Mexico: New rules on bad faith introduced into Mexican IP law

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February 04, 2019

The Decree on Amendments to Trademark Law in force as of August 10 2018 introduced new legal concepts to the IP Law to update and reinforce the intellectual property system in Mexico.

One of the most important updates was the inclusion of bad faith as a ground for refusal of trade mark applications and for the invalidation of registrations, seeking to prevent the commission of unfair competition acts and to restore the rights of the legitimate owners of trade marks.

Now, Mexican IP law stipulates that bad faith is a relative ground for refusal, giving two examples of cases in which a registration is deemed as applied for in bad faith – when the application is filed in contravention to the proper use, custom and practice of the intellectual property system, commerce or the industry, and when the applicant seeks to obtain an unfair benefit or advantage causing detriment to the legitimate owner of the trade mark.

The IP Law also stipulates two bad faith grounds for invalidation of trade mark registrations. The first one has an immediate precedent in the former articles of the IP Law and deals with registrations applied for and secured by any third party with a direct or indirect relation to the owner of a registered trade mark abroad, to cover the same or a confusingly similar mark in his own name without the express consent of the owner of the foreign trade mark.

The second one is a general cause of invalidation, according to which a trade mark registration will be invalidated if it was obtained in bad faith. This general ground for invalidation balances out the limitations of the first one.

Even though the IP Law defines three cases in which registrations shall be regarded as applied for and obtained in bad faith, the grounds for refusal and invalidation are broadly phrased and include a general bad faith clause which will catch bad faith cases that are not specifically mentioned.

It seems that the legislative intent behind the inclusion of a general bad faith clause in the IP Law is to allow it to work as a safety valve for the system. By doing so, it provides the legitimate owner of a trade mark with a broad cause of action to oppose or invalidate trade mark registrations for cases where the applicant was aware of the existence of a right that he/she is not entitled to and was obtained as a consequence of an unfair or dishonest act.

The incorporation of new bad faith grounds for refusal and invalidation in the IP Law indicates significant progress for Mexico's legal system. However, the development of this concept by the courts will be of importance, so that its definition, requirements and the standard of proof can be specified through case law.