Making  the most of a hybrid system Despite the limitations of provisional measures in Mexico, when correctly planned and executed they  can prove an adequate tool to enforce IP rights - Uhthoff

Making  the most of a hybrid system Despite the limitations of provisional measures in Mexico, when correctly planned and executed they  can prove an adequate tool to enforce IP rights

Mexico has the dubious honour of being among the top five countries in the world when it comes to IP violations and IP theft. According  to recent studies, eight out  of 10 Mexicans consume some type  of IP-infringing goods.

Counterfeiting occurs  in most countries to varying degrees. A recent study sponsored by the  American Chamber of Commerce of Mexico reported that an estimated 88% of the  Mexican population have  taken possession of a counterfeit product at least once – a phenomenon that is reflected in consumer habits, as the following figures on the  estimated market share of counterfeit goods  demonstrate:

Music CDs       52%

Films (DVDs) 49%

Clothing          16%

Sports shoes   15%

Footwear         27%

Perfumes          17%

Sunglasses       24%

Video games    33%

Toys                   23%

Mobile phones/accessories   22%

The Mexican legal system for trademark infringement claims  is a ‘hybrid’ system. This is due to the fact that the Mexican Institute of Industrial Property (IMPI) is an administrative authority (ie, an agency that is part of the executive branch of the government). It is legally competent to review  and evolve  IP procedures and, at the same time,  is responsible for maintaining the IP rights register (constituting both trademarks and patents), before a formal court can intervene.

This has a direct impact on how legal proceedings are conducted and the results that can be expected from taking legal action,  since IMPI is not  a court of law and thus lacks the full legal powers of the judiciary. This is particularly important when the objective is to put an immediate stop  to infringing conduct, which  requires an aggressive approach.

Nevertheless, the Mexican legal system provides several options to enforce and protect trademarks and patents effectively. Such options must be tailored to the specific circumstances of the case at hand – that is, how the infringement was and/or is being carried out  and the rights holder’s  end goals. In addition, the measures taken should include the means to put an immediate stop  to infringing conduct and establish a basis for the recovery of damages.

Under  the Mexican legal system, IMPI can enforce IP rights by means of an administrative declaration of infringement, which  can be issued in conjunction with penalties that include a fine and temporary shutdown of the infringer’s establishment. Administrative infringement claims  are usually recommended when:

  • the infringing conduct cannot be classified as counterfeiting because it consists of copying and/or using a trademark that is similar, but not identical, to a registered trademark to produce an association in consumers’ minds and thus illegally benefit from such  behaviour; or
  • the infringed right is a patent, as there is no criminal recourse available for patent infringement.

Where no criminal recourse is available, a rights holder has limited – but  effective – legal options to defend its IP rights and lay the foundation to claim  losses and damages. Administrative infringement claims  can involve certain remedies mandated by IMPI in order to curtail infringement and prevent the suffering of further damages. Such remedies, classified in Mexican law as provisional measures, include:

  • an order to cease immediately all conduct that is considered to infringe the plaintiff’s rights (similar to an injunction);
  • withdrawal from the market of the infringing goods;
  • the seizure of such goods  by the ordering authority; and
  • closure of the establishment where the infringement is taking place.

Provisional measures and preliminary injunctions are codified  in Article 199 of the IP Law, which  states that:

In administrative declaration procedures relating to the infringement of any of the rights protected by this Law, the Institute may adopt the following measures:

  1. I. Order the withdrawal from circulation or ban the distribution of merchandise that infringes such rights as are protected by this Law;
  2. Order the withdrawal from circulation of:

(a)  Objects manufactured or used illegally,

(b) Objects, wrappers,  containers, packaging, paperwork, advertising material and similar articles that infringe any of the rights protected by this Law,

(c)  Signs, labels, tags, paperwork and similar articles that infringe any of the rights protected by this Law, and

(d) Implements or instruments intended or used for the manufacture, preparation or production of any of the articles specified  in items (a), (b) and (c), above;

III.  Prohibit, with  immediate effect, the marketing or use of the goods  by which  one of the rights protected by this Law is infringed;

  1. Order the seizure of goods, which shall take place in accordance with the provisions of Articles 211 to 212 bis.2;
  2. Order the alleged infringer or third parties  to suspend or discontinue the acts constituting a violation of the provisions of this Law; and
  3. Order the suspension of the rendering of the service or the closure of the establishment where the measures provided for in the previous subparagraphs are not sufficient to prevent or avoid the infringement of the rights protected by this Law.

If the product or service is on the market, the traders or service providers shall be under  the obligation to abstain from disposing of the product or rendering the service as from the date on which  the ruling  is notified to them.

Producers, manufacturers and importers shall be under  the same  obligation, as shall their distributors, who shall be responsible for immediately recovering any goods that are already on the market.

In order to enforce any of the  above- mentioned provisional measures, the plaintiff is legally required to produce a guarantee that is sufficient to cover  any possible damages that could  be caused to the  defendant as a consequence of such  measures. The amount of such guarantee is determined by the  ordering authority (ie, IMPI), depending on the measure that is requested and  the  specific circumstances of the  case. Normal practice is to post  a bond,  deposit bill or similar instrument in the  amount determined by the  authority before imposition of the provisional measures.

The defendant has the right to request its release from any provisional measures exercised against it by posting a guarantee (usually a counter-bond) to cover possible damages and losses, consisting of at least 40% of the amount originally requested by the authority that ordered the measures.

Once the  measures have  been imposed, the  defendant is granted 10 working days within which  to answer the  complaint. If the  defendant fails to respond during the  prescribed time, it loses the  right to participate in the proceedings, which  are subsequently conducted as an uncontested procedure.

Once the  administrative resolution is deemed final and  definitive (IMPI’s administrative resolutions can be challenged by nullity claims  filed before the  Federal  Court  of Administrative and  Taxation Affairs, and  then by an amparo appeal (an appeal on the  grounds of unconstitutionality tried before a federal circuit court),  the  party that obtained a favourable resolution can use such  resolution as the  basis of an ordinary civil claim  brought before a civil judge  in order to seek the  recovery of estimated damages, which  are awarded in a procedure separate to the  original infringement claim.

The main advantages of requesting the application of provisional measures are as follows:

  • They stop the infringing conduct as soon  as possible, thus minimising the damages; and
  • They force the infringer to divert resources if it wishes to continue with the infringing conduct, thus increasing the cost of doing  so and forcing it to consider a settlement as quickly  as possible.

The Supreme Court  has established that in order to have  a legal basis to file a civil action intended to collect  statutory damages or lost profits, it is mandatory to obtain a final decision issued by IMPI declaring the  existence of infringement of trademarks, patents or other IP rights, caused by the  unauthorised use of such rights, thus reinforcing the  importance of administrative procedures and specifically, the  possibility to request provisional measures.

IMPI is an administrative office, not  a criminal prosecution agency or court of law; despite the  fact that its legal powers are limited, it has experienced moderate success  in enforcing IP rights, especially against individuals and  organisations that have  benefited in the  past  from IP rights infringement.

Despite the peculiarities of the Mexican legal system and the limitations of provisional measures, when correctly planned and executed, such  measures can prove an adequate tool for rights holders to enforce their rights and lay the legal foundation to seek the recovery of damages and losses before a civil court.  However, case-specific advice should always be sought from a trusted IP law professional.  WTR

 

image005 2 Uhthoff

Xavier Hadad Rojas

Senior associate

xhadad@uhthoff.com.mx

Xavier  Hadad Rojas is senior associate at Uhthoff, Gómez Vega & Uhthoff, with more than 10 years’ experience of litigation. He has  a law degree from Universidad La Salle, with a specialty in intellectual property from the  Instituto Autónomo de Mexico. He has also received certification from the  World Intellectual Property Organisation. He is a member of the  Mexican Bar Association and  the Mexican Association for the  Protection of Industrial Property.

www.WorldTrademarkReview.com

 

 

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