When a company prepares to grow—whether by expanding into new markets, licensing its brand to a local partner, or seeking investors to finance that expansion—it typically reviews its financials, corporate structure, and tax situation carefully. Intellectual property rarely receives the same level of attention: it’s often treated as a secondary matter, almost an administrative task or a legal expense rather than a business asset. And it only gets the attention it deserves when the oversight has already become a problem: a brand that can’t be used in the country the company wants to expand into because someone else has already registered it, a poorly drafted licensing agreement, or an investor who, during due diligence, can’t find the documents proving that the software or technology actually belongs to them.
More than once I’ve had to explain to a client that the problem they’re facing isn’t new, but rather has been simmering for years. Behind an unregistered trademark, a license without clear clauses, or software without a defined owner, there’s almost always the same origin: a process that was postponed month after month, a contract that no one signed because “it was already known” how things would be handled. These are oversights that don’t generate immediate consequences, and that’s precisely why they tend to go unresolved: the risk accumulates silently, without a deadline or visible urgency, until the moment of expansion arrives, and the company discovers that it built value on a foundation that wasn’t as solid as it seemed.
When the brand is no longer yours in the country you want to reach
A Paraguayan company that successfully exports its products decides, after several years of local operation, to expand into a neighboring market. It has a well-established brand, recognizable customers, and a carefully crafted identity. What it lacks is trademark registration in the target country. And when it finally applies, it encounters two equally complicated scenarios: either someone has already registered the exact same trademark, or a similar trademark from a third party exists, creating a risk of confusion and preventing registration. In either case, the company faces an unexpected barrier, just as it has invested in building its presence in this new market.
This happens more often than you might think, and not necessarily due to bad faith on the part of third parties. As a general rule in most trademark registration systems in the region, trademark rights are acquired upon registration, not through use in another country. It doesn’t matter how many years a company has operated under that name in its home market: that history alone does not equate to having the trademark registered in the destination country, nor does it replace such registration with the relevant authority.
However, there is a tool that many companies are unaware of that can prevent precisely this problem: the right of priority provided for in the Paris Convention. If a company has already applied to register its trademark in its country of origin, it has six months from that date to file the same application in any other member country of the Convention (which includes the vast majority of countries in the region), invoking that priority. This means that even if a third party applies for the same trademark in the destination country within that period, the original application takes precedence, as if it had been filed on its initial date. It is a brief window of opportunity, but one that many companies miss simply because they are unaware of its existence. In addition, the Convention provides another protection: if the trademark is already registered in the country of origin, the destination country must accept it “as is” (in its original form), with a few specific exceptions, although this does not replace the need to register it there.
But when that priority window has closed, or when the obstacle is an identical or similar trademark already registered, the company in this situation generally has a few alternatives, none of them simple. It can negotiate with the original trademark holder, usually to buy the trademark or agree to its transfer, which almost always involves paying a high price for something the company considered its own even before the registration existed. It can initiate legal proceedings to try to regain the use of the name, with the costs, time, and uncertainty that any litigation entails. And in the most extreme cases, if none of these avenues succeed within the timeframe the business needs, the company may be forced to abandon its entry into that market under its own brand, or simply postpone its expansion. In any of these scenarios, what was intended as a planned expansion becomes an obstacle that could have been avoided with the right advice to confirm the availability and feasibility of registration in that country, in the classes relevant to its business, before making the decision to enter, not afterward.
Licensing the brand without clear instructions
Some companies, to expand into a new market, don’t open their own operation: they prefer to license their brand to a local distributor, who uses it to sell their products or replicate their business model in that country. It’s a faster route with less investment than establishing a subsidiary, and it works well as long as the underlying licensing agreement is well-structured. The problem arises when that agreement is informal, generic, or simply doesn’t exist, because the relationship began on a foundation of trust and it was “already understood” how things would be handled.
A poorly defined licensing agreement leaves unanswered questions that, sooner or later, lead to conflict. Does the licensee have exclusivity in that country, or can the company license it to others in the same territory? Can the licensee expand into neighboring countries with the same brand, or is its use limited to a specific market? What quality standards must be met when using the brand, and who ensures compliance? Without clear clauses regarding territory, exclusivity, and quality control, the licensor loses significant control over its own brand, even though it remains, on paper, its owner.
The most serious risk arises when the exit strategy is also not clearly defined: under what conditions the license can be terminated, with what notice, and what happens to the use of the brand once the relationship ends. Without this clarity, the company may be tied to a partner it no longer wishes to work with, unable to regain control of its brand in that market without litigation. And in the most extreme cases, if the licensee has registered the trademark in their own name in that country (something a well-drafted contract should expressly prohibit), the company may lose control of its own brand in the market it helped to build.
Licensing a brand isn’t just about authorizing its use; it’s about defining, in writing, the scope of that authorization and what happens when the relationship ends. What was intended to be a streamlined way to expand without significant investment can become a source of conflict when these terms weren’t agreed upon with the same seriousness as any other core business asset.
Software without a clear owner or clear rules of use
The third scenario, which is becoming increasingly common, occurs in technology-based companies undergoing investment or acquisition processes. It is during due diligence, when an investor or buyer reviews the business’s assets in detail, that something previously unquestioned is put to the test: the ownership of the software that underpins the operation.
The situation repeats itself with variations, but the core issue remains the same. The code was developed by different people over time (employees, a freelancer hired on a case-by-case basis, an external software factory, co-founders who later left), and there was never a formal agreement transferring the rights. The company uses it, exploits it, and builds its business model on it, but it cannot clearly demonstrate with documentation that it is the sole owner. As long as there isn’t a demanding third party reviewing those documents, the problem remains hidden.
The mistake is assuming that ownership is taken for granted. When development is done by an employee under a dependent employment relationship, there is usually a legal presumption in favor of the employer. When the programmer is a freelancer hired on a case-by-case basis, however, it is a commissioned work, and its ownership is governed, above all, by what the parties have agreed upon. Something similar occurs when the development is done by a co-founder of the company, in their personal capacity, before or outside of any dependent employment relationship: in that case, the software belongs to them, unless there is an express assignment in favor of the company, or the company has acted as what is known as the “producer” of the development. And it is precisely in this role of producer that the case of a software factory deserves special attention, because it often acts in that capacity (organizing, coordinating, and commissioning the development), and in that capacity, there may be a legal presumption in its favor if nothing has been expressly agreed upon in this regard. This means that, depending on who commissioned the development and under what legal structure, ownership can end up in hands other than those the company assumed, even without any malicious intent on anyone’s part. The company may have paid for the work, but paying for the development does not, in itself, equate to ownership of the final product.
Hence the importance, in any of these scenarios, of having a rights assignment agreement that clearly establishes ownership. But the mere existence of such an agreement is insufficient: it must precisely define three things. First, the scope of development, that is, which part of the software or technology is actually covered by the assignment. Second, ownership, who owns the rights once the development is complete. And third, exploitation, what the company can do with the software: use it, modify it, sublicense it, sell it. None of these points are implied, and exclusivity, in particular, must be expressly agreed upon. If the agreement does not address it, the author retains the right to continue exploiting the same development, or even to assign it to another party, without the company being able to prevent it.
Ordering this after the software has already been created is risky, expensive, and in some cases, simply impossible: it depends on the author’s willingness to sign a contract they didn’t sign at the time. And it’s precisely during due diligence that this lack of foresight comes to light. Faced with a lack of clarity regarding ownership, the buyer or investor doesn’t assume everything is in order; they assume the opposite risk. They request clarifications, make closing the deal contingent on resolving the missing agreements, or simply adjust the valuation downwards to compensate for the uncertainty. What was a core asset for the company ends up weighing heavily as an unrecognized liability, right in front of the very entity that was going to evaluate it most rigorously.
Build over years, lose in a moment of carelessness
These three scenarios share the same underlying logic: intellectual property is neglected and postponed. Trademark registration in the target market is delayed, as is securing the terms of a license in writing, and formalizing the transfer of rights to the software that underpins the business. And this postponement continues until the moment the company is most vulnerable: facing an already occupied foreign trademark, a broken relationship with a licensee partner, or an investor scrutinizing every detail. In all three cases, the window for calmly resolving the problem has already been lost.
What distinguishes companies that navigate these times smoothly is not simply luck, but having treated their intellectual property as part of their business strategy from the outset, not as a formality to be dealt with when there’s spare time. Registering on time, licensing with clear terms, and assigning rights in writing are decisions that must be made long before expansion, investment, or a sale makes them urgent. Because intellectual property, like any strategic asset for expansion, is built over years. And it can be lost with a single oversight.
By Miriam Teresa Colmán, lawyer at Altra Legal
