What does the new Mexican IP Law change?
Martha Celis of OLIVARES analyses the new Federal Law for the Protection of Industrial Property which makes modifications to the rules around partial non-use cancellation actions, partial nullity actions and damages
On July 1 2020, the United States–Mexico–Canada Agreement (USMCA/T-MEC) came into force. As a result of it, Mexico was committed to make legislative changes in order to harmonise Mexican legislation with the said international agreement.
Some of the Mexican legislation impacted by the entry into force of the T-MEC is the Federal Law of Metrology and Normalisation superseded by the new Law of Quality Infrastructure, the Law of Industrial Property superseded by the new Federal Law for the Protection of Industrial Property, the Copyright Law (amendments) and the Federal Criminal Code (amendments) in connection with offences against IP rights.
The new Federal Law for the Protection of Industrial Property has just been published on July 1 2020 in the Federal Official Gazette (DOF), and will enter into force 90 working days after its publication.
Since its publication in the DOF, when the new law will come into force has been a discussion point. It is ambiguous whether these working days will be calculated according to the non-working days declared by the executive power, or pursuant to the Federal Law of Administrative Procedure, or according to the non-working days set forth by the abrogated Law of Industrial Property. Nevertheless, it has recently been published on the website of the Mexican Congress, that the new law will come into force on November 5 2020, which seems to confirm that the 90 business days may be calculated pursuant to the executive power's non-working days.
This new IP Law represents an important legislative change in modern times as it aims to implement into domestic law the standards set by the new trade and cooperation agreements signed by Mexico in recent years.
In this regard, new actions and changes in defence of IP rights have been implemented into the new IP Law, as described below.
Partial non-use cancellation actions
The Trademark System in Mexico has faced several problems because there are numerous trademark registrations in the registry which were granted to identify several products and/or services within one class, but in commercial practice such trademarks are not used to identify each and every product and/or service protected, but only to identify one or some of them.
The issue is that, many times, it is not possible to obtain a trademark registration in a particular class, since there is a senior trademark registration either covering the whole class heading, or almost all the products or services belonging to that class. However, the trademark covered by the senior registration blocking the junior application is not used to identify all the products and/or services that it covers, and in some cases, the trademark is not even in use with respect to those that could be an obstacle to the junior application.
The former IP Law did not allow for the possibility of requesting partial cancellations. Therefore for the purpose of maintaining a registration when challenged on a non-use basis, it was enough to prove the use of the trademark only in connection with one of the products/services covered by the entire description. Accordingly, even if there was no use of the trademark in connection with the specific goods/services that triggered confusion, the defendant was able to keep the registration with the scope originally allowed.
With partial non-use cancellation actions, the Mexican Institute of Industrial Property (IMPI) is empowered to declare the cancellation of the registration in connection with the products that are not in use, while the trademark registration will remain valid in relation to the products for which use is demonstrated.
This new action along with the already regulated Declarations of Use for distinctive signs, will definitely help to clear the registry of trademark registrations that are not in use in connection with all the goods/services for which they were registered, allowing the registration of other similar marks, in light of the so-called principle of specialty.
Partial nullity actions
The nullity causes of action also face some relevant changes. Perhaps, the most important change is that under the new IP Law, partial nullity actions are allowed.
The IMPI will be empowered to declare the partial nullity of trademark registrations only in connection with some of the goods or services covered by the trademark registration.
Pursuant to the Federal Law for the Protection of Industrial Property, if the partial nullity of a trademark registration is declared, the IMPI will proceed with a marginal annotation in the Certificate of Registration, where the modifications and the causes for the partial nullity will be stated.
Article 258 of the new IP Law, provides a catalogue of the invalidity causes of action that can be brought against a trademark registration, including now the possibility of requesting the partial nullity of a trademark registration when the invalidity causes of prior use (Section II) and prior registration/application (IV) are brought.
The invalidity cause of action set forth in Section II of Article 258 (prior use) did not face major changes except the inclusion of the possibility of requesting partial nullity in connection with certain goods/services covered by the registration. The invalidity action contemplated in Section IV of the above-mentioned article was modified in order to include the possibility of bringing an invalidity action based not only on a senior trademark registration, but also based on a prior existing trademark application.
In the former IP Law, the possibility of filing an invalidity action alleging that there was an existing trademark application under prosecution pre-dating the challenged trademark registration was not dealt with in the nullity cause of action based on prior rights. Instead, in order to bring this action, it was necessary to allege that the trademark registration was granted in violation of any of the provisions of the Industrial Property Law, linking this action with the prohibitions concerning registration of a trademark (formerly Article 90) or with any other legal provision.
Moreover, the invalidity cause of action based on false declarations was changed. The former Section III of Article 151 of the abrogated IP Law provided that a trademark registration would be invalidated if the trademark registration was granted based on false data contained in the application. Although this invalidity cause of action was ambiguous, the jurisprudence made clear that such information falsely declared should be considered to be "essential." In practice, most of the actions filed based upon this invalidity cause of action were related to the date of first use declared in the application papers.
In addition, it has to be said, that the recent jurisprudence in connection with this type of action provides that the burden of proof when alleging false data in the application papers lies with the plaintiff. Before this, in this type of action the burden of proof was shifted to defendant, who had to demonstrate that the information declared in the application papers is accurate.
Now, in the new IP Law, this nullity cause of action based on false information provides that a trademark registration will be invalidated if the owner of the registration does not prove the veracity of the date of first use declared in the application.
This modification reflects what already occurred in practice because now it is clear that the false declaration refers to the date of first use of the trademark, and that as a matter of law, the burden of proof to demonstrate the veracity of the date of first use lies with the owner of the registration (the defendant).
The change of burden of proof to the owner of the trademark registration is good news, otherwise this nullity cause of action could become dead letter, since the burden of proof lying with the plaintiff may be considered excessive. This is because he/she would have to prove that the defendant did not start to use the trademark when it was declared, which in would be a complex task.
Additionally, it is important to comment that pursuant to Article 259 of the new Federal Law for the Protection of Industrial Property, the nullity action will not be admitted by the IMPI if an opposition against the registration of the trademark involved in litigation was filed, provided that the arguments and the evidence supporting the nullity action are the same as those raised and submitted during the opposition and decided upon by the authority in the corresponding resolution.
This provision closes the door on the possibility of filing an opposition during the trademark application process and then filing a nullity action against the eventual trademark registration based on the same arguments and evidence, if the opposition was not successful. With the new IP Law, individuals or entities, will have to decide either to pursue the opposition proceeding or to wait for the issuance of the registration in order to bring a nullity action.
The truth is that, in practice, the nullity action will be pursued as a formal litigation proceeding, giving the opportunity to the parties to submit evidence, to make counter-arguments or to file counter-claims, to submit closing allegations, etc. while the opposition is not a proceeding followed in the form of a trial.
We will have to wait for the criteria of the federal courts regarding the legal interest of the person challenging the resolution in the opposition, since before the entry of the new law, the criteria a of the Specialised Bench of Industrial Property of the Federal Court for Administrative Affairs was to dismiss nullity trials filed by the opponent, since the former IP Law did not prohibit the filing of an invalidity action if an opposition was filed with the same arguments and supportive documents. Therefore the opponent had the opportunity to bring a nullity action if the opposition was unsuccessful, as the analysis of confusion performed during the opposition would not affect the analysis of confusion made during the nullity action.
Now, with the inclusion of the referred to Article 259 in the new IP Law, this possibility of bringing both an opposition and a nullity action (provided that it is based on the same arguments and evidence) has been removed.
Infringement actions – claim for damages
Certainly there are several changes relating to infringement actions in the new IP Law, such as the possibility of serving notice on the infringer with the complaint through edicts when the domicile is unknown, or when it is not possible to notify it in the domiciles indicated by the plaintiff. As well as this, the convenience of lifting the preliminary injunctions will now be analysed by the IMPI before doing so, thus not proceeding "automatically" to lift the injunctions upon the exhibition of a counter-bond. However, perhaps, the most relevant change is that the IMPI will now be empowered to declare damages.
According to Article 397 of the new IP Law, damages may be claimed incidentally once the infringement is declared and this determination becomes enforceable under the terms of the Federal Procedural Law.
The IMPI will determine the damages and losses, as well as the amount of the corresponding compensation. The right to claim damages will lapse after two years, counted from the date on which the IMPI declared the infringement and this decision is enforceable.
At a first glance, this change would seem to favourably impact the defence of IP rights, mainly because in practice the owners of IP rights were discouraged from pursuing a claim for damages, either because a final decision was required, it resulted in many years of litigation, or because of the complexity involved in gathering the supporting evidence to be filed before the civil courts.
The issue that may cause a discussion is that pursuant to the new IP Law, the claim for damages can be filed once the declaration of infringement becomes enforceable pursuant to the Federal Law of Administrative Proceedings. According to this provision, the IMPI's decisions are valid and in full force until they are declared unlawful. Therefore, the discussion may be focused on whether once the declaration of infringement is issued it would be enforceable in terms of the Federal Law of Administrative Proceedings, or if a final decision considered as res judicata is required to claim damages.
On a positive note, the changes in the new IP Law will definitely benefit our trademark system and will strengthen the defence of IP rights in Mexico.
Martha Celis is an attorney at OLIVARES with more than 10 years of experience in the area of litigious proceedings, mainly those taking place before the Mexican Trademark Office. She provides specialised advice to clients in the field of protection and enforcement of IP rights, assisting clients comprehensively during this process. She also has experience in litigious proceedings before the Federal Court for Administrative Affairs, district courts and federal circuit courts.