Back to Basics as of the Third Anniversary of the New IP Law in Mexico

The Mexican [Federal] Law for Industrial Property Protection (FLIPP) recently had its third anniversary since coming into force. Despite having the same structure of its preceding laws, its enforcement has still resulted in new challenges, mainly related to criteria and interpretation by IP practitioners as well as authorities. Controversy – mainly focused on patent litigation – has been one of the most relevant topics and this is why a back-to-basics analysis is useful to increase the chances of success in lodging an action.

Mexican patents

Scope

The rights conferred by a granted patent are determined by the granted claims, and description, drawings, and examples shall serve to interpret the granted claims. Thus, analysis of a patent infringement fundamentally relies on the subject matter protected by the granted independent claims since they contain all the essential technical features of the invention.

Following a literal approach, if all the essential features of a granted independent claim are contained in the infringing product or process, it is understood that said product or process is the one protected by the patent and, therefore, an infringement may be ruled.

On the other hand, Regulations of the IPL (RIPL) establish that two kinds of claims may be protected by a Mexican patent: independent and dependent.

Furthermore, it is important to bear in mind that FLIPP establishes that patents may be protected in Mexico for both products and processes, granting title-holders the following rights.

• To prevent third parties from manufacturing, using, selling, offering for sale, exporting, or importing the patented product, without the pertinent holder’s consent – if the invention is a product.
• To prevent others from using the process, and using, selling, offering for sale, exporting, or importing a product obtained from the patented process, without the pertinent holder’s consent.

All the above apply to active ingredients, formulations, second medical uses, medical devices and formulation, and manufacturing processes in the case of pharmaceutical patents. Thus, the allegedly infringed patent as well as a correct understanding of its claims constitutes the appropriate legal standing to file a patent infringement action.

Parties

The plaintiff may be the one able to demonstrate ownership over a patent in full force and effect or licence (with litigation faculties).

The defendant is the individual and/or entity performing activities allegedly protected by patented subject matter by using a patented process, manufacturing the patented product, or initiating the necessary steps for such use or manufacturing.

The procedure

Administrative infringement actions are admitted, prosecuted and ruled by the Mexican Institute of Industrial Property (IMPI) in the first stage (administrative venue) based upon any of the infringement hypotheses set forth in the law.

An infringement action is lodged when the IP right holder submits an initial brief before IMPI arguing an infringement and enclosing relevant evidence. Once the action is accepted, it is served to the defendant, who is then granted a term within which to file a response, as well as to argue against the inspection. Consequently, IMPI will notify the plaintiff and grant a term to file an objection brief regarding the response.

If provisional measures are requested, IMPI will carry out an inspection visit to the defendant’s premises.

Once there is no pending evidence to be gathered other than documentary evidence, final pleadings are granted by IMPI, enabling the issue of its final decision.

There is a specific consideration when the infringement is related to patents. Prior to final pleadings, the litigation department will request the issuance of a technical opinion regarding the case from the patent department, and the term for final pleadings would be granted once the technical opinion is issued.

If an infringement to a patent right was proved in the proceeding, IMPI is entitled to impose an administrative penalty on the infringer (ie, a fine or a temporary or permanent closure of the infringer’s establishment).

An infringement action in Mexico is ruled within a term of three to four years (in the first stage/instance) before IMPI and even longer for complex patent cases.

Preliminary measures

Mexican law allows plaintiffs to request the execution of preliminary measures to stop the manufacturing and/or commercialisation of the infringing product as well as to obtain additional evidence of the alleged infringement.

From a petition of preliminary measures, IMPI may execute any of the following orders addressed to the defendant:

• to withdraw from circulation or to ban the distribution of goods that infringes an IP right;
• to remove from circulation:
1. illegally manufactured or used objects;
2. objects, wrappers, containers, packaging, paperwork, advertising materials and similar articles that infringe an IP right;
3. signs, labels, tags, paperwork and similar articles that infringe an IP right; and
4. utensils or instruments intended or used for the manufacture, preparation or production of any of the infringing goods.
• to prohibit, with immediate effect, the marketing or use of goods that infringe an IP right;
• to suspend or discontinue the act/s that constitute/s the violation of an IP right; and
• to suspend the rendering of the service (including the closure of the establishment) if measures are not sufficient to prevent or avoid the infringement of the patent rights.

Requirements

It is important to mention that execution of preliminary measures is subject to a fulfilment of preliminary conditions. The plaintiff must provide evidence that:

• patent infringement is occurring;
• patent infringement is imminent;
• there is a risk of imminent irreparable damage; or
• imminent loss is present.

In addition, it is necessary to demonstrate that the plaintiff has complied in attesting or bringing to the notice of the public that the infringed right has been already granted through proper marking.

“Patented”, “patented product”, “patent pending” or similar, followed by the patent serial number, are examples of legends acceptable to comply with this requirement. Publication of the patent in the Official Industrial Property Gazette also constitutes a public notice for enabling patent enforcements.

If damages have been caused to the defendant, the proper processes have to have been followed in order to guarantee the payment of compensation if the action is ruled refusing the infringement.

If the interested party complies with all the requirements stated in the FLIPP for the imposition of preliminary measures, IMPI may execute them during an inspection visit by IMPI’s officers at the infringer’s premises.

After the execution...

Once the preliminary measures are applied, IMPI is entitled to increase the amount of the guarantee if such authority considers that the original amount does not reflect the real impact of the imposed measures.

If preliminary measures are requested and implemented before the infringement complaint’s filing, the interested party must lodge an action within 20 days after the imposition of the preliminary injunction measures. Otherwise, the requesting party must repair any possible damage caused to the alleged infringer by the execution of the preliminary injunction.

The preliminary measures will remain in effect while the infringement proceeding continues and up until a final decision is rendered either re-establishing the situation or condemning the alleged infringer.

Counter-guarantee

The defendant is entitled to post a counter-guarantee to release the executed measures.

• If infringement of the patent is denied and preliminary injunction measures were adopted (without the filing of a counter-guarantee), the defendant will be in a position to claim from the plaintiff an amount that can be up to that equivalent of the security filed by the plaintiff.
• If infringement is declared at the end and a counter-guarantee was filed during the proceeding by the alleged infringer, the plaintiff will be in a position to claim an amount that can be up to the amount of the counter-guarantee filed by the defendant.

The amount of the counter-guarantee generally covers the amount of the original security filed by the patentee plus an additional 40%.

Merits of the case

As mentioned, if the subject matter of a patent is a process, the rights conferred by the patent include the right to prevent others from using the process or using, selling, offering for sale, or importing the product directly obtained by the patented process without the consent of the patent owner.

The offer for sale or to make available on the market must occur in Mexico, independently of the territory where the process is used, because otherwise the exclusive rights of the patent holder would not be complied with.

In this case, it is important to emphasise the fact that, for infringement of a process patent to take place, all the steps of at least one independent claim must be performed by the allegedly infringing party.

However, in the case of pharmaceutical products, infringement may occur if the pharmaceutical product of a patented process undergoes further processing or other chemical change before importation.

Common defences

At the moment of filing the brief of response to an initial brief, the defendant can file a counterclaim against the validity of the patent. Should this be the case, the invalidation action counter-claimed by the defendant must be ruled first, as this will determine the infringement action to the extent that if the patent is declared as null, the infringement action will lack legal standing and thus would have to be dismissed.

Use prior to the filing or priority date of the patent application is also a frequent defensive argument, as well as other types of uses, namely (i) use of the patented invention as a variation or propagation initial source to obtain other products, and (ii) use of the patented invention or the person who has made the necessary arrangements for such purpose, during its rehabilitation period.

Appeals

Decisions by IMPI on an infringement action can be challenged through two further instances of appeal.

• Nullity Trial prosecuted and ruled by the Federal Court for Administrative Affairs (FCAA), specifically by the Specialised Court on Intellectual Property Affairs (SEPI).
• Constitutional action – Amparo – appeal prosecuted and decided by a District Court.

Compensation

The plaintiff is allowed to lodge a claim to be compensated if an infringement is ruled. In this scenario, the patent title-holder is bound to legally prove the scope and/or magnitude of the damages suffered as a result of the patent infringement, to be compensated in an amount to be determined, as a matter of law, on a reasonable royalty basis of no less than 40% of the sale price (gross sales) of the products which were proved to be sold by the infringer.

FLIPP establishes that a right holder can now file the civil action to obtain compensatory damages regardless of if the administrative instance of litigation is not beyond the shadow of appeal (ie, without a prior issuance of a declaration of infringement by IMPI).

In that sense, and as mentioned before, FLIPP allows the holder of an affected right the possibility of claiming damages through the following two independent actions:

• before IMPI – after 5 November 2021, by filing a parallel procedure (incidental), once the plaintiff obtains a favourable decision declaring an infringement conduct; or
• directly before the Civil Courts – by filing a civil or mercantile lawsuit – in this scenario, the procedure may be suspended, in the case of the counterpart filing as a counterclaim a cancellation or invalidation action against the plaintiff’s patent, which will be ruled by IMPI.

Other defensive considerations

Parallel imports and patents

If the subject matter of a patent is a product, such patent confers to its owner the right to prevent others from manufacturing, using, selling, offering for sale, or importing the patented product without his/her consent. Meanwhile, a patent is no longer enforceable against any person that acquires, commercialises or uses a patented product once it has been legally introduced to the Mexican market.

This mention of importation of a product as an exclusive right of the patent owner, in addition to the absence of an express mention of exhaustion of rights upon importation, has been interpreted as a prohibition to parallel imports in case of patents.

Application for sanitary registration

Performing clinical trials, or any other research activity, independently of a sanitary registration application, might be considered as an experimental use exemption, since it could be considered a non-commercial use.

However, it is important to bear in mind that the sole application of a sanitary registration can be deemed as looking for a commercial purpose in the understanding that the main objective of getting a sanitary registration is to commercialise a product. Therefore, filing a sanitary registration application of a patented drug per se could lead to liability for patent infringement.