Trademark Litigation in Mexico by HC121004124650


									                                Trademark Litigation in Mexico

                                  Administrative Infringement

                             Declarations and Court Enforcement

Under Mexican Law, trademark litigation is conducted through various administrative and
judicial authorities; the choice of which is dependant upon whether a person seeks to overturn
an administrative decision or desires judicial review of an Intellectual Property agency decision.

Overcoming an adverse administrative decision

If a trademark registration or renewal is denied because another mark is cited as having priority,
the applicant may seek to have the decision overturned through one of three administrative
proceedings: 1) nullification, 2) forfeiture and 3) cancellation. When any of these proceedings is
instituted, the IMPI (Instituto Mexicano de la Propiedad Industrial) notifies the owner of the mark
subject to the action, who then has one month to respond.


The holder of a registered mark or an applicant for the registration of a mark may file with the
IMPI for the nullification of a trademark registration within five years of the registration date if:
   The registration was granted in violation of the provisions of the Law in force at the time of
    granting the registration
   The mark is identical or confusingly similar to another that has been used in Mexico or
    abroad before the filing date of application for the registered mark, and is applied to the
    same or similar products or services
   The registration granted was based upon an application containing false information
   The registration was granted due to error, inadvertence or a difference of appreciation, with
    respect to an identical or confusingly similar mark, which is applied to the same or similar
    services or products
   The agent, representative, user or distributor of a mark registered abroad, applies for and
    obtains the registration in his name, without the express consent of the holder of the foreign


An action for forfeiture can be brought when the trademark that is registered has not been used
for three consecutive years prior to the filling of the action. A period of nonuse is not a basis for
forfeiture if use of the mark has resumed.


An action for cancellation of a registered mark may be filed at any time if the mark has become
a generic designation for one or more of the goods or services covered by the registration.

Enforcement of Trademarks Rights
Mexican law provides three avenues for the enforcement of trademarks rights by way of: 1)
administrative infringement proceedings (pursuant to Title VII, Chapter II of the Industrial
Property Law of 1991), 2) civil unfair competition actions (pursuant to Title VII, Chapter II of the
Industrial Property Law and Article 6bis of the Federal Commercial Code) and 3) criminal
proceedings (pursuant to Title VII, Chapter III of the Industrial Property Law and Article 2 of the
Federal Act against Organized Crime). IMPI has jurisdiction over administrative infringement
proceedings and the Federal Courts have jurisdiction over civil and criminal actions.

What is Administrative Infringement?

Article 213 of the Industrial Property Law lists various trademark-related violations that
constitute administrative infringement, including the following:
   Committing acts that are contrary to accepted usage and customs in industry, commerce
    and services that imply unfair competition and that are related to intellectual property
   Placing for sale or in circulation, products and services indicating that the mark on the
    products or services is protected by a registration when such is not the case
   Using a mark that is confusingly similar to a registered mark for the same or similar
    products or services
   Using, without the consent of the owner of a registered mark, an identical or confusingly
    similar mark as an element in a commercial name, when the business of the establishment
    is identical or similar to the products or services registered mark
   Using, without the consent of the owner, a registered mark or one that is confusingly similar
    as a commercial name of real or fictitious person engaged in the production, importation or
    commercialization of goods or services that are the same or similar to those of the
    registered mark
   Using, without the consent of the owner, a registered mark on products or services that are
    the same as or similar to those for which the mark is registered
   Offering for sale or placing in circulation, altered products with a registered mark
   Offering for sale or placing in circulation, products with a partially or totally altered,
    substituted or covered mark.

Infringement Declaration Process

The action for an administrative declaration must be filed in the IMPI, in writing and in Spanish,
signed by the interested party or that party's legal representative, and accompanied by proof of
payment of the filing fee. A complaint must contain the following:
   Name and domicile of the plaintiff and/or the legal representative
   Domicile for receipt of notices and/or summons
   Name and domicile of the defendant or of the legal representative
   The basis or cause for the action, set forth in clear and precise terms
   A description of the facts and circumstances
   The legal basis for the action
In an administrative proceeding, the original or certified copies of the documents on which the
action is based, as well as the respective evidence, are presented. This may include all kinds
of evidence, except testimonial and confessional evidence, unless it is contained in a written
document. Evidence that is illegal or immoral is prohibited. Evidentiary value is given to
invoices and the inventories compiled by the owner of the mark or licensee.

After receiving the complaint, IMPI prepares an official notice to the alleged infringer. IMPI may
require the defendant to hand over documents or information, and conduct an inspection of the
defendant’s premises. The defendant is then given an opportunity to respond to the complaint
and present evidence on its behalf. The alleged infringer is notified of the action when the IMPI
personnel carry out an inspection procedure. This occurs after the drafting of the official
document setting forth the circumstances relative to why such measures are being carried out
by IMPI personnel.

After reviewing the parties’ submissions, IMPI issues its decision for resolution of the case,
which is then served upon the parties. Additionally, when indicated, the respective sanction is
set forth in this written resolution.

In those cases where an administrative infringement is declared, the IMPI is empowered to
order injunctive measures that include any of the following:
   Prevent the circulation and sale of goods or services that infringe the rights of the mark
   Order that the infringing goods be removed from circulation; as well as the objects,
    wrappers, containers, packaging, advertising material and similar items such as signs, bill
    boards, stationery, as well as utensils or instruments used to manufacture or produce of the
   Immediately prohibit the commercialization or use of the infringing products
   Order the seizure of goods
   Order the alleged infringer or third parties to cease the infringement
   Order the suspension of the infringing service or closure of an establishment when the
    preceding measures are not sufficient to prevent or stop the infringement.
Other penalties for administrative infringement can include:
   Fines of up to 20,000 days of the general minimum salary payable in the Federal District
    (about $85,000 U.S.). If the infringement persists there can be an additional fine of up to the
    amount of 500 days of the general minimum salary payable in the Federal District (about
    $2,100 U.S.).
   Administrative arrest for up to 36 hours.
   Temporary closure of the defendant’s business for up to 90 days.
   Permanent closure of the defendant’s business.

Relief from a Declaration

It is important to note that once an administrative resolution has been issued by the IMPI in
trademark and related matters, there is no ordinary recourse for revoking the same. After the
resolution is notified, and in accordance with recent Supreme Court decisions, the losing party
can only file for an annulment trial at the Federal Fiscal and Administrative Justice Court. After
an unsuccessful annulment trial, the losing party could appeal to the District Courts in
Administrative Matters, which are part of the Federal Judicial System, but must file an "amparo"
(an extraordinary writ) within fifteen working days. Once the Federal Circuit Courts have
decided on the disputed matter, the losing party could not present any other action in order to
overturn the judgment.

Enforcement through Unfair Competition: Administrative versus Civil


Article 213 of the Industrial Property Law also contains general prohibitions against unfair
competition that can constitute administrative infringements, which may be used to protect
unregistered trademarks, trade names, trade dress, and the like, and which include:

    -   Engaging in acts contrary to proper practice and custom in industry, commerce and
        services which amount to unfair competition and which relate to intellectual property.

    -   Using, within the geographical area of the effective clientele a trade name that is
        identical of confusingly similar to another already being used by a third party to protect
        an industrial, commercial or service establishment in the same or a similar field.
        Performing, in the course of industrial activities or trade, acts that confuse, mislead or
        deceive the public by causing it wrongly to believe or assume: a) that a relation or
        association exists between a given establishment and that of a third party, that products
        are manufactured according to specifications, licenses or authorizations from a third
        party, c) that services are rendered or products sold accordingly to authorizations,
        licenses or specifications from a third party, or d) that the product concerned comes
        from a territory, region or locality different from the true place of origin, in such a way as
        to mislead the public as to the geographical origin of the product.

    -   Pursuing or achieving the aim of denigrating the products or services, the industrial or
        commercial activity or the establishment of another party.

    -   Using a trade name or a name confusingly similar thereto without the consent of the
        owner thereof or without the appropriate license to distinguish an industrial, commercial
        or service establishment in the same or a similar branch.


For the purposes of a civil action, Article 6bis of the Federal Commercial Code defines unfair
competition as any act that:

       Creates confusion, by whatever means, regarding the establishment, the products, or
        the industrial or commercial activities of another business enterprise.

       Discredits, through false statements, the establishment, the products or the industrial or
        commercial activities of another business enterprise.
       Induces an erroneous belief among the public as to the nature, method of manufacture,
        characteristics, efficacy or quantity of products.

       Is otherwise defined as unfair competition by law.

The primary purpose of a civil action is to obtain indemnification for damages. Article 221bis of
the Industrial Property Law states that an award of damages shall in no case be less than 40
percent of the retail price of each infringing product sold. In order to proceed with a civil action
however, an aggrieved party must first secure a declaration of administrative infringement from
the Intellectual Property authorities.

Enforcement of Trademark Rights by criminal proceedings

Under Article 223 of the Industrial Property Law, it is a criminal offense to:

       Falsify marks on a commercial scale.

       Repeat any of the acts defined as administrative infringement once the first
        administrative sanction has been enforced.

Criminal actions are prosecuted by the Attorney General at the request of the aggrieved party.
A finding of guilt carries with it the possibility of two to six years imprisonment. The court may
also issue a fine corresponding to one hundred to ten thousand days of the general minimum
wage payable in the Federal District (about $425 to $42,500 U.S.).

Federal Act against Organized Crime Amendments

In amendments approved and published by the Mexican Congress in February 2004, the
Federal Act against Organized Crime creates additional punishment for the crimes listed in its
new Article 2. This article distinguishes between a person who has a directive, managerial or
supervising position and a person who has not.

The article also states that any person who holds a directive or managerial or supervising post
and commits a piracy or counterfeiting activity could be punished with eight to sixteen years
imprisonment and a monetary fine of five hundred to twenty five thousand days of the general
minimum wage (about $2,125 to $106,250 U.S.). Any person who does not hold a directive,
managerial or supervising position and who commits piracy activities could be punished with
four to eight years imprisonment and a monetary fine of two hundred and fifty to twelve
thousand and five hundred days of the daily minimum wage (about $1,062 to $53,125 U.S.).

Trademark litigation is a very delicate matter and unfortunately, in many cases it has been used
for misconducts. In our professional practice our firm has taken matters against this abuse.
Under the provisions of the Industrial Property Law, a trademark registration can be cancelled if
it was granted based on false data in the application. This cancellation ground has been widely
employed to attack trademark registrations as a weapon in anticipation of infringement or other
actions. A plaintiff simply claims that the declared first use is false and the burden moves to the
registrant to prove the contrary. The consequence has been that many valid registrations that
have early dates of use that are not well documented have been cancelled. Our client owned a
registration that was in such a circumstance and we successfully argued before the Federal
Tribunal of Administrative and Fiscal Justice that the burden to prove a false date of first use
should be on the party making the claim. The decision was affirmed by the First Collegiate
Court in Administrative Matters. As a result, our client's registration was protected. We hope
that the IMPI will now apply the court's criteria and end the abusive cancellation claims.

Overall, trademark litigation in Mexico can be conducted through various paths, depending on
the results that are sought, any person interested in the defense of a trade mark of his/her own,
could choose among the following: administrative actions, administrative infringement
declarations, annulment trials, administrative “amparos”, civil actions and criminal prosecutions.

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