Company names: a new approach
In June 1942, World War II was at its peak. Mexico was officially engaged and declared a state of war against the Axis powers (principally Germany, Japan and Italy) on May 22, 1942 after two tankers were sunk by German U-boats on their way to supply crude oil to the Allied parties (led by the US and the UK).
Although Mexico did not actively engage in the war, its closeness to the US and the industrial boom rising from the need for raw and finished materials to build war equipment obliged the Mexican government to take certain decisions, including limiting certain civil liberties.
Foreign capital was increasingly coming to Mexico. In order to avoid the Axis powers’ interests entering the country, the executive branch issued an executive decree regulating this matter and promulgating a new law.
As a rationale for this law, the government argued the need to regulate ‘temporary’ capital and interests to avoid Axis interests entering Mexico and, more importantly, to regulate the alien capital entering the country, hence establishing several ‘locks’ and requirements that foreign investors had to comply with in order to do business in the territory.
One of the issues regulated included the faculty for the Ministry of Foreign Affairs to grant authorisations to use a certain name within a company name. Other issues included the percentage of foreign capital allowed in specific areas of industry; the need for prior authorisation granted by the ministry in order for foreign investors to acquire businesses in Mexico; and the authorisation required to participate as shareholders in Mexican companies.
Almost 60 years after the war ended and after the executive decree came to an end, the Ministry of Foreign Affairs continued to regulate issues pertaining to incorporation of Mexican companies and foreign investments.
This year, a new law was belatedly issued, granting the Ministry of Economy specific faculties to authorise the use of any given company name, among other matters. This change is important not only as to the change of authority, but also because it establishes new rules under which names can be rejected and why.
During previous years, authorisations to grant a company name were given regardless of the existence of registered trademarks before the Mexican Institute of Industrial Property (IMPI). This caused confusion and even erroneous acquisitions of IP rights.
On September 14, 2012, the Regulations for the Use of Company Names were published in the Federal Gazette. These provisions specifically regulate certain articles of the Foreign Investment Law and provide the rules pertaining to all company names, including the authorisation to use any given name; the granting process; and denial reasons, among others.
“NOW THAT THE AUTHORITY IN CHARGE OF GRANTING THE AUTHORISATION HAS CHANGED, AND GIVEN THE TECHNOLOGICAL TOOLS AVAILABLE TO THE AUTHORITY, WE EXPECT TO HAVE A BETTER PROCEDURE.”
Now that the authority in charge of granting the authorisation has changed, and given the technological tools available to the authority, we expect to have a better procedure to obtain authorisations. First, the authority for granting these authorisations shifted from the Ministry of Foreign Affairs to the Ministry of Economy, the government body in charge of IMPI, and it can therefore perform cross-searches avoiding the erroneous granting of company names already granted as trademarks. The technological tools include the possibility of accessing the Mexican trademark database.
In addition to the above, the regulations include specific guidelines as to when a company name will be rejected. Under Article 9 of the regulations, the ministry may deny the granting of the use of any company name when:
