The INTA Bulletin of July 209 (Vol. 64 No. 12) informed that the International Trademark Association (INTA) filed an amicus brief with the Specialized Chamber in Intellectual Property of the Federal Court of Tax and Administrative Affairs (FCTAA), in connection with an appeal filed against the Mexican Patent and Trademark Office (MPTO).

According to the bulletin, the basic purpose of the amicus brief was to persuade the FCTAA to “reverse the decision rendered by IMPI (the Spanish acronym for the MPTO) and to interpret the law to provide Mexican trademark owners with the right to seek cancellation of a registration on the ground of bad faith, a right currently enjoyed by foreign trademark owners.”

Of course, as a Mexican lawyer, it was interesting to learn that INTA was involved in a Mexican case, but it was even more interesting that the basic purpose of the brief did not make much sense to me.

The Trademark Reporter (Vol. 99 July-August, 2009, No. 4), available online for INTA members, reproduces the amicus brief (in English) filed on behalf of INTA with the FCTAA.

The brief is related to an appeal associated to three trademark cancellation actions filed by a well-known large restaurant operator named Grupo Anderson’s, S.A. de C.V. (Grupo Anderson’s), against three different trademark registrations, and to section 151, paragraph V, of the Industrial Property Law.

The challenged trademarks cover the design of a frog character used mainly on apparel; the proprietor was Tiendas Oficiales, S.A. de C.V.

The brief does not disclose specific information about the challenged trademarks, but after a quick research, I suspect that they are Mexican trademark registrations Nos. 743,437 FACE OF FROG CHARACTER DESIGN (International Class 25) and 804,371 FACE FROG CHARACTER DESIGN (International Class 35).

By coincidence (or perhaps not), on April 2008, Tiendas Oficiales, S.A. de C.V. assigned the above-stated registered trademarks to a Mexican corporation named Grupo Serigráfico, S.A. de C.V.

The amicus brief also makes reference to a trademark registration in International Class 27 -an odd Class, considering that the trademark is mainly for clothing- for the FACE FROG CHARACTER DESIGN, but my preliminary search did not reveal it (finding out what registration that could be would demand spending some money and a more time-consuming research, which I am not interested to do for the time being).

The statutory provision

Section 151 of the Industrial Property Law stipulates five basic reasons to challenge a Mexican trademark registration:

I. Registration issued against a provision stated in the Industrial Property Law or in any other statute (including international treaties).

II. Earlier and continuous use, in Mexico or abroad, of an identical or confusingly similar trademark, covering the same or similar services or products.

III. False information stated in the application.

IV. Existence of an earlier Mexican trademark registration for an identical or confusingly similar mark, covering the same or similar products or services.

V. Registration of a trademark identical or confusingly similar to one already registered abroad, if the application was filed by an agent, representative, distributor or licensee of the trademark owner, without its consent. In this case, the statute explicitly provides the presumption that the trademark was in bad faith.

A Mexican trademark registration may also be cancelled due lack of use for three consecutive years in Mexico, on at least one of the products or services listed in the registration, and because the registered trademark became a generic expression.

The amicus brief explains that the cancellation actions against Tiendas Oficiales’ trademark registrations claimed that the defendant’s trademark registrations were not valid under paragraphs I, II, III, IV and V of section 151 of the Industrial Property Law.

An invalidation claim on the grounds provided in section 151, paragraph V, of the Industrial Property Law, would necessarily involve a licensee, agent, representative or distributor that registered, without authorization from the trademark owner, an identical or confusingly similar trademark already registered abroad.

According to the brief, the MPTO refused to cancel Tiendas Oficiales’ trademark registrations on the grounds provided by section 151, paragraphs I, II, III and IV, of the Industrial Property Law, but failed to make an explicit statement about the invalidation claim under paragraph V.

Such flaw should be enough to invalidate, at least partially, the MPTO’s decision, and allows the FCTAA to render a decision on the merits of the undecided invalidation claim.

The amicus brief states that section 151, paragraph V, of the Industrial Property Law, discriminates Mexican citizens and entities, because “a trademark registration may only be declared null and void on the basis that the mark was registered in bad faith in circumstances involving foreign trademark owners. As such, the owner of a Mexican trademark registration has no recourse against an agent, representative, licensee or distributor who applies to register an identical or confusingly similar mark in its own name without consent”.

Further, the brief states that section 151, paragraph V, of the Industrial Property Law is against section 1 of the Mexican Constitution (equal protection), articles 41, paragraphs 2 and 3, and 62, paragraph 4, of TRIPS and article 1708 of NAFTA.

I must say that I disagree with most of the arguments stated in the three substantive considerations provided in the amicus brief, and with the conclusions.

First consideration. Lack of cancellation procedures for trademarks registered in “Bad Faith” to Mexican Companies.

The first consideration is incorrect.

Paragraph V of section 151 of the Industrial Property Law provides a special protection for owners of trademarks registered abroad against unfair registrations by their licensees, distributors, agents or representatives, regardless the nationality of such trademark owners.

It is important to clarify that Mexico is a civil law country, with a first-to-file trademark system; although users of non-registered trademarks have some limited actions and defenses, there are no common law rights in our country. The only way to be acknowledged as trademark owner in Mexico is having a Mexican trademark registration. Further, the statute demands the existence of a Mexican trademark registration or application in order to license the mark in Mexico.

Therefore, in order to acknowledge a company as trademark owner in Mexico, the trademark must be registered in Mexico. If the licensee, distributor or agent registers a trademark identical or confusingly similar to an earlier registered or applied mark in Mexico, for the same or similar products or services (the earlier licensor’s trademark registration or application should block such an application by the licensee, but the MPTO sometimes makes errors), the senior trademark owner could file a cancellation action claiming that the licensee’s trademark registration is invalid under sections I (claiming the existence of a senior trademark application), II (earlier and continued use of the trademark) or IV (claiming the existence of a senior trademark registration), regardless if the licensee filed the application in bad or good faith.

Under Mexican law, if the licensee’s registration is for a trademark that is not identical or confusingly similar to the licensor’s mark, or for products or services different from the ones covered by the licensor’s trademarks, there would be no invasion of the licensor’s exclusivity rights; the licensee would not be registering the licensor’s trademark because it would not be the licensor’s trademark in the first place, either because the mark is different or because the covered goods or services are different (actually, from the amicus brief, this seems to be the reason why the MPTO refused to invalidate Tiendas Oficiales’ trademark registrations under section 151, paragraph IV of the Industrial Property Law).

Notwithstanding the above, a trademark registration acquired by a licensee for a trademark identical or confusingly similar to the licensor’s but applied to different products could still be deemed invalid, if the licensor mark is well-known or famous in Mexico. However, such invalidation would not be related to the invasion of earlier exclusivity rights, but to the unfair competition that the registration of a well-known or famous trademark could imply.

Nevertheless, the invalidation cause provided in paragraph V of section 151 of he Industrial Property Law provides one advantage in relation with the causes of invalidation stated in paragraphs II (earlier use) and IV (earlier Mexican registration). Such advantage is associated with the statute of limitations. A cancellation action on the grounds provided in paragraphs II and IV must be filed within a three and five years term, counted form the date of publication of the challenged trademark registration in the Industrial Property Gazette. On the other hand, a cancellation action on the grounds stated in paragraph V may be filed at any time.

In any case, although the invalidation cause stipulated in section 151, paragraph V, of the Industrial Property Law, may be filed only by owners of trademarks registered abroad when their licensees, distributors, agents or representatives obtain a Mexican trademark registration for said trademarks without their authorization, Mexican companies are nor banned from challenging the Mexican trademark registration on such grounds, provided that they own a foreign trademark registration.

Second consideration. Section 151, paragraph V, is against equal protection provided in Section 1 of the Mexican Constitution.

The second consideration is incorrect.

First, as explained above, the invalidation cause provided in section 151, paragraph V, of the Industrial Property Law, may be claimed by any owner of a foreign trademark registration, regardless if it is a Mexican company or a foreign company.

Second, the statute stipulates an identical treatment for all persons in the circumstances provided in paragraph V of section 151 of the Industrial Property Law.

For example, if the Industrial Property Law provided a different statute of limitations, depending on the nationality of owner of the foreign trademark registration, then it would be possible to argue that the stipulation is against the equal protection clause stated in the Constitution, but that is not the case.

Third Consideration. Mexico’s compliance with International Agreements.

First, no international treaty, State Constitution or federal or state law or statute is of equal rank than the Federal Constitution. They are all of lower rank than the Constitution.

For many years, the guideline provided in a binding precedent from the Supreme Court was that international treaties were of equal rank than the federal laws, but below the Constitution. In 1999, the Supreme Court rendered a new ruling, stating that federal treaties were of higher rank than federal laws, but always below the Constitution. This new ruling from the Supreme Court was confirmed in 2007, but is not binding yet.

From my perspective, the Mexican statutes provide the applicant or right-holder with reasonable procedures and formalities that are fair and equitable, as TRIPS and NAFTA demand, and I fail to see how the cause of invalidation stated in section 1512, paragraph V, of the Industrial Property Law, provided in the benefit of owners of foreign trademark registrations (both Mexicans and foreigners) may be deemed as unfair, unreasonable or inequitable. 

I believe that section 151 of the Industrial Property Law, including paragraph V, provides a reasonable opportunity to cancel a Mexican trademark registration, as stated in section 1708 of NAFTA, within reasonable time frames; the shortest term provided in the statute of limitations to file a cancellation action is three years, while there is no term to challenge a registration on the grounds provided in paragraph V.

Section 151, paragraph V, of the Industrial Property Law is not against the principle of national treatment stated in Article 3 of TRIPS and 1703 of NAFTA.

All entities and individuals, regardless their nationality, are entitled to seek the invalidation of a Mexican trademark, if they fulfill the requirements stated in said paragraph V, mainly owning a foreign trademark registration. As I stated above, if the plaintiff (Mexican or foreigner) holds a Mexican trademark registration, then a different cause of cancellation, provided in paragraph IV, would apply.

It is true that when there is discrepancy between a federal (or state) statue and an international treaty, the latter must prevail, and the court (or the MPTO) should apply the international treaty, if such treaty provides in the benefit of one of the parties a specific substantive right, claimable before a Mexican authority.

For example, the old Industrial Property Law of 1942 (in force until 1976) did not provide protection for service marks. However, the Supreme Court ruled that service marks could be registered and protected in Mexico, by applying the provisions stated in the Paris Convention*.

No Mexican court, not even the Supreme Court, may change a statute to adjust it to an international treaty. The Supreme Court and other federal courts may declare invalid a statutory provision, or a statute, but they can’t amend the law.

The amicus brief asks the FCTAA to interpret the Mexican Industrial Property Law in a manner according to the international treaties, namely, “that it does not limit the cancellation of trademark registrations obtained in bad faith to circumstances involving foreign trademark owners only”.

As I stated above, the statutory provision does not limit the cause if cancellation stated in section 151, paragraph V, to foreign trademark owners, but to owners of foreign trademark registrations, which is not the same.

On the other hand, neither NAFTA or TRIPS provide that the holder of a trademark registration is entitled to invalidate another trademark registration because the latter was filed by a licensee, distributor, representative or agent of such right holder, and the registration is presumed to have been obtained in bad faith; therefore, there is no substantive right stipulated in those international treaties that the FCTAA could apply in the benefit of one of the parties in the dispute.

If the lack of a statutory provision in Mexico, stipulating a cause of invalidation as the one stated above, were deemed to be against the obligation of Mexico of providing fair and equitable procedures, or stating a reasonable opportunity to cancel a Mexican trademark registration (a position I would not agree with), the courts cannot remedy such failure, at least not under the current Constitution.

It would be up to the Federal Congress to amend the statute and broad the current causes of invalidation of a trademark stated in the Industrial Property Law; meanwhile, the lack of compliance of Mexico of the international treaties would be a source of international liability.

It would be important to state that article 6 Septies of the Paris Convention provides the right to cancel a registration filed by an agent or representative without authorization of the trademark owner, no mater if such trademark owner had the mark registered in Mexico or in another country; the provision makes no reference to licensees, so it would be quite arguable if this cause of cancellation can be applied to licensees, as in the Grupo Anderson’s case.

Conclusion

Stating that the Mexican owner of a prior registration does not have the right, available to non-Mexican trademark owners, to challenge a later registration (for an identical or confusingly similar trademark) that was obtained in bad faith, as the amicus brief of INTA concludes, is wrong. The right is available for Mexicans and foreigners, provided that they own a foreign trademark registration and that the registration in Mexico was obtained by a licensee, distributor, representative or agent, without consent of the right-holder of said foreign trademark registration. This action is available besides the more general cancellation cause, on grounds of the existence of an earlier Mexican trademark registration for an identical or confusingly similar trademark, covering the same or similar services or products, regardless the good or bad faith of the applicant of the junior registration.

I agree that an amendment to the current section 151, paragraph V, of the Industrial Property Law, providing additional protection to holders of trademarks registered abroad and in Mexico against bad faith trademark registrations obtained by licensees, distributors, agents and representatives, would be desirable. However, current section 151 of the Industrial Property Law already allows all owners -Mexicans and foreigners- of a prior Mexican trademark registration or application (even earlier users of non-registered trademarks) to challenge a later registration that invades the previously acquired exclusivity rights.

* Binding rulings of the Second Chamber of the Supreme Court. Seventh Era, Second Chamber, Weekly Judicial Journal of the Federation, 72 Third Part, Pages 23 and 25.