Features – Mexican Trademark and Copyright Law as it Applies to E-Commerce

Jose-Juan Mendez received his law degree from the Universidad Anahuac in Mexico City, and was admitted to practice law throughout the Mexican Republic in 1994. He obtained his Master of Law degree from the Franklin Pierce Law Center in New Hampshire. He is member of the Mexican Bar Association and is the coordinator of the Industrial and Intellectual Property Committee of National Corporate Lawyer Association (ANADE). He specializes in industrial property matters in general, patents and trademarks, author rights and electronic commerce. Jose-Juan has been a local partner of Baker & McKenzie – Mexico City, since 2000.

I. Introduction

The world today revolves around information technology. The enormous growth of the Internet and e-commerce has had a global effect. These changes are, among other important issues, directed to replace formal business transactions and ways of entertainment with the implementation of new technology in the Internet.

Therefore, this electronic impact has invited the general population to transact business through the web, offering a great variety of goods and services to promote their sales. However, in some instances, web pages are using registered trademarks and copyrights without proper authorization. This illegitimate use is generally made through the display of a person’s image, music and signs, among other representations.

II. Trademarks and Copyrights in the Mexican Law

a) Trademarks

According to the Mexican Industrial Property Law (“IP Law”), a trademark is defined as “any visible sign adopted by a manufacturer, merchant or service provider to identify its goods or services and distinguish them from others of their same kind of class in the market place”. Furthermore, the IP Law expressly includes the following signs as trademarks:

  1. Visible, sufficiently distinctive names and figures capable of identifying the goods or services to which they are applied or attempted to be applied, against other products or services of their same kind or class.
  2. Tri-dimensional forms.
  3. Trade names and denominations or corporate names, provided they do not fall within the expressed prohibitions of the IP Law.
  4. The name of a natural person, provided that it is not confused with a registered trademark or a published trade name.

Naturally, a trademark must be distinctive if it is to serve the function to identify the origin of goods or services and thereby avoid confusion, deception or mistake. If a trademark is to protect buyers from confusing what they are acquiring, then the trademark must somehow be recognizable, identifiable and different from other marks.

The exclusive right that a trademark provides to its owner starts when registration is granted by the Mexican Institute of Industrial Property (“IMPI”). Trademark prosecution takes (depending on the complexity of the case) an average of six months to mature into registration. Trademarks have strong protection within all the Mexican Territory.

b) Copyrights

According to the Mexican Copyright Law (“Copyright Law”), the following works are able to obtain protection as copyrights:

Literary works, musical with or without letter, dramatic, dance, pictoric or drawing, sculpture or plastic, cartoon, architectonic, cinematographic, audiovisual, radio and T.V. programs, computer software (data bases are included, but software created to produce harmful effects to other software or hardware is excluded from copyright protection), photographic, of compilation, provided they constitute intellectual creations. As mentioned, databases are also copyrightable as compilations, as far as the selection and arrangement of their data constitute intellectual creations. Such protection is not bestowed to the data itself nor to the material contained therein. Non original databases shall be protected only for 5 years, while copyrightable works will be protected during the author’s life plus 75 years.

The Copyright Law provides that, only those works of original creation and capable of being disseminated or reproduced by any means will be subject to registration before the Copyright National Institute (“CNI”) as protection is obtained since the artistic or literary work is fixed in tangible means. Nevertheless, copyrights are protected without necessarily having a deposit or registration; however registration is advisable to have evidentiary elements to support the enforcement action in litigation cases.

The Copyright law also comprises another figure called “reserve”, which is not a registration, but a mere reservation, and it does not contain the same degree of creativeness as an intellectual work. The reserves can be obtained for i) titles of periodical publications, ii) advertising promotions, ii) human characterization or fictitious characters, iii) periodical publications, iv) names of persons or groups engaged in artistic activities, etc.

In short, a trademark and a copyright allow the buyer to assert a preference in his or her purchasing, allow the manufacturer to promote its product, and perhaps in most cases serve to assure a certain level of quality.

III. Risk of Using Trademarks and Copyrights in the E-Commerce and the Internet

Everyday, more manufacturers and service providers implement a web page where Mexican consumers may solicit their products and services. Furthermore, the idea of incorporating more creative elements into these sites is increasing day by day. Generally, web pages are trying to include photographs, music, designs, images and even phrases or words to attract more consumers, which in our opinion is a good commercial strategy; however, in most of the cases, unfortunately they do so without adequate intellectual property advice.

Therefore, in the practice, several companies are facing the possibility of being sued by copyright and trademark holders, since they overlook obtaining prior intellectual property protection.

At this point, we would like to make clear that practically without exception, the use made through the Internet, by a third party, of a registered trademark or a copyright without proper authorization, constitutes an infringement and /or a criminal offense in Mexico.

a) Trademark Protection

Article 213 of the IP Law establishes rules regarding the infringement of trademarks, as set forth hereunder:

Art. 213. The following constitute administrative infringements:

IV. To use a trademark confusingly similar to another registered trademark, to cover the same or similar products or services as those protected by the registered trademark;

V. Using, without the consent of the holder, a registered trademark or trademark confusingly similar as a an element of a trade name or a firm or corporate name, or vice versa, provided that said names, firm or corporate names relate to establishments that operate with the products or services protected by the trademark;

XIX. Offer for sale or place into circulation products equal or similar to those to which a registered trademark is applied, knowing that the trademark was used on them without the consent of their holder.

Furthermore, the Regulations of the Mexican Industrial Property Law clearly establish concept of the use, as follows:

Art. 62.- For the purposes of Article 130 of the Law, among other cases, it shall be understood that a trademark is in use, when the goods or services covered by such trademark, have been put in the market or are available in the market in the country under such trademark in the amount and form corresponding to the uses and custom of the commerce. It shall also be understood that the trademark is in use when is applied to goods for exportation.

Based on the foregoing, you will realize that Mexican trademark owners are entitled to file infringement actions against third parties for the unauthorized use of their trademarks through the Internet.

Under the IP Law the penalties for this type of infringement are fines from up to $66,000.00 US currency, to temporary and definitive closure of the infringing business and even administrative arrest for 36 hours.

b) Copyright Protection

At this point, we also would like to explain the consequences of using copyright works through the web. If a web page is using photos, music, artistic or literary works or any other kind of copyrighted materials, severe sanctions may be faced. Among other, Copyright Law establishes the possibility of bringing the following type of actions:

  1. Criminal action
  2. Administrative remedies

Criminal Action

With respect to the use of copyrighted materials, there is the possibility of filing before the Attorney General of the Mexican Republic, a complaint for the criminal offense detailed in Article 424 of the Federal Criminal Code (modified on May 17, 1999), section III:

Article 424 – A prison sentence of six months to six years and a fine of three hundred to three thousand days of the minimum wage will be imposed on:

III. Anyone who uses a copyrighted work in a damaging manner, with a commercial purpose and without authorization.

It is important to note that in the above-mentioned Criminal Code reform, and in the IP Law, the nature of this type of crime was amended to felony status. This signifies that a charged party will have no right to bail while the penal process is resolved.

The reform also modified elements needed to prove the crime. The Public Prosecutor can register its investigation before the Federal Criminal Judge without need to prove the subjective elements of the crime. Both modifications were designed to facilitate the work of Public Prosecutors.

Administrative Remedies

Besides criminal action, we have an administrative remedy before the IMPI. Curiously, the remedy is established in Title X of the Copyright Law, which grants competence not to the CNI but to the IMPI to enforce the copyright infringement in commercial matters, simply assimilating the process followed in the area of industrial infringement to that of copyright infringement.

The consequence of an administrative declaration of infringement of course is the imposition of administrative sanctions such as fines, administrative arrest, temporary closure of the business or permanent closure in case of recurrence. Once an administrative declaration of infringement is obtained, one may bring civil actions for damages and losses.

Now, besides the actions already mentioned and explained, Civil Remedies may be initiated by trademark and copyright titleholders against web pages users.

Civil Remedies

Article 221 BIS of the IP Law establishes the following

The repair of material damages or the payment of damages and losses resulting from a violation of the rights conferred by this Law will never be lower than forty percent of the sale price to the public of each product or the rendering of services that implies a violation of any one or more of the industrial property rights regulated by this Law.

As a result of the above, the reparation of material damage or losses that may be sued for the violation or unauthorized use of industrial property or copyrights will be no less than 40% of the sale price to the public of each relevant product or service. In effect, this signifies it is not necessary to prove the amount of damages or losses nor the direct causal relationship. One simply must prove that a violation occurred and prove the sale price to the public of the products or services which implies a violation.

IV. Conclusions

Based on the foregoing, it is of utmost importance to warn web page users to take intellectual property advice before actually creating their web pages, in order to prevent further defensive legal actions from trademark and copyright titleholders, whose rights may be infringed.

Considering the risks imposed by the Mexican legislation for intellectual property infringement, it is our strong recommendation to have preventive legal counseling, since it is cheaper and less troublesome that implementing defensive strategies once the claims have risen.

Posted in: E-Commerce, Features, Intellectual Property