The next trade frontier

The-next-trade-frontier

Mr Alf Luna argues that joining the Transpacific Partnership is an opportunity for Mexico to review and improve its IP system.

The current Industrial Property Law in Mexico was enacted back in 1991 with its prior name, Ley de Fomento Y Protección a la Propiedad Industrial, and it was substantially modified in 1994. The Mexican statutory law for copyright, the so-called Ley Federal del Derecho de Autor was published in the Mexican Official Gazette in December 1996. Since then, there have been few amendments and reforms to the intellectual property laws and its regulations. In addition, there have been very few changes in Mexican Institutions, with barely any impact on the Intellectual Property System in Mexico.

Needless to say that the statutory Industrial Property law enacted in 1991 and its modifications on 1994 derived directly from the negotiations of the North American Free Agreement with the US and Canada (NAFTA) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). These major but aged amendments to the intellectual property laws showed the willingness of the Mexican Government to reach the minimum standards to protect intellectual property that were being negotiated at that time and that were required to subscribe the agreements.

Changes since 1991

In short, after 1991 the few changes implemented in the framework of the IP are listed herein as follows: 1994 amendments to the IP law (Preliminary injunctions introduced in the system); 1993 the Mexican Institute of Intellectual Property (IMPI) is created; 1994 NAFTA entered in force; 1995 TRIPS entered in force; 1997 and 1999 reforms to the Copyright Law; 2001 amendments to the Federal Law for Administrative Proceedings provided original jurisdiction to the Federal Court for Tax and Administrative Affairs (FCTA) to review the decisions issued by the IMPI; 2002 saw the publication of the Decree on the Promulgation of the WIPO Performances and Phonograms Treaty; 2009 the FCTA created the IP Specialized Bench (SEPI); 2010 and 2011 discussions for adopting the Anti Counterfeiting Trade Agreement (ACTA); 2011 online proceedings before the SEPI; 2012 Gratuitous Application of Justice in the copyright arena; 2013 The Madrid Protocol Agreement entered into force; and 2013 Discussions to adopt the Trans Pacific Partnership. There is no doubt that when NAFTA was negotiated and subscribed to by Mexico, the internet was incipient, the value and impact of the internet for commerce and business was full of speculations. At that point in time the digital age, the biotechnology and nanotechnology started to be considered as innovations for the near future, but the implications and impact on the life of millions of people and the revolution in the way businesses and commerce operates around the world were at that point in time only in the imagination of some visionaries. Neither the drafters of NAFTA nor the lawmakers in Mexico that prepared the laws to comply with the requirements of NAFTA and TRIPS at the time. If the impact of the internet, the digital age and the new technologies were not accurate and seriously contemplated in the negotiations of NAFTA, much less there were considerations regarding the implementation of rules to govern the new relationships derived from the internet, the digital age, the new technologies and the vanishing of the geographical borders for the increasing phenomenon of globalization and the non-stoppable international commerce.

There is no doubt that nowadays, the system requires an urgent review. For example, when claiming damages derived from the violation of industrial property rights, especially in patent infringement cases, the enforcement could take from 12 to 15 years of litigation to reach an award of damages.

Damages, linkage & DPE

It is necessary to highlight that by Jurisprudence of the Mexican Supreme Court of Justice, the owner affected by a violation or infringement of patent rights, can only claim damages once a request for administrative declaration of infringement is firm and beyond shadow of appeal. Therefore, it is necessary to exhaust the entire procedure of infringement before the IMPI and its possible three further appeal stages. In a case of patent infringement this can take between 5 and 8 years, and that is in the best case scenario. It could take longer if there is an application of a Jurisprudence of incompetence of the IMPI’s officers based on errors in the delegatory decrees of functions or, otherwise. That could see a remand to lower courts for further considerations, mainly to review the case again due to violations to the due process of law in lower stages, which are very common in cases before IMPI, where the proof of experts is often misguided by the IMPI itself.

The ruling by the Supreme Court is consistent and coherent with the intellectual property protection system established in our legislation, which decided to pursue such conducts through administrative procedures. However, the application of the mentioned jurisprudence exalted the pitfalls of the IP enforcement system, in time, effectiveness, quality and the expected dissuasive and preventive effects of administrative sanctions. In short, after all the infringing proceeding and subsequent instances have been exhausted, the affected titleholder only gets to punish the offender with a fine which is given

to the government and usually the amount of the fine is not sufficient to inhibit the infringing activity. And it is up to this moment, when the affected titleholder can start an independent civil action before a Civil Court to claim damages, where the titleholder will also face three eventual appeal stages, possible remands to lower courts and evidentiary complexities to prove the sales of the infringing product and thus, apply the rule of 40% of the amount of the infringing sales as minimum compensation of damages to the titleholder.

Due to the foregoing, some legal instruments have been of high value to prevent the violation of patents and maintain exclusivity, such as the linkage regulation and the data protection.

Back in 2003, the linkage regulation was enacted in article 147 Bis of the Mexican Industrial Property Regulations and article 167 Bis of the Health Regulation. Under the cited provisions, the IMPI is bound to publish a specific gazette every six months, listing those patents in force that cover allopathic medicines.

Inter alia, COPEPRIS is bound to observe the patents which are listed in the gazette according to the generic name of the active ingredient, prior to granting marketing authorizations to third parties different to the titleholder, and alternatively request additional information to the applicant. In case of doubt of an eventual violation of patent rights, COFEPRIS can request technical support from the IMPI, regarding the scope of the patent rights.

The Mexican Linkage Regulation only excludes from the Gazette those patents that cover processes of manufacture and formulation of drugs.

Since the date in which the linkage was in force, under a wrong and limited interpretation, the IMPI only published patents covering active ingredients per se, excluding from the linkage gazette patents covering pharmaceutical formulations and medical uses. Olivares and Cia fashioned a litigation strategy and also handled the majority of the cases, contesting this wrong interpretation through constitutional actions to obtain the publication of patents covering formulations and second uses. The Mexican Supreme Court agreed with this broadened interpretation.

It is important to mention that the inclusion of formulation patents in the linkage gazette provides a preventive measure to avoid the Mexican Health Authorities granting marketing authorizations which may fall within the scope of the listed patents.

This is the other legal instrument used by innovators to protect considerable efforts in getting marketing approvals for medicines and agrochemicals. The Mexican domestic law is silent about Data Package Exclusivity (DPE). Actually, the current Health Law allows the indirect reliance on innovators’ dossiers by approving generics through interchangeability tests with no period of protection of the information provided by the innovator. Based on TRIPS and NAFTA and the hierarchy of the international treaties in our legal system, our law firm fashioned a legal strategy to obtain the recognition of DPE for products that deserve the protection. We obtained the only decisions by a court of law, recognizing and ordering the agency in charge to grant marketing authorizations, COFEPRIS, to observe and recognize DPE for the products of interest.

Now, on June 19, 2012, has COFEPRIS published on their official website an internal decree providing guidelines to observe and protect DPE in Mexico with the following main points of interest: These guidelines demonstrate that the current administration of COFEPRIS is willing to recognize and protect DPE according to NAFTA and TRIPS and there is no doubt that the decree is positive and provides a certain grade of confidence to innovators. However, there are some pending issues the regulatory agency has mentioned that the guidelines do not apply to, such as biological products. The decree is also silent about the proceedings and measures to enforce and observe the right, providing certainty to all the involved parties. Finally, the main question and test will be the weight and strength of an internal decree versus the lack of domestic statutory law recognizing DPE. According to our legal system, and taking in consideration that this decree under review can be disregarded or changed by an eventual new administration of COFEPRIS after the coming Presidential elections, our efforts and suggestions will continue to focus on obtaining a clear and specific regulation of DPE in the statutory law or regulation.

The Transpacific Partnership

In November 2011, during the APEC meeting, Mexico manifested its interest in joining the Transpacific Partnership (TPP). On June 18, 2012 during the G20 in Los Cabos, México, the countries participating in the TPP decided to invite Mexico to participate.

The original TPP countries are: Brunei, Chile, Nueva Zeeland and  Singapore. Since 2009, membership of the TPP is being negotiated with the US, Australia, Vietnam, Malaysia and, Peru. Mexico and Canada are also willing to be part of the partnership.

The eventual eleven partners of the TPP will represent 30% of the world’s GDP, 19% of worldwide exports, 22% of worldwide imports and a market of 198 million of potential consumers (without counting the US population). While writing this article, Japan has also expressed its desire to join the TPP.

Regarding intellectual property, the partners of the TPP remain confident that copyrights, patents and trademarks will be enforced. It appears that there is general consensus within the partners that the standard of protection for intellectual property should go beyond TRIPS.

The terms, conditions and wording of the TPP remain confidential; however, it has been public that the main topics regarding intellectual property are the following: Non-traditional trademarks; Madrid Protocol/International trademark applications; appellation of origin and geographic indications; efficient and prompt civil and criminal enforcement; effective customs measures; pharmaceutical patents; agrochemical patents; and copyrights and the digital era.

There is the perception that for all these topics, the minimum standard would be TRIPS and the parties are also looking at the levels of protection established in ACTA and the Free Trade Agreement between the US and South Korea. In the case of pharmaceutical patents and regulation, the main topics appear to be that the countries commit to having additional mechanisms of intellectual property protection such as patent linkage, extensions or compensations of the life term of patents due to regulatory delays and data package exclusivity for new chemical compounds and formulation and second uses.

In conclusion, due to the negotiations and eventual integration of Mexico to the Transpacific Partnership, Mexico has a new and valuable opportunity to review and change its entire intellectual property system and adopt higher, and even more important, efficient standards of IP protection. The implications of joining the TPP go beyond the Mexican IP system, as it the partnership aims to support the creation of jobs, higher living standards and the reduction of poverty in the country members. To those who are devoted to IP, as well as, the companies and individuals from the innovation and creativity economy, an efficient, enhanced, and improved IP system would be always welcome.

Resume

Mr Luna has proactively participated in cases challenging the constitutionality and inefficiency of certain amendments to the Federal Law of Administrative Proceedings in Mexico, as well as certain amendments of the Federal Copyrights Law. He is also the sponsor of a proposal to modify the litigation system of Industrial Property in Mexico. Mr Luna heads the law firm’s Life Science and Pharmaceutical law Group and he regularly lectures at Universidad Latinoamericana. He has received personal recommendations from Chambers Latin America and the Guide to the World’s Leading Patent Experts.

Practice Areas: IP litigation, copyrights, regulatory, anti-counterfeiting, patents.

Professional Memberships: PTMG, BIO, INTA, The Mexican Bar.

Education: Graduate of Universidad Latinoamericana, holds diplomas from the Universidad Panamericana and Master’s Degree in Intellectual Property Law at the Franklin Pierce Law Center in the United States.