The global economy has undergone a significant transformation in the 21st century, resulting in the emergence of “nearshoring”, referring to the relocation of assembly lines from one country to another, especially when they are distant from each other. This process has forced a fundamental restructuring of regional supply chains in Mexico, transitioning from labor-intensive factories, commonly known as maquiladoras, to sophisticated knowledge-intensive manufacturing. As multinational companies keep moving their processes to Mexican states, such as Nuevo Leon and Queretaro, motivated by the USMCA (United States-Mexico-Canada Agreement), the Intellectual Property (IP) infrastructure supporting these investments is facing an unprecedented stress test.
The investment protection challenge lies not in physically securing the assets or resolving labor arbitration issues, but in the intangible realm of Intellectual Property (IP). Specifically, the battleground has shifted from the protection of products to the protection of processes. In the pharmaceutical, automotive, aerospace, and semiconductor sectors, which are key industries for Mexican exportations, the competitive advantage shifted from being located in the final widget (a commodity) to being in the proprietary method of its production (e.g., a heat-treatment algorithm or an efficient process in the assembly line).
While Mexico has successfully modernized its legislative framework through the Federal Law for the Protection of Industrial Property (LFPPI) of 2020, the administrative enforcement mechanisms, specifically the inspection visits conducted by the Mexican Institute of Industrial Property (IMPI), have failed to evolve with the complexities of this new nearshoring phenomena. This has resulted in an “evidence gap” that threatens to undermine the Intellectual Property certainty to sustain high-tech Foreign Direct Investment (FDI). This article dissects the origins of this gap, contrasting the theoretical robustness of the LFPPI with the practical limitations of IMPI inspections, and suggests new possible enforcement actions designed to align Mexico’s legal procedures with the technical realities arising from nearshoring.
To understand the severity of the process of patent challenge, one needs to understand that this nearshoring shift has fundamentally altered the nature of intellectual property risks in Mexico, shifting the focus from visible product counterfeiting to concealed process infringement, for which patent experts have limited capacity to identify. Unlike the past, where violations were tangibly evident in material assets, key sectors such as pharmaceuticals and aerospace rely on proprietary internal methods—like specific heat treatments or chemical synthesis—that leave no distinguishing physical mark on the final export. This opacity creates a dangerous “black box” environment where manufacturers can misappropriate patented techniques without detection, allowing them to export indistinguishable final goods.
The economic implication, unlike product counterfeiting, which primarily damages sales and brand equity, is that process patent infringement creates a structural competitive disadvantage. For instance, a competitor utilizing a misappropriated high-efficiency manufacturing method can significantly undercut prices by avoiding the original R&D expenditures. If the legal system fails to check this behavior, it signals that innovation is penalized while misappropriation is rewarded, leading multinational corporations to “black box” their advanced technologies to protect their intellectual property. This defensive posture discourages technology transfer, restricts the upskilling of the Mexican workforce, and hinders the development of a local innovation ecosystem.
To combat this, the LFPPI released in November 2020, represented a critical modernization of Mexican IP law to align with the rigorous standards of the USMCA and CPTPP. Replacing the outdated 1991 framework, the LFPPI specifically strengthened the protection for process patents by addressing the inherent difficulty patent holders face in proving infringement when they cannot access a competitor’s manufacturing facility.
To level the playing field, the law introduced the “reversal of the burden of proof” (Article 335) concept, requiring defendants to prove they did not use a given patented method. This legal shift triggers if the resulting product is new or if there is a substantial likelihood the product was made using the patented process and the plaintiff cannot reasonably verify the method. This ensures that infringers cannot hide behind “locked factory doors” simply because the end product is not strictly novel.
However, although the reversal of the burden of proof offers a strong legal theory, it creates a practical paradox where the plaintiff must first demonstrate a “substantial likelihood” of infringement to satisfy IMPI’s rigorous standards. Patent holders typically rely on circumstantial evidence to argue that the defendant is utilizing the protected method. However, IMPI examiners frequently reject such indirect proof to prevent unnecessary expeditions, thus trapping plaintiffs in a dilemma where they require the burden shift to access the necessary evidence, but need that evidence to justify the burden shift in the first place.
To break this loop, the Mexican system relies almost exclusively on the Administrative Inspection Visit, a singular visit that differs from the prolonged discovery process found in US litigation. During this visit, IMPI inspectors enter the defendant’s facility to verify allegations, recording their findings in the Detailed Minute, a document that effectively serves as the definitive record for the case. Because the entire legal outcome thus depends on whether the inspector accurately identifies and documents the infringement during this window, this inspection type confirms that LFPPI theories are not supported by administrative practices to provide legal certainty to IP experts and patent holders.
Moreover, inspections are also hindered by defendants’ aggressive use of Trade Secret protections to block access to incriminating evidence. By labeling critical elements like software code or chemical formulas as confidential, defendants exploit the risk aversion of IMPI inspectors, who fear liability for unauthorized disclosure. This hesitation leads inspectors to give up to these objections, effectively creating gray zones where process infringement remains hidden behind the trade secret principle that administrative officials are afraid to infringe.
To bridge the “evidentiary gap” where inspectors struggle to audit complex modern manufacturing, Mexico should look into European audit models as a blueprint for reform. One possible solution is the formal integration of Private Certified Experts (Peritos) into the administrative inspection visits. Under this proposed protocol, plaintiffs can petition and fund a designated technical specialist (subject to strict NDAs) to accompany the IMPI inspector. This expert can guide the inspector through complex chemical workflows or digital systems, ensuring that the official record captures the necessary technical reality without burdening the state budget or requiring IMPI to maintain an impossible roster of specialists.
Ultimately, the adoption of such technical protocols is not just a procedural formality, but a necessary evolution to match the reality of these industrial sectors. As long as enforcement relies on generalist inspections rather than specialized technical audits, the robust protections promised by the LFPPI will remain theoretical. Mexico must urgently bridge this disconnect between its advanced laws and its administrative capacity. Otherwise, the inability to effectively overview process patents will create limitations to high-tech investments that Mexico is seeking to attract.
In sum, Mexico’s industrial landscape in 2025 presents sophisticated manufacturing hubs, for which IP enforcement mechanisms are struggling to catch up. While the LFPPI provides the necessary legal frameworks to protect processes with its burden of proof concept, the current reliance on inspectors generates significant evidence gaps that may lead to infringement thriving within the “black boxes” of complex processes.
For patent holders, the immediate implication is that possessing a granted right is no longer sufficient to guarantee protection; legal guarantees must be backed by technical strategies. In this transitional period where administrative capacity lags behind legislative intent, innovators must adopt a proactive enforcement posture, treating inspections not as procedural formalities but as operations where they must give full technical clarity to inspectors.
To solve this gap, the path forward lies not in demanding highly specialized inspectors, but in integrating private certified experts to illuminate these technical nuances, thereby transforming theoretical protections into tangible enforcement. Ultimately, ensuring the security of the region’s supply chains requires that Mexico’s administrative practices evolve to match its legislative ambition, proving that it is not only open for business but fully equipped to defend the innovation it hosts.
References
- Congreso General de los Estados Unidos (2020, July 1). Ley Federal de Protección a la Propiedad Industrial. Diario Oficial de la Federación. (Last amended November 14, 2025).
- Gereffi, (2025, February 7). Nearshoring in Mexico: Diverse options for industrial upgrading (LC/MEX/TS.2025/1). Economic Commission for Latin America and the Caribbean (ECLAC).
- KPMG México. (2024, September). El nearshoring tiene el potencial de impulsar a la industria de manufactura: Oportunidades y desafíos. KPMG Insights.
- México Evalúa. (2024). ¿Listos para el nearshoring? Regular mejor para atraer más inversión (Cuadernillo 11).
- Chambers and (2025). Intellectual Property Enforcement in Mexico: Trends and Developments. Chambers Global Practice Guides.
- Olivares (2002). Proving patent infringement in Mexico. Managing Intellectual Property,International Briefings.
- Instituto Mexicano de la Propiedad Industrial (IMPI). (n.d.). Servicios que ofrece el IMPI: Protección e Infracciones Administrativas.
By: Eng. Margarita Guerrero González
mguerrero@uhthoff.com.mx
