Setback for IP rights in Mexico

Setback for IP rights in Mexico

A decision about the interaction of patent rights and administrative authorizations issued by the Mexican health authority is proving controversial. Jose R Trigueros argues that the ruling is flawed and is a cause for concern for IP rights holders.

A few decades ago, Mexico was well behind most developed countries in the protection of IP assets. Slowly, the passing of stringent and more adequate legislation, as well as the growth in case law and a wider recognition by both the government and Mexican companies of the economic and cultural significance of intellectual property, has advanced the cause for IP protection and enforcement.

It would be a bold statement to say that Mexico is now side by side with other developed countries regarding IP protection, taking into account the challenges that the country still faces regarding the subject matter. Perhaps the biggest of them all being the daunting task of preparing the government bodies that deal with IP to understand the nature and purpose of IP rights.

Of course, the country has taken huge steps to attract investment, attain economic growth and provide a safe environment for IP. The Mexican Institute of Industrial Property (IMPI) is one of the most efficient government bodies, its people really focused on protecting and enforcing IP rights. On the other hand, the recent development of a specialized chamber for IP matters within the Federal Court of Tax Justice and Administrative Affairs (FCTAA) has strengthened the position of judicial authorities that deal with the protection and enforcement of IP rights.

Setbacks to IP rights

Nonetheless, the confusion and lack of understanding regarding IP rights is still the cause of important setbacks that IP holders have had to deal with. In 2011, a very controversial decision was issued by a First Circuit Collegiate Administrative Tribunal (one of Mexico’s highest courts and one of its most competent judicial bodies), and its ripples are still being felt within the IP community.

The Tribunal was analyzing the legality of an injunction brought against a company suspected of infringing patent rights. However, its ruling went further and indicated that since the alleged infringer was also the holder of a prior sanitary authorization issued by the Federal government, it had a government sanctioned endorsement to commercialize a product and thus, its commercial activities could not be considered illegal.

Consequently, since the legality (or lack thereof) of the commercial activities engaged in by the suspect infringer could not be determined, the patent could not be immediately considered as infringed and thus, the injunction should be lifted.

The subject matter of the dispute was the infringement of a compound patent owned by a pharmaceutical company; however, a wider interpretation of the decision will certainly obstruct the issuance of effective provisional measures in IP infringement cases if the alleged infringer is granted with a government authorization of any kind.

The case arose due to a patent infringement suit in which the plaintiff requested that the IMPI grant an injunction to prevent further infringement by the defendant. In this case, that included the withdrawal of infringing goods from the market and prohibition of the commercialization of goods that may further infringe the patent in question.

The injunction was appealed before a federal judge, who in turn lifted the injunction but requested the defendant to post a counter bond for securing the costs and damages that the plaintiff could suffer as a consequence of its decision.

The defendant appealed again, this time before a Collegiate Administrative Tribunal. The Tribunal decided to lift the injunction without requiring the defendant to post a counter bond. The decision relied strongly on the fact that a sanitary authorization had been granted to the defendant. However, we consider that the decision is questionable due to the unique nature and purpose of a sanitary authorization, as opposed to the exclusivity protection granted by IP rights.

Flaws in the Tribunal ruling

A detailed analysis of the holding issued by the Collegiate Administrative Tribunal reveals key flaws in the reasoning that lead to such decision. Namely, that:

1.      A sanitary registration confers rights similar to, or that can be compared with, a patent right.

2.      The existence of a sanitary registration granted to a third party puts into question the rights of a patent holder.

3.      A patent infringement may not be evident if the alleged infringer holds a sanitary registration.

The line of reasoning described above fails to grasp both the nature and purpose of a sanitary registration. In fact, the Collegiate Administrative Tribunal inexplicable and arbitrarily strengthened the meaning of a sanitary registration, associating it with several elements that are closely associated with exclusivity rights.

A sanitary registration, as provided in the Mexican legal frame, is one of several administrative authorizations comprised in the Mexican General Health Law (MGHL). These administrative authorizations set the requirements for public or private entities to engage in activities related to human health.

Obtaining an administrative authorization in the field of human health is a complicated process. The MGHL and its bylaws are technical regulations designed to prevent health risks and enforce the safety and efficacy of all goods and services related to human health and consumption.

The purpose and scope of the MGHL is carefully detailed in its first articles, asserting that the MGHL provides regulations and procedures to provide and safeguard the constitutional right to health that every individual is entitled to enjoy, as well as the conditions and requirements for healthcare services, either public or private and the duties and obligations of the federal and local governments and agencies. The MGHL does not grant or recognize claims of any kind regarding ownership or a product, compound, substance or molecule. The purpose of a sanitary authorization and in particular, of a sanitary registration, is to verify the product’s safety and efficacy and that society is not at risk if a health product is made available on the market.

In fact, the sanitary registration certificate includes a paragraph stating that the registration is a mere certificate of safety and efficacy issued by the Mexican government and also a mere requirement, but not a full authorization for commercializing health products. The paragraph goes as far as to state that the issuance of a sanitary registration must not interfere with other laws or government agencies.

On the other hand, IP and specifically patents have a different constitutional background and specific objectives which every IP professional acknowledges.

It may be said that the decision issued by the Collegiate Administrative Tribunal is not adequately founded and constitutes a flawed interpretation of the law, since it arbitrarily imbues a sanitary authorization with characteristics that are not related to it.

Furthermore, it considers a sanitary registration as ade facto temporary shield against patent infringement, regarding the unauthorized use of a patent as not outright illegal neither completely legal until an infringement is finally declared. The rationale is the base for lifting an injunction without requiring the alleged infringer to post a back bond, as required by the Mexican Industrial Property Law (MIPL).

Unfortunately, the decision may complicate or even eliminate the possibility of obtaining an injunction against patent infringers holding a sanitary registration, since the requirements set forth in the MIPL specifically state that the plaintiff shall serve the MIIP with evidence that:

a)     An IP right is being infringed.

b)     The infringement is imminent.

c)      The infringement may cause irreparable harm to the plaintiff.

Conflict with TRIPS

The ruling is also in conflict with articles 50 and 41 of the TRIPS Agreement, due to the fact that the decision could eliminate the valuable option of obtaining injunctions against suspected patent infringers.

The decision may put Mexico at odds with the international IP legal framework, since effective preliminary measures against infringements may not be granted or could be lifted by a higher court without the filing of a back-bond, under the assumption that a sanitary registration may automatically mean that the alleged infringer is in fact, legally commercializing an infringing product.

As a complementary note, the TRIPS agreement is integrated by the Constitution to the Mexican legislation and, in light of several precedents issued by our highest courts, as an international treaty, it is hierarchically superior to Federal law.

Next steps?

There are still legal options to challenge the unfortunate decision issued by the Collegiate Administrative Court. A different Collegiate Administrative Court has reached a decision which is directly contradictory to the ruling considered in this article. The contradiction in criteria should be denounced and the Supreme Court will have to decide which decision must be upheld.

Mexico is currently the 13th largest economy in the world. A flawed decision such as the one we are being faced with could agitate investors and transnational companies as well. Uncertainty in the rule of law could hit the sorely needed confidence of the world in our country.

We firmly trust that when the time comes, the Supreme Court Ministers will choose to enforce the law and all the international treaties of which Mexico is party.

Another alternative is to wait for the final stages of the case in question. Although, the injunction has already been lifted the case is not decided yet and the Collegiate Administrative Court may still right its criteria in light of the law, international treaties and precedents as well as the impending damage that such a decision would cause on the country’s economy.

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José R. Trigueros is a partner of Leyva, Montenegro, Trigueros, Abogados S.C. (LMT), leading the IP area of the Firm. He is experienced in copyrights, trademarks, trade secrets, industrial designs and patents, specifically pharmaceutical patent litigation, an area in which the Firm represents Pfizer, Inc. in Mexico. His litigation experience covers all IP areas at every stage of a trial, specifically at the Amparo stage.

José worked as IP lawyer at Becerril, Coca & Becerril and later as IP Manager of the Mexican Stock Exchange. His experience in academia involves participations as adjunct professor at several Mexican universities and as professor of Economic Law and Commercial Contracts at the Instituto Tecnológico de Estudios Superiores Monterrey (ITESM) Santa Fe Campus.