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Mexico’s Supreme Court of Justice finally defines ‘use of trademark’

Alejandra Badillo of Olivares discusses a Supreme Court ruling where the use of trademark in IP law is now defined as having “real and effective use”

One of the problems of the Mexican legal system, specifically in concern of IP, is the deficient regulation in the legislation regarding what is and what should be understood by ‘use of a trademark’, ‘use of a trademark in accordance with the customs and habits’ and ‘effective use vs token use’, a situation that generates legal uncertainty for all trademark owners.

In both the Intellectual Property Law and the new Federal Law for Protection of the Industrial Property, there is no definition for what should be understoodby the use of a trademark in order to preserve a registration.

The only provision that seeks to give certain parameters in regard to trademark use is the Regulation of the Intellectual Property Law, specifically Article 62, which establishes that it will be understood that a trademark is in use “when the products or services that it distinguishes have been placed in the trade or are available in the market in the country under that brand in the amount and in the manner that corresponds to the uses and customs in the trade”.

However, it was never delimited what “quantity and manners that corresponds to the customs and habits in the commerce” meant and as a consequence of this, since it was left to the discretion of the judges to determine the uses and customs in each case, there was no uniform criterion of what ‘use of trademark’ is, which allowed the ‘token use’ of a trademark as sufficient for the preservation of a registration in Mexico.

Now, after years of fighting to get the Supreme Court of Justice to issue a criterion on ‘trademark use’ and ‘effective use vs token use’, and to stop the token use for the preservation of a trademark registration, it has finally ruled on the constitutionality and scope of Article 62 of the Regulation of the IP Law.

In the resolution issued in the Review Recourse 1227/2020, the Supreme Court of Justice ruled that Article 62 of the regulation of the Intellectual Property Law is constitutional, for the reasons described below.

International treaties not contravened

It does not contravene international treaties, because the text of the treaties only states that the effective use of a trademark is required as a condition prior to its registration and there is no restriction related to the enforceability of the real and effective use of a trademark to interrupt non-use cancellation.

The fact that Article 62 of the Regulation of the Intellectual Property Law requires that in order to comply with the use of a trademark, it must be proven that the products or services distinguished by such a trademark have been placed in the trade or are available in the market in the country under that brand. This should be in accordance with the amount and in the manner that corresponds to the uses and customs in the trade, and so it does not contravene or contradict the provisions of the said treaties.

Real and effective use for the preservation of a registration

From the interpretation of Articles 130 and 152 Section II of the Intellectual Property Law, the word ‘use’ provided in the articles corresponds to the use of a trademark in a qualified way. This is by means of unequivocal acts that allow the persistence or continuity in the market (certain time) and a certain quantification of its consequences in it (sales, appreciable profits, etc.).

Therefore, it must be understood as a real and effective use, which must be represented, among other ways, by carrying out commercial transactions in a relevant number (nor sporadic or apparent), external acts of sale, distribution, commercialisation, storage, or effective preparations for the carrying out of any of these acts.

Domestic law not contravened

It does not exceed the provisions of Articles 130 and 152 Section II of the Intellectual Property Law, since the requirement stated in Article 62 of the Regulation, about the demonstration of the availability of goods identified with a trademark in the amount and in the manner that corresponds to the uses and customs in the trade. This is translated into the possibility of interrupting the non-use cancellation of a trademark registration, once the real and effective use is demonstrated.

For this reason, the provision is in accordance with Articles 130 and 152 Section II and does not exceed the regulatory faculty. It provides what is necessary for the correct and duly application of the Intellectual Property Law, as it pursues the observance of its purposes, that is, that registered trademarks identify products and services in the trade and avoid excesses in the IP rights that unduly limit commerce.

Concluding remarks

This resolution is a great precedent for the Mexican legal system. Not only is a criterion of effective and real use of a trademark established for the first time in Mexico, but it also allows Mexico to adopt a precedent concordant with international jurisprudence in trademark law, which sanctions the token use that has as its sole purpose the preservation of a registration.

Furthermore, the fact that the Supreme Court of Justice delimited that the use established in the Intellectual Property Law refers to a ‘real and effective use’, will provide legal certainty to all those applicants and owners of trademark registrations who want to start non-use cancellation claims or to defend against them. This will allow judges to apply uniform criteria and avoid the issuance of contradictory rulings.

Alejandra Badillo
Attorney, Olivares

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