samedi, août 28, 2010

Mexico: Protecting an IP portfolio: an effective and targeted anti-counterfeiting strategy

Protecting an IP portfolio: an effective and targeted anti-counterfeiting strategy

Contributed by Becerril, Coca & Becerril SC

Legal framework

The prevention of counterfeiting in Mexico is mainly governed by:

  • the Industrial Property Law;
  • the Federal Criminal Code;
  • the Copyright Law; and
  • the Customs Law.

Depending on the subject matter, these laws - alone or in combination - provide rights holders with the necessary tools to take legal action against counterfeiting in order to seize illegal merchandise, obtain preliminary injunctions and bring criminal, administrative and civil actions to seek appropriate remedies against infringement.

Border measures

Customs officers inspect the contents of containers that arrive in Mexico, either in transit or as their final destination, in order to detect counterfeit merchandise. However, Customs has no official database on trademark owners or licensees. Instead, it works with an informal database, which contains information collected from past actions and details provided by some trademark owners about their portfolios.

With the assistance of the Mexican Institute of Industrial Property, Customs will shortly launch an official database of trademark information. This will allow customs officials to consult trademark owners when potentially counterfeit merchandise is detected. This collaboration should improve the efficiency of the process, giving Customs immediate access to detailed information about trademark owners, licensees and their representatives. This, in turn, will ensure that rights holders and their representatives are contacted promptly and can take appropriate legal action.

Customs cannot proceed against counterfeit goods unless the trademark owner has brought a legal action for seizure of the counterfeiting merchandise. Therefore, Customs must contact the trademark owner as quickly as possible, since Customs can detain merchandise only for a limited time unless a legal action is initiated.

In order to ensure efficient border measures, it is crucial that rights holders provide Customs with the details of their trademark portfolio, as well as information on who can take action on their behalf, so that their representative can be contacted in time to move swiftly against counterfeit merchandise detected at the borders.

Criminal prosecution

The Industrial Property Law and the Federal Criminal Code identify counterfeiting-related activities that constitute crimes. All criminal actions must be initiated before the General Attorney's Office - the prosecuting body that compiles the official file before it is sent to a federal court.

Certain counterfeiting crimes can be prosecuted ex officio, whereas others can be prosecuted only if the injured party complains to the competent authorities. In light of this, when a rights holder becomes aware of the existence of counterfeit goods that directly affect its trademark, it must file a criminal petition with the General Attorney's Office.

Criminal actions are typically initiated: (i) where counterfeit goods are detected by Customs, with the object of seizing the consignment and preventing the goods from entering the Mexican market; and (ii) once counterfeit goods have already entered the market, when raids are conducted at specific premises where the goods are stored or sold.

In a criminal action, the merchandise is provisionally seized as soon as it is detected; it remains in custody until a final decision orders its destruction. Once the action has been initiated and the merchandise seized, a prosecutor at the General Attorney's Office will investigate the merits of the case, compiling all information, evidence and expert opinions necessary to decide whether to prosecute. If it decides to do so, the official file is submitted to a criminal federal court, which will review all of the evidence in order to determine whether a crime was committed.

As the federal judge will base his or her decision on the file submitted by the General Attorney's Office, this file must be properly prepared and must include all possible evidence and information in support of the rights holder's position. A key advantage of a criminal action is that the counterfeit merchandise is seized at the outset. Therefore, even if the decision takes time to be issued, the rights holder can keep the counterfeit merchandise off the market. The main remedies available in criminal actions are destruction of the counterfeit goods and imprisonment of the counterfeiters, depending on the crime.

Civil enforcement

According to the applicable legislation, civil actions against IP rights violations can be initiated only once the Mexican Institute of Industrial Property has issued an administrative decision declaring the infringement of an IP right (for further details please see "How to claim damages for IP violations"). Such a decision is issued following an administrative proceeding that is prosecuted as a form of trial. The decision must be definitive and beyond appeal.

Before commencing a civil action, the rights holder must initiate an administrative action against the infringer before the institute. When filing the initial brief (or even before), the rights holder can request preliminary measures which, in the case of counterfeit goods, might include seizure of the suspect merchandise or a prohibition against its sale or distribution.

Different types of preliminary injunction can be requested before, at the same time as or after filing the administrative action. These will be granted and implemented by the institute if the rights holder:

  • posts a bond to cover potential damages to the infringer if, at the end of the proceedings, it does not obtain a favourable decision declaring that an infringement has been committed;
  • proves the existence of its IP right;
  • proves that:
    • the IP right has been violated or is highly likely to be violated;
    • the evidence demonstrating such a violation will be destroyed; or
    • irreparable harm may be suffered as a result of the violation; and
  • provides the authorities with the information necessary to identify the counterfeit merchandise.

As in criminal actions, even if the administrative proceeding takes a long time to be decided, a preliminary injunction will prevent the infringer from continuing to distribute and sell the illegal merchandise. However, in administrative proceedings the infringer is entitled to file a counter-bond to suspend the effects of the preliminary injunctions. This can be filed at any time after the preliminary injunction has been implemented.

The criteria for determining the amount of the bond and the counter-bond are not stated in the applicable law. Consequently, the institute determines amounts on the merits of the case. The counter-bond is usually set at double the amount of the rights holder's original bond filed.

In the case of administrative actions, the preliminary injunctions can be suspended if the infringer files a counter-bond, although such a bond is intended to cover potential damages to the rights holder that may be caused by the suspension of such measures.

A final decision in this type of administrative proceeding usually takes at least three years. Once the administrative decision has been issued, a civil action can be filed to seek damages from the infringer for violation of the IP right.

The applicable legislation expressly states that damages for the violation of IP rights must be awarded for at least 40% of the sale price of the products. This rule should be taken into account by civil judges when calculating damages for IP rights violations.

As a civil action is prosecuted through a full trial, with higher instances of appeal, it may take a long time for the rights holder to obtain a final decision; however, sufficient tools are provided for the recovery of damages.

Anti-counterfeiting online

Mexican law does not recognise specific online counterfeiting crimes or provide specific penalties for such activities. However, rights holders can still take action against online violations.

Certain provisions of the applicable legislation apply to online counterfeiting and may be used to combat such activities. However, the appropriate strategy must be evaluated on a case-by-case basis in order to determine the most suitable action.

Preventive measures and strategies

Rights holders and their representatives must move swiftly as soon as a violation is detected, given the short timeframe for action before the authorities are required to release the merchandise. Therefore, rights holders and their representatives should have all of the information and documentation that they need to take action at any time, including:

  • adequate powers of attorney;
  • information on licensees and distributors;
  • information about the ports or other entry points at where original merchandise normally enters the country; and
  • full details of the trademarks and the products that they protect.

Rights holders' representatives must be familiar with the particulars of the genuine merchandise so that they can easily and quickly determine whether the merchandise is counterfeit. This not only allows for a rapid response, but also reduces the risk of counterfeit merchandise being mistakenly reported as genuine. Rights holders and their representatives should also maintain close communications with Customs in order to teach officers about the characteristics of genuine or fake merchandise and keep them informed of changes to the rights holder's IP portfolio.

Perhaps most importantly, rights holders and their representatives should ensure that they tackle the most important cases, taking account of the size of the consignment or other factors (eg, the issue of whether the counterfeit merchandise is offered for sale at a location which might harm the image of the rights holder). A cleverly thought-out strategy will help the rights holder to keep the costs of anti-counterfeiting low while still ensuring that such activities are as effective as possible.

For further information on this topic please contact Juan Carlos Amaro Alvarado at Becerril, Coca & Becerril SC by telephone (+52 55 5263 8730), fax (+52 55 5263 8731) or email (