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.
- 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.
- 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.
- 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.
- Defences
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.
- Damages
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.
- 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.
- 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.
