Nevertheless, Mexico acknowledges certain rights and defenses for the users of non-registered trademarks; Mexico also allows applicants to claim a date of commencement of use in Mexico, in order to obtain some benefits after the issuance of the trademark registration. In any case, these rights and defenses should not be construed as common-law rights (there is no common-law in Mexico) or exceptions to the first-to-file principle: the first applicant has priority to get the trademark registration, no matter who claimed the earliest date of first use or if the earliest applicant expressly stated that it has not started using the trademark at all.

In the same sense, only the registered owner of the Mexican trademark registration would have exclusivity rights on the trademark, regardless if a third party started using the same trademark before, even if the Instituto Mexicano de la Propiedad Industrial or Mexican Patent and Trademark Office (MPTO) has acknowledged such earlier use.

Notwithstanding the above, the claim of the date of first use of the trademark in the application, may actually extend the scope of rights resulting from the registration, but may also create a significant vulnerability of the trademark registration against an invalidation action.

I. ACTIONS AND DEFENSES FOR THE EARLIER USERS OF NON-REGISTERED TRADEMARKS IN MEXICO

The first user of a non-registered trademark in Mexico is not acknowledged as the proprietor of the mark, thus it may not file trademark infringement actions against other users of the same mark for the same goods or services.

Nevertheless, in theory, the first user of the trademark could file unfair competitions actions against other users of the mark, but it has to prove an intention to deceive the consumers, or that the trademark is well-known; in practice, it is difficult to prevail if there is not a registered or well-known trademark involved in the unfair competition claim.

Notwithstanding the above, Mexican law provides a defense and an action to the first users of non-registered trademarks to oppose the holder of a trademark registration.

A. Defense against a trademark registration

The Mexican statute provides that a trademark registration is not enforceable against a third party that have used in good faith and in Mexico, an identical or confusingly similar trademark to the registered one for the same or similar goods/services, if such use in Mexico has been continuous and started before the filing date of the trademark application or before the date of first used stated in said application.

B. Action against a trademark registration

The user of a trademark may file an invalidation action against an identical or confusingly similar registered trademark, covering the same or similar goods or services, provided that said use is continuous, started before the filing date of the application or the date of first use stated in the application, if any.

The Mexican statute of limitations stipulates that the invalidation action has to be filed within a three years term after the publication of the registration in the Industrial Property Gazette.

This action is unique because it is not necessary to prove earlier use in Mexico. Earlier and continuous use in any country in the world would be enough to invalidate the Mexican trademark registration. It is not necessary to prove that the used trademark is well-known or famous in Mexico (there is another action for those cases), and there is no reciprocity requirement in case the use took place abroad.

II. BENEFITS FROM CLAIMING FIRST USE IN A MEXICAN TRADEMARK APPLICATION

Claiming a date of first use in a trademark application may provide important advantages compared with a trademark registration with no prior use claim, although the applicant may benefit from those advantages only after the issuance of the registration.

The first use claim does not expedite or delay the prosecution of the trademark application. It is not required to file a specimen of the product/or service and the MPTO would not demand evidence confirming the date of commencement of use.

The claim –or lack of claim- about the date of first use and the statement stating that the trademark has not been used in Mexico may not be amended.

1. Defense of the trademark registration against earlier users

If a third party wants to challenge the validity of a trademark registration due earlier and continuous use in Mexico or any other country (as explained in I.B above) of an identical or confusingly similar mark covering the same or similar products or services, and the challenged registration has a claim of first use, then the plaintiff has to prove that it started using the trademark before said date of commencement of use (and not before the filing date in Mexico as it happens with a “regular” trademark registration).

2. Enforceability against earlier incorporated legal entities that use the trademark without authorization in their corporate name

The general rule is that the owner of a trademark registration may file an infringement action against a company that uses, as part of the corporate name, the registered trademark without authorization of the trademark owner, provided that:

(i) The infringing company’s activities are related to the goods or services covered by the infringed trademark, and

(ii) The filing date of the infringed trademark registration is earlier than the date of incorporation of the infringing company.

The above is the general rule. However, if there was a claim of first use in the trademark application, the trademark owner may file the infringement action against companies that started using the mark in their corporate names before the filing date of the application in Mexico, but after the date of commencement of use stated in the application.

One matter that has not been clarified in connection with this cause of infringement (actually, with all causes of patent, trademark and copyright infringement) is associated to the statute of limitations. The special statutes are silent about this issue, but the more general Federal Law of Administrative Procedures (complementary to the special Industrial Property and Copyright statutes) states a 5 years term.

The existence of a statute of limitations in connection to the infringement of IP rights has so many important implications (such as when the term stated in the statute of limitations starts; in our case,  when the infringing corporation ws incorporated, when the infringing corporation ceases activities or when the infringing corporation is is dissolved) that discussing them requires another post.

3. Enforceability against earlier non-authorized users of the registered trademark

The general rule provides that a Mexican trademark registration is not enforceable against a third party that started using in Mexico, in good faith, and before the filing date of the Mexican trademark application, a mark identical or confusingly similar to the registered one to identify the same or similar goods or services.

However, a Mexican trademark registration would be enforceable against a third party that started using before the filing date of the Mexican registered trademark, the same or a confusingly similar mark in Mexico (even in good faith) applied to the same or similar goods and services, if there is a date of first use stated in the trademark application, and such date of first use predates the date the third party began using the mark.

III. RISKS ASSOCIATED TO THE FIRST USE CLAIM IN THE TRADEMARK APPLICATION

This is not a perfect world, and the benefits that may provide the claim about the date of first use of a trademark in the trademark application are not exempt of certain risk, namely the vulnerability of the trademark registration with the first-use claim against an invalidation action due false information stated in the application.

The statute provides as cause of invalidation of a trademark registration, stating false information in the trademark application. Such false information may refer to any of the data fields of the application, such as the applicant’s name, address, nationality, and of course, the date of first use.

The statute of limitations provides that an invalidation action against a trademark registration due false information in the trademark application may be filed within a five years term, counted from the date of publication of the registration in the Industrial Property Gazette.

When a third party files an invalidation action against a trademark registration, claiming that the date of first use stated in the trademark application was false, the burden of proof is on the trademark owner, who has to prove that the date of commencement of use in Mexico was correct.

Mexican law and courts are very formalistic, thus proving the accuracy of a date of first use can become an extremely difficult task.

A non-binding precedent from the Tribunal Federal de Justicia Fiscal y Administrativa or Federal Court of Tax and Administrative Affairs (FCTAA), states that if the date of first use was inaccurate by just a few days, and the evidence shows that the trademark owner it started using the trademark long before the plaintiff, the trademark registration should not be invalidated*. I think that the FCTAA’s position is absolutely fair, but it is not fully consistent with the statutem and the precedent has yet to be confirmed to be binding.

(Update September 30, 2016. A binding ruling from a panel of appeal judges in the Mexico City Circuit ruled that the plaintiff has to prove that the date of first use was false or innacurate. This ruling significantly reduces the risk of having a registered tradematk invalidated because there was a date of first use. Read my post “New binding ruling benefits owners of trademarks registered in Mexico that claimed date of first use”.)

In order to prevent the vulnerability to an invalidation action due false information stated in the application, the general advice is that the date of commencement of use should have some documentary backup, namely invoices issued to customers located in the Mexican territory.

If the applicant is not certain that the trademark has been used in Mexico, or does not have any document to prove it, the usual recommendation is not stating a date of first use in Mexico, either by explicitly stating that the mark has not been used in our country, or by leaving the data field in the application blank.

Use by persons different from the trademark applicant, such as sister and parent companies and shareholders, as a general rule, may not be claimed in the benefit of the trademark applicant.

Some tips about the claim of first use:

(1) If the applicant has used the trademark on goods or services different from the ones stated in the trademark application, the applicant should not claim a date of commencement of use.

(2) In my opinion, if the applicant has used the trademark on one or a few of the goods or services listed in the trademark application, but not all of them, the applicant may claim a date of first use and such date would benefit all the products or activities listed in the trademark application.

It is important to say that this is my opinion; the statute is silent regarding this issue, and there are no published precedents supporting or rejecting my position.

(3) In my opinion, stating that the trademark has not been used, or leaving the field blank (there would be a statutory presumption that the trademark has not been used), in spite of the fact that the trademark has actually been used in Mexico, would not be a false statement that would make the registration vulnerable to an invalidation action due false information.

From my perspective, stating that the trademark has not been used or failing to make a statement at all, in spite that the applicant has used the mark, would be a valid and legitimate waiver of the right to claim the date of first use, given that no third party would be harmed in any way by such non-use statement.

Of course, my colleagues may disagree with my opinions, especially in the absence of explicit provisions in the statutes or judicial precedents. Hopefully, the courts will decide who is right in a not so distant future.

* See Journal of the Federal Court of Tax and Administrative Affairs, Era VI, Year I, No. 11, November 2008, page 587. This decision somehow confirms an old isolated non-binding ruling from a Federal Court of Appeals of 1990 (Weekly Judicial Journal of the Federation, Eight Era, Volume VI, Second Part-1, July-December 1990, page 198).

La entrada The relevance of the date of first use in Mexican trademark applications se publicó primero en Reyes Fenig.

The Tribunal Federal de Justicia Fiscal y Administrativa or Federal Court of Tax and Administrative Affairs (FCTAA) is a relatively new court. It was enacted in 2001, and its immediate predecessor was the Federal Tax Court. Most of the judges of the FCTAA are tax specialists. However, amendments to several statutes, particularly the modifications of April and May 2000 to the Federal Law of Administrative Procedures, broadened the scope of the old Federal Tax Court to decide a large number of administrative matters, (i.e. trademark registration, public officials liability, environmental protection, mining permits… etc.) until it became the FCTAA in December 2000. 

From mid 2000 to late 2008, appeals regarding IP matters were decided by on the thirteen non-specialized chambers of the FCTAA in Mexico City. Since January 2009, IP appeals are being decided by a specialized chamber, also located in Mexico City. 

The Federal Law of Contentious Administrative Procedures (FLCAP) rules the appeal procedure with the FCTAA. The immediate predecessor of the FLCAP was the contentious chapter of the Federal Tax Code, that governed the appeals with the now extinct Federal Tax Court. 

As you may see, a tax court and a tax law were the predecessors of the current specialized IP Chamber of the FCTAA and of the statute that govern the procedure for appeals involving IP. 

In a typical procedure concerning taxes, there are two parties with opposing interests: the State and the tax payer. The statute that governs the appeals in IP matters took this model. The problem is that in many IP matters, there may be more than one opposing party (such as the proprietor of a registered trademark that was cited as anticipation in a case involving the rejection of a trademark application, or the adversary in a patent invalidation or infringement action). 

At Law School, my Tax Law teacher told us that the purpose of Tax Law was defending tax payers, and many of the provisions (not all) stated in the Federal Tax Code, and later in the FLCAP reflect this way of thinking. Tax law tends to be very formalistic about the decisions and procedures to determine the existence of taxes and liabilities related to unpaid taxes. The lack of fulfillment of a formal or procedural requirement may result in the invalidation of the decision and the procedure, and all the Chambers of the FCTAA must review ex officio that the challenged decision complies with all formal requirements, regardless the arguments of the appellant. 

While such rigor may be desirable in a tax case, it may not be justifiable in a case where the decision of the Mexican Patent and Trademark Office (MPTO) was the result of a “trial-shaped” procedure or did not impose a fine but rejected a trademark or patent application. 

The FLCAP makes no distinction between decisions arising from a purely administrative procedure (such as the abandonment of a patent or the rejection of a trademark application) and decisions rendered as the result of an administrative procedure where the MPTO acted as a court to decide a dispute between two parties, such as a trademark or patent infringement case. 

Therefore, all the rigor that the FCTAA must use to review the compliance of formalities of a tax related decision, regardless the merits of the appeal, are being also applied to review all the decisions from the MPTO. 

The precedents 

A very important issue in Mexican administrative law, and especially in tax law, refers to the authority of the government agencies and the officials to decide taxes, administrative sanctions and impose fines. 

Historically, the government has exercised it power abusively. As a consequence, the Constitution and legislation have provided a number of requirements and limits to protect individuals and private entities from such abuses (whether such protections actually work or if they work only in the benefit of a privileged few would be subject of another discussion). 

One of the above-stated requirements is that the authority of any government agency to impose some burden or extinguishing some right of a private person must be expressly provided in an act of a federal o state legislature (Ley) or in a body of rules issued by the President or Governor himself (Reglamento). 

Certain bodies of rules, such as the estatutos orgánicos or “organizing regulations and the acuerdos delegatorios or “decisions to delegate authority” may provide a government agency with authority for certain actions, but in no case such authority may be broader than the one provided in the legislation or rules, and may not stipulate authority to impose burdens or limit or extinguish rights, if the legislation or the rules did not explicitly stated such authority. 

The requirement for all government officials to have explicit authority provided in the statute or in the rules to decide a case where the official imposes a burden or extinguishes or limits a right does not stop there. There is a binding precedent from the Supreme Court that demands that the official that decides a case must state all the statutes and rules that provide the authority to render the decision, including the article, section, paragraph, subparagraph, etc.** The FCTAA must review this issue ex-officio***, and if it finds one mistake, it must invalidate the decision due lack of authority of the issuing official, even if such lack of authority was never argued by any of the parties, or if it is irrelevant to decide the merits of the case. 

As I explained above, such rigor may be desirable in a tax case, because it has the clear intention of protecting the tax-payer against the abusive behavior of the executive branch. However, in a trademark infringement or cancellation case, this sort of ruling does not result in the enhanced protection of intellectual property rights. On the contrary, it seriously harms intellectual property owners and their activities; the delay of a final decision causes doubts and uncertainty about the enforceability and validity of IP rights, because the effect of the invalidation due apparent or actual lack of authority of the MPTO’s officials is the issuance a new decision signed by an official with authority to do so, or simply correcting the typing flaw that refers to the applicable provision of the statute that originates the authority of such official. 

Of course, given the some voids in the regulations that govern the activities of the MPTO’s officials, the new decision is not always free of formal flaws that may also cause, again, their invalidation, without ever looking at the merits of the appeal. 

Unfortunately, an IP case does not always stop at the FCTAA. The final instance is the Federal Court of Appeals. There are eleven non-specialized courts of appeals with jurisdiction to review the decisions rendered by the IP Specialized Chamber of the FCTAA. The courts of appeals issue contradictory rulings from time to time. When contradictory rulings arise, the Supreme Court may review the cases and decide what ruling should prevail; the Supreme Court’s decisions are binding for all the courts of appeals and the FCTAA. 

Finally, if the patent, trademark or copyright owner wants some indemnification related to a patent, trademark or copyright, the MPTO’s infringement decision must become final (after all the appeals), and then the right-holder may file an action with a court of common jurisdiction, which means to start all over again, but now to try to claim damages and lost of profits. 

The future 

One thing is clear: The current system does not work. Even a relatively simple case may take many years to be decided just because all the time wasted in irrelevant appeals. 

Some practitioners have suggested that the law should be amended to exclude IP from the scope of the FCTAA. Actually there is a bill that the Chamber of Representatives approved in late 2006 to exclude IP from the scope of the Federal Law of Administrative Procedures, and as a consequence, from the FCTAA. The bill is pending at the Senate. 

Although the lack of efficiency of the FCTAA is obvious, I am not sure that this is a good solution. District Courts may decide faster than the FCTAA, but the MPTO’s decisions tend to have many procedural and forma errors that may result in decisions from the District Judges just to cure formal and procedural flaws, with no actual benefit as for the time it takes to reach a final decision would be concerned. 

Finally, most District Judges have not been in regular contact with IP law since 2002, after the FCTAA took over the appeals for IP matters, so their decisions show in general less analysis of the case that the decisions of the FCTAA. 

From my perspective, Mexican IP law needs a structural change. The MPTO should not have authority any long to decide infringement and invalidation cases; such authority should be on specialized federal district courts, which may decide in the same decision if the trademark registration or patent is valid, if it has been infringed and award damages and/or attorney’s fees to the prevailing party.

 Of course, it is a complex issue and any solution would have to be more complex than what I just stated above. In any case, what all practitioners agree is that we need a change, and we have to start working on it now.

 * Ninth Era, Weekly Judicial Journal of the Federation, Courts of Appeals, XXIX, April, 2009, page: 1925, Thesis: I.7o.A.617 A, Registry 167451

 ** Ninth Era, Weekly Journal of the Federation, Supreme Court, Second Chamber, XXV, June 2007, page 287, Thesis: 2a./J. 99/2007

 *** Ninth Era, Weekly Journal of the Federation, Supreme Court, Second Chamber, XXVI, December 2007, page 154, Thesis: 2a./J. 218/2007

La entrada The basic structure of IP litigation in Mexico (Second part) se publicó primero en Reyes Fenig.

A very common complaint from IP owners is the extremely long time it takes to obtain a final decision in an IP infringement action or a patent invalidation or trademark cancellation case.

The purpose of this post is explaining the structure of IP litigation in Mexico, and of the appeals system in this field of law; why appeals have been taking so long in being decided; why they may take longer; why the courts appear to be so unreasonably formalistic about the authority of the officials of the Mexican Patent and Trademark Office that decide cases; and what can we expect in the close future.

In Mexico, most IP litigation involves administrative instances, such as the Mexican Patent and Trademark Office.

It is possible to file criminal charges in connection to trademark forgery and illegal reproduction of works protected by copyright, and file actions for damages with a civil court, and the Mexican Patent and Trademark Office would have little involvement, if any, in these sorts of procedures.

However, administrative cases involving infringement and invalidation of IP rights largely outnumber the matters currently handled by the General Attorney’s Office and the criminal and civil courts, thus this post with make only reference to the administrative litigation.

Having said the above, the basic structure of an IP litigation process is the following:

A. The first instance is the Instituto Mexicano de la Propiedad Industrial or Mexican Patent and Trademark Office (MPTO).

The MPTO not only issues patents and registers trademarks; it also has authority to decide infringement actions involving patents, trademarks and some cases of copyright, and the invalidation or cancellation of patents and trademarks.

An infringement or cancellation or invalidation action involves a full administrative trial, with the filing of a complaint, and answer, filing and review of evidence, final arguments and a decision.

The MPTO typically takes from 10 to 18 months to decide a trademark cancellation/infringement action. A patent infringement/invalidation action may take from one to three years, sometimes more, if the substantive matter of the patents is complex, as in the case of biotechnology.

The MPTO may not award damages or attorneys’ fees. It may only impose a fine of the infringer; order the preliminary and/or definitive seizure of infringing product issue a preliminary/definitive order to stop the manufacture and/or commercialization of infringing goods; or remove a trademark from the registry or invalidate the patent.

B. Appeals against the MPTO

There are three possible ways to challenge a final decision from the MPTO, no matter if the decision is the result of litigation or of a purely administrative procedure (final rejection of a trademark or patent application).

B1. Administrative Review. It is possible to file a petition for administrative review with a higher-rank official of the MPTO itself.

The filing of the petition for Administrative Review is optional. The appellant may choose not to file it and appeal the decision with the Tribunal Federal de Justicia Fiscal y Administrativa or Federal Court of Tax and Administrative Affairs (FCTAA) –see B2- or file an Amparo claim (constitutional appeal) with a Federal District Court –see B3-.

The higher rank officials of the MPTO tend to confirm the decisions, unless there was a clear procedural or formal error.

Filing a petition for Administrative Review using substantive arguments against the decision is usually a waste of time, or an effective way to delay a final decision, given that the MPTO may take one year or more to simply confirm the earlier decision.

The decision issued in connection Administrative Review may be subject of an appeal with the FCTAA (see B2) or an amparo claim (see B3).

From a technical perspective, the appeal with the FCTAA and the amparo claim are completely different procedures in nature and structure, but in order to keep it simple, I will make emphasis only in practical issues.

B2. Appeal with the FCTAA. The appeal with the FCTAA is the most usual way to challenge the decisions of the MPTO. The appellant has 45 business days to file the appeal with the FCTAA.

The FCTAA is divided in salas or chambers of three judges each, and a Highest Chamber of eleven judges.

The FCTAA started reviewing appeals concerning IP in mid 2000, as a consequence of an amendment to the Federal Law of Administrative Procedures (FLAP). Since January 2009, appeals concerning IP matters are decided by a specialized chamber.

The FCTAA takes between one and two years to decide an appeal. The FCTAA has authority to order the MPTO to cure some formal or procedural flaw and render a new decision, or to decide on the merits of the case instead of the MPTO.

The general rule is that the parties are allowed to file new evidence and arguments, not previously submitted with the MPTO. However, there is a recent non-binding decision from the Seventh Court of Appeals in Mexico City, that intends to limit the filing of new evidence and arguments to prove the use of a trademark in appeals associated to cancellation actions due lack of use*.

B3. Amparo claim. The amparo claim involves a constitutional review of a final authority’s decision by a federal district judge to verify if there was a breach of a garantía individual or constitutional basic right.

One basic constitutional right in Mexico is that all decisions should be issued in accordance to the law. If the decision breaches the law, then it may also be unconstitutional.

As a general rule, the consequences of the amparo are limited to the invalidation of the authority’s decision, if found against the constitution, and the issuance of a new decision, which under certain circumstances, may be subject of a new amparo claim or an appeal with the FCTAA.

The amparo was the usual way to challenge decisions from the MPTO, until mid 2000, when the amendment to the FLAP gave the FCTAA authority to review appeals against the decisions o the MPTO, among other government agencies.

Notwithstanding the above, the amparo claim is still available to challenge most decisions of the MPTO, although practitioners do not use it, given the shorter time they would have to prepare the appeal. Further, the district judges tend to invalidate decisions only to order the MPTO to cure a formal or procedural flaw and render a new decision, instead of deciding the merits of the case. Finally, and from my very personal perspective, the FCTAA’s decisions usually show more careful analysis of the parties’ arguments than the decisions from the district judges.

Unlike the appeal with the FCTAA, the general rule is that the parties are not allowed to file new evidence or arguments.

The appellant has 15 business days to file the amparo claim, and the judge may take from 6 to 12 months to issue a decision.

C. Final appeals

As explained above, the decision issued by a higher rank official of the MPTO in connection to a petition for administrative review (see B1) may be challenged with the FCTAA or a federal district judge.

The decisions issued by the FCTAA and the district judge may be subject of a final appeal with a tribunal colegiado de circuito or federal court of appeals, or with the Mexican Supreme Court in some extraordinary cases, such as the direct interpretation of the Federal Constitution or the constitutionality of a statute or statutory provision.

The final appeal may be decided by any of the seventeen courts of appeals specialized in administrative matters located in Mexico City. A federal court of appeals takes about six to ten months to decide a final appeal. The Supreme Court may take a little longer.

In the second part of this post, I will explain some of the reasons why the appeals take so long to be decided, and why they may take longer.

* Ninth Era, Weekly Judicial Journal of the Federation, Courts of Appeals, XXIX, April, 2009, page: 1925, Thesis: I.7o.A.617 A, Registry 167451

La entrada The basic structure of IP litigation in Mexico (First part) se publicó primero en Reyes Fenig.