The Mexican legal practice has adopted new ways of defending trade mark registrations in cancellation actions on grounds of lack of use.
Some years ago, our trade mark system only allowed two ways of proving the use of a registered trade mark with the aim of avoiding the loss of its registration. The system only recognised the use of a trade mark directly by the owner, or by a registered licensee. This implied the duty to register a licence agreement, so that the Mexican courts would recognise the use by third parties as equivalent to that by the owner.
However, the criteria have changed during recent years, as Mexican courts have recognised other ways of proving use by third parties without a recorded licence agreement. They have adopted new criteria that involves the well-known controlled use of trade marks. In order to maintain a trade mark's registration, Mexican courts have recognised the controlled use of trade marks as an exception for proving the use of trade marks by third parties in national territory.
"A greater protection and enforcement of IP rights is now possible"
Thanks to these changes, a greater protection and enforcement of IP rights is now possible, offering the owners of registered trade marks different ways to keep their exclusive rights by means of new legal standards such as the controlled use of trade marks.
According to the Mexican IP Law, a trade mark is a visible sign that distinguishes products or services from others of the same type in the market, and the exclusive rights for its usage is obtained through its registration before the Mexican Patent and Trademark Office (MPTO). The trade mark is effective for 10 years and it can be indefinitely renewable for terms of not less than 10 years when conditions for renewal are met.
The exclusive rights conferred on the owner of a trade mark implies that the owner is the only person who can lawfully use such trade mark in national territory.
Likewise, the rights allow the owner to authorise third parties to use, manufacture and commercialise the trade mark in connection with the products or services for which it was registered, in Mexican territory.
"Mexican courts have recognised other ways of proving use by third parties without a recorded licence agreement"
Therefore, it is clear that the Mexican IP Law allows the owner of a registered trade mark to lawfully use and exploit its trade mark under the conditions provided by the law either by itself, or by registered licensees.
However, according to the Mexican IP Law, such exclusive right compels to the owner of a trade mark to use it, either by itself in national territory, or by a registered licensee, within the first three years and during its effectiveness. Otherwise, the lack of use will open the door to third party challenges by means of cancellation actions on grounds of lack of use.
In this sense, not only the Mexican IP Law, but also several criteria issued by higher courts, have been protecting such exclusive rights by means of different legal instruments, such as: licences; distribution and franchise agreements; and, controlled use, to avoid loss of registration.
How to prove use
A trade mark registration may be cancelled when it ceases to be used during the three consecutive years immediately prior to the filing of a cancellation action on grounds of lack of use claim.
In this sense, the Regulation of the Mexican IP Law defines the term use (among other situations) as when the products or services covered by a registered trade mark have been placed in trade or are available to consumers as it was registered or with modifications that do not change its distinctive character, and according to the customs and practices in the related market.
Now, from a harmonised interpretation of provisions 128, 130 and 152 section II of the Mexican IP Law, the owner of a registered trade mark has the duty to use it during its effectiveness, either by itself, or by a registered licensee, in Mexican territory.
In this sense, the statutory requirements that have to be met in order to properly prove the use of a trade mark are the following:
- The use of a trade mark by its owner or a registered licensee, in Mexican territory;
- The use of a trade mark as it was registered or with modifications that do not change its distinctive character;
- The use of a trade mark in connection with the products or services for which it was registered; and,
- The use of the trade mark according to the customs and practices of the country.
Licence agreements for IP rights express the will of the parties to reach a business agreement where the licensor grants to the licensee the authorisation for using, exploiting and – in some cases – commercialising a trade mark in connection with the products for which it was registered and under the licensor's terms.
According to provision 140 of the Mexican IP Law, such licence agreements have to be registered before the MPTO to be enforceable against third parties. This is so any use by the licensee may benefit the owner if the trade mark is challenged on ground of lack of use.
Another effect of registering a licence agreement is the publicity the MPTO grants to a legal act. In this way, the contract will be in the public domain and will advertise that such trade mark registration is licensed.
The registration of a licence agreement must follow a standard procedure as specificied by law, so it can be enforceable against third parties.
Therefore, it seems that – among other statutory requirements which must be met – the only way to maintain the effectiveness of a registered trade mark, is by its owner or registered licensee using it.
In recent years, the Mexican trade mark authorities, based on provisions of the international treaties to which Mexico is party, namely the North America Free Trade Agreement (Nafta) and Trade-Related Aspects of Intellectual Property Rights (TRIPs) have recognised an exception for proving the use of a registered trade mark by third parties provided such use is subject to the owner's control.
First, is worth mentioning that, due to the normative hierarchy, the Supreme Court has stated that international treaties are ranked above federal laws. Therefore, Mexican courts must follow the provisions provided by international treaties, before following the provisions set out by federal laws.
"International treaties to which Mexico is party have played an important role "
Having said that, section 9 provision 1708 of Nafta foresees that "each Party shall recognise use of a trade mark by a person other than the trade mark owner, where such use is subject to the owner's control, as use of the trade mark for purposes of maintaining the registration".
Likewise, section 1 provision 1 of Nafta provides that members should give effect to the provisions of this agreement, but should not be forced to. Further, the member may implement in their local law more extensive protection than is required by this agreement, as the Mexican IP Law does.
On the other hand, section 2 provision 19 of TRIPs states that "when subject to the control of its owner, use of a trade mark by another person shall be recognised as use of the trade mark for the purpose of maintaining the registration".
Accordingly, third party use may benefit the owner of a trade mark registration to maintain its registration. Nevertheless, such statutory assumption foresees that said use must be under the owner's control. Therefore, it implies a licence agreement does not have to be registered before the MPTO.
Consequently, the scope of protection of a trade mark registration provided by international treaties is broader than that provided by the Mexican IP Law. That is, the ratio legis of such treaties grant more protection to an exclusive right previously granted to maintain its registration.
However, while international treaties recognise third party use as a means of protecting its legal rights, there is a loophole. Such texts do not define what should be understood when a trade mark is subject to the owner's control. The higher courts have remedied such a loophole by setting new criteria. They define controlled used as the interference of the owner in the commercialisation of its products distinguished by a certain trade mark, and have issued criteria for when such a circumstance may occur.
An easy way to understand how the controlled use in Mexico is recognised would be the following. Suppose that the validity of a certain trade mark registration has been challenged by means of a cancellation action on grounds of lack of use by a third party. According to Mexican IP law, the burden of proof is on the owner. This means that it would have to prove that it has been using such trade mark as it was registered, or with modifications that do not change its distinctive character, in Mexico, and in connection with the products or services for which it was registered.
In this sense, the owner of the trade mark could prove use of the trade mark: (i) by itself; (ii) by a registered licensee; or, (iii) by a third party, provided such use is subject to the owner's control.
For the third option option, the owner would have to offer as evidence either: a licence agreement (without being registered) in which it is showed the licensee has the authorisation not only for manufacturing the products to be distinguished under the registered trade mark, but also for commercialising the registered trade mark; a distribution agreement; or, the by-laws of the corporation in which it is proved the majority shareholder is the owner of the trade mark, as in this manner the owner would have the decision on how the trade mark would be commercialised.
In addition, the owner must provide invoices in which it is proved that the trade mark has been in use by an authorised third party at least during the last three consecutive years prior to the filing of a cancellation action on grounds of lack of use claim. Such proofs should show that although the challenged trade mark has been used by a third party, such use has been under the owner's control.
A positive evolution
The protection of exclusive rights previously granted under the Mexican Trademark System has evolved positively, changing from being restricted to providing a greater protection for IP rights. In this sense, international treaties to which Mexico is party have played an important role in these sorts of issues, by forcing Mexico – under the normative hierarchy – to adopt new forms of protection, such as controlled use.
The controlled use is just an interpretation from the Mexican courts, so the safest way to guarantee that the use through third parties would inure into the owner's benefit, is still the registration of the proper licence agreement (short form or redacted version to avoid disclosure of confidential information) with IMPI or MPTO.
Amanda Sigler graduated from the Instituto Tecnológico y de Estudios Superiores de Monterrey in 2011 and joined Goodrich Riquelme y Asociados in July 2014 as an IP attorney. She specialises in IP litigation, elaboration and filing of attack and defence strategies of IP rights (cancellation actions against trade mark registrations and slogan registrations), filing, maintenance and prosecution of trade mark applications and registrations, slogan applications and registrations and trade names.
Amanda has four years' experience in the IP area. Before joining Goodrich, she was an IP attorney in other important law firms, focused mainly on the defence of IP rights.
Amanda is fluent in Spanish and English.