New Mexican industrial property law is proposed

In late 2019, the discussions on the United States – Mexico – Canada Agreement (USMCA) and the protocol that modified it under pressure from the Democrats took place. The Mexican Senate ratified it on December 12 2019 and the US Congress on January 16 2020. The process in Canada is likely to take place in the following months and the USMCA might be enacted by the middle of 2020, including the intellectual property provisions.

In this context, a fully new industrial property law (IPL) was proposed in the Mexican Senate. The Mexican Institute of Industrial Property (IMPI) supported the announcement. Although it was stated that one of the reasons behind the proposed law is to implement the USMCA's provisions, these provisions actually comply with practice under current Mexican law, at least for inventions (though there are a few issues which will be discussed in this article). The proposed new law has a more ambitious objective than simply updating Mexican patent law to keep it in line with new trends in technology.

The bill is comprehensive and covers all aspects of industrial property rights, but only the provisions affecting inventions will be addressed below.

From 2018 onwards, there have been several reforms to the Industrial Property Law (IPL) that have caused an impact on patent and design prosecution practices. It was known that the reforms to the IPL enacted then were only those that were urgently needed for consistency with the Hague Agreement Concerning the International Registration of Industrial Designs (The Hague Designs System) into which Mexico had been incorporated, the acquired obligations under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the ongoing negotiations with the European Community, the USA and Canada, and the European Free Trade Association (EFTA).

However, a more comprehensive reform to the IPL that required more time and work was still needed. With the change in political environment that came along with the presidential election of 2019, the new IMPI director, Juan Lozano, sped up the process of the change in the law through one of the senators of the governing party MORENA, Senator Ernesto Perez-Astorga. Senator Perez-Astorga submitted a new bill for substituting the current IPL before the Chamber of Senators on November 14 2019, a submission which was announced on November 11 2019 with full support from the IMPI. Almost at the same time, another senator of the party Movimiento Ciudadano (MC), Senator Noe Fernando Castañón-Ramírez, submitted a comprehensive reform to the current IPL.

According to the parliamentary rules of the Mexican Congress, the initiatives will have to be studied and voted on together, along four other minor initiatives that are also pending at the Mexican Senate. The core of the study will be the Perez-Astorga initiative because of the support the IMPI is providing and because it is from the MORENA party, which has the majority in both Mexican Congress chambers. The analysis below is based on the Perez-Astorga initiative as it is the one with the greatest support.

The initiative provides express authorisation to submit partial translations in Spanish of documents in a foreign language (Art. 13) but only in the case of infringement or nullity proceedings. This is a good tool, but there does not seem to be a reason to restrict this benefit to only these proceedings when it could be extended to patent prosecution. In this practice, it is very common to receive requests from patent examiners to provide foreign language documents which, according to current and new laws, must be translated into Spanish in full. This is a significant cost for applicants, who often prefer to abandon applications than to incur expenses that could rise as high as 10,000 USD when, for example, long documents in oriental languages are involved.

In line with Juan Lozano's announced intention as new IMPI director that everything should predominantly be managed through electronic filings, different articles of the law now include the ability to electronically sign documents and include other rules for electronic communication.

Another general provision to watch in the current and proposed laws relates to the confidentiality and availability of abandoned files to the public. The proposed law establishes in Article 23 that only those files that are published and pending, or in force shall be available to the public, leaving out the availability of abandoned files to the public.

Article 24 of the proposed law exempts from confidentiality obligations unpublished files which are requested by a judicial authority, which, in turn, expressly contravenes Article 168 of the same law. This must be fixed in order to protect the confidentiality and interests of applicants until publication of applications.

Finally, a transitional article is necessary to manage the current registry of powers at the IMPI so that such a registry is kept in force and applicants need not register powers again.

The current IPL references employment law regarding employee's inventions, which establishes that employees' inventions belong to the employer. The current provisions do not regulate other work relationships. The proposed law broadens the scope and refers to "agreements or legal instruments regulating a working relationship". Although the provision reinforces the validity of clauses regulating such relationships, it might not be enough. The proposed law could provide a default provision for determining ownership when contracts are silent about it.

In addition, in the case of researchers in public research centres or institutions there is an express indication that they must receive the benefits established in the applicable law. Accordingly, in collaborating with these types of institutions, the provisions related to compensation for researchers within such institutions will be crucial if these provisions finally pass.

One of the most important and unique features of the current Mexican IPL is the definition of invention. This definition is maintained in the proposed law. This is useful because, unlike many laws in the world, Mexico has statutory language establishing what is considered an invention.

Some of what is currently excluded from the definition of invention is becoming archaic and inapplicable as a result of new technology. This is the case for computer-implemented inventions or certain biotechnology and plant developments which are becoming more frequent and relevant for innovation. This is why it is seen as a good sign that Articles 47 to 49 of the proposed IPL establish what is not considered an invention and what is not patentable in a more specific manner, bringing more certainty to applicants.

The initiative provides express authorisation to submit partial translations in Spanish of documents in a foreign language (Art. 13) but only in the case of infringement or nullity proceedings. This is a good tool, but there does not seem to be a reason to restrict this benefit to only these proceedings when it could be extended to patent prosecution

The objections connected to ethical issues affecting some biotechnology inventions are expressly referred to under "scientific ethics" in the proposed Article 12. This is a narrower standard than the more general term "morals", used in most treaties and in the current Mexican IPL. These standards are further mentioned and specified in the proposed Article 49, particularly for inventions related to human beings, by defining cloning and derivative products of cloning procedures, modification of the "germinal genetic identity of human beings and its products" and "the use of embryos for industrial or commercial purposes" as non-patentable matter. The same restrictions to modification of genetic identity are included in the proposed law for animals in general "if they imply suffering to the animals without substantial veterinary or medical usefulness for mankind or animals".

For biotechnology inventions, Article 49 of the proposed law further includes clarification regarding isolation of microorganisms or genes "as such". These may be patentable under the proposed law when "obtained through a technical procedure". Regarding the human body, the restriction currently existing in the Mexican IPL is to the "human body and the parts thereof". The proposed Article 49 eliminates the word "parts" from the prohibition, clearly opening the door to patenting organs. The proposal keeps a prohibition on patenting the human body in any stage of its development and for the mere discovery of partial or total sequences of genes.

The proposed article also includes changes to plant protection. It changes the current prohibition on patenting "essentially biological processes for obtaining plants" by substituting the term "plants" for "vegetables" and by adding a definition of the "essentially biological" concept, which now only includes those "procedures consisting entirely of natural phenomena such as crossing and selection". Patentability of microbiological or technical procedures, or the products obtained thereof, shall not be affected by the exclusions in the article.

As for computer-implemented inventions, although computer programs and mathematical methods are still outside the definition of invention under the provisions of the proposed Article 47, the article includes a general provision reading as follows: "The matter provided for in the above sections of this article shall not be considered invention when the application claims exclusively such matter as such". Accordingly, computer programs or mathematical methods claimed as part of a broader invention will clearly be allowed.

Regarding eligibility, for incremental innovation it is very important to note that the proposed Article 49 keeps open the possibility of protecting inventive second uses of known inventions, inventive modifications of known inventions or inventive combinations of known inventions.

If the proposed law is passed, prosecution strategies for Mexican patents will have to be thought through more precisely in advance. Articles 106 and 111 of the proposed law dramatically limit the possibility of mistakes in the prosecution of a patent by establishing only one formalities office action issued by the IMPI. Under the current internal IMPI rules, there is a limit of two formalities office actions for patent applications, the second of which must be issued within four months from the date of the applicant's response to the first action. The timeframe established under the current rulings has worked well and is enough to cover formalities within 12 months, and never after the 18 months prior to publication of the patent application. There are not any concerns to address relating to formalities. The restriction therefore seems inconvenient and unnecessary.

The suggested limitations on office actions seem worse in light of the proposed Article 112, which limits substantive examination actions to only two, therefore giving the IMPI the chance to omit examination of other substantive issues if the first official action is a clarity objection. This might lead to only one effective office action, which may be insufficient for the prosecution of most patents.

Most importantly, these limitations seem unnecessary considering that currently the four office actions available under the internal rules of the IMPI for substantive examination have proven to be enough to ensure efficient patent prosecution in Mexico within the international standard timeframe of five years. This timeframe is in fact the one established in the USMCA already ratified by Mexico.

Moreover, the proposed law intends to also limit the possibility of filing voluntary divisional applications by prohibiting the further voluntary division of a divisional application in Article 100. This will mean that whenever a patent application is divided, all the divisional applications that could potentially be of interest must be filed at one point in time or during pendency of the originally filed patent application. If such a law were enacted, once the original application was granted or denied, no further divisional applications could be filed thereafter. These limitations might be contrary to international treaties such as the Paris Convention regarding divisional applications.

Unlike this proposed law, the other initiative of the MC party includes opposing provisions, namely, it provides flexible alternatives to applicants for restoring their IP rights.

The good news is that the apparent intent of the proposed law is to keep the fundamentals of patent law within the standards already implemented in Mexico in the current IPL, which in general are compliant with international treaties. Such fundamentals include of course novelty, inventive step and industrial applicability definitions, requirements for the description and claims, and other features such as the one-year period of grace for disclosure of inventions or the standards related to being "skilled in the art".

One of the most important and unique features of the current Mexican IPL is the definition of invention. This definition is maintained in the proposed law. This is useful because, unlike many laws in the world, Mexico has statutory language establishing what is considered an invention

However, there are changes in the details. There are several modifications in language in the proposed law in comparison with the current language in the IPL that need to be closely followed by practitioners and stakeholders. There is room for improvement in the drafting of certain articles dealing with the above-mentioned fundamental concepts. There is also the introduction of a new concept of "essential technical feature".

Such drafting suggests an apparent requirement in the proposed Article 99 stipulating that a drawing must be part of the abstract of the invention. There are limitations when it comes to the conversion of patents into utility model or design register applications in Article 103 and the introduction of expressly recited double patenting provisions to prohibit the drafting of equivalent claims.

One significant drafting improvement in the proposed law relates to patent nullity causes. The causes of patent nullity can be only those related to non-compliance with substantive patentability requirements.

The only provision that was included in the proposed law as a result of the USMCA is the one referring to compensation for delays of the IMPI in patent prosecution. This will be granted, according to the proposed law, with a certificate of protection under Articles 126 to 136, which establish the administrative procedure and the conditions for its grant.

The rest of the provisions of the USMCA do not correspond to the patent law because they either refer to data exclusivity for pharmaceutical products under health law regulations or because Mexico has already complied with such provisions, including the pharmaceutical patents provisions related to the linkage of drug patents to sanitary registrations under the current Mexican system.

The proposed law, with regard to patents, can be evaluated as a good update when referring to the substantive issues of the patent system, but it has high risks when it comes to administrative proceedings, particularly considering that Mexico is keeping the reservations to the PCT flexibilities of priority restoration and other tools for applicants who inadvertently or unintentionally abandon a patent application. Under such circumstances, the reduction in the number of both formal and substantive office actions does not seem correct and will certainly affect those applicants with weaker administrative tools for managing their patents.

Once the proposal is studied and voted about at the Mexican Senate, the Chamber of Deputies must also study the proposed law and modify it or approve it. If approved, it will be passed over to the president for publication and enactment. If not, it will be returned to the Senate for further study of the modifications and subsequent approval or denial. The fastest the process is expected to run would be within 2020, but it will likely take longer because this does not seem to be a priority for the Mexican government.

Hector Chagoya-Cortes
		Hector is partner and patents and technology director at BC&B. He has a chemical engineering background and has been working in the field of IP since 1997. He holds the Certified Licensing ProfessionalTM credential and has been recognised consistently as a leading patent practitioner in several international surveys since 2005. Hector is currently in charge of the whole patent practice of the firm, as well as of consulting services for leveraging value from IP assets. He focuses his practice on leading working teams through patent prosecution, technology intelligence studies, IP assets valuation, IP negotiations, technology evaluation and the substantive issues of patent litigation. He is recognised as an expert in the engineering economy and has published a variety of articles in specialised international magazines. He has also co-authored chapters in various books related to licensing, trade secrets and pharmaceutical law and practice. He has occupied different positions in professional associations related to his practice in Mexico and internationally.