Technology tangle: Mexico

April 27, 2010

BY SERGIO L. OLIVARES, JR.
PARTNER

WHILE TRADE DRESS RIGHTS MAY BE ENFORCED AGAINST THIRD PARTIES UNDER UNFAIRCOMPETITION PROVISIONS, THE SCOPE OF PROTECTION AFFORDED TO MOST UNREGISTERED RIGHTS IS LIMITED TO SERVING AS A DEFENCE AGAINST CLAIMS MADE BY A LATER REGISTRANT OF A SIMILAR OR IDENTICAL MARK.

The Mexican Law of I ndustrial Property (LIP) provides a dual system of protection for trademarks – that is, the law provides that trademark rights may be obtained through both registration and prior use.
This duality is important as it means that prior use may serve as the basis of:
• a registration; and
• a defence against any attempt by the registrant of an identical or similar mark to enforce its mark against a good-faith prior user.
Legal background
Before looking at the provisions applicable to unregistered trademarks, we must first consider what the law defines as a ‘trademark’ and what can be registered as a trademark.
Article 87 of the LIP provides that “industrialists, merchants or service providers may use trademarks in industry or commerce…The right to their exclusive use is established through registration with the Institute of Industrial Property”.
In practice, any person or entity can apply for trademark registration to the Mexican Institute of Industrial Property (IMPI).
Whether registered or not, a mark is considered to exist from the moment a product or service is distinguished with a visible sign (a word, design or combination thereof, or a three-dimensional form). However, registration represents the official recognition that the sign satisfies all the required elements to be legally considered as a mark.
Further, Article 89 provides that all visible signs can be protected as long as they are sufficiently distinctive and thus capable of distinguishing the goods or services of one undertaking from those of others.
In practice, this means that olfactory and sound marks cannot be protected in Mexico. However, three-dimensional marks can be protected since they are visible signs.
The limitations to trademark protection are set out in Article 90, which lists the legal grounds for rejecting a trademark application. Common grounds for refusal of registration include the following:
• The mark is descriptive or generic;
• The mark comprises a geographical indication or place name that is characterized by the manufacture of certain products; or
• The mark comprises a shape that is in common usage, or results from the nature or function of the goods.
However, most refusals of registration are based on the fact that the mark for which registration is sought is identical or similar to a trademark that is either registered or for which registration is pending in relation to identical or similar goods or services.
The criteria to be considered in determining whether a mark is confusingly similar to an existing trademark are set out not in the LIP, but rather in the case law of the federal courts. The examiner must take into account:
• the visual, phonetic and conceptual similarities between the marks;
• the similarities, rather than differences, between the marks when considered as a whole;
• the similarities between the goods or services designated by the marks;
• the relevant consumer sectors at which the goods or services are directed; and
• the distribution channels of the products to which the mark will apply.
Unregistered rights protection
However, as mentioned above, the law also regulates unregistered trademarks, as use of an unregistered mark constitutes a source of rights that can be enforced against third parties and can serve as a defence against a claim of infringement.
To serve as a defence against a claim of infringement, an unregistered mark must have been used in good faith and uninterruptedly since before the filling date or declared first use of the registered mark on which the claim is based (Article 92(I) of the LIP). The law is silent on how much use is required; however, it is recommended that this use:
• be conducted in accordance with customary trade practices; and
• take place for at least three to six months before the filing date or declared first use of the conflicting registered trademark.
In the case of prior good-faith uninterrupted use, Article 151(II) entitles the prior user to contest the validity of an identical or similar registered trademark within three years of publication of the relevant Trademark Gazette. In such case the plaintiff must prove continuous and uninterrupted use of the trademark prior to the filing date or declared first use; however, it need not prove good-faith use of the trademark.
There is no direct action for the enforcement of unregistered rights against unauthorized use by third parties. However, rights over distinctive signs, such as trade dress, can be brought before IMPI through unfair competition actions provided in Articles 213(I) and (IX) of the LIP, without any need for registration.
Trade dress enforcement
On January 25 2006 the LIP was amended to include, among other things, the possibility to enforce rights acquired through the use of trade dress. The reform sees the unauthorized use of an identical or confusingly similar trade dress to one previously adopted by a third party as a type of unfair competition. ‘Trade dress’ is defined as a combination of distinctive signs, operative elements and other image elements. Unregistered rights in trade dress can be protected.
Registered rights enforcement
While unregistered rights offer some protection, registration provides a number of benefits for mark owners. The following is an outline of the remedies available.
Where an infringer uses a confusingly similar mark for identical or similar goods or services to those covered by a trademark registration, the mark owner can enforce its rights by filing an infringement action with IMPI. This is the only forumavailable as there are no specialized trademark or IP courts in Mexico.

The prosecution of an infringement claim before IMPI begins with the filing of a formal written claim. Once the claim is admitted, IMPI will serve notice on the defendant, which must respond within 10 days; thereafter, IMPI will decide on the merits of the case. Both plaintiff and defendant must provide supporting evidence at the time of filing or responding to the claim, respectively. IMPI’s decision can be appealed to the Federal Court of Tax and Administrative Affairs, whose decision in turn may be appealed to a circuit court.
Where an infringement case has come to a conclusion, the prevailing party is entitled to claim no less than 40% of the entire sales of the infringing product at the sale price before a civil court.
To prove infringement, the plaintiff may file evidence in any form, with the exception of confessions and testimonies. Evidence to help prove infringement is most commonly obtained through an inspection of the defendant’s premises by an IMPI inspector. The inspection is usually conducted at the time the defendant is served notice of the claim and/or of the imposition of any preliminary injunction. A type of discovery is available to the plaintiff.
The penalties for this type of infringement include:
• fines of up to $70,000;
• the temporary or permanent closure of the infringing business;
• administrative arrest for up to 36 hours; and
• an administrative fine imposed by IMPI.
The fine will be doubled if the infringement continues; continuation after a final and binding decision on the merits of the administrative infringement claim will be regarded as a criminal offence and penal actions can be taken against the defendant.
The law also provides for the possibility of obtaining a provisional injunction against the infringer either before filing an infringement claim or at any time during its prosecution. If the plaintiff requests a provisional injunction, it may be required to post a bond as security for possible damages suffered by the defendant as a result of the injunction. The injunction must be requested in writing. If the injunction is sought before the infringement claim is filed, the plaintiff must file a formal infringement claim within 20 days of its execution; if it fails to do so, the plaintiff will forfeit the bond to the defendant, although it will not lose the right to file the infringement claim. The defendant is entitled to post a counter-bond to suspend the effects of the provisional injunction, and may submit arguments against the provisional injunction within 10 days of its execution.
Under Article 199bis of the LIP, IMPI may grant the following remedies in the form of a preliminary injunction in an administrative infringement proceeding:
• the recall or withdrawal from circulation of the infringing merchandise;
• the withdrawal of the following from circulation:
• articles that have been illegally manufactured or used;
• packaging, wrapping, stationery, advertising materials and other items that infringe the plaintiff’s trademark rights;
• advertisements, signs, posters, stationery and similar items that infringe the plaintiff’s trademark rights; and
• equipment or instruments used to manufacture, produce or obtain any of the above items;
• the prohibition, with immediate effect, of the commercialization or use of the infringing products;
• the seizure of the infringing products;
• the suspension or cessation by the alleged infringer or third parties of all infringing acts; and
• the suspension of the service or closure of the establishment, when the above measures are insufficient to prevent or avoid the infringement.
If the infringing products or services are on the market, all merchants or service providers must refrain from offering them for sale as of the date of notification of the resolution. The same obligation applies to producers, manufacturers, importers and distributors, which will be responsible for immediately recalling infringing products from the market.
Conclusion
Mexican law grants bona fide users of commercial signs:
• rights to obtain a trademark registration for their signs; and
• rights against junior registered trademarks.
As indicated above, this is a very limited set of benefits when compared to the rights afforded to registered trademarks. Mark owners should look to register their marks if possible to obtain full protection in Mexico.
Source: World Trademark Review. Country correspondent, Nov/Dec 2008.