The Intellectual Property Review: Mexico
Forms of intellectual property protection
In Mexico, the Federal Law for the Protection of Industrial Property (FLPIP) provides the legal system governing trademarks, patents, utility models, designs, trade secrets, designations of origin and integrated circuits. Of particular significance in Mexican law is its unique concept of utility models, which in Mexico are limited to improvements to existing tools and distinct from the general broad conception of an invention, contrary to the general concept of utility patents. 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.
The FLPIP, which became effective on 5 November 2020, abrogated and replaced the former Mexican Industrial Property Law. Significantly for the pharmaceutical industry, the new industrial property law has positively accepted patents claiming the use of known compounds and compositions, provided that these are novel. Notwithstanding this, examiners at the Mexican Patent and Trademark Office (MPTO)2 have consistently accepted inventions claiming not only active ingredients but also formulations, use and second-use dosages and processes, although some complications have arisen when trying to enforce the patent linkage system on inventions claiming other than active ingredients.
Data protection in the pharmaceutical field is not specifically covered in domestic legislation pertaining to industrial property. Nevertheless, protection of this kind is available under the applicable provisions contained in international treaties such as the new free trade agreement between Mexico, the United States and Canada.3 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 international treaties. The relevant Mexican regulatory authority, Cofepris, has yet to set up an administrative process to comply with the applicable international legal provisions, which prevents it from addressing petitions; accordingly, the data owner needs to institute appropriate legal proceedings to compel Cofepris to guarantee appropriate protection.
The Federal Law on Copyright provides protection to artistic works and includes a right known as the Reserva right, which grants protection to the names of musical groups, television series and characters, even their psychological characteristics. Infringing activity pertaining to copyrights that involves commercial activity likely to result in financial gain to the detriment of the copyright owner must be addressed through the MPTO. Legal disputes over 'patrimonial rights' are thus to be tried by the MPTO, although the Mexican Copyright Office4 can oversee attempts at conciliation 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 is limited to making efforts to find an amicable solution between the parties and it has no binding authority to resolve the issues in dispute.
The major, and most significant, recent development has been the enactment in November 2020 of the FLPIP. The FLPIP has introduced 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 introduced by the FLPIP would require detailed consideration beyond the scope of this review.
Among the most notable recent changes in the otherwise traditional structure of the patent system are those resulting from a recent decision by the Mexican Supreme Court to extend the term of a valid patent, reversing all prior and failed attempts to achieve this end (albeit on the basis of legal considerations not invoked in the earlier attempts). While the decision does not compel the judiciary or the MPTO to deal with other cases in this way, it constitutes a solid precedent and may well lead to future similar decisions and ultimately compulsory jurisprudence. This decision is also significant in that it provides an option by which to extend the term of basically all existing and valid patents that are not subject to the patent term extension provisions contained in the FLPIP. Assessment on a case-by-case basis would be needed to ensure a patent meets the conditions contained in the Supreme Court decision. Patents applied for as from 5 November 2020 are subject to the FLPIP provisions.
Also of relevance to intellectual property, although primarily affecting the regulatory practice for medicaments, a resolution published in the Official Gazette on 18 November 2020 following an executive order from the Secretary of Health compels Cofepris to issue market approval to pharmaceutical products manufactured abroad and to be imported to Mexico by the federal government within five days of receipt of an application containing all the required information. Aside from obvious concerns regarding, among other things, unfair competition practices and associated risks to the efficacy and security of medicaments imported under the order, it is clear that valid patents will be put at great risk of infringement as the patent linkage system is unlikely to be scrupulously applied in the fast-track market approval process conceived under this order, if at all. Notably, and contrary to what might have been expected, the executive order is not limited to importations of medicaments considered urgent because of the pandemic (i.e., vaccines). The order will apply to all medicaments, regardless of whether these are already available in the country or whether or not the government would otherwise face a shortage.
Both the Supreme Court decision and the order of the Secretary of Health warrant further serious consideration and legal assessment in the context of industrial property rights; however, the substantive analysis these matters call for is beyond the immediate scope of this chapter.
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. Furthermore, 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 that 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-type claims for these will be allowed; and
- the human or animal body, including partial or total gene sequences.
Other than the exceptions above, genetic material such as genetically altered cells or isolated DNA sequences, whether natural or mutated, will be considered patentable subject matter provided that it is not covered by any of the above conditions.
Notably, neither provisional nor continuation-in-part applications are available in Mexico. While it is indeed possible to claim priority rights over applications filed abroad, the applications filed thereon in Mexico will be considered final. Divisional patent applications (also known as divisionals) are available, but a divisional resulting from another divisional will no longer be accepted, unless the examiner specifically accepts this or unless this was specifically requested by the examiner during prosecution. The current provisions governing divisional applications are contained in the FLPIP; however, corresponding criteria or guidelines as to how examiners will determine whether to accept a divisional application originating from another divisional have yet to be made available.
The notion of novelty is considered rather broadly in Mexico as this concept is recognised as having international scope. Violations that fall within the international scope of the concept of novelty may lead to revocation of a granted patent if an interested party institutes cancellation proceedings against the patent. Although the MPTO has sufficient authority under the law to institute cancellation proceedings ex officio, these are hardly ever filed, as it would be rather difficult to meet the requirements for legal standing. The disclosure of an invention, whether by practising the invention or even through offering the resulting product, does away with novelty, unless an application for the invention is filed within 12 months of the disclosure, in which case evidence of the disclosure is required to be attached to the application (whether this is filed as a non-convention application, or under Paris Convention or Patent Cooperation Treaty (PCT) requirements). The publication of an application for the invention falls outside the scope of the exempted 12-month term and thus destroys novelty.
One must be conscious of the inflexibility of terms set out in the Mexican legal system, as grace periods or extensions are strictly limited to those contained in the law and do not include extraordinary circumstances or even force majeure. For instance, for the purposes of entry into the national phase of PCT applications, Mexico is a 30-month country. There are no exceptions whatsoever whereby a PCT application would be accepted beyond this term. The same will apply for divisional applications, which are to be filed within four months of the request made by the examiner at the maximum, 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 greatly welcomed by examiners. Opposition proceedings have been eliminated in the current law, although examiners are compelled to take into consideration information provided by the applicant in support of the application (perhaps in the form of the grant of a priority application, which may well expedite prosecution in Mexico) or challenging an application by a third party that is exempt from demonstrating sufficient legal standing. Post-grant proceedings in Mexico take the form of a claim for revocation, which can be tried at any given time if the grounds for revocation pertain to:
- novelty, inventive step, ineligible patentable subject matter, or sufficiency of disclosure or enablement;
- claims that exceed the invention as described;
- violations pertaining to legal provisions governing divisional applications;
- priority violations;
- amendments to the claims in a granted patent that have resulted in broader claims;
- subject matter of an invention that falls within the scope of double patenting, and is thus considered to belong to the public domain; and
- the grant of a patent to someone other than the inventor.
The final two of these grounds for revocation are not only new to the industrial property system in Mexico but also rather controversial, and they merit specific comment. According to the relevant statute, double patenting refers to a claim for subject matter already claimed, or when the essential technical characteristics of the subject matter claimed represent an 'insubstantial variation' of that already claimed, even if the applicant is the same in both claims. A primary problem is to determine what constitutes an insubstantial variation, as subjective interpretations of this term will most likely result in disputes. The grounds for revocation in point (g) above eliminate Mexico's long-standing first-to-file system, and this is also expected to result in disputes for which there is no case law or jurisprudence available.
For the time being, the implementing regulations for the former Industrial Property Law remain effective, although their provisions will only apply where these do not conflict with the FLPIP. The currently awaited implementing regulations for the FLPIP are expected to provide clarification on the above and many other issues, because although these concepts appear quite clear, without specific rules on how implement them, their bluntness would appear to preclude any substantive changes in practice.
Patents are granted for a 20-year period from the filing date or from the applicable priority date, with no extensions available, unless prosecution of the patent consumes more than five years unreasonably by fault of the MPTO, in which case the applicant will have to request a complementary certificate to compensate for the unreasonable delay. The request has to be filed before the expiry of the term for compliance with the requirements in the notice of allowance, with no extensions available. If the request is found to be acceptable by the MPTO, an extended term of one day for every two days of unreasonable delay will be granted.
Enforcement of rights
With the enactment of the FLPIP, the enforcement of industrial property rights in Mexico has undergone a number of significant 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 significant changes as these may immediately affect recent and long-term decisions.
In our view, the new philosophy underpinning the changes to patent protection seeks to limit the extent to which inventions could find ways to obtain coverage under the former law using what are now considered excessive practices. The new Article 50 clearly reflects 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 safeguard the public domain and to prevent double patenting during the prosecution and grant of patent rights.'
The verb used in the original Spanish text, 'velar' (literally 'ensure', which we have translated here as the more contextually appropriate 'safeguard'), implies an obligation to protect the public domain (i.e., to favour the public domain when examining an application). Vague as it may seem, the Article clearly conveys a worrying message on an anticipated change in the criteria to be enforced by examiners, particularly under the umbrella of the double patenting argument.
The lack of regulations for the FLPIP renders the application of the above legal provision rather unclear, at least for now. Under transitional provisions of the new law, the regulations of the former law will continue in effect until a new set of regulations is issued; however, as a matter of principle, the Mexican legal system provides that the text of federal law prevails over that in implementing regulations.
Insight into the new legislative approach can be found in the assumed definition for double patenting provided in the FLPIP, whereby insubstantial variations of the essential characteristics of an invention claimed in another patent will not be subject to patent protection, even if that other patent belongs to the same patentee. Given that inventions remain subject to patent protection if they meet the requirements of novelty, inventive step and industrial application, and the definitions of these remain unchanged and in accordance with the concepts used in the Paris Convention, a conflict may well arise over what could be comprehended or understood in the absence of a definition of the term 'insubstantial'.
In line with this new approach, divisional applications have been subject to the prohibition on filing from another divisional, unless the examiner specifically requests this or if it is found viable by the examiner. However, no guidelines on determining the characteristics of a viable divisional filed from another divisional application have been provided.
Lastly, inventions claiming new uses of known substances, compounds or compositions are now statutorily allowed as opposed to merely being 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 through the simple offering of a counterbond are no longer available, as the MPTO will expect to consider substantive argument and evidence for it to rule on reversals or stays of injunctive relief.
Further detail will be provided on these issues below.
i Procedural differences between Mexico and other jurisdictions, and relevant evidence of infringement
While in itself the procedure under the FLPIP remains practically the same as that under the previous law, this is quite different from the procedure in other countries, particularly countries that are not civil law jurisdictions. To begin with, all claims for patent infringement have to be tried by the MPTO, therefore subjecting the cases to administrative rather than judicial processes. In addition, there is no discovery period under the applicable law. Therefore, the plaintiff has 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 depends, whether it be documentary evidence, expert testimony, official inspections or documents in the possession of the defendant of relevance to the case, as the MPTO can order the defendant to produce these.
As noted above, all evidence is to be submitted with the initial pleading. For the plaintiff, the only exception to this rule applies to documentary evidence in the exclusive possession of the defendant that (once offered) the MPTO deems relevant to the case. In this situation, the MPTO would request the defendant to produce the evidence, with the warning that failure to comply will result in the allegations made by the plaintiff in connection with the documentary evidence being assumed proven. While there are certainly concerns about the constitutional legality of this rule, 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. Specifically, no judge in Mexico can grant a measure of this kind and thus in industrial property cases only provisional measures are available, as provided for in the FLPIP and which have been 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 and a cease-and-desist order requiring the defendant to cease immediately the alleged infringing activity. These measures could be applied individually or together. Notably, the FLPIP has added the option for the plaintiff to request provisional measures over merchandise in transit through 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.
In contrast to rules contained in the former law providing for a relatively simple process for the grant of provisional measures, as well as an even simpler, basically automatic, process to stay the effects of such measures, the FLPIP provides that the implementation of provisional measures, and ultimately the staying of their effects, will no longer be automatic or limited to the posting of a bond or a counterbond. The attorney assigned to the case at the MPTO will now have to assess whether a ruling ordering the implementation or lifting of injunctive measures is to be granted, taking into consideration the potential extent of the damage to either party (in particular, assessing potential irreparable harm), the 'appearance of law' as it may be inclined to favour either of the parties, and potential violations of public order or the common good. In a substantial and highly anticipated amendment to the law, injunctive relief will now entail a demonstration of substantive content wherein, effectively, the parties will need to address the merits of the case before provisional remedies are awarded or stayed.
Interlocutory decisions addressing injunctive remedies will be subject to appeal before the Federal Court by means of constitutional appeal (amparo) proceedings, 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 these 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 the places where the inspections are to be conducted, thereby denying those entities and parties (normally including the defendant) time to prepare for the visit. For each visit, the inspector prepares an official report, which is introduced into the case as the result of the inspection and 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, and these are to be introduced into the case file for proper consideration by the MPTO.
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 has 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 well be decided before the revocation or invalidation case is decided, and without taking the latter into consideration. The defendant must also 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, and within which the documents must be produced. Failure to meet the extended term will result in the evidence being ruled inadmissible in the case and, thus, not being taken into consideration. No further extensions are available under the law.
Once the defendant has produced a response and the submission of all evidence 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 a technical opinion from an examiner, to be shared with the parties before calling for closing arguments. Generally, it takes a few months for technical opinions to be made available, since the applicable law does not stipulate a term for this. However, once closing arguments are filed, the MPTO will be ready to render a decision and this is 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
- insufficiency of disclosure or enablement.
If a revocation action is invoked as a defence during infringement proceedings, it 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 counterclaim 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 of 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 considered, 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 final decision to be handed down.
The fact that the MPTO is now 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 it simplifies matters by providing a greater degree of certainty with regard to recovering damages (as it will not be necessary to obtain a firm decision nor institute civil proceedings to obtain a finding for damages when liability for the infringement is found by the MPTO), thus engendering preparedness to claim, quite significant questions remain regarding the constitutionality of the relevant provisions and these may yet prejudice the otherwise commendable effort that has gone into the amendment. Awarding damages has always been and remains within the purview of the judiciary, and the relevant laws have yet to be amended before the new authority bestowed on the MPTO is confirmed. The amendment takes the issue of damages a step further by empowering the judiciary to rule on substantive matters addressing industrial property concerns. As yet, however, this has been done without regard to the rules governing the scope of the judiciary's jurisdiction, which currently fails to include intellectual property disputes.
It is also discouraging to note that Transitional Article 17 of the FLPIP states that further modifications to the organic structure of the MPTO have to be carried out to provide necessary operational budgetary, financial, human and material resources before these new functions can be carried out. Although Transitional Article 17 stipulates that this was to be done within one year of the entry into force of the FLPIP, a formal deadline has yet to be set.
Alternatively, the FLPIP still provides for the traditional course of action for seeking an award of damages. This entails securing a final decision finding infringement prior to instituting the civil proceedings required to claim damages.
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.
A request for conciliation should be made in writing to the MPTO by either of the parties, at any time prior to the issuance of a decision. The petition must be accompanied by a proposal for a settlement agreement, and service of the petition 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 the proposal is declined, the MPTO will call the parties to a conciliation hearing to discuss the terms of a possible settlement. The MPTO is required to exercise its best efforts to reconcile the positions of the parties but to refrain from putting forward any possible terms of a decision addressing the merits of the case.
Any settlement reached by the parties must be formalised by the MPTO to be enforceable, although conciliation proceedings will not stay the claim for infringement, which continues its regular course. In the absence of the specifics of a particular case, a settlement agreement may well include damages or whatever other form of compensation the parties agree between them.
vii Appellate review
Decisions rendered by the MPTO on infringement cases can be appealed before SEPI, the specialist intellectual property chamber of the Federal Administrative Court of Justice, and before the collegiate circuit courts by means of amparo proceedings. Occasionally, on issues pertaining to the constitutionality of legal provisions or if the case is found to be particularly significant, a further appeal can also be heard before the Supreme Court.
1 Carlos Pérez de la Sierra is a senior partner and Efrén del Olmo is a junior associate at Calderon & De La Sierra.
3 Known as T-MEC, USMCA and CUSMA in Mexico, the United States and Canada respectively.