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Articles

October 05, 2017

The New Trademark Opposition System in Mexico


By John M. Murphy

Through a series of amendments to the Industrial Property Law published June 1, 2016, Mexico created a formal trademark opposition system. While the new system is far from perfect, it is an important step forward.

 

Background


Although trademarks have been registrable in Mexico since 1885, 1 there was never a formal trademark opposition system. Applications that survived ex parte examination proceeded directly to registration.
The virtue of the system was that it was simple and rapid. The Mexican Institute of Industrial Property (IMPI) generally granted or refused applications within six months of filing.


The disadvantage was that ex parte examination had inherent limitations, as discussed below. Moreover, the owner of a Mexican trademark registration had (and continues to have) the exclusive right to use the mark for the goods or services identified in the registration, and could not be sued for trademark infringement, until and unless the registration was canceled or declared invalid. This often gave the owner of a wrongly granted trademark registration an unfair and unwarranted advantage against others in the market.
Consider the following hypothetical: Compagnie, a French company, has long used the mark CHAT NOIR for cologne. These products have been sold in Mexico through a local distributor, Equis. However, Compagnie terminates Equis over a payment dispute and signs an agreement with a new distributor.


Compagnie has never registered the mark CHAT NOIR in Mexico. After being terminated, Equis registers the mark CHAT NOIR in its own name and begins selling a cheaper fragrance under the mark. Compagnie does not learn of the application until after it has matured to registration. When Compagnie resumes sales of genuine CHAT NOIR cologne in Mexico, Equis sues Compagnie and its new distributor for trademark infringement.
Under Mexican law, Compagnie may counterclaim for invalidation of Equis’s registration, based on Compagnie’s prior use of the mark CHAT NOIR in both France and Mexico, and Equis’s bad faith in registering the mark. Once IMPI declares Equis’s registration to be invalid, Compagnie can register the mark CHAT NOIR in its own name, and sue Equis for infringement. However, this is a lengthy process
Published in Landslide, Volume 10, Issue 1, ©2017 by the American Bar Association. Reproduced with permission. All rights
reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored
in an electronic database or retrieval system without the express written consent of the American Bar Association.

Under Mexican law, Compagnie may counterclaim for invalidation of Equis’s registration, based on Compagnie’s prior use of the mark CHAT NOIR in both France and Mexico, and Equis’s bad faith in registering the mark. Once IMPI declares Equis’s registration to be invalid, Compagnie can register the mark CHAT NOIR in its own name, and sue Equis for infringement. However, this is a lengthy process with an uncertain outcome. 2 Rather than face this prospect, Compagnie pays Equis a large sum of money to assign the registration, dismiss the infringement action, and cease its sales of counterfeit cologne.


To prevent situations like these, IMPI has allowed the filing of informal “observations” against pending trademark applications, akin to letters of protest in the United States. 3 However, trademark examiners were not obligated to respond to or even consider such observations. 4 Moreover, trademark owners who relied on commercial watch services usually did not learn of potentially infringing marks until after the registration was granted and published in the Industrial Property Gazette.
The lack of an opposition system became a minor international embarrassment because only eight jurisdictions apart from Mexico did not allow trademark oppositions. 5 Both the Senate and the Chamber of Deputies noted, in statements of legislative purpose, the need to harmonize the Industrial Property Law (LPI) with the laws of Mexico’s principal trading partners. 6

 

How the New Opposition System Works

The new opposition system was designed with two goals in mind. First, Congress sought to blunt the criticisms of commentators who claimed that delay in granting trademark registrations would destroy small business and entrepreneurship in Mexico. 7 Second, Congress sought to minimize any disruption to the previously existing trademark registration process. 8 The principal features are as follows:
• New trademark applications are published in the Industrial Property Gazette within 10 business days of filing. 9
• Any person who believes an application should be refused may file an opposition within one month of publication. 10 This term may not be extended.
• IMPI has established an opposition fee of MXN$3,733.72, or slightly over USD$200 at the current exchange rate.
• The opposition must be presented in writing and may be accompanied by any evidence which the opposer considers appropriate. 11
• Within 10 business days of the close of the opposition period, IMPI publishes a list of applications that have been opposed in the Industrial Property Gazette. The applicant then has one month to respond. 12 The applicant’s failure to respond is not considered a tacit admission of the opposer’s allegations. 13


In most countries, an opposition is a proceeding distinct from ex parte examination, litigated before a specialized body such as the Trademark Trial and Appeal Board of the US Patent and Trademark Office. In Mexico, the opposition and answer are simply forwarded to the examiner for consideration during substantive examination. IMPI does not suspend its examination of the application while the opposition is pending. 14 Moreover, the opposition does not “confer upon the person who presents it the character of an interested party, third party or party,” 15 which means that the opposer has no right of appeal if the opposition is dismissed. 16 In effect, the new system simply formalizes the previous practice of observations against pending applications.

 

Benefits of the New Opposition System


By and large, trademark examiners at IMPI do their job conscientiously. However, there are inherent limitations on what ex parte examination can accomplish. For example, Mexican law recognizes that famous and well-known marks are entitled to broader protection than marks in general, but examiners have no way of evaluating the fame or notoriety of prior marks unless the owner of the famous or well-known mark has filed observations or the mark is the subject of a formal declaration of fame or notoriety. 17


Similarly, examiners search the IMPI trademark database (Marcanet) using a “phonetic search” algorithm that in theory identifies the marks in the database most similar to the mark being searched. However, while the algorithm does a reasonable job of identifying visually or phonetically similar marks, it does not identify foreign equivalents or marks that are similar in meaning but dissimilar in appearance and pronunciation. Further, there is no way to search for similar marks across multiple classes. 18


Further, examiners are limited in their ability to identify marks that are descriptive, generic, functional, or otherwise inherently incapable of serving as trademarks under Mexican law. Most examiners would likely refuse an application to register LAGER for beer or ROMAINE for lettuce, but few would know that a certain word or phrase is a term of art in the field of neurosurgery or petroleum engineering.
In Mexico as elsewhere, the refusal of a trademark application must be legally and factually supported by the examiner. 19 The primary goal of the new system is to strengthen ex parte examination by creating a formal means by which interested parties can advise examiners of potential bases for refusal that they might otherwise miss, and supply them with evidence to support refusals that would otherwise be overturned on appeal.

 

Weaknesses of the New Opposition System


An obvious weakness of the new opposition system—at least from the standpoint of potential opposers—is that oppositions will be considered by examiners and not by an independent body. Because an opposition “will not prejudice the result of the substantive examination undertaken by the Institute regarding the application,” 20 and the dismissal of an opposition will not be subject to appeal, there is a risk that examiners will not give oppositions the attention they deserve, particularly if IMPI is determined at all costs to maintain application processing times. While the final refusal of an application must be supported by a resolution detailing the factual and legal basis for the refusal, the examiner has no obligation to explain his or her reasons for dismissing an opposition. 21 The examiner need only notify the opposer that the registration has been granted. 22
A second, less obvious weakness is that the potential grounds for opposition are limited to grounds for ex parte refusal under LPI Articles 4 and 90 (e.g., the mark is descriptive, generic, functional, scandalous, confusingly similar to a prior registered mark, or in conflict with a prior famous or well-known mark). Other objections may only be raised through an invalidation action after the registration is granted, namely:

• The registered mark is identical or confusingly similar to another mark previously used, in Mexico or any other country, for identical or similar goods or services. 23

• The registration was granted on the basis of an application containing false information (typically, an incorrect date of first use). 24
• The registration was obtained without authorization by an agent, representative, authorized user, or distributor of a person who has registered the mark in another country. 25

There is a certain logic to this: if one views the opposition system as an aid to ex parte examination, there is no point in allowing grounds for opposition that would not be a basis for ex parte refusal. However, if one views the opposition system as a means of preventing the filing of abusive infringement actions by the owners of trademark registrations that should never have been granted (as in the above hypothetical), it is plainly deficient.

 

Implementation


The amendments to the LPI that created the opposition system took effect on August 30, 2016. On September 12, 2016, IMPI published the first edition of the Industrial Property Gazette listing newly filed applications. By March 10, 2017, a total of 1,915 oppositions were filed—approximately 2.6 percent of all applications filed.
The impact of the new system requires further assessment, because many oppositions filed thus far have not been decided, and some opposed applications that are ultimately refused would have been refused ex parte under the former system. While there is no hard data, application pendency seems to have lengthened somewhat. However, this may be a temporary phenomenon that will abate as IMPI and the trademark bar acclimate to the new system.

 

 

 

Endnotes
1.Nava Negrete, Justo, Tratado sobre derecho de marcas [Treatise on Trademark Law], México: Porrúa, 2012, p. 76.
2.Historically, IMPI has required parties to submit invoices to show prior continuous use of a mark. In many cases, invoices are unavailable, or are refused admission into evidence on formal grounds. In other cases, the invalidation claim is rejected because the party seeking invalidation cannot prove that the goods identified in the invoices bore the mark at issue.
3.See U.S. PAT. & TRADEMARK OFFICE, TRADEMARK MANUAL OF EXAMINING PROCEDURE (TMEP) § 1715 (Apr. 2017).
4.One nonbinding judicial decision states that in rare cases, IMPI may be required as a matter of constitutional law to consider third-party observations in order to avoid contradictory decisions in co-pending trademark registration and infringement proceedings. Marca. Previa concesión de su registro debe otorgarse la garantía de audiencia a quien en diverso procedimiento solicitó la declaración administrativa de infracción por el uso de una semejante en grado de confusión, aun cuando la Ley de la Propiedad Industrial no prevea la figura de tercero opositor, Tribunales Colegiados de Circuito [TCC], SemanarioJudicial de la Federación y su Gaceta, Novena Época, tomo XXV, Enero de 2007, Tesis I.4o.A.552 A, Página 2265 (Mex.).

5. These jurisdictions are Algeria, Belarus, Curaçao, Kyrgyzstan, Lebanon, Malta, Monaco, and Serbia. John M. Murphy, Famous and Well-Known Marks in Mexico: Past, Present, and Future, 105 TRADEMARK REP. 1060, 1149 (2015).
6.I niciativas de los Senadores integrantes de la Comisión de Comercio y Fomento Industrial, con Proyecto de decreto por el que se reforman y adicionan diversas disposiciones de la Ley de la Propiedad Industrial, Gaceta del Senado [GS], núm. 49, tomo I, 10 de noviembre de 2015, pp. 135–36 (Mex.); De la Comisión de Economía, con proyecto de decreto por el que se reforman y adicionan diversas disposiciones de la Ley de la Propiedad Industrial, Gaceta Parlamentaria, Cámara de Diputados [GPCD], año XIX, núm. 4518-V, 28 de abril de 2016, p. 81 (Mex.).
7. See, e.g., Jalife, Mauricio, “Oposición al sistema de oposición de Marcas” [Opposition to the Trademark Opposition System], El Financiero, 26 de marzo de 2014, http://www.elfinanciero.com.mx/opinion/oposicion-al-sistema-de-oposicion-de-marcas.html.
8. GS núm. 49, tomo I, supra note 6, at 136.
9. Ley de la Propiedad Industrial [LPI], Diario Oficial de la Federación [DOF] 27-6-1991, últimas reformas DOF 01-06-2016, art. 119 (Mex.).
10. LPI art. 120.
11. Id.
12.Id.
13. GS núm. 49, tomo I, supra note 6, at 136.
14. LPI art. 120.
15. Id.
16. However, there is nothing in the statute to prevent an unsuccessful opposer from filing an invalidation or cancellation action with the Industrial Property Protection Division of IMPI once the registration has been granted. It remains to be seen whether, or to what degree, the dismissal of an opposition will prejudice the outcome of a later invalidation or cancellation proceeding involving the same mark.
17. Murphy, supra note 5, at 1120–35.
18. Marcanet allows users to search for identical marks without regard to classification. Further, a phonetic search in one class will sometimes return marks in other classes, but these marks are rarely considered by examiners, and in any case it is not clear how the algorithm determines which marks in other classes are relevant.

19.Marcas. Debe motivarse la notoriedad de las, para justificar la aplicacion de la fracción XV del artículo 90 de la Ley de Fomento y Protección de la Propiedad Industrial, Tribunales Colegiados de Circuito [TCC], Semanario Judicial de la Federación, Octava Época, tomo XV-2, Febrero de 1995, Tesis I.4o.A.827 A, Página 405 (Mex.); Tribunal Federal de Justicia Fiscal y Administrativa [TFJFA], TribunalFederal de Justicia Fiscal y Administrativa, Sexta Época, año II, núm. 24, Diciembre de 2009, Tesis VIJ-SS-51, Página 71 (Mex.).
20. LPI art. 120.
21. In practice, IMPI has taken to publishing decisions stating its reasons for the dismissal of oppositions. This raises the interesting (but unresolved) issue of whether this converts the opposition into a contentious proceeding in which the unsuccessful plaintiff has a right of appeal.
22. LPI art. 120.
23. LPI art. 151.II.
24. LPI art. 151.III.
25. LPI art. 151.V.
19. Marcas. Debe motivarse la notoriedad de las, para justificar la aplicacion de la fracción XV del artículo 90 de la Ley de Fomento y Protección de la Propiedad Industrial, Tribunales Colegiados de Circuito [TCC], Semanario Judicial de la Federación, Octava Época, tomo XV-2, Febrero de 1995, Tesis I.4o.A.827 A, Página 405 (Mex.); Tribunal Federal de Justicia Fiscal y Administrativa [TFJFA], TribunalFederal de Justicia Fiscal y Administrativa, Sexta Época, año II, núm. 24, Diciembre de 2009, Tesis VIJ-SS-51, Página 71 (Mex.).
20. LPI art. 120.
21. In practice, IMPI has taken to publishing decisions stating its reasons for the dismissal of oppositions. This raises the interesting (but unresolved) issue of whether this converts the opposition into a contentious proceeding in which the unsuccessful plaintiff has a right of appeal.
22. LPI art. 120.
23. LPI art. 151.II.
24. LPI art. 151.III.
25. LPI art. 151.V.

 

Published in Landslide, Volume 10, Issue 1, ©2017 by the American Bar Association. Reproduced with permission. All rights
reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored
in an electronic database or retrieval system without the express written consent of the American Bar Association.

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