The amicus brief filed by INTA with the Federal Court of Tax and Administrative Affairs (Grupo Anderson’s Case)

 

The INTA Bulletin of July 209 (Vol. 64 No. 12) informed that the International Trademark Association (INTA) filed an amicus brief with the Specialized Chamber in Intellectual Property of the Federal Court of Tax and Administrative Affairs (FCTAA), in connection with an appeal filed against the Mexican Patent and Trademark Office (MPTO).

According to the bulletin, the basic purpose of the amicus brief was to persuade the FCTAA to “reverse the decision rendered by IMPI (the Spanish acronym for the MPTO) and to interpret the law to provide Mexican trademark owners with the right to seek cancellation of a registration on he ground of bad faith, a right currently enjoyed by foreign trademark owners.”

Of course, as a Mexican lawyer, it was interesting to learn that INTA was involved in a Mexican case, but it was even more interesting that the basic purpose of the brief did not make much sense to me.

The latest issue of The Trademark Reporter (Vol. 99 July-August, 2009, No. 4), already available online for INTA members, reproduces the amicus brief filed on behalf of INTA with the FCTAA.

The brief is related to an appeal associated to three trademark cancellation actions filed by a well-known large restaurant operator named Grupo Anderson’s, S.A. de C.V. (Grupo Anderson’s), against three different trademark registrations, and to section 151, paragraph V, of the Industrial Property Law.

The challenged trademarks cover the design of a frog character used mainly on apparel; the proprietor was Tiendas Oficiales, S.A. de C.V.

The brief does not disclose specific information about the challenged trademarks, but after a quick research, I suspect that they are Mexican trademark registrations Nos. 743,437 FACE OF FROG CHARACTER DESIGN (International Class 25) and 804,371 FACE FROG CHARACTER DESIGN (International Class 35).

By coincidence (or perhaps not), on April 2008, Tiendas Oficiales, S.A. de C.V. assigned the above-stated registered trademarks to a Mexican corporation named Grupo Serigráfico, S.A. de C.V.

The amicus brief also makes reference to a trademark registration in International Class 27 -an odd Class, considering that the trademark is mainly for clothing- for the FACE FROG CHARACTER DESIGN, but my preliminary search did not reveal it (finding out what registration that could be would demand spending some money and a more time-consuming research, which I am not interested to do for the time being).

The statutory provision

Section 151 of the Industrial Property Law stipulates five basic reasons to challenge a Mexican trademark registration:

I. Registration issued against a provision stated in the Industrial Property Law or in any other statute (including international treaties).

II. Earlier and continuous use, in Mexico or abroad, of an identical or confusingly similar trademark, covering the same or similar services or products.

III. False information stated in the application.

IV. Existence of an earlier Mexican trademark registration for an identical or confusingly similar mark, covering the same or similar products or services.

V. Registration of a trademark identical or confusingly similar to one already registered abroad, if the application was filed by an agent, representative, distributor or licensee of the trademark owner, without its consent. In this case, the statute explicitly provides the presumption that the trademark was in bad faith.

A Mexican trademark registration may also be cancelled due lack of use for three consecutive years in Mexico, on at least one of the products or services listed in the registration, and because the registered trademark became a generic expression.

The amicus brief explains that the cancellation actions against Tiendas Oficiales’ trademark registrations claimed that the defendant’s trademark registrations were not valid under paragraphs I, II, III, IV and V of section 151 of the Industrial Property Law.

An invalidation claim on the grounds provided in section 151, paragraph V, of the Industrial Property Law, would necessarily involve a licensee, agent, representative or distributor that registered, without authorization from the trademark owner, an identical or confusingly similar trademark already registered abroad.

According to the brief, the MPTO refused to cancel Tiendas Oficiales’ trademark registrations on the grounds provided by section 151, paragraphs I, II, III and IV, of the Industrial Property Law, but failed to make an explicit statement about the invalidation claim under paragraph V.

Such flaw should be enough to invalidate, at least partially, the MPTO’s decision, and allows the FCTAA to render a decision on the merits of the undecided invalidation claim.

The amicus brief states that section 151, paragraph V, of the Industrial Property Law, discriminates Mexican citizens and entities, because “a trademark registration may only be declared null and void on the basis that the mark was registered in bad faith in circumstances involving foreign trademark owners. As such, the owner of a Mexican trademark registration has no recourse against an agent, representative, licensee or distributor who applies to register an identical or confusingly similar mark in its own name without consent”.

Further, the brief states that section 151, paragraph V, of the Industrial Property Law is against section 1 of the Mexican Constitution (equal protection), articles 41, paragraphs 2 and 3, and  62, paragraph 4, of TRIPS and article 1708 of NAFTA.

I must say that I disagree with most of the arguments stated in the three substantive considerations provided in the amicus brief, and with the conclusions.

First consideration. Lack of cancellation procedures for trademarks registered in “Bad Faith” to Mexican Companies.

The first consideration is incorrect.

Paragraph V of section 151 of the Industrial Property Law provides a special protection for owners of trademarks registered abroad against unfair registrations by their licensees, distributors, agents or representatives, regardless the nationality of such trademark owners.

It is important to clarify that Mexico is a civil law country, with a first-to-file trademark system; although users of non-registered trademarks have some limited actions and defenses, there are no common law rights in our country. The only way to be acknowledged as trademark owner in Mexico is having a Mexican trademark registration. Further, the statute demands the existence of a Mexican trademark registration or application in order to license the mark in Mexico.

Therefore, in order to acknowledge a company as trademark owner in Mexico, the trademark must be registered in Mexico. If the licensee, distributor or agent registers a trademark identical or confusingly similar to an earlier registered or applied mark in Mexico, for the same or similar products or services (the earlier licensor’s trademark registration or application should block such an application by the licensee, but the MPTO sometimes makes errors), the senior trademark owner could file a cancellation action claiming that the licensee’s trademark registration is invalid under sections I (claiming the existence of a senior trademark application), II (earlier and continued use of the trademark) or IV (claiming the existence of a senior trademark registration), regardless if the licensee filed the application in bad or good faith.

Under Mexican law, if the licensee’s registration is for a trademark that is not identical or confusingly similar to the licensor’s mark, or for products or services different from the ones covered by the licensor’s trademarks, there would be no invasion of the licensor’s exclusivity rights; the licensee would not be registering the licensor’s trademark because it would not be the licensor’s trademark in the first place, either because the mark is different or because the covered goods or services are different (actually, from the amicus brief, this seems to be the reason why the MPTO refused to invalidate Tiendas Oficiales’ trademark registrations under section 151, paragraph IV).

Notwithstanding the above, a trademark registration acquired by a licensee in such a way, could still be deemed invalid, for example, in the case of well-known or famous trademarks, but not because the invasion of earlier exclusivity rights, but because of the unfair competition that the licensee’s registration may imply.

Nevertheless, the invalidation cause provided in paragraph V of section 151 of he Industrial Property Law provides one advantage in relation with the causes of invalidation stated in paragraphs II (earlier use) and IV (earlier Mexican registration). Such advantage is associated with the statute of limitations. A cancellation action on the grounds provided in paragraphs II and IV must be filed within a three and five years term, counted form the date of publication of the challenged trademark registration in the Industrial Property Gazette. On the other hand, a cancellation action on the grounds stated in paragraph V may be filed at any time.

In any case, although the invalidation cause stipulated in section 151, paragraph V, of the Industrial Property Law, may be filed only by owners of trademarks registered abroad when their licensees, distributors, agents or representatives obtain a Mexican trademark registration for said trademarks without their authorization, Mexican companies are nor banned from challenging the Mexican trademark registration on such grounds, provided that they own a foreign trademark registration.

Second consideration. Section 151, paragraph V, is against equal protection provided in Section 1 of the Mexican Constitution.

The second consideration is incorrect.

First, as explained above, the invalidation cause provided in section 151, paragraph V, of the Industrial Property Law, may be claimed by any owner of a foreign trademark registration, regardless if it is a Mexican company or a foreign company.

Second, the statute stipulates an identical treatment for all persons in the circumstances provided in paragraph V of section 151 of the Industrial Property Law.

For example, if the Industrial Property Law provided a different statute of limitations, depending on the nationality of owner of the foreign trademark registration, then it would be possible to argue that the stipulation is against the equal protection clause stated in the Constitution, but that is not the case.

Third Consideration. Mexico’s compliance with International Agreements

First, no international treaty, State Constitution or federal or state law or statute is of equal rank than the Federal Constitution. They are all of lower rank than the Constitution.

For many years, the guideline provided in a binding precedent from the Supreme Court was that international treaties were of equal rank than the federal laws, but below the Constitution. In 1999, the Supreme Court rendered a new ruling, stating that federal treaties were of higher rank than federal laws, but always below the Constitution. This new ruling from the Supreme Court was confirmed in 2007, but is not binding yet.

From my perspective, the Mexican statutes provide the applicant or right-holder with reasonable procedures and formalities that are fair and equitable, as TRIPS and NAFTA demand, and I fail to see how the cause of invalidation stated in section 1512, paragraph V, of the Industrial Property Law, provided in the benefit of owners of foreign trademark registrations (both Mexicans and foreigners) may be deemed as unfair, unreasonable or inequitable. 

I believe that section 151 of the Industrial Property Law, including paragraph V, provides a reasonable opportunity to cancel a Mexican trademark registration, as stated in section 1708 of NAFTA, within reasonable time frames; the shortest term provided in the statute of limitations to file a cancellation action is three years, while there is no term to challenge a registration on the grounds provided in paragraph V.

Section 151, paragraph V, of the Industrial Property Law is not against the principle of national treatment stated in Article 3 of TRIPS and 1703 of NAFTA.

All entities and individuals, regardless their nationality, are entitled to seek the invalidation of a Mexican trademark, if they fulfill the requirements stated in said paragraph V, mainly owning a foreign trademark registration. As I stated above, if the plaintiff (Mexican or foreigner) holds a Mexican trademark registration, then a different cause of cancellation, provided in paragraph IV, would apply.

It is true that when there is discrepancy between a federal (or state) statue and an international treaty, the latter must prevail, and the court (or the MPTO) should apply the international treaty, if such treaty provides in the benefit of one of the parties a specific substantive right, claimable before a Mexican authority.

For example, the old Industrial Property Law of 1942 (in force until 1976) did not provide protection for service marks. However, the Supreme Court ruled that service marks could be registered and protected in Mexico, by applying the provisions stated in the Paris Convention*.

No Mexican court, not even the Supreme Court, may change a statute to adjust it to an international treaty. The Supreme Court and other federal courts may declare invalid a statutory provision, or a statute, but they can’t amend the law.

The amicus brief asks the FCTAA to interpret the Mexican Industrial Property Law in a manner according to the international treaties, namely, “that it does not limit the cancellation of trademark registrations obtained in bad faith to circumstances involving foreign trademark owners only”.

As I stated above, the statutory provision does not limit the cause if cancellation stated in section 151, paragraph V, to foreign trademark owners, but to owners of foreign trademark registrations, which is not the same.

On the other hand, neither NAFTA or TRIPS provide that the holder of a trademark registration is entitled to invalidate another trademark registration because the latter was filed by a licensee, distributor, representative or agent of such right holder, and the registration is presumed to have been obtained in bad faith; therefore, there is no substantive rights stipulated in those international treaties that the FCTAA may apply in the benefit of one of the parties in the dispute.

If the lack of a statutory provision in Mexico, stipulating a cause of invalidation as the one stated above, were deemed to be against the obligation of Mexico of providing fair and equitable procedures, or stating a reasonable opportunity to cancel a Mexican trademark registration (a position I would not agree with), the courts cannot remedy such failure, at least not under the current Constitution.

It would be up to the Federal Congress to amend the statute and broad the current causes of invalidation of a trademark stated in the Industrial Property Law; meanwhile, the lack of compliance of Mexico of the international treaties would be a source of international liability.

It would be important to state that article 6 Septies of the Paris Convention provides the right to cancel a registration filed by an agent or representative without authorization of the trademark owner, no mater if such trademark owner had the mark registered in Mexico or in another country; the provision makes no reference to licensees, so it would be quite arguable if this cause of cancellation can be applied to licensees, as in the Grupo Anderson’s case.

Conclusion

Stating that the Mexican owner of a prior registration does not have the right, available to non-Mexican trademark owners, to challenge a later registration (for an identical or confusingly similar trademark) that was obtained in bad faith, as the amicus brief of INTA concludes, is wrong. The right is available for Mexicans and foreigners, provided that they own a foreign trademark registration and that the registration in Mexico was obtained by a licensee, distributor, representative or agent, without consent of the right-holder of said foreign trademark registration.

I agree that an amendment to the current section 151, paragraph V, of the Industrial Property Law, providing additional protection to holders of trademarks registered abroad and in Mexico against bad faith trademark registrations obtained by licensees, distributors, agents and representatives, would be desirable.

However, Section 151 of the Industrial Property Law allows all owners -Mexicans and foreigners- of a prior Mexican registration or application (even earlier users of non-registered trademarks) to challenge a later registration for an identical or confusingly similar trademark for the same or similar products, regardless if it was obtained in bad or good faith.

* Binding rulings of the Second Chamber of the Supreme Court. Seventh Era, Second Chamber, Weekly Judicial Journal of the Federation, 72 Third Part, Pages 23 and 25.

Are letters of consent and trademark coexistence agreements effective in Mexico?

 

Mexican statutes do not stipulate any provision regarding trademark coexistence agreements and letters of consent. Nevertheless, these instruments have been widely used to prevent or overcome objections from the Mexican Patent and Trademark Office (MPTO) associated to applications for trademarks identical or confusingly similar to earlier registered or applied ones, protecting the same or similar products or services.

The statute provides that the MPTO will reject a trademark application when the trademark is identical or confusingly similar to an earlier registered or applied one, to cover the same or similar goods or services. Owners of existing registrations are allowed to apply for the registration of identical trademark to protect goods/services similar to those covered by the senior registration. 

However, the attitude of the MPTO to trademark coexistence agreements and letters of consent has changed, and in the last fifteen months it has been quite hostile. Now the question would be: if they are not regulated, do letters of consent and coexistence agreements actually work in Mexico? 

In general, letters of consent and coexistence agreements have two basic purposes: (i) to overcome an objection raised by an examiner, associated to a senior trademark registration or application; and (ii) to prevent or settle a trademark dispute between two different persons. 

In general, Mexican practitioners give more importance to the administrative aspect of the letter or agreement (as a mean to overcome an objection from the examiner) and often neglect the second contractual aspect, overlooking the rights and obligations arising from the letter of consent or coexistence agreement. 

Consequences of letters of consent and coexistence agreements in connection with the MPTO 

As I stated above, letters of consent and coexistence agreements are not regulated in Mexican law, thus they are not binding for the officials of the MPTO. 

The Mexican Industrial Property Law states that one of the aims of the statute is “encouraging the improvement of the quality of goods and services in industry and commerce, according to the interest of the consumers”. 

With the above in mind, the MPTO started arguing about fifteen months ago that the protection of the consumers must have priority over the interests and wishes of the trademark owners. As a consequence, the approach of the MPTO to letters of consent and trademark coexistence agreements has been lees friendly than it used to be. 

In an effort to provide some certainty about how effective a letter of consent might be to improve the chances of having a trademark registered in spite of the existence of earlier registered identical or confusingly similar trademarks to cover the same or similar products or services, the MPTO developed a few guidelines. The guidelines are not actual directives, since they do not appear in any document or internal regulation, and have been communicated orally by the official in charge of the trademarks area of the MPTO in conferences with practitioners, so it also means that they may become more liberal or more astringent at any time and without notice. 

Basically, the MPTO will accept a letter of consent or coexistence agreement to dismiss an anticipation, in the following cases: 

(i) Similar trademarks covering the same or similar products or services, provided that the distinctive element of one of the trademarks is not identically reproduced in the other trademark; and 

(ii) Identical trademarks covering similar products or services, provided that the goods or services listed in the pending application are not implicitly included in the list of products or activities of the senior trademark registration/application, or vice versa.

 The MPTO will not accept a letter of consent or coexistence agreement in the following cases: 

(a) Identical trademarks covering the same products or services. A word mark would be regarded identical to a word+design trademark if they share the same words. 

(b) Trademarks that share the same distinctive element to cover, implicitly or explicitly, the same products or services. 

This last guideline is causing problems to corporations that allow different subsidiaries or sister companies to register trademarks using the same house mark or distinctive feature for their specific lines of business, because the MPTO is rejecting such new applications, even when the applicant files a letter of authorization or agreement executed with the proprietor of the senior trademark registration 

In a case I found a few minutes ago while browsing in the on-line database of the MPTO, on February 20, 2009, the MPTO rejected the trademark application No. 919,139 “ILT ON SITE” filed by a Mexican corporation to cover “real estate affairs”, due the existence of the earlier trademark registration No. 982,020 “ILT”, also covering “real estate affairs”. The MPTO rejected the application in spite of the fact that the owner of the anticipation is a shareholder of the applicant and that he executed a letter of consent, stating that he authorized the registration of “ILT ON SITE” by his company. 

Usually the MPTO does not issue an office action, informing the applicant that it will not accept the letter of consent or coexistence agreement, but issues the final rejection of the trademark application. From there, the only remedies available for the applicant are filing a petition for administrative review by a higher rank officer within the MPTO itself (often a waste of time), or an amparo indirecto or constitutional appeal with a District Judge, or an appeal with the Tribunal Federal del Justicia Fiscal y Administrativa or Federal Court of Tax and Administrative Affairs (FCTAA), which is the most usual way of challenging the MPTO’s decisions. 

It is important to state that the non-specialized Chambers of the FCTAA have issued inconsistent decisions concerning the consequences of letters of consent and coexistence agreements; I have no information about any ruling from the specialized Chamber. 

Although I am aware of the existence of rulings in different senses, the only two published precedents I found (non-binding) from two of the non-specialized Chambers of the FCTAA*, expressly state that the MPTO should reject an application for a trademark identical or confusingly similar to an earlier registered one for similar goods or services, even if the owner of the earlier registered trademark expressly authorizes the approval of the application. 

Therefore, letters of consent and coexistence agreements may not guarantee that the MPTO will approve a trademark application; in the best scenario, they would only increase the chances of success, provided that they follow the current guidelines of the MPTO. 

Consequences of letters of consent and coexistence agreements between the parties 

When a letter of consent is executed by the trademark owner only, it is only an unilateral declaration, with no binding effects for the applicant. However, once the letter if filed with the MPTO, the applicant is implicitly accepting the terms of the letter, and then it becomes a contract under Mexican law. 

Most letters of consent I have reviewed are more or less vague about the rights and obligations of the involved parties. In many cases, the letter only states that the trademark owner ‘authorizes’ the registration of the applicant’s trademark for certain goods or services or in a specific International Class. 

A plain authorization granted by the trademark owner must imply at least some obligations for the authorizing party and some rights for the applicant; the problem is that these obligations and rights would be implicit, not explicit. From my perspective, the ‘authorization’ implies the obligation for the trademark owner to not oppose the application, but nothing more. If the letter or agreement only refers to an “authorization”, the earlier trademark owner would be allowed to file a cancellation action against the registration resulting from the so authorized application, claiming that it invades the exclusivity rights arising from the senior trademark registration, because the general Mexican statute that governs contracts, provides that the waiver of any right must be explicit; otherwise it is illegal and unenforceable. 

The above is just an example about the importance that a trademark lawyer should give to the contractual aspect of the letter of consent or a coexistence agreement. Further, if the applicant is unsuccessful in obtaining the approval of the trademark application, in spite of the authorization letter or agreement, such letter or agreement could be the only instrument available for the applicant to defend itself in case it decides using the unregistered trademark and, on the other hand, the earlier trademark owner decides to file an infringement action. What I mean is that even if the letter of consent or coexistence agreement was not effective to obtain the trademark registration from the MPTO, the obligations and rights contained therein would still be valid and enforceable between the parties, thus it becomes extremely important that the letter of consent or coexistence agreement explicitly stipulates the rights of the parties and the waivers.

 *Journal of the Federal Court of Tax and Administrative Affairs. Fifth Era, Year VII, Volume IV, No. 73, January 2007, Page 1927. Thesis: V-TASR-I-2346.

* Journal of the Federal Court of Tax and Administrative Affairs. Fifth Era, Year VII, Volume IV, No. 73, January 2007, Page 1929. Thesis V-TASR-II-2347.

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

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.