Civil actions for indemnification of damages due trademark and patent infringement are unusual if compared with the number of administrative infringement actions. The main statutory provisions regarding payment of damages are articles 221 and 221 Bis of the Industrial Property Law, enacted in 1994.

Section 221 Bis of the Industrial Property Law states that the amount of the indemnification due violation of the rights stipulated in the statute shall be no less than the equivalent of 40% of the retail price of the goods or services sold or rendered in violation of such rights. The claim for damages has to be filed with a court of common jurisdiction.

A landmark decision was the 2004 jurisprudencia or binding precedent 1a./J. 13/2004[1] from the Mexican Supreme Court (MSC). The binding precedent was a consequence of contradictory decisions issued by lower court, namely, if it was necessary to have a final infringement decision issued by the Mexican Patent and Trademark Office (MPTO) as a prerequisite to file a civil action for damages (read our article  Damages claims due patent and trademark infringement).

After the binding precedent 1a./J. 13/2004, the MSC has issued a handful of decisions in about the civil action of indemnification of damages associated to patent and trademark infringement (copyright too), none of them binding. From the decisions of the MSC, I have extracted a few basic guidelines:

a) It is necessary to have a final infringement decision from the MPTO before filing a civil action for indemnification of damages.

b) The court where the civil lawsuit has been filed cannot review the MPTO’s decision about the infringement.

c) The plaintiff has to prove, in the trial, that the infringement caused actual damages.

d) The plaintiff must also prove the cause-effect relation between the infringement and the actual damages.

e) Civil actions for damages that involve trademark or patent rights originated from a contractual dispute (such as a breach of a license agreement), or that are not related to a cause of administrative infringement (i.e. a criminal case), do not require a previous infringement decision from the MPTO.

Issues identified as a), b), c) and d) were stated in the 2004 binding precedent from the MSC. As a consequence, and until very recently, I thought there would be little controversy about them in indemnification cases associated to trademark and patent infringement.

On December 2017, the Judicial Journal of the Federation published a non-binding decision from the MSC, regarding the constitutional validity of article 221 Bis of the Industrial Property Law[2]. Basically, the MSC ruled that the lack of identification of the specific industrial property rights that, if infringed, would allow the claim of payment of damages provided by article 221 Bis of the Industrial Property Law, does not make the statutory provision unconstitutional.

Of course, the precedent of the MSC was very important, and confirmed the standing of the Court on different technical issues (namely the ones identified as a), b), c) and d) above) around the action for indemnification of damages because of patent and trademark infringement. However, making a little research, I found that the underlying civil case (from 2013) was even more interesting because the lower tribunal colegiado or court of appeals disagreed with some critical positions that the MSC has adopted since 2004 in different decisions.

Because of a number of technical reasons, the MSC did not review the merits of the underlying civil case in the decision published in 2017, only the constitutionality of article 221 Bis of the Industrial Property Law.

The underlying civil case was decided by the Octavo Tribunal Colegiado en Materia Civil del Primer Circuito or Eight Panel of the Federal Court of Appeals in Mexico City (Eight Panel)[3] on May 8, 2013. (Update February 27, 2019: The case number was D.C. 153/2013. The public version of the full decision (in Spanish) may be downloaded here).

The Eight Panel ruled that the precedent 1a./J. 13/2004 of the MSC was binding only about having a final infringement decision from the MPTO as a prerequisite for a civil action for indemnification of damages. Other questions stated in the precedent are just “orientations” (unfortunately the Eight Panel did not state a statutory provision, precedent or legal theory supporting the ruling).

Therefore, the Eight Panel decided that, on a damages case based on section 221 Bis of the Industrial Property Law, the plaintiff does not have to prove actual damages or the cause-effect relation between the infringement (previously declared by the MPTO) and the actual damages. The plaintiff only has to prove the amount of the sales at retail price of the infringing product/service, and calculate the equivalent to 40% in order to obtain the amount that, as a minimum, the plaintiff has the right to collect as indemnification from the infringer/defendant.

If other federal panels and state courts follow the Eight Panel’s example, we may see in the next years a revival of successful lawsuits for indemnification of damages due to patent and trademark infringement in Mexico. It will also be interesting to see if the MSC will have something to say about the non-binding “orientations” that the Eight Panel and potentially other courts will start finding in the binding precedents of the MSC.

[1] “PROPIEDAD INDUSTRIAL. ES NECESARIA UNA PREVIA DECLARACIÓN POR PARTE DEL INSTITUTO MEXICANO DE LA PROPIEDAD INDUSTRIAL, SOBRE LA EXISTENCIA DE INFRACCIONES EN LA MATERIA PARA LA PROCEDENCIA DE LA ACCIÓN DE INDEMNIZACIÓN POR DAÑOS Y PERJUICIOS”, at Semanario Judicial de la Federación y su Gaceta, Ninth Period, Vol XIX, May 2004, page 365 (Electronic version: https://sjf.scjn.gob.mx/sjfsist/Paginas/DetalleGeneralV2.aspx?Epoca=1e3e10000000000&Apendice=1000000000000&Expresion=1a.%2FJ.%252013%2F2004&Dominio=Rubro,Texto&TA_TJ=2&Orden=1&Clase=DetalleTesisBL&NumTE=1&Epp=20&Desde=-100&Hasta=-100&Index=0&InstanciasSeleccionadas=6,1,2,50,7&ID=181491&Hit=1&IDs=181491&tipoTesis=&Semanario=0&tabla=&Referencia=&Tema=. Date of review: January 14, 2019).

[2] “PROPIEDAD INDUSTRIAL. EL ARTÍCULO 221 BIS DE LA LEY RESPECTIVA NO CONTRAVIENE EL PRINCIPIO DE SEGURIDAD JURÍDICA” at Semanario Judicial de la Federación, Décima Época, Book 49, Vol I, December 2017, page 437 (Electronic version: https://sjf.scjn.gob.mx/sjfsist/Paginas/DetalleGeneralV2.aspx?Epoca=1e3e10000000000&Apendice=1000000000000&Expresion=%25202015750&Dominio=Localizacion&TA_TJ=2&Orden=1&Clase=DetalleTesisBL&NumTE=1&Epp=20&Desde=-100&Hasta=-100&Index=0&InstanciasSeleccionadas=6,1,2,50,7&ID=2015750&Hit=1&IDs=2015750&tipoTesis=&Semanario=0&tabla=&Referencia=&Tema=. Date of review: January 19, 2019).

[3] While all decisions from the different federal courts and panels are of public record and everybody may request a copy (with personal information redacted), not all decisions are published as precedents. It is up to each court and panel deciding if the case is relevant enough to be published in the Judicial Journal of the Federation. The decision of the underlying civil case rendered by the Eight Panel on May, 2013, was not published. (Update February 27, 2019: You may download the public version of the full decision (In Spanish) here)

La entrada Damages claims due infringement of trademarks and patents in Mexico. Who has the final saying? se publicó primero en Reyes Fenig.

Further, article 221 of the IPL states that the right to file a damages claim is independent from the administrative penalties that the Mexican Patent and Trademark Office (MPTO) may impose to the infringer of the corresponding patent or registered trademark.

For some years, the federal courts of appeals ruled that articles 221 and 221 Bis of the IPL allowed patent and trademark owners to file damages claims against infringers without a prior infringement decision issued by the MPTO[1]. The courts also ruled that it was valid to claim as damages and/or lost of profit the equivalent of 40% of the retail price of the infringing products sold without proving that the plaintiff suffered an actual damage or lost of profit or the cause-effect link between the infringement and said damages/lost of profits. Although the decisions were referred to trademark cases, the same provisions were applicable to patent infringement.

In 2003, the Segundo Tribunal Colegiado en Materia Civil del Primer Circuito, or Second Panel of the Courts of Appeals for civil matters in Mexico City, decided a damages case due trademark infringement, and ruled that section 221 of the IPL demanded an earlier final infringement decision from the MPTO as a condition to file the civil action for damages[2].

Given the inconsistencies between the courts of appeals, the Mexican Supreme Court, namely the Primera Sala or First Panel, intervened to set a binding ruling. The result was binding precedent  1a./J. 13/2004[3].

It is necessary to state that the decision the Supreme Court contains many technical errors in connection to the intellectual property regulation, regrettably evidencing that the Justices that participated in the decision had not enough expertise in trademark and patent law.

In any case, the most relevant issue of the Supreme Court’s decision was a radical change about the conditions required to file a civil lawsuit for damages in cases of trademark and patent infringements.

Basically, the Supreme Court decided that it is necessary to have a final infringement decision from the MPTO before filing a civil action for damages and/or lost of profits. The Court also ruled that, in spite of the statutory minimum damages provided in the statute, the plaintiff had to prove in the damages trial that the infringement caused actual damages and/or lots of profit and the cause-effect relation between the infringement and the suffered damage/lost of profit.

In my opinion, the arguments and conclusions of the Supreme Court are incorrect and are not supported by the statutory provisions; further, such ruling works against the legitimate interests of intellectual property owners in Mexico.

I do not agree with the statement of a well-known Mexican business columnist that said that the decision of the Supreme Court made the MPTO stronger, given that the decision did not provide the MPTO with better tools to perform its job more efficiently. Actually the Supreme Court weakened the Mexican intellectual property system as a whole.

For an updated review of the civil action for indeminfication of damages due patent and trademark infringement, read Damages claims due infringement of trademarks and patents in Mexico. Who has the final saying?

[1] “PROPIEDAD INDUSTRIAL, LEY DE LA. NO ES NECESARIA LA PREVIA DECLARACIÓN ADMINISTRATIVA DE INFRACCIONES PARA LA PROCEDENCIA DE LAS ACCIONES MERCANTILES Y CIVILES PREVISTAS EN DICHA LEGISLACIÓN” at Semanario Judicial de la Federación y su Gaceta, Ninth Period, Vol XIII, March 2001, page 1797 (Electronic version: https://sjf.scjn.gob.mx/sjfsist/Paginas/ResultadosV2.aspx?Epoca=1e3e10000000000&Apendice=1000000000000&Expresion=190110&Dominio=Localizacion&TATJ=2&Orden=1&Clase=TesisBL&bc=Jurisprudencia.Resultados&TesisPrincipal=TesisPrincipal&InstanciasSeleccionadas=6,1,2,50,7&Hits=20. Date of review: January 14, 2019); and “MARCAS. DAÑOS Y PERJUICIOS DERIVADOS DE LA VIOLACIÓN A LOS DERECHOS DE PROPIEDAD INDUSTRIAL. LA ACCIÓN RELATIVA NO ESTÁ SUJETA A QUE PREVIAMENTE SE AGOTE EL PROCEDIMIENTO ADMINISTRATIVO ANTE EL INSTITUTO MEXICANO DE LA PROPIEDAD INDUSTRIAL” at Semanario Judicial de la Federación, Ninth Period, Volume XVI, August 2002, page 1323 (Electronic version: https://sjf.scjn.gob.mx/sjfsist/Paginas/DetalleGeneralV2.aspx?Epoca=1e3e10000000000&Apendice=1000000000000&Expresion=186222&Dominio=Localizacion&TA_TJ=2&Orden=1&Clase=DetalleTesisBL&NumTE=1&Epp=20&Desde=-100&Hasta=-100&Index=0&InstanciasSeleccionadas=6,1,2,50,7&ID=186222&Hit=1&IDs=186222&tipoTesis=&Semanario=0&tabla=&Referencia=&Tema=. Date of review: January 14, 2019).

[2] “ACCIÓN DE RESPONSABILIDAD CIVIL POR DAÑOS Y PERJUICIOS. VIOLACIÓN AL DERECHO DE USO EXCLUSIVO DE MARCAS. ES CONDICIÓN PARA SU PROCEDENCIA EL PRONUNCIAMIENTO FIRME DE ILICITUD POR PARTE DEL INSTITUTO MEXICANO DE LA PROPIEDAD INDUSTRIAL (PROCEDIMIENTO MERCANTIL)” at Semanario Judicial de la Federación y su Gaceta, Ninth Period, Volume XVII, March 2003, page 1680 (Electronic version: https://sjf.scjn.gob.mx/sjfsist/Paginas/DetalleGeneralV2.aspx?Epoca=1e3e10000000000&Apendice=1000000000000&Expresion=184719&Dominio=Localizacion&TA_TJ=2&Orden=1&Clase=DetalleTesisBL&NumTE=1&Epp=20&Desde=-100&Hasta=-100&Index=0&InstanciasSeleccionadas=6,1,2,50,7&ID=184719&Hit=1&IDs=184719&tipoTesis=&Semanario=0&tabla=&Referencia=&Tema=. Date of review: January 14, 2019.)

[3] “PROPIEDAD INDUSTRIAL. ES NECESARIA UNA PREVIA DECLARACIÓN POR PARTE DEL INSTITUTO MEXICANO DE LA PROPIEDAD INDUSTRIAL, SOBRE LA EXISTENCIA DE INFRACCIONES EN LA MATERIA PARA LA PROCEDENCIA DE LA ACCIÓN DE INDEMNIZACIÓN POR DAÑOS Y PERJUICIOS”, at Semanario Judicial de la Federación y su Gaceta, Ninth Period, Vol XIX, May 2004, page 365 (Electronic version: https://sjf.scjn.gob.mx/sjfsist/Paginas/DetalleGeneralV2.aspx?Epoca=1e3e10000000000&Apendice=1000000000000&Expresion=1a.%2FJ.%252013%2F2004&Dominio=Rubro,Texto&TA_TJ=2&Orden=1&Clase=DetalleTesisBL&NumTE=1&Epp=20&Desde=-100&Hasta=-100&Index=0&InstanciasSeleccionadas=6,1,2,50,7&ID=181491&Hit=1&IDs=181491&tipoTesis=&Semanario=0&tabla=&Referencia=&Tema=. Date of review: January 14, 2019).

La entrada Damages claims due patent and trademark infringement se publicó primero en Reyes Fenig.