Use of mark by third party is trademark use if owner exercises control

The Intellectual Property Chamber of the Federal Court of Tax and Administrative Justice has overturned a resolution of the Mexican Institute of Industrial Property (IMPI) and, in doing so, recognised that a trademark owner may avoid the cancellation of its trademark on the grounds of non-use if it can prove that the mark has been used by a third party over which it exercises corporate control.
In reaching its decision, the IP Chamber interpreted the North American Free Trade Agreement (NAFTA) and the Agreement on Trade-Related Aspects of Intellectual Rights (TRIPS) in relation to the Mexican Industrial Property Law and its regulations, even though corporate control does not exist in Mexican law. The decision is particularly interesting in that the IP Chamber interpreted international agreements - a new power which was conferred on the IP Chamber by a December 2010 amendment to the Organic Law of the Federal Court of Tax and Administrative Justice.
In the case at hand, IMPI had cancelled a trademark on the grounds of lack of use. According to IMPI, the holder of the trademark right had not sufficiently proven that it had been using the mark between September 3 2005 and September 3 2008.
The IP Chamber held that IMPI had wrongfully applied:
  • Article 152, Paragraph II of the Industrial Property Law (cancellation for lack of use);
  • Article 1708, Paragraph 9 of NAFTA;
  • Article 19, Paragraph 2 of the TRIPS Agreement; and
  • Articles 55 (joint economic interest group) and 62 (use of a mark) of the Regulations implementing the Industrial Property Law.
In particular, IMPI had not recognised that the trademark holder exercised corporate control over the company which used the trademark, and had cancelled the trademark on the grounds of lack of use because there was no registered licence agreement between the trademark owner and the controlled company. Therefore, IMPI had failed to apply Article 1708, Paragraph 9 of NAFTA, which states as follows:
"Each party shall recognise use of a trademark by a person other than the trademark owner, where such use is subject to the owner's control, as use of the trademark for purposes of maintaining the registration."
Moreover, according to the IP Chamber, the TRIPS Agreement recognises corporate control in Article 19, Paragraph 2, which states as follows:
"When subject to the control of its owner, use of a trademark by another person shall be recognised as use of the trademark for the purpose of maintaining the registration."
The IP Chamber thus concluded that corporate control is recognised by NAFTA and the TRIPS Agreement, which are a relevant part of the Mexican legal system. According to the Mexican Constitution and several Supreme Court decisions, any international agreement is part of the supreme law of the land. This conclusion implies that international treaties are above federal laws, such as the Industrial Property Law. Consequently, IMPI must directly apply international treaties and agreements.
The IP Chamber found that IMPI had failed to apply NAFTA and the TRIPS Agreement. IMPI's resolution was thus annulled, as the trademark owner had provided sufficient evidence that the trademark at issue had been used by a third party over which it had control.

Roberto Arochi, Arochi Marroquín & Lindner SC, Mexico

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