The basic structure of IP litigation in Mexico (First part)

 

A very common complaint from IP owners is the extremely long time it takes to obtain a final decision in an IP infringement action or a patent invalidation or trademark cancellation case.

The purpose of this post is explaining the structure of IP litigation in Mexico, and of the appeals system in this field of law; why appeals have been taking so long in being decided; why they may take longer; why the courts appear to be so unreasonably formalistic about the authority of the officials of the Mexican Patent and Trademark Office that decide cases; and what can we expect in the close future.

In Mexico, most IP litigation involves administrative instances, such as the Mexican Patent and Trademark Office.

It is possible to file criminal charges in connection to trademark forgery and illegal reproduction of works protected by copyright, and file actions for damages with a civil court, and the Mexican Patent and Trademark Office would have little involvement, if any, in these sorts of procedures.

However, administrative cases involving infringement and invalidation of IP rights largely outnumber the matters currently handled by the General Attorney’s Office and the criminal and civil courts, thus this post with make only reference to the administrative litigation.

Having said the above, the basic structure of an IP litigation process is the following:

A. The first instance is the Instituto Mexicano de la Propiedad Industrial or Mexican Patent and Trademark Office (MPTO).

The MPTO not only issues patents and registers trademarks; it also has authority to decide infringement actions involving patents, trademarks and some cases of copyright, and the invalidation or cancellation of patents and trademarks.

An infringement or cancellation or invalidation action involves a full administrative trial, with the filing of a complaint, and answer, filing and review of evidence, final arguments and a decision.

The MPTO typically takes from 10 to 18 months to decide a trademark cancellation/infringement action. A patent infringement/invalidation action may take from one to three years, sometimes more, if the substantive matter of the patents is complex, as in the case of biotechnology.

The MPTO may not award damages or attorneys’ fees. It may only impose a fine of the infringer; order the preliminary and/or definitive seizure of infringing product issue a preliminary/definitive order to stop the manufacture and/or commercialization of infringing goods; or remove a trademark from the registry or invalidate the patent.

B. Appeals against the MPTO

There are three possible ways to challenge a final decision from the MPTO, no matter if the decision is the result of litigation or of a purely administrative procedure (final rejection of a trademark or patent application).

B1. Administrative Review. It is possible to file a petition for administrative review with a higher-rank official of the MPTO itself.

The filing of the petition for Administrative Review is optional. The appellant may choose not to file it and appeal the decision with the Tribunal Federal de Justicia Fiscal y Administrativa or Federal Court of Tax and Administrative Affairs (FCTAA) –see B2- or file an Amparo claim (constitutional appeal) with a Federal District Court –see B3-.

The higher rank officials of the MPTO tend to confirm the decisions, unless there was a clear procedural or formal error.

Filing a petition for Administrative Review using substantive arguments against the decision is usually a waste of time, or an effective way to delay a final decision, given that the MPTO may take one year or more to simply confirm the earlier decision.

The decision issued in connection Administrative Review may be subject of an appeal with the FCTAA (see B2) or an amparo claim (see B3).

From a technical perspective, the appeal with the FCTAA and the amparo claim are completely different procedures in nature and structure, but in order to keep it simple, I will make emphasis only in practical issues.

B2. Appeal with the FCTAA. The appeal with the FCTAA is the most usual way to challenge the decisions of the MPTO. The appellant has 45 business days to file the appeal with the FCTAA.

The FCTAA is divided in salas or chambers of three judges each, and a Highest Chamber of eleven judges.

The FCTAA started reviewing appeals concerning IP in mid 2000, as a consequence of an amendment to the Federal Law of Administrative Procedures (FLAP). Since January 2009, appeals concerning IP matters are decided by a specialized chamber.

The FCTAA takes between one and two years to decide an appeal. The FCTAA has authority to order the MPTO to cure some formal or procedural flaw and render a new decision, or to decide on the merits of the case instead of the MPTO.

The general rule is that the parties are allowed to file new evidence and arguments, not previously submitted with the MPTO. However, there is a recent non-binding decision from the Seventh Court of Appeals in Mexico City, that intends to limit the filing of new evidence and arguments to prove the use of a trademark in appeals associated to cancellation actions due lack of use*.

B3. Amparo claim. The amparo claim involves a constitutional review of a final authority’s decision by a federal district judge to verify if there was a breach of a garantía individual or constitutional basic right.

One basic constitutional right in Mexico is that all decisions should be issued in accordance to the law. If the decision breaches the law, then it may also be unconstitutional.

As a general rule, the consequences of the amparo are limited to the invalidation of the authority’s decision, if found against the constitution, and the issuance of a new decision, which under certain circumstances, may be subject of a new amparo claim or an appeal with the FCTAA.

The amparo was the usual way to challenge decisions from the MPTO, until mid 2000, when the amendment to the FLAP gave the FCTAA authority to review appeals against the decisions o the MPTO, among other government agencies.

Notwithstanding the above, the amparo claim is still available to challenge most decisions of the MPTO, although practitioners do not use it, given the shorter time they would have to prepare the appeal. Further, the district judges tend to invalidate decisions only to order the MPTO to cure a formal or procedural flaw and render a new decision, instead of deciding the merits of the case. Finally, and from my very personal perspective, the FCTAA’s decisions usually show more careful analysis of the parties’ arguments than the decisions from the district judges.

Unlike the appeal with the FCTAA, the general rule is that the parties are not allowed to file new evidence or arguments.

The appellant has 15 business days to file the amparo claim, and the judge may take from 6 to 12 months to issue a decision.

C. Final appeals

As explained above, the decision issued by a higher rank official of the MPTO in connection to a petition for administrative review (see B1) may be challenged with the FCTAA or a federal district judge.

The decisions issued by the FCTAA and the district judge may be subject of a final appeal with a tribunal colegiado de circuito or federal court of appeals, or with the Mexican Supreme Court in some extraordinary cases, such as the direct interpretation of the Federal Constitution or the constitutionality of a statute or statutory provision.

The federal court of appeals takes about six to ten months to decide a final appeal. The Supreme Court may take a little longer.

In the second part of this post, I will explain some of the reasons why the appeals take so long to be decided, and why they may take longer.

* Ninth Era, Weekly Judicial Journal of the Federation, Courts of Appeals, XXIX, April, 2009, page: 1925, Thesis: I.7o.A.617 A, Registry 167451

NIC-Mexico sets the rules for the MX domains

NIC-México, entity in charge of registering the domain names with ccTLD mx, announced the different stages to register domain names directly under the ccTLD mx (i.e. reyesfenig.mx).

 

It is important to state that the policies to register Mexican domain names are quite liberal: they do not require domestic presence in Mexico or that the registrant owns a trademark or other intellectual property right associated to the domain name.

 

First Stage

 

The first stage is called “pre-registry”, and will take place from May 1, 2009 to July 31, 2009.

 

In this stage Nic-Mexico will receive the applications to register domain names under mx directly from those persons that already owned a domain name with ccTLD by March 1, 2009, provided that the applied domain is identical to the senior domain (original domain).

 

If Nic-Mexico receives more that one application for the same domain, the owner of the earlier original domain will have priority.

 

If the original domain is being subject if a transfer process or of a dispute under the UDRP, the registration of the applied domain under mx directly will be held in abeyance.

 

The rules provided for NIC-Mexico stipulate priority only for the owners of senior domain names with ccTLD mx. No priority or sunrise period has been provided for owner of trademarks.

 

Second stage

 

The name of the second stage is “waiting”, and it will take place from August 1 to August 31, 2009.

 

In this period, NIC-Mexico shall not receive any application for the registry of domain name under the mx directly. It will only process the applications filed in the pre-registration stage.

 

If the original domain name was subject of a transfer or to a dispute process, NIC-Mexico will reserve the applied domain name under mx directly and shall reject other applications for the same domain. El reserved mx domain may be requested after the end of the transfer process of the dispute.

 

Regrettably, the rules do not specify the term that the owner of the original domain has to request the registration of the domain with mx after the end of the transfer or after the dispute is over.

 

Third stage

 

The third stage has been named of “initial registration”.

 

In this stage, any person may apply for a domain name under mx directly, regardless the prior ownership of a domain name with ccTLD mx at a reduced fee, provided that it is not a reserved domain. The registration fee will be diminishing throughout the third stage.

 

Reserved names

 

There is a group of names that will be kept reserved, or available only for certain entities.

 

The reserved names are the following:

 

a. Names related with the structure and functions of ICANN, IANA and NIC-Mexico.

 

b. Already existing TLDs

 

c. Names with one or two letters, numbers or symbols, unless there is an original domain name existing by May 1, 2009.

 

d. Names related with technical aspects of the Internet.

 

e. Names of Mexican states.

 

f. Names temporarily reserved for being subject to a transfer or dispute process.

 

There is more information available at: http://www.registry.mx/jsf/static_content/domain/reopening.jsf.

Trademark application serial number 1,000,000

 

On April 6, 2009, the Instituto Mexicano de la Propiedad Industrial or Mexican Patent and Trademark Office (MPTO) received the trademark application serial number one million.

 

The applied trademarks is “NOVO DENT” and the applicant is Jorge Sharon Cohen Cherbowski (Mexican citizen). The trademark covers teeth whitening services.

 

Although the Instituto Mexicano de la Propiedad Industrial started working under its current structure and legal frame in 1994, the truth is that the MPTO has actually received more then one million trademark applications throughout its history.

 

For some reason I am not familiar with, the MPTO reseted the application numbers at some point in the 80’s; I am not sure if similar resets took place before. Further, the application serial numbers for trademarks do not take into account the applications for avisos comerciales or commercial slogans and for nombres comerciales or trade names, which receive separate application numbers.

 

In any case, the growing number of trademark applications handled each year by the MPTO poses a great challenge.

 

The MPTO has made significant efforts to improve its technologic capabilities and services. Although some adjustments are still required and there is no electronic filing, the new on-line services for the review of electronic files and documents deserve a special acknowledgement.

 

Of course, the MPTO is still far from being what practitioners expect from it. There are still many technical and regulation deficiencies, and examiners are often criticized for the decisions and positions they assume. In defense of the Mexican examiners, I still have to meet a trademark practitioner that is happy with the examiners of his/her own national office.

TLDs under MX directly will be available again

 

Network Information Center Mexico, S.C. (NIC-MEXICO), an entity related to the Instituto Tecnologico y de Estudios Superiores de Monterrey, and in charge of managing domain names with country code domain (ccTLD) mx, informed that domain names directly under Top Level Domain (TLD) mx will be available again.

 

Between 1989 and 1996, the registration of domain names using TLDs with mx only, such as anahuac.mx, were restricted to universities and certain very specific entities. In 1996, NIC MEXICO made the edu.mx TLD available, and closed the registration for new domains under the TLD mx directly, thus the only available TLDs with ccTLD mx were com.mx, gob.mx, net.mx, org.mx and edu.mx.

 

On January 28, 2009, NIC-Mexico informed that it will allow the registration of domains under the TLD mx directly, starting this year.

 

The mechanism and rules to register domain names under TLD mx directly are not clear yet, although it seems that there will be different stages, and will start on May 2009. NIC-Mexico stated that it will give priority to the persons that already own a domain name with ccTLD mx, such as com.mx, gob.mx, org.mx, edu.mx and net.mx.

 

The communication from NIC-Mexico did not clarify if the owners of Mexican trademark registrations without a domain name with ccTLD mx would also have priority to register under the TLD mx directly.

New Intellectual Property Court in Mexico

 

On January 5, 2009, the new Chamber specialized in intellectual property of the Federal Court of Tax and Administrative Affairs (FCTAA) started working.

 

The Mexican Patent and Trademark Office (MPTO) is the first instance in most IP matters (registration, administrative enforcement and validity of IP rights).

 

For the second instance, the appellant has three alternatives available: (i) a petition for administrative review with a higher rank official of the MPTO itself (usually a waste of time); (ii) an amparo appeal with a Federal District Court; (iii) or an appeal with the FCTAA. The appeal with the FCTAA is the most usual.

 

The tribunal colegiado de circuito or federal court of appeals will continue being the final instance.

 

The FCTAA has jurisdiction to decide cases in a wide range of administrative-related areas, such as environment, administrative liability of federal officials, federal taxes, trademarks, patents, copyright, mining, logging permits…

 

The FCTAA has Chambers all over the country; in Mexico City, where most of the administrative activity is concentrated, it has thirteen unspecialized Chambers of each Judges. There is also a Highest Chamber of eleven Judges. Before January 5, most appeals related to an IP case would be, more or less randomly, sent to one of the thirteen unspecialized chambers in Mexico City.

 

Starting January 5, 2009, a single Chamber will concentrate all the appeals filed with the FCTAA regarding IP matters. Most cases that were handled by the other Chambers of the FCTAA, in Mexico City and in other states, have been transferred to the specialized one.

 

Although the new specialized Chamber is considered by most practitioners an important breakthrough, its life could be short in connection to trademarks, patents and litigation cases related thereto, as well as in most copyright administrative enforcement cases.

 

The jurisdiction of the FCTAA in trademark, patent and administrative copyright enforcement matters started with an amendment of the Federal Law of Administrative Procedures enacted on April 2001, that provided that proceedings and decisions from several government agencies, including the MPTO, would be regulated by the Federal Law of Administrative Procedures.

 

The 2001 amendment was severely questioned by most IP practitioners, given the many technical deficiencies of the Federal Law of Administrative Procedures. However, we learned to live with it, and eventually appreciated some important advantages that the Federal Law of Administrative Procedures offers given its pro-applicant profile.

 

However, on November 2006, the Chamber of Representatives passed a bill that amends the Federal Law of Administrative Procedures, excluding intellectual property from the scope of the statute. As a consequence, the FCTAA will no longer have jurisdiction on IP matters.

 

It was an odd amendment. The reasons stated by the lawmakers that proposed the bill were extremely poor. The FCTAA was not consulted, and who was actually behind the bill to exclude IP matters from the scope of the Federal Law of Administrative Procedures remains a mystery, although the lawmaker that proposed it is from the current government’s party. Although some lawyers welcomed the amendment, most practitioners are against it. As far as I know, the MPTO has not assumed any position about the amendment to the Federal Law of Administrative Procedures, but it is well-known that the MPTO’s officials have never been happy with such statute.

 

The bill to amend the Federal Law of Administrative Procedures was unanimously approved by all parties at the Chamber of Representatives on November 2006. Odd enough, on December 2007, the FCTAA announced the creation of the Chamber specialized in IP matters.

 

Now the Senate must approve the bill in order to be enacted by the President. The bill has been pending with the Mexican Senate for more than a year. The Mexican chapter of AIPPI has opposed the bill and urged the Senate to reject it. We’ll see if the objections against the amendment of the Federal Law of Administrative Procedures, persuade the Senate to reject the bill.

 

Meanwhile, the new IP Chamber of the FCTAA (located in Mexico City) has started working. Although I do not think that the creation of the specialized Chamber will solve the considerable backlog of IP-related cases nor expedite the appeals procedures, I would expect higher quality decisions.

Renewing Trademarks in Mexico

 

The renewal of trademark registrations is an important aspect of the maintenance of any IP portfolio. Making the right decision about renewing (or not renewing) a trademark allows the proprietor to maximize the value of its trademarks, or cut unnecessary expenses.

 

In this post, I am explaining the basic aspects about renewing trademarks in Mexico, calling the reader’s attention to two issues that should be carefully considered when the trademark owner decides to renew a trademark registration in our country.

 

The basics about trademark renewal in Mexico

 

A Mexican trademark registration is valid for a ten years term, counted from the filing date in Mexico, regardless the priority, registration or first-use date. The registration may be renewed an unlimited number of times for ten years terms.

 

As you may know, Mexico does not allow multiple class applications, so it is usual for an entity or individual to own several trademark registrations for an identical trademark in different classes. Further, Mexico is less restrictive than other countries (mainly the United States) about the description of articles or services that may be listed in a trademark application, so the applicant is allowed to list products and activities that it has no really intention to identify with the mark, provided that they belong to the same class.

 

In these cases, Mexican law provides that a trademark must have been used on at least one of the goods or services covered at least by one of the existing registrations for that trademark, in order to allow the renewal.

 

For example, if I register the trademark ARTURO REYES for ‘legal services, baby sitting and clothing rental’ (International Class 45), ‘cosmetics and detergents’ (International Class 03) and ‘beauty contests’ (International Class 41), I would have to file three different applications and eventually obtain three separate registrations. If I use the trademark to distinguish legal services only, said use would be enough to allow me to renew the International Class 45 trademark registration, with the full original coverage, and also the registrations in International Classes 03 and 41.

 

The window to renew a trademark registration lasts twelve months. It starts six months before the date of expiration of the registration and ends six months after said date. For example, if the filing date if a trademark registration is August 1, 1998, the registration expires on August 1, 2008; the renewal application may be filed between February 1, 2008 and February 1, 2009 (arguably, it could be February 2, 2009). No additional terms are available.

 

Tricky issues concerning the renewal of trademark registrations

 

(1) Use requirement.

 

Although it is not necessary to file a specimen of the trademark or a sample of the branded product when filing the renewal application, the statute demands the trademark lawyer or agent to state under oath that the trademark to be renewed is being used and that the use in Mexico has not been interrupted for three consecutive years or more.

 

Trademarks that have not been used in Mexico on at least one of the products or services covered by any of the existing trademark registrations for that mark should not be renewed.

 

Mexico does not demand continuous use, thus only an interruption of the use of the trademark in Mexico of three consecutive years or longer would obstacle the renewal. In the same sense, if the trademark owner started using the registered trademark started after the third anniversary of the date of registration, such lack of use for the first three years would constitute a bar for the renewal of the trademark, even if the mark was later continuously used.

 

In my opinion, the statute is quite inconsistent. On one hand it allows the renewal of trademark registration for goods or services that have never been identified with the trademark (if there is use in another class where a registration for the same mark exists), and at the same time it forbids to renew a trademark because there is a three years gap of non-use.

 

Further, the use of the registered trademark in one International Class is valid to allow the renewal of other registrations for the same trademark in other International Classes, even in absence of use; but arguably it would not be valid to defend a trademark registration in an International Class different form the one there has been use, against a cancellation action for lack of use for three consecutive years*.

 

Making a statement under oath regarding facts that are not true could be a federal crime in Mexico, and the criminal liability could involve both the trademark lawyer and the trademark owner. For that reason, many Mexican lawyers and agents (including me) will ask their clients for a written statement about the use of the trademark, to minimize the risks of renewing trademarks that have not been used.

 

Notwithstanding the above, it is important to say that I am not aware of any case where the district attorney started an investigation because a false statement regarding the use of a renewed trademark, although it does not mean there would be a risk, especially if the adversary is hostile.

 

(2) Renewal fee

 

As we stated above, Mexico does not allow multiple-class applications. However, because of the change from the old National Classification to the International Classification and the later amendments of the International Classification, the Instituto Mexicano de la Propiedad Industrial or Mexican Patent and Trademark Office (MPTO) has unilaterally reclassified the products or services of the original description, sometimes creating multiple-class registrations.

 

For example, old trademark registrations in National Class 46 that covered ‘food and its ingredients’ were later reclassified in International Classes 01, 05, 29, 30 and 31. Similar reclassifications have taken place lately with the amendments to the International Classification or due changes in the directives of the MPTO (i.e. under the Seventh Edition of the Nice Classification, Mexican authorities used to classify retail and wholesale services in International Class 42 instead of 35).

 

The regulation that stipulates the government fee, provides that it shall be paid ‘per class’. Notwithstanding the above, most trademark lawyers in Mexico pay the government fee ‘per registration’.

 

The difference of calculating the fee ‘per registration’ or ‘per class’ is irrelevant in most cases, given that most trademark registrations list articles or services of only one International Class. However, there are a significant number of trademark registrations that have been reclassified and now explicitly include products or services of more than one International Class.

 

The current implicit directive of the MPTO (there is no written document) is that the renewal fee should be paid per registration, in spite of the explicit provision regarding the payment for class stated in the regulation of government’s fees. Of course, if a trademark owner calculates and pays the renewal fee per class, the MPTO would accept the payment and renew the trademark registration, but there would be no refund.

 

The government fee for renewing a trademark registration is relatively high, thus calculating it ‘per registration’ instead of ‘per class’ is quite attractive (about $253.00 USD per registration instead of $253.00 USD per each class included in the registration).

 

Since the MPTO has never objected the calculation of the renewal fee ‘per registration’ and there are no published precedents about the invalidation of a trademark renewal, most Mexican trademark lawyers feel safe with the practice of paying a fee lower than the one explicitly stipulated in the regulation for multiple-class registrations. However, the lack of published precedents about the validity of underpaid renewals does not mean that there is no risk.

 

The MPTO has no authority to invalidate the renewal of a trademark, but the Tribunal Federal de Justicia Fiscal y Administrativa or Federal Court of Tax and Administrative Affairs (FCTAA) does.

 

Alternatives for the payment of the renewal fee for multiple-class registrations

 

If calculating the renewal fee ‘per class’ instead of ‘per registration’ results in an extremely high fee, my suggestion would be trying to reduce it by dropping one or more International Classes from the registration to be renewed.

 

As long as there are no binding precedents regarding the validity of renewals where the fee was calculated ‘per registration’, the holders of multiple-class registrations have to choose between paying a higher (or much higher) renewal fee to stay in the safe side, or paying a lower fee and assume the risks. Certainly, we have to take into account that the actual risks of an invalidation action against the renewal of a registration seem low, at least for the time being. Therefore, as long as it is an informed decision and the trademark owner is aware of the risks, it would be reasonable to choose calculating the renewal fee ‘per registration’.

 

* The Highest Chamber of the Federal Court of Tax and Administrative Affairs ruled that in the case of well-known trademarks, the use of the mark in one International Class is enough to defend the validity of the existing registrations for the same trademark in other International Classes, even if there has been no use in these classes. Thesis V-TASS-239, R.T.F.J.F.A. Fifth Era. Year VI. No. 62. February 2006, page 283.

Revisiting the protection to well-known and famous trademarks in Mexico

 

The Mexican statute provides explicit protection for well-known trademarks since the Law of Patents and Trademarks of 1976. Before the 1976 statute, there is evidence of direct application of the stipulations stated in Paris Convention to fill the gaps in the Mexican statute, but none of the published decisions refer to well-known trademarks.

 

On June 16, 2005, the Federal Congress amended the Industrial Property Law to introduce important modifications to the provisions regarding the protection of well-known trademarks.

 

Before the amendment, there were two ways a trademark could be acknowledged as well-known in Mexico:

 

a) If the Instituto Mexicano de la Propiedad Industrial or Mexican Patent and Trademark Office (MPTO) rejected a trademark application, arguing that it was identical or confusingly similar to a well-known trademark, and it could cause confusion among the consumers about the origin of the products or services covered by the trademark application.

 

Given the lack of opposition procedure in Mexico against trademark applications, in this sort of case, the holder of the well-known trademark has little (if any) involvement in the acknowledgement of its trademark as well-known, and sometimes it may not even been aware that the trademark was acknowledged as well-known in Mexico.

 

b) If the MPTO cancelled a trademark registration, or issued a trademark infringement decision, as a consequence of a cancellation action or administrative infringement action filed by the owner of the well-known trademark, in which the fact that the trademark was well-known was claimed by the owners as the cause of cancellation or infringement.

 

The decisions issued by the MPTO were not binding (the MPTO could change its mind in a future case), and there was no list or special publication showing what trademarks have been acknowledged as well known.

 

Nevertheless, the only way a trademark owner could proactively seek the acknowledgement of a trademark as well-known in Mexico was starting a cancellation or infringement action with the MPTO. The trademark owner had the burden of proving that its trademark was well-known every time it started a trial.

 

The amendments to the Industrial Property Law enacted in 2005 intended to enhance and clarify the protection of well-known trademarks:

 

(1) Well-known and Famous Trademarks.

 

The statute now stipulates a distinction between “well-known” and “famous” trademarks.

 

The main difference is that a “well-known” trademark may bar future applicants from registering an identical or confusingly similar trademark, no matter the class, if such applied trademark may create confusion among the consumers about the source or characteristics of the product or service, or may be regarded as an unfair use of the goodwill associated to the well-known trademark, or may jeopardize the reputation of the well-known trademark.

 

The “famous” trademark would bar future applicants from registering an identical or confusingly similar trademark for any class of product or service, without having to justify that there would be a risk of confusing or misleading the consumers, or that there would be a risk of unfair use of the famous mark’s goodwill or of harming the reputation of the famous mark.

 

If the MPTO incorrectly issues the registration of a trademark identical or confusingly similar to a well-known or famous trademark, the owner of the well-known of famous trademark may file a cancellation action.

 

However, the lawmakers failed to amend the provisions regarding trademark infringement. Odd enough, only the imitation of a well-known trademark is explicitly regarded as a cause if infringement.

 

(2) Ad-hoc acknowledgement of Well-known and Famous Trademarks

 

As explained above, before the 2005 amendment, the only way a trademark owner could actively get the acknowledgement of a trademark as well-known was by filing a trademark infringement or cancellation action, and claiming the illegal imitation of a well-known trademark as cause of cancellation or infringement.

 

Now, in addition to the recognition that a trademark is well-known or famous as a result of a cancellation or infringement action, the law stipulates an ad-hoc procedure and publication to acknowledge a trademark as well-known of famous.

 

The ad-hoc acknowledgement is valid for five years, and may be renewed (the statute uses the word “update”) for additional five-year terms if the owner proves that the trademark continues being famous or well-known.

 

The statute provides a quite exhaustive list of evidence that the applicant must file with the MPTO to obtain the well-known of famous acknowledgment.

 

If a third party believes that the acknowledgement of a trademark as well-known or famous was incorrect or illegal, it may challenge its validity by filing an invalidation action with the MPTO.

 

Three years later

 

Three years later, the first acknowledgement of a trademark as well-known or famous as a result of the ad-hoc procedure has no been issued yet.

 

Actually, during a conference that took place on March 2008, the MPTO accepted that it has received less than five applications for the ad-hoc acknowledgement of a trademark as well-known or famous since the amendment was enacted in 2005.

 

It is important to say that although the law was amended in 2005, the MPTO published the government fee for the ad-hoc acknowledgement of trademarks as well-known and famous on September 13, 2007; all the applications filed between June 17, 2005 and September 13, 2007, were put on hold, pending of the publication of the government fee.

 

It does not mean that there have not been decisions acknowledging trademarks as well-known or famous in Mexico in the last three years, but all those decisions have been related to cancellation or infringement actions, not to the ad-hoc procedure.

 

The main reasons for the lack of success of the ad-hoc procedure for the acknowledgement of a trademark as well-known or famous in Mexico are the following:

 

a. Burden of proof.

 

In spite of the opinion of some trademark lawyers, who argue that if a trademark is well-known or famous, it should not require much evidence to prove it, the practice in Mexico has been that it requires a considerable amount of evidence proving that a trademark is well-known (or famous).

 

In the case of the ad-hoc procedure, the statute provides an exhaustive, non-limitative, checklist of required evidence to prove that a trademark is well-known or famous in Mexico:

 

i. Identification of the sector of the market integrated by the actual or potential consumers that are familiar with the applicant’s trademark and the products or services it identifies, supported by surveys, market studies or any other source of information not prohibited by the law.

 

ii. Identification of other sectors different from the potential or actual consumers that would be familiar with the applicant’s trademark and the products or services it identifies, supported by surveys, market studies or any other source of information not prohibited by the law.

 

iii. Information about the commercial circles integrated by merchants, manufacturers or service providers related with the goods or products identified with the applicant’s mark that would be familiar with the products and services it identifies, supported by surveys, market studies or any other source of information not prohibited by the law.

 

iv. Information about the date of commencement of use of the applicant’s trademark in Mexico and abroad.

 

v. Information about the time the applicant has continuously used the trademark in Mexico and abroad, if applicable.

 

vi. Information about the commercialization channels of the goods/services identified wit the applicant’s trademark in Mexico and abroad, if applicable.

 

vii. Information about the media used to promote the applicant’s trademark in Mexico and abroad, if applicable.

 

viii. Information about the time the applicant has actually advertised the trademark in Mexico and abroad, if applicable.

 

ix. Reports about the advertising and promotion investment associated with the mark in the three years prior to the filing date of the application for acknowledgment that the trademark is well-known of famous in Mexico.

 

x. Information about the geographic area of actual influence of the applicant’s trademark.

 

xi. Reports about the income associated to the services identified with the applicant’s trademark at least in the last three years.

 

xii. Information about the economic value of the mark, as stated in the assets statement of the applicant or according to a valuation of the mark.

 

xiii. The Mexican and foreign trademark registrations for the applicant’s mark.

 

xiv. The franchises and licenses executed involving the applicant’s trademark, if any.

 

xv. The market share of the applicant’s trademark.

 

The MPTO has decided, so far, that the applicant must file all the above-stated documents in order to allow the MPTO reviewing the merits of the ad-hoc application.

 

As a consequence, most trademark owners have found that it is impossible, or unpractical, gathering all the above data and documents, resulting in an extremely low number of applications for the well-known or famous ad-hoc acknowledgement.

 

b. Limited benefits

 

There is some uncertainty about the actual benefits from obtaining the ad-hoc acknowledgement of a trademark as well-known or famous.

 

There is no doubt that a trademark acknowledged as well-known through the ad-hoc procedure would block third party’s trademark applications for certain classes stated in the ad-hoc publication and the famous ad-hoc acknowledgement would block future trademark applicants in all International Classes.

 

On he other hand, the use without authorization of a well-known trademark, by itself, is a cause of administrative infringement. However, the imitation of a famous trademark, by itself, does not give an explicit cause of administrative infringement; the trademark owner may claim benefit from the provisions against unfair competition, but that does not seem good enough, considering how burdensome was to get the ad-hoc acknowledgement of the trademark as famous.

 

It is also unclear whether, in an infringement case due unauthorized use of a well-known trademark, if the prior ad-hoc acknowledgement would be enough or if it would be necessary to prove that the trademark is well-known in trademark all over again.

 

c. Costs

 

The preparation of the application and evidence for the ad-hoc acknowledgement of a trademark as well-known or famous is very expensive.

 

The government fee for the acknowledgement of a trademark as well-known is relatively low (about $300.00 USD for the application plus $125.00 USD per International Class where the trademark is regarded as well-known).

 

However, for the famous trademark ad-hoc acknowledgment, and the renewal or “update”, the government fee is very high (about $300.00 USD for the application plus $5,000.00 USD for the ad-hoc acknowledgment and $5,600.00 USD for the renewal or “update”).

 

 

Given the lack of success, and confidence, in the ad-hoc procedure for the acknowledgement of trademarks as well-known and famous in Mexico, litigation continues being the only actual option to obtain the official recognition of a trademark as well-known or famous.

Names of magazines, journals and newspapers in Mexico: A Trademark is not enough

 

In most civil-law countries, the publisher of a newspaper, magazine or journal may secure exclusivity rights in the publication’s name by obtaining a trademark registration. It does not work like that in Mexico.

 

Mexican law provides two parallel systems to obtain exclusivity rights in the name or title of a journal, magazine or newspaper. On the one hand there is the trademark system. The entity in charge of registering trademarks is the Instituto Mexicano de la Propiedad Industrial or Mexican Patent and Trademark Office (MPTO).

 

The other system is the reserva de derechos. The reserva is a special registration for names of magazines, journals and newspapers provided in the Federal Copyright Law and issued by the Instituto Nacional del Derecho de Autor or Mexican Copyright Office (MCO).

 

Practically speaking, the reserva de derechos and the registered trademark provide virtually identical proprietary rights in the registered mark or reserved name. Therefore, conflicts between trademark and reserva holders are not unusual.

 

From a teleological point of view, there is no justification for the existence of two parallel systems. Most Mexican practitioners believe that all the provisions regarding the reserva de derechos applied to the name of a journal, magazine or newspaper should be derogated; however, this issue apparently is not in the agenda of the Mexican federal Congress.

 

There are advantages and disadvantages of owning a reserva de derechos instead of a trademark for the name of a magazine or newspaper.

 

Advantages of the reserva de derechos

 

(1) A conflicting trademark registration to identify magazines, journals or newspapers may be invalidated if there is an earlier reserva de derechos for an identical or confusingly similar name. An earlier registered trademark does not provide grounds to cancel a later reserva de derechos.

 

(2) An earlier and continuous user of a name applied to a magazine or journal may cancel a reserva de derechos for that same name or a confusingly similar one, but only if the said use took place in Mexico, while a Mexican trademark registration may be cancelled due to earlier use in Mexico or abroad (provided that the action is filed within the time limits provided by the statute of limitations).

 

(3) All documents recorded with the Mexican Patent and Trademark Office regarding pending trademark applications and trademark registrations become part of public records. The records of reservas de derechos are kept confidential; unless there is an order from a court or consent from the reserva holder, third parties may not review the official records or obtain copies.

 

(4) In the case of a successful infringement action due to the unauthorized use of a name protected by a reserva de derechos, the minimum fine provided in the statute for the infringer is much higher than the minimum fine stipulated for the trademark infringer.

 

(5) The Secretaría de Gobernación or Ministry of the Interior has a sort of censorship office that has authority to issue two special certificates named certificado de licitud de título and certificado de licitud de contenido. These certificates are not a source of intellectual property rights and do not provide exclusive rights; they only certify that the title and the general content of the magazine do not infringe public order.

 

Arguably, all magazines and journals distributed in Mexico must have the certifications of the Ministry of the Interior, and only the holder of a reserva de derechos is allowed to apply for the certificates issued by the Ministry of the Interior.

 

(6) The Mexican Mail Service provides a preferential fee for magazines and journals, if they have a reserva de derechos and the certificates issued by the Ministry of the Interior.

 

Disadvantages of the reserva de derechos

 

(1) The main disadvantage of the reserva is that it has to be renewed yearly, significantly increasing the maintenance cost in the medium and long terms.

 

(2) For a registered trademark, it is sufficient to file a statement under oath, stating that the use of the registered trademark has not been interrupted in Mexico for three consecutive years or more to renew the registration. In the case of the reserva it is also necessary to file a sample of the magazine or publication identified with the reserva (issued within the twelve months prior to the renewal due date).

 

(3) The trademark owner has a twelve-months window to renew the trademark. The window to renew the reserva holder is only two months.

 

(4) Reserva searches are available from the MCO, but the MCO takes about three weeks to provide the results. There is no on-line database of the reservas de derechos.

 

(5) If an applicant files an application for a reserva de derechos and the MCO decides that there is an earlier reserva issued or applied for a confusingly similar name, instead of issuing an office action citing the anticipation and allowing the applicant to argue in favour of its application, the MCO may reject it. The rejection of the MCO may be appealed to the Federal Court of Tax and Administrative Affairs.

 

 

In an ideal scenario, the publisher of a magazine, newspaper or journal should have both a trademark registration in class 16 and a reserva de derechos.

 

If budget constraints force the publisher to choose between the two, as a general rule, I would suggest the reserva de derechos; it provides more solid exclusivity rights on the reserved name, although foreign publishers and IP counsels may feel uncomfortable by choosing a reserva instead of a trademark, given the lack of familiarity with the reserva.

Trademark searches in Mexico

 

In a first-to-file country, such as Mexico, one way of foreseeing if a trademark is available for use and registration is conducting a trademark search with the databases of the Mexican Patent and Trademark Office (MPTO).

 

There are two main databases that may be consulted in a trademark search: the Industrial Property Gazette that the MPTO issues on monthly basis, and the online phonetic database of the MPTO.

 

Foreign entities that offer search services usually obtain the information from the Industrial Property Gazette, while local agents often use the online database. Unlike the trademarks database of the USPTO or the OHIM, there is no free access** to the trademarks database of the MPTO to conduct searches;  it is necessary to have a prepaid account. **(See important update below).

 

A search conducted using the information stated in the Industrial Property Gazette will provide basic information about trademark registrations, such as the mark, the device (if applicable), registrant’s name, address and nationality, the filing date and application serial number, the registration number and the date of publication in the Industrial Property Gazette.

 

The phonetic search would provide all the above-information (although many agents fail to state the date of publication in the Gazette), plus the location of the applicant’s premises (as stated by the applicant), the next renewal due date, and the date of commencement of use of the trademark in Mexico, if the applicant claimed it.

 

Further, given the lack of opposition procedure in Mexico, trademark applications are not published. The Industrial Property Gazette only states information about registered trademarks, while the on-line database of the MPTO also provides data about pending applications that may also obstacle a later trademark application.

 

Foreign searching companies would often state in the report that there is no deadline to file an opposition. Technically speaking, the statement is correct, since there is no opposition at all, but it also may be misleading. Mexican trademark registrations may be cancelled, but there are statutory deadlines to file the cancellation actions, and the deadline may vary depending on the cause of cancellation.

 

Nevertheless, when conducting device searches, the foreign searching companies may offer some advantages. The on-line database of the MPTO does not allow agents to search for devices, and such searches must be requested by filing s written petition with the MPTO; the MPTO usually takes from three to six weeks to deliver a report; searching companies may produce results in a shorter term, although, depending on the database they use, there may be some important information missing.

 

The results of the trademark search conducted with the on-line database of the MPTO tend to be very accurate, but should not be regarded as 100% reliable. In some unusual occasions, the search fails to reveal the existence of trademarks very similar to the searched one. Further, the MPTO takes about ten days to update the database with the information concerning the new trademark applications.

 

On a related matter, although there are no common-law rights in Mexico and the first user of a trademark would not be acknowledged as proprietor, such user may cancel a Mexican registration for an identical or confusingly similar trademark, applied to the same or similar products or services, based only on the earlier use of the mark, either in Mexico or abroad. A typical trademark search would not show the existence of such potential adversaries or disputes.

 

** Update: Starting June 1, 2009, the online database of the Mexican Patent and Trademark Office is available for free to any person with Internet access. A link to the search engine is in the “other interesting links” column of this blog.

Ownership on Works and Inventions by Employees in Mexico

 

Every day, the intellectual property assets of businesses increase their importance. They are not, and should not, seen any longer as a by-product, but as a fundamental asset for the survival, well-being and prosperity of businesses.

 

Employees and their activity are a very important source of intangible assets, so adopting a clear, well supported and fair policy in connection to the intellectual property generated by employees should be considered as strategic in any innovative business. Further, an inadequate intellectual property policy inside a business organization may lead to potential liability issues and reduce the value of the company.

 

Mexican copyright and patent law are similar to the laws of other jurisdictions concerning the exclusivity rights stipulated for the right-holder. However, as far as for inventions and works developed by employees are concerned, the regulations may be surprisingly different. Further, Mexican lawyers unfamiliar with intellectual property laws often confuse inventions and works.

 

As a preliminary issue, Mexican law makes a clear distinction between works protected by copyright and inventions/designs protected by the patent law. There are some grey areas, especially in the case of industrial designs, where the border between works and inventions is not clear from a substantive perspective. However, the applicable statues (the Industrial Property Law and the Federal Copyright Law) explicitly state that works are not protected by patent law, and copyright law excludes inventions from copyright protection.

 

 

Inventions by employees

 

The Federal Employment Law provides that the employer owns the intellectual property on all inventions developed by employees, provided that the development of inventions was one of the objectives of the employment relation. If the employment agreement is silent about who should be the owner of the intellectual property rights on the invention, but it states that making inventions is one of the purposes of the employee, then the right holder is the employer.

 

The employee has the right for an additional compensation only if the invention benefits the employer in such a way that the regular wage of the employee is not proportioned with said benefit. The parties must agree on the compensation the employee is entitled to, and in the lack of an agreement, the labour courts will decide.

 

In all other cases (i.e. inventions developed by employees without having such responsibility provided in the employment contract using the employer’s resources) the proprietary rights associated to the invention belong to the employee; the employer only has a right of first refusal in case the employee decides to assign the right to file the patent/design application or the corresponding patents, design registrations or patents/design applications.

 

Works by employees

 

Mexican copyright is very liberal about what may be subject matter of copyright protection, and extremely author-protective. As a consequence, it has many restrictions regarding the ownership of intellectual property rights on works by parties different from the author.

 

There are four preliminary issues that need to be addressed for better comprehension of this matter:

 

First. Mexican copyright law protects works regardless their destiny or merits. Therefore, designs that are intended to give industrial products a new ornamental appearance may be protected by copyright, regardless the provisions concerning industrial designs.

 

Second. It is important to distinguish between “derechos morales” or personal rights and “derechos patrimoniales” or economic rights. Personal rights are related to the special acknowledgment that the author deserves as such and the relation between the author and her/his work. It includes, among others, the right to disclose the work, the right to be acknowledged as author, the right to modify the work and the right to oppose the mutilation or modification of the work.

 

Economic rights are related to the use of the work, and include the right of copying and authorizing the public communication of the work, among others.

 

Third. As a general rule, the author may only contractually transfer the economic rights. In the case of works made by employees, the employer may be entitled to the economic rights, and to the right to disclose the work.

 

Fourth. Copyright is fully protected and enforceable, at least in theory, without registration or any particular formality.

 

Having said the above, the employer is entitled to be acknowledged as the copyright holder of the works developed by the employees, only if there was an individual employment contract (opposed to the collective contracts executed with unions) in written with the employee. Further, the employment contract must explicitly state that all economic rights related to the copyright on the work belong to the employer; otherwise, the law will assume that 50% of the economic rights belong to the employer and 50% to the employee.

 

If there is no written employment agreement or if it is silent about who would be the copyright owner of the works developed by the employee, then the full copyright holder would be the employee.

 

As an exception, copyright on software developed by a employee as part of its duties belong to the employer, regardless the existence of a written individual contract or that the contract is silent concerning the percentage of the copyright ownership that would belong to the parties.

 

There is a fundamental difference between the provisions of the Federal Employment Law regarding inventions and industrial designs, and the Federal Copyright Law in the case of works. The transfer of the intellectual property on inventions and industrial designs from employee to employer is implicit due a statutory provision. In the case of copyrightable works, it requires a contractual explicit stipulation. In both cases, there is no actual assignment between employer and employee; the acquisition of the IP rights by the employer is automatic.

 

Assignments

 

If the parties decide to execute an assignment document to ease the filing of a patent, industrial design or copyright application for the employee’s invention/design or work, they should also take into account some special provisions stipulated in the Mexican Copyright Law.

 

The statute provides that copyright assignments should be always be temporal, with the exceptions of software, literary, musical and audiovisual works, and works to be represented on a stage. If the parties do no state a term, the term of the copyright assignment is five years only. The parties may freely stipulate a copyright assignment for up to fifteen years. Copyright assignment for more than fifteen years is valid only if the nature of the work or the investment required to use it justify such term.

 

Therefore, it is necessary to be extremely careful when drafting the intellectual property provisions in employment contracts for Mexican workers, and even seek advice from a specialized lawyer. Otherwise, there is the risk of dangerous gaps and voids on the intellectual property ownership that may negatively impact not only the employer’s operation, but also its customers and clients.