Copyright 1995 NLCIFT
Intellectual Property Protection and Enforcement in
Mexico. by Christina Moeckel
I. Background of Mexico's Legal System.
Mexico is a civil law country, as opposed to the U.S. and Canada
which belong to the common law system. There are significant
differences between these legal systems with respect to the
importance of judgments and the role of international treaties.
Similar to the U.S. in Mexico, laws can only be enacted by the
Federal or the State Congress. However, unlike in the U.S. courts
are limited to interpreting the laws that were enacted by Congress.
In Mexico case decisions are not as significant in setting
precedents as they are in the U.S.
In Mexico International Treaties are self-executing and need
therefore not be implemented by law. Therefore, Mexican lawmakers
and government officials often argue that Mexico's law does not
require amendments to comply with NAFTA, since NAFTA itself is a
Mexican law. In reality, however, judges do not consider NAFTA as
a Mexican law when rendering decisions.
II. Sources of Law protecting Intellectual Property.
Copyright in Mexico is protected by the Mexican Copyright Act "Ley
Federal de Derechos de Autor". This law was enacted in 1984 and was
amended in 1991 to include computer programs.
The second source of law is the Industrial Property Act "Ley de la
Propiedad Industrial". The predecessor of this code, "Ley de
Fomento y Proteccion de la Propiedad Industrial" was enacted in
1991 and amended in October 1993 and in 1994. The Industrial
Property Law encompasses among others patents, trademarks and trade
secrets.
Prior to the enactment of the Copyright Act in 1984 and the
Industrial Property Law in 1993 Mexican laws on intellectual
property and foreign investment were very restrictive on the import
of foreign technology. The intellectual property laws contained
compulsory licensing provisions for foreign technology that kept
foreign companies from exporting their technology to Mexico.
The prospect of being part of NAFTA made Mexican lawmakers
reconsider their restrictive import policies and led to the
amendments to the Copyright Act and the Industrial Property Law in
1991 and 1993.
III. Copyright Law.
U.S. firms last year lost US $162.4 million in Mexico as a result
of software piracy. All in all, in 1994 theft of software programs
resulted in losses totaling $200.2 million for both local and
foreign companies, an increase of 28% over 1993, according to
estimates of the Business Software Alliance. Of nearly 20 cases
filed by BSA members since 1992, not one has been adequately
pursued by the Mexican attorney general's office. Only two
indictments have been made and none has gone to trial yet. Mexico's
laws protecting intellectual property have not been effective in
the area of software piracy.
1. Protection offered by the Mexican Copyright Act.
Article 7 of the Mexican Copyright Act offers protection to
literary, scientific, technical, legal, musical and sculptural
works and to all works of art. Since 1991, computer programs are
explicitly protected as a seperate category of works. Nonetheless,
the Mexican Copyright Act does not state that computer programs are
protected as literary works within the meaning of the Berne
Convention. Thus, it is still unclear whether computer programs
will benefit from the existing jurisdiction regarding works of
literature.
Unfortunately, Mexican law does not provide any definition for
computer programs and few decisions have been rendered that can
clarify the scope of protection for computer programs. The literal
elements of computer programs are protected, whereas a great amount
of uncertainty exists regarding the protection of nonliteral
elements such as flow-charts and the "structure, sequence and
organization" of a program.
Article 2(III) of the Mexican Copyright Act conveys to the author
the exclusive right to commercially exploit the work. According to
Article 135(III) of the Copyright Act, the infringer must act "with
profit making intent" (con fines de lucro) for his or her conduct
to be actionable under criminal law. Therfore, only unauthorized
commercial exploitation of the author's work represents copyright
infringement. The problem arises, however, when the infringer does
not make direct profits by exploiting the work but makes indirect
profits, i.e. by making multiple unauthorized copies not for sale,
but for use within the company. According to Art. 75 of the
Copyright Act, it may be sufficient if the copyright owner proves
the indirect commercial intent of the infringer.
Mexican copyright law recognizes the concept of "work-for-hire."
According to Article 59 of the Copyright Act, the employer is
considered the author of a work regardless of its status as
individual or corporation. It is advisable to set up a written
agreement that establishes the contractual terms.
The doctrine of fair use is recognized by Article 18 of the Mexican
Copyright Act. Fair use encompasses among others the translation or
reproduction of small fragments of scientific, literary or art
works for the purpose of education, literary criticism or
scientific investigation, the making of a copy for private use, and
a back-up copy of a computer program.
2. Registration Procedures.
In Mexico, copyrights are registered with the Copyright Office in
Mexico City. Registration is relatively uncomplicated to obtain.
You may register your Work for a nominal fee.
Although access of third parties to the deposited material is
prohibited, unless it is authorized by the owner, it is advisable
in case of registration of a copyright in a computer program not to
provide the full source code but to deposit the first or last 10%
in object code.
The documents that are required to prove copyright ownership need
not be legalized.
Article 119(II) of the Mexican author's rights law requires the
registration of Licensing Agreements to take effect. The power of
attorney may also be registered. It should be notarized but need
not be legalized by the Secretary of State
The same is true for the power to receive royalties.
The application requirements:
Spanish translations of all documents are required.
Three copies of the work must accompany the application. Name,
address, and nationality of the applicant, and if the applicant is
a corporate entity, the place of incorporation.
The full title of the work must be provided and whether the work
has been published. In case of a work already published, date and
place of first publication and date of first publication in Mexico
must be provided.
In case of a "work for hire" the application must indicate the
name, address and nationality of persons who contributed to the
work.
Regarding computer programs, print-outs of the first and last ten
pages of the source code or object code versions of the program
must be filed.
Registration takes approximately 6 weeks to 10 months to effect.
3. Enforcement.
Mexico's Federal Copyright Law does not provide for civil remedies
such as injunctions or impoundment. Instead, the copyright owner
must convince the attorney general to move forward and seize the
infringing goods.
In Mexico, the enforcement of intellectual property rights is still
in a developing stage. There have been a few high profile cases of
enforcement of unauthorized duplication - such as the case of
software copyright infringement by the large German chemical
company Hoechst, which used unauthorized copies of software within
the company - but most of the subtler issues of infringement have
gone unaddressed. The reasons for such selective intellectual
property enforcement have to do with the relatively high degree of
sophistication required to determine the infringement of such
rights.
In the rare event that a civil action occurs in intellectual
property matters, a complaint must be filed with the appropriate
civil court. The plaintiff must provide a detailed description of
the nature of his injury and determine the amount of damages.
The Copyright Office is not empowered to investigate cases of
infringement. It is, however, authorized to intervene in conflicts
between authors.
In practice, however, no civil suits are brought because the
proceedings are slow, document intensive and no injunctions are
available.
Mexican copyright law states that damages must be at least 40 % of
the sales price to the public of a copy multiplied by the number of
unauthorized copies. Consequently, after protracted and expensive
litigation, damages awarded will be no more than 40% of the actual
damages.
For this reason, most parties seek to protect their rights under
criminal law.
Criminal procedures in Mexico.
For a criminal trial, evidence of the crime and person who
allegedly infringes the copyright must be provided. The more
evidence can be collected, the faster the trial will proceed.
The duration of a criminal trial varies. It depends on how busy the
Attorney General is at the time the denuncia, which is the criminal
complaint, is presented. The action may take 6 months to one year.
The denuncia, or criminal complaint, must be presented to the
Procuraduria General de la Republica, or Federal Attorney General's
office. The denuncia need not state the law, but in practice it is
necessary to provide a complete statement of the law since
copyright violations and copyright law are not well known.
The documents providing evidence of copyright are either a
certificate issued by the Mexican or U.S. Copyright Office. Every
document must be fully legalized by the State Department or
consularized by the Mexican Embassy, which provides such services
in Washington D.C. within 3 weeks.
After the presentation of the denuncia, delays are normal.
It is advisable to establish good relations with the prosecutors.
Also commitments from higher levels are very useful. The
investigation will start at this time.
In case where notice to the adverse party is likely to lead to the
disappearance of evidence - such as in cases of software copyright
infringement - counsel for the moving party may be able to convince
the Attorney Generals's Office to proceed without notice. In this
event, the prosecutor will apply to a federal motions judge for a
search warrant (orden de cateo). If issued, a team consisting of
prosecutors, the moving party's lawyer, the federal judicial police
(federales), technical experts, and photographers will appear at
the alleged infringer's premises without notice and begin to
examine the alleged infringing activity or items. If denied, the
defendant will be called to the Federal Attorney General's Office
to give testimony.
After a search and seizure, expert reports are prepared. If they
are positive, an indictment or an arrest warrant will be issued.
The alleged infringer might go to jail or be set free on bond until
trial.
After trial, which generally consists of a series of court
appearances, responsible individuals will either be freed or
incarcerated ( six months to 6 years).
More frequently a fine will be imposed of up to U.S. $ 1,500.
Controversy exists as to whether this amount is sufficient to keep
others from copying software.
The biggest problem that a criminal trial presents for the moving
party is the requirement that commercial or profit-making intent of
the infringer be demonstrated. This can be difficult to show in
cases such as the internal duplication of computer software by
large companies for use within the company but not for sale, as
well as in cases where hardware sellers load the software on the
harddrive without authorization by the right holder in order to
make their products more attractive, but without charging for the
software. Mexican authorities's thus far have shown a willingness
to liberal interpretation of the commercial intent requirement.
But this requirement still presents an obstacle for right holders
in a criminal trial.
For all those reasons you might be anxious to come to a settlement.
A settlement between the parties is allowed and recommended during
or before civil or criminal trials. During criminal trials, a
settlement is only possible if the matter is of minor importance
and is therefore qualified as a "querela", which means that the
outcome of the case is left to the disposition of the parties.
If the matter is categorized as "de oficio" the parties can not
stop the trial by settlement, since the state has the duty to
prosecute the matter regardless of the parties' agreements. If such
a trialis initiated by a party the chances for a private settlement
are low.
There does not appear to be a strong rationale between the two
types of actions particularly in the computer software context.
Unauthorized reproduction of the computer program is more likely to
be qualified as "de oficio", whereas unauthorized use is considered
as a "querela". Therefore a settlement between the parties is
easier to reach in cases of unauthorized use since the trial can be
stopped after an agreement has been reached.
A settlement is generally favorable since it tends to save time and
money.
4. Critical deficiencies.
Mexico's Federal Copyright Law fails to prescribe acceptable
minimum monetary fines to adequately deter copyright infringement.
Mexico's system of imposition of civil monetary compensation falls
far short of what would adequately compensate the copyright holder.
Criminal sanctions fail to deter copyright violations as the
copyright law prescribes fines for the unauthorized exploitation of
a protected work for profit of from 50 to 500 times the minimum
daily salary in force in the Federal District - roughly US$100 to
US$1,000.
IV. Industrial Property Law.
Industral Property Law covers the areas of patents, trademarks and
trade secrets. The Industrial Property Law is administered by the
Industrial Property Office "Instituto Mexicano de la Propiedad
Industrial" (IMPI), located in Mexico City. The Industrial Property
Office is an independent organization which was created by the
Secretary of Commerce and Industrial Development (Secretar¡a de
Commercio y Fomento Industrial (SECOFI)) and is in charge of patent
and trade mark registration, as well as disputes on an
administrative level regarding the above mentioned areas of
intellectual property.
1. Patent Protection.
Mexican Industrial Property Law offers patent protection for
inventions.
Requirements for protection are novelty, inventive activity and
industrial application. An invention is considered novel, when it
is not state of the art. Inventive activity, is the creative
process providing results that cannot be obtained from the state of
the art methods by a person skilled in the art.
Excluded from protection are among others theoretical or scientific
principles, discoveries of natural phenomenons, schemes, plans,
rules and methods for carrying out mental acts, games or
businesses, methods of surgical, therapeutic or diagnostic
treatment and computer programs.
Patentable works include everything that fulfills the three
requirements for patentability and is not explicitly excluded. Non
patentable works include plant varieties, biological processes for
obtaining or reproducing plants or animals, plant or animal
species, and genetic material.
In Mexico, contrary to the United States, the time of invention is
irrelevant to determine priority. In Mexico, the person who first
files the patent application is considered the inventor and will be
the owner of the future patent.
Registration.
Patent applications can only be performed through a local counsel.
This lawyer must be provided with all relevant data such as
applicant's name, address, a clear description of the invention,
priority data, if it is a foreign invention. Along with the
application the power of attorney and the patent assignment, that
is, assignment of rights in the invention may be filed.
Publication of the pending application will take place 18 months
following the filing date. Afterwards the IMPI will decide whether
all requirements are satisfied to grant the patent.
2. Utility Models and Industrial Designs.
Utility models and Industrial Designs are protected under Chapter
II and IV of the Industrial Property Law.
Utility models may be registered for a period of 10 years with the
IMPI if they are novel and are suceptible to industrial
application.
Industrial designs may be registered for a period of 15 years if
they are independent creations and differ to a significant degree
from known designs.
3. Trademark Law.
Trade and service marks may be registered with the IMPI for a
period of ten years and may be renewed every ten years. Only
visible signs may be registered. Trade dresses may only be
registered if they are three-dimensional. A name may be registered
if it has distinctive features such as representation of a specific
good or service. Descriptive names of goods may, however, not be
registered.
The Mexican concept of intent to use requires the owner of the
trademark to use his mark within the first three years following
the date of filing. If this period was too short the owner may
obtain an extension for the next three years. If a trademark is
similar to another to an extent that can cause confusion, the
trademark may not be registered.
Registration is usually completed within a year. Licensing
agreements regarding trademarks must also be registered. In order
to receive recognition of the priority date, the application must
be filed by a U.S. or Canadian owner of the trademark.
Trademark research can be conducted either through the IMPI
directly in Mexico City or through the National Law Center in
Tucson, Arizona.
4. Denomination of Origin.
According to the Articles 156 et seq. of the Industrial Property
Law the name of a region from which the product originates may be
protectet by declaration of the IMPI and publication in the Diario
Oficial. The producer of the respective product may apply for such
protection.
5. Trade Secret Law.
In Mexico, trade secret law is regulated under the Industrial
Property Law. This law was amended and became effective from
October 1, 1994. In addition to governing trade secrets, it
provides rules for patents and trade marks.
Definition.
The definition of a trade secret under Mexican law is provided by
art. 82 of the Industrial Property Law. According to Article 82 of
the Industrial Property Law, an "industrial" or trade secret
represents all industrial or commercial information which is kept
by a corporation or an individual as confidential and which can be
used to obtain or maintain an economical or competitive advantage
over third parties.
Elements of Trade Secret.
Mexico requires three elements for information to be considered a
trade secret.
The first element established by Article 82 of the Mexican
Industrial Property Law is confidentiality. In order to be
considered confidential the information must be neither public
knowledge nor obvious to an expert working in the field. The
knowledge must also not be obtained by authorized disclosure or
judicial order.
In order to be protected as a trade secret according to art. 82 the
information must be used in the business of the owner and enable
the latter to maintain a competitive or economic advantage. The
industrial secret must refer to products, characteristics or
finalities, methods of production, forms of distribution or sale of
products.
As a third element according to Art. 83 of the Industrial Property
Law the information must be in writing in order to be protected as
a trade secret. The information must be fixed in a written
instrument such as documents, electronic or magnetic media, optic
discs, microfilms or similar instruments.
Misappropriation.
Misappropriation is defined under Article 85 of the Industrial
Property Law. The requirements are: the existence of a professional
relationship and the warning that the information given was
confidential. Under Article 86, any appropriation performed by
illegal means also constitutes an infringement of the trade secret.
5. Enforcement of Industrial Property Rights.
Enforcement may either be obtained through administrative
proceedings or through trial. Sanctions are almost exclusively
available under criminal law. Damages can only be obtained through
a separate civil trial. The process of enforcing industrial
property rights can be time consuming and expensive.
Administrative Procedure
Each application or motion regarding patents, trademarks or trade
secrets must be directed to the Industrial Property Office in
Mexico City. The application or motion must be in writing and in
Spanish. It must be signed by the interested party or his
representative, who must present a judicial power of attorney.
The administrative procedures include procedures for the
declaration of nullity, expiration or cancellation of a patent or
trademark. The application for an administrative ruling shall
contain the applicant's, as well as the opposing party's name and
address, the purpose of the application, the description of the
facts and the provisions of the law on which the application is
based.
If a patent application is rejected a petition for reconsideration
may be filed in writing with the Industrial Property Office within
30 days following the date of notification.
Administrative violations, such as using a confusingly similar
trade mark or marking a product as if it were protected by a patent
or a registered trademark, although it is not, may be sanctioned
with a fine of up to twenty thousand times the daily minimum wage
prevailing in the Federal District, temporary or permanent closure
of the infringer's premises or administrative arrest for up to 36
hours.
Civil Enforcement.
Article 221 of the Industrial Property Law permits civil actions to
obtain damages from the person that discloses a trade secret. Some
remedies based on the Civil Code are also available, but can in
some cases be more theoretical than practical.
Damages might be sought under contract law, if the parties had
entered into a contract.
Under the Industrial Property Law, the person that suffers the harm
can initiate a civil action for damages. The damages must not be
less than 40% of the market price of the product or the cost of
realization of any service that is in violation of the Industrial
Property Law.
Criminal Enforcement.
Under the Industrial Property Law, it is a crime to disclose an
industrial secret to a third person that is known as result of a
labor or business relationship, profession or is based on a license
to use the secret. Two requirements have to be met: the violator
must have known about the confidentiality and disclosed the secret
with the purpose of obtaining an economic benefit or the violator
must have disclosed the secret with the intention of producing harm
to the person that was keeping the secret.
It further constitutes a crime to use a false trademark or to
repeat any of the administrative offenses.
The infringement of a trademark or a trade secret is punishable by
up to two years in prison or a fine equal to 100 to 10,000 times
the daily minimum wage. In addition the public prosecutor can close
the establishment of the infringer.
A petition must be filed with the Attorney General's Office. The
petition is handed over to the Public Prosecutor who is the
District Attorney for Special Crimes. The plaintiff has to provide
enough evidence to support the action. The technical opinion of the
Mexican Institute of Industrial Property will be asked in order to
determine whether the action by the defendant presented and
infringement or not. If the Public Prosecutor considers that there
is enough evidence, he can bring the case before the Federal
Criminal Court. It is possible to appeal before the Federal Circuit
Court within a period of 15 days .
