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

Origins of the FCTAA

The Tribunal Federal de Justicia Fiscal y Administrativa or Federal Court of Tax and Administrative Affairs (FCTAA) is a relatively new court. It was enacted in 2001, and its immediate predecessor was the Federal Tax Court. Most of the judges of the FCTAA are tax specialists. However, amendments to several statutes, particularly the modifications of April and May 2000 to the Federal Law of Administrative Procedures, broadened the scope of the old Federal Tax Court to decide a large number of administrative matters, (i.e. trademark registration, public officials liability, environmental protection, mining permits… etc.) until it became the FCTAA in December 2000. 

From mid 2000 to late 2008, appeals regarding IP matters were decided by on the thirteen non-specialized chambers of the FCTAA in Mexico City. Since January 2009, IP appeals are being decided by a specialized chamber, also located in Mexico City. 

The Federal Law of Contentious Administrative Procedures (FLCAP) rules the appeal procedure with the FCTAA. The immediate predecessor of the FLCAP was the contentious chapter of the Federal Tax Code, that governed the appeals with the now extinct Federal Tax Court. 

As you may see, a tax court and a tax law were the predecessors of the current specialized IP Chamber of the FCTAA and of the statute that govern the procedure for appeals involving IP. 

In a typical procedure concerning taxes, there are two parties with opposing interests: the State and the tax payer. The statute that governs the appeals in IP matters took this model. The problem is that in many IP matters, there may be more than one opposing party (such as the proprietor of a registered trademark that was cited as anticipation in a case involving the rejection of a trademark application, or the adversary in a patent invalidation or infringement action). 

At Law School, my Tax Law teacher told us that the purpose of Tax Law was defending tax payers, and many of the provisions (not all) stated in the Federal Tax Code, and later in the FLCAP reflect this way of thinking. Tax law tends to be very formalistic about the decisions and procedures to determine the existence of taxes and liabilities related to unpaid taxes. The lack of fulfillment of a formal or procedural requirement may result in the invalidation of the decision and the procedure, and all the Chambers of the FCTAA must review ex officio that the challenged decision complies with all formal requirements, regardless the arguments of the appellant. 

While such rigor may be desirable in a tax case, it may not be justifiable in a case where the decision of the Mexican Patent and Trademark Office (MPTO) was the result of a “trial-shaped” procedure or did not impose a fine but rejected a trademark or patent application. 

The FLCAP makes no distinction between decisions arising from a purely administrative procedure (such as the abandonment of a patent or the rejection of a trademark application) and decisions rendered as the result of an administrative procedure where the MPTO acted as a court to decide a dispute between two parties, such as a trademark or patent infringement case. 

Therefore, all the rigor that the FCTAA must use to review the compliance of formalities of a tax related decision, regardless the merits of the appeal, are being also applied to review all the decisions from the MPTO. 

The precedents 

A very important issue in Mexican administrative law, and especially in tax law, refers to the authority of the government agencies and the officials to decide taxes, administrative sanctions and impose fines. 

Historically, the government has exercised it power abusively. As a consequence, the Constitution and legislation have provided a number of requirements and limits to protect individuals and private entities from such abuses (whether such protections actually work or if they work only in the benefit of a privileged few would be subject of another discussion). 

One of the above-stated requirements is that the authority of any government agency to impose some burden or extinguishing some right of a private person must be expressly provided in an act of a federal o state legislature (Ley) or in a body of rules issued by the President or Governor himself (Reglamento). 

Certain bodies of rules, such as the estatutos orgánicos or “organizing regulations and the acuerdos delegatorios or “decisions to delegate authority” may provide a government agency with authority for certain actions, but in no case such authority may be broader than the one provided in the legislation or rules, and may not stipulate authority to impose burdens or limit or extinguish rights, if the legislation or the rules did not explicitly stated such authority. 

The requirement for all government officials to have explicit authority provided in the statute or in the rules to decide a case where the official imposes a burden or extinguishes or limits a right does not stop there. There is a binding precedent from the Supreme Court that demands that the official that decides a case must state all the statutes and rules that provide the authority to render the decision, including the article, section, paragraph, subparagraph, etc.** The FCTAA must review this issue ex-officio***, and if it finds one mistake, it must invalidate the decision due lack of authority of the issuing official, even if such lack of authority was never argued by any of the parties, or if it is irrelevant to decide the merits of the case. 

As I explained above, such rigor may be desirable in a tax case, because it has the clear intention of protecting the tax-payer against the abusive behavior of the executive branch. However, in a trademark infringement or cancellation case, this sort of ruling does not result in the enhanced protection of intellectual property rights. On the contrary, it seriously harms intellectual property owners and their activities; the delay of a final decision causes doubts and uncertainty about the enforceability and validity of IP rights, because the effect of the invalidation due apparent or actual lack of authority of the MPTO’s officials is the issuance a new decision signed by an official with authority to do so, or simply correcting the typing flaw that refers to the applicable provision of the statute that originates the authority of such official. 

Of course, given the some voids in the regulations that govern the activities of the MPTO’s officials, the new decision is not always free of formal flaws that may also cause, again, their invalidation, without ever looking at the merits of the appeal. 

Unfortunately, an IP case does not always stop at the FCTAA. The final instance is the Federal Court of Appeals. There are eleven non-specialized courts of appeals with jurisdiction to review the decisions rendered by the IP Specialized Chamber of the FCTAA. The courts of appeals issue contradictory rulings from time to time. When contradictory rulings arise, the Supreme Court may review the cases and decide what ruling should prevail; the Supreme Court’s decisions are binding for all the courts of appeals and the FCTAA. 

Finally, if the patent, trademark or copyright owner wants some indemnification related to a patent, trademark or copyright, the MPTO’s infringement decision must become final (after all the appeals), and then the right-holder may file an action with a court of common jurisdiction, which means to start all over again, but now to try to claim damages and lost of profits. 

The future 

One thing is clear: The current system does not work. Even a relatively simple case may take many years to be decided just because all the time wasted in irrelevant appeals. 

Some practitioners have suggested that the law should be amended to exclude IP from the scope of the FCTAA. Actually there is a bill that the Chamber of Representatives approved in late 2006 to exclude IP from the scope of the Federal Law of Administrative Procedures, and as a consequence, from the FCTAA. The bill is pending at the Senate. 

Although the lack of efficiency of the FCTAA is obvious, I am not sure that this is a good solution. District Courts may decide faster than the FCTAA, but the MPTO’s decisions tend to have many procedural and forma errors that may result in decisions from the District Judges just to cure formal and procedural flaws, with no actual benefit as for the time it takes to reach a final decision would be concerned. 

Finally, most District Judges have not been in regular contact with IP law since 2002, after the FCTAA took over the appeals for IP matters, so their decisions show in general less analysis of the case that the decisions of the FCTAA. 

From my perspective, Mexican IP law needs a structural change. The MPTO should not have authority any long to decide infringement and invalidation cases; such authority should be on specialized federal district courts, which may decide in the same decision if the trademark registration or patent is valid, if it has been infringed and award damages and/or attorney’s fees to the prevailing party.

 Of course, it is a complex issue and any solution would have to be more complex than what I just stated above. In any case, what all practitioners agree is that we need a change, and we have to start working on it now.

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

 ** Ninth Era, Weekly Journal of the Federation, Supreme Court, Second Chamber, XXV, June 2007, page 287, Thesis: 2a./J. 99/2007

 *** Ninth Era, Weekly Journal of the Federation, Supreme Court, Second Chamber, XXVI, December 2007, page 154, Thesis: 2a./J. 218/2007

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 final appeal may be decided by any of the seventeen courts of appeals specialized in administrative matters located in Mexico City. A 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

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.

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.

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.

Some basics about copyright law in Mexico

 

1. Works are protected from the moment of creation

 

Works are protected by copyright from the moment they are created, materialized in any media and capable of being copied, regardless their merit or destiny. The work is protected when it is original or has certain degree of originality.

 

2. Copyright does not need registration

 

The registration of the work is not essential for copyright protection. Copyright is acknowledged without registering the work or fulfilling any particular formality. The registration of a work with the Public Copyright Registry, by itself, does not transform the registrant in author or make him holder of the copyright on the registered work.

 

The registration of a work originates a document that proves beyond any doubt the existence of the work at a given time, and the claim by the registrant of the copyright on the work. However, the registration is not the source of the copyright.

 

The aforementioned does not imply that registering a work is useless. On the contrary, it is an effective way to preparing evidence about the existence of the work, which may be extremely important in case of a dispute. Further, given that Mexican society is extremely formalistic and paper-oriented, the work has a higher status when registered. It is frequent that businessmen, authors and government officials (even from “specialized” agencies) acknowledge the existence of copyright only if the work is registered.

 

Registering a work with the Instituto Nacional del Derecho de Autor or Mexican Copyright Office (MCO) is relatively simple, and if done correctly, the MCO may issue the registration certificated in only four weeks.

 

3. Copyright provides two categories of rights: the personal rights and the economic rights

 

Copyright provides two different categories on rights: derechos morales or personal rights and derechos patrimoniales or economic rights. Only economic rights may be contractually assigned, provided that the parties comply with certain statutory formalities.

 

4. The purchase of the original work does not assign the copyright

 

Purchasing the original work does not imply in any way the acquisition of the copyright on the purchased work. The assignment of the copyright demands a specific written agreement with monetary consideration.

 

5. The existence of a work implies the existence of an author

 

In Mexican law, the existence of an individual identified as author is essential for the copyright; corporations cannot be authors, although they may be the copyright holders. Any entity claiming to be the copyright holder would have to demonstrate the chain of title from the author. This requirement may be particularly complicated for certain works, such as software, where it may be difficult to identify all the authors that had intervention in the work.

 

6. Ideas by themselves are not protected by copyright

 

It is necessary to materialize the idea through the work, and even so the subject matter of the protection would be the work, not the idea. The same idea may give place to different original works, and each one of them would have an independent protection. 

 

7. Trademarks, patents and copyright are not the same.

 

There are some similarities between patents, copyright and trademarks, but it is essential to clearly distinguish them one from the others. Each kind of protection gives their holders different privileges and disadvantages in relation to the others.

 

Against to the opinion of many reputed colleagues, I think that the chose of the legal way of protecting an intellectual creation may exclude the others; for example, if the shape of an industrial product is registered as an industrial design as provided by the Industrial Property Law, it automatically excludes the possibility of claiming copyright on the same design.