Every day, the intellectual property assets of businesses increase their importance. They are not, and should not, seen any longer as a by-product, but as a fundamental asset for the survival, well-being and prosperity of businesses.

Employees and their activity are a very important source of intangible assets, so adopting a clear, well supported and fair policy in connection to the intellectual property generated by employees should be considered as strategic in any innovative business. Further, an inadequate intellectual property policy inside a business organization may lead to potential liability issues and reduce the value of the company.

Mexican copyright and patent law are similar to the laws of other jurisdictions concerning the exclusivity rights stipulated for the right-holder. However, as far as for inventions and works developed by employees are concerned, the regulations may be surprisingly different. Further, Mexican lawyers unfamiliar with intellectual property laws often confuse inventions and works.

As a preliminary issue, Mexican law makes a clear distinction between works protected by copyright and inventions/designs protected by the patent law. There are some grey areas, especially in the case of industrial designs, where the border between works and inventions is not clear from a substantive perspective. However, the applicable statues (the Industrial Property Law and the Federal Copyright Law) explicitly state that works are not protected by patent law, and copyright law excludes inventions from copyright protection.

Inventions by employees

The Federal Employment Law provides that the employer owns the intellectual property on all inventions developed by employees, provided that the development of inventions was one of the objectives of the employment relation. If the employment agreement is silent about who should be the owner of the intellectual property rights on the invention, but it states that making inventions is one of the purposes of the employee, then the right holder is the employer.

The employee has the right for an additional compensation only if the invention benefits the employer in such a way that the regular wage of the employee is not proportioned with said benefit. The parties must agree on the compensation the employee is entitled to, and in the lack of an agreement, the labour courts will decide.

In all other cases (i.e. inventions developed by employees without having such responsibility provided in the employment contract using the employer’s resources) the proprietary rights associated to the invention belong to the employee; the employer only has a right of first refusal in case the employee decides to assign the right to file the patent/design application or the corresponding patents, design registrations or patents/design applications. 

Works by employees

Mexican copyright is very liberal about what may be subject matter of copyright protection, and extremely author-protective. As a consequence, it has many restrictions regarding the ownership of intellectual property rights on works by parties different from the author.

There are four preliminary issues that need to be addressed for better comprehension of this matter:

First. Mexican copyright law protects works regardless their destiny or merits. Therefore, designs that are intended to give industrial products a new ornamental appearance may be protected by copyright, regardless the provisions concerning industrial designs.

Second. It is important to distinguish between “derechos morales” or personal rights and “derechos patrimoniales” or economic rights. Personal rights are related to the special acknowledgment that the author deserves as such and the relation between the author and her/his work. It includes, among others, the right to disclose the work, the right to be acknowledged as author, the right to modify the work and the right to oppose the mutilation or modification of the work.

Economic rights are related to the use of the work, and include the right of copying and authorizing the public communication of the work, among others.

Third. As a general rule, the author may only contractually transfer the economic rights. In the case of works made by employees, the employer may be entitled to the economic rights, and to the right to disclose the work.

Fourth. Copyright is fully protected and enforceable, at least in theory, without registration or any particular formality.

Having said the above, the employer is entitled to be acknowledged as the copyright holder of the works developed by the employees, only if there was an individual employment contract (opposed to the collective contracts executed with unions) in written with the employee. Further, the employment contract must explicitly state that all economic rights related to the copyright on the work belong to the employer; otherwise, the law will assume that 50% of the economic rights belong to the employer and 50% to the employee.

If there is no written employment agreement or if it is silent about who would be the copyright owner of the works developed by the employee, then the full copyright holder would be the employee.

As an exception, copyright on software developed by a employee as part of its duties belong to the employer, regardless the existence of a written individual contract or that the contract is silent concerning the percentage of the copyright ownership that would belong to the parties.

There is a fundamental difference between the provisions of the Federal Employment Law regarding inventions and industrial designs, and the Federal Copyright Law in the case of works. The transfer of the intellectual property on inventions and industrial designs from employee to employer is implicit due a statutory provision. In the case of copyrightable works, it requires a contractual explicit stipulation. In both cases, there is no actual assignment between employer and employee; the acquisition of the IP rights by the employer is automatic. 

Assignments

If the parties decide to execute an assignment document to ease the filing of a patent, industrial design or copyright application for the employee’s invention/design or work, they should also take into account some special provisions stipulated in the Mexican Copyright Law.

The statute provides that copyright assignments should be always be temporal, with the exceptions of software, literary, musical and audiovisual works, and works to be represented on a stage. If the parties do no state a term, the term of the copyright assignment is five years only. The parties may freely stipulate a copyright assignment for up to fifteen years. Copyright assignment for more than fifteen years is valid only if the nature of the work or the investment required to use it justify such term.

Therefore, it is necessary to be extremely careful when drafting the intellectual property provisions in employment contracts for Mexican workers, and even seek advice from a specialized lawyer. Otherwise, there is the risk of dangerous gaps and voids on the intellectual property ownership that may negatively impact not only the employer’s operation, but also its customers and clients.