. Article 51.- Evaluation and Promotion of the Scientific Researcher’s Career.- The mechanisms, requirements and conditions for the evaluation and promotion of scientific researchers who may have entered the researcher's career shall be provided for in the Regulations for the Career and Professional Levels of the Scientific Researcher. As such and for this purpose, the provisions set forth in the Public Service Organic Law shall not apply. Article 52.- Disciplinary Regime Applicable to Researchers Entering the Scientific Researcher’s Career.- Notwithstanding the regime established by the national code of ethics and codes of ethics of the institutions engaged in scientific research, in case of committing offenses, the public institutions shall apply to their accredited scientific researchers the sanctions established in the corresponding regulation, without prejudice to the provisions of the Public Service Organic Law, its General Regulations and further provisions under this Code and the corresponding regulation. Article 53.- Regime of Licenses, Service Commissions and Permits.- The public institutions in which the scientific researchers provide services shall apply the licensing, service commissions and permits to be established in the Regulations for Career and Professional Level of the Scientific Researcher. This regime shall foster the necessary conditions for the strengthening of scientific research personnel satisfying the academic demands involved in their activities. It shall also allow mobility of researchers among the different research centers. Article 54.- Linkage of the Scientific Research Staff that is not in the Scientific Researcher’s Career.- The public institutions, whose main duties are related to scientific research activities, can link scientific research staff that is not within the Researcher’s Career upon the signing of occasional service contracts, as provided in Article 58 of the Public Service Organic Law. The time limit established in that article is excluded for the renewal of occasional contracts or services required for scientific research projects. Article 55.- Remuneration of the Scientific Researcher.- The remuneration of the Scientific Researcher of the public entities shall be determined by the governing body of Human Resources and Remunerations of the public sector subject to the law that regulates public service in coordination with the Secretariat for Higher Education, Science, Technology and Innovation. The research entities funded exclusively with private resources shall comply with the provisions set forth in this Organic Law, the Labor Code or the Civil Code, as the case may be. Article 56.- Termination of Duties.- The scientific researchers of the public entities shall terminate their duties for the grounds set forth in articles 47 and 48 of the Public Service Organic Law and those determined in the Regulations for Career and Professional Level of the Scientific Researcher. In the case of research entities funded in full with private resources, the provisions set out in this Organic Law, the Labor Code or the Civil Code shall be observed, as the case may be.

CHAPTER IV FINANCING PROGRAMS FOR RESEARCH Article 57.- Funds Intended for Research Projects.- It is the allocation of non-reimbursable financing allocated to the stakeholders of the National System of Science, Technology, Innovation and Traditional Knowledge, whether public, private or mixed who may perform research activities for the execution of programs and projects intended for the effective exercise of the rights of the persons, the communities, the peoples, the nationalities and nature. A percentage of these resources shall be intended to finance projects through competitive funding. These contests shall be guided by the principles of transparency, co-responsibility, excellence, equality, efficiency, progressiveness, relevance and accountability. Article 58.- Scientific Research Areas and Lines.- The Secretariat for Higher Education, Science, Technology and Innovation shall define regularly and in a participatory fashion research areas and lines in accordance with the guidelines of the National Development Plan, National Plan of the Social Economy of Knowledge, Creativity, Innovation and Traditional Knowledge, the purposes of the Higher Education System and the needs of the Productive System. Said lines shall be mandatorily fulfilled for the research programs and projects financed by the governing body; which may also be considered as research references by other stakeholders of the National System of Science, Technology, Innovation and Traditional Knowledge. Article 59.- Public Interest on the Research Projects and Programs Financed through Public Funding.- The research programs and projects financed through public funding, by nature, are of public interest and therefore, are of direct benefit to the public, so once the funding is awarded pursuant to the corresponding procedures and principles, the subsequent declaration of the competent authority for the allocation and transfer of resources shall not be required. Article 60.- Mechanisms for the assurance of the effective recovery of funds when they are misused.- Without prejudice to the rules governing the activity of the State control agencies, the Secretariat for Higher Education, Science, Technology and Innovation through the corresponding regulations and the bases for the delivery of competitive funding to be enacted to the effect, shall establish the grounds and sanctions for the misuse of funds and the appropriate mechanisms for its effective recovery. The mechanisms referred to in the preceding paragraph must be proportional. Its implementation shall not affect the development of the funded programs and projects. The Secretariat for Higher Education, Science, Technology and Innovation shall have coercive jurisdiction for the collection of debt securities issued by any concept of obligations. Article 61.- Ownership of Property Acquired through Research Funding.- Except as otherwise provided in the respective procedures, intangible assets, real and personal property, including software, which may have been acquired or produced by public funds shall be owned by the stakeholder or stakeholders of the National System of Science, Technology, Innovation and Traditional Knowledge that have carried out the funded program or project. The assets, which due to the circumstances described in the preceding paragraph are part of the heritage of individuals, shall submit to the control regime of public assets.

The administrators of these assets are responsible for the proper use thereof until their lifespan is exhausted. The ownership and management of intangible assets acquired or generated with the funds provided by this chapter shall be regulated in accordance with the book of Knowledge Management of this Organic Law and contest rules. Scientific inputs and equipment that have been purchased with public funds shall have to be inventoried and displayed in the National System of Science, Technology, Innovation, and Traditional Knowledge of this Organic Law, pursuant to the list and categories that the Secretariat for Higher Education, Science, Technology and Innovation may elaborate for that purpose. Article 62.- Optimization of the Use of Infrastructure and Equipment for Scientific Research.The laboratory infrastructure and equipment for scientific research of the universities, polytechnic schools and research entities both public and private duly registered, shall be at the disposal of other stakeholders duly registered or accredited in the System so that they can use such facilities. For the enforcement of this rule, such institutions shall count on the corresponding planning. The Secretariat for Higher Education, Science, Technology and Innovation shall protect the compliance of this provision and shall govern the due compensations as well as the use conditions of the infrastructure and equipment by third parties, which shall be established in the corresponding regulation. Article 63.- Regime of Service Procurement and Acquisition of Assets for a Responsible Scientific Research.- The public institutions, prior to a reasoned resolution issued by the highest authority to justify the direct connection with activities aimed at the responsible scientific research shall submit to a special regime of direct contracts with local and foreign suppliers for the contracting of services and procurement of assets. Such processes shall be published subsequently, pursuant to the Organic Law of the Public Procurement National System. CHAPTER V ETHICS IN SCIENTIFIC RESEARCH Article 64.- Ethics in Scientific Research.- The required principles for the compliance of ethics in the scientific research shall be developed in a National Code of Ethics which shall include at least the following areas: 1. 2. 3. 4. 5. 6.

Respect for the dignity of life and biodiversity; Informed consent of the people involved in the research; Informed consent of peoples and nationalities; Rights of the people involved in the research; Confidentiality of the data obtained in the research processes; and, Respect to animals for experiment purposes.

CHAPTER VI SCIENTIFIC RESEARCH IN BIODIVERSITY Article 65.- Protection of the Biological and Genetic Resources in Scientific Research.- For the development of scientific research upon the biological, genetic resources and their by-products in Ecuadorian territory, the natural and legal persons or any other associative entities, both local and foreign, shall obtain the corresponding authorization to access the biological, genetic resources and their by-products for research purposes. In order to grant such access, the Secretariat for Higher Education, Science, Technology and Innovation shall accept the technical criteria and protocols of the national environmental authority for the conservation of biodiversity. It is forbidden to collect, capture, hunt, and fish, manipulate or mobilize biological resources both nationally and internationally for research purposes without the corresponding permits. Violation of this rule shall be punished according to the provisions of the Comprehensive Organic Criminal Code. Article 66.- Access to Genetic Resources and their By-products for Business Purposes.- The natural or legal persons, both national and foreign who intend to physically access the genetic resources of the country or their by-products with business purposes shall obtain the respective authorization. The public institute of scientific research on biodiversity, through the unit responsible for technological transfer, shall be competent to carry out the negotiation process of the corresponding monetary and non-monetary benefits, as well as to authorize the access to genetic resources and their by-products. Every product and research not originally included in the negotiation shall be a subject matter of a new process. The Advisory Council, established in article 507 hereof shall engage in the process to access the genetic resources contained in the biological biodiversity and agricultural biodiversity found in the lands of the communities, peoples and nationalities. The procedure to enforce this article shall be developed in the respective regulation. Article 67.- National Bank of Genetic Resources.- The public institute of scientific research on biodiversity shall create the National Bank of Genetic Resources for the guardianship and custody of Ecuadorâ&#x20AC;&#x2122;s genetic resources. Natural persons or legal entities that access the genetic resources duly authorized and upon the signing of the respective contract, shall deposit a duplicate sample collected in the National Bank of Genetic Resources. Article 68.- Import and Export Permits for Scientific Research.- The Committee of Foreign Trade shall generate a special and simplified system to obtain permits for imports and exports of living organisms, specimens of scientific collections or any other input having as a purpose the development of scientific research. For this purpose the petitioner of the permit shall be duly accredited as a researcher by the Secretariat for Higher Education, Science, Technology and Innovation.

The Secretariat for Higher Education, Science, Technology and Innovation in coordination with the customs authority, the national environmental authority and further competent institutions shall be responsible for establishing the legislation and required processes to ensure the proper management and transportation of this kind of imports and exports, in order to prevent death, damage or loss of the living organisms or the biological material in question. The imports and exports of the goods described in this article shall be solely governed by this Organic Law and the provisions set forth in the regulations issued thereunder. Article 69.- Benefits of the Use of Biodiversity.- The State shall engage in the benefits of the use of biodiversity and its genetic heritage, in a proportion not less than the individual who has requested access or research on biological or genetic resources, according to the public policy issued by the Secretariat for Higher Education Science Technology and Innovation. Furthermore, the State shall participate in at least the same proportion as any third party who have obtained monetary or non-monetary benefits arising from the research, use, transfer, development and commercialization of biological, genetic material or the information, products or procedures derived thereof, according to the public policy issued by the Secretariat for Higher Education, Science Technology and Innovation. TITLE II SOCIAL INNOVATION CHAPTER I DEFINITION, COMPONENTS AND CHARACTERISTICS Article 70.- Social Innovation.- It is the creative and cooperative process whereby a new or significantly improved good, service or process with added value is introduced and which modifies and incorporates new social behaviors for problem resolution, the acceleration of the individual or collective capacities, the satisfaction of societyâ&#x20AC;&#x2122;s needs and the effective exercise of rights. It is intended to generate social, economic, cultural and technological impacts that foster the Good Living. The social innovation processes shall integrate dynamically and interdependently, primarily, the National System of Science, Technology, Innovation and Traditional Knowledge; the Higher Education System; the Culture System; and the Economic System, with their public, private, mixed, popular and supportive, cooperative, associative, community members that includes the cultural and creative industry, as well as all the rest of them set forth in the Constitution. The social innovation shall foster the interaction of the different stakeholders, means and instruments of the National System of Science, Technology, Innovation and Traditional Knowledge through social innovation ecosystems intended to the effective use of the research results, creative ideas or technologies in order to create and develop innovative undertakings. The State, in cooperation with the private, mixed, popular and supportive, cooperative, associative and community sectors shall promote the social innovation processes through the strengthening of human talent, the development of scientific research, the growth of the technological assets, the provision of specialized services, the endowment of support infrastructure and public spaces, the generation of financial and legal means and instruments and the implementation of other incentives.

Article 71.- Open Innovation.- It is the process whereby innovation is generated as from the free flow of knowledge among different stakeholders. The Secretariat for Higher Education, Science, Technology and Innovation shall facilitate the social access to knowledge, publicly and openly, so as to facilitate and promote the open innovation processes. Article 72.- Innovative Undertakings.- These are actions intended to develop a new or significantly improved good or service which its essential factor is the use of knowledge generated as from the research processes, experimental and technological development or creative processes based on science, of which ultimate purpose is its introduction in the market. The Secretariat for Higher Education, Science, Technology and Innovation, in coordination with the rest of the stakeholders of this system, shall foster the social innovation processes to boost innovative undertakings. CHAPTER II SOCIAL INNOVATION PROCESS Article 73.- Social Innovation Process.- It is the management of results as from the research processes, experimental and technological development, or creative processes based on science, performed by different stakeholders of the National System of Science, Technology, Innovation and Traditional Knowledge, including those stakeholders pertaining to the cultural and creative industry. It comprises mainly the following components: incubation, acceleration, habitat, technological transfer and technological heritage aimed at the generation of social innovation. The information related to the results of the social innovation processes that may have been financed totally or partially with public resources or benefited with tax incentives shall be incorporated in the National Information System of Science, Technology, Innovation and Traditional Knowledge, in accordance with the provisions set forth herein. Article 74.- Incubation of Innovative Undertakings.- The Stateâ&#x20AC;&#x2122;s competent bodies, with the support of the private, mixed, popular and supportive sectors shall establish mechanisms that enable the provision of specialized services for the development of innovative undertakings and their subsequent generation of added value. These specialized services consist of activities related to the search of ideas with market potential, market research, production of prototypes, business models development, management of intellectual property, networking, portfolio of investors and financiers, endowment of shared physical spaces, among others defined by the Secretariat for Higher Education, Science, Technology and Innovation. Article 75.- Acceleration of Innovative Businesses.- The State, in cooperation with the private, mixed, popular and supportive sectors shall foster the provision of the specialized services to support innovative businesses that have generated income taxable with the income tax during the last two years and that have a high growth potential. The specialized services shall focus on improving the technical and commercial capacities, sales growth plans, portfolio of investors and financiers. Article 76.- Habitat of Innovative Businesses.- The State, in cooperation with the private,

mixed, popular and supportive sectors shall foster the provision of specialized services that contribute to provide support to innovative businesses developing products and services in series and with high added value, in addition to seeking its insertion in foreign markets. The services in this phase shall focus mainly on specialized market research, design of plans to access international markets, commercial promotion, and networking, among others defined by the Secretariat for Higher Education, Science, Technology and Innovation within their field of competence. Article 77.- Transfer of Technology.- It comprises the activities to transfer knowledge, techniques or technological processes that allow the elaboration of products, processes or services. The technological transfer encompasses contractual agreements such as the proof of concept, the technological validation, the transfer of intellectual property rights, intellectual property licensing, know-how contracts, training, hiring of local labor, among others. The technological transfer shall be incorporated as a requirement in public procurement of goods, works and services including consulting services, as well as in the investment contracts and any other contracting modality performed by the State, according to the policy issued for the effect. In such processes parameters and criteria of specific qualification can be established for those bidders who are willing to assume greater commitments of technological transfer according to the methodology that the Executive Branch may determine for such purpose. This public policy, prioritizing the strategic sectors and those of public interest shall determine the minimum levels and the mechanisms of technological transfer that shall be required in the Stateâ&#x20AC;&#x2122;s procurement pursuant to the technical, economic and legal parameters which shall be issued and updated in coordination with the different public entities on a yearly basis. The State may establish, according to the policy issued by the governing body on the subject matter, market reserves on public procurement for the products and services with technological intensity of the Ecuadorian suppliers. Article 78.- Upon the Accreditation of the Entities Engaged in the Social Innovation Process.The accreditation to public or private entities performing activities of innovative undertakings incubation, acceleration and habitat of innovative businesses and technological transfer consist of the validation made to certify the quality of said entities based on the compliance with the requirements and a rigorous evaluation of quality standards and criteria. The accreditation allows said entities to access the incentives set forth in this Organic Law, as well as to approve innovative projects so that these can access the incentives provided for in this standard. CHAPTER III TECHNOLOGICAL DISAGGREGATION AND MONITORING Article 79.- Technological Disaggregation.- It comprises the technical breakdown or separation of the parts of the technological package as well as the technological capacity and knowledge found in those components individually or jointly and the subsequent incorporation of the Ecuadorian value added on goods, services and processes. Technological disaggregation processes shall be in place in the public procurement of goods,

services, rights and processes either of national or foreign origin, as well as the investment contracts and any other contracting modality performed by the State, as per the policy issued for such purpose. In public procurement processes and investment contracts signed by the State, those suppliers willing to assume greater commitments of technological disaggregation are to be preferred according to the methodology determined by the national authority of public procurement, in coordination with the Secretariat for Higher Education, Science, Technology and Innovation. The analysis of the technological package or of its intensive components in terms of knowledge shall be required for public procurement of suppliers of goods, services and processes of national and international origin, according to the public policy issued by the governing body for planning and country development. Article 80.- Technological Monitoring.- It is the process of permanent search, capture, analysis, use and communication of the scientific and technological information with transfer potential available locally and globally for the generation of knowledge and strategic decision-making intended to improve the social innovation processes. Its results shall incorporate to the National Information System of Science, Technology, Innovation and Traditional Knowledge. The technological monitoring shall enable to focus on critical technological development, to identify the best technological partners and to take full advantage of the latest existing developments. The Secretariat for Higher Education, Science, Technology and Innovation shall be responsible for coordinating, managing and articulating the technological monitoring processes and their alerts systematically and publicly; notwithstanding the processes performed by the private sector and which results can be required and incorporated in the national technological record, managed by the Secretariat. BOOK III ADMINISTRATION OF KNOWLEDGE

TITLE I GENERAL PRINCIPLES AND PROVISIONS CHAPTER I GENERAL PRINCIPLES Article 81.- Intellectual rights.- Comprises mainly intellectual property and traditional knowledge. Its regulation constitutes a tool for the appropriate administration of knowledge. Their acquisition and exercise, as well as their weighting with other rights, shall ensure the effective enjoyment of the fundamental rights and shall contribute to the adequate dissemination of knowledge in benefit of rightholders and society. For the other existing forms, this Organic Law guarantees protection against unfair competition. Article 82.- Exception to public domain. Intellectual property rights are an exception to the

public asset of knowledge and will answer to the social role and responsibility in accordance with the provisions of the Constitution and the Law. Intellectual property can be public, private, of the community, of the State, associative, collaborative and mixed. Article 83.- The acquisition and exercise of intellectual property rights.- Acquisition implies the existence or concession of rights, and exercise implies the maintenance and enforcement thereof. When suitable, acquisition shall also include the transfer made by any act and title. The acquisition and exercise of intellectual property rights shall be subject to an effective use and enjoyment of the right to health and nutrition, education, information, access to culture and to engage in scientific advancements, as well as the right to develop economic activities, freedom of labor, access to high-quality goods and services, and access to the right of other types of property, in accordance with the provisions of the Constitution. Such acquisition and exercise shall also be subject to the promotion of social innovation, and transfer and dissemination of knowledge, in mutual benefit of the producers and users, so that it benefits a social and economic wellbeing and balances rights and obligations. Article 84.- Purposes of intellectual property.- Intellectual property rights constitute a tool for the development of creative activity and social innovation, they contribute to technology transfer and access to knowledge and culture, innovation, and reduce cognitive dependence. Article 85.- Typology of intellectual property.- Intellectual property rights comprises mainly authorâ&#x20AC;&#x2122;s rights and related rights, industrial property and plant varieties. Article 86.- Typology of assets.- For the purposes of this Organic Law, according to the corresponding intellectual property rights, the following typology of assets is established: 1. 2. 3. 4.

Assets that guarantee fundamental rights; Assets related to the strategic sectors; Assets related to biodiversity and traditional knowledge; and, The other assets.

Article 87.- Assets that guarantee fundamental rights.- The assets that guarantee fundamental rights and that are protected by intellectual property rights, are of public interest and shall enjoy a type of protection that allows the satisfaction of the basic needs of society, for which, without prejudice of the use of limitations and exceptions to the rights, other uses shall be allowed without the authorization of the rightholder in accordance with the provisions set forth herein and in international treaties to which Ecuador is a party. The provisions in the preceding paragraph shall also apply to the rights regarding undisclosed information and test data, on chemical-agricultural and pharmaceutical products. Article 88.- Assets related to the strategic sectors.- The forms of intellectual property related to the strategic sectors are of vital importance for the socio-economic and technological development of the country, which is why they will enjoy a type of protection that allows the State to access the protected subject matter, for reasons of public, social or national interest, in accordance with the requirements and conditions established in the Agreement on TradeRelated Aspects of Intellectual Property Rights. Likewise, considering the unique characteristics of each case and prior agreement between the parties, the State may access the undisclosed information, related to the strategic sectors, to

the extent that all guarantees are given to keep the information undisclosed. The protected subject matter referred to in the preceding paragraphs can only be accessed when it corresponds to intellectual property rights or undisclosed information of the right of ownership of contractors, beneficiaries of concession or service providers. In all these cases, the rightholders shall receive compensation, either by royalties or by remuneration for the concession or provisioning of services. The State shall have access to any unprotected information produced from contracts to which it is a party. All contracts should include the obligation to share such information with the State. Article 89.- Knowledge developed from biodiversity.- The State shall participate in the holding of forms of intellectual property and other rights regarding procedures and synthesized products or by-products obtained from biodiversity, in accordance with the provisions of the Constitution. Likewise, the State shall have a share of the benefits resulting from the economic exploitation of these procedures and products, without prejudice to its protection through the intellectual property rights. Article 90.- Access, use and exploitation of traditional knowledge.- Regarding traditional knowledge, related or not with biodiversity, what is provisioned in the preceding article shall be applied in benefit of the rightful owners, who, at least, shall participate equitably to the contribution of traditional knowledge in accordance with the provisions of the international treaties to which Ecuador is a party of and domestic legislation hereof. Article 91.- Limitations and exceptions.- The rights and benefits resulting of the limitations and exceptions set out in this book are inalienable. Any stipulation to the contrary shall be void. Article 92.- Other limitations to intellectual property rights.- The acquisition and exercise of intellectual property rights is limited by the provisions herein and the provisions applicable on access to biological and genetic resources and traditional knowledge, consumer and environment protection, restrictive trade practices of free competition and unfair competition, as appropriate. CHAPTER II GENERAL PROVISIONS Article 93.- National Treatment.- The rights given by this Law apply equally to domestic and foreign, resident or not in Ecuador, except on necessary conditions established under national legislation for the exercise of these rights. For the purposes of this Organic Law, stateless persons shall be considered as nationals of the country where they have established their residence. Article 94.- Rightholders not domiciled in the country.- Applicants or holders of an industrial property right or of a certificate of plant breeder not domiciled in Ecuador, shall have a legal representative domiciled in the country with enough inscribed power before a competent authority on intellectual rights matter, especially to answer requests, actions and lawsuits. Any change in the abovementioned powers shall be inscribed before said competent authority within the term determined by the regulation.

This same obligation shall apply to holders of copyrights and related rights that are not residing in the country. Article 95.- Obligatory nature of registration.- Every transfer, use authorization or license on any intellectual property right or pending application, shall be registered before a competent authority on intellectual property rights. Such legal business shall be executed and effective upon their registration. The requirements and formalities for transfers, use, authorizations or licenses shall be regulated in the corresponding regulation. TITLE II COPYRIGHT AND RELATED RIGHTS CHAPTER SCOPE Article 96.- Recognition and concession of rights.- The rights of the authors and of the other holders over their works are recognized, granted and protected, as the rights of artists, performers, phonogram producers and broadcasting organizations, under the terms of this Title. CHAPTER II GENERAL CONCEPTS Article 97.- Acquisition and exercise of author’s right.- The acquisition and exercise of author’s right and related rights are not subject to registration or deposit, or to the compliance of any formality. The rights that are recognized and granted in this Title are independent from the ownership of the object which is incorporated in the work or output – which includes the act or process of interpreting, broadcasting and producing. CHAPTER III AUTHOR’S RIGHT Section General Precepts Article 98.- Author’s rights.- Author’s rights are born and protected by the mere action of creating the work. The protection of author’s rights is granted regardless of gender, merit, purpose, destination or manner of expression of the work.

The manner in which the ideas of the author is described, explained, illustrated or incorporated to the work is protected exclusively. However, if an idea has only one manner of expression,

such manner will not be eligible for protection. The ideas contained in literary and artistic works, or the ideological or technical content of scientific works are not subject matter of protection, or their industrial or commercial use. Likewise, the procedures, methods of operation or mathematical concepts per se are not subject matter of protection. Article 99.- Cumulative protection.- Authorâ&#x20AC;&#x2122;s right is independent and compatible with: 1. Industrial property rights that may exist on the work; and, 2. Other intellectual property rights recognized in this Title. However, industrial property rights that may exist on the work shall not affect its use when it passes on to being of public domain. Section II Subject Matter Article 100.- Works eligible for protection.- The protection granted by this Title shall accrue to all literary, artistic and scientific works that are original and can be reproduced or disseminated in any manner or means now known or later developed. The works eligible for protection includes, among others, the following: 1. Works expressed in books, pamphlets, printed matter, correspondence, articles, novels, stories, poems, chronicles, column reviews, essays, letters, scripts for theater, film, television, lectures, speeches, lessons, sermons, pleadings in law, memoirs and other works of similar nature, expressed in any manner; 2. Collections of works; such as, encyclopedias, anthologies or compilations, and databases of all kinds, which by the selection or arrangement of their contents constitute original intellectual creations, without prejudice of the rights subsisting on the works, materials, information or data; 3. Dramatic and dramatic-musical works, choreographic and mimed works and generally all staged works; 4. Musical compositions with or without lyrics; 5. Cinematographic other audiovisual works; 6. Sculptures and works of painting, drawing, engraving, lithography, comic books, cartoons, comics, including drafts or sketches, and other plastic art; 7. Projects, blueprints, mockup and designs of architectural and engineering works; 8. Illustrations, charts, maps, sketches and drawings relating to geography, topography and, in general, science; 9. Photographic works and those expressed by processes analogous to photography; 10. Works of applied art, to the extent that its artistic value may be dissociated from the industrial character of the object in which they are incorporated; 11. Re-mixed works, provided that, by the combination of its elements, the works constitute an original intellectual creation; and, 12. Software. Article 101.- Derived works.- Without prejudice to the rights subsisting in the original work, works such as adaptations, translations, arrangements, revisions, updates and annotations; compendia, summaries and extracts are protected as derived works; and, other transformations of a work to the extent that the derived work is original and has had the

authorization of the rightholder of the original work or has been developed in accordance with the limitations and exceptions established herein. Article 102.- Creations based on cultural expressions.- Creations or adaptations based on ancestral traditions and practices, expressed in groups of individuals reflecting the expressions of communities, their identity, their values transmitted orally, by imitation or by other means, either using literary language, music, games, mythology, rituals, customs, handicrafts, architecture or other arts, shall respect the rights of the communities in accordance with international regulations, and community and national regulations for the protection of expressions against its illicit exploitation, as the basic principles of collective rights. Article 103.- Non protectable subject matter.- Laws and regulations, bills, judgments, acts, decrees, resolutions, deliberations and rulings of public bodies are not eligible for protection, as well as other official texts of a legislative, administrative or judicial order, and their official translations. Also, it is not eligible for protection the political speeches and lectures delivered in legal proceedings. However, the author shall enjoy the exclusive right of gathering as a collection the work mentioned in this section in conformity with the provisions of Section VII herein. Section III Rights of holders Article 104.- Right holders.- Only a natural person may be an author. Legal entities may be holders of the economic rights of a work, in compliance with the provisions under this Title. The law of the origin country of the work shall govern when determining ownership, according to the criteria in the Berne Convention, the Paris Act of 1971. Article 105.- Works of undetermined authors.- In the case of works created in communities of peoples and nations where the individual authorship of the work cannot be determined and that it cannot be found in any of the categories mentioned in this Section, the ownership of the rights correspond to the community, preserving their right of self-determination. Article 106.- Presumption of the ownership of a work.- The author or owner of a work, unless proven otherwise, is presumed to be the person whose name, pseudonym, initials, acronym or any other identifying sign appears on the work in the usual manner. The author or owner of the author’s right shall also be the person whose name is under the registration of author’s right before a competent authority on the subject matter of intellectual rights. Article 107.- Administration of author’s rights.- Author’s right is not part of the community property, and may be freely administered by the author, their spouse or partner or rightful claimant. However, the economic benefits generated from the exploitation of the work are part of the heritage of the community property. Article 108.- Collaboration work.- In the work of divisible collaboration, unless otherwise agreed, each collaborator is owner of the rights of the parts of the work he or she created. In a work of indivisible collaboration, unless otherwise agreed, the rights belong jointly and pro indiviso to the coauthors. Each coauthor, unless otherwise agreed, may exploit the work

without the consent of the other coauthors, provided they do not harm the normal exploitation of the work. The economic benefits obtained from the exploitation shall be distributed pro rata to each coauthor after deducting the expenses made for this purpose and a twenty percent of the economic share that shall correspond to the author exploiting the work. Article 109.- Collective work.- Unless otherwise agreed, the natural person or legal entity who has organized, coordinated and directed the work shall be deemed the holder of the authorâ&#x20AC;&#x2122;s right. Unless otherwise agreed, the authors shall retain their rights regarding their contributions that can be exploited independently, provided they do so in good faith and do not unreasonably prejudice the normal exploitation of the collective work. It shall be presumed as the organizer, coordinator and director of the work the natural person or legal entity mentioned as such in the work. Article 110.- Rightholders of works created in higher education institutions and educational centers.- In the case of works created in educational institutes such as, universities, polytechnic schools, higher technical schools, technological schools, pedagogical centers, art centers, conservatories, and public research institutes, as a result of academic or research activities such as a final degree work, research or innovation projects, academic articles, or similar works, without prejudice to works created under employment contract, the ownership of the economic rights shall correspond to the authors of the work. However, the educational institution shall have a free, non-transferable and non-exclusive license for the noncommercial use of the work for academic purposes. Without prejudice to the rights recognized in the preceding paragraph, the educational establishment may commercially use the work prior authorization of the holders and a notification to the authors if they refer to different people. In which case, a percentage of no less than forty percent of the economic benefits of such exploitation shall correspond to the authors. The same benefit shall apply to the authors who have transferred their rights to higher education institutions or educational centers. The right referred to in the preceding paragraph in favor of the authors is indefeasible and shall also apply in the case of works performed inside public research institutes. Article 111.- Works created under employment contract and on commission.- Unless otherwise agreed or specially stipulated in this Title, the ownership of works created under employment contract shall belong to the author. Likewise, unless otherwise agreed or specially stipulated in this Title, in the works created on commission, the ownership shall correspond to the contracting party in a non-exclusive way, which is why the author shall keep the right to exploit the way in a different manner than what is established in the contract, provided they do so in good faith and do not unreasonably prejudice the normal exploitation made by the contracting party. In either case, the author or authors shall have the inalienable right to receive at least ten percent of the economic benefits generated from the exploitation of the work, individually or pro rata, depending on the case. This right shall be applicable even on the cases of transfer or transmission of ownership of a

work created under employment contract and on commission. Article 112.- Anonymous works.- In anonymous works, it shall be considered as the representative of the author the publisher whose name appears on the work, and the publisher shall be entitled to exercise and enforce their moral and economic rights, until the author reveals their identity and justifies their capacity as authors. Section IV Content of authorâ&#x20AC;&#x2122;s right First Paragraph Moral rights Article 113.- Moral rights.- The following is the moral rights of the author which are unwaivable, inalienable, unseizable and imprescriptible: 1. Keep the work unpublished or disclosed; 2. Claim paternity of their work at any time, and demand that their name or pseudonym is mentioned or excluded each time the work is used; 3. Oppose to any distortion, mutilation, alteration or modification of the work that prejudices against the integrity of the work, or the honor or reputation of its author; and, 4. Access the unique or rare copy of the work whose physical base is in possession of or owned by a third party, in order to exercise the right of disclosure or any other applicable right. The latter right shall not allow to demand the displacement of the work and its access shall be made in the place and manner that causes the least inconveniences for the legitimate possessor or owner, who will be compensated, in their case, for any damages that may occur. The rights referred to on items 2 and 4 shall have an imprescriptible character. Once the term of protection of works is completed, the rights contemplated on items 1 and 3, shall not be enforceable against third parties. Article 114.- Rights of the successor in title.- After the death of the author, the exercise of the mentioned rights shall belong to their successor in title, for the term of the economic rights, according to the applicable provisions in each type of work or output â&#x20AC;&#x201C; which involves the act or process of interpreting, broadcasting, and producing. Second Paragraph Economic rights Article 115.- Prohibitions to third parties.- The author or their rightful claimant has the exclusive right to prevent third parties from engaging, without their consent, any of the following acts: 1. Reproduction of the work by any means or process; 2. Public communication of the work by any means used to disseminate the words, signs, sounds or images; 3. Public distribution of copies or material of the work by selling, leasing or renting; 4. Import copies without the authorization of the holder, of the persons referred to in Article 121 or the Law; and, 5. Translation, adaptation, arrangement or other transformation of the work.

Article 116.- Reproduction of a work.- Reproduction implies the fixation of the work in a medium that allows its perception, communication or acquisition of copies of all or part of the work, by any manner or means now known or later developed. Article 117.- Public communication.- Public communication implies any act whereby a plurality of persons, gathered or not in the same place and at the time they individually decide, may have access to the work without prior distribution of copies to each one; especially the following acts: 1. Stage presentations, recitals, dissertations and public performances of dramatic, dramatico-musical, literary and musical works by any means or process; 2. Public projection or showing of cinematographic and other audiovisual works; 3. Transmission of any work by broadcasting, television or any other means of wireless distribution of words, signs, sounds or images. This concept also includes sending signals from a ground station to broadcasting or telecommunications satellite; 4. Transmission of works to the public by wire, cable, optic fiber or similar process, whether free or by subscription; 5. Re-transmission, by any of the means mentioned in the foregoing subparagraphs and by a broadcasting organization different from the original one, of the work broadcasted by radio or television; 6. Broadcast or transmission in or to a place accessible to the public and by means of any appropriate apparatus, of a work broadcasted by radio or television; 7. Public display of works of art or reproductions thereof; 8. Provisioning of public works, by wire or wireless means; and, 9. In general, the public dissemination by any means now known or later developed of words, signs, sounds or images. Any public communication that exceeds the private sphere is considered public. Article 118.- Distribution of the work.- Distribution implies provisioning the original and copies of the work to the public through sale or other types of property transfer such as rental or lease. Rent implies provisioning the original or copies of a work for its use in a limited time in exchange for payment of a royalty or price. Excluded from this concept of rental, for the purposes of this article, is the availability for exhibition purposes and those made for on-site consultation. It shall not be considered rental of a work when this work is not the essential object of the contract. Thus, the author of an architectural work or work of applied art may not object to the rental made by the owner of a construction or object that incorporates the work. Article 119.- Exhaustion of distribution rights.- The right of distribution by sale or other transfer of ownership is exhausted by the first sale or other transfer of ownership of the original or copies after it has been introduced into the market of any country with the consent of the holder, licensee, a person economically related to the holder or the licensee, or any other person authorized to do so. This right is exhausted regarding the successive re-sales within the country or abroad, but it does not exhaust or affect the exclusive right to prevent the rental of the copies sold. For the purposes of the preceding paragraph, it shall be implied that two persons are

economically related when one person can exert directly or indirectly on the other person a decisive influence regarding the exploitation of the work or when a third party can exert such influence over both persons. Article 120.- Import of works without authorization.- The right to import confers the holder with the authority to prohibit the insertion of copies of the work into Ecuadorian territory of copies without the authorization of the holder, of the persons mentioned in the previous Article or the law. This right may be exercised both to suspend the entry of such copies at ports and borders and to withdraw or suspend the circulation of the copies that have already entered the country. This right shall not affect copies that are part of travelers' luggage. Third Paragraph Technological measures for administration and protection of rights Article 121.- Technological measures.- Holders of copyright or related rights, may establish effective technological measures such as encryption or other systems, regarding their works and output protected by author’s rights and related rights, that restrict acts unauthorized by the holders or established in the legislation. Article 122.- Prohibitions.- Any action that is intended to induce, enable, facilitate or conceal an infringement of any rights established under this title shall be prohibited. The following acts are especially prohibited: 1. Remove or alter without authorization any electronic information on management of rights; and, 2. Distribute, import for distribution, broadcast, or communicate to the public, without authorization, copies of works knowing that the electronic information on the administration of rights has been suppressed or altered without authorization. Electronic information implies that which is included in the copies of works, or appears in relation to a communication to the public of a work, which identifies the work, the author, the holders of any author’s right or related right, or the information on the terms and conditions of use of the work or output, and the numbers and codes that represent said information. Article 123.- Obligations of the rightholders.- It shall be the duty of the rightholders of works and output protected by author’s rights and related rights that incorporate technological measures referred to in this Paragraph, to provide the users – under opportune conditions – the means, systems, devices and services necessary to neutralize or otherwise render ineffective said technological measures, who need to use only works of public domain or exercise a limitation or exception to the author’s rights and related rights established under this Title. Otherwise, the above means, systems, devices or services that neutralize or otherwise render ineffective such technological measures may be acquired from third parties, or offered or provided by them, without any liability for the third party or for the beneficiaries of the limitations and exceptions.

Article 124.- Evasion of technological measures.- The evasion of technological measures is allowed in order to: 1. 2. 3. 4. 5.

Decide on the acquisition of protected work or output; Research on data encryption; Research on security of computer systems; Use works of public domain; Exercise a limitation or exception to authorâ&#x20AC;&#x2122;s rights and related rights pursuant to this Title; and, 6. Exercise all fair uses set forth in this Organic Law. Section V Special provisions on certain works First Paragraph Software and Database First Section Proprietary software and databases Article 125.- Software protection.- The software is protected as a literary work. Such protection is granted regardless if it has been incorporated in a computer and regardless of the manner of expression, either as source code; i.e., legible by humans; or object code; i.e., in a machine-readable form; either operating systems or application systems, including flowcharts, plans, use manuals, and in general, those elements that determine the structure, sequence and organization of the program. Standard methods of software development are excluded from this protection. Article 126.- Necessary changes for the use of software.- Without prejudice to the moral rights of the author, the holder of the rights of the software, or the owner or other lawful user of a copy of the software, can make the necessary changes for the use thereof, in accordance with their needs, provided this does not imply a commercial use. Article 127.- Rightholders.- The producer owns the rights of software, that is, a natural person or legal entity that takes the initiative and responsibility of implementing the work. Unless proven otherwise, the holder is presumed to be the person whose name appears on the work or its copies in the usual way. The holder is also authorized to exercise in their own name the moral rights of their work, including the power to decide on its dissemination. The producer has the exclusive right to prevent third parties from engaging without their consent successive versions of the software and software resulting from it. The provisions of this article may be modified by agreement between the authors and the producer. Article 128.- Activities allowed without authorization.- The following activities relating software lawfully circulating are allowed, without the need of permission of the author or holder, or any payment:

1. Copy, alteration or adaptation of a copy of the software, made by the owner or other lawful user, necessary for its use; 2. Copy of the software made by the owner or other lawful user, that is for security and archiving purposes, meaning that it is made with the only intention of replacing the original copy legitimately obtained when it can no longer be used due to damage or loss; 3. Reverse engineering activities on a lawfully obtained copy of a software that is carried out with the sole purpose of achieving operational compatibility between programs or made for educational and research purposes; and, 4. Activities made on a lawfully obtained copy of the software with the sole purpose of testing, investigating, or correcting its operation or the safety of it or other programs, of the network or computer on which it is applied. Article 129.- Exception to reproduction.- For the purposes of this Title, the installation of a software in the internal memory of said apparatus is not considered a reproduction of software, considered it is done for personal exclusive use. Article 130.- Lawful use of the software.- Unless otherwise agreed, the lawful use of a software shall be done by a reasonable number of users, through the installation of networks, workstations or other similar procedures. Article 131.- Exception to transformation.- For the purposes of this Title, transformation does not constitute the adaptation of a software made by the owner or other lawful user for the exclusive use of the software. Article 132.- Prohibition to transfer the changes made to software.- Adaptations or modifications allowed in this paragraph may not be transferred under any title, without prior authorization of the holder of the corresponding right. Also, the copies obtained in the indicated manner shall not be transferred under any title, unless it is done together with the program that was used as matrix and with the authorization of the holder. Article 133.- Other exceptions.- In addition to the exceptions to authorâ&#x20AC;&#x2122;s rights under this Section of software, the exceptions or limitations provided for literary works may be applicable. Article 134.- Protectable subject matter for databases.- Compilations of data or other material, in any form, which, by reason of the selection or arrangement of their contents, constitute intellectual creations, are protected as such. This protection of database, according to this Title, does not extend to the protection of the data or information gathered, but shall not affect rights that may subsist in the works protected by authorâ&#x20AC;&#x2122;s rights or output protected by related rights. The recognized protection of databases under this Article shall not apply to the software used in the manufacturing or operation of databases accessible by electronic means. Second Paragraph Free software and open formats Article 135.- Free software.- Free software implies the software in which the holder provides a license that guarantees the user access to the source code and entitles them to use said software for any purpose. It especially grants users, among others, the following essential liberties: 1. The freedom to run the software for any purpose;

2. The freedom to study how the software works, and modify it to suit any need. The access to the source code is an essential condition for this; 3. The freedom to redistribute copies; and, 4. The freedom to distribute copies of their modified versions to others. Source code is the set of written instructions in a programming language, designed to be read and transformed by any software tool in computer language or instructions to run the software in the computer. Article 136.- Obligatory nature of the use of free software and open standards.- The public sector and institutions of the National System of Education and the System of Higher Education at all levels of education, shall use exclusively and compulsorily free software and open standards. In the case that free software or open standards, or both, are not being used appropriately, the public entities obliged in this Article shall reasonably request and, according to the regulations issued hereof, the authorization to acquire other type of software. Private institutions of the National System of Education and the System of Higher Education may dispense free software or open standards, or both, in the cases specified in the relevant regulations. In any case, the authorization for the acquisition of other type of software shall impose the obligation to migrate or develop free software, within a reasonable time defined by the competent authority. It is excluded from the authorization provided for in the preceding paragraphs hiring software updates purchased previously to the enforcement of this Organic Law and the systems, which for technical or commercial reasons cannot be replaced by free software. These acquisitions shall be duly justified by the contracting authority and must be duly reported to the governing body of the public procurement system, to control ex post. The institutions obliged by this provision must make the source code of the said free software available to the public under standards of documentation through the National System of Information on Science, Technology, Innovation and Traditional Knowledge. Exceptions to this provision are the software developed or hired by public institutions that for safety reasons should keep the source code undisclosed. The authority established by the President of the Republic through a regulation, shall authorize the undisclosure of said source code. Hiring software as a service of the entities obliged in this Article shall be made with suppliers that guarantee that the data is located in Ecuador. Article 137.- Free choice of software.- Users are entitled to freely choose the software on devices that support more than one operating system. The suppliers of electronic devices are obliged to allow users to acquire such equipment with or without software, and to allow users to decide the type of software the suppliers install on these devices. When buying electronic devices the suppliers are obliged to offer users with alternatives to proprietary software or free software, if any.

Proprietary software may be offered only when free software cannot be installed on said devices. Third Paragraph Free hardware Art. 138.- Free Hardware.- Free hardware is the electronic circuits whose specifications, such as: schematic diagrams, firmware source code - if it applies- and other documentation for configuration and operation, give users the following liberties: 1. The freedom to study such specifications, and modify them to fit any need; 2. The freedom to redistribute copies of such specifications; and 3. The freedom to distribute copies of their modified versions to others. Second paragraph Audiovisual works Article 139.- Coauthors of audiovisual work.- Unless otherwise agreed, the following coauthors of audiovisual works is presumed: 1. 2. 3. 4.

The director or maker; The authors of the plot, adaptation, and screenplay and dialogues; The author of the music especially composed for the work; and, The drawer, in the case of animated designs.

Article 140.- Original work.- Without prejudice to the authorâ&#x20AC;&#x2122;s rights on preexisting works that may have been adapted or reproduced, the audiovisual work shall be protected as original work. Unless otherwise agreed, the authors of the preexisting works may exploit their contribution in isolation manner of any genre, provided they do so in good faith and do not unreasonably prejudice the normal exploitation of the audiovisual work. However, the exploitation of the work in common, as well as works especially created for the audiovisual work, shall be exclusively of the holder of the rights of the audiovisual work, according to the next Article. Article 141.- Rightholder of audiovisual works.- The holder of the rights of an audiovisual work is the producer, that is, the natural person or legal entity who takes the initiative and responsibility of carrying out the work. Producer, unless proven otherwise, is presumed to be the natural person or legal entity whose name appears on such work in the usual manner. Said holder is also authorized to exercise in his own name the moral rights over the work including the power to decide on disclosure. The provisions of this Article may be modified by agreement between author, director and producer. Third Paragraph Architectural works

Article 142.- Limitations to authorâ&#x20AC;&#x2122;s rights.- The author of an architectural work may not object to changes of their work in the construction process or after, made by the property owner or to be ordered by a competent authority. However, they may require that their name is not mentioned in relation to the modified work. The author of an architectural work may not object to the demolition of the building. Article 143.- Use of other works.- The acquisition of an architectural work project implies the right of the acquirer to carry out the projected work, but the author's consent is required in the terms they state and according to the laws regulating the practice of architecture, to be used on other works. Fourth Paragraph Three-dimensional works and other works Article 144.- Right to obtain a share in resale.- If the original of a three-dimensional work or original manuscript of the writer or composer where resold: 1. In public auction; or, 2. With the direct or indirect involvement of a trader of such works as buyer, seller, trade agent or intermediary. Unless otherwise agreed, the seller must pay the author a share of at least five percent of the resale price, provided that said price is higher than the first sale. This right is unwaivable, inalienable and transferable upon death in favor of the author's heirs. It shall be exercised for the term of the economic rights of the work. The action to enforce payment of this right for every resale will expire after two years from the date of the respective resale. Article 145.- Responsible for business establishments.- Those responsible for business establishments, the trader or any other person who was involved in the resale, shall be jointly liable with the seller for the payment of this right and they shall notify the competent authority on intellectual property rights and the corresponding management society of this resale or notify the author or their heirs, within three months after the resale, with the relevant documentation for the settlement. Article 146.- Portrait or bust of a person.- The portrait or bust of a person may not be placed on the market without their consent and after their death, their heirs. However, the publication of the portrait shall be free when it relates only to scientific, educational, historical or cultural purposes, or with facts or events of public interest or which have been developed in public. Article 147.- Portrait photos.- No one may use a photographic work or a mere photograph consisting essentially of a portrait of a person, if the picture is not done with their authorization, their legal representative, their heirs, with the limitations established in the Law. The authorization shall refer to the specific type of use of the picture. The photographed person may object to its use if itâ&#x20AC;&#x2122;s different from the authorized use, unless the image accounts for facts or events mentioned in the preceding Article.

Authorization is not required when the photographed person is a minor component of photography. Section VI Transfer of rights First paragraph Transfer due to death Article 148.- Transfer of economic rights.- The economic rights granted under this Title are transferred to heirs and legatees in accordance with the provisions of the civil law. Article 149.- Rights of the heirs or legatees.- Unless otherwise agreed, each heir or legatee, as appropriate, may exploit prior authorization of the competent authority on intellectual property rights the work without the consent of the others, provided this is done in good faith and does not unreasonably prejudice the normal exploitation of the work, and without prejudice to distribute pro rata the economic benefits gained from the exploitation after deductions of costs incurred and a percentage of twenty percent of these benefits in their favor. This percentage shall be done without prejudice to the profit that corresponds to the respective heir or legatee per share. Second Paragraph Transfer of ownership of rights and contracts of exploitation of the works First Section Transfer of ownership of rights Article 150.- Transfer of economic rights.- The economic rights granted under this Title, unless expressly provided otherwise, are likely to transfer any title and, in general, every act or possible contract under civil law or commercial law as personal property. In case of transfer, any title, the transferee shall enjoy and exercise ownership. The alienation of the material medium does not imply any cession or authorization regarding the authorâ&#x20AC;&#x2122;s right of the work that said medium incorporates. Second Section Contracts in general Article 151.- Provision of authorâ&#x20AC;&#x2122;s rights.- Subject to the provisions of this Book, the ability of the authors or holders to make their rights available or authorize the use of their works or output is recognized, either gratuitous and onerous, according to the established conditions. This ability may be exercised through free and open licenses, and alternative licensing models or waivers. Article 152.- Contracts of transfer of authorâ&#x20AC;&#x2122;s rights.- Contracts on transfer of rights, authorization of use or exploitation of works by third parties shall be given in writing and is presumed onerous. In addition, where appropriate, the period of validity will be determined in the same contracts. The authors shall have an inalienable right to receive at least ten percent of the economic benefits resulting from the exercise of the economic rights. Under these contracts, the author shall guarantee the authorship and originality of the work. It

also means including, without express provision, the obligation to respect the moral rights of the author. Article 153.- Manners of exploitation of a work.- The various manners of exploitation of a work are independent between them, and the contracts shall be deemed to the manners of exploitation expressly stipulated and, unless otherwise agreed, those which are included depending on the nature of the contract or that are necessary to fulfill its purpose. Thus, the cession or licensing of the reproduction rights shall involve the right of distribution by sale or other title of copies whose reproduction has been authorized. All other rights, as the rights on non-existent or not yet known forms of exploitation at the time of the entry of the contract shall be deemed reserved. Unless otherwise established, the contracts shall have a term of ten years and shall be limited to the territory of the country where the contract was entered. Article 154.- Exclusive and non-exclusive cession of author’s rights.- In conformity with the provisions of the preceding article, the exclusive cession of the author’s rights transfers to the assignee the right of exclusive exploitation of the work, enforceable against third parties and the author himself. It also confers to the exclusive assignee, under the rights which have been assigned and unless otherwise agreed, the right to grant cessions or licenses to third parties, and to hold any other act or contract for the exploitation of the work. Also, the exclusive assignee has legitimation to pursue violations of author’s right affecting the powers that have been granted. In the non-exclusive cession, the author shall keep the right to exploit the work or authorize its exploitation to third parties. Unless otherwise provided, the non-exclusive cession shall not be transferable and the assignee may not grant licenses to third parties. In the absence of an express stipulation, the cession shall be deemed non-exclusive. Article 155.- Invalidity of the cession of the economic rights over works created in the future.- Without prejudice to the provisions regarding the works created under employment contract, the cession of the economic rights is invalid in works that the author may create in the future, unless they are clearly specified in the contract at least in its kind and provided it does not exceed five years. It is equally invalid any stipulation by which the author commits to not create any work in the future. Article 156.- Exclusive license of the author’s rights.- In conformity with the provisions in Article 153, the exclusive license of the author’s rights gives the licensee the exclusive right to exploit the work, enforceable against third parties and the author. In the non-exclusive license, the author keeps the right to exploit the work or authorize its exploitation to third parties. Unless otherwise stipulated, the license, exclusive or not, shall not be transferable and the licensee may not sublicense to third parties. In the absence of express stipulation, the license shall be considered nonexclusive.

Without prejudice to the rules on consumer protection and to the restrictive trade practices of free and unfair competition, the acquisition of copies of works that are traded with the corresponding license shall imply the acquirer's consent to the terms of such licenses. These licenses shall be drafted with sufficiently clear terms for the comprehension of the consumer. Article 157.- Obligations of granted exploitation.- In all contracts in which the author receives a direct or indirect share of the exploitation benefits of the work, it shall include, without need of express stipulation, the obligation to put all the necessary means for the effectiveness of the granted exploitation, according to the nature of the work and the prevailing practices in the professional, industrial or commercial activity. Article 158.- Dissemination of commissioned works susceptible to publication via newspapers, magazines or other means.- Notwithstanding the above provisions, the natural persons or legal entities who have commissioned magazine articles, papers, photographs, graphics or other works susceptible of publication via newspapers, magazines or other mass media, have the right to publish said works by the diffusion means provided in the commission, as well as to authorize or prohibit the use of works by similar means or equivalent to those of its original publication. The rights of the author are maintained to exploit the work in different broadcast media, provided it is done so in good faith and does not prejudice the normal exploitation of the work. If said works were made under employment contract, the author shall keep the right to make an independent edition as a collection. The points in this Article may be modified by agreement between the parties. Third Section Publishing contracts Article 159.- Publishing contract.- Publishing contract is a contract by which the author or rightholder authorizes another person, called the publisher to reproduce and distribute the work at the risk of the latter, under the agreed conditions. Article 160.- Prior notice of a published work to the new publisher of a work.- If the author has previously entered a publishing contract for the same work with a third party, or if it has been published by a third party with the author's consent or knowledge, the author shall disclose such circumstances to the publisher before the contract is concluded. Failure to do so, the author shall be liable for possible damages. Article 161.- Prohibition of signing a new contract.- During the term of the contract and in conformity with the territorial scope stipulated, unless otherwise agreed or given consent from the publisher, the author may not enter a new publishing contract for the same work with a third party or reproduce and distribute it, or authorize its reproduction or distribution to a third party. Article 162.- Prohibition to publish the modified work.- The publisher may not publish the work with abridgements, additions, deletions or any other alterations without the author's consent. Article 163.- Right to publish the modified work.- The author shall retain the right to make

corrections to their work, amendments, additions or improvements deemed appropriate before it starts printing. When modifications make publishing more costly, the author shall be exempt of compensating the expenses that may arise to the publisher, unless otherwise agreed. If the changes involve fundamental changes in content or form of the work and these where not accepted by the publisher, the withdrawal of the work shall be considered, obliging the author to compensate for the damages that were caused to the publisher and to third parties. The provisions of this article shall be applied to the reprints that may be made of the work during the contract period. Article 164.- Pricing of the work.- In the absence of express stipulation, the publisher is entitled to set the selling price of each copy. Article 165.- Use of unsold copies.- If, at the expiration or termination of the publishing contract, the publisher retains unsold copies of the work, the author may purchase them at cost price plus ten percent. This right may be exercised within thirty days from the expiration or termination of the contract, after which the publisher may continue to sell the copies in the same conditions stipulated in the contract. Article 166.- Termination of the publishing contract.- The publishing contract ends once the stipulated term has concluded, or when the edition is sold out. Article 167.- Obligation of the publisher of a work.- Every person who publishes a work in the country is obliged to put in a visible place, on all copies, at least the following information: 1. The title of the work and the author's name or pseudonym, or the expression that the work is anonymous; 2. The name of the compiler, adapter or author of the version, if any; 3. The notice of reserved rights or the indication of the type of license under which the work is published; 4. The year and copyright registration; 5. The name and address of the printer and publisher; 6. The place and date of printing; 7. The number of edition; and, 8. The barcode with the International Standard Book Number (ISBN). Article 168.- Number of copies made by the publisher.- The publisher may not publish a greater number of copies than that agreed with the author and, if they do, they shall pay the author for the highest number of published copies, without prejudice to the entitled compensation. Article 169.- Settlement of copies of a work.- Unless a different term is stipulated, the publisher shall be obliged to settle and pay semiannually to the author or to their who representative, the amounts that correspond to remuneration. In any case, the author or his representative shall be entitled to examine, at any time, the facilities, records and sales receipts of those who publish, distribute or sell the work and those related with the subject matter of the contract. Publishers, distributors and retailers shall keep and retain such documents.

Article 170.- Bankruptcy or insolvency of the publisher.- Bankruptcy or insolvency of the publisher shall not terminate the contract, except when the printing of the work has not started. The rights of the bankrupt publisher may not be assigned if it causes damage to the author or to the dissemination of his work. Article 171.- In publishing contracts for musical works.- The above provisions apply to publishing contracts of musical works, unless they are incompatible with the nature of the exploitation of the work. Article 172.- Inclusion of the work in phonograms.- Unless otherwise agreed, the publisher or subcontracted publishers or licensees, as appropriate, shall be entitled to authorize or prohibit the inclusion of the work in phonograms, its synchronization for advertising purposes, public communication, or any other similar forms of exploitation authorized in the publishing contract, without prejudice to the authorâ&#x20AC;&#x2122;s rights and the obligation to pay the compensations agreed in the contract. Article 173.- Publisher Rights.- Unless otherwise agreed, the publisher has legitimation, independently from the author or the owner of rights, to pursue violations of authorâ&#x20AC;&#x2122;s rights that affects the rights which they have been authorized.

Fourth Section Phonographic inclusion contracts Article 174.- Contract of phonographic inclusion.- The contract of phonographic inclusion is the one in which the author of a musical work or their rightful claimant, publisher or the corresponding collective administration association, authorizes a phonogram producer to record or fix a work to reproduce it on a phonographic disc, magnetic tape, digital medium or any other device or similar mechanism for its reproduction and distribution of copies. Unless otherwise agreed, the authorization of the producer shall not include the right of public communication. Article 175.- Financial profit of the author.- Unless otherwise agreed, the financial profit or share of the author shall be directly proportional to the value of the copies sold. Unless a different term is stipulated, the producer is obliged to settle and semiannually pay the author or their representative, the amounts that correspond for the concept of their share. In any case, the author or their representative shall be entitled to examine, at any time, the facilities, records and sale receipts of the producer and that related to the subject matter of the contract. The producer must keep and retain these documents. Article 176.- Minimum data to be entered in the material of phonograms.- Phonogram producers should include in the supporting material of phonograms, at least the following information: 1. The title of the work and names of the authors, or their pseudonyms, of the works that are part of the phonogram and the author of the version, when any; 2. The names of the performers. The orchestral or choral ensembles shall be mentioned by name or by the name of its director, as appropriate; 3. Where appropriate, the notice of reserved rights by the symbol (P) (the letter P inscribed

within a circle) followed by the year of first publication; 4. The registered name of the phonogram producer or of its trademark; and, 5. In the phonogram, the printed serial number of the production run is obligatory. The information that due to lack of space was not possible to enter in the labels of the copies shall be printed in the envelope, cover or enclosed leaflet. Article 177.- Pricing of the work.- The provision contained in Article 175 shall apply, as appropriate, to the literary work that was used as text of a musical work or as declamation or lecture for its fixation in a phonogram, with reproduction and distribution purposes. Fifth Section Representation contracts Article 178.- Representation contract.- It is that by which the author or owner of rights authorizes a natural person or legal entity called an agent to perform the work at the risk of the latter, under the conditions agreed. These contracts must be entered for a fixed term or for a specified number of representations or public performances. Unless otherwise agreed, the agent acquires the exclusive right to represent the work for six months since its release and, for the remaining term of the contract without exclusivity. In the contract it must be stipulated the term of the only or first representation of the work. Unless otherwise agreed, the term shall be one year from the date of the contract or, where appropriate, since the author names the agent as a representative. The provisions on the representation contract shall be applicable to other forms of public communication when relevant. Article 179.- Undetermined percentage of the authorâ&#x20AC;&#x2122;s share per performance in the contract.- When the author's share has not been determined in a contract, the share shall be at least ten percent of the total value of the tickets of each performance and twenty percent of the premiere show. Unless otherwise agreed, in the case of free access performances, the percentage referred to in the preceding paragraph shall apply to the total value of the potential revenue that would have been obtained if the show had not had that character. Unless a different term is stipulated, the agent is obliged to settle and pay semiannually to the author or to their representative, the amounts that correspond for the concept of their compensation. In any case, the author or their representative shall be entitled to examine, at any time, the facilities, records and sale receipts of the agent and that related to the subject matter of the contract. The agent must keep and retain these documents. Article 180.- Penalty to the businessman who fails to pay the author.- If the agent fails to pay the corresponding share to the author, the competent authority, at the request of the author or their representative, shall order the suspension of the performances of the work or the immediate retention of the product of collection. In the case that the same agent is representing other works by different authors, the authority

shall have the immediate withholding of the surplus quantities of the collection after the authorâ&#x20AC;&#x2122;s right of said works is satisfied, until the total amount owed to the unpaid author is covered. In any case, the author is entitled to terminate the contract and withdraw the work from the power of the agent, as well as to exercise other actions to which they are entitled. Article 181.- Termination of the representation contract.- The agent may terminate the contract, losing any advances made to the author, if the work would stop showing due to rejection by the public during the first three performances, or due to unforeseeable circumstances or force majeure. Sixth Section Broadcasting contracts Article 182.- Broadcasting contract.- Is that by which the author or their rightful claimant authorizes the transmission of the work to a broadcasting organization. These provisions shall also apply, as relevant, to transmissions made by wire, cable, fiber optics, or other similar procedure. Article 183.- Authorization for the transmission of a work.- The authorization to transmit a work excludes the right to broadcast it again or exploit it in public, unless otherwise agreed. For the transmission of a work towards or in other countries the express consent from the author or their rightful claimant shall be required, except the transmission of a work by digital means or other means which involve the possibility of transmission over the Internet or crossborder that, unless otherwise agreed, entail the authorization for its transmission towards or in other countries. Seventh Section Audiovisual work contracts Article 184.- Audiovisual work contract.- It is that in which the author and the performing artists, or their rightful claimant, or the corresponding management societies, allows a person to play in video recordings, distribute and publicly transmit an audiovisual work, at the risk of that person, in the agreed conditions. Article 185.- Prohibition of distribution of an audiovisual work.- The distribution or public communication of the audiovisual work shall not be negotiated if the agreement, which fully guarantees the payment of the rights, has not been previously signed with the author, artists, performers, or their rightful claimant, or the corresponding management collective societies. Eight Section Advertising contracts Article 186.- Advertising contracts.- Are those whose purpose is the exploitation of works for advertising or identification of announcements or promotional material through any media. Unless otherwise agreed, the contract shall enable the dissemination of announcements or publicity for a maximum period of six months since the first communication, liable to be paid separately for each additional term of six months. The contract shall specify the material medium in which the work is reproduced, when it

concerns the right of reproduction, and the number of copies including on the print run, if this is the case. Each additional print run shall need an express agreement. The provisions on publishing contracts, including phonographic and audiovisual works, are applicable to these contracts, when relevant. Section VII Limitations and exceptions to economic rights First Paragraph Term Article 187.- Term of economic rights.- The term of protection of economic rights comprises the whole life of the author plus seventy years after their death. When the ownership of the rights belongs to a legal entity, the term of protection specified in the preceding paragraph shall begin from the disclosure or publication of the work. If the work has not been disclosed or published within seventy years since its completion, the term of protection specified in the preceding paragraph shall begin from the creation of the work. Article 188.- Term of economic rights in posthumous works.- In the case of posthumous works, the term of seventy years shall begin from the death of the author. Article 189.- Term of economic rights of works with anonymous authors.- The anonymous work shall be protected seventy years after the work has been lawfully made available to the public. However, when the pseudonym used by the author leaves no doubt about their identity, the term of protection shall be provided for in Article 187. If the author of an anonymous or pseudonymous work discloses their identity during the stated period, the term of protection applicable shall be established in Article 188. If the identity of the author of the work disclosed under a pseudonym is not known, it shall be considered anonymous. Otherwise, the work shall be subject to the provisions in Article 188. Article 190.- Term of economic rights in works created in collaboration.- For collaborative works, the term of protection established in Article 187 shall begin since the death of the last coauthor. Article 191.- Term of economic rights in collective works.- If a collective work is disclosed in parts, the term of protection shall begin since the disclosure or publication of each installment, part or volume. Article 192.- Term of economic rights in audiovisual works.- For audiovisual works, the term of protection shall be seventy years after the disclosure of the work, or, if such event does not occur within a period of at least fifty years, after the completion of the work. Article 193.- Term of economic rights in photographic works and applied arts.- For photographic works the term of protection shall be seventy years since the completion of the work, its disclosure or publication, whichever is later. For works of applied art, the term of protection shall be seventy years since the completion of the work, its disclosure or publication, whichever is later. Article 194.- Term of economic rights in works of communities, peoples or nationalities.- In

the case of works of communities, peoples and nationalities to which the Constitution recognizes collective rights, which cannot determine any individual authorship, the term of protection shall be seventy years since the registration of said work to the competent national authority on intellectual property matter, which shall verify among other requirements, that the request has the collective consent of communities, peoples and nationalities. Article 195.- Calculation of the term of protection of a work.- The term of protection shall count since the date of death of the author or the completion, disclosure or publication of the work, as appropriate. When said date is unknown, the term of protection shall begin from the first of January of the following year of death of the author or that of the completion, disclosure or publication of the work, as appropriate. Article 196.- Termination of the protection terms of a work.- Once the protection terms provided for in this paragraph have been fulfilled, the works shall be transferred into public domain and, therefore, may be freely used by anyone, respecting the authorship of the work. Second Paragraph Limitations and exceptions Article 197.- Fair use of a work.- The fair use of a work shall not constitute a violation of the economic rights of it. To determine whether the use of the work complies with the provisions of this Article it shall be taken into account the provisions of this Code and international treaties to which Ecuador is a party, and among others, the following elements: 1. If the use of the work is for nonprofit educational purposes; 2. The objectives and the nature of use; 3. The nature of the work; 4. The amount and importance of the portion used in relation to the work as a whole; and, 5. The effect of use in the current market value and potential of the work. Article 198.- Acts that do not require authorization for its use.- Without prejudice to the provisions of the preceding Article, and in accordance with the principles of this Organic Law, the following acts do not require the authorization of the holder of the rights and are not subject to any remuneration: 1. The inclusion in an owned work of relatively short fragments of other people's works in a written, audio or audiovisual manner, as well as isolated works that are not part of the same collection, of a plastic, photographic, figurative or similar nature, provided that it is done so with already disclosed works, that their inclusion is with a quotation, or that it is done for analysis, comment or opinion, and that the source and the author's name is mentioned. Newspaper compilations made in the form of reviews, or press review shall be considered as quotations; 2. The use of a work in the process of official procedures of public administration, legislature or the administration of justice; 3. The sporadic exhibition, performance, interpretation and public communication of works on official events organized by State institutions, with commemorative, cultural, scientific or educational purposes, provided always that the act is free of charge and that the participants do not receive a specific remuneration for their intervention in the act;

4. The reproduction, translation, distribution and public communication with informational purpose of articles, comments, photographs, illustrations and similar works on current events and of collective interest, provided that the source and the author's name is mentioned, if the original indicates so, and has not appeared on the source the reservation of rights; 5. The reproduction, translation and public communication for informational purposes of conferences, speeches and similar works disclosed at assemblies, public meetings or public debates on matters of general interest; 6. The reproduction, adaptation, distribution and public communication with informational purposes of news of the day and various facts that have the character of mere press information, disseminated by any means or process, provided that the source is mentioned; 7. The reproduction, adaptation, distribution or public communication with scientific or educational purposes or for access of people with disabilities, of architectural, photographic works, of three-dimensional work, applied arts or similar, which are permanently located in open spaces for the public, through photography, painting, drawing, filming or any other or similar technique, provided that the name of the author of the original work is mentioned, if known, and the place of its location; 8. The reproduction and public communication with informational purposes of works seen or heard in time of current events by means of photography, cinematography or radio broadcasting or public broadcasting through a wired or wireless medium; 9. The individual reproduction of a work made by a library, archive or museum, when the corresponding copy is in the collection of the library, archive or museum, and said reproduction is made for the following purposes: a) To preserve the original copy and replace it if lost, destroyed or disabled; b) Deliver to another library or archive the reproduced copy with the purpose of lending the users of this library or archive. The library or archive that receives the copy may make a copy of the work if it is necessary for its preservation, and if the copy is intended for the use of its users; or, c) Replace in the permanent collection of another library or archive, a copy, which has been lost, destroyed or rendered unusable. A library or archive may also perform the following actions: i.

The reproduction of fragments of works that are in their collection, at the request of a user of the library or archive for personal use only;

ii. The electronic reproduction and public communication of works of their collection that are used for free consultation and for a reasonable number of users, only in the network of the corresponding institution or for users of that institution, under their control, in conditions which guarantee that no electronic copies can be made of such reproductions; iii. The translation of works originally written in a foreign language and legitimately acquired

when, upon completion of a period of three years from the first publication, or a year if they are periodicals publications, its translation into Spanish, other languages of intercultural relations and official languages in the respective territories, has not been published in the country by the rightholder; The translation shall be done for research or study purposes by the users of these libraries or archives, and can only be reproduced on selective partial quotations in the publications resulting from these translations; iv. The provision of temporary access to users of the library or archives, or other libraries or archives, to the works protected by author’s rights or output protected by related rights that are incorporated in a digital format or other intangible medium that is within their collections; v. The Reproduction and supply of a copy of the work protected by author’s rights or output protected by related rights to another library or archive, or other libraries or archives, wherever they are located, or in accordance with any other exception that allows the receiving archive or library to make such copy; vi. The reproduction, adaptation, translation, transformation, arrangement, distribution and communication of a work protected by author’s rights or output protected by related rights, in one or more accessible formats for the exclusive use of persons with disabilities; and, vii. Text mining. Libraries or archives and their officials shall be exempt from liability for all acts performed by its users as long as they act in good faith and have reasonable grounds to believe that the work protected by author’s rights or output protected by related rights has been used in the framework allowed by the limitations and exceptions provided in this paragraph or in a way that it is not restricted by the author’s rights of the work or output, or that said work or output is of public domain or under a license allowing its use; 10. Individual public lending of an audiovisual work by video library or other collection of audiovisual works, when the corresponding copy is in the repertoire of the video library or collection; 11. Making ephemeral recordings of a work on which they have the right to broadcast, made by a broadcasting organization with their own equipment and for its own use. The broadcasting organization is obliged to destroy said recording within five years, except in the case of recordings with a special historical or cultural value that deserves its preservation; 12. The execution of a transmission or retransmission made by a broadcasting organization, of an original work broadcasted by the organization, provided that the public transmission or retransmission, either simultaneously with the original broadcast and that the work is issued by broadcasting or publicly transmitted without any changes; 13. Satire, pastiche or parody of a disclosed work, provided they comply with the rules of these genres; 14. The recording and registration, including non-audiovisual technical means, for personal use of lessons and lectures given in universities, polytechnics, technical and technological institutes, high schools, primary schools, education and training institutes in general, and

other academic institutions, made by the participants to whom such lessons and lectures are addressed. The mentioned records and registrations shall not be subject to any trading or public use without the authorization of the holder of the rights; 15. The reproduction with teaching purposes or for tests in educational institutions of lawfully published articles in newspapers or magazines, or parts or fragments from lawfully published works, or isolated three-dimensional works, provided that said use is not subject to sale or other transaction for good and valuable consideration; The works mentioned in the preceding paragraph may be used in the course of study processes or face-to-face learning, blended learning, dual learning, online and distance learning, provided that it is used exclusively for the students of the corresponding classes. 16. In the case of orphan works, or works that are not legally available in the domestic market for more than one year since its publication, and while they remain in that quality or circumstances, the educational institutions may use their complete works referred to in both preceding paragraphs, provided that the use of such works is required by the corresponding education authority; 17. The representation, execution, and public communication of a work in the process of the activities of a teaching institution made by the staff and students of said institute, provided the act is free of charge and that the audience is mainly staff and students of the institution or parents or guardians of students, and other people directly related to the activities of the institution; 18 The translation or adaptation of a work for academic purposes, in the process of the activities of an educational institution, without the possibility that such translation or adaptation may be distributed later on; 19

The use of software with the purpose of showing clients on trading establishments in which they exhibit, sell, repair equipment or commercialize programs, provided they do so in conditions that prevent its dissemination outside the country.;

20 The use of three-dimensional work with the exclusive purpose of announcing the public exhibition or sale of said work; 21 Public exhibition of three-dimensional work or its reproductions made with diffusion of the culture, provided it is free of charge and that there is a direct economic benefit for the organization; 22 The interpretation, execution and communication of musical works or audiovisuals on the inside of establishments of public systems of health and education; social rehabilitation centers, provided it is addressed to the people inside these establishments and that those who are in these institutions are not obliged to pay to the management of these institutions for this interpretation, execution or communication; 23 The temporary reproduction of a work that is secondary and transitory, that is part of an integral and essential technological process and that it is done with transmission purposes in a network between third parties on behalf of one agent, and which does not represent in any case any independent economy;

24. The reference or links to on-line sites, or other lawful and similar activities, as the reproduction and storage necessary for the functioning process of a motor of search for the Internet, as long as this does not imply a violation of the protected contents; 25. Public communication and reproduction of texts, drawings, shapes and other contents of an application or registration of industrial property or application or breeder certification by data base open to the public, provided that, regarding the applications, these have a public characteristic; 26. Public communication of works made in small establishments open to the public through only a home device, whose main activity is not regarding said public communication and that the use has no purpose of setting the atmosphere. For this type of communications, the existing related rights on the output shall be considered; and, 27 The public communication of works made on public transportation by land that are urban and interprovincial and, that is not destined for touristic or entertainment activities

Article 199.- Other acts.- The limitations and exceptions mentioned in this paragraph includes, not only the rights explicitly mentioned, but also those that, by the nature or purpose of the limitation or exception, are included. Thus, in all the cases where a reproduction is authorized, the translation of this is also included if it is originally in a foreign language. Likewise, in the cases where a reproduction of a work is allowed, the distribution of copies of the work shall also be included, provided it is justified by the authorized reproduction. In all these cases the provisions of international treaties to which Ecuador is a party, shall be complied. Article 200.- Works or output denominated orphan.- Orphan works or output implies those whose author's rights or related rights are in force under the terms of protection established in this Organic Law, but whose holders are unidentified, or if they are identified, their location has not been possible. Who intends to use orphan works or output must perform all acts and reasonable efforts aimed at identifying the rightholder and notify the competent authority on intellectual property rights. In case the rightful holder or rightful claimant shall appear and duly justify their capacity, they may take the actions provided for in this Law. Article 201.- Advertising works.- The obligation to indicate names of authors and artist shall not apply in advertising audiovisual works, nor is it mandatory to mention the author's name in advertising photographs. Article 202.- Limitations and exceptions.- The limitations and exceptions established in this paragraph shall apply also to the protected output by related rights, in what was relevant. Section VIII Compulsory licenses Article 203.- Granting compulsory licenses.- The competent authority on intellectual property rights may grant compulsory licenses on the exclusive rights of a holder, consisting of literary or

artistic, musical or audiovisual works in the following cases: 1.

When there are practices that have been declared by the competent authority on control of market power, as contrary to free competition, especially when they represent an abuse of dominant market position by the holder of the rights of the author or related rights;

When the holder of a musical work has given authorization for the performance or recording of a work to a person and there is no possibility to get another authorization for new interpretation or recording by a third party;

When a literary or artistic work is not translated into Spanish, one of the official languages of intercultural relations or official languages in the corresponding territories and said translation is not available in the domestic market;

When a literary or artistic work is not available in the domestic market and the following term has passed since its publication in any medium: three years in the works of a scientific or technological content; five years in the works of general content; and seven years in works such as novels, poetry and art books; and,

When an audiovisual work, videogram or other audiovisual fixation has not been traded by the holder in Ecuador, or when the amount available to the public has been unable to meet the domestic market.

Article 204.- Regulation of compulsory licenses.- Ex officio or upon request by the competent national authority on intellectual property may grant compulsory licenses for the national territory in a non-exclusive manner on the cases and types of works listed in Article 203. Such licenses shall not be transferable with the exception of the cases where it is transferred as part of a company or the companyâ&#x20AC;&#x2122;s intangible asset which allows its exploitation; said transfer shall be recorded by writing and registering before the competent authority on intellectual property rights The grant of a compulsory license does not exempt the licensee from respecting the existing moral rights of the work or of the methods that are not part of the license. The license may be revoked, subject to the legitimate interests of the licensee, on reasoned request from the rightholder, or ex officio if the original circumstances that supported the concession of this license have disappeared. Article 205.- Economic retribution for the compulsory license.- The holder of the rights of a work, which is subject to a compulsory license, shall have the right to receive a fair economic retribution that shall be determined by the competent national authority on intellectual property rights according to the provision in the corresponding regulations. Article 206.- Impossibility of other measures.- The person requesting the concession of a compulsory license of a literary or artistic work shall not be subject to other administrative or judicial measures regarding this work, payment of fair compensation for such purposes determined by the competent authority on intellectual property rights in accordance with the procedure applicable to compulsory licenses, to the extent that whoever performs the reproduction and distribution complies with the conditions and special requirements specified by the corresponding regulations.

CHAPTER IV RELATED RIGHTS Section I General Precepts Article 207.- Protection of related rights.- The protection of related rights does not affect in any way the protection of author's rights, nor shall be interpreted as prejudicing such protection. In case of conflict, it shall always be what is most favorable for the author. The authors shall have the inalienable right to receive at least ten percent of the profits earned by the exploitation of related rights. Article 208.- Final provisions of related rights.- Regarding related rights contemplated in this Chapter, in the absence of an express provision, the other provisions of this Title shall be applied. Section II Performers First Paragraph Moral Rights Article 209.- Recognition and concession of moral rights.- Independently from the economic rights and even after its transfer, the artists or performers shall have, regarding their interpretations and performances, the right to be identified as such, unless the omission is determined by the way the interpretation or performance is used. They shall also have the right to oppose to any distortion, mutilation or other modification of their interpretation or performance that can cause damage to their honor or reputation. Upon the performerâ&#x20AC;&#x2122;s death, the exercise of these rights shall correspond to their successor in title for the term of the economic rights. In any case, the modifications of an interpretation or execution that is made during the normal exploitation of the performance, such as edition, compression, dubbing, or formatting, in means or formats new or existing, and that is executed during the authorized use by the performer, shall not be considered as distortions or modification as it is pointed out in the first paragraph. Likewise, it is implied that the modifications that may damage the performerâ&#x20AC;&#x2122;s reputation mentioned in said paragraph are in relation to only the changes that are objectively detrimental in a substantial manner for the reputation of the performers. The use of technologies or new or modified means do not constitute by themselves a modification of the provided terms in this Article. Second Paragraph Economic rights Article 210.- Rights of performers.- The performers have the right to authorize or prohibit the communication to the public in any form of their non-fixed performances, and the fixing and reproduction of their performances by any means or process. However, the performers may not object to the public communication of their performances, when they make by themselves a broadcasted performance or it is made from a previously

authorized fixing or made from a fixation made with their previous consent. Article 211.- The right of economic remuneration or compensation.- Performers shall be entitled to receive economic remuneration or compensation for the public communication of a phonogram containing their performance. Unless otherwise agreed, the economic remuneration or compensation to be collected in accordance with the preceding paragraph shall be shared equally between the phonogram producers and artists or performers, regardless of the author's economic rights established in Articles concerning the economic rights of the author, in accordance with international conventions. The performers who have authorized the fixation of their performances in audiovisual media shall be entitled to a fair economic remuneration or compensation for broadcasting by radio or television, as well as cable transmission of the different forms of transmission and retransmission that is done for profit. Article 212.- Collective rights of the performers.- Performers who collectively participate in the same performance shall designate a representative for the exercise of the rights recognized in this Section. In the absence of such designation the director of the group who participated in the execution shall represent them. In the absence of a director of the group, any interested party may request the competent authority on intellectual rights to appoint a member of the group as a representative for this purpose. The competent authority on intellectual property rights shall determine the distribution. Article 213.- Protection of the rights of performers.- The term of protection of the rights of performers shall be seventy years since the first of January of the following year in which the performance took place, or its fixation depending on the case. Section III Producer of Phonograms Article 214.- Rights of the producers of phonograms.- The phonogram producers have the exclusive right to prevent third parties from making any of the following acts without their consent: 1. Direct or indirect reproduction of their phonograms, by any media or procedure; 2. Public communication of phonograms by wireless medium or by wire, cable, optic fiber or other comparable medium; 3. Import illicit reproductions of phonograms; and, 4. Distribution of the phonograms to the public. The producer of phonograms shall be entitled to an economic remuneration or compensation for the public communication of their phonograms in those open establishments to the public where music is used to set the atmosphere and where no profit is obtained directly or indirectly as a result of such use, in other cases of public communication this right shall be exclusive. The economic remuneration or compensation received by the producers of phonograms for the public communication of phonograms including performances shall be shared equally with

the performers of said performances. A one-stop place may be built, designated to raise the economic remuneration or compensation corresponding to the authors, phonogram producers and performers, for the public communication of their musical works, performances or phonograms. Article 215.- Exhaustion of rights.- Notwithstanding the provisions in the previous Article, the holder shall not have the right to prevent a third party from distributing a phonogram after it has been introduced in the commercial sector of any country with the consent of the holder, licensee, or any person economically related to the holder or licensee, or any other person authorized to do so; or, any person in a legitimate manner.

For the purposes of the preceding paragraph, it shall be implied that two persons are economically related when one person can exert directly or indirectly on the other person a decisive influence regarding the exploitation of the work or when a third party can exert such influence over both persons. Article 216.- Licenses granted by the phonogram producer.- Exclusive licenses granted by the phonogram producer shall specify the rights whose exercise is authorized to the licensee. Unless otherwise agreed, the licensee shall have legitimacy, regardless of the licensor, to pursue rights violations affecting the powers that have been granted. Article 217.- Duration of the protection rights by phonogram producers.- The term of protection of the rights of the phonogram producer shall be seventy years since the first of January of the following year in which the phonogram was published. If such publication does not occur within the seventy years since the fixation of the phonogram, the term shall begin since the fixation. Section IV Broadcasting organizations Article 218.- Rights of the broadcasting organizations.- The broadcasting organizations have the exclusive right to prevent third parties from doing any of the following actions without their consent: 1. Retransmission of their emissions, by any media or procedure; 2. Fixing and reproducing their emissions; and, 3. Public communication of their emissions when these are made on accessible places to the public through a payed admission. Article 219.- Production of broadcasting signals.- The emission referred to in the preceding Article includes the production of program-carrying signals destined for a satellite broadcasting, and distribution to the public by an entity that broadcasts or disseminates the emissions of others, received through any of these said satellites. Article 220.- Decoding broadcasting signals.- Without the authorization of the corresponding broadcasting organization, it shall be deemed illicit the decoding of satellite signs that carry programs that are protected by technological protective measures, its reception with profit purposes or its dissemination, or importation, distribution, sale, lease or offer to the public of any apparatus or system that do not have a legitimate use different from decoding said signals.

Article 221.- Protection of broadcasting organizations.- For the purposes of the enjoyment and exercise of the rights set forth in this Section, a similar protection is recognized, as appropriate, to the stations of broadcasting organizations that transmit programs to the public by wire, cable, optic fiber or other similar procedure . Article 222.- Term of the rights of broadcasting organizations.- The term of the protection of rights of broadcasting organizations shall be of fifty years starting on January first of the following year in which that emission was made. Section V Other rights Article 223.- Protection of rights of third parties.- Who makes a mere photograph or other fixation obtained by a similar procedure, which does not have the character of photographic work shall have the exclusive right to prevent third parties from engaging without their consent in the reproduction, distribution or public communication of the mere photograph or fixing, in the same terms as the authors of photographic works. This right shall last for five years from the first of January of the following year since the making, disclosure or publication year, as appropriate. CHAPTER V COLLECTIVE MANAGEMENT SOCIETIES

Article 224.- Collective management societies.- The collective management societies are nonprofit legal entities, whose corporate purpose is the collective administration of the economic rights of the authorâ&#x20AC;&#x2122;s rights or related rights, or both. Said societies are subject to the approval, authorization, monitoring, control, regulation, intervention and penalty of the competent authority on intellectual property rights. Section I General obligations and attributes of the collective management societies Article 225.- Administration of the collective management societies.- The collective management societies shall be obliged to administer the rights that are given to them and shall be legitimized to exercise them according to the provisions in this Book and in the provided bylaws in the mandates, granted powers and in the contracts they have signed with foreign entities, depending on the case. In no case may the collective management societies collect fees for works or output that are not in their corresponding repertoires. Article 226.- Associates of the collective management societies.- The collective management societies shall have the obligation of accepting as associates any rightholder. The bylaws of the Society shall prescribe the conditions for accepting rightholders as associates to those who apply and certify such capacity. Article 227.- Affiliation.- The affiliation of the rightholders of authorâ&#x20AC;&#x2122;s rights or related rights to a collective management society shall be voluntary The representation granted to collective administration societies according to this Chapter shall

not affect the right of holders to exercise directly the rights recognized in this Title.

Section II Approval and control of collective administration societies First Paragraph General requirements for the constitution and authorization of operation Article 228.- Approval of the bylaws of the collective administration societies.- The bylaws of the collective management societies shall be approved by the competent authority on intellectual property rights, which shall also authorize its operation. In addition, these companies shall be subject to being monitored, controlled and intervened by said authority. Article 229.- Requirements.- The general requirements for the constitution of collective management societies are: 1. 2. 3.

That the bylaw of the applying entity complies with the established requirements in this Chapter; To have a minimum of fifty members who are Ecuadorian holders of rights to be managed; and, To have enough resources to perform the steps and activities required to complete the authorization process of operation as an applying collective management society.

Article 230.- Authorization for operation.- The general requirements for the authorization for operation of collective management societies are: 1. That it is duly constituted; 2. That the information provided and the information gathered by the competent Authority in the field of intellectual property rights, shows that the applicant entity has enough resources to ensure the effective administration of the rights whose management will be entrusted; 3. Demonstrate that the society represents a quantitatively significant number of works or other protected output to manage; 4. Prove that the society is able to perform collective administration abroad; and, 5. That it has all the manuals and internal procedures in accordance with best practices and recommendations of the competent Authority concerning intellectual property rights. Second Paragraph Bylaws of the collective management society Article 231.- Bylaws.- Without prejudice to the provisions of other applicable laws and regulations, the bylaws of collective management societies shall, especially, prescribe the following: 1. Associates: a. The demand that only the original or entitled holders of the administrated rights may be associates; b. The process and requirements for admission and removal from the entity, the cases of suspension of the social rights and expulsion; c. The means to prove the associates as the legitimate rightholders of author's rights or related rights;

d. The manner of distribution of the revenue; e. The criteria for the allocation of social and welfare benefits; f. The rights and duties of members and the disciplinary rules and, in particular, the right to be informed and the right of voting for the election of the governing bodies and representation. The vote shall be democratic and secret. All members shall be entitled to participate in the election of the authorities of the society; and, g. Regardless of the categories of existing associates in a collective management society, all associates shall have the same right to participate in decisions taken in assembly. 2. Governing and representing bodies: a. The governing and representing bodies of the society and their respective powers, as the rules regarding the convening, installation, operation and adoption of resolutions of the collegiate bodies. The governing bodies shall be the General Assembly, the Board and the Monitoring Committee. In the formation of the Board and the Monitoring Committee it shall be ensured an implementation of policies of gender inclusion. b. The requirement that the only members of the Board or of the Monitoring Committee shall be those who are domiciled in the country, in the case of natural persons or those who have a legal representative in the country in the case of legal entities in accordance with Article 94 of this Organic Law, which have generated during the twelve months preceding the election a revenue equivalent to the minimum established by the management society, with the approval determined by the competent authority on intellectual property rights and who has not been subject to criminal, civil or administrative sanctions that prove a lack of integrity in relation to the administration, management and exercise of roles within a collective management society or related entities. Members of the Board may not simultaneously be members of the Monitoring Committee. They shall serve for a maximum term of four years and may be reappointed for an additional term; c. The General Assembly, consisting of all associates of the society, is the supreme governing body and its powers shall be: i. Knowing the annual budget and its financing; ii. Knowing the annual economic report and management; iii. Knowing the fees regulations; iv. Knowing the distribution procedures; v. Knowing the rationale used by the Board and approved by the Monitoring Board to set the percentages of the collected revenues aimed for administrative costs and social benefits within the legal limits; vi. Elect the members of the Board and Monitoring Committee; vii. Decide on the expulsion and suspension of a member; and, viii. All others chosen by the associates through a resolution in the Assembly. d. The Board whose powers shall be: i. Direct and manage the collective management society; ii. Give a management report at each General Assembly; iii. Grant and revoke general and special powers where relevant;

iv. Set the corresponding remuneration of the President and General Director in accordance with the budget to submit in the Assembly; v. Establish the fees prior revision of the Monitoring Committee; and, vi. Other powers established in this Organic Law, the corresponding regulations and the bylaws of the collective management society. e. Monitoring Committee whose powers shall be: i. Review and submit comments to the maximum amounts that can be assigned to the Board, compensation and remuneration of the General Director and managers of the society; ii. Review and submit comments of the annual budget and its financing; iii. Review and submit comments of the annual economic report and management; iv. Review and submit comments of the fees regulations; v. Review and submit comments of the distribution procedures; vi. Review and submit comments on the criteria for determining the percentages of the revenue intended for administration costs and social benefits within legal limits. 3. Assets and balance: a. Initial assets and provided resources; b. The use of the net worth or assets, in the case of dissolution of the entity, shall be subject to be approved by the competent authority on intellectual property rights; c. The requirement to submit the balance sheet and accounting documents for examination by an appointed external auditor of a list submitted by the competent authority on intellectual property rights chosen by the collective management society at their expense, and the obligation to make such examination available to the associates, also sending a copy thereof to the competent authority within five days after finalized, without prejudice to the exam and report corresponding the internal monitoring bodies, according to the bylaws; and, d. The prohibition of the collective management society of signing contracts with members of the governing bodies, as well as the spouse, partner or relatives within the fourth degree of consanguinity and second of affinity of those members, except on management contracts and all the conventions that link an associate or administrator with the society for the representation of their rights. The same prohibition shall apply to contracting with legal entities in which any said persons are representatives, officers or partners of an associate. Third Paragraph End use of revenues Article 232.- Allocation of managing expenses of collective management societies.- The General Assembly shall be required to annually set the percentage for administrative expenses and service fees, which together may not exceed thirty percent of the total revenue collected. A percentage no greater than ten percent of the collected revenue shall be invested in projects to promote creative activity of the associates, which must be approved by the General Assembly of the administration entity.

The percentage allocated to welfare and social security benefits may not be more than ten nor less than five percent of the collected revenue, as established in the General Assembly. In the case that the associates are legal entities, such securities shall be added to the percentage for promoting creative activities. Exceptionally, after decision of the Monitoring Committee and authorization of the competent authority on intellectual property rights, the corresponding percentage of the administrative expenses and management fees may be up to thirty-five percent, in decrease of the amount allocated to the promotion of creative activities of the associates. When the percentage of administrative expenses and management fees is less than thirty percent of the total revenue, the surplus shall be added to the percentage of distribution. At least fifty percent of the total revenue must necessarily be distributed equally among the various rightholders, in proportion to the actual exploitation of works, performances, broadcasts or phonograms, depending on the case. In the case of collective management societies that are structured since the issuance of this Organic Law, the percentage of administrative expenses and management fees during the first three years, may be added to the percentage of welfare and health benefits and to the percentage allocated for projects promoting creative activities. Article 233.- Legal capacity of collective management societies.- In order to be enforceable against third parties, the collective management societies are required to report to the competent authority on intellectual property rights, the appointment of members of their governing bodies as well as the instruments evidencing the representations they exercise for foreign associations or organizations, mandates given to them by the associates or for third parties to collect the remunerations for economic rights and their respective repertoires. Fourth Paragraph Obligations of the members of the governing and representative bodies Article 234.- Obligations of the Board, Monitoring Committee and General Director.- The members of the Board, of the Monitoring Committee and the General Director, at the time of taking office and every two years, shall submit to the competent authority on intellectual property rights an affidavit of not being included in any of the incompatibilities established in this Chapter along with a sworn statement of assets and income. Fifth Paragraph Obligations after the authorization for operation Article 235- Obligations of the collective management societies.- Without prejudice to other obligations under their bylaws, the collective management societies once authorized shall: 1. Publish, at least annually, in a newspaper of national circulation, the balance sheet and income statement; and, 2. Submit to its associates, at least semiannually, the complete and detailed information of all activities related to the exercise of their rights. Sixth Paragraph Fees Article 236.- Creation of a database.- The collective management societies shall keep an

updated database of public access with clear and accurate information of works, performances, broadcasts or phonograms whose author's rights or related rights they are managing, as well as the people who are their associates and domestic and foreign represented, indicating: 1. The singling out of each of the works, performances, broadcasts or phonograms they represent regarding each holder or representative; 2. The fees for each type of use and user category; 3. The uses reported for each work; 4. The methods used for distribution; and, 5. In addition, the collective management society shall make available permanently in a physical or electronic form to the associates: the annual budget, internal regulations, management reports and distribution to the associates. This information shall be available to the public both on online sites of collective management societies as on the registered office. Article 237.- Fees.- The collective management societies shall set a reasonable, fair and proportionate fee for the use of works, performances, broadcasts or phonograms included in their corresponding repertoires. The fees established are subject to the authorization of the competent authority on intellectual property rights, which shall first obtain or request the factual and technical background supporting the rates, as well as compliance with the formal requirements established in this Organic Law, the relevant regulations and the bylaws of the society. Once approved, the fees shall be published in the Official Register and in a newspaper of national circulation by order of the competent authority on intellectual property rights. Article 238.- Signing of contracts.- Collective management societies may enter contracts with associations or guilds of users that set fees for particular uses. Any interested party may base on these fees if requested in writing to the corresponding administration entity. Seventh Paragraph Payment and distribution of the revenues Article 239.- Collective management societies by type of work.- If there is two or more collective management societies by type of work, a single collective entity shall be structured, whose corporate purpose is solely to collect economic rights on behalf of the constituent societies. If the management societies would not agree on the formation, organization and representation of a collective entity, its designation and structuring shall correspond to the competent authority on intellectual property rights. In any case, the single collecting agency referred to on the preceding paragraph shall be structured with the authorization of the competent authority on intellectual property rights. Collection costs of the single collecting entity shall be charged to the administration expenses of the respective management societies that are represented. Article 240.- Distribution of the revenues.- At the time of the distribution of revenues, the collective management societies shall provide enough information to enable the associates to understand the procedure of the respective liquidation. The provision of information shall be individual for each associate through the format that, to that effect, is authorized by the

competent authority on intellectual property rights to each collective management society. Article 241.- Type of revenues.- The revenues should be effectively settled, distributed and paid by the collective management societies to the corresponding rightholders no later than a semester after its collection. Except on the cases where the competent authority on intellectual property rights authorizes a different term prior approval of the General Assembly. The exact dates of payments to partners must be reported annually to the competent authority on intellectual property rights and to associates no later than the first quarter of each year. Article 242.- Fines due to bad faith.- Who exploits a work, performance, broadcast or phonogram in violation of this Title shall pay, as compensation, a fifty percent surcharge on the percentage, calculated for all the time the exploitation has been made with bad faith. The payment of this surcharge fee shall be done without prejudice to the payment of the amounts owed by the exploitation. The preceding paragraph shall also apply to collective management societies if they have been granted licenses on works, performances, phonograms or broadcasts that do not represent, in any case must ensure the licensee the use and peaceful enjoyment of the rights. The action to demand the payment referred to in this Article shall expire after two years from the date of the act. Article 243.- The obligation to keep records of broadcasting, television, or cable organizations.- All broadcasting, television or cable organizations and in general those conducting public communication of protected works, performances, broadcasts or phonograms for commercial purposes and that make a detailed selection of materials that communicate directly to the public, shall keep catalogs , records or monthly schedules where they shall register and record every broadcast by order of emission, the title of the broadcasted works and the name of the authors or holders of author's rights and related rights that apply and are of their knowledge. Said catalogs, records or forms must be sent to each and every collective management society and the single collection agency for public communication rights for the purposes set out in this Chapter. The collective management society shall provide receipts or records that account for the receipt of catalogs, records or forms regarding this Article.

Eighth Paragraph Audit, intervention and punishment Article 244.- Monitoring and inspection visit.- The competent authority on intellectual property rights may, ex officio or upon request of an interested party, conduct inspections and monitoring visits to verify the proper operation of collective management societies and make summaries and investigations in cases of violations to the governing regulations. In any case, ex officio or upon request of an interested party, the competent authority on intellectual property rights may conduct due diligence and investigations and intervene in collective management societies if they do not comply with the governing regulations. The intervention shall include all areas of society. After the intervention is done, the competent authority on intellectual property rights shall approve the actions and contracts for their validity.

Prior investigation and through a duly justified administrative action, the competent authority on intellectual property rights may declare an intervention as a previous preliminary injunction or during the substantiation of an investigation or summary against a collective management society. For this purpose, the competent authority on intellectual rights shall appoint an official controller or another person who has the appropriate technical conditions perform the necessary functions. The intervention shall last until the inquiry or investigation is completed. In cases qualified by the competent authority on intellectual property rights, the intervention may be ordered as a measure to guarantee compliance with the sanctions imposed on the collective management society for violating the governing regulations, and until they are rectified. Article 245.- Sanctions to collective management societies.- If a collective management society does not comply with the provisions of this Organic Law, the corresponding regulations or its bylaws, following the procedure in the previous Article; and fails to remedy the infringement within the time limit set by the national competent authority, the competent authority may impose, in relation to the seriousness of the offense or recidivism of one of the sanctions listed in this article. The penalties shall be imposed considering the following criteria, the seriousness of the infringement and disregard of the regulations set out in this Organic Law and other applicable rules: and, having incurred for the first time or being a repeat offender. In the case of repeated infringement they shall be punished with the gravest sanction. If all are the infringements are of equal severity the maximum penalty shall be imposed. The sanctions are those listed below: 1. Written warning; 2. Fine; 3. Suspension of the operating license for a maximum term of six months; and, 4. Revocation of the operating license. When a collective management society has been sanctioned it shall inform the scope thereof to its associates, and the competent authority on intellectual property rights shall public said infraction in the manner determined by the corresponding regulations. Failure to comply with this provision the competent authority on intellectual property rights may sanction the society with the sanction determined by the regulation. In the cases where violations are the result of willful misconduct or gross negligence made by the General Director, managers, or members of the Board or of the Monitoring Committee, the collective management society shall act against the corresponding person responsible for the damages caused through fines under this article. Article 246.- Determining default or inobservance.- The competent national authority on intellectual property rights may, ex officio or at the request of an interested party, conduct inspections or due diligences to determine default or inobservances of the regulations of this Organic Law and other rules applicable to the operation of the Collective Management Societies, made by the administrators, Board and Monitoring Committee. In the case the competent authority on intellectual property rights establishes responsibilities the authority shall determine that the Collective Management Society imposes the following sanctions:

1. Written warning; 2. Fine, and; 3. Removal from position. These sanctions shall be imposed without prejudice to the corresponding actions in accordance with what is established on common law. Article 247.- Effects of suspension of collective management societies.- If the suspension of the operating license is enacted, the collective management society shall retain its legal personality solely for the purpose of remedying the infringement. If the collective management society fails to remedy the infringement within a maximum period of six months since the decree of suspension, the competent authority on intellectual property rights shall definitely revoke the operating license of the society; in this case, they shall proceed to the dissolution of the collective society and the immediate refund of what belongs to the associates, in equal shares. Without prejudice to the foregoing, in all cases of suspension of the operating license, the society may, under the control of the competent authority on intellectual property rights, collect the economic rights of the authors represented by said society. The amount resulting from the collection shall be deposited on a separate account under the name of the competent authority on intellectual rights and shall be returned immediately to the society once the resolution derogating the suspension is issued. Article 248.- Access to mediation.- If an association, union or representative group of users, whose representation is duly justified, considers that the fee established by a collective management society is affixed or applied abusively or incorrectly, they may request mediation from the competent authority on intellectual property rights. TITLE III INDUSTRIAL PROPERTY CHAPTER I PRIORITY CLAIM Article 249.- Right of priority.- The first application for the concession of a patent for invention or utility model, or industrial design or trademark registration, validly submitted in another country member of the Andean Community or before a national, regional or international authority with which Ecuador were bound by a treaty establishing an analogous right of priority laid down in this Chapter, shall confer the applicant or their rightful claimant a right of priority to request in Ecuador a patent or registration regarding the same subject matter. The scope and effects of the right of priority shall be those provided in the Paris Convention for the Protection of Industrial Property. The right of priority may be based on an earlier application submitted to the competent authority on intellectual property rights, provided that the request has not claimed the right of priority previously. In this case, the filing of the subsequent application claiming the right of priority shall imply the abandonment of the earlier application regarding the subject matter common to both. It is recognized that the right of priority is originated by submitting any application validly

accepted for processing. To benefit from the right of priority, the application claiming for the right shall be filed within the non-renewable periods from the date of submission of the application whose priority is invoked: 1. Twelve months for applications of concession of patents for invention and utility models; and, 2. Six months for applications of registration of industrial designs and trademarks. Article 250.- Requirements to invoke the right of priority.- For purposes of the provisions of the preceding article, a statement shall be submitted with the relevant documentation, in which the priority of the earlier application is invoked indicating the date of submission, the office at which it was submitted and its number. The statement and the relevant documentation shall be submitted jointly or separately, with the application or, at the latest, within the non-renewable terms from the date of submission of the application whose priority is invoked: 1. In the case of applications for the concession of a patent or utility models: sixteen months; and, 2. In the case of applications for registration of industrial designs or trademarks: nine months. A copy of the application in which the priority is claimed shall also be submitted, certified by the authority that issued it and a certificate of the date of submission of said application issued by the same authority. Other additional formalities than those established in this article shall not be required, for purposes of the priority rights. Article 251.- Loss of priority.- Failure to meet the deadlines or submission of the documents mentioned in the foregoing articles shall result in the loss of the claimed priority. CHAPTER II PATENTS FOR INVENTION Article 252.- Patents for invention.- The patent system is a tool to promote industrial and technological development and the achievement of the Good Living. Section I Requirements for protection Article 253.- Protectable subject matter.- A patent shall be granted for any invention, whether products or processes, in all fields of technology, provided that it is new, that it involves an inventive step and that it is industrially applicable. Article 254.- Inventions not considered as such.- The inventions that shall not be considered are: 1. Findings, principles and scientific theories and mathematical methods; 2. The whole or part of living beings as found in nature, natural biological processes, biological material existing in nature, or that which can be isolated, including genes,

proteins, genome or germplasm of any living being; 3. Literary and artistic works or any other work protected by author's right; 4. Plans, rules and methods for performing intellectual activities, games or economic-trading activities; 5. The software or logical base, as such; 6. The manners of presenting information; 7. A new type of a substance, including salts, esters, ethers, complexes, combinations and other derivatives; 8. Polymorphs, metabolites, pure form, particle size and isomers; 9. The uses and any new trait or new use of a known substance or use of a process or a machine or known apparatus; and, 10. Genetic resources that contain biological diversity and agro-biodiversity as such. Article 255.- Novelty.- An invention is considered new when it has not been included in the state of the art. The state of the art comprises everything that has been made accessible to the public in any place or time, by written or oral description, use, marketing or any other means before the submission date of the patent application or, if applicable, the recognized priority. Solely for the purpose of determining a novelty, the content of a patent application in process presented before the competent authority on intellectual property rights shall also be considered as state of the art, whose date of submission or priority has been done before the date of submission of the patent application that is under examination process, provided that said content is included in the prior application when it is published or that the term provided in Article 275 has already finished. Article 256.- Non disclosure of patentability.- For purposes of determining patentability, it shall not be taken into consideration the disclosure occurred within a year preceding the date of submission of the application or within a year preceding the priority date, if it were invoked, provided that such disclosure came from: 1. The inventor or their rightful claimant; 2. A competent national office that, in violation to the regulation governing the subject matter, publishes the content of the patent application submitted by the inventor or his rightful claimant; 3. A third party, including public officials and state agencies, which had obtained the information directly or indirectly from the inventor or his successor in title; 4. An order of an authority; 5. An obvious abuse against the inventor or their rightful claimant; and, 6. The fact that the applicant or their rightful claimant had displayed the invention at officially recognized exhibitions or fairs, or that for academic or research purposes it had been necessary to make it public to continue with its development. In this case, the person interested, when submitting an application, shall present a statement pointing out that the invention has been shown, and present it with the corresponding certificate. Article 257.- Inventive level.- It shall be considered that an invention has an inventive step if, for a well-versed person in the corresponding technical field, the invention is not obvious or obviously derived from the state of art, and also represents a significant technical contribution. It is implied that a well-versed person in the corresponding technical field is an expert or group of experts with qualifications of studies and experience in the technical area of invention.

Article 258.- Industrial applicability.- It is considered that an invention is susceptible of industrial application if it can be produced or used in any productive activity, including services. Article 259.- Unpatentable inventions.- The following shall not be patentable: 1. Inventions whose commercial exploitation must be necessarily prevented to protect public order or morality, even to protect health or life of people or animals or to preserve plants or to prevent severe damages to the environment or ecosystem. For these purposes, it shall not be considered contrary to public policy or morality the commercial exploitation of an invention that by the mere existence of a legal or administrative provision prohibits or regulates said exploitation; 2. The methods of diagnostic, therapeutic and surgical methods for the treatment of humans or animals; 3. Plants and animals and essentially biological processes for obtaining plants or animals other than non-biological and microbiological processes; and, 4. Traditional knowledge. For purposes of the provisions in paragraph 1, the following shall not be patentable, among others: a) The processes for cloning human beings; b) The human body and its genetic identity; c) The use of human embryos for industrial or commercial purposes; and, d) The procedures for modifying the genetic identity of animals when these procedures cause them suffering without any substantial medical benefit to humans or animals. Article 260.- Products or procedures not subject to a second patent.- Already patented products or processes, including the state of the art, in accordance with article 255, shall not be subject to a new patent, for the simple fact of attributing a different use from that originally contemplated by the initial patent. Section II Holders Article 261.- Holders of a patent.- The right to the patent belongs to the inventor. This right is transferable by inter vivos and transferable upon death. The holders of the patents may be natural persons or legal entities. If several persons have jointly created an invention, the right shall belong jointly to all of them or their rightful claimants. It shall not be considered as inventor or co-inventor the one who has not made an inventive step, for example, who has been limited to assist in the implementation of the invention. If several people make the same invention independently from each other, the patent is granted to the person submitting the first application or claims the earliest priority date, or to their rightful claimant. Article 262.- Distribution of ownership, profits and royalties of inventions made in educational centers and research centers.- In the case of inventions made in research or academic activities in schools, universities, polytechnics, technical, technological, art colleges

and conservatories, and research institutes or by using their means or under their direction, or by teachers, researchers and students, the ownership and the sharing of benefits arising from the exploitation of the patent, at a rate not less than forty percent, shall be in favor of the inventors involved such as teachers, researchers or students. This right shall apply even in cases of transfer of ownership of the patent. The right referred to in this article for teachers, researchers and students is unwaivable and inalienable. The expenses related to the protection and enforcement of the rights shall be paid by the majority holder, as well as actions and contracts made after the application or concession of a patent. The patent may be transferred by inter vivos, in which case schools, universities, polytechnics, technical, technological, art colleges and conservatories and public research institutes, may not transfer a percentage greater than forty-nine percent of the patent application or ownership. Article 263.- Ownership developed in compliance of a contract.- For cases not included in the previous Article, the right to a patent on an invention made in fulfillment of a contract shall belong to the contractor or employer, unless otherwise agreed. However, the inventors shall have the inalienable right to participate in the ownership and profits from the exploitation of the patent at a percentage of no less than twenty five percent. When an employment contract does not require the employee to exercise their own inventive activity, the ownership shall be up to the employers. In these cases, the inventors are not entitled to receive the percentage set out in the preceding paragraph. Article 264.- Right of invertorship paternity.- The inventor shall have the right to be considered as such in the patent or may also oppose to this mention.

Section III Patent application Article 265.- Patent application.- The application to obtain a patent of invention shall be submitted to the competent authority on intellectual property rights according to content, requirements and other regulations provided. Article 266.- Description of the patent.- The description shall be sufficiently clear and complete to enable a person skilled in the corresponding technology to execute it without requiring an undue experimentation. The description shall indicate the title of the invention and shall include the following information: 1. The technological area of reference or the area of application; 2. The prior technology known by the applicant that was useful for the comprehension and examination of the invention, and references to previous documents and publications relating said technology; 3. A description of the invention in terms that allows for the comprehension of technical problems and solutions provided by the invention, exposing the differences and possible advantages over the prior technology; 4. An outline of the drawings, if there are any; 5. A description of the best way known by the applicant to execute or implement the

invention, using examples and references to drawings, if these are relevant; 6. An instruction of the way in which the invention satisfies the condition to be susceptible for industrial application, if this is not obvious from the description or nature of the invention; and, 7. An indication that the applicant had in their possession the invention until the date of submitting the application. Article 267.- Deposit of biological material.- When the invention relates to biological material which cannot be properly identified in the description, said material must be deposited in an authorized depositary institution by the competent authority on intellectual property rights, in accordance with the corresponding regulations. The deposit must be made no later than the date of submission of the application or, where it applies, on the submission date of the application whose priority is invoked. The deposits made before an international authority recognized under the Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Procedure in Patent, 1977, shall be valid, or before other institutions recognized by the competent authority on intellectual property rights for these effects. In these cases, the description shall indicate the name and address of the depositary institution, the date of deposit and the deposit number assigned by said institution. The deposit of biological material shall only be valid for purposes of concession of a patent if it is performed under conditions that allow any interested person to get samples of said material no later than the expiration date of the term provided in article 275 this Organic Law. Article 268.- The patent and disclosure of origin.- According to the provisions of international treaties to which Ecuador is a party, this Law and its corresponding regulations, in the case the subject matter of a patent application implies the use of genetic resources and associated traditional knowledge, the applicant must inform: 1.

The country where those resources or associated traditional knowledge were obtained; and, 2. The source, including details regarding the entity, if any, of those resources or associated traditional knowledge that were obtained. The applicant must also attach a copy of an internationally recognized certificate of compliance with the legislation on the access to genetic resources or associated traditional knowledge. If an internationally recognized certificate of compliance is not applicable in the supplier country, the applicant shall provide the relevant information regarding compliance with prior informed consent and access and fair and equitable sharing of benefits, as required by the national regulations of the country that supplies the genetic resources and/or associated traditional knowledge â&#x20AC;&#x201C; the country of origin of said resources or a country that has acquired the genetic resources or associated traditional knowledge â&#x20AC;&#x201C; in accordance with the Convention on Biological Diversity and other international treaties to which Ecuador is a party. Article 269.- Claims.- The claims shall define the subject matter that the applicant wishes to protect with the patent. It shall be clear and concise, and entirely supported in the description. Claims may be independent or dependent. They shall be independent when the subject matter to be protected is defined without making reference to any previous claim. It shall be dependent when the subject matter to be protected makes reference to an earlier claim in its

definition. A claim referring to two or more previous claims shall be considered a multiple dependent claim. In the case of claims on a group of chemical-pharmaceutical products, the application shall provide sufficient information on tests and experiments carried out to enable the reproduction of each form of creation of the invention, unless the description provides evidence that the same results would be obtained if any element of the claimed group were replaced. Article 270.- Summary.- The summary shall have a synthesis of the technical disclosure contained in the patent application. If the invention shall consist of a pharmaceutical product, it shall indicate its international generic name, if it were known at the date of application. The summary shall be for technical information purposes only and shall have no effect to interpret the scope of protection conferred by the patent. Article 271.- Invention unit.- The patent application may include only one invention or group of interrelated inventions, in such way that they constitute a single inventive concept. Article 272.- Sanctions for deliberate omission or willful misrepresentation.- Willful misrepresentation or deliberate omission of information in the application that may lead to the competent authority on intellectual property rights into error in the examination of the application shall be grounds for rejection or invalidity of the patent, without prejudice to the claim for damages of any third party affected by this. Article 273.- Modifications of the application.- Ex officio or upon, the application may be modified at any time during the process even before the competent authority on intellectual property rights issues an administrative decision at first instance. The modification may not involve a change of the subject matter of the invention or an extension of protection corresponding the disclosure included in the initial application. Similarly, the correction of any error in the material may be requested. Likewise, the applicant may divide or join a patent application or make it into a utility model, depending on the case. Article 274.- Reference.- The corresponding regulation shall establish the requirements, terms and procedures, among others, for analyzing the application, its publication, the presentation of opposition, and the concession or denial of the application. Article 275.- Public nature of the file.- Within eighteen months after the date of submission of the application, or when it applies, after the date a priority has been invoked, the file shall be of public nature and may be consulted by third parties, and the competent authority on intellectual property rights shall order the publication of the application on the corresponding broadcasting media. The publication shall include the first claim and, if it applies, a summary of the required information. Notwithstanding what is established in the foregoing paragraph, the applicant may request that the application be published at any time as long as the examination has concluded. If this is the case, the competent authority on intellectual property rights shall order its publication. Article 276.- Reserved nature of the file.- As long as the publication has not been made or the term established on the foregoing paragraph has not finished, the file shall be reserved and

may only be consulted by third parties with the agreement of the applicant. This provision shall be applicable also in the case of withdrawal of the application before its publication. Notwithstanding the foregoing paragraph, anyone that proves that the applicant of a patent has pretended to assert in front of them the rights of the application, that person may consult the file before its publication even without the consent of the applicant. Section V Rights and limitations Article 277.- Duration of the registration of a patent.- The patent shall have a duration of twenty years, starting from the time of the submission of the application. The date of submission shall be: 1. For national applications, the date of submission certified by the competent authority on intellectual property rights. 2. For international applications, the date of submission of the international application; or, 3. For applications claiming priority under some other treaty the date of shall be since the date the submission whose priority is claimed. There shall not be any additional or complementary protection, under any type of title or modality, which extends the term indicated in this Article. Article 278.- Protection scope.- The scope of the protection granted by the patent shall be determined in accordance with the claims. The description, drawings or blueprints, biological material and any other element deposited before a competent authority on intellectual property rights shall be used to interpret the claims. Article 279.- Rights of the holder of a patent.- The patent gives its holder the right to prevent third parties from doing, without their consent, any of the following actions: 1. When a product is claimed in the patent: a) Manufacturing the product; b) Offering as sale, selling or using the product; or import the product for any of these purposes; and, 2. When the patent claims a process: a) Implementing the process; or, b) Executing any of the actions indicated on point number 1 regarding a product obtained directly from the process. Article 280.- Limitations to the right of the patent holder.- The holder of a patent may not exercise the right prescribed on the foregoing article in any of the following cases: 1. 2. 3. 4.

Actions made on a private environment and on a non-commercial level; Actions made for experimental purposes, regarding the object of the patented invention; Actions made with teaching or academic or scientific research purposes; Actions referred to in article 5 of the Paris Convention for the Protection of Industrial Property; 5. Using the patent â&#x20AC;&#x201C; when it protects a biological material with reproductive capacityâ&#x20AC;&#x201C; as an initial base for obtaining new viable material, unless its acquisition requires the repeated use of the patented entity; and,

6. Actions relating to testing, using, manufacturing or selling a patented invention with the sole purpose of generating and presenting information required for the approval of manufacturing, using or selling any product, including pharmaceutical products and agricultural chemicals products, in Ecuador or in another country, for the production of products destined for sale after the expiration date of the patent. Article 281.- Exhaustion of the right.- The patent shall not grant the right to prevent a third party from making trade-related activities regarding a product protected by the patent, after that product has been introduced into the commercial sector of any country with the consent of the holder, licensee, a person economically related to the holder or licensee, or any other person authorized to do so. For the purposes of the preceding paragraph, it shall be implied that two persons are economically related when one person can exert directly or indirectly on the other person a decisive influence regarding the exploitation of the work or when a third party can exert such influence over both persons. When the patent protects the biological material with reproductive capacity, the patent shall not protect the biological material obtained by reproduction, multiplication or propagation of the material introduced in the commercial sector according to the first paragraph, as long as the reproduction, multiplication or propagation was necessary to use the material according to the purposes for which it was introduced in the commercial sector and that the derived material of said use is not used for multiplication or propagation purposes. Article 282.- Previous user.- Without prejudice to the provision of nullity provided in this chapter, the rights granted by the patent shall not be valid against a third party that â&#x20AC;&#x201C; on good faith and before the date of priority or the submission of application on which the patent was given â&#x20AC;&#x201C; was already using or exploiting the invention or has made serious or effective preparations to use or exploit it. If that is the case, that person has the right to initiate or continue using or exploiting the invention, but this right may only be signed over or transferred together with the establishment or company in which said use or exploitation was being made. Article 283.- Transfer.- A granted patent or a pending application of concession may be transfer by inter vivos or by succession. All transference of a patent granted or a pending application of concession shall be registered before the competent authority on intellectual property rights. Such legal business shall be executed and effective upon their registration before the competent authority of intellectual property rights. For purposes of registration, the transfer shall be written. Any interested party may request the registration of a transfer. Article 284.- Concession of licenses.- A granted patent or a pending application of concession may be subject to license one or more parties for the exploitation of the corresponding invention. The competent authority on intellectual property rights shall register all license of exploitation of a patent granted or a pending application of concession. Such legal business shall be

executed and effective upon their registration before the competent authority of intellectual property rights. For purposes of registration, the transfer shall be written. Any interested party may request the registration of a transfer In cases where there are changes on the name or address of the holder of the patent during the validity term of the license, the holder of the registration shall apply for the registration of these changes before the competent authority on intellectual property rights. Otherwise, any notification made according to the information appearing on the registration shall be considered valid. The sub-licenses shall require explicit authorization of the holder of the rights. Article 285.- Registration of the contracts of transfer or license.- The competent authority on intellectual property rights shall not register contracts where transfers or grants of explotation license of patents are not done in accordance with the provisions of the Common Regime for the Treatment of Foreign Capital and on Trademarks, Patents, Licenses and Royalties, or that are not complying with the communitarian or national regulations on restrictive trading practices of free competition or unfair competition. Otherwise, in what was applicable, it shall abide by what is provisioned in the Organic Law for Regulation and Control of Market Power and the provided sanctions shall be applied. Section VI Actions subsequent to concession Article 286.- Modifications made to the Record.- The holder of a granted patent shall register before the competent authority on intellectual property rights any change in name, address, domicile or other information of the holder, or their legal representative. Otherwise, any notification made according to the information appearing in the registration shall be considered valid. Article 287.- Changes made in claims.- The holder of a patent may ask the competent authority on intellectual property rights to modify the patent to limit the scope of one or more claims. Likewise, it shall request the correction of any error on the patent. Section VII Waiver Article 288.- Waiver.- The holder of a patent may waive to one or more claims of the patent or the whole patent, by making a statement addressed to the competent authority on intellectual property rights. The waiver shall be effective since the date of the receipt of the corresponding statement. Section VIII Nullity of a patent Article 289.- Absolute nullity of the patent.- The competent authority on intellectual property rights, ex officio or upon request, and at any moment, shall state the absolute nullity of a patent, on the following cases:

1. 2. 3. 4. 5. 6.

If the subject matter of the patent does not constitute an invention; If the patent was granted for a non-patentable invention; If an invention does not comply with the patentability requirements; If the patent does not disclose the invention sufficiently; If the claims included in the patent are not entirely supported by the description; If the granted patent had a wider disclosure than the initial application and this implies an extension of protection; 7. If it is the case, if a copy of the contract of access has not been presented, when the products or processes whose patent is being requested have been obtained or developed from genetic resources or of byproducts whose origin is in Ecuador; 8. If it is the case, if a copy of the document that proves the license or authorization of use of the traditional knowledge of the Indigenous, Afroecuadorian or local communities of Ecuador has not been presented or if any of the member countries of the Andean Community, when the products or processes whose protection is being requested have been obtained or developed from said knowledge whose origin country is Ecuador or any member country of the Andean Community; 9. If the patent has been granted in violation of article 268; 10. If the patent has been granted in violation of article 272; 11. If there are grounds for absolute nullity provided in the law and for administrative actions; and, 12. If the patent has been granted in violation of the law that substantially has resulted in its concession. When the causes specified above only affects some of the claims or parts of a claim, nullity shall be declared only regarding those parts or those claims, as appropriate. The patent, claim or part of a claim that has been declared null shall be deemed null and without value since the date of submission of the application of the patent. Article 290.- Relative nullity.- In cases where administrative acts are affected by defects that do not cause for absolute nullity as specified in the preceding article, it shall be deemed as relative null. In such cases, the competent national authority shall, in conformity with the domestic legislation, declare them null and void within a period of five years from the date of concession of the patent. Article 291.- Nullity act due to lack of right.- The competent authority on intellectual property rights may annul the patent when a patent has been granted to a person who has no right to it. The person who has the right to obtain that patent may be the only one who can initiate the process of nullity. That right of action shall lapse five years after the date of concession of the patent or within two years from the date on which the person, who has legitimate right, learned about the use of the invention, whichever period expires first. Article 292.- Notification and presentation of arguments and evidence.- In the cases of nullity, the parties shall be notified to state their arguments and present the evidence they consider convenient. When deemed necessary to solve on the nullity of a patent, the holder may be asked to present one or more documents mentioned in article 286 regarding the patent of the said process. Article 293.- Deadlines for presenting arguments and evidence.- The arguments and evidence

referred in the previous article shall be submitted within a period of two months after being notified. Before the expiry of the period stipulated, any of the interested parties may request an extension of two additional months. Once the periods stipulated in this article have expired, the competent authority on intellectual property rights shall rule on the patentâ&#x20AC;&#x2122;s invalidation and inform the parties of their decision. Article 294.- Damages.- The preceding actions shall not affect the actions that may correspond for damages. Article 295.- Lapsing of the patent and grace period.- To keep a patent valid or to keep a pending patent application, the annual fee prescribed by the competent authority on intellectual property rights shall be paid. This fee may be paid in advance. The deadline for paying each annual fee shall be the last day of the month of the submission of the application, according to article 277. Two or more annual fees may be paid in advance. Annual fees shall be paid within a grace period of six months after the beginning date of the corresponding annual period, together with the prescribed surcharge. The patent or pending application shall remain valid during the grace period. Failure to pay the annual fee as stipulated in this article shall result in the legal lapsing of the patent or the patent application. Section X Regime of compulsory licenses Article 296.- Granting compulsory license due to lack of exploitation.- After three years of the concession of a patent, or four years after the application of a patent, whichever is longer, the competent authority on intellectual property rights, on request of an interested party, shall grant a compulsory license mainly for industrial production of the product protected by the patent or the integral use of a patented process, but only if, at the time of the request, the patent has not been exploited, or if it has been suspended for more than one year. Exploitation implies the industrial production of a product protected by a patent or the integral use of a patented process in Ecuador together with the distribution or commercial use of the obtained results, sufficiently to satisfy the market demands. The compulsory license shall not be granted if the holder of the patent justifies their inactivity due to imposed restrictions by laws or regulations, or reasons of force majeure. Article 297.- Notification and scope of compulsory licenses.- Decisions to grant a compulsory license, as stipulated in the previous article, shall be taken after the patent owners have been notified to present their arguments as they see fit within sixty days from the notification. The competent authority on intellectual property rights shall specify the scope or extension of the license, and shall particularly specify the period for which it is granted, the subject matter of the license, the amount of the remuneration, and the conditions for the payment thereof. The remuneration shall be set at an adequate level in accordance with the individual circumstances of each case and, in particular, the economic value of the authorization. Article 298.- Modification of the requirements for compulsory licenses.- At the request of the

owner of the patent or the licensee, the conditions governing the compulsory license may be changed by the competent authority on intellectual property rights when new circumstances come into place, in particular, when the patent holder grants another license on terms that are more favorable than the existing ones. Article 299.- Obligations of the licensee.- The licensee shall be obliged to exploit the licensed invention within a period of three years from the date the license was granted. In cases of inaction the licensee shall give valid reasons consisting of force majeure, for which the term of concession shall be suspended in favor of the licensee. Otherwise, by request of the patent holder, the competent authority on intellectual property rights shall revoke the compulsory license. Article 300.- Declaratory and scope of the compulsory license granted for public interest reasons.- Following a declaration by executive decree or ministerial decision of the existence of public interest reasons, of emergency or national security and, as long as these reasons remain, the State shall, at any moment and without need to negotiate previously with the holder of a patent, dispose of a public and non-commercial use of a patented invention by a government entity or a contractor, or submit the patent to a compulsory license. The competent authority on intellectual property rights shall grant the licenses that are requested, without prejudice to the rights of the holder of the patent to be paid according to the provisions in this section. The holder of the patent shall be notified whenever possible. The decisions for granting the compulsory license shall establish the scope or extension of this, specifying in particular the period of validity, the subject matter of the patent, the amount and the payment conditions of the royalties, without prejudice to what is provided in article 304 of this Chapter. The granting of a compulsory license for reasons of public interest does not diminish the right of the holder of the patent to continue exploiting it. Article 301.- Compulsory licenses for anticompetitive practices.- Ex officio or upon request, the competent authority on intellectual property rights shall grant compulsory licenses when there are practices that have been declared by the competent authority on protection of competition as contrary to the corresponding regulation, especially when it constitutes an abuse of dominant position in the market by any holder of the patent. On these cases, to determine the amount of remuneration in benefit of the holder of the patent, the need to correct the anticompetitive behaviors shall be considered. Article 302.- Compulsory license due to dependence.- The competent authority of intellectual property rights shall grant a license at any moment, if this is requested by the holder of a second patent whose exploitation requires necessarily the use of the first patent. Said license shall be subject, without prejudice to the provisions in article 304, to the following: 1. 2. 3.

The invention claimed in the second patent implies an important technological advance of a considerable economic importance regarding the invention claimed in the first patent; The holder of the first patent shall have the right of a crossed license in reasonable conditions to use the invention claimed in the second patent; and, The license of the first patent may not be granted without the concession of the second patent.

Article 303.- Compulsory license for the holder of a plant variety.- When the breeder of a plant variety may not exploit a breeder certificate without infringing the right of a patent of invention, they may request for a compulsory license on this patent to exploit the variety that is the subject matter of this certificate. In this case, the holder of the patent shall have the right to obtain a reciprocal compulsory license to use the protected variety when this was necessary to exploit the patented invention. The granted compulsory license may only be transferred with the certificate or the patent that needs said license for its exploitation. Article 304.- Requirements for granting a compulsory license.- The concession of a compulsory license and public use and non-commercial use regulated in this section are subject to the following: 1. When a compulsory license is requested according to articles 296, 302 and 303, the possible licensee shall prove that they have intended to obtain the authorization from the holder of the rights on reasonable commercial terms and conditions and, that in these attempts they have not been answered or have been denied, within a minimum term of four months from the formal request in which such terms and conditions have been presented to allow the holder of the patent to form a sound opinion. When it regards a national emergency, or in other circumstances of extreme urgency, or in the cases of non-commercial public use, the holder of the intellectual property right shall be notified as soon as reasonably possible; 2 The compulsory license shall not be exclusive and sublicenses may not be granted. It may only be transferred as part of the company or as its intangible asset that allows its industrial exploitation, submitting the transfer to the competent authority on intellectual property right by writing and registration; 3 The compulsory license shall be granted mainly to supply the domestic market, unless when it is about exporting pharmaceutical products according to the Decision of the World Trade Organization of August 30 of 2003 or the regulation that replaces it, or unless it is about behaviors that have been deemed by the competent authority on protection of competition as contrary to the corresponding regulations; 4 The licensee shall recognize in benefit of the holder of the patent a proper remuneration according to the circumstances of each case, the price of the license or non-commercial public use, without prejudice to the provisions in article 301. Failing agreement between the parties, after thirty days of being notified about the decision of the competent authority on intellectual property rights, regarding the concession of the license or non-commercial public use, said authority shall determine the remuneration 5 The compulsory license may be revoked, for the adequate protection of the persons that have received the authorization for its use, on well-reasoned request of the holder of the patent, if the circumstances that originated the concession of it have disappeared and are not likely to originate again. The competent authorities are authorized to examine, after a well-reasoned request, if said circumstances still exist. 6. The scope and duration of the compulsory license shall be limited in function of the purposes for which it was granted; and, 7. Regarding patents of invention that protect semiconductor technology, the compulsory license is only authorized for non-commercial public use or to remedy or rectify a declared practice by the competent authority on protection of competition as contrary to the corresponding regulations. Article 305.- Impeachment of the compulsory license.- Impeachment of the compulsory license or of non-commercial public use granted according to this section shall not stop the

exploitation or exercise any influence on the deadlines established. Its interjection shall not prevent the holder of the patent to receive, meanwhile, the economic compensation determined by the competent authority on intellectual property rights, in the unclaimed part. CHAPTER III UTILITY MODELS Article 306.- Protectable subject matter under utility models.- A patent of utility model shall be granted to every new way, configuration or arrangement of the elements of an artifact, tool, instrument, mechanism or other object or of its parts, that allows a better or different operation, use or manufacture of the object that incorporates it or that provides some use, advantage or technical effect that did not exist before. Article 307.- Unprotectable subject matter under the utility model.- Processes shall not be able to be patented as utility models nor the subject matter excluded from protection of patents for inventions. Sculptures, architectural works, paintings, engravings, stamps or any other object with only aesthetic value shall not be considered utility models. Article 308.- Change of modality of the patent application.- It may be requested that the application of a patent of utility model may be turned into a patent application for invention or industrial design registration, as long as the subject matter of the initial application allows it. Article 309.- Applicable provisions to the patents of utility models.- The provisions on patents for invention shall be applicable to the utility models in what is applicable, excepting the provisions regarding the terms and deadlines of processing, which shall be reduced in half according to the provisions in the corresponding regulations. Notwithstanding the foregoing, the term established in article 275 shall be twelve months. Article 310.- Term of protection of the utility models.- The term of protection of the utility models shall be ten years since the date of submission of the patent, according to the provisions in article 277. CHAPTER IV LAYOUT-DESIGNS OF INTEGRATED CIRCUITS Section I Protection requirements Article 311.- Originality of a layout design.- A layout design shall be protected if it is original. A layout design shall be considered original when it is the result of the creatorâ&#x20AC;&#x2122;s own intellectual effort and is not common among the creators of layout designs and the manufacturers of integrated circuits at the moment of its creation. A layout design that has a combination of elements or interconnections that are common shall only be protected if the combination, all together, complies with the conditions mentioned in the foregoing paragraph.

Section II Holders Article 312.- Ownership.- The right to register a layout design of integrated circuits shall correspond to its designer. This right may be transferred inter vivos or by succession. If the layout design had been designed by two or more persons together, the right of registration shall correspond to all of them in common. Article 313.- Distribution of ownership and benefits of the layout design of integrated circuits developed on educational and research centers.- Article 262 of this Law shall be applied when the design had been made on the course of research or activities mentioned in said article. Article 314.- Ownership of the layout design developed in compliance with a contract.Article 263 of this Law when the design has been made in compliance with a contract of a work or under employment contract. Section III Application Article 315.- Submission term.- If the layout design has been exploited commercially in any place in the world, the submission of the application must be done within a term of two years since the date of the first commercial exploitation of the layout design. If the application were to be submitted after this term, the registration shall be denied. Section IV Application process Article 316.- Registration procedure.- The application to obtain a patent for a layout design of integrated circuits shall be submitted before the competent authority on intellectual property rights according to the contents, requirements, deadlines and processes, for, among others, the examination of the application, its publication, the presentation of oppositions and the concession or denial of the application in the corresponding regulation.

Section V Rights and limitations Article 317.- Term of protection of the layout design.- The protection of a registered layout design shall have duration of ten years since the oldest of the following dates: 1. The date in which the first commercial exploitation has been made in any part of the world; or, 2. The date in which the application of registration has been submitted. The protection of a registered layout design shall expire in a term of fifteen years starting from the last day of the year in which the design was created. Article 318.- Independence of protection.- The protection of a registered layout design shall be applied independently from the integrated circuit if it is incorporated in an article and independently if the layout design has been incorporated in an integrated circuit.

Article 319.- Rights of the holders of a registration.- The registration of a layout design of integrated circuits confers its holder the right to prevent third parties that do not have their consent from doing any of the following actions with commercial purposes: 1. Reproduce, by incorporating in an integrated circuit or in any other way, protected the layout design, in whole or part that complies with the originality condition according to article 311; 2. Import, sale or distribute in any way the protected layout design, or an integrated circuit that incorporates said design; or, 3. Import, sale or distribute in any way an object that has the protected layout design incorporated in it, only to the extent that this contains a layout design illegitimately reproduced. Article 320.- Scope of protection.- The protection granted by the registration only protects the layout design per se, and does not include any idea, algorithm, concept, process, system, technique or coded information or incorporated in the layout design. Article 321.- Limitations of the right of the holder.- The registration of a layout design shall not grant the right to prevent the following actions: 1. 2. 3. 4.

Actions made in a private environment and with non-commercial purposes; Actions made with evaluation, analysis or experimentation purposes; Actions made exclusively for teaching or academic or scientific research purposes; and, Actions referred to in article 5 of the Paris Convention for the Protection of Industrial Property.

Article 322.- Exhaustion of the right.- The registration of a layout design shall not grant the right to prevent a third party from making trade-related actions regarding protected layout designs, integrated circuits that incorporate them or objects that contain these integrated circuits after they have been introduced in the commerce of any country with the consent of the holder, a licensee, a person economically related to the holder or licensee, or any other authorized person. For the purposes of the preceding paragraph, it shall be implied that two persons are economically related when one person can exert directly or indirectly on the other person a decisive influence regarding the exploitation of the work or when a third party can exert such influence over both persons. Article 323- Second layout design created through evaluation.- The holder of the registration of a first layout design shall not prevent a third party from making industrial or commercial exploitation regarding a second layout design created by a third party through an evaluation or analysis of a first protected layout design, as long as the second layout design complies with the condition of originality according to article 311. They cannot prevent these actions regarding integrated circuits that are incorporated on the second layout design or of the objects that incorporate said integrated circuits. Article 324.- Independent creation.- The holder of the registration of a layout design may not prevent a third party from doing the actions mentioned in article 319 regarding another original layout design created independently by a third party, even if it is identical. Article 325.- No infringement of rights.- The actions referred to in article 319 regarding integrated circuits that incorporate illegitimately reproduced layout designs or an object

including said integrated circuit shall not be deemed as an infringement of the rights of a registered layout design when the person who made or ordered said actions proves that, by acquiring the integrated circuit or the object which incorporates it, they did not know that said layout design was reproduced illegitimately. From the moment in which that person receives notifications of the infringement of the layout design, they may continue to do those actions regarding the products that still exist or that they have requested previously, but, by request of the holder of the registration, shall pay a compensation equivalent to a reasonable royalty based on what should correspond as payment for a contracting license. Article 326.- Application and process regarding the applications for registration and the registration of layout design of integrated circuits.- The provisions in articles 283 and 286 of this Organic Law shall be applied for the applications of registration of layout design of integrated circuits

Section VI Nullity of registration Article 327.- Absolute nullity.- The competent authority on intellectual property rights, ex officio or upon request, and at any time, shall declare the absolute nullity of a registration of a layout design on the following cases: 1. The subject matter of the registration does not constitute a layout design; 2. The registration does not comply with all the protection requirements provided for in article 311; 3. The granted registration of a layout design has been submitted after the deadline established in article 315; and, 4. At the appearance of causes for absolute nullity provided on national legislations for administrative acts. When the causes mentioned previously just affect a part of the registered layout design, the nullity shall be declared only regarding that part, making the other parts as pending registration, provided that they all together comply with the originality requirement provided in article 311. Article 328.- Procedure to declare nullity of registration of the layout design system.- The provision on articles 290 and 293 of this Law shall be applicable regarding the nullity of a registration of a layout design registration.

Section VII Licensing Article 329.- Compulsory licenses.- Due to lack of use or for public interest reasons, especially national emergency, public health or national security, or to remedy some anticompetitive behavior, the competent authority on intellectual property rights may, upon request of an interested party or of a competent authority, dispose at any time: 1. That a registered layout design be used or exploited industrially or commercially by a state entity or by one or more people of public or private right made for this purpose; or,

2. That said layout design is left open for concession of one or more compulsory licenses, in which case the competent authority on intellectual property rights may grant said license to whom requires it, in compliance with the established conditions. For concession of a compulsory license regarding layout designs, the established conditions to grant compulsory licenses regarding the patents for invention shall be applicable in what was relevant. CHAPTER V INDUSTRIAL DESIGNS Section I Protection requirements Article 330.- Protectable subject matter.- The particular appearance of a product that results in any meeting of lines or combinations of color, or any other two dimensional or three dimensional external form, line, outline, configuration, texture or material, without a change in the purpose of said product shall be considered as industrial design. Article 331.- Requirement for protection.- The industrial designs that are eligible for registration shall be the new ones. An industrial design shall not be considered as new if, prior to the date of the application or the date of a validly invoked priority, has been made accessible to the public in any place of the national territory or any moment, through its description, use, commercialization or by any other means. An industrial design shall not be deemed new by the sole fact of having secondary differences regarding previous designs or because it refers to another type of product than said designs. Article 332.- Unprotectable subject matter.- The following shall not be eligible for registration: 1. Industrial designs whose commercial use shall be necessarily prevented to protect morals or public order. For this purpose, it shall not be deemed contrary to morals or public order the commercial use of an industrial design, by the sole existence of a legal or administrative provision that forbids or regulates said use; 2. Industrial design whose appearance is essentially dictated by technical order considerations or by the making of a technical function, that does not incorporate any arbitrary contribution from the designer; 3. Industrial designs that are only in a form whose exact reproduction is necessary to allow the product which incorporates the design be mechanically assembled or connected with other products of which it is a component of. This prohibition shall not be applied to products whose design is based on a form destined to allow the inclusion or multiple connections inside a modular system; and, 4. Industrial designs that have signs, symbols, shapes, characters, among others, that constitute an expression of the culture or traditional knowledge of Indigenous, Afroecuadorian or local communities. Section II Holders Article 333.- Ownership.- The right of registration of an industrial design belongs to the

designer. This right may be transferred by inter vivos or by succession. The holders of the registration may be natural persons or legal entities. If several people were to create an industrial design together, the right of registration belongs to all of them jointly. If several people were to make the same industrial design independently from one another, the registration shall be granted to that person or rightful claimant who first submits the corresponding application or who invokes the priority of the oldest date. Article 334.- The holders of the right of industrial designs created in the institutions of higher education and educational centers.- Article 262 of this Law shall be applied when the design were to be made in the process of research or the mentioned activities in said article. Article 335.- Industrial design made in compliance of a contract.- Article 263 of this Organic Law shall be applied when the design has been made in compliance of a contract of a work or in the framework of an employment contract. Section III Registration Application Article 336.- Process of registration.- The application for obtaining an industrial design shall be submitted to the competent authority on intellectual property rights in accordance with the content, requirements and other rules provisioned in the regulation. Likewise, it shall be established in the regulation of this Law the requirements, terms and process, for, among others, the examination of the application, it publication, the presentation of oppositions and the granting or denial of the application in the regulation of this Law. Section IV Rights and limitations Article 337.- Duration of the registration of the industrial design.- The registration of an industrial design shall be valid for ten years, starting from the date of submission of the application. The date of submission shall be considered as: 1. For national applications, the submission of the application certified by the competent authority on intellectual property rights; or, 2. For applications that claim priority under some treaty, the date of submission whose priority is being claimed. Article 338.- Right of the holder of an industrial design.- The registration of an industrial design shall grant its holder the right to prevent third parties from manufacturing, selling or importing products who do not have their consent for commercial purposes that incorporate or reproduce the industrial design. The registration shall grant the right to act against third parties who make, sell or import a product for commercial purposes, whose design has only secondary differences in comparison to the protected design or whose appearance is similar. Article 339.- Scope of protection.- The protection granted to an industrial design shall not be extended to other elements or characteristics of the design made essentially by technical

considerations or by making a technical function that does not incorporate any arbitrary contribution of the designer. The protection given to an industrial design shall not include those elements or characteristics whose exact reproduction was necessary to allow that the product that includes the design mechanically or connecting it with another product of which it is a part of. This limitation shall not be applied to products in which the design is based on a form destined to allow the incorporation or multiple connections of the products, or their connection inside a modular system. Article 340.- Exhaustion of the right.- The registration of an industrial design shall not grant the right to prevent a third party from making commercial-related actions regarding a product that incorporates or reproduces that design, after that said product has been introduced in the commercial sector of any country with the consent of the holder, licensee, or a person economically related to the rightholder or licensee, or any other authorized person. For the purposes of the preceding paragraph, it shall be implied that two persons are economically related when one person can exert directly or indirectly on the other person a decisive influence regarding the exploitation of the work or when a third party can exert such influence over both persons. Section V Nullity of registration Article 341.- Absolute Nullity.- The competent authority on intellectual property rights shall declare absolute nullity of the registration of an industrial design, at any time, on the following cases: 1. 2. 3. 4.

The subject matter of registration does not constitute an industrial design; The industrial design does not comply with the protection requirements; The registration has been granted for a subject matter excluded from the protection as an industrial design; and, When there are causes of absolute nullity provided for in the national legislation for administrative actions.

Article 342.- Process applicable for nullity.- Regarding the nullity of an industrial design registration, articles 290 and 293 of this Law shall be applicable. Section VI Reference Article 343.- Applicable provisions to industrial designs.- The provisions in articles 256, 273, 280 number 1,2, 3 and 4, 283, 284, 285 and 286 of this Organic Law shall be applicable for industrial designs. CHAPTER VI TRADEMARKS Section I Protection requirements Article 344.- Registration of trademarks.- Trademark implies any sign that is used to

distinguish products or services in the market. The signs susceptible of graphic representations may be registered as trademarks. The nature of the product or service to which a trademark will be applied shall not be an obstacle in any occasion for its registration. The following signs, among others, shall be capable of constituting a trademark: 1. Words or combination of words; 2. Images, shapes, symbols, graphics, logos, monograms, portraits, labels, emblems and shields; 3. Sounds and smells; 4. Letters and numbers; 5. A color delimited by shape, or a combination of colors; 6. The shape of products, their containers or packing; and 7. Any combination of sign indicated in the previous sections. Trademarks of institutions of the public sector shall reflect the cognitive and cultural identity of the country, according to the provisions in the regulation. Article 345.- Absolute prohibitions to the registration of trademarks.- Signs may not be registered as trademarks when they: 1. Cannot constitute a trademark according to what is established in the previous Article; 2. Lack of distinctive character; 3. Consist exclusively of usual shapes in the products or containers, or in forms or characteristics imposed by the nature or function of said product or of the service; 4. Consist exclusively of shapes or other elements that give an functional or technical advantage to the applied product or service; 5. Consist exclusively in a sign or indication that may be used in the market to describe the quality, amount, destination, value, geographical origin, the time of production or other information, characteristics or data of the products and services for which the sign or indications are to be used, including the laudatory expressions referred by these products or services; 6. Consist exclusively in a sign or indication that is the generic or technical name of the product or service; 7. Consist exclusively or has become a common or usual naming of the product or service in the common language or its use in the country 8. Consist in an isolated color considering, without being delimited by a specific shape; 9. May deceive the commercial media or the public, in particular about the geographical origin, the nature, the manner of manufacture, the characteristics, qualities or ability for the use of the product or services; 10. Reproduce, imitate or have a denomination of protected origin for the same product or different products, when its use may cause confusion or association with the denomination; or if it implies an unfair use of its fame; 11. Has a denomination of a protected origin for wines and spirits 12. Reproduce or imitate, without proper authorization, as a trademark or elements referred to in trademarks, the name, shield of arms, flags and emblems of the States and all imitation from a heraldic point of view, as shield of arms, flags and other emblems, acronyms or denominations of any international organization. However, these signs may be registered when they do not create a confusion of a link between the applicant and the state or organization;

13. Reproduce or imitate, without the proper authorization, as trademarks or as elements in trademarks, the official signs, seals or stamps of control or guarantee adopted by the States when its use may create a confusion or association; 14. Reproduce or imitate the name of the State, local governments or their official symbols, as the official names, acronyms and symbols of the public institutions, organizations and entities, or the sign that constitute a brand of the country, unless its registration is requested by the competent authority; 15. Reproduce or imitate signs in accordance with technical norms, unless their registration is requested by the competent national authority on norms and capacities of the country or the countries members of the Andean Community; 16. Reproduce coins or bills of legal tender in the country, or any country, bonds and other commercial documents, seals, stamps or tax stamps in general; 17. Reproduce imitate or include the denomination of a plant variety protected in the country or abroad, if the sign is intended for goods or services related to that variety, or where such use would be liable to cause confusion or association with the variety; or, association with the variety; or 18. Be contrary to the law, morals, public order or good character. The signs mentioned on numbers 2,5,7 and 8 that are not inherently capable of distinguishing the relevant products or services may be registered as trademarks when they have acquired a distinctive ability due to their constant use in the country to identify the products or services of the applicant. Article 346.- Relative prohibitions.- The signs that are harmful to the rights of third parties may not be registered, such as those signs that: 1. Are identical or similar to a previously applied trademark, for the same products or services, or for products and services regarding those whose trademark use may cause a risk of confusion or association; 2. Are identical or similar to a protected trade name, or, if they apply, a mark or banner, that given the circumstances, their use may cause a risk of confusion or association; 3. Are identical or so similar to an applied or registered advertising slogan, that given the circumstances their use may cause a risk of confusion or association; 4. Are identical or similar to a distinctive sign of a third party, that given the circumstances their use may cause a risk of confusion or association, when the applicant is or has been a representative, distributor or a person expressly authorized by the holder of the protected sign in the country or abroad; 5. Constitute a reproduction, imitation, translation, transliteration or transcription, as a whole or in part, of a distinctive sign notoriously known, whatever the products or services are to which the sign was going to be applied, when its use could cause a risk of confusion or association with a third party or their products or services; an unfair use of prestige of the sign; weakening its distinctive power or its trade or advertising value; 6. Consist of a sign that harms the identity or prestige of non-profit legal entity or natural person, especially, of a name, last name, sign, title, diminutive, pseudonym, image, portrait or cartoon of a different person than the applicant, unless it is consented by that person or their heirs; 7. Consist of a sign that infringes the right of industrial property or the authorâ&#x20AC;&#x2122;s right of a third party, unless it is done with their consent; 8. Consist of the name of Indigenous, Afroecuadorian or local communities, or denominations, words, letters, characters or signs used to differentiate their products, services or was of processing, or that constitutes the expression of their culture or practice,

unless the application is presented by the community or with their consent; and, 9. Consist, includes or reproduces medallions, awards, diplomas or other prizes, unless it is done so by whoever gives them.

Article 347.- Bad faith application.- When the competent authority on intellectual property rights has reasonable evidence that allows them to infer that a registration was done in bad faith or to perpetrate, obtain or consolidate an act of unfair competition, the authority may deny said registration. Article 348.- Procedure of the registration.- The application for the registration of a trademark must be submitted before the competent authority on intellectual property rights according to the content, requirements and other regulations provided for in the corresponding regulation. Likewise, the regulation shall establish the requirements, terms and processes, for, among others, the application examination, its publication, the presentation of opposition and the concession or denial of the application. Section II Rights and limitations Article 349.- Right for the exclusive use of a trademark.- The right for an exclusive trademark shall be acquired by it registration before the competent authority on intellectual property rights. The trademark shall be used as it was registered. Variations shall only be accepted in elements that do not alter their distinctive character of the registered sign. Article 350.- Duration of the registration of a trademark.- The registration of a trademark shall have be valid for ten years starting from the date of its concession and may be renewed by successive periods of ten years. Article 351.- Renovation of the registration of a trademark.- The holder of the registration or an interested party, shall request the renovation of the registration before the competent authority on intellectual property rights within six months prior the expiration date of the registration. Nevertheless, the holder of the registration, as whoever was interested, shall enjoy a grace period of six months starting from the expiration date to apply for its renovation. During this term, the registration of the trademark shall be valid. For the renovation, an evidence of use of the trademark shall not be demanded. The presentation of the corresponding application shall suffice and the renovation shall be granted with no more processes, under the same terms as the original registration. However, the holder may reduce or limit the products or service indicated in the original registration. Article 352.- Rights granted by the registration of trademarks.- The registration of trademarks grants it rightholder to prevent third parties from doing the following acts without their consent: 1. Apply or use a trademark or a distinctive sign which is identical or similar to products for which the trademark has been registered; on products related to the services under registration; or on containers, packing, wrappings or reconditioning of said products; 2. Suppress or modify the trademark for commercial purposes, after it has been applied or used on the products under registration of the trademark; on products linked to the

3. 4.

services under registration, or on containers, packing, wrappings or reconditioning of said products; Make labels, containers, wrappings, packing or other materials that reproduce or include the trademark, as trading or holding unlawfully said materials; Use in trade an identical or similar sign to the trademark regarding any of the products or services, when said use may cause a risk of confusion of association with the holder of the registration. When there is a use of an identical sign for products or services, it shall be assumed that there is a risk of confusion; Use in trade a sign identical or similar to a notoriously known trademark regarding any product or service, when this may cause an economical or unfair commercial damage to the holder of the registration of said trademark due to a weakening of the distinctive power or due to the commercial or advertising value of the trademark, or due to an unfair use of the prestige of the trademark or of its holder; and, Publicly use an identical or similar sign to a trademark notoriously known, even for noncommercial purposes, when this may cause a weakening of the distinctive power or of the commercial or advertising value of the trademark, or an unfair use of its prestige.

Article 353.- Use of a sign in trade by a third party.- For purposes of what is established on numbers 4, 5 and 6 of the preceding article, the use of a sign in trade by a third party shall imply, among others, the following actions: 1. 2. 3.

Introducing in trade, selling, offering for sale or distributing products or services with this sign; Import, export, storage or transport products with this sign; or, Use the sign in advertising, publications, commercial documents or written or oral communications, regardless of the communication means employed and without prejudice to the rules on advertising that may be applied.

Article 354.- Use of the trademark by third parties for informational purposes.- Provided it is done in good faith and does not constitute a use as a trademark, third parties may, without the consent of the trademark holder, use in trade their own name, address or pseudonym; a geographical name; or any other precise indication concerning the kind, quality, quantity, destination, value, place of origin or time of production of its products or the provision of services or other characteristics thereof; provided that such use is confined to purposes of identification or information and is not inducing the public into an erroneous perception on the origin of the products or services. Article 355.- Use of the trademark for advertisement.- The registration of the trademark does not confer its holder the right to prohibit a third party from using the trademark to advertise, including comparative advertising, offering for sale or mentioning the existence or availability of lawfully marked goods or services; or to indicate the compatibility or suitability of spare parts or accessories to be used with the products of the trademark; provided that in both cases such use is done in good faith, the purpose of informing the public for sale be limited and not likely misleading or confusing of the commercial origin of the corresponding products. Article 356.- Exhaustion of the right.- The registration of a trademark shall not confer the right to prevent third parties from engaging in acts of trade regarding a product protected by that registration, after that product has been introduced into the market in any country with the consent of the holder, a licensee , a person economically related to the holder or licensee, or any other person authorized to do so, particularly when the products and containers or packaging that were in direct contact with them had not undergone any change, alteration or deterioration.

For the purposes of the preceding paragraph, it shall be implied that two persons are economically related when one person can exert directly or indirectly on the other person a decisive influence regarding the exploitation of the work or when a third party can exert such influence over both persons. Article 357.- Prohibition of trading products and services identified with the foreign brand.When in a member country of the Andean Community a trademark identical or similar to a registered trademark is registered in the country but under the name of a different holder, to distinguish the same products or services, trading of said products or services is prohibited in the country, unless the trademark holders enter into agreements allowing said trading. In the event of reaching such agreements, the parties shall take the necessary obligations to avoid public confusion about the origin of the merchandise or services involved, including what is corresponding to the identification of the origin of the products or services in question, with highlights and proportional characteristics, to give proper information to the consuming public. These agreements shall respect the public interest and rules on restrictive trading practices of free competition and unfair competition. In addition, they shall register the agreement before the competent authority on intellectual property rights. In any case, the import of a product or service that is under the situation described in the first paragraph of this article shall not be prohibited, when the trademark is not being used in the country, according to the provisions of article 365, unless the holder of that trademark proves to the competent authority on intellectual property rights that the non-usage of the trademark is due to justified reasons. Article 358.- Obligation to indicate the place of manufacture of the product or service.- When the trademark consists of a geographical name, the product or service may not be commercialized without bearing visible and clearly legible the original place of manufacture of the product or service. Article 359.- Transfer of trademark registration.- A trademark registration or a pending application for registration is transferable inter vivos and transferable upon death, with or without the company to which it belongs. Any transfer of a trademark granted or pending application shall be registered with the competent authority on intellectual property rights. Said legal transactions were perfected and shall become effective from its registration before the competent authority on intellectual property rights. For the purposes of registration, the transfer shall be done in a written manner. Any interested person may request the registration of a transfer. However, the competent national authority may refuse such registration if the transfer causes a risk of confusion or association. Article 360.- License for the exploitation of the trademark.- A trademark registration or a pending application for registration may be licensed to one or more third parties for the use of the corresponding trademark. Said legal business shall be executed and effective upon their registration before the

competent authority on intellectual property rights. Any interested person may apply for the registration of a license. Article 361.- Registration of transfer or license contracts.- The competent authority on intellectual property rights shall not register contracts in which the concession or transfer of a license for use of trademarks is not complying with the provisions of the Common Regime for the Treatment of Foreign Capital and on Trademarks, Patents, Licenses and Royalties, or that is not acting by the communitarian or national provisions on restrictive commercial practices of free and unfair competition. Otherwise, when relevant, it shall be applied what is established on the Organic Law for Regulation and Control of Market Power and the penalties provided therein. Sublicenses shall require an explicit authorization of the rightholder. Article 362- Modification to the registration.- The holder of a registered trademark shall request the competent authority on intellectual property rights to register any change in the name, address or other details of the holder, their legal representative or proxy. Otherwise, any notification made pursuant to the information contained in the register shall be deemed valid. Section III Cancellation of the registration Article 363.- Cancellation of the registration of a trademark.- The registration of a trademark shall be cancelled at the request of any interested party when, without just cause, the trademark had not been used by the holder, its licensee or other person authorized to do so in at least one of the member countries of the Andean Community, during three consecutive years preceding the date on which the cancellation action is initiated. The cancellation of a registration due to non-use of the trademark may also be applied as a defense in an opposition process filed with basis on the non-used trademark. Notwithstanding the provisions of the preceding paragraph, a cancellation action may not begin within three years from the date of notification of the decision that exhausts the procedure of registration of the corresponding trademark in the administrative process. Article 364.- Cases of force majeure.- Registration may not be canceled when the holder proves that the non-use was due to force majeure, or official constraints imposed on the products and services protected by the trademark. Article 365.- Features of the use of a trademark.- The use of a trademark implies the trading of products or services that are registered or are available in the market under that trademark, in the amount and manner that normally corresponds, taking into consideration the nature of the products and services and the modalities under which its commercialization is being done in the market. A trademark shall also be considered used when the products are exclusively distinguished to be exported from one country to any of the countries members of the Andean Community, according to what is established in the preceding paragraph. Article 366.- Different uses of the trademark than what is registered.- The use of a trademark which was different from what has been registered shall not be motive for cancellation due to non-usage as long as its elements do not alter its distinctive character, nor shall it diminish the

protection of corresponding the trademark. Article 367.- Evidence to identify the usage of the trademark.- The burden of proof of the corresponding trademark shall be duty of the holder of the registration. The use of the trademark may be demonstrated, among others, by means of commercial invoices, accounting documentation or audit certification that show the regularity and amount of trading actions of the identified merchandises with the trademark. Article 368.- Reduction or limitation of the list of products or services under the registration of the trademark.- When the non-use of a trademark involves only one or some of the products or services for which it was registered for, a reduction or limitation of the list of products or services registered shall be ordered, eliminating those that have not been used, for which the identity and similarity of the products or services shall be taken into account. Article 369.- Preferential right to submit a trademark application.- The person that has a favorable resolution shall have the preferential right of registration. Said right may be invoked upon the submission of the request for cancellation, and up-to three months after the date in which the decision of cancellation has been signed in the administrative process. Article 370.- Trademark dilution.- The registration of the trademark shall be cancelled or the limitation of its scope shall be disposed, ex officio or upon request of an interested party, when its holder had allowed or caused for the trademark to become a common or generic sign to identify or name one or several products or services under its registration. It shall be considered that a trademark has become a common or generic sign when in the commercial media and for the public said trademark has lost its distinctive characteristic as an indication of the business origin of the product or service. For these purposes, the following facts shall occur regarding that trademark: 1. The need other competitors have to use said sign to develop their activities due to the lack of an adequate name or sign to name or identify the product or service in the market; 2. The general use of the trademark by the public and in the commercial media as a common or generic sign of the corresponding product or service; and, 3. Ignorance or limited knowledge by the public that the trademark denotes a specific corporate origin. Article 371.- Process for cancellation.- When a request for cancellation has been received, the holder of the registered trademark shall be notified accordingly so that, within the term of sixty day from the date of the notification, the holder can make its arguments and presents the necessary evidence. Upon the expiration of the term referred to in this Article the cancellation or no cancellation of the registration shall be decided through a duly reasoned resolution. Section IV Waiver of the registration Article 372.- Waiver of the registration of a trademark.- The holder of a trademark registration may resign at any moment, in whole or in part, their rights of the registration. If the waiver was in whole the registration shall be cancelled. Where the waiver is in part the registration shall be limited to the products and services on which the waiver does not relate.

The waiver shall not be accepted if there are attachments or registered rights in favor of third parties unless there is the express consent of the holders of said rights. The waiver shall only be effective since its registration before the competent authority on intellectual property rights. Article 373.- Nullity of the trademark registration.- The competent authority on intellectual property rights, ex officio or upon request of an interested party, and at any moment, shall declare absolute nullity of the registration of a trademark in the following cases: 1. When the registration has been granted with false documents or database that were essential for its concession; 2. When the registration has been granted in violation of the provisions in article 344 first paragraph or article 345; 3. When the causes for absolute nullity are put together provided in the law for administrative acts; or, 4. When the registration has been granted with any other infringement of the law that has substantially induced its concession. Article 374.- Causals for nullity of the trademark registration.- The competent authority on intellectual property rights, ex officio or upon request of an interested party, shall declare relative nullity of the registration of a trademark on the following cases: 1. 2. 3.

When the registration has been granted in violation with article 346; When the registration has been done in bad faith; or, When the registration has been used to perpetrate, obtain or consolidate an act of unfair competition.

This action shall expire five years since the date of the concession of the registration. Article 375.- Impediment to declare nullity of the trademark registration.- The nullity of a registration of trademark may not be declared if the causals have ceased to be applicable at the moment of the resolution on the nullity. Article 376.- Partial nullity.- When a causal of nullity affects just one or some of the products or services under registration of the trademark, the nullity shall apply for only those products or services, and shall be eliminated from the registration of the trademark. Article 377.- Process for the action of nullity.- In the cases of nullity, the parties shall be notified so that they can submit their arguments and the evidence they consider relevant. The arguments and proof referred to in the preceding paragraph shall be submitted within two months of the notification. Before the expiration of the term, any of the parties may request an extension for two additional months. After the term referred to in this article has expired, the competent authority on intellectual property rights shall decide on the nullity of the trademark, which shall be notified to the parties through a resolution. Article 378.- Independence of the action due to damages.- The preceding actions shall not affect those which may correspond due to damages.

Section VI Expiration of the registration Article 379.- Expiration of the trademark registration.-The registration of the trademark shall expire entirely if the holder or whoever has legitimate interest does not apply for the renovation within the legal term, including the grace period in accordance to the provision in Article 351. CHAPTER VII SLOGANS Article 380.- Definition.- A slogan is the word, phrase or inscription used as a complement to the trademark. Article 381- Registration of slogans.-The slogans that do not have any allusion to product or similar trademarks or expression that may harm said products or trademarks may be registered. Article 382.- Content of the application for slogan registration.- Without prejudice to other requirements determined in the regulation, the application to register a slogan shall be specified in the registration of the trademark or in the pending application of the trademark which shall be complemented by the slogan. Article 383.- Transfer or license.-The transfer or license of a registration of a slogan or of a pending application of registration shall be made together with the registration of the trademark or pending application of the trademark which is complemented by the slogan. Article 384.- Validity of the registration.- The validity of the slogan registration shall be subject to the validity of the trademark registration related to the slogan. Article 385.- Proof for the use of the slogan.- It shall be applied to the slogan, in what was applicable, the provisions in Chapter VI of this Title. Regarding the proof of use of a slogan, said usage shall be demonstrated together with the trademark related to the slogan. The proof of use of a slogan may contain, besides what is mentioned in article 366, any other which evidences its use in advertisement or in the market. CHAPTER VIII COLLECTIVE MARKS Article 386.- Definition.- A collective mark means any sign that is used to distinguish the origin or any common characteristic of products or services belonging to two or more people or different companies and that use it under the control of a holder. Article 387.- Holders of the collective marks.- The associations of producers, manufacturers, traders, providers of services, organizations or groups of peoples, cooperative and other organizations that are part of the popular and solidarity-based economy, legally established, may register collective marks to distinguish in the market the products and services of their components. Article 388.- Requirements and process for the registration of a collective mark.- The application for registering a collective mark shall be submitted before the competent authority

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on intellectual property rights according to the content, requirements and other regulation provided in the corresponding regulation. Likewise, the regulation shall establish the requirements, terms and procedures, for, among others, the application examination, its publication, the presentation of oppositions and the concession or denial of the application. Article 389.- Transfer or license of the collective mark.- The registration of a collective mark or a pending application of registration may be subject to transfer or license in accordance with the provisions of the internal rules of the association, group, cooperative or organization. In any case, its use shall be reserved to the members of the association, organization, group or cooperative. Sublicenses may not be granted. Every transfer, authorization of use or license on a granted collective mark or a pending application of concession shall be registered before the competent authority on intellectual property rights. Such legal business shall be executed and effective upon their registration. Article 390.- Application.- It shall be applicable to the collective marks, in what was appropriate, the provisions of Chapter VI of this Title. CHAPTER IX CERTIFICATION MARK Article 391.- Definition.- The certification mark is a sign destined to be applied to a product or service whose quality, origin or other characteristic has been certified by the holder of the trademark. Article 392.- Holders.- A holder of a certification mark may be a company or institution, of private or public law, a state, regional or international organization. Article 393.- Regulation of use of the mark.- In the application for registration of a certification mark the usage rules shall be included. Without prejudice to other requirements established in the corresponding regulation, said rules shall indicate the products or services that may be subject to certification on behalf of the holder, shall define the guaranteed characteristics for the presence of the trademark, and shall describe the way in which the control of said characteristics shall be exercised before and after the usage of the mark was authorized. The rules of usage shall be registered along with all its modifications. Said inscription shall be made before the competent authority on intellectual property rights. The lack of registration shall cause that the modification shall not be effective against third parties. Article 394.- Authorization of certification marks.- Without prejudice to the communitarian and national provisions on restrictive commercial practices of free competence, the holder of a certification mark may authorize its use to any person whose product or service meets with the established conditions in the regulations of use of the mark. The certification mark may not be used in relation to produced, borrowed or traded goods or services, by the holder of the mark. Article 395.- Application.- The certification marks shall be applied, when relevant, to the provisions in Chapter VI of this Title.

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Section I Nation branding Article 396.- Definition.- Nation branding shall be every sign destined to distinguish, promote and position the cultural identity, socio-economics and politics, biodiversity, image, reputation and other values of the country, through products and services identified with it. Article 397.- Nation branding declaration.- The declaration of the nation branding shall be done through an executive decree or ministerial agreement. Article 398.- Use of signs of the nation branding.- The signs referred to in this Chapter shall be of the ownership of the State, who shall be exercised through a competent entity. The institution that has declared a distinctive sign as nation branding shall be in charge of the process of declaration, request, diffusion, training, use and control of said signs. Its use shall be authorized through free and non-transferable licenses in accordance with the corresponding regulation of use of the nation branding. Article 399.- Independent registration.- It shall be applied to the nation branding, in what is relevant, the provisions in Chapter VI of this Title, according to what is established Notwithstanding the provisions in the preceding paragraph, the competent authority on intellectual property rights shall register the signs referred to in this Chapter on an independent registration. Without the authorization of the mentioned competent entity in article 398, no person may use said signs. CHAPTER X COMMERCIAL NAMES An article 400.- Definition.- Commercial name is any sign that is used to identify a person or commercial establishment in the exercise of their economic activities and differentiate it from the others that have identical or similar activities. A person or commercial establishment may have more than one commercial name. A social denomination, business name or any other name inscribed in a register of people or commercial business may constitute a commercial name, among others. The commercial names are independent from the denominations or business names of legal entities, both may coexist. Article 401.- Declarative register of the commercial name.- The exclusive right of a commercial name shall be acquired by its first use in commerce, and shall end when the use of the name stops or when the activities of the person or the commercial establishment end. The commercial names may be registered before the competent authority on intellectual property rights. The registration shall have a declarative nature. The right of the exclusive use of a commercial name shall be only acquired in the provided terms on the preceding paragraph. However, the registration shall constitute an assumption of property in favor of whoever has obtained said registration. This assumption shall admit proof of the contrary. In any case, when there are allegations or claims to recognize the exclusive right over a commercial name, its public and continuous use must be proven, and its good faith. The proof

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of use shall correspond to the holder of the commercial name. For the purposes of this paragraph, if the holder was not part of the corresponding process, they shall be notified ex officio. Article 402.- Waiver of the registration.- The holder of the registration of a commercial name may waiver their rights on the registration. The waiver of the registration of the commercial name shall be effective since its request before the competent national authority. Article 403.- Signs of a commercial name that cannot be protected or registered.- It cannot be protected or registered as commercial names a sign that includes any of the following: 1. Cannot constitute the commercial name according to the first paragraph in article 400; 2. When it is identical or similar to a distinctive sign of another party, as long as due to the circumstances, its use may cause a risk of confusion or association; 3. When it consists of a sign that violates the right of industrial property or authorâ&#x20AC;&#x2122;s right of a third party, unless it is made with their consent; 4. When its use is liable of causing confusion or deceit in the commercial media or in the public about the identity, nature, activities, or the line of business or any other characteristic of the user; 5. When its use is liable to cause confusion or deceit in the commercial media or public about it business or geographical origin or other characteristics of the products of services the person trades; and, 6. When it consists, in whole or in part, of a sign contrary to the law, morals, public order or good moral values. Article 404.- Reference.- The corresponding regulation shall establish the requirements, deadlines and processes, among others, for the examination of the application, it publication, the presentation of oppositions, and the concession or denial of the request. The process of registration of a commercial name shall be the one established for the registration of trademarks. Article 405.- Validity of the registration of the commercial name.- The registration of a commercial name shall be valid for ten years since the date of concession and may be renewed, prior proof of use, for successive terms of ten years. Article 406.- Rights of the holder.- The holder of a commercial name may prevent any third party from using in commerce a similar or identical distinctive sign, when this may cause a risk of confusion or association with said holder or with their products or services. In the case of commercial names notoriously known, the holder may prevent any third party from using in commerce a similar or identical distinctive sign when this may cause an unfair economical or commercial damage, due to dilution of the distinctive power or commercial or advertising value of the name, or due to unfair use of the prestige of the name or of the holder. Article 407.- Transfer of the commercial name.- The transfer of a commercial name may only be done together with that of the company where the registered activities are being performed through the commercial name. Article 408.- Application.-It shall be applicable to the commercial names, in what was relevant, the provisions of Chapter VI of this Title.

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CHAPTER XI LABELS AND INSIGNIAS Article 409.- Definition.- Labels and insignias are any sign that is used to distinguish a commercial establishment. Article 410.- Protection and registration of labels and insignias.- The protection and registration of labels and insignias shall be regulated by the provisions related to the commercial names. Section I Distinctive features Article 411.- Definition.- Distinctive features is every combination of colors, shapes, presentations, structures and designs characteristic and peculiarities of a commercial establishment, that are able to distinguish it in the presentation of services or sale of the products. Article 412.- Protection and registration of distinctive features.-The protection and registration of the distinctive features shall be ruled by the provisions related to trademarks.

Chapter XII Denominations of origin Section I Requirements for protection Article 413.- Definition.- A denomination of origin shall be the geographical sign constituted by the denomination of a country, a region or a specific place, or constituted by a denomination that refers to specific geographical area is not that of a country, region or specific place, used to determine a product originating from this place, when a certain quality, reputation or other feature of the product is exclusively or essentially attributable to the geographical area in which it is produced, extracted or made, including natural and human elements. Article 414.- Unprotectable signs.- It may not be declared as denominations of origin those that: 1. Do not adjust to the definition in the preceding Article; 2. Are contrary to the law, morals, public order or good moral values; 3. May induce in error to the public of the geographical origin, nature, manner of manufacture, or quality, reputation or other characteristic of the corresponding products; 4. Are common or generic indications to distinguish the product, when they are considered as such by the experts in the subject matter or by the general public in Ecuadorian territory; 5. Had been applied or registered in good faith as trademarks before the denomination of origin was protected in the origin country; and, 6. In relation to wine products, had been the common denomination of a grape variety existing in the Ecuadorian territory by the January 1st of 1995.

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Section II Declaration of protection Article 415.- Declaration.- A denomination of origin shall be protected since the declaration stated by the competent authority on intellectual property rights. Article 416.- Legitimate interest.-The declaration of protection of a denomination of origin shall be done ex officio or upon request of those who have legitimate interest, considering them to be natural persons or legal entities that dedicated directly in the production, extraction or elaboration of the product or products that are intended to describe with the denomination of origin, as the integrated association by said persons or entities. Public authorities of the central government or autonomous decentralized shall also be considered interested parties when it is relative to denominations of origin of their corresponding district. Article 417.- Reference.- The corresponding regulation shall establish the requirements of the application. Once it is accepted for process the procedure provided for in the trademark registration shall apply, when relevant. Article 418.- Validity of the declaration of protection of a denomination of origin.- The validity of the declaration of protection of a denomination of origin shall be determined by the existence of the conditions on which it was based, on the judgment of the competent authority on intellectual property rights. The expiration of validity may be decided if said conditions were not kept. Without prejudice to the resources that exist against said resolution, the interested parties may apply again for the declaration of protection when they consider they have reestablished the conditions for its protection. Article 419.- Modifications of the declaration of protection.- The declaration of protection may be modified at any moment in accordance with what was established by this Organic Law and the corresponding regulations. The modification shall be subject to process for the declaration of protection when it corresponds. Section III Authorization of use Article 420.- Authorization.- The persons that are directly involved in the extraction, production or elaboration of the products described by a protected denomination of origin and that perform said activity within the geographical area determined in the corresponding declaration of protection, may request the competent authority on intellectual property rights the authorization to use said denomination of origin. The authorization of use may also be granted by public or private entities that represent the beneficiaries of origin, in accordance with the provisions in the regulations issued for that purpose. When the competent authority on intellectual property rights deems appropriate for the examination of the application, they may require information and documents to the persons, associations or authorities, as it corresponds. Article 421.- Reference.- The corresponding regulation shall establish the requirements of the application. Once it is accepted for processing, the process provided for therein shall be applied. Article 422.- Validity of the authorization of use.- The authorization of use of a protected denomination of origin shall be valid for ten years and may be renewed for similar periods

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indefinitely. The renovation for the authorization, in what was relevant, shall apply the provisions in Chapter VI of this Title, related to the renovation and expiration in the trademark registration Article 423.- Cancellation of the authorization of use.- The competent authority on intellectual property rights, ex officio or upon request, shall cancel the authorization of use when the denomination of origin is used in the commerce in a manner that does not corresponds to the respective declaration of protection. For cancellations of the authorization of use, in what was relevant, the provision in Chapter VI of this Title shall apply, regarding the cancellation of trademark registration. Article 424.- Nullity of the authorization of use.- The competent authority on intellectual property rights shall declare, ex officio or by request, the nullity of the authorization of use of a denomination of origin if it has been granted in violation to the regulation of this Chapter. It shall be applicable to the nullity of the authorization of use, in what were relevant, the provisions of Chapter VI of this Title corresponding to the nullity of the registration of trademarks. Section IV Rights and limitations Article 425.- Reservation of use.- The use of a protected denomination of origin with relation to the products described in it are reserved exclusively for producers, manufacturers and artisans that have their establishments for production, extraction or elaboration in the geographical area represented by said denomination. Only the producers, manufacturers or artisans authorized to use the protected denomination of origin shall indicate next to it the expression â&#x20AC;&#x153;DENOMINATION OF ORIGINâ&#x20AC;?. The provision in articles 352 to 357 shall apply to the protected denominations of origin, in what was relevant. Article 426.- Authorization for operation.- The competent national office may authorize the operation as a group of beneficiaries or regulating office to those organizations, whatever their legal constitution may be, as long as they are legally recognized, as they request and comply with the requirements provided in the corresponding regulations. Public or private entities that represent the beneficiaries of the denominations of origins, to those defined for that purpose, shall dispose the mechanisms that allow an effective control of the use of the protected denominations of origin. Article 427.- Prohibition of use.- The use of a protected denomination of origin by those persons who are not mentioned in the first paragraph of article 425 is prohibited when such use may cause a risk of confusion on the origin of the products. Article 428.- Denomination of origin of wines and spirits.- The use of a protected denomination of origin that identifies wines or spirits for this type of products that are not originally from the place defined in the denomination of origin is forbidden, even when the real origin of the product is mentioned or the denomination of origin is used as a translation

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together with expressions such as “gender”, “type”, “class”, “style”, “imitation” or other similar words. Article 429.- Limitations of the rights.- The protection established in this Section shall not extend to the continue or similar use of a determined denomination of origin of another country which identifies wines and spirits in relation with product or services, when this denomination of origin has been used in the country continuously for these same products or services or others related during ten years as a minimum before April 15th of 1994, or in good faith before this date. Section V Recognition of protection Article 430.- Denominations of origin of a country member of the Andean Community.- The competent authority on intellectual property rights shall recognize the protection of the protected denominations of origin in another country member of the Andean Community when the application is filed by their producers, extractors, manufacturers or artisans that have the legitimate interest or public authorities of said countries. For purpose of the preceding paragraph, it shall not be protected, those denominations of origin that were not protected or have ceased to be protected in their country of origin, or that have been disused in the country Article 431.- Denominations of origin of other countries.- Regarding protected denominations of origin in different countries mentioned in the preceding article, the competent authority on intellectual property rights shall recognize the protection of such denominations, provided that it is established in some valid international treaty for Ecuador. For purpose of the preceding paragraph, it shall not be protected those denominations of origin that were not protected or have ceased to be protected in their country of origin, o that have been disused in the country Article 432.- Subsistence of the Protection.- The protected denominations of origin in this Chapter shall not be considered common or generic to distinguish the product that is described, as long as said protection subsists in Ecuador or in the country of origin.

CHAPTER XIII INDICATIONS OF SOURCE Article 433.- Definition.- Indications of source shall be a name, expression, image or sign that designates a specific country, region, location or place. Article 434.- Restrictions of usage.- An indication of source shall not be used in commerce related to a product or service when this is false or deceitful regarding its origin or when its use may cause confusion to the public regarding its origin, source, quality or any other characteristic of the product or service. For purposes of the preceding paragraph, it shall also constitute the use of an indication of source in trade that which is done in advertising or any other commercial documentation related to the sale, exhibition or offer of products or services.

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Article 435.- Disclosure of origin.- Any person may indicate its name or domicile about the products they commercialize, even if they come from a different country, region, location or place, as long as such names or domicile is presented together with the precise indication, in outstanding distinguished characters, of the country, region, location or place of manufacturing or of production of the products or other outstanding indications to avoid any other mistake of the true origin thereof. Article 436.- Procedure.- The procedure for processing the request shall be the same as the geographical indications, with the qualification that is established in the corresponding regulations.

CHAPTER XIV NOTORIOUSLY KNOWN DISTINCTIVE SIGNS Section I Requirements for protection Article 437.- Definition.- A notoriously known distinctive sign is that which is recognized as such in the country or in any country member of the Andean Community by the pertinent sector, independently from the manner or means through which it was known. Article 438.- Factors.- To determine the notoriety of a distinctive sign, the following factors, among others, shall be considered: 1. The level of knowledge among the members of the pertinent sector inside the country or in any country of the Andean Community; 2. The duration, space and geographic extension of its use, inside the country or in any country of the Andean Community; 3. The duration, space and geographical extension of its promotion, inside the country or in any country of the Andean Community, including advertisement and presentation of products or services in fairs, exhibitions or other events of the establishment or activities where these are applied; 4. The value of all the investment made to promote it, or to promote the products or services, the establishment or activity in which they are applied; 5. The number of sales and income of the holder company regarding the sign whose notoriety is claimed, inside the country or in any country of the Andean Community; 6. The level of inherent or acquired distinctiveness of the sign; 7. The book value of the sign as a business asset; 8. The amount of requests of interested parties in obtaining a franchise or license of the sign inside the country or in any country of the Andean Community; 9. The existence of significant activities of manufacturing, purchase or storage made by the holder of the sign in the country; 10.The aspects of international trade; and, 11.The existence and antiquity of any registration or application for registering the distinctive sign inside the country or in any country of the Andean Community; Article 439.- Special factors.- The notorious quality of a sign shall not be denied for the sole fact of:

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1. Not being registered or its registration is pending in the country or abroad; 2. Not being used or is not being used to distinguish products or services, or to identify establishments or activities in the country; and, 3. Is not notoriously known abroad.

Article 440.- Relevant sectors.- It shall be considered as reference relevant sectors to determine the notoriety of a distinctive sign, among others, the following: 1. The real or potential consumers of the type of products or services to which it applies; 2. The people involved in the distribution or commercial channels of the type of products or service to which it applies; or, 3. The business circles that act on relative turns to the type of products, services, establishments or activities it applies. For the purpose of recognizing the notoriety of a sign, it shall be enough that it be known inside any of the sectors mentioned on the foregoing paragraphs.

Section II Rights and limitations Article 441.- Scope of protection.- A notoriously known distinctive sign shall be protected against its unauthorized use and registration according to this Chapter, without prejudice to the other provisions in this Title that were applicable and the regulations for protection against unfair competition. There shall be no protection regarding distinctive signs that were used or registered, or whose application of registration has been submitted before the notoriously known distinctive sign has reached said character in the country or any member country of the Andean Community, except in the cases in which the distinctive signs were used or registration, or whose application of registration had been submitted in bad faith. Article 442.- Rights of the holder of the distinctive sign.- The holder of a notoriously known distinctive sign shall have the right to prevent any third party from using the sign without their consent, in whole or in an essential part, or from reproducing, imitating, translating, transliterating or transcribing thereof, susceptible of creating confusion, regarding the products, services, establishments or activities similar or identical to those that apply. The holder shall also have the right to prevent any third party to use the sign without their consent, in whole or in an essential part, or from reproducing, imitating, translating, transliterating or transcribing the sign, regarding the products, services, establishments or activities different from which the notoriously known sign is applied if said use may cause any of the following: 1. Risk of confusion or association with the holder of the sign, or their products, services, establishments or activities; 2. Unfair economic or commercial damage to the holder of the sign due to weakening of the distinctive power or commercial or advertising value of the sign; or, 3. Unfair use of the prestige or fame of the sign. The use may be verified through any communication media, including electronic media.

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Article 443.- Application.- It shall be applied to the notoriously known distinctive signs the articles 352 to 356 of this Title. Article 444.- Good faith.- When deciding on a relative action of unauthorized use of a notoriously known distinctive sign, it shall be taken into account the good or bad faith of the parties in the adoption or use of this sign. Article 445.- Lapse of the action due to unauthorized use of the distinctive sign.- The action against an unauthorized use of a notoriously known distinctive sign shall expire within five years from the date the holder of the sign had known of said use, unless this was done in bad faith, in which case the action shall not expire. Article 446.- Cancellation or modification of a domain name.- When a notoriously known distinctive sign has been unduly registered in the country as part of a domain name or an email address by an unauthorized party, upon request of the holder of that sign, the competent authority on intellectual property rights shall order, to the entity under which the name or address was registered or to whom has made said registration, the cancellation or modification of the registration of the domain name or e-mail address, or its transfer in favor of the holder of the sign, provided that the name or address was susceptible of having some of the effects mentioned in article 442. Article 447.- Cancellation of registration of a trademark.- Without prejudice to the provisions on the nullity or other provisions on the cancellation of a trademark registration, the competent authority on intellectual property rights shall cancel the registration of a trademark, upon request of the legitimate holder, when this is identical or similar to one that is notoriously known according to the existing legislation at the moment of the registration application.

TITLE IV PLANT VARIETIES Section I Requirements of protection Article 448.- Protectable subject matter.- The protection established in this Title extends to protect the varieties belonging to every plant gender and specie provided their breeding, possession or use is not forbidden for reasons of human, animal or vegetal health, food sovereignty and environmental security. Article 449.- Requirements of protection.- A breederâ&#x20AC;&#x2122;s certificate shall be granted to the person who has created a plant variety, when this is new, different, homogenous and stable, and that has been assigned a denomination that constitutes its generic designation For these purposes, the creation of a new variety through the application of scientific knowledge implies the genetic improvement of the plants. Article 450.- Genetically modified organisms.- When a breederâ&#x20AC;&#x2122;s certificate is requested for a variety that was included in the scope of the existing rules on genetically modified vegetal organisms, the competent authority on intellectual property rights shall inform the national competent bodies about the submitted application, for that purpose.

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Article 451.- Novelty.- A variety shall be considered new if the reproduction or multiplication material of the variety, or a product of its crop, has not been sold or delivered to a third party, by the breeder or their rightful claimant or with their consent, for commercial exploitation purposes of the variety. Novelty is lost on the following cases: 1. If the exploitation in the country or in any country member of the Andean Community has begun at least one year before the date of submission of the application or the claimed priority; or, 2. If the exploitation in any other country has begun at least four years or, in the cases of trees and vines, at least six years before the date of the submission of the application or the claimed priority. Article 452.- Conservation of novelty.- The novelty is not lost through sale or delivery of the variety to a third party when said actions: 1. Are the result of an unlawful action or abuse detrimental to the breeder or their rightful claimant ; 2. Are part of an agreement to transfer the right of the variety, as long as this does not implies that the material of the variety is given to a third party with commercial exploitation purposes; 3. Are part of an agreement out of which a third party increased, on behalf of the breeder, the existence of the material of reproduction or multiplication, provided the multiplied material is kept under control of the breeder or their rightful claimant and, that said materials are not used to commercially produce another variety; 4. Are part of an agreement between a breeder and a third party according to which they made field, laboratory or procedure tests in small scale to evaluate the variety; 5. Have as subject matter the crop material of the variety that has been obtained as a secondary product or surplus of the activities mentioned in numbers 3 and 4 of this article, on the condition that said product is sold or delivered without identification; or, 6. Are done in compliance of a legal obligation, particularly, concerning environmental security or the registration of a variety in an official registration of admissible varieties for trade. Article 453.- Distinction.- A variety shall be considered different if it is clearly distinguished from any other whose existence was notoriously known, at the date of the submission of the application or priority claim. In particular, the presentation in any country of a request for the concession of the right of breeder or for the registration of the variety in an official registration of cultivars shall make said variety notoriously known since that date, if such action shall give in the concession of the right or the registration of the variety, depending on the case. The notoriety of the existence of another variety may be established by different references, such as the exploitation of the variety in progress, registration of the variety in a registration of varieties kept by a recognized legal and technical professional association, or the existence of the variety in a collection of reference. Article 454.- Homogeneity.- A variety shall be considered homogeneous if it is sufficiently uniform in its essential traits, taking into account the predictable variations according to it manner of reproduction, multiplication or propagation.

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Article 455.- Stability.- A variety shall be considered stable if its essential traits were kept without alteration from generation to generation and at the end of each cycle, especially of reproduction, multiplication or propagation. Article 456.- Generic denomination.- The variety which is subject matter of an application of breeder certificate, shall be designated with a name destined to be its generic denomination. No relative right to the registered denomination such as the denomination of the variety shall obstruct the free use of the denomination in relation with the variety, even after the expiration of the breeder’s certificate. The denomination of the variety shall be indicated in the application of the breeder’s certificate. If this denomination shall not meet the requirements established the applicant should be requested to propose another denomination. As long as these conditions are not met the breeder’s certificate shall not be granted. A variety may only be subject of an application for the breeder’s certificate in Ecuador under the same denomination used for this variety in other countries members of the International Union for the Protection of New Plant Varieties – UPOV-. However, if an inconvenience or impossibility of use of said denomination in Ecuador shall be proven, due to a previous right or another legal impediment, the applicant shall be required to propose another denomination. Whoever imports or trades in the country, or exports from the country, the material of a protected variety in Ecuador, shall be oblige to use the denomination of the variety, even after the expiration of the right of breeder on that variety. When the material of a protected variety is offered for sale or traded, a trademark, commercial name or geographical indication may be used together with the denomination of the variety. In any case, the denomination of the variety shall be easily recognizable. The requirements that the generic denomination must meet shall be established in the corresponding regulation. Section II Holders Article 457.- Holders.- The right to a breeder’s certificate belongs to the breeder of the variety. This right is transferable inter vivos and upon death. The holders of the breeder’s certification may be natural persons or legal entities. If several people have created a variety together, the right shall correspond to all of them in common or to their rightful claimants. Article 458.- Breeding in educational and research centers.- Article 262 of this Law shall be applied when the variety has been bred in the investigations or activities mentioned in said article. Article 459.- Breeding developed in compliance of a contract.- Article 263 of this Law shall be applied when the variety has been bred in compliance of a working contract or under the frame of an employment contract.

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Section III Application Article 460.- Priority right.- The first application for protection of a variety validly submitted in a country member of the International Union for the Protection of New Plant Varieties – UPOV, in a member country of the Andean Community or in another country that has a similar conditions to the applications originating from the countries members of the Andean Community, shall confer a priority right to the applicant or their rightful claimant, for twelve months so that they can submit their application for protection for the same variety in Ecuador. This term shall begin on the date of the submission of the first application. For the purposes of the preceding paragraph, the applicant shall claim priority in the application of the first application, indicating the date, the number and the office of presentation of said first application as well as the relevant legal instrument. Section IV Process of the application Article 461.- Process of registration.- The application for the registration of a plant variety shall be submitted before the competent authority on intellectual property rights in accordance with the content, requirements and other rules provided in the regulation. Likewise, the requirements, deadlines and procedures, shall be established for the examination of the application, its publication, the presentation of oppositions and the granting or denial of the application in the corresponding regulation. Section V Rights and limitations Article 462.- Validity of the Breeder’s Certificate.- The breeder’s certificate shall have a duration of eighteen years for the cases of vines varieties and ornamental, fruit and forestry trees, including their rootstock, and fifteen years for the other variations, starting from the date of the concession of the certificate. Article 463.- Obligations of the breeder.- During the validity term of the breeder certificate, its holder shall have the obligation to keep and, when necessary, replace the material of the variety object of its certificate. Article 464.- Rights of the holder.- The breeder´s certificate shall confer its holder the right to prevent third parties from performing without their consent any of the following actions regarding the reproduction, propagation or multiplication of the ornamental protected variety: 1. Production, reproduction, multiplication or propagation; 2. Preparation with reproduction, multiplication or propagation purposes; 3. Offer for sale, selling or any other action that implies the introduction in the market of the material for reproduction, propagation or multiplication; 4. Export or import; and, 5. Possession for any of the mentioned purposes in the preceding points. It also grants the right to prevent the indicated actions in the preceding paragraphs regarding the entire plants or parts of plants, obtained by the unauthorized use of the material of reproduction or multiplication of the protected variety, unless the holder has been able to

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reasonably exercise their exclusive rights regarding said material of reproduction or multiplication. Likewise, it grants the right to prevent the commercial use of the plants or parts of plants as multiplication material with the purpose of producing ornamental plants or parts of ornamental plants. Article 465.- Effect of the right granted to the breeder.- The right granted to the breeder shall have as effect to subjugate to their previous authorization the following actions: 1. The production with commercial purposes; 2. Selling; and, 3. Trading the material of reproduction or vegetative multiplication of the variety. It also grants the right to prevent the indicated actions in the preceding paragraphs regarding the product of the crop, including entire plants or parts of plants, obtained by the unauthorized use of the production material of the protected variety, unless the holder has been able to reasonably exercise their exclusive right regarding said material of reproduction or multiplication. Article 466.- Application.- The provisions in the preceding Article shall apply also to: 1. 2.

Varieties that are not clearly distinguishable from the protected variety; and, Varieties whose production needs the repeated use of the protected variety.

Article 467.- Exceptions.- Does not damage the rights of the holder of a breeder certificate who reserves, reproduces, multiplies or plants the obtained product of the crop of the protected variety, or of a variety essentially obtained from it, when said actions are made: 1. For its own use; 2. To sell or exchange, without profit, that product as raw material or food; and, 3. In the context of ancestral agricultural practices or in an agricultural communitarian and traditional environment, even to sell or exchange, without profit, seeds or other material of said variety. It is excluded from this article the commercial use of the material of multiplication, reproduction or propagation, including entire plants and their parts, of the fruit, ornamental and forestry species. Article 468.- Limitations of the rights of the breeder.- The breederâ&#x20AC;&#x2122;s certificate does not grant its holder the right to prevent third parties from performing the following actions regarding a protected variety: 1. Actions made in the private environment without commercial purposes; 2. Actions made for experiment purposes; 3. Actions made for teaching or academic or scientific research purposes; 4. Actions made to obtain a new variety, and the actions indicated in article 464 regarding the material of reproduction or multiplication of the new variety, unless it is related to a variety essentially originating from a protected variety. Article 469.- Exhaustion of the right.- The breederâ&#x20AC;&#x2122;s certificate does not grant the holder the right to prevent a third party from performing actions regarding the material of their variety or

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a variety provided in article 464, or the material originating from said material, after that material has been introduced in the commerce of any country with the consent of the holder, a licensee, a person economically related to the holder or licensee, or any other authorized person to do so, unless these actions: 1. Imply a new reproduction or multiplication of the variety to produce material destined to be traded as material of reproduction or multiplication ; or, 2. Implies an export of material of the variety, that allows to be reproduced, to a country that does not protect the varieties of gender or of the specie the variety belongs to, unless the exported material is destined for consumption. For the purposes of the preceding paragraph, it shall be implied that two persons are economically related when one person can exert directly or indirectly on the other person a decisive influence regarding the exploitation of the work or when a third party can exert such influence over both persons. Article 470.- Transfer or license of the application or certificate.- A breederâ&#x20AC;&#x2122;s certificate or a pending application may be object of transfer or license for the exploitation of a variety. Every transfer, authorization of use or license of a plant breederÂ´s certificate or a pending application for its concession, shall be done in a written form and shall be registered before the competent authority on intellectual property rights and, shall be executed and effective upon its registration. Any interested person may request the registration of a transfer or license. Article 471.- Inscription of contracts of transfer and license.- The competent authority on intellectual property rights shall not register the contracts under which a breederÂ´s certificate or a pending application is subject of transfer or license for exploitation of the variety when said contracts do not comply with the provisions of the Common System for the Treatment of Foreign Capital and on Trademarks, Patents, Licenses and Royalties, or do not comply with the community or national provisions on restrictive commercial practices of free competition and unfair competition. Otherwise, what is provided in the Organic Law for Regulation and Control of Market Power shall be applied and the provided penalties therein.. The sublicenses shall require explicit authorization of the holder of the rights. Article 472.- Modifications of the registration.- The holder of the breeder certificate shall register before the competent authority on intellectual property rights any change in name, domicile, address or other information of the holder, its representative or proxy. Any notification made according to the data under the registration shall be deemed valid.

Section VI Cancellation Article 473.- Cancellation.- The competent authority on intellectual property rights shall declare, ex officio or upon request, at any moment, the cancellation of the breeder certificate in the following cases: 1. When it is verified that the protected variety has ceased to comply with the conditions of homogeneity and stability;

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2. When the breeder does not submit the necessary information and documents that show the referred conditions in the preceding number are being kept or does not replace the material of the protected variety in the manner and terms required by the competent authority on intellectual property rights; and, 3. When after the concession of the breeder’s certificate the initial denomination assigned to the variety has been deemed improper and the holder of the certificate does not comply in presenting a new proper denomination within the term established by the competent authority on intellectual property rights. Section VII Waiver Article 474.- Waiver of the certificate.-The holder of a breeder certificate may waive, at any moment, their rights through a statement addressed to the competent authority on intellectual property rights. The waiver shall be effective since the date of submission. Article 475.- Nullity of the certification.- The competent authority on intellectual property rights, ex officio or by request, at any moment, shall declare the nullity of a breeder’s certificate, in the following cases: 1. If the variety object of the breeder’s certificate does not meet with the requirements of novelty, distinction, stability and homogeneity at the time of concession; 2. If the certificate has been granted in favor of who did not have the right thereof; 3. If it applies, if a copy of the access contract has not been submitted, when the variety has been obtained or developed from the genetic resources or their byproducts in which Ecuador or any of the member of the Andean community is the country of origin; 4. If causes for nullity shall appear provided by the law for administrative acts; or, 5. If the certification has been granted in any other violation of the law that has substantially induced its concession or has been obtained with false or mistaken database, information or documents. Section IX Expiration Article 476.- Validity and expiration of the certification.- To keep the breeder’s certification valid, corresponding annual fees shall be paid, otherwise the certificate shall expire within its full rights. The payment shall be done within the first four months of each year. Two or more annual fees may be paid in advance. An annual fee may be paid within a grace period of six months, starting from the expiration of the term provided in the preceding paragraph by paying a surcharge. During the grace period, the certificate shall keep its full validity. The lack of payment of an annual fee according to this Article shall expire the certificate within full rights.

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Section X Compulsory licenses rules Article 477.- Declaration of free availability.- Prior declaration by executive decree of ministerial resolution of the existence of reasons of public interest, emergency or national security, the competent authority on intellectual property rights may declare a variety object of a breeder’s certificate of free availability, on the basis of an equivalent compensation for the holder of said certificate. The competent authority on intellectual property rights shall determine the amount of compensation, prior audience of the parties and expert report, on the basis of the scope of exploitation of the variety object of the license. Article 478.- Exploitation of the variety of free availability.- During the validity of the declaration of free availability, the competent authority on intellectual property rights shall allow the exploitation of the variety to interested people that offer enough technical guarantees and are registered for this purpose before the authority. Article 479.- Validity of the declaration of free availability of a variety.- The declaration of free availability shall be valid as long as the causes that motivated this declaration still exist and up to a term of maximum two years extendable only once and for the same amount of time, if the conditions of its declaration have not disappeared on the expiration of the first term. Article 480.- Compulsory licenses due to unfair competition.- Ex officio or upon request, the competent authority on intellectual property rights shall grant compulsory licenses when there are practices that have been deemed by the competent authority on the protection of competition as contrary to the corresponding regulations, in particular when they constitute an abuse by a dominant position in the market by the holder of the breeder’s certificate. In these cases, to determine the amount of the remuneration in benefit of the holder of the certificate, the need to correct the unfair competition practices shall be taken into consideration. Article 481.- Compulsory licenses for the holder of a patent.- When the holder of an invention patent may not commercially exploit the invention without using a protected variety by a breeder’s certificate, they may request a compulsory license on this variety as long as it is necessary to exploit said invention. In this case, the holder of the breeder’s certificate shall have the right to a compulsory license to use the patented invention as long as it is necessary to exploit the protected variety. The compulsory license that was granted may only be transferable with the patent or the certificate whose exploitation needs the license. Article 482.- Reference.- The provision in Section X of Chapter II of Title III of this Law, shall be applicable to the compulsory licenses provided for in this article. TITLE V OTHER MODALITIES RELATED TO INTELECTUAL PROPERTY Article 483.- Undisclosed information.- The undisclosed information enjoys a protection against its disclosure to third parties and against unfair practices.

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Article 484.- Test data.- The test data shall enjoy a protection as undisclosed information, as long as the information is secret, has a commercial value and has adopted the reasonable measures to keep it secret, in accordance with the provisions in article 27 number 7 of the Organic Law for Regulation and Control of Market Power. The competent authority may require the submission of the test data or undisclosed information for the effects of evaluating the security and efficiency terms in an application for commercializing pharmaceutical products or agricultural chemicals that contain new chemical entities if there were no studies or documents on the identity of its physic-chemicals and pharmacokinetics or bioequivalence or health registration or their equivalents obtained abroad, in accordance to the provisions in the Law and the corresponding regulation.

TITLE VI TRADITIONAL KNOWLEDGE Article 485.- Traditional knowledge.- Are all those collective knowledge, such as practices, methods, experiences, abilities, signs and symbols that are part of the cultural heritage of the people, nationalities and communities and that have been developed, updated and transmitted from generation to generation. Traditional knowledge is, among others, the ancestral lore and local knowledge, the intangible component associated with genetic resources and traditional cultural expressions. This traditional knowledge may refer to aspects of the ecology, climate, agriculture, medicine, arts, handicraft, fishing, hunting, among others, the same that have been developed from the tight relationship of human beings with the territory and nature. The recognition and protection of collective rights on the intangible components and traditional cultural expressions shall be complementary to the norms on the access to genetic resources, cultural patrimony, and other related aspects. Article 486.- Recognition of traditional knowledge.- In accordance with the provisions of the Constitution of the Republic of Ecuador and the international treaties to which Ecuador is a party, the collective rights of the legitimate possessors are recognized over their traditional knowledge. These rights are inalienable, unseizable, and imprescriptible and are part of the cultural identity of its legitimate possessors. The protection of this knowledge shall be made according to their own traditions, institutions and cultural practices, the Constitution and the International Treaties that govern the subject matter, helping all together to the strengthening of their internal traditional structures. Under this way of protection, the lawful possessors have, among others, the right to keep, promote, manage, reward, protect, control, innovate and develop their traditional knowledge according to their uses, practices, customs, institutions and traditions, as to prevent or stop the wrongful access, use and exploitation of this knowledge. The collective rights on traditional knowledge are susceptible of the relevant control measures before the competent authority on intellectual property rights in accordance to the provisions in this Law and its regulation. Likewise, these rights are recognized to the people belonging to the communities, people and nationalities in equity and equality of conditions and without gender discrimination.

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Article 487.- Legitimate possessors of the traditional knowledge.- For the purposes of this Law, it shall be implied that the legitimate possessors are the communities, people, indigenous nationalities, Afroecuadorian people, Montubios, and the legally recognized communes that live in the national territory. Article 488.- Shared traditional knowledge.- The protection of the shared traditional knowledge between communities, people and nationalities that live in the same geographical area are recognized as legitimate possessors. Each legitimate holder may freely exercise its collective rights. Article 489.- Inhabitants in different areas than their original territory.- The people or groups belonging to communities, peoples or nationalities and that are outside their original territory or usual residence shall keep their collective rights, provided the legitimate possessors are not wronged. Article 490.- Cross-border legitimate possessors.- In the case that the territories of the legitimate possessors originate in cross-border areas or that their usual residence is in said areas, these situations shall not affect the exercise of the collective rights recognized in this Law. Article 491.- Right of free will.- The power and exercise in decision making on traditional knowledge is recognized to the legitimate possessors according to their free determination and their own ways of coexistence, social organization, institutions, generation and exercise of authority. Article 492.- Protectable.- Traditional knowledge shall be considered, among others, the following: 1. Development of the knowledge on health and practice methods for healing, medical treatment, as the production and use of medicine through the elaboration of pharmacopoeia, phytopharmacology or pharmacology; 2. Traditional ceremonies, rituals, techniques and practices, made inside and outside their cultural area, for healing and curing; 3. Knowledge on the classification, characterization, geographical location, taxonomy and use of flora and fauna useful for the ancestral, traditional or modern medicine; 4. Knowledge, practices, techniques, technologies and activities to prepare and make combinations of active ingredients, with both flora and fauna, in the administration and management of traditional medicine; 5. Knowledge about the preparation, processing and storage of useful species and conservation, selection and use of seeds; 6. Forms of soil preparation and tillage management in addition to the agricultural and farming technologies; 7. Traditional knowledge of the properties of land, soil, minerals, flora, fauna, water resources, their uses and practices; 8. Biodiversity management, sustainable development, intercropping, agroforestry, ecosystem management, forest management and watershed management; knowledge, techniques and procedures for establishing compounds for the production of food, dietary, dyes and cosmetics and byproducts thereof; 9. Knowledge of functions and conservation of ecosystems for adaptation and mitigation of climate change; 10. Procedures for developing and producing artworks, designs and painting, ceramics,

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11. 12. 13. 14. 15. 16. 17. 18.

textiles, scriptures, dances, traditional songs and other expressions of transmission of their customs and traditions; Ceramics, crafts, fabrics, designs and traditional clothing and accessories; Artistic creations, literature, legends, myths and traditional or sacred rituals and other forms of manifestation and expression of their worldview; Ceremonies related to sacred places of worship in their worldview, spirituality and beliefs; Technologic, scientific and artistic innovations; Traditional designs and symbols, petroglyphs, rock painting, traditional materials and production processes; Music, musical instruments, dances and forms of execution; Sports, recreation and traditional games; and, Architecture, procedures, materials, construction techniques and traditional technologies, among others.

In general, all traditional knowledge is protected, defined as such by their legitimate possessors that express the genuine nature of the ancestral traditions, as the ones that come from a millenary practice of the communities, which constitute, in an oral or written manner, their historical, cultural and cosmological tradition. Article 493.- Manner of protection.- The effective and positive protection of the traditional knowledge against unfair access, use or exploitation made by unauthorized parties is guaranteed â&#x20AC;&#x201C; expressed in the prevention, control and penalty mechanisms provided in the regulations made for this purpose. The recognition of the collective rights of the legitimate possessors on their traditional knowledge is not subject to any formality or registration to guarantee the effects of its protection, validity and exercise, because this is based on the legitimacy of the communitarian scope. Strengthening mechanisms of local abilities on collective rights for traditional knowledge shall be promoted for its revitalization, promotion and protection. Article 494.- Voluntary deposit of traditional knowledge.- The legitimate possessors may make a deposit of their traditional knowledge before the competent authority on intellectual property rights. This deposit shall have a confidential and restrictive nature to the public upon request of the legitimate possessors. The objective of this deposit shall be to avoid illegitimate appropriations of said cognitive heritage, as it shall be verification medium for recognizing collective rights on traditional knowledge that may be violated in any application of the rights of intellectual property. The deposit of traditional knowledge shall not grant the holder any authorization on the concession for its use and access to third parties without the explicit authorization of the legitimate possessors on traditional knowledge and prior compliance with the corresponding regulations. Prior concession of the intellectual property rights, the competent authority on the subject matter shall verify the information referred to in the preceding paragraph with the purpose of avoiding wrongful appropriation of the traditional knowledge. Without prejudice to what this article has established, traditional knowledge that has previously been made public may be compiled. The information of the deposit, as that which is referred to in the preceding paragraph, shall be part of the National System of Information on Science, Technology, Innovation and Traditional Knowledge.

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Article 495.- Safekeeping traditional knowledge in the communitarian environment.- The State shall recognize and provide with the technical and economic resources, prior request of the legitimate possessors, for the development of the communitarian registration of traditional knowledge to be managed and guarded by the communities, under the responsibility of the competent authorities. Article 496.- Wrongful access, use and exploitation.- The exercise of the collective rights on traditional knowledge are exclusive of their legitimate possessors and, through the control measures provided for in this Law and other applicable regulations, may prevent wrongful access, use or exploitation made by unauthorized parties. Article 497.- Definition and process of traditional knowledge and public domain.- Traditional knowledge are of public domain when said knowledge and its information have stopped being part of the cultural environment of the communities, people and nationalities, and are found in bibliographies, data base or in ex situ collections in etnobotany centers, obtained with or without the free, previous and informed consent of the communities, people and nationalities. Notwithstanding the previous provision, the State shall recognize the right of the legitimate possessors on said traditional knowledge, which includes the right to a fair and equitable share of the benefits through mutually agreed terms with the respective guardians and their users, without prejudice to protections they may have under the system of classic intellectual property. The State shall establish the most appropriate mechanisms to obtain effective compliance of this provision, safekeeping the right of the communities, peoples and nationalities. Article 498.- Support from the State to the initiative of the legitimate possessors.- Respecting the right of free determination and appropriate cultural development of the legitimate possessors, the State shall promote and support the strengthening of their abilities and initiatives for the generation and maintenance of their traditional knowledge and, if it applies, the investigation, scientific and technological development obtained from said knowledge, recognizing their intellectual rights. For this purpose technical and financial resources shall be allocated. Article 499.- Use of the traditional knowledge by the legitimate possessors.- The State recognizes the right of the communities, people and nationalities to use, enjoy and dispose their traditional knowledge according to their rules on cultural communal living. The State shall generate incentives so that the communities, people and nationalities strengthen their own initiatives for research, development and innovation. Article 500.- Application for access, use and exploitation of the traditional knowledge.- The application for access, use and exploitation of the traditional knowledge shall have the previous, free and informed consent of the legitimate possessors, where a fair and equitable distribution of the monetary or non-monetary benefits shall be established. This made without prejudice to the rights corresponding to the State regarding the genetic resources, according to the provisions in the Constitution and the Law. Article 501.- Free, previous and informed consent.- The legitimate possessors in accordance to the common law, and legally constituted and lawful representation institutions, through participation mechanisms, may authorize a third party in a free, explicit and informed manner, the access, use or exploitation of their traditional knowledge, prior provision on behalf of the interested party of sufficient information regarding the objectives, risks, implications, possible

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uses and future applications of the knowledge, giving certain conditions that allows a fair and equitable distribution of the benefits obtained from said knowledge. The interested party shall commit to respect the collective rights, and, if it is the case, to keep all confidentiality regarding the information, materials, experiences, methods, instruments and other intangible or tangible elements related to traditional knowledge. Likewise, the dialogue of knowledge and implementation of culturally appropriate methods shall be respected as fundamental elements of this knowledge. In the case that the application of free, previous and informed consent is about an intangible component related to genetic resources, the interested users shall present a plan detailing the access, use and exploitation of said parts, to the Secretariat for Higher Education, Science, Technology and Innovation, as the governing body on traditional subject matters, in accordance with the corresponding regulations. The free, previous and informed consent and the fair and equitable distribution of the monetary and non-monetary benefits shall be established by the regulation drafted for that purpose, which shall consider among others the authorities, institutions and traditional ways of making decisions in the communities, peoples and nationalities, as guaranteeing an intergenerational and gender perspective in the decision making. Article 502.- Concession or denial.- The concession or denial of the legitimate owner to authorize the access, use or exploitation of their traditional knowledge shall be registered before the competent authority on intellectual property rights, with the objective that the authority may exercise the corresponding control over the decisions of the legitimate owner. Upon request, the Secretariat for Higher Education, Science, Technology and Innovation may assist on the negotiations that are being made for the concession of a previous consent, and for advising the legitimate possessors during this process. Article 503.- Contract.- Once the interested party has the free, previous and informed consent, they shall enter a contract by written form, in Spanish and, if it applies, in the mother tongue of the legitimate possessors. In case the mother tongue is only oral and does not have a written form, the contract shall be done in Spanish as the tongue of cultural interrelation. In said contract the terms and conditions shall be established on the use, access and exploitation of the traditional knowledge, and shall also include the corresponding reasons for the scope and possible international effects that are expected to be obtained; the fair and equitable distribution of the monetary and non-monetary benefits, including the plan of sustainability of the traditional knowledge; and the possible authorizations or future cessions. Article 504.- Registration of contracts.- The contracts referred to in the preceding article shall be registered before the competent authority on intellectual property rights, who shall approve them once it has a favorable criteria of the Secretariat for Higher Education, Science, Technology and Innovation, and of the pertinent entities in relation to the scope of their abilities. Said legal business shall be executed and effective upon their inscription before the competent authority on intellectual property rights. Prior registration, the competent authority on intellectual property rights, shall mainly safe keep and verify that there is a prior, free and informed consent and a fair and equitable

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distribution of the benefits for the legitimate possessors of the traditional knowledge, as controlling the compliance with national and international regulations. If the competent authority on intellectual property rights considers that the contract does not have the requirements established in the preceding paragraphs or that it may cause a damage to the legitimate possessors, the authority shall send them the observations and suggestions so that the parties modify or rectify them in the contract. Article 505.- Solutions to controversies.- In case of disagreement or conflict regarding the agreements set forth in the contract of access, use or exploitation of traditional knowledge, these shall be solved necessarily in Ecuadorian jurisdiction and through the mechanisms that mostly favor the legitimate owner. Article 506.- Sanctions.- The wrongful access, use or exploitation, in whole or in part, of the traditional knowledge shall lead to the application of sanctions and measures, for the cessation of the acts of infraction, to avoid this and repair their possible effects. The competent authority on intellectual property rights, ex officio or upon request, may take the necessary measures that are deemed necessary to avoid or cease acts of infringement on the collective rights on traditional knowledge. The free, previous and informed consent and the fair and equitable distribution of the monetary and non-monetary benefits shall be established by the regulation drafted for that purpose, which shall consider among others the authorities, institutions and traditional ways of making decisions in the communities, peoples and nationalities. As well as guaranteeing intergenerational and gender perspectives in the decision process. Article 507.- Assessment Council.- For everything relating this Title, the Assessment Council is created, and it shall have the participation of at least the following members: a representative of the indigenous people and nationalities or their delegate, a representative of the Afroecuadorian people or their delegate, a representative of the Montubio people or their delegate, a delegate of the Higher Education Institutes â&#x20AC;&#x201C;IES-, a delegate of non-governmental organisms related to the subject matter. The provisions in the corresponding regulation shall govern its structuring and operation. Article 508.- Management of traditional knowledge.- The authority of the National System of Science, Technology, Innovation and Lore, shall allocate the necessary funds for the management of the System of Special Protection of Traditional Knowledge. The management of traditional knowledge includes: research, scientific technological development, revitalization mechanisms, promotion and protection, as the prevention of loss and wrongful use of said knowledge. For that purpose, the competent authority on intellectual property rights shall issue a protocol of access, use and exploitation of traditional knowledge of obligatory compliance for the institutions and stakeholders of the system.

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TITLE VII Control CHAPTER I GENERAL PRINCIPLES Article 509.- Administrative actions.- In accordance with the provision of this Title, the holder of a protected right or another legitimate person for that effect may initiate administrative actions against any person who violates the corresponding rights. They may also act against people that execute actions that reveal imminence of an infraction. The corresponding penal actions shall be exercised in accordance with the relevant legislation. Article 510.- Actions of joint owners.- In the case of joint owners of a right, any of the joint owners may initiate actions regarding the subject matter in this Title without the necessary consent of the other joint owner, unless a legal provision or in agreement with the contrary. Article 511.- Presumption of authorâ&#x20AC;&#x2122;s right.- Unless proven otherwise, for the author of a protected work, in virtue of this Book, be admitted as such before any administrative authority, it shall be enough that their name or pseudonym, or any other denomination that does not question its identity, appear on the work in the usual way. Article 512.- Protection of trade-secrets.- In every process or procedure that involves trade secrets, the corresponding authority shall adopt all the necessary measures to protect said secrets. Only the competent authority and designated experts shall have the exclusive access to the information, codes or other elements, as long as they are essential for the process. All who according to the previous paragraph have access to those secrets shall be obliged to keep absolute confidence and shall be subject to the actions in this Law and other laws governing the protection of trade secrets. In any case, the competent authority may refrain from ordering one of the parties of the process to reveal their trade secrets, when, by the opinion of said authority, the disclosure is impertinent for the purpose of the process. Article 513.- Experts on administrative processes.- In the administrative processes the experts shall be named among those registered in the list provided by the Judiciary Council CHAPTER II JUDICIAL PROCESSES ON INTELLECTUAL PROPERTY SUBJECT MATTER Section I Action due to infraction Article 514.- Type of process.- The action due to infraction of rights of intellectual property shall be processed in summary trial in accordance with the provisions of the General Organic Code for Processes. Section II Claim action Article 515.- Claim action.- When a patent, a breederÂ´s certificate, a registration of industrial

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design or layout design of integrated circuit has been applied or obtained by who had no right of obtaining it, or in harm to another person that also has said right, the damaged person may initiate a claim action requesting for the transfer of the pending application or granted right, or for the recognition as joint applicant or joint holder of the right. Likewise, when the registration of a trademark has been applied or granted in harm of another person that also had that right, the damaged person may initiate a claim action requesting to be recognized as joint applicant or joint holder of the right. This action is understood without prejudice to other actions provided for in this Book. Article 516.- Judicial means of the claim action.- The claim action shall be processed by normal means in accordance with the provisions of the general rules of procedures. Section III Precautionary measures Article 517.- Request of precautionary measures.- Precautionary measures may be requested in accordance with the General Organic Code for Processes

CHAPTER III ADMINISTRATION PROCESSES ON INTELLECTUAL PROPERTY SUBJECT MATTER Section I Competency Article 518.- Competency on intellectual property subject matter.- The knowledge of the processes referred to in this Chapter corresponds to the competent authority on intellectual property rights. Article 519.- Process on intellectual property subject matter.- The provided process provided in this Chapter, the corresponding regulation and, alternatively the general rules on administration processes shall be applied. Section II Administrative tutelage Article 520.- Administrative tutelage.- The competent authority on intellectual property rights shall exercise, ex officio or upon request, control, monitoring and penalties functions to avoid and repress infractions to rights of intellectual property. Article 521.- Measures ordered by the authority on intellectual property.- The competent authority on intellectual property rights may order the adoption of one or more of the following measures: 1. Inspection; 2. Request of information; and, 3. Sanction the infringement of rights of intellectual property. Article 522.- Inspection.- The inspections shall be made to prove the supposed infraction of the rights of intellectual properties.

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At the moment of procedure, the alleged offender shall be notified of the administrative action and, if it applies, the application on behalf of the affected person, as a requirement for its validity and execution. An inspection may not be executed without the intervention of the other part, its representative, dependent or proxy. Article 523.- Grant of the precautionary measures at the beginning of a process.- The measures shall be ordered at the moment of the appeal of the action, as long as who is appealing confirms their legitimacy to act, the existence of the infringed right and presents evidence that allows to reasonably assume the commission of the supposed infraction or its imminence. Article 524.- Bond or other sufficient guarantee.- The stakeholder may be demanded, adjusted to the circumstances, to constitute bond or other sufficient guarantee to protect the defendant and avoid abuses. The corresponding regulation shall determine the conditions that should state the bond or guarantee. The applications to precautionary measures shall have a reserved nature and shall be qualified within forty-eight hours next to its reception. Article 525.- Provision of precautionary measures.- Given the nature of the infraction, the following precautionary measures may be ordered and practice: 1. The immediate cessation of the actions constituting the alleged infringement 2. The withdrawal from commercial channels of all products resulting from the alleged infringement, including containers, packaging, labels, printed or advertising materials or other materials as well as materials and primary means used to commit the alleged infringement; 3. The suspension of the import or export of goods, materials or means referred to in the preceding paragraph, it shall be immediately notified to the customs authority; 4. The establishment by the alleged infringer of a sufficient guarantee; and, 5. The temporary closure of the alleged offender when necessary to avoid continuation or recurrence of the alleged infringement. Article 526.- Application of the precautionary measures.- Precautionary measures are applied to products resulting from the alleged infringement and materials or means. In case of alleged violation of author's right or related rights, precautionary measures shall not apply to a copy acquired in good faith and for exclusive personal use. These measures are provisional and are subject to modification, revocation or confirmation as provided in article 530. The application of precautionary measures shall be impeached in the administrative and judicial order. Article 527.- Expert on inspections.- For the practice of inspections, it may be ordered the attendance of experts and, if so, their opinion shall be issued in the same diligence, it shall be recorded in the corresponding minutes and shall serve to implement precautionary measures.

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Article 528.- Presumption of infringements of intellectual property rights.- When the infringement of intellectual property rights or the imminence of such an offense is presumed, the competent authority on intellectual property rights may require the provision of any information to establish the existence of such infringement or imminent. The information must be submitted within fifteen days from the date of notification. The lack of response to the information request shall be taken as evidence against the alleged infringer.

Article 529.- Right to a defense and trial period.- The alleged offender shall present their arguments of defense within the term of fifteen days from the time of notification of the administrative action that orders inspection or requests information. The administrative authority shall order the initiation of a trial period of fifteen days. During said term, any of the parts may request to convene an audience where they can present their plea. The audience shall be convened at the end of the trial period.

Article 530.- Reasoned resolution.- Upon expiration of the trial period or hearing mentioned in the preceding article, as appropriate, the competent authority on intellectual rights shall issue a reasoned decision. If it has been determined that there is infringement of intellectual property rights, the offender shall be punished with the closure of the establishment of three to seven days and a fine of between one point five unified basic salary, up to one hundred forty two unified basic wages attending to the nature of the infringement and the criteria for the relevant regulations. The adoption of any of the precautionary measures provided for in this Section can be made in the same resolution or confirmed provisionally ordered. The competent authority on intellectual property rights shall apply the sanctions established in this Title when they know and solve on the unfair competition.

Article 531.- Compensation for damages for revoking precautionary measures.- In cases where the precautionary measures are revoked or become ineffective for reasons attributable to the applicant, or where it is subsequently found that there was no infringement or imminent infringement of an intellectual property right, the party against which initiated the administrative process may sue the actor for the payment of compensation for damages and legal costs. Article 532.- Obstruction in the compliance of the actions.- The competent authority on intellectual property rights shall impose the same sanctions provided for in article 538 to who unjustifiably obstructs or hinder compliance acts, measures or inspections ordered by said authority, or who fails to send the information required within the term granted. Article 533.- Presumption of not having the proper authorization of the author.- After a public communication of a work protected by author's rights or related rights is announced or otherwise known without having obtained the necessary authorization, the rightholder may request to the competent authority on intellectual rights to forbid such act, which shall be ordered immediately. To this end, it shall be presumed that the organizer, entrepreneur or user does not have proper authorization due to the single complaint made by the rightholder.

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Article 534.- Help of the Police Forces.- The National Police is obliged to provide officials of the police forces to the competent authority on intellectual property rights when requested and provide assistance for the performance of their duties. Section III Border measures Article 535.- Application of border measures.- When there is enough evidence to believe that an import or export of goods will be made with counterfeit trademarks, the holder of a trademark registration may request the competent authority on intellectual property rights to suspend this customs operation. Article 536.- Border measures.- When border measures are imposed regarding the import or export of goods with counterfeit trademarks, they shall be carried out only at the request of the party, prior submission of sufficient evidence, as well as a detailed relation of the alleged infringement. The competent authority on intellectual property rights may require the deposit or guarantee to initiate precautionary measures and to protect the importer or exporter from possible abuses of rights. Border measures cannot be imposed regarding imports or exports in a non-commercial scale and those insignificant, such as the ones in the personal luggage of travelers or sent in small consignments. Border measures may also be applied when regarding pirated goods that infringe authorâ&#x20AC;&#x2122;s rights in the foregoing terms. Article 537.- Procedure. - The actions of border measures shall be presented to the competent authority on intellectual property rights according to its content, requirements, deadlines, procedures and other rules available in the relevant regulations. Article 538.- Sanctions.- When the competent authority on intellectual property rights determines by a reasoned resolution that there was an infringement of intellectual property rights, they shall penalize the offender with a fine of between one point five unified basic wages, up to one hundred forty two unified basic wages depending on the type of infringement and to the criteria established in the corresponding regulations. In the same resolution, the adoption of any of the precautionary measures provided in this Section may be determined or the confirmation of the temporary precautionary measures that have been ordered.

BOOK IV FINANCING AND INCENTIVES TO THE STAKEHOLDERS OF THE NATIONAL SYSTEM OF SCIENCE, TECHNOLOGY, INNOVATION AND TRADITIONAL KNOWLEDGE TITLE I COMMON PROVISIONS ON FINANCING AND INCENTIVES Article 539.- Promotion of the social economy of knowledge, creativity and innovation.- The Ecuadorian State shall encourage, in terms of finances, tax and administration, all stakeholders of the National System of Science, Technology, Innovation and Traditional Knowledge in order to promote activities aimed at developing the production of knowledge, creativity and social innovation in a democratic, collaborative and supportive fashion. The Ecuadorian State shall promote an interaction between the academia and the public, private, mixed, popular and solidarity-based, cooperative, associative and community-based sectors, in order to create an ecosystem where responsible research, technological

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development, social innovation and creativity can be generated, thus promoting the effective use of both human and financial resources. Article 540.- Funding Sources.- The funding source for the stakeholders of the National System of Science, Technology, Innovation and Traditional Knowledge shall come from the State General Budget, from those generated by the different stakeholders of the System, as well as other funding sources. Article 541.- Definition and type of incentives.- Incentives are motivational mechanisms or instruments intended to generate changes in the behavior of the stakeholders in the National System of Science, Technology, Innovation and Traditional Knowledge so as to achieve its goals. Under this Organic Law, incentives are classified as: financial, administrative and tax. Article 542.- Beneficiaries of the incentives provided for in this Organic Law.- The stakeholders of the National System of Science, Technology, Innovation and Traditional Knowledge who, as appropriate, are duly accredited, registered or approved by the competent authorities shall be eligible for financial, tax and administrative incentives provided for in this Organic Law or other related regulations. TITLE II FINANCING TO THE STAKEHOLDERS OF THE NATIONAL SYSTEM OF SCIENCE, TECHNOLOGY, INNOVATION AND TRADITIONAL KNOWLEDGE Article 543.- Pre-allocation for the social economy of knowledge, creativity and innovation.To ensure the financing of activities related to the System, a pre-allocation for the National System of Science, Technology, Innovation and Traditional Knowledge is created with the following resources: 1. Non-refundable contribution equivalent to one percent of the amount of payment to contractors for the services of exploration and exploitation of hydrocarbons, from the beginning of the exploitation period, prior deduction of the labor participation and income tax; 2. Non-refundable contribution equivalent to one percent of revenues for services provided by telecommunication operators in accordance with Article 92 of the Telecommunications Organic Law; and, 3. Fifty percent of one percent of the pay slips to the Ecuadorian Social Security Institute. This contribution will be mandatory for employers in the public and private sectors, upon the amount of the payrolls of unified salaries. The assessments in this article do not represent new tax charges. The funds described in numeral 2 of this article shall finance, among others, investment projects duly prioritized pursuant to the Law for the development and deployment of equipment, infrastructure, networks for connectivity, telecommunications; and, in general, information technology and communication. Pre-allocation for the National System of Science, Technology, Innovation and Traditional Knowledge in each fiscal year shall equal to at least zero point fifty-five percent of the Gross Domestic Product of the last year. Should funding sources provided for in this article are insufficient to cover the aforementioned amount, the public finances governing body shall

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assign the difference under the investment spending of the General State Budget, through prioritized investment projects pursuant to the Law. The Economic Policy Council, in the event of a crisis of the balance of payments, may reasonably reduce this pre-allocation. Article 544.- Distribution of the resources comprising the pre-allocation.- From the distribution of resources that make up the pre-allocation- The Secretariat for Higher Education, Science, Technology and Innovation, in coordination with the competent public institutions, shall establish the technical criteria and mechanisms for earmarking resources mentioned in the previous article, pursuant to the regulations issued for this purpose. TITLE III INCENTIVES CHAPTER I INCENTIVES TO STRENGTHEN HUMAN TALENT Section I Financial Incentives Article 545.- Financial incentives to Strengthen Human Talent.- The Ecuadorian State shall create funding programs and projects focused on training and development of human talent and academic mobility for researchers. For this purpose, it shall count, among others, on the following mechanisms: 1. Scholarships; 2. Educational loans; and, 3. Financial aid; Article 546.- Preferential Credit Lines to Strengthen Human Talent.- The Monetary and Financial Regulation and Policy Board shall establish credit lines under preferential conditions to strengthen human talent through public and private banks. Article 547.- Funding Programs for Development and Artistic and Cultural Promotion.- The Sectorial Ministry responsible for Culture in coordination with the Secretariat for Higher Education, Science, Technology and Innovation shall formulate funding programs for the development and promotion of artistic and cultural activities that contribute to the strengthening of the social economy of knowledge. Section II Administrative Incentives to Strengthen Human Talent Article 548.- Leave of Absence to Public Servants Performing Academic or Training Activities.-

The Ecuadorian State shall ensure the granting of leave of absence to public servants that pursue studies at the higher level or training programs. The leave of absence applies during the official time of the course of study. The Human Talent Management Unit of each institution shall determine with grounds the relevance of the course of study or training program and if the leave of absence granted shall

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be paid or not. Article 549.- National Recognition Program to Academic Excellence.- The Secretariat for Higher Education, Science, Technology and Innovation shall develop the National Recognition Program for Academic Excellence, which shall aim to encourage high academic performance of students at different levels of training. Article 550.- Academic Excellence as Evaluation Criteria in Merit-based Public Competition and Oppostition and in Scholarship Programs.- In merit-based public competition and opposition and in funding programs for activities of the social economy of knowledge, creativity and innovation, an additional scoring shall be granted to those applicants who have been worthy of recognition of the Program mentioned in the preceding article. Article 551.- Additional Scoring in Public Procurement Processes.- Natural persons, legal entities and State suppliers who spend on fourth level training for their Ecuadorian personnel or that are academic institutions receiving dual training programs, or that hire interns of public scholarship programs for at least one year, or who perform higher education internships shall receive additional points in the procurement process set forth in the Organic Law of the National Public Procurement System. Article 552.- Migratory Incentives for Professionals.- Through the regulation issued by the authority of Human Mobility, in coordination with the Secretariat for Higher Education, Science, Technology and Innovation, an abbreviated procedure for granting labor and immigration permits for foreign persons not established in the country, who are willing to work, carry out scientific and academic mobility activities, holding a professional degree of at least master's degree or equivalent and relevant experience in areas of knowledge shall be established. People living abroad may participate in the merit-based competition and opposition for admission to the career of scientific researcher and university research professor from the country of residence. Institutions of higher education and national scientific research shall have the required mechanisms to comply with this provision. Section III Tax Incentives to Strengthen Human Talent Article 553.- Tax Incentives.- The tax incentives for human talent are: 1. Deduction of one hundred percent extra for calculating the taxable base of the income tax, of the amounts intended for compensation to students in dual training and of higher education scholarships granted by the taxpayers. The maximum amount of additional deduction shall be determined by the tax authorities in coordination with the Secretariat for Higher Education, Science, Technology and Innovation; and, 2. Deduction of hundred percent extra for calculating the taxable base of the income tax, of the costs incurred for salaries of tutors appointed to the dual training by taxpayers. The maximum amount of additional deduction shall be up to the amount corresponding to three point five basic unified remunerations for each tutor.

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CHAPTER II INCENTIVES FOR RESPONSIBLE RESEARCH Section I Financial Incentives Article 554.- Programs and Projects Promoting Innovation.- The Secretariat for Higher Education, Science, Technology and Innovation and other public institutions shall create and manage funding programs and projects intended for natural persons or public or private legal entities, for the execution of responsible research projects and technological development, in accordance with the national needs and planning. These funds are not reimbursable. Interdisciplinarity and transdisciplinarity, when applicable, and the network knowledge production and management shall be factors evaluated by the governing body of the System for the allocation of competitive funds. The Secretariat for Higher Education, Science, Technology and Innovation may carry out funding programs or projects intended for national researchers and innovators who develop products or procedures that are not subject to protection through national intellectual property regime. These funding programs or financing include, among other things, the protection of such creations abroad. Other criteria, mechanisms, areas and items to be financed shall be established by the Secretariat for Higher Education, Science, Technology and Innovation through regulations and corresponding bases, applicable to each funding program. Section II Tax Incentives for Responsible Research Article 555.- Tax Incentives.- The tax incentives for responsible research are: 1. Percentage reduction of the income tax rate when taxpayers reinvest their profits in projects or programs of responsible scientific research or technological development accredited by the Secretariat for Higher Education, Science, Technology and Innovation, this applies only to the amount reinvested. In the case that the stakeholders operate in a city of knowledge, the reduction shall be ten percent; for stakeholders operating in other areas of knowledge, the reduction shall be eight percent; and for the rest of stakeholders shall be six percent. 2. Exemption from payment of income tax for taxpayers who are duly accredited by the Secretariat for Higher Education, Science, Technology and Innovation, who carry out exclusive activities on responsible scientific research or technological development autonomously and who reinvest at least ten percent of their profits in the country and in the activity in question, this exemption applies solely to the amount reinvested. 3. Exemption from taxes on foreign trade in the imports of equipment and supplies to be used in the development of scientific research projects. The categories of exempted goods shall be determined by the Secretariat for Higher Education, Science, Technology and Innovation.

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Section III Administrative Incentives for Responsible Research Article 556.- Preferential Rates for Telecommunication Services.- Public institutions responsible for regulating the rates of telecommunications services shall establish, preferential rates in the areas of knowledge generation for the Systemâ&#x20AC;&#x2122;s stakeholders who develop activites in said areas. For this purpose, the body that regulates the rates of telecommunications services, in coordination with the Secretariat for Higher Education, Science, Technology and Innovation, shall issue the corresponding regulation. Article 557.- National Recognition Program to Responsible Scientific Research.- The Secretariat for Higher Education, Science, Technology and Innovation, through the corresponding regulations, shall formulate the National Recognition Program to Responsible Scientific Research through awards, honors and other acknowledgements which shall aim to encourage basic, applied research and technological development linked to the increase of productivity, productive diversification and the satisfaction of needs. Additional points shall be granted in the categorization processes of researchers and in funding programs to the activities of the social economy of knowledge, creativity and innovation to those researchers who prove to have been worthy of recognition of the Program mentioned in the preceding paragraph. CHAPTER III INCENTIVES FOR SOCIAL INNOVATION Section I Financial Incentives for Social Innovation Article 558.- Programs and Projects Promoting Innovation.- The Secretariat for Higher Education, Science, Technology and Innovation and other competent public institutions shall create and manage programs or projects whose beneficiaries and participants shall be natural persons or public or private legal entities, whose purpose is to promote or total or partial funding for social innovation, in accordance with national needs and planning. The criteria, mechanisms, areas and items to be financed shall be established by the Secretariat for Higher Education, Science, Technology and Innovation by means of regulations and corresponding bases, applicable to each financing program. Article 559.- Seed Capital Funding Programs.- The Ecuadorian State shall establish seed capital funding programs to develop social innovation. Stakeholders of the public, private, mixed, popular and solidarity-based, cooperative, associative and community based sectors are to be eligible for this funding. The resources of these funding programs, given their nature, have a high possibility of losses up to the entirety of the investments made. Making investments or grants with funds belonging to these programs shall not change the legal nature of the stakeholders who are beneficiaries of the financing, even if the participation of seed capital funds exceeds fifty percent of the total amount invested or the shares thereof. If as a result of the program or project to promote social innovation there are products or services that may produce economic gain, the investment received shall be subject to full or

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partial return to the System so as to fund new social innovation programs ensuring sustainability in time, in accordance with the regulations issued by the Secretariat for Higher Education, Science, Technology and Innovation for such purpose. Article 560.- Funding Programs Through Venture Capital.- The Ecuadorian State shall establish funding programs through venture capital for the development of social innovation. Stakeholders of the public, private, mixed, popular and solidarity-based, cooperative, associative and community based sectors are to be eligible for this funding. The resources of these funding programs, given their nature, have a high possibility of losses up to the entirety of the investments made. Making investments or grants with funds belonging to these programs shall not change the legal nature of the stakeholders who are beneficiaries of the financing, even if the participation of seed capital funds exceeds fifty percent of the total amount invested or the shares thereof. Article 561.- Regulation for Financial Incentives for Social Innovation.- The Secretariat for Higher Education, Science, Technology and Innovation and other public bodies, within the scope of its powers, shall issue the technical and legal instruments establishing appropriate conditions for the effective use of the resources delivered as financial incentives for social innovation, respecting the rights of investors and innovators. The beneficiary projects of these incentives shall be accredited by the governing body of the System, as determined in the respective regulations issued by it. Section II Tax Incentives for Social Innovation

Article 562.- Tax Incentives.- The tax incentives for social innovation are: 1.

Exemption from payment of the down payment of the income tax for taxpayers introducing innovative goods and services to the market. Such exemption shall apply for the first two fiscal years with no taxable income. Exemption from payment of income tax shall apply only to the percentage of the costs incurred by the taxpayer in the process that produced the innovative good, and provided that the startup has had its origin in an accredited incubator. This process shall be accredited under the standards issued by the Secretariat for Higher Education, Science, Technology and Innovation.

Exemption from income tax of the income earned by taxpayers who develop exclusive activities of national open source software or national open standards where the taxpayer has registered the appropriate license pursuant to the provisions of this Organic Law. Taxpayers may benefit from this exemption for a period of five years.

Exemption from income tax of the income earned by taxpayers who develop exclusive activities of national open source hardware according to the provisions set forth in this Organic Law.

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Taxpayers may benefit from this exemption for a period of five years. 4.

Exemption from taxes on foreign trade in the imports of equipment and input to be used in the development of innovative startup businesses in accredited innovation spaces.

The respective regulation shall determine the parameters required for the application of this incentive. Section III Administrative Incentives for Social Innovation Article 563.-Accreditation of the Stakeholders of the National System of Science, Technology, Innovation and Traditional Knowledge for the Issuance of Marketable Securities in the Stock Market.- The Secretariat for Higher Education, Science, Technology and Innovation shall issue a certificate to the stakeholders of the System who carry out social innovation activities, to participate as issuers and obtain financing in accordance with the rules provided for in the Securities Market Act, through simplified mechanisms. To carry out this accreditation the Secretariat for Higher Education, Science, Technology and Innovation shall count on the collaboration of the Superintendence of Companies and Securities and other specialized public and private institutions as determined by the regulation issued by said entity for such purpose. The certification issued by the Secretariat for Higher Education, Science, Technology and Innovation shall be considered as a requirement for the authorization of the relevant public offering, by the control body of the stock market. Article 564.- Securities Issuance.- The stakeholders of the National System of Science, Technology, Innovation and Traditional Knowledge engaged in social innovation activities for the constitution or capital increase of public limited companies may do so through the public subscription of shares through public offering on the stock market, under the provisions of the Companies Act and the Securities Market Act. In the case of small and medium companies and organizations of the popular and solidaritybased economy, they may participate through the REB stock market segment. Debt securities issued by the stakeholders of the National System of Science, Technology, Innovation and Traditional Knowledge engaged in social innovation activities, may have the guarantee of venture capital funds. Article 565.- Simplified Health Registration for new products.- The governing body for health regulations shall issue a process to obtain the simplified health registration, which shall allow the initial sales of a new products before carrying out industrial production processes. Article 566.- Additional Scoring in Public Procurement Processes for Entrepreneurs.- The startup businesses that arose from an innovation accredited area, and that are Government suppliers shall receive additional points in the public procurement processes set forth in the Organic Law of the National Public Procurement System.

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TITLE IV FOLLOW-UP AND TRANSPARENCY OF THE INCENTIVES ALLOCATED TO THE NATIONAL SYSTEM OF SCIENCE, TECHNOLOGY, INNOVATION AND TRADITIONAL KNOWLEDGE Article 567.- Follow-up and Assessment of the Tax Incentives.- The assessment of the compliance with the obligations assumed by the beneficiaries of the incentives shall be provided by the Secretariat for Higher Education, Science, Technology and Innovation. The competent tax and customs authorities shall submit annually and semi-annually where applicable, to the Secretariat for Higher Education, Science, Technology and Innovation, a list of all taxpayers who have applied for incentives so to that such entity develops a record of this information. The Secretariat for Higher Education, Science, Technology and Innovation together with the competent tax and customs authorities, where applicable, may carry out inspections to verify compliance with the criteria that may cause the implementation of an incentive. The relevant regulations shall establish the execution parameters of this evaluation. Any such control shall be subsequent, agile and timely. If the beneficiary does not meet the budget established for the access to the incentives, the Secretariat for Higher Education, Science, Technology and Innovation shall analyze the severity of the identified defaults, and shall start adopting the procedures to enforce the relevant actions, without detriment to the exercise of the powers of the competent tax and customs authorities. GENERAL PROVISIONS FIRST.- For the application of the provisions of this Organic Law it shall attend to what is established under Article 425 of the Constitution of the Republic as well as the international treaties, agreements and conventions signed by Ecuador. SECOND.- The provisions established herein referring to intellectual property shall be applied as long as they are not contradicting or opposing the commitments adopted by Ecuador in its capacity as a Member Country in the Andean Community Decisions. THIRD.- In public institutes of scientific research, teaching universities with research undertakings, and public corporations whose main activity is related to scientific research, shall be incubators for technology-based undertakings and centers for technology transfer, according to the regulations issued by the Secretariat for Higher Education, Science, Technology and Innovation. Accredited transfer centers shall have the same tax exemptions and deductions as those of their affiliated entities. FOURTH.- The budgetary balance of cash and cash equivalents of public universities and polytechnic schools, that could be generated by not yielding the resources of their budgets at the end of the fiscal year, shall be mandatorily incorporated in the next fiscal year according to the following criteria: 1. If there is an outstanding commitment for payment within the framework established under Articles 116 and 117 of the Organic Code of Planning and Public Finance, this amount shall be returned to the corresponding university or polytechnic school by the Ministry of Finance, for the purpose of complying with the acquired obligations.

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2. The balance in cash and cash equivalents that do not belong to a outstanding payment obligation shall become part of an allocation, which shall form a fund for public universities and polytechnic schools to finance investment projects aimed at improving the quality of the Higher Education System. Resources generated by self-management, internal and external credits, those assigned to hiring teaching staff and those originating from international cooperation shall not be part of this allocation and shall be returned to the corresponding university or polytechnic school by the Ministry of Finance. To this end, at the beginning of each fiscal year the Ministry of Finance shall report to the Secretariat for Higher Education, Science, Technology and Innovation and to the Secretariat for the National Planning and Development System, the amount of the balance in the cash and cash equivalents not applicable to an outstanding payment obligation differentiating the origin of the resources. The Executive Branch through the Competent Organism shall deliver to the higher education institutions within the first semester of the corresponding year the resources allocated under the Recalculation of Value Added Tax and Income Tax as allocations to Permanent Fund for University and Polytechnic Development, FOPEDEUPO, as well as balances from cash and cash equivalents to be reintegrated to them. This fund shall be managed in accordance with the provisions of this Organic Law and corresponding regulations. FIFTH.- The prioritization and financing of scientific research projects shall be exclusively authorized by the Secretariat for Higher Education, Science, Technology and Innovation. For projects of higher education institutions financed with their own resources from: selfmanagement, internal and external credits and those originating from international cooperation, shall not be subject to the first paragraph of these provisions and shall not need any authorization. SIXTH.- The annual investment plan of public scientific research institutes as well as its restructuration shall be guaranteed by the Secretariat for Higher Education, Science, Technology and Innovation. SEVENTH.- According to corresponding budgetary availability public scientific research institutes shall hire for their staffs scholarship winners who have written theses or research projects at such institutes. The Secretariat for Higher Education, Science, Technology and Innovation shall establish the requirements and processes for including them. EIGHTH.- The intervention zone of the Yachay City of Knowledge is hereby declared a territory of knowledge. According to what is established under Article 260 of the Republic, the Yachay Public Corporation is hereby empowered to assume responsibility for territorial development in the intervention zone in the Yachay City of Knowledge. Based on this joint exercise of responsibilities with the cooperation and complementarity with the Municipality of San Miguel de Urcuqui, the Yachay Public Corporation may execute all of the acts and contracts necessary for proper territorial area organization for the affected area,

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sanitation, roadwork, and disposal of solid waste, among others. NINTH.- The Regional Consulting Committees for Planning of Higher Education provided for under Article 194 of the Organic Law for Higher Education shall work as a single unit together with the Regional Consulting Committees for Planning of Higher Education, Science, Technology, Innovation and Traditional Knowledge, therefore, the secondary norms applicable shall be modified to comply with this provision. TENTH.- Public institutions shall perform a random control of their assets after their acquisition to verify that they are not subject to planned obsolescence. In order to apply this norm, the existence of planned obsolescence shall be construed as a group of techniques whereby a manufacturer, importer or distributor of assets in the creation or through modification of a product deliberately and unjustifiably reduces its durability for the purpose of increasing its replacement rate. The public agency liable of public purchases in coordination with INEN shall regulate the application of this provision. In cases in which the existence of planned obsolescence has been determined, the vendors of said assets shall be permanently barred from executing contracts with the State without prejudice to civil liability and administrative and criminal penalties as pertinent in the application of the Organic Law on Consumer Protection, Organic Law for the Regulation and Control Market Power, and the Comprehensive Organic Criminal Code, respectively. The effects indicated in the paragraph here above shall be generated when planned obsolescence in business between private individuals has been proven through the corresponding agencies. ELEVENTH.- Through the Ministry of Sectors responsible for Culture, the State shall establish programs for development, promotion, financing and diffusion of artistic production in accordance with the principles set forth herein and other applicable laws, and shall prioritize independent production and not commercial. TWELFTH.- The State shall establish policies and strategies aimed at repatriating Ecuadorâ&#x20AC;&#x2122;s genetic patrimony unduly appropriated by third parties, and shall achieve reparations for the individuals who have been subjected to scientific experimentation through practices that violate human rights. THIRTEENTH.- Legal persons of private law that receive public resources based on the financial incentives established under this Organic Law shall use those resources for the purpose of strengthening the social economy of knowledge, creativity and innovation. Their contracts shall observe the principles of efficiency, effectiveness, quality, technological validity, fair treatment, transparency, publicity, evaluation and planning. However, they shall not be subject to the norms and procedures applicable under the National System of Public Procurement. FOURTEENTH.- The Secretariat for Higher Education, Science, Technology and Innovation shall appoint the highest authority of the competent entity for matters of intellectual rights.

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FIFTEENTH.- Public institutions shall recycle their electronic waste by using the services provided by corporations that have the technical capacity under the norms established for this system. Economic resources generated from recycling electronic waste from public institutions shall be assigned to finance research projects in science, technology and innovation. SIXTEENTH.- Codes of ethics and bioethics issued or agreed in the future in the country shall follow the principles established in the National Code of Ethics. Norms regulating the codes of bioethics shall be enforced as long as they are not in conflict with this Organic Law. SEVENTEENTH.- The Secretariat for Higher Education, Science, Technology and Innovation shall provide the necessary technical support for structuring and complying with the duties of the National Organization for Ethical Scientific Research as established under Article 15 of this Organic Law. EIGHTEENTH.- Investment agreements executed under the Organic Code of Production, Trade and Investment shall incorporate technology transfer as a parameter for the application of the incentives established under the Law for new productive investment, in accordance with the regulations issued by the Secretariat for Higher Education, Science, Technology and Innovation. NINETEENTH.- Technology Transfer Centers created by higher education institutions shall be oriented towards the strengthening of their sponsoring institution, through innovation, technological development and other relevant activities. TWENTIETH.- Natural person or legal entities, local or foreign, who are holders of intellectual property rights, are obliged to exhaust all stages within the Ecuadorian jurisdiction, regarding executed or signed acts and contracts; and also regarding the resolution of disputes over interpretation, application and execution of the measures adopted by the regulatory and control bodies; and in reference to the compliance of the rights and obligations derived from the application of this Organic Law or an international treaty. TWENTY- FIRST.- If an infringement action deals with a patent whose object is a procedure for obtaining a product, it shall be the defendantâ&#x20AC;&#x2122;s duty to prove that the procedure they have used to obtain the product is different from the procedure protected by the patent that is the subject of the action. Towards this end, it shall be presumed unless proven otherwise, that all identical products produced without the consent of the holder of the patent has been obtained by using the patented procedure, if: 1. The product obtained with the patented procedure is new; and, 2. There is a considerable possibility that the identical product has been manufactured by the patented procedure and the holder cannot establish via reasonable efforts which has been the procedure that was actually used. At the submission of proof to the contrary, the legitimate interests of the defendant shall be kept in mind regarding the protection of trade secrets. TWENTY-SECOND.- In compliance with their charters, the Technology Transfer Centers and Research Centers may have managing and financial autonomy.

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At the end of each fiscal year the Technology Transfer Centers of universities and polytechnic schools shall transfer to the institution of higher education that formed them, all the profits and benefits earned by their activities. Both tangible and intangible assets processed or administered by a Technology Transfer Center shall be the property of the university or polytechnic school that formed them, and shall have them at their disposal according to institutional needs. TWENTY-THIRD.- In the cases where benefits are generated, in projects or initiatives financed totally or partially by the Ecuadorian State, the latter shall have a participation in the projects, in accordance with the percentages or the conditions established in the corresponding regulations. TWENTY-FOURTH.- In the application of the norms of this Organic Law, the principle of responsible autonomy and solidarity enjoyed by the countryâ&#x20AC;&#x2122;s universities and polytechnic schools shall be observed and respected. TRANSITORY PROVISIONS FIRST.- Until the Secretariat for Higher Education, Science, Technology and Innovation issues its respective norms for the certification of receiving entities for dual formation, said formation may continue to be executed without the necessity of this certification. SECOND.- The certification of labor skills shall be implemented in a progressive manner. THIRD.- The procedures established regarding accreditation, categorization, degree, record and registration of scientific researcher that are being processed, shall be valid for all matters that are not opposing the regulations set forth in this Organic Law and the regulations issued by the Secretariat for Higher Education, Science, Technology and Innovation. FOURTH.- In a maximum term of six months starting from the effective date of this Organic Law, public institutions, public and private institutions of higher education, public research centers and institutes that have information regarding traditional knowledge in their archives, shall send all pertinent documentation to the Secretariat for Higher Education, Science, Technology and Innovation, for it to be consolidated and recorded by the aforementioned institution within the National System of Information on Science, Technology, Innovation and Traditional Knowledge. FIFTH.- The Ecuadorian Institute of Intellectual Property, as well as all the institutional system created through the Law of Intellectual Property, published in the Official Register Supplement No. 426 on December 28, 2006, shall exist until the corresponding Executive Decree establishes the new public institution responsible for managing intellectual property and protecting traditional knowledge, and other attributes of the institutional system, including Committees of Intellectual Property, Industrial and Plant Variety; and, Copyrights, part of the Executive Branch and assigned to the Secretariat for Higher Education, Science, Technology and Innovation, in a term that may not exceed 90 days from the effective date of this Organic Law. Likewise, until the institution responsible for managing intellectual property and protecting traditional knowledge is duly structured, all of the provisions and functions herein assigned shall be exercised by the head of the Ecuadorian Institute of Intellectual Property or its

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delegates, except for those activities currently exercised by the Committees of Intellectual Property, Industrial Property and Plant Variety; and, Copyrights according to the Law of Intellectual Property. The new public institution responsible for managing intellectual property and protecting traditional knowledge shall be the legal successor to the Ecuadorian Institute of Intellectual Property assuming its assets, budget, rights and obligations including labor obligations, according to the systems applicable to each case. All of the procedures that are determined according to the Intellectual Property Law shall continue their process and terms as established in that Law. However, those procedures that are being determined from the effective date and promulgation of this Organic Law shall be made according to the established norms set forth herein; and regarding that which is not mentioned under any law shall temporarily apply the Intellectual Property Law and other norms, until the respective regulations are issued. SIXTH.- The Technology Transfer Centers created by universities, polytechnic schools, higher education and technology institutes legally recognized and currently operating, shall register or accredit according to the norms provided in this Organic Law. SEVENTH.- Public corporations, whose objective allows them to do so, shall be responsible for the acquisitions of imported products and services required by the stakeholders in the National System of Technology, Innovation and Traditional Knowledge, as well as those assets whose sale and trade is restricted by Law or by order of the competent authority, and which are necessary for these activities. EIGHTH.- The obligation of public and private universities and polytechnic schools to provide free of charge and wireless internet connection to the academic community in all areas of their campus and extensions, shall be complied within a period of one year after the promulgation of this Organic Law, which may be extended by one time only for up to one year, due to causes duly justified by the applicant, for which the Secretariat for Higher Education, Science, Technology and Innovation shall issue the respective resolution for this case. NINTH.- Until the Secretariat for Higher Education, Science, Technology and Innovation implements the accreditation process for scientific researchers, scientific research entities, as well as public or private entities that perform activities like innovative business incubation, acceleration and habitat for innovative and technology transfer businesses, may participate in obtaining incentives established in Book IV of this Organic Law. The Secretariat for Higher Education, Science, Technology and Innovation shall establish temporary requirements for obtaining said incentives. If a natural or juristic person has obtained incentives and later on is not accredited by the Secretariat for Higher Education, Science, Technology and Innovation, they do not have to return any of the granted incentives; however, they may not participate in obtaining incentives until they comply with the accreditation requirements. TENTH.- Until the Secretariat for Higher Education, Science, Technology and Innovation implements the accreditation process, the accreditation made by the Council of Evaluation, Accreditation and Quality Assurance in Higher Education shall be valid for universities and polytechnic schools for the application of the incentives provided in this Organic Law.

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ELEVENTH.- All registration of professional titles and ratings shall become part of the public register of competence certificates kept by the competent public authority. TWELFTH.- Pre-allocations to the National System of Science, Technology, Innovation and Traditional Knowledge shall be in force starting from the fifth year after the effective date of this Organic Law. During this period the Central Government shall comply with its financing in a progressive form. THIRTEENTH.- In a term of one hundred and eighty days, the entity responsible for setting custom duties shall issue the corresponding norms to make an effective tax exemptions on foreign trade for equipment and supplies import to be used in the development of scientific research projects. FOURTEENTH.- The intervention zone of the City of Knowledge “Yachay” shall be made up of the land declared of public use for this purpose and included in the city’s master plan. The Board of Directors of YACHAY EP shall approve the Master Plan of the City of Knowledge, and this may not be modified after December 31, 2016. FIFTEENTH.- Starting from the effective date of this Organic Law, the Public Conservatories for Music and Arts located in the cities of Quito, Cuenca and Loja shall become campus of the University of the Arts. For this purpose, once this Organic Law has been issued, the University of the Arts shall submit to the Higher Education Council the corresponding files of the creation of campuses, complying with the provisions of the Regulations for the Creation of Campus, Extensions and Academic Units for Universities and Polytechnic Schools. The Public Conservatories shall continue to be responsible for degrees in technologies until the Higher Education Council issues a resolution for creating campuses of the University of the Arts. Once the Higher Education Council issues the approval for the creation of the campuses, the University of the Arts shall assume the limit of current quotas for technological degrees at the Public Conservatories until the Higher Education Council approves the re-designing of such degrees as licentiate degrees. The academic staff and the administrative public employees who worked with appointments in the aforementioned Conservatories of Music and Arts shall become part of the University of the Arts, keeping all of their rights established under the law, provided that they comply with the requirements established in the Organic Law on Higher Education and the Public Service Organic Law and other applicable norms. A period of three years after the effective date of this Organic Law shall be provided to the academic staff with appointments to obtain a fourth level degree, as established under the Organic Law on Higher Education and the Public Service Organic Law. The staff working under occasional service contracts that were working at the Conservatories of Music and Arts may become part of the Universities of the Arts based on the institutions’ needs and interests. The assets of the Conservatories of Music and Arts shall become part of the assets of the University of the Arts.

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In any case, the assets, teaching staff and administrative personnel of the following Conservatories: Nacional de Música in the city of Quito, Jose Maria Rodriguez in the city of Cuenca and Bustamante Celi in the city of Loja in their average level shall keep their current legal structure. In the processes of evaluating the University of the Arts, during the first five years of its operation, CEAACES shall not take into account their extensions mentioned in the paragraph here above, said term may be extended by CEAACES for one time only, up to five additional years. SIXTEENTH.- The Higher Education Council shall establish mechanism that guarantee a continuity in the studies of individuals who have initiated a degree at the Conservatories that will become part of the University of the Arts prior the effective date of this Organic Law, likewise, the Council shall establish a transition plan for the technological technical offer to a third level degree. SEVENTEENTH.- The governing body of the National System of Public Procurement, in coordination with the Secretariat for Higher Education, Science, Technology and Innovation, shall issue the corresponding resolutions to establish the grading parameters recommended for the implementation of the incentives of additional points in the public procurement processes. EIGHTEENTH: In a period of ninety days the Ministry of Labor in coordination with the Higher Education Council shall issue the necessary normative to regulate the operational aspects and other general conditions under which the system of internships shall be developed, until said normative is issued the provisions in the Law of Internships for the business sector shall be applied. NINETEENTH: In a period of three hundred and sixty days, the Secretariat for Higher Education, Science, Technology and Innovation and the National Environmental Authority shall coordinate the procedures for authorizing the access to biological and genetic resources and its derived products. TWENTIETH: The Executive Branch shall have a period of one hundred and eighty days to issue regulations for the application of this Organic Law, such term may be extended by the same period of time for one time only.

AMENDED PROVISIONS FIRST.- In the Organic Internal Tax Regime Law amend the following: 1.1 In Article 9, after number 20), include the following sections: “21) For income earned by taxpayers duly accredited as researchers by the Secretariat for Higher Education, Science, Technology and Innovation, performing exclusive scientific responsible research activities in an autonomous manner and who reinvest at least ten percent of their profits in the country and in the above-mentioned activity, this exemption shall apply only to the reinvested amount.” 1.2 Substitute in Article 10 the phrase, “(…) Deductions.- In general, in order to determine the taxable base of this tax, those expenses disbursed for the purpose of obtaining,

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maintaining and improving nonexempt income from Ecuadorian source shall be deducted (…)” with the following: “(…) Deductions.- In general, in order to determine the taxable base of this tax, those expenses and investments made with the purpose of obtaining, maintaining and improving the nonexempt income from Ecuadorian source shall be deducted (…)” 1.3 In Article 10, after Section 18) include the following sections: “19) In the calculation of the taxable base of the income tax an additional one hundred percent shall be deducted in amounts assigned to the compensation of the students with dual education, on behalf on the taxpayers duly accredited by the competent authorities registered in the Secretariat for Higher Education, Science, Technology and Innovation, as receiving entities depending on the case. The regulations shall establish the technical and formal parameters, to be followed in order to access this additional deduction. “20) In the calculation of the taxable base of the income tax an additional one hundred percent shall be deducted in amounts assigned to wages, salaries and remunerations in general; social benefits; and employee profit sharing paid to the assigned tutors for dual education, on behalf of taxpayers duly accredited by the competent authorities registered in the Secretariat for Higher Education, Science, Technology and Innovation as receiving entities depending on the case. The regulations shall establish the technical and formal parameters, to be followed in order to access this additional deduction. 1.4 Add the following article after Article 37: “Article 37.1: Reduction of the income tax rate for a responsible and sustainable economic development of science, technology and innovation. Taxpayers who reinvest their profits in the country, whether it is in their own business or in a different one, provided that the business receiving the investment are engaged in technological development, investigation and social innovation, may obtain a deduction of ten (10) percentage points in the tariff of the income tax, on the amount reinvested, under the conditions established in the regulations set forth herein.” 1.5 Add the following section in Article 41, after Section i): “j) Exemption from payment of income tax advance payment for taxpayers who launch their innovative goods into the market in duly accredited processes by the Secretariat for Higher Education, Science, Technology and Innovation that originate from accredited incubators. This incentive shall apply only during the fiscal years in which no taxable income is earned.” 1.6 Add the following after Article 9.2: “Article 9.3: Income tax exemption on income earned by tax payers who exclusively perform activities of national free software when the taxpayer has registered for its respective license in accordance with the provisions established under the Organic Law of the Social Economy of Knowledge, Creativity and Innovation. Taxpayers may benefit from this exemption for a maximum term of five years. The respective regulations shall define the necessary parameters for applying to this incentive.”

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Article 9.4.- Income tax exemption on income earned by tax payers who exclusively perform activities of national free hardware when the taxpayer has registered for its respective license in accordance with the provisions established under the Organic Law of the Social Economy of Knowledge, Creativity and Innovation. Taxpayers may benefit from this exemption for a maximum term of five years. The respective regulations shall define the necessary parameters for applying to this incentive.” SECOND: Amend in the Organic Code of Production Trade and Investment, the following: 2.1 Add the following section in Article 125, after section m) of the Organic Code for Production, Business and Investments: “n) Equipment and elements used exclusively for the development of research or social innovation projects, by natural or juristic persons, private or mixed corporations, cooperative associations or communities, national or foreign, that are duly accredited by the Secretariat for Higher Education, Science, Technology and Innovation. The same benefit applies to natural or juristic persons who donate these imported assets to researchers, research institutes, and technology development centers, and to taxpayers working exclusively in social innovation activities, recognized by the Secretariat for Higher Education, Science, Technology and Innovation.”

2.2 In Article 46 substitute the phrase “(…) with the exemption of the payment of customs duties for foreign goods entering in such zones, for compliance with the authorized processes (…)” by the following: “(…) with the exemption of the payment of taxes on foreign trade except customs service fees of foreign goods entering such zones, for compliance with the authorized processes (…)” 2.3 Add the following paragraph to Article 43 of the Organic Code for Production, Business and Investments: “Exceptions to this prohibition are the managers and operators of the special zones for economic development of the technological type, when regarding agencies from the public sector.” 2.4 Replace section c) of Article 54 for the following: (…) Authorize the creation and supervise the development of specialized infrastructure for this matter such as: MIPYMES development centers and other centers required for developing, facilitating and promoting a productive development of these companies in accordance with the pertinent laws for each sector; 2.5 Add the following General Provision: “EIGHTH: The governing body of telecommunications policies and policies of information of society shall be responsible for defining the economic activities relevant to technologies of information and communication, applied software among others so that they are subject to the incentives mentioned in this Organic Law, as specified in section two point two, of the second amended provision of the Organic Law of the Social Economy of Knowledge, Creativity and Innovation.”

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THIRD: Amend the Organic Law of the Public Procurement National System as follows: 3.1 Add the following clause after section 1 of Article 8: “Excluded from this law is the hiring of services and asset acquisition on behalf of the stakeholders of the National System of Science, Technology, Innovation and Traditional Knowledge, duly accredited, which have been acquired with resources originating from funds of public risk capital or public seed capital.” FOURTH: Amend the Organic Law of Territorial Organization, Autonomy and Decentralization as follows: 4.1 Eliminate Section f) of Article 32. 4.2 After section m) of Article 42, of the Organic Law of Territorial Organization, Autonomy and Decentralization, add the following section: “n) Determine the policies for research and innovation of knowledge, development and technology transfer necessary for the provincial development, within the framework of national planning.” FIFTH: Amend the Monetary and Financial Organic Code as follows: 5.1 Eliminate the Eleventh General Provision. SIXTH: Amend where it says “Ecuadorian Institute of Intellectual Property” with “Secretariat for Higher Education, Science, Technology and Innovation” in the structuring of associate agencies established under the norms in force. SEVENTH: Amend the Organic Law on Higher Education as follows: 7.1 In Article 148 replace the phrase, “(…) within the framework established in this Law and in the Intellectual Property Law (…)”, with the following: “(…) within the framework established under the Organic Law of the Social Economy of Knowledge, Creativity and Innovation (…)” 7.2 Eliminate the last paragraph of Article 148. 7.3 Substitute the text of Article 117 with the following: “Article 117.- Typology of universities and polytechnic schools.- The universities and polytechnic schools shall be classified according to the scope of the academic activities they perform. In order to establish this classification, the distinction between teaching institutes with research and institutions oriented towards teaching shall be considered. The type of degrees or programs these institutions may offer will be established based on their typology, without prejudice that only teaching universities with research may offer Ph.D. degrees or their equivalent. 7.4 Add the following as the final paragraph of Article 65:

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“In case of higher technical institutes, technological institutes, pedagogical institutes, institutes of arts and conservatories created by a university or polytechnic school, when they are academic units of higher education institutes, their governing authorities shall be appointed by the highest of the maximum academic body of higher education or by the dean of the university or polytechnic school they belong to, as established under the corresponding bylaws.” EIGHTH: Amend the Law of Real Estate Brokers as follows: 8.1 Delete from Article 3, Paragraph c) the phrase “and obtain the corresponding certificate from the Ministry of Education, depending on the case.”

8.2 Repeal Article 9.

NINTH: Amend the Public Service Organic Law as follows: 9.1 Substitute paragraph b) from Article 28, with the following: “b) Depending on the needs and interests of the institution, and prior authorization from the appointing authority, to study regular postgraduate degrees at higher education institutions, for the term that the academic program lasts, provided that the public employee has completed at least two years of service in the institution where they work.” 9.2 Add the following paragraph after the last paragraph of Article 65: “During the qualification of merit and opposition contests, additional points shall be awarded to the applicants who demonstrate that they have received recognition within the National Recognition Program of Academic Excellence.”

TENTH: Substitute rule d) to review and resolve on the violation of trade secrets established under Article 27, Paragraph 7 of the Organic Law for Regulation and Control of Market Power with the following: “d). Activity relevant to the approval of trading products of any nature by a competent public authority exercising its legal mandate does not imply an unfair commercial use or disclosure of data or other information that may have been submitted for this purpose. Furthermore, the competent public authority shall protect this data and other information against disclosure, except when it is necessary to protect the public or to adopt measures to guarantee the protection of the data against its unfair commercial use.”

REPEALED PROVISIONS FIRST: Repeal the Law of Intellectual Property published in the Official Register Supplement No. 426 dated December 28, 2006. SECOND: Repeal the entire regulatory and administrative base in regulations, agreements, resolutions and other legal norms that oppose this Organic Law.

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THIRD: Repeal Rule c) to review and resolve on the violation of trade secrets established under Article 27, Paragraph 7 of the Organic Law for Regulation and Control of Market Power. FOURTH: Repeal the Law of Internships in the Business Sector published in the Official Register No. 689 dated May 5, 1995. FINAL PROVISIONS FIRST: Industrial property rights and plant variety rights are considered as personal property exclusively for the creation of taxes on them. However, a decree may be issued forbidding the transfer of such rights subject to the provisions set for in the Civil Code and the General Organic Code of Processes as well as their embargo and sell-off or sale in a public auction. SECOND: The contribution of one percent of the pay forms to the Ecuadorian Social Security Institute referred to as a pre-allocation under this Law, is considered as the contribution provided for under the eleventh general provision of the Monetary and Financial Organic Code. THIRD: This Organic Law shall become effective since its publication in the Official Register.

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