IP in business transactions: Mexico overview

A guide to intellectual property law in Mexico. The IP in business transactions Q&A gives an overview of maintaining an IP portfolio, exploiting an IP portfolio through assignment and licensing, taking security over IPRs, IP and M&A transactions, and the impact of IP on key areas such as competition law, employees and tax.

To compare answers across multiple jurisdictions, visit the IP in business transactions Country Q&A tool.

This Q&A is part of the multi-jurisdictional guide to IP law. For a full list of jurisdictional Q&As visit www.practicallaw.com/ip-mjg.

Roberto Arochi, Arochi, Marroquín & Lindner, SC
Contents

Overview of main IPRs

1. What are the main IPRs in your jurisdiction? How are they protected?

Since the 1990s, protection of IPRs in Mexico has undergone extensive changes. The Mexican IP system has been amended and modernised. Recent legislation includes:

  • Industrial property legislation.

  • Copyright legislation.

  • An intellectual property chapter in customs legislation.

  • Federal plant variety legislation.

  • New government agencies such as the Mexican Institute of Industrial Property (Instituto Mexicano de la Propiedad Industrial) (IMPI) and the National Copyright Institute.

  • New judicial authorities such as the Intellectual Property Chamber of the Federal Court of Fiscal and Administrative Justice.

Mexico has also been an active international participant (see Question 26). Mexico is part of the current negotiations of the Anti-Counterfeiting Trade Agreement (ACTA), which has been promoted by the US, the EU and Japan. Within the framework of the North American Free Trade Agreement (NAFTA), Mexico has been active in the Security and Prosperity Partnership of North America (SPPNA), which includes an anti-counterfeiting working group.

For further information about the main IPRs, see Main IPRs: Mexico.

 

Maintaining IPRs

2. What facilities are available to conduct IP searches and obtain IP information on registered IP rights?

The IMPI has developed three websites for conducting searches concerning trade marks, patents, utility models, industrial designs, slogans and all administrative proceedings related to those figures. These websites are:

These websites are important tools for the maintenance of IPRs.

 
3. What steps must a business take to maintain the registration and status of its main IPRs?

Patents

Although patents are granted for a non-renewable period of 20 years, it is important to make the mandatory annual payment to IMPI. Further, the patent must be used to avoid a compulsory licence which can be ordered by the Mexican government.

Trade marks

Any sign can be used in Mexico in the form in which it was registered or with modifications that do not alter its distinctive character. If for three consecutive years a mark is not used for the products or services for which it was registered, there are grounds for the lapse of its registration, except where either:

  • The owner or registered licensee has used it during the three consecutive years immediately before the filing of the request for the administrative declaration of lapse.

  • A situation has arisen that is beyond the control of the owner of the mark which constitutes an obstacle to its use, such as the restriction of imports or other government requirements applicable to the goods or services to which the mark is applied.

The renewal of the registration of a mark is requested by the owner six months before the expiration of its term. However, IMPI still processes requests that are filed within six months of the expiry of the term of registration. Once that period expires without any request for renewal having been filed, the registration lapses. Renewal of the registration of a mark only proceeds if the person concerned submits proof of payment of the appropriate fee and makes a sworn statement in writing attesting his use of the mark on at least one of the goods or services to which it is applied, such use not having been interrupted, without just cause, for a period equal to or longer than that provided for in Article 130 of the Industrial Property Law.

 
4. What steps can a business take to avoid committing an infringement of another party's IPRs and to monitor whether a competitor is infringing its IPRs?

Businesses can avoid infringement and monitor competitors by tracking through official channels. This is possible through the constant review of IMPI websites. It is also recommended to monitor main market venues to achieve complete coverage for any possible infringement.

 

Exploiting IPRs

5. What are the main steps in an IP audit in your jurisdiction to determine the content of an IP portfolio?

To conduct an IP audit it is necessary to conduct:

  • A thorough search in relation to the IP right holder or owner.

  • A thorough review of the IPR status, to determine if those rights are still valid.

  • A thorough review of all documents contained in the respective files to check upcoming deadlines.

 

Assignment

6. How can main IPRs be assigned?

The rights conferred by a patent or registration of a mark, or those deriving from a pending application, can be encumbered and transferred either wholly or in part, subject to the conditions and formalities set out in ordinary legislation.

In addition to general requirements under the Regulations of the Industrial Property Law, a request for registration of an assignment of patent or trade mark rights must:

  • State the name, designation or business style and nationality of the immediately preceding holder of the rights or of the successive previous holders in cases where the assignments have not been previously registered. The same particulars are required for the new holder in addition to the information requested on the official forms.

  • Be accompanied by a copy, either certified or with handwritten signatures, of the agreement or other documents evidencing the assignments, including those relating to assignments effected previously that have not been registered.

The request for registration may be filed by the assignor or his substitute or by the assignee of his substitute.

 
7. What formalities are required to assign each of the main IPRs?

Patents

For the transfer of rights or encumbrance to be binding on third parties, it must be registered with IMPI. A single request may be filed seeking registration of transfers of ownership of two or more pending applications or two or more patents or registrations where the transferor and transferee are the same persons in each case. The applicant must identify each of the applications, patents or registrations in respect of which the entry is to be made. The appropriate fees must be paid according to the number of applications, patents or registrations involved.

Trade marks

The encumbrance or transfer of rights must be registered with IMPI under the Industrial Property Law, to be enforceable against third parties. A single submission can be made to request registration of the transfer of ownership of two or more pending applications or two or more registered marks, where the person transferring them and the person acquiring them are the same in all cases. The applicant must identify each of the applications or registrations in relation to which the registration is to be made. The corresponding fees must be paid according to the number of applications or registrations involved.

 
8. What main terms should be included in an assignment of IPRs?

The main terms include:

  • Clarification on the IPRs to be assigned.

  • Consideration for the assignment.

  • The extent of the IPRs.

 

Licensing

9. How can each of the main IPRs be licensed?

Patents

The owner of the patent or registration can license its use, through an agreement.

Trade marks

The owner of a registered or pending trade mark can, by agreement, license one or more persons to use the mark in relation to all or some of the goods or services to which the mark applies.

 
10. What are the formalities to license each of the main IPRs?

Patents

The licence must be registered with IMPI to be binding on third parties. A single request can be filed seeking registration of the licensing of rights in two or more pending applications or two or more patents or registrations where the licensor and licensee are the same persons in each case. The applicant must identify each of the applications, patents or registrations in relation to which the entry is to be made. The appropriate fees must be paid according to the number of applications, patents or registrations involved.

Trade marks

The licence must be registered with IMPI to be binding on third parties. For a licence to be registered with IMPI, it is sufficient to file the corresponding application in the manner specified under the Industrial Property Law.

In addition to meeting the general requirements established in the Regulations of the Industrial Property Law, a request for registration of a licence for use in relation to any industrial property right, must specify:

  • The names, designations or business styles, nationalities and addresses of the licensor and the licensee.

  • The term of the agreement.

  • Whether the agreement accords the licensor the right to bring legal action for the protection of the industrial property rights to which it relates.

  • For the use of a mark, the goods or services for which the licence is granted.

  • Any other particulars that may be required in the official forms.

The application must be accompanied by a copy, either certified or with handwritten signatures, of the agreement evidencing the licence. The copy submitted may omit:

  • Clauses referring to royalties and other remuneration payable by the licensee.

  • Clauses that refer to confidential information and methods or means of distribution and marketing of goods or services concerned.

  • Any annexes containing technical information that may form part of the agreement.

The request for registration can be filed by any of the parties.

A single submission can be made to request registration of the licensing of rights relating to two or more pending applications or two or more registered marks, where the licensor and licensee are the same in all cases. The applicant must identify each of the applications or registrations in relation to which the registration is to be made. The corresponding fees must be paid according to the number of applications or registrations involved.

 
11. What main terms should be included in an IP licence?

The products sold or the services rendered by the licensee must be of the same quality as those manufactured or rendered by the owner of the mark. Further, those products or the establishment in which the services are rendered or contracted must state the name of the user and any other particulars required by the Industrial Property Law. The person holding a licence registered with IMPI can, unless agreed otherwise, institute legal proceedings for the protection of the rights in the mark as if he were the owner. Use of the mark by the user holding a licence registered with IMPI is considered as if made by the owner of the mark.

 

Taking security

12. Is security commonly taken over IPRs?

Security is not commonly taken over IPRs.

 
13. What are the main security interests taken over IPRs?

Security interests are not generally taken over IPRs.

 

M&A

14. What IP-related due diligence is commonly carried out in both a share sale and an asset sale?

IP-related due diligence carried out in share sales or in asset sales is the same where it is carried out (see below). It generally deals with IPRs and value.

Share sale

IP-related due diligence is generally only carried out when the control of the company is given away by virtue of the share sale.

Asset sale

Due diligence concerning IP usually takes place when the assets sold are IPRs or IP-related assets (such as software).

 
15. What IP-related warranties and/or indemnities are commonly given by the seller to the buyer in both a share sale and an asset sale?

In both cases, the seller warrants that he is the owner of the IPRs or that he has the lawful right to transfer them.

 
16. How are the main IPRs transferred in both a share sale and an asset sale?

Share sale

The shares themselves include all rights, assets and obligations concerning the company that issued them. Therefore, when transferred, the buyer receives these rights and obligations.

Asset sale

These are generally transferred through an agreement.

 

Joint ventures

17. Is it common for companies to set up joint ventures in your jurisdiction to develop projects that heavily involve IPRs?

Joint ventures concerning IPRs depend on the necessities and/or opportunities within the markets.

 

Competition law

18. What are the main provisions of your national competition law that can affect the exploitation of the main IPRs?

There is no provision of Mexican competition law that can affect the exploitation of the main IPRs.

 
19. What are the most common national competition law issues that arise in the exploitation of the main IPRs?

Not applicable (see Question 18).

 
20. What exclusions or exemptions are available for national competition law issues involving the exploitation of the main IPRs?

Not applicable (see Question 18).

 

Advertising

21. To what extent do advertising laws impact on the use of third party trade marks?

The Federal Consumer Protection Law and the General Health Law Regulation on Advertising establish how advertising can be done in Mexico. In all advertising, the sign must be thoroughly advertised. Comparative advertising is allowed by the Federal Consumer Protection Law.

 

Employees and consultants

22. Who owns each of the main IPRs created by an employee in the course of his employment? Is compensation payable in relation to employee IPRs? What main steps can an employer take to ensure it owns each of the main IPRs?

The attribution of rights to name, property and exploitation of inventions made in a company, is regulated by the following rules:

  • The inventor is entitled to have his name listed as the author of the invention.

  • When the employee is engaged in research or improvement of the procedures used in the company, on the company's behalf, the ownership of the invention and the right to exploit the patent belongs to the employer. The inventor, regardless of salary that he would have received, is entitled to additional compensation, determined by agreement of the parties or the Board of Conciliation and Arbitration, when the importance of the invention and its benefits is not commensurate with the salary received by the inventor.

  • Otherwise, the ownership of the invention belongs to the person or persons who invented it, but the employer has a preferential right to the exclusive use or acquisition of the invention and related patents.

 
23. Who owns each of the main IPRs created by an external consultant? What main steps can a business take to ensure it owns each of the main IPRs?
 

Tax

24. What are the main taxes payable by a licensor on the licensing of the main IPRs?

The main taxes payable by a licensor are:

  • Income tax.

  • Value added tax.

  • Flat rate business tax.

 
25. What are the main taxes payable by a seller on the disposal of the main IPRs?

The main taxes payable by a seller are:

  • Income tax.

  • Flat rate business tax.

The seller must retain the value added tax.

 

Cross-border issues

26. What international IP treaties is your jurisdiction party to?

Mexico is a party to the:

  • WIPO Paris Convention for the Protection of Industrial Property 1883.

  • WIPO Berne Convention for the Protection of Literary and Artistic Works 1971.

  • WIPO Nairobi Treaty on the Protection of the Olympic Symbol 1981.

  • WIPO Brussels Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite 1974.

  • WIPO Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms 1971.

  • WIPO Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations 1961.

  • WIPO Copyright Treaty 1996.

  • WIPO Performances and Phonograms Treaty 1996.

  • Budapest Treaty on the International Recognition of the Deposit of Microorganisms for the Purposes of Patent Procedure 1977.

  • Lisbon Agreement for the Protection of Appellations of Origin and their International Registration.

  • Patent Cooperation Treaty 1970.

  • Locarno Agreement Establishing an International Classification for Industrial Designs 1958.

  • WIPO Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks 1957.

  • Strasbourg Agreement Concerning the International Patent Classification 1971.

  • WIPO Vienna Agreement Establishing an International Classification of the Figurative Elements of Marks 1973.

  • WTO Agreement on Trade-Related Aspects of Intellectual Property Rights 1994 (TRIPS).

  • NAFTA.

  • Free Trade Agreements: Northern Triangle (Guatemala, El Salvador and Honduras); Costa Rica; Nicaragua; Colombia; Chile; Uruguay; Israel, Japan, European Union and European Free Trade Association (EFTA).

 
27. Are foreign IPRs recognised in your jurisdiction?

Due to its accession to the Paris Convention, the TRIPS Agreement and the NAFTA, Mexico has agreed to recognise foreign IPRs. When the registration of a mark is applied for in Mexico within the periods specified in international treaties, or within six months of the filing of applications in other countries, the filing date in the country of first filing may be recognised as the priority date. For trade mark priority to be recognised, the following requirements must be met:

  • The priority must be claimed, and proof given of the country of origin and of the filing date of the application in that country, when applying for registration.

  • The application filed in Mexico must not seek to cover products or services additional to those provided for in the application filed abroad, in which case priority is only recognised for those specified in the application filed in the country of origin.

The requirements specified in international treaties and the Industrial Property Law must be met within three months of the filing of the application. For the priority under the Industrial Property Law to be recognised, the registration applicant of a trade mark must meet the following requirements:

  • He must mention in the application (when known), the number of the registration application for the mark filed in the country of origin, the filing date of which is claimed as the priority date.

  • He must submit proof of payment of the prescribed fee.

  • Within three months of filing the application, he must submit a certified copy of the registration application of the mark filed in the country of origin, with a translation where appropriate. Where this requirement is not complied with, the priority right is considered as not having been claimed.

Where a patent is sought after having been applied for in other countries, the filing date in the country of first filing may be recognised as the priority date, provided that filing in Mexico occurs within the periods specified by international treaties, or within 12 months of the application for a patent in the country of origin.

For patent priority to be recognised, the following requirements must be met:

  • On application for the patent, priority must be claimed and the country of origin and the date on which the application was filed in that country must be specified.

  • The application filed in Mexico must not seek the grant of rights additional to those deriving from the application filed abroad. If rights additional to those deriving from the application filed abroad (considered as a whole) are sought, the priority must only be partial and consistent with that application. A further request can be made for the recognition of priority in relation to claims for additional rights.

The requirements specified in international treaties and the Industrial Property Law and its regulations must be complied with within three months of the application being filed. The requirements are the same as for a trade mark (see above).

 

Reform

28. Are there any proposals for reform?

The Chamber of Deputies has passed an amendment bill for the Author's Right Federal Law, to combat recordings in cinemas. This still requires passing by the Senate. It is likely to be in force in 2012.

An amendment bill for the Customs Law is pending in the Senate. This bill will create a trade mark register at the Mexican Customs Office.

 
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