03 Sep Declarations of Use in Mexico
The most recent amendments to the Industrial Property Law in México, effective from 10th August 2018 have caused a fair degree of debate over how to implement the new obligation to file Declarations of Use on trademark registrations. The Mexican Trademark Office as most other Mexican law firms hold the position that the new obligation falls exclusively over trademark registrations granted after the amendment to the law became effective. After serious and objective consideration and legal analysis our Firm has adopted a radically different position that holds that all trademark registrations granted from 10th August 2015 are indeed subject to this new obligation.
Our analysis has fundamentally been based on a thorough legal study aimed to safeguard the rights of our clients from an always sensible conservative approach, keeping in mind that the last word on this debated issue will not come from the Mexican Trademark Office but rather from the judiciary and that participation from the Supreme Court of Justice in México could not be by any means discarded.
Given the consistent and adamant aim of the Mexican Trademark Office and of some other law firms in Mexico to convey the message that it is safe to limit the obligation to file Declarations of Use (DOU) on those registrations granted as from 10th August 2018, we are clear on our duty to alert the IP community on the serious risk of adopting this position as the outcome, if the same is proven wrong as we hold, would simply result in the remediless loss of trademark rights.
The present document contains a summary of our analysis and reasoning behind our decision to part from the general position on this issue and aims to fully support the advice we provide our clients with. In any case, we will certainly be pleased to address any queries or doubts from our colleagues and clients in due course.
The relevant statute is contained in amended article 128 of the Industrial Property Law which literally reads as follows:
Article 128.- The holder of a trademark must declare before the Institute, accompanying payment of the applicable tariff, the real and effective use of the mark. Such declaration is to be filed during the subsequent three months counted from the completion of the third year of the registration having been granted. If the holder fails to declare use, the registration will lapse by virtue of law.
The above text aims to be a literal translation from Spanish to English that sadly reflects the poor legislative language used. Nevertheless, we are to abide by the letter of the law which, in the present case, dictates that trademark registrations which third anniversary from grant falls when the amendment to the law has become effective, will be due to file a Declaration of Use. Accordingly, if the third year from grant on a given registration falls, for instance, on 11th August 2018, the new and compelling requirement to file a DOU will unquestionably fall onto this registration.
The ability to interpret a legal text in México follows the general rule in that interpretation will only be within the law when the relevant text fails to clearly convey the new obligation or burden. In the present case, there is no doubt nor room for interpretation as to the fact that trademark registrations which third year from grant falls when the amended statute has become effective, would be under the obligation to file a Declaration of Use.
Aside from the general rule, there is also room for interpretation when fundamental rights, for instance those contained in the Federal Constitution, may be jeopardized. Some of our colleagues in other law firms have found that changing the statue quo of registrations granted before the amendment became effective, by way of imposing a new obligation or burden will cause the amendment to be applied retroactively in legal detriment of acquired rights. In our view, the right in our federal Constitution that guarantees no retroactive application of the law when the same results in legal detriment does not apply in this particular case, on the following considerations:
The retroactive application of the law is indeed permitted under our federal Constitution, unless legal detriment is caused. To properly interpret the constitutional provision, the concept of “legal detriment” shall be well understood under applicable law and jurisprudence which dictates that, in the threshold of public law, the loss of an acquired right or the loss of a right to which one had access to, because of a new law, will constitute or cause legal detriment. In the present circumstances, it is our view that there is no loss whatsoever of an acquired right. A trademark registration grants two fundamental rights when issuance takes place, namely, the right to the exclusive use of the mark and the right to commence use of the same within the following three years. Neither of these rights has been changed, altered or cancelled with the amendment. The addition of an obligation which alters no prior rights whatsoever and simply imposes an obligation to demonstrate fulfillment of an originally acquired obligation (to use the registered mark within the three years following grant) can only be understood legal and in line with Constitutional provisions.
Legislative practice in México dictates that time considerations on how to implement a new law or amendments to an existing law are to be set forth in so-called transitory provisions. Therefore, a transitory provision in the amendment passed by Congress could have well avoided the present debate by establishing which registrations were to fall under the new obligation. However, no transitory provision addressing this issue was ever added to the amendment bill. One may wonder if there was no need for such a transitory provision in consideration of the fact that the amended text of the law required no clarification or called for interpretation, irrespective of the rather poor language used in the legal text.
To properly implement the new rights and obligations in the amendment, the executive branch of government is to publish Regulations to the Industrial Property Law. This new set of administrative rules, aimed to define formats, clarify concepts and establish the rules to govern the implementation of the law are yet to be published albeit they should have been enacted by now since the amendment to the law is now well into effect.
The draft Regulations have already been disclosed and are open to public comment before a regulatory body whose main objective is to make certain that the rules in the Regulations will not contradict or pose conflict with existing law, particularly with the Federal Law on Industrial Property recently amended which it is to regulate. Our firm has been actively participating in the approval process, offering our analysis and conclusions reached on the proposed text, which align with the position herein expressed.
In recent weeks, the present debate has escalated and gained the attention of the Mexican Trademark Office who appears to be looking to clarify or simply to correct the otherwise clear directions contained in new article 128 of the Industrial Property Law by seeking to enter a transitory provision in the soon to be enacted Regulations to the Industrial Property Law. Notwithstanding, even if the transitory provision suggested by the Mexican Trademark Office were to be included in the Regulations to the Law, the same would undoubtedly be understood contrary to our Federal Constitution as it would aim to counter federal legislation.
Irrespective of the “exchanged impressions with IMPI authorities” invoked by some of my colleagues in other law firms, which I find rather unethical, the Mexican Trademark Office will not have the final word when ruling on this issue if it were to be disputed. The federal courts and even the Supreme Court of Justice in México would have the final saying in this potential controversy and we seriously doubt that a federal judge, let alone a Justice, will find that fundamental rights were violated with the introduction of the requirement to provide a Declaration of Use to confirm that an original obligation (to use the registered mark within the term of three years from grant) had been fulfilled.
Aside from the above and in a mere practical approach, we would find it irresponsible to advice our clients against the filing of the Declaration of Use in the manner we have advised, with even the slight possibility of facing the lapse of a registration and of having to litigate to overcome such an outcome, with rather poor chances to prevail. When asked if, as an attorney representing a client one would voluntarily waive the possibility to challenge the validity of a registration on grounds of non-compliance with the requirement to file a Declaration of Use, in the way we have suggested, to prevail in a given case, no one appears to be ready to do so. Needless to say that we would not waive the right of a client to invoke that a given registration lapsed for failing to submit the noted Declaration of Use, to prevail in a given case.
Author: Carlos Pérez de la Sierra, Senior Partner.