The Intellectual Property Review: Mexico
Forms of intellectual property protection
The Federal Law for the Protection of Industrial Property (FLPIP) in Mexico provides for the legal system governing trademarks, patents, utility models, designs, trade secrets, designations of origin and integrated circuits. Relevant to Mexican law for the unique concept they entail are utility models, which, contrary to the most general concept of utility patents, are limited in Mexico to improvements to existing tools and part from the general broad conception of an invention. Minor inventions subject to utility model protection in most other countries are covered in Mexico under the patent concept and are thus subject to the same substantive requirements, such as novelty, inventive step and industrial application.
Significant to the pharmaceutical industry, the new IP law has affirmatively accepted patents claiming the use of known compounds and compositions, so long as the same are novel. Notwithstanding this, examiners at the Mexican Patent and Trademark Office (MPTO) have consistently accepted inventions claiming not only active ingredients but formulations, use and second-use dosages and processes, although some complications have arisen when trying to enforce the linkage system on inventions claiming other than active ingredients.
Data protection in the pharmaceutical field is not specifically covered in local legislation pertaining to industrial property. Nevertheless, protection over the same is available from the provisions to the effect contained in international treaties such as the new Free Trade Agreement between Mexico, the United States and Canada. To enforce protection, however, the data owner needs to resort to the courts to obtain compelling remedies for the regulatory authority to provide the protection agreed upon in the noted international treaties. The regulatory authority, Cofepris, is yet to set up an administrative process to comply with the applicable international legal provisions, which prevents them from addressing petitions; accordingly, the data owner needs to institute appropriate legal proceedings to compel Cofepris to guarantee appropriate protection.
The Federal Law of Copyrights provides protection to artistic works and includes a figure known as the Reserva, under which the names of musical groups, television series and characters, even their psychological characteristics, are awarded protection. Infringing activity pertaining to copyrights is to be addressed with the MPTO, when it entails commercial activity likely to cause financial gain to the detriment of the copyright owner. Legal disputes of 'patrimonial rights' are thus to be tried with the MPTO, although the Copyright Office can oversee conciliatory attempts between the parties. Binding decisions are handed down by the MPTO on the commercial infringement of copyright (subject to the different appeal routes available), but the Copyright Office may only exercise efforts towards an amicable solution between the parties but without the binding authority to resolve the issues in dispute.
The major and most significant development has been the enactment of the FLPIP, which became effective on 5 November 2020. The new law enters new concepts into the industrial property system such as patent term extension, damages – which can now be determined and awarded by the MPTO – the partial cancellation of trademark registrations and conciliatory proceedings aimed at settling disputes pertaining to industrial property rights, among others. Some of these notable changes will be discussed in this chapter; however, a complete summary of the changes in the new law would require specific consideration which escapes the purpose of this review.
Among the most notable changes in the otherwise traditional structure of the patent system resulted from a recent decision by the Mexican Supreme Court to extend the term of a valid patent, reversing all prior and failed attempts to the effect, albeit on the basis of legal considerations not invoked in earlier attempts. While the decision does not compel the judiciary or the MPTO to consider other similar cases, it constitutes a solid precedent that may well give way to further decision finding in the same way to eventually form compulsory jurisprudence. This decision is further relevant as it provides for an opportunity to extend the term of basically all existing and valid patents (a particular assessment will be needed for each patent of interest to ensure that it meets the necessary considerations contained in the decision) that are not included in the patent term extension provisions contained in the new law, as these are limited to patents applied for as from 5 November 2020.
Relevant to intellectual property as well, albeit affecting primarily the regulatory practice for medicaments, a recent Executive Decree (18 November 2020) compels the Regulatory authority to issue market approval to pharmaceutical products manufactured abroad and to be imported to Mexico by the federal government, within the term of five days from receipt of an application containing all the required information. Aside from the obvious consequences that call for unfair competition practices and associated risks of the efficacy and security of medicaments that will be imported under the Executive Decree, among many others, it is clear that valid patents stand a huge risk of infringement as the linkage system will hardly, if at all, be applied to the fast-track market approval process conceived under the Executive Decree. It is relevant to highlight that contrary to what may have otherwise been expected, the Executive Decree is not limited to the importation of medicaments (vaccines, for example) considered urgent under pandemic considerations. The Decree is set to apply to all medicaments, whether already available in the country and irrespective of whether a shortage of the same would be faced by the government.
The decision from the Mexican Supreme Court as well as the Executive Decree mentioned above call for substantive analysis which is not envisioned in this chapter, although we would be happy to share our thoughts and legal assessment of the same upon request.
In principle, all inventions that meet novelty, inventive step and industrial application requirements are patentable in Mexico. Specific exemptions apply to software and to biological and genetic material as found in nature, as neither would be considered an invention. Further, inventions claiming the following will not be subject to patent protection:
- processes to clone human beings;
- processes aimed at modifying the genetic identity of humans which imply the possibility of developing humans;
- the usage of human embryos with industrial or commercial purposes;
- processes aimed at modifying the genetic identity of animals without medical or veterinary usefulness;
- essentially biological processes to obtain vegetables or animals;
- vegetable varieties or breeds other than microorganisms;
- surgical or therapeutic methods, although Swiss mode claims for the same will be allowed; and
- the human or animal body, including the partial or total gene sequency.
Other than the exceptions above, genetic material, such as isolated DNA sequences, whether natural or mutated, as well as genetically altered cells, will be considered patentable subject matter so long as it is not covered by any of the above.
It is relevant to note that neither provisional nor continuation in part applications are available in Mexico. While it is indeed possible to claim priority rights over those filed abroad, the applications filed thereon in Mexico will be considered final. Divisional applications are available, but a divisional resulting from another divisional will no longer be accepted, unless the examiner specifically accepts the same or unless the same was specifically requested by the examiner during prosecution. The current provisions governing divisional applications are contained in the new law, and criteria or guidelines thereon are yet to be made available to provide further specifics on how examiners will define whether to accept a divisional originating from another divisional application.
The concept of novelty in Mexico is rather broad as it entails international scope. The violation of the international scope on novelty may lead to the revocation of the granted patent if cancellation proceedings are instituted by an interested party against the same. While the MPTO has sufficient authority under the law to institute cancellation proceedings ex officio, these are hardly ever filed, as sufficient legal standing considerations would be rather hard to meet. The disclosure of an invention, whether by the practising of the same or even through the offering of the resulting product, do away with novelty, unless an application for the invention is filed within 12 months of the disclosure. Evidence of such disclosure is to be attached to the application (whether this is filed as a non-convention one or under the Paris Convention or Patent Cooperation Treaty (PCT) considerations) to meet the applicable requirements. The publication of an application for the invention falls beyond the scope of the exempted term and thus destroys novelty.
One must be conscious of the rigidness of terms in the Mexican legal system, as grace periods or extensions are strictly limited to those contained under the law, which do not include extraordinary circumstances or even force majeure. For instance, Mexico is a 30-months country for the purposes of entry into the national phase of PCT applications. There are no exceptions whatsoever under which such an application would be accepted after this term. The same will apply for divisional applications, which are to be filed within the maximum term of four months from the request made by the examiner, after which no extensions will be granted. Accordingly, it highly advisable to be mindful of terms as extraordinary extensions (those not specifically contained in the law) are not granted, unless ordered to the contrary by a court of law, which is seldom the case.
Under the law, the submission of prior art is not a requirement, although it is highly welcomed by examiners. Opposition proceedings have been eliminated in the current law, although examiners are compelled to take into consideration information provided for by the applicant in favour of the application (perhaps in the form of the grant of a priority application, which may very well expedite prosecution in Mexico) or against a given application by a third party that is exempted from providing demonstration of sufficient legal standing. Post-grant proceedings in Mexico take the form of a claim for revocation and will be tried at any given time if grounds for revocation pertain to:
- novelty, inventive step, enablement, ineligible patentable subject matter or sufficiency;
- when the claims exceed the invention as described;
- for violations pertaining to legal provisions governing divisional applications;
- for violations to priority considerations;
- when amendments to the claims in a granted patent have resulted in broader claims;
- when the subject matter of the invention falls into double patenting considerations and is thus considered to belong to the public domain; and
- if a patent was granted to someone than the inventor.
The last two grounds for revocation above are not only new to the industrial property system in Mexico, but rather controversial as well and merit specific comment. With regard to double patenting, the relevant statute has defined the same as subject matter already claimed or when its essential technical characteristics represent an unsubstantial variation of the subject matter already claimed, even if the applicant is the same. A primary problem to solve would entail establishing what is to be understood by 'an unsubstantial variation' as the subjectivity will most likely result in disputes. The second grounds for revocation under comment eliminates the first-to-file system Mexico had long favoured and is also expected to be the cause of disputes for which no case law or jurisprudence is available.
For the time being, the Regulations to the former Law on Industrial Property remain effective, although their legal provisions will apply only when not in conflict with the provisions of the new law. The awaited new set of Regulations is expected to provide clarification on the above and many other issues, although these concepts appear quite clear and while lacking in specifics on how they will be implemented, their bluntness would appear to render them unable to be substantively changed.
Patents are granted for a 20-year period from the filing date or from the applicable priority date, with no extensions available, unless the prosecution were to unreasonably consume more than five years attributable to the MPTO. If that were the case, the applicant is to request a complementary certificate to compensate for the unreasonable delay. The request is to be filed before the term to comply with requirements in the Notice of Allowance expires, with no extensions available. If the request is found acceptable by the Patent Office, an extended term of one day for every two days of unreasonable delay will be granted.
Enforcement of rights
With the enactment of the new FLPIP, which became effective on 5 November 2020, the enforcement of industrial property rights in Mexico underwent a number of relevant changes that fundamentally impact both the conceptual understanding of patent law and the strategic approach required to ensure effective protection of patent rights. While most of the definitions and institutions traditionally governing patent law have been maintained, substantive changes have been introduced that compel revisiting proven prosecution and enforcement considerations and tactics. The present analysis aims to highlight the most relevant changes as these may immediately affect recent and long-term decisions.
The new philosophy behind the changes introduced on patent protection seeks to limit, in our view, the extent to which inventions may have found a way to obtain coverage under the former law with what are now considered excessive practices. The new Article 50 clearly reflects on this new approach as it sets out the general aim of the MPTO when it comes to patentable subject matter: 'Article 50 – The Mexican Patent Office is to guard public domain and to prevent double patenting during the prosecution and grant of patent rights.'
The verb used in the original Spanish text, 'velar', which we have translated as 'guard' for lack of a more appropriate word in English, entails an obligation to be protective of the public domain; to favour the public domain when examining an application. Vague as it may appear, the legal provision clearly conveys a worrying message on an anticipated change of criteria to be enforced by examiners, particularly under the umbrella of the double patenting argument.
The lack of Regulations to the law renders the application of the above legal provision rather unclear, at least for now. Transitory provisions of the new law provide that the current Regulations to the former law will continue in effect until a new set of Regulations is issued; however, legal principles applicable in the Mexican legal system provide that the text in federal law will prevail over that included in Regulations.
An aid to the understanding of the new statutory trend is the assumed definition for double patenting provided for in the new law, under which unsubstantial variations of the essential characteristics of an invention claimed in another patent, even if it belongs to the same patentee, will not be subject to patent protection. A conceptual conflict can be anticipated in consideration of the fact that inventions remain subject to patent protection if they meet novelty, inventive step and industrial application considerations, the definitions of which remain unchanged and subject to Paris Convention concepts and could, therefore, very well conflict with what could be comprehended or understood with the non-provided definition of 'unsubstantial'.
In line with the new trend, divisional applications have endured the prohibition of being filed from another divisional, unless the examiner specifically requests the same or if it is found viable by the examiner. No guidelines are provided, however, under which to determine the characteristics of a viable divisional filed from another divisional application.
Lastly, inventions claiming new uses of known substances, compounds or compositions are now statutorily allowed as opposed to assumed, as was the case under the former law.
Further amendments pertaining to patent enforcement were introduced, such as:
- conciliation proceedings as an alternative dispute resolution mechanism (expressly indicated for infringement proceedings);
- the authority of the MPTO to determine and award damages when ruling on a claim for infringement; and
- motions to obtain provisional measures (injunctive relief) to be automatically lifted with the simple offering of a counter bond are no longer available as substantive argument and evidence will be expected by the Patent Office to rule on whether to reverse or stay on injunctive relief.
Further detail will be provided on these issues in the course of the present analysis.
i Procedural differences between Mexican and other jurisdictions and relevant evidence of infringement
While the process in itself remains practically the same as in the previous law, it remains quite different from those available in other countries, particularly non-Roman law countries. To begin with, all claims for patent infringement are to be tried with the MPTO, which renders the cases to be administrative processes rather than judicial instances. In addition, there is no discovery period under applicable law. Therefore, the plaintiff is to prepare the case thoroughly before the initial pleading is filed, without being able to avail, at this stage, information or documents in the exclusive possession of the defendant. The claim for infringement contained in the initial pleading of the case cannot be amended once filed. Therefore, it is necessary to include all arguments and evidence on which the case is supported, whether it be documentary evidence, expert testimony, official inspections or documents in the possession of the defendant that would be relevant to the case, as the MPTO can order the defendant to produce the same.
As noted above, all evidence is to be included with the initial pleading. The only exception to this rule for the plaintiff applies to documentary evidence in the exclusive possession of the defendant and that, once offered, the MPTO deems relevant to the case. If so, the MPTO would request said evidence be produced by the defendant, under the warning that if the same is not produced as ordered, the allegations of the plaintiff made in connection with the respective documents will be assumed proven. While there are certainly some concerns over the legality of this rule under Constitutional provisions, the courts have consistently accepted and supported the statute invoked to this effect.
ii Provisional measures (injunctions)
Injunctions are not available under Mexican law in the form known in other jurisdictions. For instance, no judge in Mexico can award such measures and thus we are left with the figure of provisional measures on industrial property cases, as provided for in the FLPIP, and which are tried and ruled upon by the MPTO.
The previous law provided for two different forms of provisional measures, namely: an order to seize the alleged infringing goods, or an order under which the defendant is to immediately cease the alleged infringing activity, or both. It is relevant to note that this new law added the possibility for the plaintiff to request provisional measures over merchandise in transit while in Mexican ports of entry and on alleged infringing goods being offered for sale or sold in whatever virtual, digital or electronic means, known or not yet known.
Contrary to applicable rules contained in the former law that provided for a relatively simple process to be awarded provisional measures and an even easier and basically automatic one to stay on the effects of the same, the FLPIP now provides that the implementation and the eventual stalling of the effects of provisional measures will no longer be automatic and limited to the posting of a bond or a counterbond. The attorney assigned to the case at the MPTO will have to assess whether a ruling ordering the implementation or the lifting of the injunctive measures is to be awarded, taking into consideration the extent of the potential damages to either party, particularly assessing potential irreparable harm – the 'appearance of law' as it may be inclined to favour either of the parties – as well as potential violations to public order or common good. In a substantial and highly expected amendment to the law, injunctive remedy will now bear substantive content in which the parties will need to effectively address the merits in the given case before being awarded or stalled on provisional remedies.
Interlocutory decisions addressing injunctive remedies will be subject to appeal before the Federal Court by means of amparo proceedings (Constitutional Appeal), as the reasoning offered to award or lift provisional measures may incur constitutional violations, such as due process, fair interpretation of the law or consistency with applicable case law.
iii Structure of the trial
Once the MPTO has admitted the initial pleading and the evidence offered by the plaintiff, service of the same on the defendant is ordered. If inspection visits were offered as part of the evidence, these are to take place precisely on the date of service of the claim, even if the facilities of the defendant were also chosen for an inspection visit. The inspections are to take place without any prior warning to the defendant or to the places where the inspections are to take place, leaving the visited entities, among which the defendant is normally included, without time to prepare for the same. An official report is prepared by the inspector for each visit, which is introduced into the case as the result of the inspection visit offered as evidence. The visited entity has the right to make observations, comments and objections to the inspection visit, either during the visit itself or within 10 days of the inspection, which are to be introduced in the case file for proper consideration by the Patent Office.
The defendant is then given a non-extendable term of 10 days to produce a response to the claim for infringement. Any counterclaim by the defendant will also need to be instituted within the 10-day term, with no extensions available. Revocation or invalidation claims instituted by the defendant after the 10-day period granted to respond will not be deemed linked to the process and, thus, the claim for infringement may very well be decided upon before the revocation or invalidation case is decided, and without taking the same into consideration. The defendant is also to produce all arguments and evidence (documentary evidence, inspection visits, expert testimony, etc.) in support of its defence, within the 10 days granted. The only exception to this rule is for documents offered by the defendant that are located outside Mexico. If this is the case, the MPTO will grant a further 15-business-day term, to be counted from the date of service of the relevant ruling, by which the respective documents are to be produced. Failure to meet the extended term, for which no further extensions are available under the law, will result in said evidence being ruled inadmissible in the case and, thus, not to be taken into consideration.
Once the defendant has produced a response and all evidence offered by the parties has been completed, the case will be deemed closed and ready for a decision to be rendered. Current practice at the MPTO dictates that the contentious section of the MPTO may then request from an examiner a technical opinion, to be shared with the parties before closing arguments are called for. Technical opinions generally take a few months before they are made available, since applicable law fails to submit a term by which these are to be produced. However, once closing arguments are filed, the MPTO will be ready to render a decision, likely to be handed down within approximately two months.
In addition to a defence supported on non-infringement arguments that may be supported by expert testimony, grounds on which the revocation of a patent may be sought are:
- lack of novelty;
- lack of inventive step;
- lack of industrial applicability; and
- sufficiency of disclosure or enablement.
A revocation action when invoked as a defence during infringement proceedings will be resolved alongside the claim for infringement.
Once the counterclaim for cancellation has been admitted by the MPTO, together with the evidence offered, service of the same on the defendant is ordered. The defendant is then given a non-extendable term of one month to produce a response. The defendant must also produce all arguments and evidence in support of the defence within the one month granted (as noted above, an extraordinary extension for 15 business days will be available to the defendant to produce evidence located outside Mexico). Once the defendant has produced its response and all evidence offered by the parties has been completed, the case is closed and ready for a decision be rendered.
When initiated independently, revocation proceedings will take approximately the same time to be resolved, namely two to three years for a firm decision to be available.
The fact that the MPTO is now be able to determine and award damages when ruling on a claim for infringement is perhaps one of the most questionable issues in patent litigation resulting from the recent amendment to the law. While in theory the idea is to simplify and provide a sufficient level of certainty and readiness to collect damages (as it will not be necessary to obtain a firm decision nor to institute civil proceedings to be issued with a finding for damages at the same time as liability for the infringement is found by the MPTO), quite relevant questions on the constitutionality of the relevant provisions will lead the otherwise commendable effort into a sombre scenario. Awarding damages has always been and remains within the realm of the judiciary, and the relevant laws are yet to be amended before the new authority bestowed on the MPTO becomes certain. The amendment takes the issue on damages a step further when the judiciary is empowered to find on substantive issues addressing industrial property concerns, without caring to amend the rules governing the scope of their jurisdiction which, at present, fails to include intellectual property disputes.
It is discouraging as well to note that transitory provision 17 provides that before these new functions can be carried out, further amendments to the organic structure of the MPTO will be needed to meet the necessary budgetary, financial, human and material resources to operate. A deadline by which to see these needs fulfilled has not been set.
Alternatively, the new law still provides for the traditional course of action with which to seek and be awarded damages, which entails a firm decision finding for infringement before being able to institute the required civil proceedings to that effect.
vi Alternatives to litigation
The FLPIP introduces a whole new chapter providing for conciliation proceedings, the main purpose of which is to encourage the parties involved in a claim for infringement to explore the possibility of an amicable settlement.
Conciliation should be requested in writing with the MPTO by either of the parties, at any time prior to the issuance of a decision. The petition needs to be accompanied by a proposal of the settlement agreement, and service of the same will be ordered to the counterparty. If the proposal is accepted, the parties will be required to produce the executed agreement within five days; however, if it is declined, the Patent Office will call the parties to a conciliation hearing to discuss the terms of a possible settlement. The MPTO is to exercise its best efforts to reconcile the positions of the parties, but refrain from venturing the terms of a decision addressing the merits of the case.
Any settlement reached by the parties will need to be formalised before the MPTO to be enforceable, although conciliation proceedings will not stay the course of the claim for infringement, which continues its regular course. Absent specifics, a settlement agreement may well include damages or whatever other form of compensation the parties may be amenable to agree.
vii Appellate review
Decisions rendered by the MPTO on infringement cases can be appealed before the IP Branch of the Federal Tribunal on Administrative Matters and before the Collegiate Courts by means of amparo proceedings. Occasionally, on issues pertaining to the constitutionality of legal provisions or if the case is found sufficiently relevant, a further appeal before the Mexican Supreme Court can also be tried.
1 Carlos Pérez de la Sierra is a senior partner and Efrén del Olmo is a junior associate at Calderon & De La Sierra.