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.

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.

Trademark and Patent marking under Mexican law

 

The marking of products or services that use industrial property rights (such as patents or registered trademarks), so third parties may be aware of the existence of such intangible assets, provides the right holders with certain benefits. The marking is not an actual obligation, given that failure to mark a product is not illegal by itself nor harms any third party’s rights.

 

Marking a product with the indication of an industrial property right may prevent or discourage third parties from infringing the intellectual property right associated to a product or service. If, in spite of the marking, a third party infringes the patent or trademark right, the measures available for the right holder are also stronger.

 

There are certain rules about the marking of products provided in the Mexican statute:

 

1. The use of the symbol ®, the abbreviation M.R. or the expression “Marca Registrada” (Registered Trademark), “patente en trámite” (patent pending) or “patentado” (patented) may only be used if the trademark is registered in Mexico of there is a patent application or issued patent in Mexico.

 

The use of any of the aforementioned indications without a Mexican trademark registration, patent or patent application is illegal and an IP infringement, and the Mexican Patent and Trademark Office may impose a fine, or in extreme cases order the closure of the infringing premises.

 

There is the case of products imported into Mexico that use the symbol ® because the trademark is registered in the country of origin, but not in Mexico. In such case, the use of the ® is also illegal in Mexico.

 

The same rule is applicable to patented products. The indication about the existence of the patent or a pending application is valid only if there is a Mexican patent or patent application. In any case, given that the statute makes no distinctions, it is possible to use the expression “patente pendiente”, even if the relevant Mexican patent application has not been published yet in our country.

 

2. The use of TM and SM is irrelevant in Mexico, thus it has no legal consequences.

 

The symbols TM and SM are use in the United States to claim common-law rights on a trademark protected by common-law. Mexico is a civil law country and common-law rights simply do not exist. In any case, the use of TM or SM may not replace the use of the ® symbol or an equivalent (M.R. or Marca Registrada)

 

3. Benefits from the use of marking associated to patents and trademarks

 

The use of markings to inform about the existence of a patent or registered trademark (i.e. the symbol ® of the word “patentado”) provides certain benefits stipulated in the Mexican statute:

 

a) Request the Mexican Patent and Trademark Office the issuance and enforcement of preliminary measures (similar to a preliminary injunction) against an infringer.

 

b) File a lawsuit for payment of the damages and lost of profits that the infringement caused to the right holder.

 

c) File criminal charges with the General Attorney’s Office in case of forfeited products identified with the registered trademark.

 

Failure to indicate or inform that the trademark used to identify a product or service is registered does not mean that the trademark owner would not be allowed to enforce the trademark rights. The proprietor may still file an administrative infringement action, but it would not be entitled to request the enforcement of preliminary measures, may not file a civil action for payment of damages and may not file charges due trademark counterfeiting.

 

4. Alternatives to the marking of the products and services

 

There are ways to cure the lack of use of the symbols or expressions provided in the statute to inform third parties about the IP rights associated to a product or service.

 

The Industrial Property Law allows the owner of a registered trademark or a patent to use “other means” (without further definition) to inform third parties about the IP rights. In such cases, the benefits to the right holder are the same than if he has used the symbol ®, the legend Marca Registrada, the abbreviation “M.R.” o the words “patentado” and “patente en trámite”,

 

In practice, the Mexican Patent and Trademark Office has allowed the trademark and patent owners to replace the aforementioned markings with a notice published in a major newspaper.

 

5. Some pending issues

 

There are several issues that the courts will need to clarify in connection to the marking of products and services.

 

For instance, it is unclear what would be the consequence of marking a product with terms in a language different to Spanish (i.e. Registered Mark instead of “Marca Registrada” or patented instead of “patentado”). The obvious question would be if the use of such expressions in other languages would entitle the right holder to the same benefits than if the expressions were in Spanish. The provision makes no distinction about this subject, and the fact is that in Mexico there are other languages widely spoken besides Spanish.

 

Another unclear issue refers to the possible retroactive effect that the use of the marking or a published notice about a trademark or patent would have. For example, if the trademark owner would be entitled to claim damages from the period of time when, in spite of the existence of the trademark registration and a trademark infringement, the trademark owner had not announced yet by any means about the proprietary rights.

  

6. Other signs. For those not familiar with intellectual property law, the symbol © and the expressions copyright, “derechos reservados” and all rights reserved are not related to patents or trademarks, but to copyright. Their use and consequences are ruled by other statutes, which I may analyze in other future post.

 

 

Damages claims due patent and trademark infringement

 

Section 221 Bis of the Mexican Industrial Property Law (IPL) provides that the owner of a patent or registered trademark (there are no common-law rights in Mexico) is entitled to claim from the infringer as damages and/or lost of profits at least 40% of the retail price of each infringing product sold by the defendant. The reason of such stipulation is not only to provide monetary relief to the right holder but also to punish the infringer.

 

Further, section 221 of the IPL states that the right to file a damages claim is independent from the administrative penalties that the Mexican Patent and Trademark Office (MPTO) may impose to the infringer of the corresponding patent or registered trademark.

 

For some years, the federal courts of appeals ruled that sections 221 and 221 Bis of the IPL allowed patent and trademark owners to file damages claims against infringers without a prior infringement decision issued by the MPTO*. The courts also ruled that it was valid to claim as damages and/or lost of profit the equivalent of 40% of the retail price of the infringing products sold without proving that the plaintiff suffered an actual damage or lost of profit or the consequential link between the infringement and said damages/lost of profits. Although the decisions were referred to trademark cases, the same provisions were applicable to patent infringement.

 

In 2003, the Segundo Tribunal Colegiado en Materia Civil del Primer Circuitoor Second Court of Appeals for civil matters in Mexico City decided a damages case due trademark infringement, and ruled that section 221 of the IPL demanded an earlier final infringement decision from the MPTO as a condition to file the civil action for damages.**

 

Given the inconsistencies between the courts of appeals, the Mexican Supreme Court, namely the Primera Sala or First Panel, intervened to set a binding ruling. The result was binding precedent No. 13/2004***.

 

It is necessary to state that the decision the Supreme Court contains many technical errors in connection to the intellectual property regulation, regrettably evidencing that the Judges that participated in the decision had not enough expertise in trademark and patent law.

 

In any case, the most relevant issue of the Supreme Court’s decision was a radical change about the conditions required to file a civil lawsuit for damages in cases of trademark and patent infringements.

 

Basically, the Supreme Court decided that it is necessary to have a final infringement decision from the MPTO before filing a civil action for damages and/or lost of profits. The Court also ruled that, in spite of the statutory minimum damages provided in the statute, the plaintiff had to prove in the damages trial that the infringement caused actual damages and/or lots of profit and the cause-effect relation between the infringement and the suffered damage/lost of profit.

 

In my opinion, the arguments and conclusions of the Supreme Court are incorrect and are not supported by the statutory provisions; further, such ruling works against the legitimate interests of intellectual property owners in Mexico.

 

I do not agree with the statement of a well-known Mexican business columnist that said that the decision of the Supreme Court made the MPTO stronger, given that the decision did not provide the MPTO with better tools to perform its job more efficiently. Actually the Supreme Court weakened the Mexican intellectual property system as a whole.

 

* Judicial Weekly Journal of the Federation and its Gazette, Courts of Appeals, Volume: XVI, August 2002, pag. 1323; and Judicial Weekly Journal of the Federation and its Gazette, Courts of Appeals, Volume: XIII, March 2001, pag 1797.

 

** Judicial Weekly Journal of the Federation and its Gazette, Courts of Appeals, Volume: XVII, March 2003, pag. 1680.

 

*** Judicial Weekly Journal of the Federation and its Gazette, First Panel, Volume: XIX, May 2004, pag. 365.

 

The extension of life of patents in Mexico

 

The Mexican Constitution states that the exclusivity rights provided therein for inventors are “temporary privileges”. 

 

Without entering into the discussion about the language used in the Constitution, it is clear that one of the characteristics of the exclusivity rights on inventions is the temporality.

 

Temporality may vary according to each specific intellectual property right. For example, the term of a registered utility model is only 10 years counted from the filing date, while the term of a patent is, as a general rule, 20 years counted from the filing date.

 

In this post we will briefly discuss the extension patents, and specifically the only case of patents extension currently allowed by Mexican law, although probably without having that intention.

 

The general rule is that the life of a patent (20 years from the filing date in Mexico) may not be extended. The only exceptions are the so called pipe-line patents.

 

In general terms, the pipe-line patents are those that were filed under the scope of Transitory Section Twelfth of the Industrial Property Law of 1991 (1991 IPL) between June 28, 1991 and June 18, 1992. The claimed inventions of such patents were basically pharmaceutical and agrochemical entities; these inventions were not patentable under the old Inventions and Trademarks law of 1976. The 1991 IPL not only made new pharmaceutical and agrochemical entities patentable, but provided a retroactive effect, so new medicines, fertilizers and pesticides already patented in other countries were made patentable in Mexico, notwithstanding the fact that said medicines, pesticides and fertilizers were already of public domain in Mexico and lacked novelty.

 

Putting aside the discussion about if the above-described provision was fair or not, the fact is that the language used by the lawmakers was poor, and left the implicit possibility of extending the term of pipe-line patents by stating that: “the term if the patents issued under this section shall end on the same date of expiration of the patent issued in the country where the first application was filed, and in no case the term shall exceed 20 years counted from the date of filing in Mexico”.

 

What happened is that in some of the countries where the first application for a patent related to a Mexican pipe-line were filed, namely the United States and Japan, the patent offices of those countries started extending the term of some of such “sister” patents. Of course, under normal circumstances, the extension of the life of a patent in a country –i.e. the United States- would not have direct consequences in another –i.e. Mexico-. However, in the case of pipe-line patents, given that the statute stipulated that the Mexican patent would expire in the same date than the foreign patents issued in the country where the first application was filed, the term extension granted for the “sister” foreign patent automatically impacts the Mexican pipe-line patent with a term extension.

 

The Instituto Mexicano de la Propiedad Industrial (IMPI) or Mexican Patent and Trademark Office (MPTO) is the administrative authority in charge of issuing patents and registering trademarks, among other tasks. The MPTO has been severely criticized in Mexico by the manufacturers of generic drugs because of extending the life of Mexican patents. The generic manufacturers argue that extending the life of a Mexican patent because a foreign government decided to do so is illegal (if not outrageous) and benefits innovative pharmaceutical companies (none of them Mexican) against the interest of Mexican companies and Mexican consumers.

 

In favor of the MPTO, I must say that it has always been against extending the life of patents. When a patent holder has claim in its benefit the extension of a Mexican pipe-line patent as a consequence of the extensions already granted in other countries, the MPTO has systematically refused to acknowledge such extension and the applicant has had to appeal such rejections with the courts. As far as I am aware, the innovative laboratories have always prevailed in the appeals, but not thanks to the MPTO, who has tried to use all remedies and arguments available to avoid extending the life of a patent. It not the court’s fault either; Mexican courts only apply and construct the statutes, but they are not a source of law. If there is some responsible for this situation, it is the Mexican Congress and its lousy language.

 

Concerning this matter, there is a very interesting non-binding precedent from the Highest Panel of the Federal Court of Tax and Administrative Affairs identified as V-P-SS-629 that appeared in page 87 of the Journal of the Federal Court of Tax and Administrative Affairs, January 2005, No. 49, Year V, Fifth Era. We will review this decision in another opportunity.