Procedures and strategies for anti-counterfeiting: Mexico
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The following legislation governs counterfeiting in Mexico:
- the Industrial Property Law;
- the Federal Criminal Code;
- the Copyright Law; and
- the Customs Law.
Depending on the matter involved, these laws – alone or in combination – provide rights holders with the necessary tools to take legal action against counterfeiting and seize illegal merchandise, obtain preliminary injunctions and seek appropriate remedies against infringement.
Officers at Mexico’s 49 customs offices inspect the contents of containers with Mexico as their final destination in order to detect counterfeit merchandise.
Because the authorities cannot commence proceedings against counterfeit goods, rights holders must file corresponding legal actions in order to obtain the seizure of illegal goods.
For this reason, the Official Database for Mexican Trademark Registrations of Mexican Customs was created in 2011. The database is designed to allow rights holders to ask Customs to record information about their registered trademarks in Mexico, so that the administrative authorities can identify counterfeit goods being imported into the country in violation of such registered trademarks.
Mexican Customs can then review the information provided by rights holders and identify imports of counterfeit goods. This makes the process more efficient and gives Customs immediate access to detailed information about rights holders, licensees and their representatives. Further, it allows rights holders and their representatives to be contacted promptly so that they can initiate the appropriate legal actions in due time. If Customs detects a container of counterfeit goods, it will contact the rights holder or its agent so that it can file the pertinent legal action for the counterfeit goods to be seized by the competent authorities.
Even though the recordal of information about a particular trademark in the database is optional for rights holders, and the request process commenced operations only in January 2012, it has already proved a useful tool for fighting counterfeiting in Mexico.
Since such recordal does not require renewal, it will remain in force for as long as the trademark registration is valid. However, the rights holder or its Mexican agent or representative must update the information recorded about the trademark (eg, licensees and authorised importers) so that Customs can access the correct information immediately and detect counterfeit goods.
In addition, in 2018 training for officers of the different customs offices continued throughout Mexico. This allowed rights holders and their representatives to educate officers about the issues that should be considered when determining whether merchandise is genuine, as well as information about importers, materials, distributors and countries of origin of counterfeits. Such training allows officers to identify counterfeit merchandise more easily; therefore, it is likely that it will be repeated during 2019.
The training mentioned above is offered not only to customs officers, but also to other authorities involved in the detection of possible counterfeiting.
Customs cannot take action against counterfeit goods unless the rights holder has initiated a corresponding legal action so that the competent authorities can order the seizure of the goods. Therefore, Customs must be swift in contacting the rights holder or its Mexican agent or representative, since it has only limited time to detain the merchandise if a legal action is not initiated.
It is therefore crucial that rights holders provide Customs with details of their trademark portfolios, as well as information on who can take action on their behalf, so that they or their representative can be contacted promptly and in sufficient time to move swiftly against any counterfeit merchandise that is detected at the borders.
The Industrial Property Law and the Federal Criminal Code establish which activities related to counterfeiting are considered to be crimes. All criminal actions must be initiated before the General Attorney’s Office, which will prosecute and integrate the official file before it is sent to a federal court.
According to Mexican law, some counterfeiting crimes can be prosecuted ex officio and some can be prosecuted only if the injured party complains to the competent authorities. In light of this, if a rights holder becomes aware of the existence of counterfeit goods that directly affect its mark, it must file a criminal petition with the General Attorney’s Office.
In 2010 the Criminal Code and the Industrial Property Law were amended to grant the General Attorney’s Office the authority to act ex officio against counterfeiters selling goods bearing counterfeit trademarks if these are stored or sold in street markets or in commercial establishments.
Criminal actions are typically initiated:
- where counterfeit goods are detected by Customs, with the object of seizing the consignment and preventing the goods from entering the Mexican market; and
- once counterfeit goods have already entered the market – raids are conducted at specific premises where the counterfeit goods are being stored or sold.
In a criminal action the merchandise is provisionally seized as soon as it is detected and remains in custody until a final decision has been issued ordering its destruction.
Once the action has been initiated and the merchandise seized, a prosecutor at the General Attorney’s Office will investigate the merits of the case, recovering all information, evidence and expert opinions necessary to decide whether to prosecute.
If the prosecutor decides that the case should proceed, the official file will be submitted to a criminal federal court, which will review all of the evidence in order to determine whether a crime has been committed.
As the federal judge will base his or her decision on the file submitted by the General Attorney’s Office, it is crucial that this be created properly and include all possible evidence and information in support of the rights holder’s position.
A key advantage of a criminal action is that the counterfeit merchandise is seized at the outset. Therefore, even if the decision takes some time to be issued, the rights holder will have succeeded in keeping the counterfeit merchandise off the market.
The main remedies available in criminal actions are destruction of the counterfeit goods and imprisonment of the counterfeiters, depending on the crime.
Although in the past criminal actions were filed by rights holders against counterfeit goods detected by customs officers when the goods were being transported, the current policy of the General Attorney’s Office is not to seize containers in transit if they have a final destination other than Mexico. This policy was adopted on the basis that containers in transit which contain counterfeit goods cannot be deemed to be criminal, since the merchandise transported in those containers will not be imported into or commercialised within Mexico.
According to the applicable legislation, civil actions against violations of industrial property rights can be initiated only once the Mexican Institute of Industrial Property (IMPI) has issued an administrative decision declaring the infringement of an industrial property right. Such a decision is the consequence of a full administrative proceeding prosecuted as a kind of trial, and must be definitive and beyond appeal.
In this regard, the rights holder must initiate an administrative action against the infringer with IMPI before it can commence a civil action. Only in the case of copyright is it possible to pursue a civil action to claim damages before IMPI has issued a definitive administrative decision.
Alongside the initial brief, or even before the brief is filed, the rights holder can request preliminary measures. In the case of counterfeit goods these might include seizure of the suspect merchandise or a prohibition against their sale or distribution.
Different types of preliminary injunction can be requested before, at the same time as or after the administrative action is filed. These will be granted and implemented if the rights holder satisfies the following requirements:
- It posts a bond to cover possible damages to the infringer should it fail to obtain a declaration that an infringement has been committed;
- It proves the existence of its IP right;
- It proves that:
- the IP right has been violated;
- it is highly probable that the IP right will be violated;
- the evidence proving such violation will be destroyed; or
- irreparable harm may be suffered as a result of the violation; and
- It provides the authorities with the information necessary to identify the counterfeit merchandise.
Where infringing goods are detected at Customs, the Industrial Property Law and Customs Law establish that in order to suspend the free circulation of foreign counterfeit goods, the rights holder must provide information related to the importer and the counterfeit goods, such as:
- the importer’s name;
- a description of the counterfeit merchandise;
- the customs office where the counterfeit merchandise is expected to enter Mexico; and
- the estimated time when the counterfeit merchandise will enter Mexico.
As in criminal actions, even if the administrative proceedings take a long time to be decided, the preliminary injunction imposed at the outset will prevent the infringer from continuing to import or distribute and sell the illegal merchandise.
However, in administrative proceedings the infringer is entitled to file a counter-bond to suspend the effects of the preliminary injunction. The amount of the counter-bond must be double the amount of the original bond filed by the rights holder, plus 40%. This can be paid at any time after the preliminary injunction has been implemented and means that the seized goods will be released for import, distribution or sale.
The criteria for determining the amount of the bond are not stated in the applicable law. Consequently, IMPI determines the amount of this bond depending on the merits of the case. In practice, the rights holder files an initial bond in order to comply with the requirements of the law. IMPI will then inspect the place where the infringing goods are located and may then require the rights holder to increase the amount of the initial bond if the goods to be seized exceed the original guarantee.
If the rights holder does not provide the necessary bond, IMPI can lift the preliminary measures and the goods temporarily seized will be released for import, distribution or sale. In the case of administrative proceedings, the preliminary injunction can be suspended if the infringer files a counter-bond; this is intended to cover possible damage to the rights holder that may be caused by the suspension.
This type of administrative proceeding takes at least three years to be decided finally. Once the administrative decision has been issued, a civil action can then be initiated to seek damages from the infringer for violation of the IP right.
The applicable legislation expressly states that damages for IP infringement must be at least 40% of the goods’ sale price. This rule should therefore be taken into account by civil judges when they calculate the amount of damages to be awarded for IP rights violations. As the civil action is prosecuted through a full trial with further instances of appeal, it may take some time for the rights holder to obtain a final decision. However, sufficient tools are available for the recovery of damages.
Although Mexican law does not recognise specific online counterfeiting crimes or provide specific penalties for such activities, it is still possible to take action against online IP violations.
Certain provisions in the applicable legislation can also apply to online counterfeiting and may be used to combat such activities. However, the appropriate strategy must be evaluated on a case-by-case basis in order to determine the most suitable action.
Rights holders and their representatives must move swiftly as soon as a violation is detected because of the short timeframe they have to take action before the authorities are required to release the merchandise; they cannot continue to detain suspected counterfeit goods if a legal action is not initiated. It is thus recommended that both rights holders and their representatives have ready all information and documentation necessary to take action at any time (eg, the proper power of attorney, information on licensees and distributors, details of the points where original merchandise normally enters the country and full details of the trademarks and the goods they protect).
Representatives must also be familiar with the particulars of the genuine merchandise, so that they can easily and timely determine whether merchandise is counterfeit. Such a prompt reaction will ensure that the rights holder is informed quickly of instances of counterfeiting and reduce the risk of counterfeit merchandise being mistakenly reported as genuine.
Rights holders and their representatives should also maintain close communications with Customs, the General Attorney’s Office and other involved authorities regarding the characteristics of genuine or fake merchandise, and keep them updated of any changes to or new information about their IP portfolio. In addition, the authorities may have doubts regarding the key identification points of the original goods when analysing counterfeit goods; in such cases, the rights holder’s representatives can be of assistance. Therefore, participation by rights holders, through their representatives, is highly recommended, as they are best placed to explain key differences between genuine and counterfeit goods and provide samples of both so that the original and counterfeit goods can be distinguished.
The latter is a key point, since in some cases the authorities are unfamiliar with the IP rights at issue and the original goods. Thus, counterfeit goods can be identified more successfully through close communication and samples provided by rights holders.
Finally, rights holders and their representatives should ensure that they take action against the most important cases, in light of the size of the consignment or other factors (eg, if the counterfeit merchandise is offered for sale at a location that might harm the rights holder’s image and prestige). A clever strategy will help rights holders to keep the costs of anti-counterfeiting initiatives down, while still ensuring that such activities are as effective as possible.