Partners Francisco Tiburcio, Alejandro Catalá and Gilberto Valle analyse the latest legislative crackdowns on Mexican property fraud
Enforcement of intellectual property rights in Mexico has always been subject of concern by the title owners as well as of the international community. Therefore, the legal framework of the intellectual property system, linked with the rule of law and the criminal law system in our country, has been and is a priority. Consequently, in different Free Trade Agreements (FTA) our country has negotiated, an intellectual property and enforcement of rights chapter has been fundamental. Mexico now is part, among others, of the A) Transpacific Partnership Agreement 2018 (TPP), B) FTA with the United States and Canada (USMCA) 2020 and C) the European Union (TLCUEM), pending ratification at Congress.
In order to implement the USMCA (Sec. 20.1 to 20.89) provisions, it was enacted a New Federal Law of Industrial Property (FLPIP), published in the Federal Official Gazette (FOG) and came into effect on November 5, 2020. Likewise, it was amended the Federal Copyright Law (FCL), published in the FOG of July 7, 2020, as well as the Federal Criminal Code (FCC), published in the FOG of July 1, 2020.
We will highlight the most relevant amendments in connection with enforcement of intellectual property rights and criminal offences, provided in the FLPIP, FCL and FCC.
Criminal offences in FLPIP
(Trademarks, geographical indications, appellations of origin and trade secrets)
Unlike the former Industrial Property Law (IPL), in the FLPIP the recidivism of administrative offences is no longer a criminal one. Therefore, it is no longer criminally prosecutable. Nevertheless, the IPL is still applicable for crimes committed when it was in effect.
- Trademarks: Regarding trademark counterfeiting, the FLPIP includes trademarks that distinguish products and services, tridimentional trademarks, certification and collective marks, as well as non-traditional trademarks, such as sound and scent marks. Under the FLPIP, counterfeiting should be understood as the unauthorised use of an identical trademark, duly registered in Mexico or including the essential characteristics of a previously registered one. For prosecuting this crime, counterfeiting must be perpetrated with the intent of commercial speculation and representing a fake product or service as legitimate.
According to the FLPIP, the prison sentence for trademark counterfeiting ranges from three to ten years and a fine of up to $44,810,000.00 MXN (approximately US$2.2m).
The same sanctions shall be imposed on those who produce, store, transport, introduce or sell objects flaunting a counterfeited trademark and to those who knowingly supply raw materials for manufacturing said objects. In these cases, the Public Prosecutor shall request from the Mexican Institute of Industrial Property (MIIP) a technical opinion in order to bring an indictment against the offender before the judge. Likewise, the Trademark duly registered, should bear the legends, ‘Marca Registrada, Marca Colectiva Registrada o Marca de Certificación Registrada,’ MR,®.
- Apellations of origin (AO) and geographical indications (GI): The sanctions applicable to trademark counterfeiting shall also be imposed on those who produce, store, transport, attempt any customs clearance, distribute, or sell Mexican products flaunting an AO or GI without the certification required, according to Mexican Official Standards.
Under the LFPIP, it is not necessary that the perpetrator be aware that the products stored, transported, distributed, or sold are counterfeited trademarks or lack the corresponding certification (for AO or GI). It constitutes a crime, if the actions are carried out with the mere purpose of obtaining an economical benefit either for the perpetrator himself or a third party.
- Trade secrets: Under the FLPIP it is a criminal offence to A) To illegally disclose, B) Misappropriate, or C) Unduly use or disclose a trade secret known due to the offenders’ job, position, rank, business relationship or license for use, to a third party, provided the offender has been previously warned about the confidentiality of the trade secret and disclosed it with intention to obtain an economic benefit either for the offender himself or for a third party and cause a detriment against the trade secret’s holder. These offences are punished by imprisonment ranging from two up to six years and a fine up to $26,886,000.00 MXN (approximately US$1.3m).
Copyrights, infringements and criminal offences
- In order to comply with USMCA’s SEC. 20.56-20.89 provisions, among others, the Federal Legislative Branch amended the FCL and FCC. Presently, FCL provides for: a) Copyright and related rights Technological Protection Measures, as an anti-piracy solution for digital media (TPM); b) Rights Management Information (RMI), for legal rights identification purposes; c) Liability of Internet Services Providers (LISP); and d) Notice and Takedown Process Services Providers (NTPS). On the other hand, FCC now establishes imprisonment from six months up to six years and fines of roughly US$3,000 to those who: a) Knowingly or having reasonable ground to know, evade an effective technological measure for controlling access to a protected work, performance or phonogram, lacking due authorisation for doing so; b) Manufacture, import, distribute, offer for sale and/or rent products, parts and/or provide services that are promoted, advertised or marketed by the offender for evading any effective technological measure; c) Knowingly or having reasonable ground to know delete or remove RMI, lacking due authorisation for doing so; d) Distribute or import for distribution RMI while knowing that it has been altered, lacking due authorisation for doing so; and e) Distribute or import for distribution, broadcast, communicate, or make available to the public copies of works, performances or phonographs, knowing that its RMI has been removed or altered from them without having due authorisation for doing so.
- Remedies: Although FCC sanctions offenders with fines for executing copyright crimes, the aggrieved party has the right to claim damage restitution. For its quantification, the amount shall not be less than the 40% of the retail price of each product (or service) relevant to the protected right violation. The retail price that shall be taken into account is that of the original product or service.
Legal entities’ criminal liability
Under the FCC an individual could be held criminally liable: a) a person acting by him/herself; b) a person acting on behalf of a legal entity and c) a legal entity by virtue of a criminal offence carried out by a person who executed a crime in his name, or on its own behalf, for its benefits or through the means that set entity provided, when in addition it has been determined that there was a lack of due control within the organisations.
The FCC (Sec. 11 Bis) set crimes of federal jurisdiction, in which a legal entity could be considered criminally liable. Among others, it includes the industrial property crimes, set for on the former IPL (Sec. 223), but FCC, does not include yet the crimes established on the FLPIP (Sec. 402). It is expected that amendment to Section 11 Bis for the FCC, should be approved by Congress shortly.
Francisco Tiburcio has been a partner in the criminal law practice at Basham, Ringe y Correa since 2000. His main areas of specialisation are criminal law, trial practice and counselling on crime prevention. He has more than 32 years’ experience in criminal practice, mainly in white collar, intellectual property, tax, health and environmental law crimes, as well as areas related to mining and industrial security. He advises both domestic and foreign corporations, many of which are Fortune 500 companies. He has participated as a speaker in numerous business forums and conferences on strategies and methods for crime prevention. He is an associate of Frauded and Lex Mundi and has published several books on Mexican criminal law as well as various articles in specialised journals. He has a PhD from Universidad Panamericana, Mexico City.
Alejandro Catalá has been a partner at Basham, Ringe y Correa since 2006 and is currently based in Mexico City. His most important practice areas are criminal prevention counselling and civil and criminal litigation. He is a member of the firm’s executive committee specialising in white-collar criminal law advice to leading global and Mexican corporations. He is a regular speaker on criminal law at various business forums and associations engaged in fighting criminal activity and vice-president of the intelligence and risk management commission of the International Chamber of Commerce.
Gilberto Valle is a partner in the Querétaro office of Basham, Ringe y Correa who specialises in criminal law and the corporate prevention of criminal conduct. He is a trial lawyer and consultant. He has particular experience in criminal law litigation, representation of victims and injured parties in criminal investigations and prosecutions (at both the local and federal level), corporate security and due diligence investigations associated with anti-corruption compliance, design and implementation of compliance policies including prevention of criminal conduct programmes and corporate exposure to criminal liability. He is a member of the US-Mexico Bar Association.