If you’re considering nearshoring to Mexico, you’ll want to do so with a firm understanding of how intellectual property rights are registered, protected, and enforced. The protection of intellectual property (IP) is critical in the modern world, and carries with it particular importance for companies based in the United States but who are manufacturing in Mexico.

The most basic fact to understand is that intellectual property rights are handled a bit differently in Mexico than in the United States. Understanding these differences, how IP protections are enforced, and what remedies exist for rights holders when a trademark infringement occurs, is essential for protecting your IP. With that being said, with the recent passage of the United States-Mexico-Canada Agreement (USMCA) Mexico took on a number of increased commitments to protecting the IP of companies from signatory countries. These increased protections embedded in the USMCA will offer United States-based companies robust IP rights protections over the coming years.

What is Intellectual Property (IP)?

Before diving into the details about Intellectual Property Rights (IPR) in Mexico, it is worth taking a moment to briefly define what IP is.

The Congressional Research Service defines intellectual property as “a creation of the mind embodied in physical and digital objects.” Intellectual property rights are granted by governments to rights holders to allow them the exclusive ability to develop and market their creation without unfair competition.

There are a few key points about IPR that are worth noting:

• Time-Bound – Intellectual property rights are time-bound, meaning that they exist for only a finite amount of time before exclusivity over the product is removed and others are allowed to use or build on the idea.
• Private – Intellectual property rights are private rights. This is important to understand because the U.S. Government generally cannot enforce rights that exist for a private individual in Mexico. Rather, related rights must be registered in Mexico, and private individuals must take responsibility to protect and enforce those rights under Mexican law when operating in Mexico.

It is also important to recognize how crucial IP is to the U.S. economy. Industries that rely on IP support roughly 45 million jobs and 38% of the U.S. gross domestic product. As the economy has increasingly moved towards the digital sphere, the importance of recognizing and protecting IP has only continued to grow.

How is Intellectual Property Protected in Mexico?

The protection of Intellectual Property Rights (IPR) in Mexico occurs through different enforcement agencies and mechanisms than it does in the United States. Intellectual property rights in Mexico are protected by a number of agencies under Mexican legislation, each of which have discrete areas of responsibility. 

Let’s take a look at what those agencies are and what they are responsible for in IP protection:

• Instituto Mexicano de la Propiedad Industrial (IMPI) – Also known as the Mexican Institute of Industrial Property, the IMPI is responsible for administering and overseeing the patent protection and trademark registration process. The IMPI is also responsible for administrative enforcement of intellectual property infringement.
• Instituto Nacional del Derecho de Autor (INDAUTOR) – Known as the National Institute of Copyright, INDAUTOR is responsible for managing copyright registrations and administering disputes between copyright holders.
• Unidad Especializada en Investigación de Delitos contra los Derechos de Autor y la Propiedad Industrial (UEIDDAPI) – The UEIDDAPI is a unit within the Office of the Attorney General that has been tasked with the prosecution of intellectual property related crimes.
• Aduanas (Mexican Customs Service) – The Mexican Customs Service is responsible for restricting the movement of illegal goods across Mexico’s borders.
• Comisión Federal para la Protección contra Riesgos Sanitarios (COFEPRIS) – The Federal Commission for the Protection Against Sanitary Risks is the entity in Mexico responsible for overseeing the regulation of processed foods, medical devices and pharmaceuticals.

While the regulatory and oversight structure protecting intellectual property Mexico is different from the United States, so too are the actual structures of the laws themselves. There are two broad categories of intellectual property law in Mexico: Copyright protection covers literary works, music, art and photography, while Industrial Property refers to inventions and registered intellectual property. These Mexican property rights are codified in two laws: the Ley de la Propiedad Industrial or Industrial Property Law and Ley Federal del Derecho de Autor or Federal Copyright Law.

The Industrial Property Law received numerous updates strengthening its trademark provisions, including defining “bad faith” and creating a system for refusal, both of which should further limit trademark squatting. The Federal Copyright Law also received updates in 2018, most notably by incorporating a mechanism that allows rights holders to request the halt of rights violations that are ongoing while the case moves forward.

What is the Role of International Rules in Mexico’s Intellectual Property Rights?

The history of intellectual property protection in Mexico has drawn heavily on international agreements, and international rules are still very important today for foreign investors. 

Mexico is a signatory of the following treaties that strengthen IPR:

• The Paris Convention
• The Patent Cooperation Treaty
• The Hague Agreement
• The Madrid Protocol

While the regulatory structures responsible for IPR in Mexico are different from the United States, they should also be understood as being heavily influenced by international treaties that Mexico has entered into. In addition to the above list, both the North American Free Trade Agreement (NAFTA) and the USMCA have helped shape and strengthen domestic laws and regulations protecting IPR. It’s important to understand how these massive free trade agreements have shaped and continue to shape posture towards intellectual property rights in Mexico.

Intellectual Property Rights Under the USMCA

Let’s look at what changed from NAFTA to USMCA Bringing intellectual protection rights up-to-speed for the twenty-first century was a core focus of negotiation around the USMCA. Many of the IP provisions embedded in the USMCA have only recently begun to take effect, so it is helpful to understand how this agreement will alter the landscape of intellectual property rights and enforcement in Mexico.

The USMCA, and the series of updates to Section 321, entered into force on July 1, 2020. The 2,082-page trade deal between the United States, Mexico, and Canada represents a significant overhaul of many of the provisions found in NAFTA. NAFTA, which was passed in 1994 during the nascent stages of the internet, lacked a number of provisions necessary to adequately protect IPR in a digital age. 

Here are some of the NAFTA effects on Mexico:

• The failure of NAFTA to anticipate many of the IP challenges that modern businesses now confront in the digital age should not distract from the fact that the IP provisions contained in NAFTA were cutting-edge at the time of its passage. 
• NAFTA also represents the earliest efforts to develop strong IPR with international partners through trade negotiations. 

This trend was continued with the World Trade Organization’s (WTO) Agreement on Trade-Related Aspects of Property Rights (TRIPS), which was passed in 1995. The WTO TRIPS Agreement outlined the basic structure for protection and enforcement of IPR that the USMCA continued to build on. Following the adoption of WTO TRIPS, the United States began integrating an approach to trade negotiation known as “TRIPs-plus”, whereby the U.S. would seek trade objectives that offered a level of protection for IP that was roughly equivalent to U.S. law. The USMCA represents the latest effort toward that end.

The USMCA incorporates many advances in IPR that have become commonplace since NAFTA was passed, and which are embedded in other international agreements the United States has entered.

Chapter 20 in the USMCA deals with intellectual property law. At 65 pages in length, the chapter covers a wide range of topics concerning IP. Here are a few of the most notable IPR provisions embedded in Chapter 20 of the USMCA:

• Copyright Terms – Copyright terms of the life of the rights holder plus 70 years.
• Safe Harbors -The creation of safe harbors, which shield websites from liability for third-party content on their sites, while also providing a mechanism for taking down copyright-infringing content on their sites.
• Notice and Takedown System – A notice and takedown provision through which rights holders can notify intermediaries regarding infringing content on their sites. This mechanism mirrors U.S. law, which also takes a notice and takedown approach.
• Trade Secrets – The creation of criminal penalties and procedures for the theft of trade secrets, are defined as confidential business information with commercial value.
• Geographic Indicators – The creation of due process and a procedural mechanism for Geographic Indicators (GIs).
• Trademarks – Trademarks are covered by a renewable 10-year protection period that mirrors similar protections in U.S. law. The USMCA also included provisions to remove administrative barriers to protecting and enforcing trademarks that existed in NAFTA.
• Industrial Designs – The USMCA introduces 15 year protection periods for industrial designs, up from 10 years under NAFTA.
• Ex-Officio Authority – One of the most notable IPR provisions in the USMCA is the adoption of ex-officio authority for customs officials in each of the member countries. This authority allows customs officials the ability to halt and seize goods that violate IPR, which was not the case under NAFTA. The granting of ex-officio authority was seen as one of the most significant hurdles to effective IP enforcement under the previous regulatory regime.

Closing Thoughts

With the adoption of the USMCA, Mexico has taken great steps forward towards creating robust protection and enforcement mechanisms for IPR. For example, the lack of ex-officio authority to customs officials was seen as a major barrier to effective IPR enforcement in Mexico. With the passage of the USMCA, customs officials in all three countries will be better equipped to stop and seize IP infringing contraband as it passes through their countries or across borders.

The USMCA contains a number of provisions that modernize Mexico’s IPR apparatus, including mechanisms for registering, protecting, and enforcing IPR throughout Mexico. Though the regulatory structures that oversee IPR in Mexico are different than the United States, the passage of the USMCA ensures that rights holders in the U.S. will have a level of protection for their IP that is similar to that found in the United States.

If your company is exploring manufacturing in Mexico, working with a strong partner in the country like NAPS can help. With unparalleled experience offering administrative solutions to your manufacturing needs, our team at NAPS can help you learn about the manufacturing laws in Mexico. Whether it be manufacturing compliance regulations or environmental regulations in Mexico, we will help you hit the ground running with your operations. To learn more, contact us today.

Sources:

1. https://www.trade.gov/knowledge-product/mexico-protecting-ip
2. https://crsreports.congress.gov/product/pdf/IF/IF11314
3. https://fas.org/sgp/crs/row/IF10033.pdf
4. https://www.bakerinstitute.org/media/files/files/2ead146a/bi-report-011720-mex-usmca.pdf
5. https://ustr.gov/sites/default/files/files/agreements/FTA/USMCA/Text/20-Intellectual-Property-Rights.pdf
6. https://www.stopfakes.gov/article?id=Mexico-Protecting-IP