Mexico
The four administrative instances of
patent litigation
Juan Carlos Amaro Alvarado
Becerril Coca & Becerril SC
Mexican IP legislation sets out four stages of litigation for a plaintiff in order to obtain a final decision that recognises, avoids, creates, amends or penalises the infringement of a patent.
The two first stages take place before the Mexican Institute of Industrial Property (MIIP). The circuit courts and the Supreme Court have ruled that final decisions issued by the MIIP in administrative proceedings are to be appealed before the Federal Court of Tax and Administrative Affairs through a federal administrative annulment trial. A constitutional action against the federal courts decision may then be filed as a last legal remedy if necessary.
Administrative proceedings before the MIIP
To commence patent litigation the plaintiff must instigate administrative proceedings before the MIIP, which is the administrative authority charged with prosecuting IP matters. Under the Industrial Property Law the MIIP oversees three administrative proceedings: infringement actions, nullity or invalidity actions, and cancellation actions based on non-use.
Infringement action
The law states that a patent holder or an authorised licensee can initiate an administrative infringement action against a natural or legal person that:
manufactures or produces products covered by a patent;
sells or causes to be in commerce products covered by a patent;
uses patented processes; or
sells or causes to be in commerce products with the knowledge that those products were obtained through a patented process.
In addition, the patent holder has the exclusive right to prohibit other persons from manufacturing, using, selling, putting on the market or importing patented products, as well as to prevent other persons from using a patented process or using, selling, putting on the market or importing products obtained through a patented process. Accordingly, although the importation of patented products is not expressly defined as an administrative infringement under the law, it is an act reserved exclusively to the patent holder. Therefore, importation without permission is against the law and could constitute infringement.
Filing of the initial brief: To initiate an infringement action the plaintiff must file a written claim signed by the interested party or its representative and accompanied by evidence supporting the infringement action, the power of attorney granted by the patent owner (if applicable), and the payment of the corresponding government fees.
All evidence is allowed in the infringement procedure apart from testimonials and confessional statements, unless submitted in written form. In this regard, in order to support the infringement action, one of the most important pieces of evidence offered by the plaintiff is the visit of inspection conducted by the MIIP. In this inspection the MIIP officer will visit the infringers premises to search for evidence to prove the infringement.
In addition, until the infringement action is decided the plaintiff can ask the MIIP to impose preliminary injunctions against the infringer. In such cases the MIIP will impose sanctions on the defendant before and during the issue of the infringement action decision. The MIIP has the power to:
order the removal from business or impede the commercialisation of infringing products;
order the removal from business of objects used or manufactured illegally;
order the removal from business of infringing objects, packages, containers, boxes, papers and marketing materials;
order the removal from business of equipment or instruments designed for or used in the manufacture, elaboration or obtainment of infringing products;
prohibit immediately the commercialisation or use of infringing products;
seize goods;
order the infringing party or third parties to desist from acts against the Industrial Property Law; and
order the suspension of services or close down establishments where the above measures are not enough to prevent further violations of the rights conferred by law.
In order to proceed with the above measures the plaintiff must file a bond to guarantee possible damages to the defendant in case the MIIP does not uphold the infringement. However, the defendant is entitled to file a counter-bond to suspend the preliminary injunction measures, which in this case will guarantee the plaintiff against possible damages if the MIIP upholds the infringement.
Admission: After the MIIP has accepted the infringement action, the infringer is notified of the result. The defendant must respond to the complaint within 10 working days of this notification.
Prosecution and decision: Once the infringer has filed its response the MIIP requires both parties to file their final pleadings before analysing the evidence in order to issue its decision.
Penalties: If the infringement is declared, the infringer can be punished according to the severity of the infringement with a fine of up to US$95,000, plus an additional fine of US$2,500 for each day that the infringement continues. In addition, the infringer faces temporary closure of the company for 90 days, definitive closure of the company and/or administrative arrest for 36 hours, as well as damages and losses that may be claimed by the patent owner before a civil court based on the infringement declaration issued by the MIIP.
Nullity or invalidation action
A patent can be challenged through an administrative procedure when:
the claimed invention does not comply with the basic requirements of patentability novelty, non-obviousness and utility (industrial applicability);
the claimed invention cannot be considered as an invention;
the description and claim are not enabling or are incomplete;
the patent was granted against the law in force at the moment of grant; or
the patent was granted through a serious mistake or omission.
In other words, patents are considered invalid when they claim inventions that are not novel, do not contain an inventive step, do not have an industrial use, or claim subject matter that is considered non-patentable or that is not considered to be an invention (eg, essentially biological processes for producing, reproducing and propagating plants and animals; discoveries disclosing or uncovering something already existing in nature, even if it was previously unknown to humankind).
Patent invalidation actions are usually used as a defence against patent infringement actions and may be declared partial (particularly in the case of non-unitary inventions) in regard to specific claims or in the form of a clarification or precision in the claims.
Filing of the initial brief, admission, prosecution and decision: The procedure for a nullity or invalidation action is identical to that for an infringement action, except that in a nullity or invalidation action the term for the defendant to file the corresponding response is one month.
Penalties: If the nullity or invalidation action succeeds, the MIIP will nullify the claimed patent.
Cancellation action on the grounds of non-use
A patent can be cancelled by the MIIP due to non-use after only two years of operation of a compulsory licence (Article 80(III) of the Industrial Property Law), and only if the grant of the compulsory licence did not remedy the lack of use of the invention or the patent owner fails to prove that it is using the patented invention or that there is a justified reason for the lack of use.
In turn, any person can file an application for a compulsory patent licence when the corresponding invention has not been used by the patent owner or its licensee in Mexico three years after the patent was granted and if, within one year of the application for a compulsory licence, the patent owner failed to commence exploitation of the invention. The importation into Mexico of patented products or of products obtained by patented processes is regarded as use in Mexico. Given that, for the purpose of granting compulsory licences, mere importation of the product is regarded as use, the compulsory licensing system is practically inoperable.
Filing of the initial brief, admission, prosecution and decision: The procedure for a cancellation action is identical to that for an infringement action, except that in a cancellation action the term for the defendant to file the corresponding response is one month.
Penalties: If the nullity or invalidation action succeeds, the MIIP will cancel the claimed patent.
Appeal before the MIIP
Under amendments to the Law of Administrative Proceedings, an affected party can appeal against a decision of the MIIP by filing a review recourse, which is heard by the MIIP, or by filing a nullity claim or annulment trial, which is heard by the Federal Court of Tax and Administrative Affairs.
Prosecution
The review recourse is an administrative appeal decided by the superior of the authority that issued the MIIP decision. This is a summary proceeding in which the MIIP will notify the other party, allowing it a short period in which to file pleadings before it issues its decision.
Effects
The appeal can confirm, modify or revoke the original decision. However, considering that the authority deciding the appeal is part of the MIIP, it is unlikely to revoke or modify the original decision.
Nullity claim/annulment trial before the federal court
The affected party in the original administrative proceeding may choose between the review recourse or a nullity claim prosecuted before the Federal Court of Tax and Administrative Affairs. However, a decision issued by the MIIP in a review recourse can be appealed to the federal court under the nullity claim.
In other words, the nullity claim can comprise either the second or third stage in a patent litigation.
Prosecution
The nullity claim is prosecuted before the Federal Court of Tax and Administrative Affairs. The plaintiff must file an initial written brief, enclosing all evidence in support of the claim.
Once the claim is admitted, the Federal Court of Tax and Administrative Affairs notifies the parties, which in this case are the counterparty to the original proceeding and the MIIP, granting them a term of 45 business days to file a written response accompanied by the proper evidence to support the defence.
Once the parties respond or once the term expires, the Federal Court of Tax and Administrative Affairs grants a common term of 15 business days to all parties involved to file final pleadings before it issues a decision.
Effects
This appeal could confirm, modify or revoke the original decision or the decision issued by the Federal Court of Tax and Administrative Affairs in the review recourse.
Constitutional action before the circuit courts
As a final stage the affected party is entitled to file a constitutional action in order to appeal the decision of the Federal Court of Tax and Administrative Affairs.
Prosecution
The plaintiff must file a written brief before the Federal Court of Tax and Administrative Affairs, which immediately sends it to the circuit court, which admits the appeal and notifies the involved parties, granting them 10 days to file final pleadings before it issues a decision.
Effects
The appeal could order the Federal Court of Tax and Administrative Affairs to confirm, modify or revoke its decision. If the order is to modify or revoke the decision, the circuit court may define specific criteria for the issuance of the new decision; otherwise, the decision is definitive and no appeal is possible.
Conclusion
The prosecution of patent litigation in Mexico takes a long time. Therefore, patent holders sometimes withdraw the litigation, allowing the infringers to continue their illegal activities and permitting new infringers to commence illegal activities in the understanding that it takes a long time to obtain a final decision.
In light of this, the best way to expedite the process of obtaining a final decision and to achieve full government support for the enforcement of patents and other IP rights would be the creation of specialised IP courts.
However, this is still only an idea and will not take effect until the legislature and the MIIP take on the responsibility to support fully the protection of IP rights through the correct application of the Industrial Property Law and the international treaties to which Mexico is a signatory.
