By Javier Villanueva Walbey, Cuesta Campos y Asociados S.C.
Intellectual Property has become for many companies one of the most important assets, which is why protecting and enforcing intellectual property rights now a days has become a great challenge, as each jurisdiction has different prosecution rules and procedures to protect and enforce such rights.
Consequently, we have drafted a list of "do's" and "don'ts", which in our experience will be very helpful for companies managing Intellectual Property Assets in Mexico, as well as to prevent infringement or misappropriation.
1. Do: Seek registration and protection for your Intellectual Property Assets
When a Company is planning to extend its business abroad, it is always important to evaluate the different means available to obtain protection of Intellectual Property assets, as in some cases it is better to obtain the corresponding registration prior to commencing business in a foreign country.
Seeking protection of Intellectual Property rights will prevent third parties from misappropriation. We have seen situations where companies have had to deal with several litigations in order to recover trademark rights due to the lack of on time registration and a third party, not the legitimate owner, obtained registration to take advantage over the company.
2. Don't: Enter into the market without conducting a clearance search
Many companies enter into different markets with products or services through distributors, subsidiaries or affiliates, without knowing whether a trademark, trade name or slogans, might infringe third party IP rights.
Therefore, it is highly advisable to conduct a clearance search in order to determine if the use of certain trademarks, trade names or slogans, do not infringe third party rights, and when applicable, to determine the chances of success to obtain registration before the Trademark Office.
It is also common that as part of international transactions, foreign companies tend to acquire Mexican Subsidiaries, without knowing if such subsidiary is rightfully using IP assets (third party licensed assets or third party assets without license), which in many cases lead to face infringement actions after the closing of the acquisition, therefore prior to the acquisition; the companies should conduct an Intellectual Property due diligence in order to confirm that acquired company is using third party IP assets with the proper licenses (i.e. software) and that is not using any other trademark, invention, copyright, etc., that could infringe third party rights.
When choosing a corporate name, make sure it does not infringe a third party trademark, in order to avoid administrative sanctions and being forced to change the name after several attempts of brand positioning, as pursuant to the IP law using a registered trademark without authorization as corporate name, is considered infringement.
3. Do: Use your trademarks in an effective manner in Mexican commerce
Pursuant to the Mexican IP Law, a trademark should be used as follows:
- (i) As registered. If the trademark is modified, it is important that the main distinctive elements remain the same. For companies using trademarks that consist on a word and a design, it is recommendable to register the word alone and the word plus the compound, for cases in which the design could change or vary.
- (ii) By the owner of the trademark or its authorized license. It is very common that the owner of a trademark (in most cases a foreign entity) does not use the trademark directly, as such use is made through a third authorized party (independent distributor or Mexican subsidiary), therefore it is important to execute and record the corresponding license agreement to evidence such relationship.
- Even though the Trade Related Aspects of Intellectual Property, which Mexico has subscribed as part of World Trade Organization, provides the controlled use by a third party valid, without complying with any additional requirements, the Mexican IP law requires the registration before the Trademark Office of the license agreement. In this regard, in some cases is convenient to register the corresponding license agreement, to avoid unnecessary litigations.
4. Don't: Enter into license or distribution agreements without the proper exit and IP clauses.
When negotiating and entering into distribution or license agreements, always make sure that you will have control over all your intellectual property rights, the distributor or licensee should use the IP assets according to the company policies and instructions. Always set security measures obligations and restrictions of use when licensing technology and Trade Secrets.
Don't allow your distributor to register any of your IP assets; as in case of the termination of the distribution it could be difficult to recover such registrations.
If your company is using third party licensed rights, make sure that the Licensor is indeed the legitimate owner. On the agreement provide a clause in order to point out the responsibility from the licensor in the event of third party claims or lawsuits over the licensed IP rights.
5. Do: Save evidence of use of your trademarks.
It is advisable to save evidence that proves the use of a trademark such as: invoices, advertisements, publications, brochures, catalogues or any other marketing document, as they would be useful in the event of a cancellation action based on non-use.
Make sure that such documents are proper to prove the use, this is, that the trademark is contained in such documents, the date of use is clear and related to the products or services for which the trademark was registered (i.e. invoices should bear the trademark, the precise description of the product and/or service rendered, avoid using codes or numbers to identify the product or make sure there is an inventory to relate the invoices with and state the date of issuance of the invoice).
6. Don't: Forget to provide specific Intellectual Property Clauses on Individual Labor Agreements
The employees of a company, in some cases, might develop inventions, marketing campaigns, designs, copyrights, etc., even though the company should have the corresponding employment agreements, it is important to set detailed and specific Intellectual Property clauses considering the following:
- (i) The Federal Labor Act provides that the employer will owe the rights over an invention developed by an employee, as part of his job description. If an employee develops an invention, and such research and investigation was not part of his job description, the rights derived from that invention will pertain to the employee and the employer will have the right of first refusal to acquire or use the invention.
- (ii) Pursuant to the Copyright Act, if an employee creates a work of art , it will be understood that the employee has the right over the 50% of the work and the employer the other 50%, unless a written employment agreement states that the company will own the whole right over the work of art.
Even if a company has Individual Labor Agreements, it is also advisable to execute assignment agreements with the employees in connection to specific creations or inventions, or in some cases work for hire agreements, in which the employee should grant the broadest settlement for the Intellectual Property asset.
7. Do: Make efforts to enforce your trademarks
Depending on your company business scope, you might face infringing activities that harm your intellectual property rights, thus, it is always advisable to make strategic efforts to stop third unauthorized parties from using your IP rights, this efforts could represent a mere cease and desist letter or initiating infringement proceedings which could derive on a losses and damages claim.
Sending the proper message to the market will help to refrain third parties from violating your company IP rights.
8. Don't: Allow that your trademarks become diluted or generic
In some cases the Mexican Trademark Office have missed to reject trademark registrations that are similar to a trademark already registered, allowing them to coexist, making that several words or design that at first were distinctive become diluted for certain products or services. In order to avoid the dilution of your trademarks, it is important to not allow the above-mentioned registrations and to annul all trademarks granted by the trademark office that are confusingly similar. Even though the Mexican IP Law does not provide an opposition system, in some cases it is helpful to file briefs informing the Trademark Office that certain trademark should not be granted.
Likewise, if the trademark used by your company becomes very famous so that consumers and different commerce sectors use your trademark to name a product, it is important to initiate legal actions to prevent third parties from using the trademark, if the owner of the trademark takes no actions, it can become a generic term.
9. Do: Have the appropriate security measures to protect your Trade Secrets
One of the most important assets are Trade Secrets, pursuant to the Mexican IP Law certain requirements must be complied in order to have protection over such information, processes, formulas, documents, etc. All Trade Secrets must be dully documented and the owner must implement appropriate security measures to protect such asset. It is advisable to execute confidentiality agreements with employees and third party contractors, in order to prevent them from using or disclosing the Trade Secrets, not all employees of a company should have access.
It is very common to receive requirements from governmental authorities to disclose information, or as a requirement to obtain an authorization, license, permit, etc., thus, a company is required to disclose confidential information or part of a Trade Secret, in such cases is important to consider that the company should only submit specifically the part of the information required, always indicating that such information should be kept confidential and safeguarded, if not, it could lead to illegal disclosure of such confidential information or Trade Secret.
10. Don't: Allow piracy on the customs
As part of the enforcement and protection of the Intellectual Property rights, it is important to be aware of the counterfeit products that enter into Mexico through Customs, in order to be able to seize such goods prior to the circulation into the commerce, which in some cases makes the enforcing process more complicated. In this regard it is advisable to keep surveillance and close contact through the Customs-Office trademark Registration program, to cooperate with customs giving them general information of your authorized importers, exporters, manufacturing places, and product characteristics.
