One change that has not received much attention is referred to the Government Fee, and how it is calculated according to the amendment published on April 26, 2018 (Update October 30, 2018: An additional amendment was published on August 7, 2018).

Good news first: The government fee for new patent filings was cut by almost half.

Bad news: Under the new fee, long applications will pay more.

Under the old fee, the number of drawings or claims or the number of pages was not relevant to calculate the government fee. It was the same fee for short applications than for long applications.

The government fee is now calculated according to the total number of pages of the specification, drawings and formal documents (such as priority application, power of attorney and assignment). The flat minimum fee applies only to patent applications with 30 pages or less, considering all the above-stated documents. For every page over 30 pages, the applicant will have to pay between US$4.00 and US$5.00. Amino-acid sequences will not be considered for the calculation of the fee, if the patent application is filed electronically.

Since the only documents to be considered to calculate the government fee are the ones enclosed to the application form, this new way to determine the fee will encourage applicants to file patent applications with the fewest possible number of pages: more figures might be included in each page; applicants may prefer filing formal documents (assignment, POA and priority document) and the Spanish translation of the specification and claims at a later stage after the filing of the application (English uses fewer words than Spanish and rules regarding letter size and margins apply only to the Spanish translations. Don’t be surprised if a 37 pages long specification in English results in a 56 pages long Spanish translation).

(Update October 30, 2018: A further amendment to the Government Fee published on August 7, 2018, set some rules to clarify how to calculate the amount of the government fee due in a patent application: 1. Only the official application form, specification, claims, abstract and drawings shall be considered to calculate the number of pages of the application, thus, the amount due; 2.  The government fee should be calculated based on the Spanish text or Spanish translation of the specification, claims, abstract and drawings. This means that the amount paid when filing the patent application might not be final if the specification, claims and/or drawings were filed in English or any other language different than Spanish.  As I stated above, English uses fewer words than Spanish, so most likely the application will have to make an additional payment when filing the Spanish translation).

In spite of the changes to the rules regarding the government fee, the Mexican Patent and Trademark Office did not include a definition of small entity, as a general concept applicable to domestic and foreign small entities. Instead, the rules provide a reduced rate to inventors, universities, government research entities and “micro y pequeñas industrias”, as defined by the Mexican Ministry of Economy.

The definition of “micro” and “pequeñas industrias” is stated in the “Ley para el Desarrollo de la Competitividad de la Micro, Pequeña y Mediana Empresa”[1] or Act for the Development of Competitiveness of Micro, Small and Medium Businesses. The act refers and governs Mexican businesses only. Therefore, the reduced fee for “small entities” does not refer to foreign entities, regardless the size. Applicants from abroad should be careful when claiming “small entity status”, even if the Mexican Patent and Trademark Office currently accepts the small entity claim. The courts might not be that flexible.

[1] See Diario Oficial de la Federación, December 30, 2002; amended in Diario Oficial de la Federación, June 6, 2006; August 5, 2011; January 18, 2012;  January 21, 2015; December 1, 2016; May 19, 2017.

La entrada Change in the government fee will impact patent practice in Mexico. se publicó primero en Reyes Fenig.

I can remember the huge optimism around free market and trade liberalization when I was at Law School in the mid-nineties. The triumph of economic and political liberalism in most of the world seemed secured.

However, security concerns, inequality, distrust in the traditional political elites and fear of “others”, have caused some countries to take steps in unexpected directions. I do not see a revolutionary change, but we are seeing scenarios that were unthinkable five years ago.

One victim of the change og the tide has been NAFTA.

Readers should know that the implications of NAFTA in Mexico were huge, far beyond trade. For Mexicans, it was assuming a different role in the world. Needless to say, NAFTA deepened an already fundamental relation between Mexico and the US (the relation with Canada is important, but far from the relevance of the relation with the United States). As the well-known Mexican historian Lorenzo Mayer explains:

NAFTA was one of the most important symbolic moments in the Mexico-US relations since the formal alliance between the two countries in World War II. The agreement highlighted the failure of the development model known as Mexican economic nationalism, became a personal triumph for President Carlos Salinas and a collective triumph for the then ruling group in Mexico. After NAFTA, the state policies that were in place in Mexico, from the Mexican Revolution to the policy toward Central America in the eighties, were forgotten. Instead, Mexico adopted an administrative policy that may be called a new “special relationship” with the only Superpower of the end of the 20^th Century[1].

NAFTA had profound effects in the regulation of IP rights in Mexico. Large parts of the Mexican statutes regarding trademarks, patents, vegetal varieties and copyright were direct consequence of NAFTA. Now that that the survival of NAFTA is compromised, one may ask if the end of the trade agreement would impact the Mexican IP legislation.

Making predictions is a risky activity, but I think I can make a few reasonable guesses:

1. The United States, Canada and Mexico will continue being neighbors and trade will continue. In spite of the alleged efforts to diversify the destiny of exports, Mexico will continue highly dependent of trade with the United States and the relation will continue being highly asymmetric.
2. Economies in the three NAFTA nations will suffer; less in the United States and Canada than in Mexico, especially due decreased growth and investment rates in our country. Of course, there also will be winners.
3. Trade rules will change, but not too much. Mexico, the United States and Canada are still members of the World Trade Organization (WTO) and its rules would apply. The advantages of NAFTA would be gone, but Mexico is not going back to protectionism and import substitution industrialization policies.
4. It is unlikely that the end of NAFTA will cause a setback in the current protection of IP rights in Mexico. Even without NAFTA, our country would still be a party of many bilateral and multilateral agreements (notably, the Agreement on Trade-Related Aspects of Intellectual Property Rights or TRIPS) that bind Mexico to keep the current legislation.
5. On the other hand, without NAFTA, Mexico will have little incentives to enhance the protection of IP rights, mainly in the field of technological innovation, where our northern neighbor enjoy a dominant position. I can think about a few examples of “not-happenings” if NAFTA ends: a) extending the term of patents due unjustified delay in examination or in issuance of marketing authorizations; b) providing a better regulation to the “non-reliance” aspect of efficacy and security data for new chemical entities to be used in pharmaceuticals and agrichemicals[2]; c) providing a minimum exclusivity term for sad data[3]; d) extending the patentability of certain developments that today are not even considered inventions, and; e) providing some sort of provisional protection procedures for inventions that are subject matter of published pending patent applications.

We do not know what the future of NAFTA will be; last October, some pessimistic estimates calculated that that the chances of survival of NAFTA were less than 50%[4]. If negotiations are not succesful and NAFTA ends, it would certainly not be the end of the world but, whatever the outcome may be, Mexicans should think again what kind of relation we want with our North American neighbors and the rest of the world.

[1] Josefina Zoraida Vázquez and Lorenzo Meyer, México frente a Estados Unidos. Un ensayo histórico, 1776-2000, 4^th ed., México, FCE, 2001, p. 239.  The English translation is mine.

[2] Data protection regarding safety and efficacy of new chemical entities for medicines and agrochemicals have tow aspects: non-disclosure and non-reliance. Only non-disclosure is properly covered by the statute and regulations, while non-reliance enjoys a weak protection, limited to pharmaceuticals, from an administrative internal guideline of the Mexican FDA. Such guideline may be easily suspended or terminated at any time.

[3] TRIPS does not provide a minimum term for data exclusivity. NAFTA states a minimum five years term, the same that the internal guideline of the Mexican FDA, although the guideline is applicable to pharmaceuticals only. The end of NAFTA will leave the term of data exclusivity in a weaker situation.

[4] “US demands raise fears that leaving NAFTA could hurt economy” at Chicago Tribune; electronic version at http://www.chicagotribune.com/business/sns-bc-us–nafta-in-danger-20171011-story.html. date of review: December 2, 2017.

La entrada What happens with IP in Mexico if NAFTA dies se publicó primero en Reyes Fenig.

On November, 2016, the Weekly Journal of the Federal Judicial Branch published a non-binding decision by one of the panels of the Court of Appeals of the First Circuit, in Mexico City, regarding patent infringement.

Essentially, the court stated that there is patent infringement if the infringer, instead if using the invention according to the literal claims, obtained the same result by equivalent means, without involving an inventive step[1].

This is an important breakthrough in Mexican patent law. In a more general view, this is one of a significant number of relatively recent non-binding precedents from courts of appeals in Mexico City and the Specialized Panel in Intellectual Property of the Federal Court of Administrative Affairs (FCAA) that seek to improve the protection of IP rights in Mexico by means of a more liberal construction of the statutory causes of administrative infringement (punishable by the Mexican Patent and Trademark Office) provided in the Mexican Industrial Property Law.

This tendency of the FCAA and some courts of appeals in Mexico City was somehow announced by a non-binding precedent of 2013. In this precedent, the Eight Court of Appeals in Mexico City stated that the general provision against unfair competition provided by Section 213, paragraph I, of the Industrial Property Law may be considered as a last resource remedy that allows punishing actions that, in spite of harming IP rights, are not literally stated as administrative infringement in the Industrial Property Law.

For example, the Industrial Property Law does not state as a cause of infringement importing goods identified with trademarks identical or confusingly similar to one registered in Mexico to identify the same of similar products to the ones stated in the Mexican trademark registration. In order to cure that void, the FCAA ruled in a non-binding precedent published on August, 2015[2], that such an activity should be punished as unfair competition under the Industrial Property Law and the general provision against unfair competition (Section 213, paragraph I, of the Industrial Property Law[3]).

More recently, on March 2017, the First Court of Appeals in Mexico City published in a non-binding precedent[4] stating that importing a product using a registered industrial design may be punishable as administrative infringement under the general provision against unfair competition (again, Section 213, paragraph I, of the Industrial Property Law), in spite of the fact that importing goods that use registered industrial designs without authorization is not stated as an infringement in the Industrial Property Law.

Although the above-stated precedents are not binding, they are considered authoritative, so I expect that the Mexican Patent and Trademark Office and the FCAA will show a more favorable and flexible approach to infringement cases in the benefit of IP owners in the following months.

However, the liberal construction of the statutory causes of infringement provided in the Industrial Property Law has not been free of criticism. One important objection relates to a binding precedent from the Supreme Court[5] regarding the basic principles applicable to administrative infringements.

The Supreme Court ruled that some principles ruling criminal law are applicable to administrative infringements cases, namely, the principle about the definition of the offense or “tipicidad”: in order to make an action punishable, such action must be exactly stated as an offense in the statute. An action can’t be punishable using analogy or higher reason.

If the MPTO and the courts must construct the statutory causes of administrative infringement as narrowly as criminal offenses, I wonder if the flexible constructions of the general provision against unfair competition stated in paragraph I of Section 213 of the Industrial Property Law would meet the standard set by the Supreme Court.

[1] “Patente. La interpretación periférica, por identidad o por equivalencia, constituye un método para definir si un tercero ha invadido en perjuicio de su titular los derechos que derivan de esa exclusividad dentro de un procedimiento de infracción” at Gaceta del Semanario Judicial de la Federación, Tenth Period, Number 36, Volume IV, November 2016, page 2412. Electronic version: https://sjf.scjn.gob.mx/sjfsist/Paginas/DetalleGeneralV2.aspx?Epoca=1e3e10000000000&Apendice=1000000000000&Expresion=interpretaci%25C3%25B3n%2520perif%25C3%25A9rica&Dominio=Rubro&TA_TJ=2&Orden=1&Clase=DetalleTesisBL&NumTE=1&Epp=20&Desde=-100&Hasta=-100&Index=0&InstanciasSeleccionadas=6,1,2,50,7&ID=2013115&Hit=1&IDs=2013115&tipoTesis=&Semanario=0&tabla=&Referencia=&Tema=.

[2] “Infracciones en materia de comercio. El abandono de la mercancía en aduana no exime de que se constituya una conducta infractora originada en la motivación psicológica del dolo al momento de realizar la importación” at R.T.F.J.F.A., Seventh Period, Year V, Number 49, August 2015, page 468.

[3] Section 213.- “It is an administrative infringement: I. Taking any action against the good uses and customs in industry, trade and services that imply unfair competition and related with the subject matter regulated by this Act”.

[4] “Diseño industrial. La importación de un bien protegido por un registro relativo sin consentimiento de su titular, constituye un acto contrario a los buenos usos y costumbres en la industria o comercio”, at Gaceta del Semanario Judicial de la Federación, Tenth Period, Number 40, Volume IV, March 2017, page 2695. Electronic version: https://sjf.scjn.gob.mx/sjfsist/Paginas/DetalleGeneralV2.aspx?Epoca=1e3e10000000000&Apendice=1000000000000&Expresion=IMPORTACI%25C3%2593N%2520DE%2520UN%2520BIEN%2520PROTEGIDO%2520POR%2520UN%2520REGISTRO&Dominio=Rubro&TA_TJ=2&Orden=1&Clase=DetalleTesisBL&NumTE=1&Epp=20&Desde=-100&Hasta=-100&Index=0&InstanciasSeleccionadas=6,1,2,50,7&ID=2013984&Hit=1&IDs=2013984&tipoTesis=&Semanario=0&tabla=&Referencia=&Tema=.

[5] “Tipicidad. El principio relativo, normalmente referido a la materia penal, es aplicable a las infracciones y sanciones administrativas” at Semanario Judicial de la Federación y su Gaceta, Ninth Period, Volume XXIV, August 2006, page 1667. Electronic version: https://sjf.scjn.gob.mx/sjfsist/Paginas/ResultadosV2.aspx?Epoca=1e3e10000000000&Apendice=1000000000000&Expresion=174326&Dominio=Rubro&TATJ=2&Orden=1&Clase=TesisBL&bc=Jurisprudencia.Resultados&TesisPrincipal=TesisPrincipal&InstanciasSeleccionadas=6,1,2,50,7&Hits=20.

La entrada A court opens the door to the Doctrine of Equivalents in Mexico se publicó primero en Reyes Fenig.

On the other hand, it seems that there is the generalized idea among law-makers and government officials that amending the statutes to make the penalties therein stipulated more severe is an effective way to discourage illicit activities, thus somehow curing the lack of effective enforcement.

In this sense, on January 12, 2012 the Federal Journal of the Federation (official communication channel of the Federal Government) published several procedural and substantive amendments to the Industrial Property Law.

Some amendments, such as the ones aimed to ease the service of official communications and decisions issued by the Mexican Patent and Trademark Office (MPTO), only concern Mexican practitioners and I am not going to discuss them here.

Other more interesting amendment duplicates the fines associated to trademark, copyright and patent infringement in case of bad-faith infringers, and stipulates a presumption of bad-faith infringement.

If the trademark, copyright or patent owner marked the product with a warning about the existence of an exclusivity right (including but not limited to the © symbol with the date of first publication/disclosure of the work, name and address of the copyright holder; Patentado or equivalent; ®, M.R., Marca Registrada or equivalent) or published a warning about such an exclusivity right in a nationwide newspaper, then the infringer is presumed to be a bad-faith infringer and the amount of fine must be automatically doubled. It is my opinion that such a bad-faith presumption is a iuris et the iure presumption, that is, that the infringer may not file the evidence to prove on the contrary.

There is more information about the trademark and patent marking in our ealier post.

Although it is good to have more severe penalties for IP infringers, I believe that it would be better if the authorities work harder to effectively enforce the provisions we already have. For example, the MPTO may take almost one month to issue a preliminary measures order (similar to an injunction) in a patent or trademark infringement case, reflecting a lack of sense of urgency (to say the least) completely inconsistent with the purposes of the preliminary measures.

Rather than amending laws and regulations, we need a change of attitude about what it means to be the administrative authority in charge of enforcing IP rights.

La entrada An amendment in the Industrial Property Statute increases fines for bad-faith infringers in Mexico se publicó primero en Reyes Fenig.

Before the 2010 amendments, many activities associated to the infringement of IP rights in Mexico were already punished with extreme severity. For example, the willful production, distribution and importation of goods bearing counterfeited trademarks in commercial scale are delitos graves or felonies, thus the defendant is not allowed to be free on bail during the trial. In the same sense, the willful non-authorized reproduction of works protected by copyright in commercial scale is a felony too.

However, in all cases, in order to start an investigation, the holder of the copyright or registered trademark copyright had to file a querella or formal complaint. A characteristic of the crimes that require querella is that the right holder may stop the investigation or the trial by withdrawing the charges (perdón in Spanish).

The querella requirement could obstacle an investigation; for example, when officials of the Customs Agency or the General Attorney Office found and seized a shipment of counterfeited goods or illegal copies of works, without a querella, there was no justification to maintain the seizure of goods or authority to continue the investigation. Further, the formalities that have to fulfill a power of attorney required to file a querella can be very difficult to accomplish for foreign entities. As a result, a federal judge could dismiss a trial because the power of attorney of the representative of the right holder was missing some formal requirement.

As I said before, in the case of crimes that need a formal complaint, the copyright or trademark owner could terminate the investigation or even the trial with a perdón or withdrawal of charges. This possibility allowed the trademark or copyright holder to negotiate a settlement with the defendant, although this sort of negotiations often discouraged, even upset, the officials of the General Attorney Office.

Now, with the June 2010 amendment, many -not all- IP related crimes (most of them associated to copyright) will be investigated ex-officio.

In the copyright field, for example, willfully producing, reproducing, importing, transporting, distributing, selling (in a store) or leasing copies of copyright protected works, with commercial purposes and without authorization, is not only a felony but also will be investigated ex-officio. On the other hand, willfully selling unauthorized copies of copyright-protected works in the streets, with commercial purpose, is a crime that now will be investigated ex-officio, although it is not a felony.

In the trademark field, the June 2010 amendment did not change most of the crimes associated with trademark counterfeiting provided in the statute. Most cases of trademark counterfeiting remain being felonies, but they still need the formal complaint or querella filed by the trademark owner in order to be investigated.

Nevertheless, as a consequence of the June 2010 amendment, willfully offering in sale goods bearing counterfeited trademarks, in the streets with commercial purposes, is now a crime that may be investigated ex-officio although, paradoxically, it is not a felony.

The Federal Congress also amended some provisions regarding the preliminary measures that a trademark, patent or copyright holder may request from the Mexican Patent and Trademark Office (MPTO) to stop infringing activities, namely the requirements that the defendant must fulfill to lift such measures.

The most usual way to oppose infringement of IP rights –including most copyright infringement cases- is the administrative infringement action, filed with the MPTO. The MPTO has authority to issue preliminary measures. The preliminary measures may include the seizure of infringing products and an order to the infringer to stop the production of infringing products and recall the merchandise already in hands of distributors.

In order to obtain the preliminary measures, among other requirements, the defendant must file a bond. The purpose of the bond is to guarantee the payment of the actual damages that the preliminary damages may cause to the defendant in case the MPTO decides there was no infringement.

The defendant is allowed to lift the preliminary measures and continue it business as usual, by filing another bond. The purpose of the bond is to guarantee the payment of the damages that the defendant’s activities may cause to the plaintiff.

In practice, the MPTO has not enough data, if any at all, about the amount of the possible damages that the preliminary measures may cause to the alleged infringer, thus the MPTO sets the amount of the bond at it own discretion. Sometimes, the plaintiff files the bond with the MPTO before it accepts to issue them; if it is high, there is a good chance that the MPTO will accept it, although technically it is an arguable practice.

If after the enforcement of the preliminary measures, the MPTO believes that the amount of the bond is too low, it has authority to request the plaintiff to increase the bond, within a three or five days term. Failure of the plaintiff to increase the bond would result in the lift of the preliminary measures.

Once that the preliminary measures have been enforced, the alleged infringer has the right to lift them, y filing another bond. The purpose of this bond is guaranteeing the payment of the damages that the alleged infringing activities may cause to the plaintiff. The practice of the MPTO was to set the amount of the defendant’s bond in twice the amount of the bond filed by the plaintiff.

Now, the amended statute stipulates that the bond that the defendant may file shall be 40% higher than the bond filed by the plaintiff. Nevertheless, the MPTO keeps authority to request the increase of the amount of the bonds filed by the plaintiff or defendant, in case it considers that their amounts are not high enough to guarantee the payment of the damages.

Finally, it is now an administrative infringement that the patent holder, or the recorded licensee (if the recorded license does not provide against the filing of infringement actions against third parties), files an infringement action against a third party, if there was an earlier final decision ruling that there was no patent infringement involving the same cause of infringement.

From my perspective, this new cause of infringement is odd, and I can only understand it as a way of refraining innovative pharmaceutical companies from harassing generics manufacturers with constant infringement actions repeating the same causes of infringement, assuming of course that the efforts of the patent holders to enforce their patent rights can be generally qualified as ‘harassment’.

The amendments to the Federal Criminal Code suggest that there is an intention to increase the fight against piracy, although it also shows lack of a coherent strategy, given the different treatment to crimes associated to trademarks and those related to copyright, and the inconsistencies in each field.

Only time will tell if the will to combat piracy is real, or only a measure to cool down Mexico’s trade partners, mainly the United States, who kept Mexico is the Watch List of the 2010 Special 301 Report.

La entrada Amendments to the Mexican statutes toughens (and softens) fight against piracy and IP infringement se publicó primero en Reyes Fenig.

For many years, a usual complaint from patent owners of pharmaceutical products was that the Mexican FDA –Comisión Federal para la Protección contra Riesgos Sanitarios, better know by its acronym COFEPRIS- was encouraging patent infringement by issuing marketing authorizations for patent-infringing drugs.

On 2003, the President amended the Reglamento de la Ley de la Propiedad Industrial or Rules of the Industrial Property Law and the Reglamento de Insumos para la Salud or Rules for Health Supplies to create a “link” between the Mexican Patent and Trademark Office (MPTO) and the Mexican FDA.

According to the amended Rules of the Industrial Property Law, the MPTO must publish every six months an updated list of patented drugs, identified by the name of the active ingredient. The list must include the names of the patentee and recorded licensee (if any), the term of the patent, among some other information about the protected drug. The idea of the list, widely known as the “List of Patented Medicines”, is to inform the public, and especially the Mexican FDA, about the existence of patent rights on certain active ingredients.

On the other hand, according to the amended Rules for Health Supplies, when filing an application with the FDA for marketing authorization of a drug, the applicant must state either there is no patent protection for the drug, or that it is the patent holder or recorded licensee. The Mexican FDA has to review the List of Patented Medicines and even verify with the MPTO to make sure that there would be no patent infringement if it grants the marketing authorization to the applicant. If necessary, the Mexican FDA will request the applicant to provide evidence that it is the patent owner or that it has a license recorded with the MPTO.

The disputes around the linkage system

It was clear that patents claiming new active ingredients should be included in the List of Patented Medicines, and that patents claiming processes were not to be listed.

However, there were a lot of questions about patents for new compositions or formulations and new uses. The language used when amending the Rules of the Industrial Property Law raised some doubts, although the amended Rules for Health Supplies only considers patents claiming new active ingredients as subject of being included in the List of Patented Medicines.

The original position of the MPTO was that new pharmaceutial formulations and compositions should not be included in the List of Patented Medicines. It did not mean that is was ok to infringe patents claiming new formulations or processes, but that the mechanism provided by the linkage system only benefited patents that claimed new active compounds.

Many innovative pharmaceutical laboratories starting filing amparos or constitutional appeals with the district courts in Mexico City against the lack of inclusion of their formulation patents in the List of Patented Medicines, and in most cases the patent owners prevailed, so the MPTO has been forced to publish several addenda to the List of Patented Medicines to include patents for new formulations and compositions.

Although most federal courts of appeals in Mexico City supported the idea that the  List of Patented Medicines should include patents for new formulations, the Fourth Court of Appeals in Mexico City published a ruling[1], stating that only patents on new active ingredients should be included in the List of Patented Medicines.

The expansion of the linkage system

The contradictory rulings between different courts of appeals caused the intervention of the Supreme Court shortly after the Fourth Court of Appeals in Mexico City published the ruling. On January 2010, the Second Chamber of the Supreme Court, specialized in administrative matters, published binding precedent number 2a./J. 7/2010[2], stating that the List of Patented Medicines should include patents claiming new formulations in a very close decision (3 Judges in favor and 2 Judges against).

n the Mexican system, a binding decision from the Supreme Court is binding for all federal, state and administrative courts in Mexico, but not for the MPTO. Technically, the MPTO could continue refusing to include patented formulations in the List of Patented Medicines and the owners of the excluded patents would have to appeal such exclusions, although such appeals should be decided quicker than before the Supreme Court’s decision.

Notwithstanding the above, the MPTO usually tries to adapt its actions and decisions to the binding precedents of the courts, so I would expect that the MPTO will voluntarily include patents on new pharmaceutical compositions and formulations in the next number of the List of Patented Medicines. The ruling of the Supreme Court did not mention patents for new uses of drugs, and we may exact the MPTO to continue opposing the publication of these patents in the List of Patented Medicines.

(Update September 20, 2018. Several decisions from the federal courts of appeals show that the courts favor the publication of second use patents in the linkage system. No  binding precedent has been issued).

Some downside of the linkage system and its expansion

All measures and mechanisms to improve the protection of patents and prevent the infringement are welcome. However, the linkage system and the expansion ruled by the Supreme Court could lead to unfair decisions.

First, and this has nothing to do with including formulation patents in the List of Patented Medicines, I am against the fact that the Rules for Health Supplies force applicants for marketing authorizations to prove that they are the patent owner or a recorded licensee. Why there should be a license and why it should be recorded? If the applicant for the marketing authorization is just distributor, there is no reason for the parties to execute a license; however the Mexican FDA will still demand evidence that the applicant has a license recorded with the MPTO in order to issue the marketing authorization. From my perspective, the demand stated in the Rules for Health Supplies about the existence of a license recorded with the MPTO shows that neither the Mexican FDA not the MPTO understood the legal consequences of recording a license. It also evidences the extremely formalistic mentality of the Mexican bureaucrats and society in general.

Second, considering the restrictive construction that the MPTO originally made of the amended Rules of the Industrial Property Law about what patents should be included in the List of Patented Medicines, I believe that it was not the original intention of the Administration to benefit formulation patents from the linkage system. I think that the courts have been able to expand the system to formulation patents mainly because the lousy language used in the 2003 amendment to the Rules of the Industrial Property Law.

The fact that the Rules for Health Supplies were amended at the same time than the Rules of the Industrial Property Law and that the Rules for Health Supplies clearly limit the scope of the linkage system to patents claiming an active ingredient somehow confirms the above.

Third, the inclusion of formulation patents in the List of Patented Medicines, although it may be a very effective way to prevent infringement of such patents, it may also cause the rejection of marketing authorizations for drugs that use a formulation different from the one claimed in the patent. Unlike many cases of patents claiming active ingredients, the Mexican FDA may have to interpret the claims of the formulation patent to decide whether the applied drug infringes said claims. This is dangerous, because the Mexican FDA is not a patent expert, and it is unclear whether if the MPTO would be able to provide effective, timely and accurate support in this field.

Does it make sense for a non-innovative country such as Mexico to increase the protection to pharmaceutical patents at the risk of blocking non-infringing drugs?

[1] “PROPIEDAD INDUSTRIAL. LAS PATENTES DE MEDICAMENTOS ALOPÁTICOS QUE DEBEN PUBLICARSE EN LA GACETA RELATIVA, DEBEN SER ÚNICAMENTE AQUELLAS QUE PROTEGEN UNA SUSTANCIA, INGREDIENTE O PRINCIPIO ACTIVO”, at Semanario Judicial de la Federación y su Gaceta, Ninth Era, Tome XXIX, May 2009, page 1092.|

[2] “PROPIEDAD INDUSTRIAL. LAS PATENTES DE MEDICAMENTOS ALOPÁTICOS O SUS REIVINDICACIONES QUE NO CONSTITUYAN PROCESOS DE PRODUCCIÓN O DE FORMULACIÓN DE MEDICAMENTOS Y QUE EN SU COMPOSICIÓN FARMACÉUTICA INCLUYAN UN INGREDIENTE, SUSTANCIA O PRINCIPIO ACTIVO, DEBEN INCLUIRSE EN LA PUBLICACIÓN A QUE SE REFIERE EL ARTÍCULO 47 BIS DEL REGLAMENTO DE LA LEY DE LA PROPIEDAD INDUSTRIAL”, at Semanario Judicial de la Federación y su Gaceta, Ninth Era, Tome XXXI, February 2010, page 135.

La entrada The Mexican Supreme Court expands the linkage system to prevent patent infringement se publicó primero en Reyes Fenig.

The decisions of the FCTAA have made the Mexican Patent and Trademark Office (MPTO) to acknowledge the extension of term of several pipe-line patents, for the same extended term granted to the corresponding foreign patent from which the priority was claimed. Further, the decisions of the Highest Chamber of the FCTAA allowing the extension of term are now binding*. For a more detailed explanation about Mexican pipe-line patents and their extension, you may review the post  The extension of life of patents in Mexico.

In spite of the relatively large number of extended pipe-line patents, all the controversy surrounding the pipe-line patents themselves and their life extensions and that the FCTAA published the first precedent regarding this matter in 2005, neither the Federal Courts of Appeals nor the Supreme Court had published any ruling concerning the term extension of pipe-line patents, until January 2010.

The January 2010 issue of the Weekly Judicial Journal of the Federation publishes a non-binding decision of he First Court of Appeals in Administrative Matters of the First Circuit (based in Mexico City)**. This decision is associated to a final appeal (Amparo Directo) filed by the well-known Mexican pharmaceutical company Probiomed, S.A. de C.V. The decision rules that the term of pipe-line patents, and of all patents in general, cannot be extended whatsoever. This decision is in open conflict with the binding ruling of the FCTAA, and restarts a discussion that I thought was (a few technicalities aside) essentially over, as a consequence of the binding precedent from the FCTAA and because all pipe-line patents, even the extended ones, should expire by mid 2012 (the statute provided that no pipe-line patent could have a term longer than 20 years counted from the filing date in Mexico).

Notwithstanding the above, the decision of the Federal Court of Appeals does not imply an actual change in the way Transitory Article Twelve of the 1991 Industrial Property Statute has been understood, particularly concerning the extension of pipe-line patents.

The decision of the First Court of Appeals in Mexico City is non binding (the binding precedents of the Highest Chamber of the FCTAA are not binding for  the District Courts and Courts of Appeals, only for the different lower Chambers of the FCTAA), so there is no reason for the Specialized Chamber in Intellectual Property of the FCTAA to stop following the binding decision of the Highest Chamber of the FCTAA and continue ordering the MPTO to acknowledge the term extension of pipe-line patents when the foreign patent offices grant the term extension of the foreign patent that corresponds to the claimed priority in the Mexican pipe-line patent.

We have to wait to see if the precedent from the First Court of Appeals in Mexico City causes the intervention of the Supreme Court. The Supreme Court may intervene if there is a contradictory ruling from another Court of Appeals. I believe that at least the first decision of the Highest Chamber of the FCTAA allowing the extension of term of a pipe-line patent (precedent V-P-SS-629, decided on July 7, 2004) was appealed by the MPTO and a Court of Appeals had to decide based on the merits of the appeal (the statute changed in December 2005; since then, most appeals of the MPTO against the decisions of the FCTAA are dismissed).

Not everybody is allowed to demand the intervention of the Supreme Court to decide which of the contradictory decisions held by different courts of appeals is right, but the MPTO can. I hope that the MPTO, or the parties involved in the appeals, will soon demand such intervention of the Supreme Court, so we may have certainty about the validity of the term extension of Mexican pipe-line patents. (Update January 2011: Unfortunately, as a result of some formal flaws in the appeal brief that the MPTO filed against the first decision of the Highest Chamber of the FCTAA of 2004, the Federal Court of Appeals dismissed that appeal without reviewing the merits, thus the intervention of the Supreme Court, will take more time to occur, if ever).

* Jurisprudencia or binding decision VI-J-SS-40. Journal of the Federal Court of Tax and Administrative Affairs, Sixth Era, Year II, No. 21, September 2009, page 27.

** Isolated precedent published in the Weekly Judicial Journal of the Federation, Ninth Era, Courts of Appeals, XXXI, January 2010, page 2173.

La entrada Mexican courts disagree about the term extension of patents se publicó primero en Reyes Fenig.

On January 5, 2009, the new Chamber specialized in intellectual property of the Federal Court of Tax and Administrative Affairs (FCTAA) started working.

The Mexican Patent and Trademark Office (MPTO) is the first instance in most IP matters (registration, administrative enforcement and validity of IP rights).

For the second instance, the appellant has three alternatives available: (i) a petition for administrative review with a higher rank official of the MPTO itself (usually a waste of time); (ii) an amparo appeal with a Federal District Court; (iii) or an appeal with the FCTAA. The appeal with the FCTAA is the most usual.

The tribunal colegiado de circuito or federal court of appeals will continue being the final instance.

The FCTAA has jurisdiction to decide cases in a wide range of administrative-related areas, such as environment, administrative liability of federal officials, federal taxes, trademarks, patents, copyright, mining, logging permits…

The FCTAA has Chambers all over the country; in Mexico City, where most of the administrative activity is concentrated, it has thirteen unspecialized Chambers of each Judges. There is also a Highest Chamber of eleven Judges. Before January 5, most appeals related to an IP case would be, more or less randomly, sent to one of the thirteen unspecialized chambers in Mexico City.

Starting January 5, 2009, a single Chamber will concentrate all the appeals filed with the FCTAA regarding IP matters. Most cases that were handled by the other Chambers of the FCTAA, in Mexico City and in other states, have been transferred to the specialized one.

Although the new specialized Chamber is considered by most practitioners an important breakthrough, its life could be short in connection to trademarks, patents and litigation cases related thereto, as well as in most copyright administrative enforcement cases.

The jurisdiction of the FCTAA in trademark, patent and administrative copyright enforcement matters started with an amendment of the Federal Law of Administrative Procedures enacted on April 2001, that provided that proceedings and decisions from several government agencies, including the MPTO, would be regulated by the Federal Law of Administrative Procedures.

The 2001 amendment was severely questioned by most IP practitioners, given the many technical deficiencies of the Federal Law of Administrative Procedures. However, we learned to live with it, and eventually appreciated some important advantages that the Federal Law of Administrative Procedures offers given its pro-applicant profile.

However, on November 2006, the Chamber of Representatives passed a bill that amends the Federal Law of Administrative Procedures, excluding intellectual property from the scope of the statute. As a consequence, the FCTAA will no longer have jurisdiction on IP matters.

It was an odd amendment. The reasons stated by the lawmakers that proposed the bill were extremely poor. The FCTAA was not consulted, and who was actually behind the bill to exclude IP matters from the scope of the Federal Law of Administrative Procedures remains a mystery, although the lawmaker that proposed it is from the current government’s party. Although some lawyers welcomed the amendment, most practitioners are against it. As far as I know, the MPTO has not assumed any position about the amendment to the Federal Law of Administrative Procedures, but it is well-known that the MPTO’s officials have never been happy with such statute.

The bill to amend the Federal Law of Administrative Procedures was unanimously approved by all parties at the Chamber of Representatives on November 2006. Odd enough, on December 2007, the FCTAA announced the creation of the Chamber specialized in IP matters.

Now the Senate must approve the bill in order to be enacted by the President. The bill has been pending with the Mexican Senate for more than a year. The Mexican chapter of AIPPI has opposed the bill and urged the Senate to reject it. We’ll see if the objections against the amendment of the Federal Law of Administrative Procedures, persuade the Senate to reject the bill.

Meanwhile, the new IP Chamber of the FCTAA (located in Mexico City) has started working. Although I do not think that the creation of the specialized Chamber will solve the considerable backlog of IP-related cases nor expedite the appeals procedures, I would expect higher quality decisions.

La entrada New Intellectual Property Court in Mexico se publicó primero en Reyes Fenig.

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.

La entrada Ownership on Works and Inventions by Employees in Mexico se publicó primero en Reyes Fenig.

Marking a product with the indication of an industrial property right may prevent or discourage third parties from infringing the intellectual property right associated to a product or service. If, in spite of the marking, a third party infringes the patent or trademark right, the measures available for the right holder are also stronger and the penalties to the infringer higher.

There are certain rules about the marking of products provided in the Mexican statute:

1. The use of the symbol ®, the abbreviation M.R. or the expression “Marca Registrada” (Registered Trademark), “patente en trámite” (patent pending) or “patentado” (patented) may only be used if the trademark is registered in Mexico of there is a patent application or issued patent in Mexico.

The use of any of the aforementioned indications without a Mexican trademark registration, patent or patent application is illegal (actually, it is a cause of infringement), and the Mexican Patent and Trademark Office may impose a fine, or in extreme cases, order the closure of the infringing premises.

 There is the case of products imported into Mexico that use the symbol ® because the trademark is registered in the country of origin, but not in Mexico. In such case, the use of the ® in Mexico would be illegal.

The same rule is applicable to patented products. The indication about the existence of the patent or a pending application is valid only if there is a Mexican patent or patent application. It is possible to use the expression “patente pendiente” or equivalent even if the relevant Mexican patent application has not been published in our country. There is no specific symbol (equivalent to the ® for trademarks) in our country to indicate that there is a patent or pending patent application in Mexico.

2. The use of TM and SM is irrelevant in Mexico, thus it has no legal consequences.

The symbols TM and SM are used in the United States to claim common-law rights on a trademark. Mexico is a civil law country and common-law rights simply do not exist. In any case, the use of TM or SM may not replace the use of the ® symbol or its equivalents (M.R. or Marca Registrada).

3. Benefits from the use of marking associated to patents and trademarks

The use of markings to inform about the existence of a patent or registered trademark (i.e. the symbol ® or the word “patentado”) provides certain benefits stipulated in the Mexican statute:

a) Request the Mexican Patent and Trademark Office the enforcement of preliminary measures (similar to a preliminary injunction) against an infringer.

b) File a lawsuit for payment of the damages and losses that the infringer caused to the right holder.

c) File criminal charges with the General Attorney’s Office in case of forfeited products identified with the registered trademark.

d) The infringer is presumed to be a bad-faith infringer and the fine that the Mexican Patent and Trademark Office may impose would double. (2012 update. See our later post )

Failure to indicate or inform that the trademark used to distinguish a product or service is registered does not mean that the trademark owner would not be allowed to enforce the trademark rights. The proprietor or licensee may still file an administrative infringement action, but it would not be entitled to request the enforcement of preliminary measures, may not file a civil action for payment of damages and may not file charges due trademark counterfeiting.

4. Alternatives to the marking of the products and services

There are ways to cure the lack of use of the symbols or expressions provided in the statute to inform third parties about the trademak or patent rights associated to a product or service.

The Industrial Property Law allows the owner of a registered trademark or a patent or patent application to use “other means” (without further definition) to inform third parties about the IP rights. In such cases, the benefits to the right holder would be the same than if he has used the symbol ®, the legend Marca Registrada, the abbreviation “M.R.” o the words “patentado” and “patente en trámite”.

In practice, the Mexican Patent and Trademark Office has allowed the trademark and patent owners to replace the aforementioned markings with a notice published in a nationwide newspaper.

5. Some pending issues

There are several issues that the courts will need to clarify in connection to the marking of products and services.

For instance, it is unclear what would be the consequence of marking a product with terms in a language different to Spanish (i.e. Registered Mark instead of “Marca Registrada” or patented instead of “patentado”). The obvious question would be if the use of such expressions in other languages would entitle the right holder to the same benefits than if the expressions were in Spanish. The provision makes no distinction about this subject, and the fact is that there are other languages widely spoken in Mexico besides Spanish (including 62 native languages spoken by more that 10 million Mexicans).

Another unclear issue refers to the possible retroactive effect that the use of the marking or a notice published in a newspaper about a trademark or patent would have. For example, if the trademark owner would be entitled to claim damages from the period of time when, in spite of the existence of the trademark registration and a trademark infringement, the trademark owner had not announced yet the proprietary rights by any means.

6. Other signs. For those readers not familiar with intellectual property law, the symbol © and the expressions copyright, “derechos reservados” and all rights reserved are not related to patents or trademarks, but to copyright. Their use and consequences are ruled by other statutes, which I may analyze in another post.

La entrada Trademark and Patent marking under Mexican law se publicó primero en Reyes Fenig.