Know your rights: grounds for ownership and opposition under a Mexican trademark licence

The Mexican legalsystem recognises all kinds of licence agreement, particularly those pertaining to industrial property. However, despite Mexican law following international standards and trends, local law and enforcement remains an ongoing issue.

Licensing rules and procedures

Trademark licences can be granted by way of a simple written agreement. Recording a licence has significant legal effects as it can be enforceable against third parties; therefore, the use of a trademark by a licensee can benefit the licensor, and the licensee may bring infringement actions against third parties (provided that it is empowered to do so in the corresponding agreement).

However, the courts have held that in relation to the non-use of a registered trademark, pursuant to international treaties (eg, the North American Free Trade Agreement and the World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights), a trademark owner may benefit from a licensee’s use of the mark even if the licence has not been recorded, provided that evidence demonstrating the relationship between the owner and the licensee is submitted during litigation. Notwithstanding, registration of the licence remains preferable.

Mexican law requires that the products sold or services rendered by a licensee are of the same quality as those manufactured or rendered by the trademark owner. Further, licence agreements typically include:

• the licence term;
• the exclusivity or non-exclusivity of the licensee;
• the territory in which the licence is applicable;
• whether the licensee can bring infringement actions against third parties;
• terms of renewal; and
• royalties (if any).

The Industrial Property Law regulates licence agreements with regard to the following issues:

• A licence cannot be registered when the IP right has expired or where the duration of the licence is longer than the term of the IP right.
• With the exception of public utility or compulsory licences, any licence may be exclusive.
• Non-competition covenants are enforceable under Mexican law. Although there has been some debate on their validity under constitutional construction, to date there has been no jurisprudence on the matter.

The Industrial Property Law also regulates indemnification, disclaimers of liability, damages and limitation of damages.

Ownership rules

Pursuant to the Industrial Property Law, exclusive – and thus licensable – trademark rights are created once the mark is registered with the Mexican Institute of Industrial Property (IMPI). Registration confers the exclusive right to use a trademark nationwide and to oppose it against third parties that use identical or similar marks. Use of a mark also confers on the prior user the right to bring cancellation actions against owners of senior registrations and to avoid infringement actions for such use.

Indeed, protection is obtained once the trademark has been registered before IMPI. Any word, sign or three-dimensional (3D) figure that is capable of distinguishing products and services from others in the market may be registered as a trademark. The law does not provide for the registration of non-traditional marks; therefore, rights holders should work together with their counsel to source alternative means of protection for such marks. However, there is some suggestion that amendments are being discussed to address this issue.

The Mexican IP system also recognises co-ownership of intellectual property. In these cases, the particular provisions for each kind of IP right must be taken into account, as the applicable law may differ from one to another. For instance, work that is susceptible to copyright and trademark applications can be co-owned. While the Industrial Property Law establishes the prerequisites for co-ownership of a trademark, the Copyright Law recognises – without prerequisites – that due to their nature, some works are usually co-owned, and simply regulates the rights derived from such works.

Similarly, co-owned patent rights are administered independently through the Civil Code, which also applies to trademarks and copyrights when these are not expressly regulated.

Therefore, all rights holders should be aware of the particular provisions applicable to the type of intellectual property that they own, in order to administer co-owned IP rights properly.

In light of this, Article 89 of the Industrial Property Law outlines the visible signs that can constitute a trademark, including:

• denominations or visible signs that are sufficiently distinctive and capable of identifying goods or services from those of others in the same class;
• 3D forms;
• trade names and denominations or corporate names; and
• names of natural persons, provided that they are not confusingly similar to a registered trademark or published trade name.

Further, under Article 90 of the law, the grounds for refusal are:

• animated or changing denominations, figures or 3D signs;
• generic terms;
• descriptive marks or indicative words;
• isolated letters, digits or colours;
• translation into other languages, spelling variations or artificial construction of unregistrable words;
• signs that include coats of arms or emblems of any country, state, municipality or other political divisions;
• geographically descriptive or misdescriptive marks;
• names of towns or places that are characterised by the manufacture of certain products;
• names, pseudonyms, signatures or portraits of persons without their consent;
• titles of intellectual or artistic works, titles of periodical publications, advertising or fictitious characters;
• trademarks that constitute false indications as to the nature, components or qualities of the goods or services;
• denominations, figures or 3D forms identical or similar to a trademark that IMPI considers to be well known or famous in Mexico; and
• trademarks that are identical or confusingly similar to previously registered trademarks or trade names that have been filed or published.

Grounds for opposition and infringement actions

Third parties that consider a trademark application to breach the Industrial Property Law can oppose its registration (Articles 4° and 90). Oppositions must be submitted to IMPI within one month of the publication date of the application in the Official Gazette. This follows an amendment to the Industrial Property Law, which entered into force on August 30 2016.

The validity of a trademark registration can be challenged through cancellation actions before IMPI on any of the following grounds:

• Non-use: the trademark has not been used within the three consecutive years before the cancellation action filing date. This action may be exercised after three years from the approval date of the challenged trademark.
• The trademark registration was granted in violation of IMPI provisions. This action may be exercised at any time.
• Prior use: the trademark is identical or confusingly similar to another mark, which was used in Mexico or abroad before the registration application, and which is applied to the same or similar products or services. This action may be exercised within three years of the publication date of the registration in the Official Gazette.
• False data: the trademark registration was granted on the basis of false information submitted in the application. This action may be exercised within five years of the publication date of the registration in the Official Gazette.
• The trademark registration was granted in error, by mistake or owing to a difference of judgement due to the prior existence of an identical or confusingly similar mark applied to identical or similar services or products. This action may be exercised within five years of the publication date of the registration in the Official Gazette.
• Bad faith: the trademark registration will be cancelled when an agent, representative, user or distributor of a foreign trademark owner obtains registration of the mark or of a confusingly similar one, without the express consent of the foreign owner. This action may be exercised at any time.

A trademark infringement action can be brought where:

• the trademark used is confusingly similar to another registered mark;
• a registered or confusingly similar mark is used without the owner’s consent as an element of a trade name, firm name or corporate name, or vice versa – provided that the names relate to establishments that operate the same products or services protected by the mark;
• the trademark is used as a name, sign, symbol, initial or emblem;
• a previously registered or confusingly similar trademark is used without the owner’s written consent as part of a trade name, firm name or corporate name of a natural or corporate person whose activity is the production, import or marketing of commodities or services equal or similar to those covered by the registered trademark; or
• a registered mark is used without the owner’s consent or the respective licence on products or services equal or similar to those on which the trademark is applied.

Mauricio Mondragón Velázquez
Head associate
[email protected]

Mauricio Mondragón Velázquez is head associate of Uhthoff, Gómez Vega & Uhthoff’s sanitary regulation practice. He has over seven years of experience in the regulatory field advising on the health requirements of manufacturers and importers for the preparation and sale of food, alcoholic and non-alcoholic beverages, food supplements, cosmetics and medicines.

In addition to his regulatory work, Mr Mondragón is sought for his expertise in data privacy and protection, as well as preparation and oversight of legal terms and conditions involving contests and marketing and promotional events.

Mr Mondragón is a member of the Mexican Intellectual Property Association and the National Association of Business Lawyers.