| Back to InterAmSM Directory / Mexico / Intellectual Property / Supplementary Materials - Materiales Suplementarios |
© 1998 National Law Center for Inter-American Free Trade
OVERVIEW OF INTELLECTUAL PROPERTY ENFORCEMENT IN MEXICO
By Alejandro Perez Serrano, IP Project Coordinator
The laws enacted during the Echeverria administration, including the 1972 Technology Transfer Law and the 1976 Law on Inventions and Trademarks, [ See e.g. Ley sobre el Registro de Transferencia de Tecnología y el Uso y Explotación de Patentes y Marcas [Law on the Registration of the Transfer of Technology and the Use and Exploitation of Patents and Trademarks], published in the Diario Oficial (hereinafter "D.O.") on Dec. 30, 1972 and the Ley de Invenciones y Marcas [Law on Inventions and Trademarks], published in the D.O. on Feb. 10, 1976.] reflected the Mexican government’s protectionist policies. The newly enacted laws created an extremely unfriendly atmosphere for foreign trade by imposing, among other things, onerous restrictions on the licensing of technology. [ For example, these laws established the requirement that the parties to a licensing agreement obtain prior authorization from the Mexican government. They also set a one percent ceiling on the payment of royalties in licensing agreements involving trademarks and a three percent ceiling on the payment of royalties in the licensing of patents. ]
In 1982, during the administration of President José López Portillo, the Mexican Congress enacted the Law Governing the Control and Registration of the Transfer of Technology and the Use and Exploitation of Patents and Trademarks. [ Ley Sobre el Control y Registro de la Transferencia de Tecnología y el Uso y Explotación de Patentes y Marcas [Law Governing the Control and Registration of the Transfer of Technology and the Use and Exploitation of Patents and Trademarks], D.O. 01-11-82 [Mex.].] This law further complicated the existing system by tightening the restrictions on inbound technology transfers.
Mexico changed its policies regarding foreign investment and intellectual property under the administration of President Carlos Salinas de Gortari. In 1990, the Mexican Congress enacted the Technology Transfer Regulation. [ Reglamento de la Ley Sobre el Control y Registro de la Transferencia de Tecnología y el Uso y Explotación de Patentes y Marcas [Regulations of the Law Governing the Control and Registration of the Transfer of Technology and the Use and Exploitation of Patents and Trademarks], D.O. 01-09-90 [Mex.].] This regulation was designed to eliminate a number of obstacles to inbound technology transfers existing under earlier intellectual property laws.
In 1991, the Mexican Congress passed the Law for the Promotion and Protection of Industrial Property, [ Ley de Fomento y Protección a la Propiedad Industrial [Law for the Promotion and Protection of Industrial Property] D.O. 06-27-91 [Mex.].] which was subsequently amended in 1994. [ See Decreto por el que se reforman, adicionan y derogan diversas disposiciones de la Ley de Fomento y Protección de la Propiedad Industrial. [Decree Amending, Adding and Repealing Several Provisions of the Law for the Promotion and Protection of Industrial Property] D.O. 02-08-94 [Mex.].] As a result of the 1994 amendments, the statute is currently referred to as the Industrial Property Law ("IPL"). [ The IPL is the primary law regulating industrial property in Mexico. The IPL governs patents, utility models, industrial designs, trademarks and commercial slogans, trade names, appellations of origin and trade secrets. The IPL also establishes procedural rules for administrative proceedings such as invalidity, lapse, cancellation and administrative infringement. Pursuant to the recent amendments to the Mexican Copyright Act (Federal Law of Author’s Rights), the IPL also governs administrative proceedings arising from the "commercial violation" of copyrights. The IPL is enforced by the Mexican Institute of Industrial Property ("IMPI"), which is a decentralized agency of the Department of Commerce and Industrial Development ( Secretaría de Comercio y Fomento Industrial , or "SECOFI").]
This significant change in policy and the corresponding efforts of the Mexican government to modernize its industrial property system were enthusiastically received by the international community. With Mexico’s enactment of the IPL, the consensus was that "Mexico quickly evolved from being a nation with an egregious lack of intellectual property protection to a nation with a world class intellectual property system." [ Rafael V. Baca, Compulsory Patent Licensing in Mexico in the 1990s: The Aftermath of NAFTA and the 1991 Industrial Property Law , 8 Transnat'l Law. J. 33, 39 (1995). (Citing a comment of Gretchen A. Pemberton and Mariano Soni, Jr., Mexico's Industrial Property Law , 25 Cornell Int'l L.J. 103 (1992)).]
The Mexican copyright law governing "author’s rights," as copyrights are referred to in Mexico, has undergone fewer modifications than the industrial property law. The preceding version of the current copyright act, the Federal Law of Author’s Rights, [ Ley Federal de Derechos de Autor [Federal Law of Author's Rights] D.O. 12-21-63 [Mex.], as amended in 1991 and 1993.] was enacted in 1956 and amended in 1963. Until recent years, the 1956 copyright law was considered to be consistent with international standards. However, with the appearance of new technologies permitting the reproduction of sound recordings, videos and computer software, U.S. businesses began to report substantial trade losses due to piracy of copyrighted goods in Mexico. [ See e.g. reports filed by The Interactive Digital Software Association and the Business Software Alliance, U.S. Companies Lose $2.5 Billion to Entertainment Software Pirates , Associated Press , February 20, 1996. (Document available in Westlaw (1996 WL 4412526)).]
In light of the concerns expressed by U.S. copyright-based industries in 1991 and 1993, the Mexican Congress amended the Copyright Act to provide higher penalties for infringement. Nevertheless, the amendments to the Federal Law of Author’s Rights failed to substantially improve the existing situation. Trade organizations in the United States continued to report substantial losses due to copyright piracy. [ A report filed by the International Intellectual Property Alliance (IIPA) stated that estimated trade losses to copyright-based industries in Mexico in 1995 amounted to more than US$285 million. See " Mexico Cited as Violator of Intellectual Property" North American Free Trade & Investment Report , February 29, 1996.] As a result, on December 24, 1996, the Mexican Congress enacted a new Copyright Act, also entitled the Federal Law of Author’s Rights ("FLAR"). [ Ley Federal del Derecho de Autor [Federal Law of Author's Rights], (D.O 12-24-96) [Mex.]. [Hereinafter "FLAR"]. The FLAR is intended to protect the rights of authors, interpretive or performing artists, publishers, producers and broadcasting organizations. The FLAR is enforced by INDAUTOR. However, cases involving the commercial infringement of author’s rights are brought before the IMPI.]
The current FLAR entered into effect on March 24, 1997 and contains a number of innovative substantive and procedural provisions. The 1997 FLAR also created the National Institute of Author’s Rights (Instituto Nacional del Derecho del Autor, "INDAUTOR") as a decentralized administrative agency of the Mexican Department of Education. INDAUTOR is charged with overseeing the proper application of the copyright laws and ensuring their enforcement.
Both the FLAR [ See FLAR, supra note 12, Article 213. This article provides in its relevant part: "Civil suits concerning copyrights and related rights shall be based upon, processed and resolved according to the provisions of this law before the federal courts." ] and the IPL [ See IPL supra note 5, Article 227. This Article provides: "The federal courts shall have jurisdiction over offenses referred to in this Chapter, and also over commercial and civil disputes and the provisional measures arising out of the implementation of this Law...."] theoretically appear to permit a party to initiate a civil action. However, in practice this option is never used. This is because for some practitioners the Mexican judicial system is perceived to be very slow and consequently ineffective for handling complex intellectual property litigation.
Another distinctive note of the Mexican Intellectual Property system is that there is no private right to injunctive relief for the infringement of copyrights, trademarks, trade secrets or patents. However, it should be noted that this is a debatable issue. From the perspective of Mexican practitioners, injunctions or injunction-like measures do exist and are available under Mexican law. For example, certain provisions of the IPL appear to provide some form of injunctive relief. [ IPL, supra note 5, Article 199 bis (ii) and (iii). IPL Article 199 bis provides: "In administrative declaration procedures relating to the violation of any of the rights protected under this Law, [IMPI] shall adopt the following measures: immediately prohibit the marketing or use of products by which one of the rights protected under this Law are violated."] However, as it will be discussed below, this provisional measure is rarely exercised. Rather, IMPI inspectors perform a "visit of inspection" and, if they consider that an administrative infringement or offense has been committed, the inspectors confiscate the infringing goods as well as the equipment for making those goods. There are other remedies in the Mexican Federal Code of Civil Procedure, including embargos and interdictos that to some extent are similar to injunctions. However, these remedies are not used in intellectual property litigation.
Infraction of author’s rights matters essentially involves "minor" or administrative violations of author’s rights. [ Examples of administrative infractions are the formalization of a contract without the proper formalities or posing as a collective society without having obtained authorization from INDAUTOR. See FLAR supra note 12, Article 229.] These actions are administered exclusively by INDAUTOR. INDAUTOR may impose a range of fines for such violations, up to a maximum of 15,000 days of the official minimum daily salary for the Federal District. [ FLAR, supra note 12 at Article 230. The official minimum daily salary for the Federal District is approximately US$ 3.50]
Infraction of commercial matters involves violations which primarily pertain to economic rights. Accordingly, in practice these types of remedies are more frequently used than existing remedies for administrative violations of author’s rights. Infraction of commercial matters includes, for example, utilization or communication of a protected work without the consent of the author; utilization of the image of a person without his/her authorization; production, manufacture, storage, distribution, transportation or commercialization of unlawful copies of a protected work. [ Id. at Article 231.] These actions, however, must be carried out for the purpose of direct or indirect profit. [ Id.] Infraction of author’s rights in commercial matters are administered by IMPI in the terms set forth in the IPL. [ Id. at Article 234.] IMPI’s procedure for sanctioning these violations is, in general terms, similar to the procedure followed for the enforcement of trademarks and patents.
Finally, it should me noted that as an alternative for resolving conflicts arising out of the interpretation or exercise of the FLAR, the statute also includes mediation and arbitration procedures. [ Id. at Articles 217 and 219. ] Both procedures are completely voluntary. The voluntary mediation procedure consists of five stages. First, the affected party submits a written complaint to INDAUTOR. INDAUTOR subsequently notifies the other party of the complaint and requests that party to submit an answer to the complaint within ten calendar days following the notification. INDAUTOR then sets a date and time for a hearing. On the day of the hearing, INDAUTOR attempts to conciliate the dispute between the parties. Lastly, if no agreement can be reached, INDAUTOR will invite the parties to participate in and be bound by an arbitration procedure. [ Id. at Article 218.]
An arbitration procedure may be voluntarily requested by the parties or initiated by operation of a contract clause or by entering into an arbitration agreement. [ Id . at Article 220.] The procedure is resolved by a panel of three arbitrators. Each party selects one arbitrator from a list published on a yearly basis by INDAUTOR. The two party-appointed arbitrators then select a third arbitrator to be chair of the panel. [ Id . at Article 222.] The maximum time period for the entire arbitration procedure is 60 days, running from the date of the document designating the arbitration panel. [ Id . at Article 224.] The expenses of the arbitration are borne by both parties in accordance with the rates published by INDAUTOR. [ Id. at Article 228.]
As provided by the IPL, [ Id. at Article 213.] the following acts may constitute administrative infringement of a trademark: (1) engaging in acts contrary to accepted custom and practice or acts of unfair competition; (2) commercializing goods or services with a false indication of trademark registration; (3) using a mark that is confusingly similar to another registered mark to protect products or services identical or similar to those protected by the registered mark; (4) using a previously registered or confusingly similar mark as a tradename; (5) false designation of origin; (6) dilution or denigration of products, services or commercial activities of another party; (7) using a registered mark without the consent of its owner or without a proper license; (8) offering for sale products identical or similar to those to which a registered mark is applied; (9) offering for sale products to which a registered mark is applied and which have been altered; and (10) offering for sale or bringing into circulation products to which a registered mark is applied.
In the above-referenced cases, the complainant may request that IMPI issue an administrative declaration of infringement (declaración de infracción administrativa) in the terms that will be described below. This action may also be initiated ex officio. [ Id. at Article 188.]
As provided by the IPL, [ Id. at Article 213.] the following acts may constitute administrative infringement of a patent: (1) causing to appear as patented product goods that are not; (2) manufacturing or producing products covered by a patent or utility model or industrial design registration without the consent of the owner thereof or without the appropriate license; (3) offering for sale or placing in circulation products covered by a patent or by a utility model or industrial design registration in the knowledge that they were manufactured or produced without the consent of the owner of the patent or registration, or without the appropriate license; (4) using patented processes without the consent of the owner of the patent or without the appropriate license; and (5) offering for sale or bringing into circulation products that are the result of the use of patented processes in the knowledge that said processes were used without the consent of the owner of the patent or of the licensed user.
As in the case of trademark infringement, in the above-referenced cases, the injured party may request IMPI to issue an administrative declaration of infringement (declaración de infracción administrativa). [ Id. at Article 187.] This action can also initiated ex officio by IMPI. [ Id. at Article 188.]
The determination of the appropriate remedy or sanction to be imposed is made by IMPI. IMPI takes the following factors into consideration: the intentional character of the act or omission constituting the infringement; the economic circumstances of the infringer; the seriousness of the infringement in relation to the trading of products or the rendering of services; and the harm done to those directly affected. [ Id. at Article 219.] It should be noted that the administrative sanctions or remedies described below are independent of any monetary damages incurred by the affected party. [ Id. at Article 221.]
(a) Visit of Inspection: A visit of inspection is a procedure ordered with the purpose of investigating places of manufacture, storage, transportation or sale of products, services and documents and verifying legal compliance with intellectual property laws. [ Id. at Articles 203 and 207.] This is the most widely used remedy in cases of infringement of trademarks in Mexico. If during the course of a visit of inspection IMPI finds a manifest violation, IMPI inspectors are authorized to impound the infringing goods under the circumstances described in section (b) below.
It should be noted that not all of the intellectual property violations warrant a visit of inspection. If such a visit is not warranted, IMPI will only serve notice to the presumed infringer allowing him/her a period of ten days to respond to the request of administrative declaration of infringement. [ Id. at 216.]
(b) Impoundment of Infringing Articles and Machinery: If IMPI inspectors find "flagrant" or irrefutable evidence that an administrative or criminal violation of rights has occurred, they may "impound, as a precautionary measure, the products with which such infringement or offenses were presumably committed." [ Id. at Article 211.] This impoundment may involve "equipment, instruments, machinery, devices, drawings, specifications and any other means used in the accomplishment of the acts and events considered to be infringements or offenses." [ Id. at Article 212 bis I.]
If the injured party began a civil action to recover material damages or losses and IMPI issues a final judgment declaring that an administrative infringement was committed, the confiscated goods can be placed at the disposal of the competent judicial authority. On the other hand, if the affected party agreed to be bound by an arbitration procedure, the confiscated goods will be placed at the disposal of the arbitrator. In any other case, the parties may present a written proposal concerning the disposition of the seized goods; such proposal will be studied jointly by the parties. If no agreement is reached, the IMPI Governing Board may decide to donate the goods to agencies or entities of the Federal Public Administration, federal entities, municipalities, or public welfare or social security institutions, when the public interest is not affected, or to destroy the goods. [ Id. at Article 212 bis 2.]
(c) Monetary Fines: If IMPI determines that an administrative infringement occurred, IMPI may impose upon the infringer a fine in an amount of up to 20,000 days of the official minimum daily salary payable in the Federal District. [ The official minimum daily salary payable in the Federal District is approximately U.S. dollars $3.50 dollars per working day.] An additional fine of up to 500 days salary may be imposed for each day that the infringement continues. [ IPL supra note 5, at Article 214 (i) and (ii).] In the event of a second or subsequent offense, the fines previously imposed shall be doubled. The amount of the fine may in no event exceed three times the applicable maximum amount previously mentioned. [ Id. at Article 218.]
(d) Temporary and Final Closures: If IMPI rules that an administrative infringement was committed, it may, independent of the fines previously mentioned, order a temporary closure for up to ninety days. IMPI may also order the permanent closure of the establishment. [ Id. at Article 214 sections (iii) and (iv).] Permanent closure shall be ordered when the establishment has been temporarily closed twice within a period of two years, provided that during this period the infringing activity was repeated. [ Id. at Article 219.]
(e) Administrative Arrest: Administrative arrest for up to 36 hours can also be ordered if IMPI determines that an administrative infringement occurred. [ Id. at Article 219 Section V.]
(f) Provisional Measures: The IPL includes a series of provisional measures that can be ordered in the case of administrative infringement of intellectual property rights in Mexico. Arguably, these provisional measures may grant some form of injunctive relief in Mexico. They include, among others, the following: 1) ordering the withdrawal from circulation or prevent the circulation of goods that infringe the rights of those persons protected under this law; 2) prohibiting the marketing or use of products by which one of the rights protected under this law is violated; and 3) ordering the presumed infringer or third parties to suspend or stop the actions constituting a violation of the provisions of this law. [ Id. at Article 199 bis.]
Furthermore, enforcing intellectual property rights through administrative entities, rather than through the judicial system, may present several disadvantages. For example, it may create a conflict of interest in the cases where IMPI performs the functions of both a judge and a party. This situation could arise when an action is brought before the IMPI to invalidate a patent or other intellectual property right that IMPI itself may have granted.
Another issue regarding the Mexican enforcement system that needs to be addressed is the impossibility of obtaining damages, profits and attorney’s fees in a procedure carried out by IMPI. After a costly and sometimes lengthy procedure, the prevailing party would have to initiate a different proceeding before a trial court in order to obtain damages and attorney’s fees. This is why a prevailing party very rarely attempts to recover damages, profits or attorney’s fees in interference or infringement actions filed in Mexico.
Holders of intellectual property rights would presumably be more eager to transfer technology to Mexico or invest in its development if a private right to injunctive relief were readily available to private parties wishing to enforce their patent, copyright, trademark or trade secret rights. To maximize the efficacy of the resources available and to promote more efficient enforcement of intellectual property rights, it would be desirable for Mexico to study the possibility of creating a specialized intellectual property court in Mexico.
The holder of an intellectual property right would be able to institute a private civil lawsuit before the proposed specialized court, independently pursue his/her claims and present all relevant evidence. A separate and independent IP court would eliminate the conflict that otherwise arises when an action is brought before the IMPI to invalidate a patent or other intellectual property right that the IMPI itself may have granted. In addition, the existense of such a court would enable the private plaintiff to prepare and present his/her own evidence, including expert witness opinions.
The specialized IP court is neither a new concept nor a departure from Mexico’s legal traditions. Several specialized courts already exist in Mexico, including the Federal Tax Court (Tribunal Fiscal de la Federación) and the Agrarian Tribunal (Tribunal Agrario Nacional).
© 1998 National Law Center for Inter-American Free Trade