A question of fairness: preliminary injunctions in Mexico
In Mexico, patent and other intellectual property infringement actions are litigated, in the first instance, before the Mexican Institute of Industrial Property (IMPI). Since 1994, IMPI has been authorised to grant various forms of provisional relief, including preliminary injunctions against the manufacture, sale and distribution of allegedly infringing goods.
Under Article 199 bis.1.I of the Industrial Property Law, a plaintiff seeking provisional relief must “prove his ownership of the rights”, as well as “the existence of an infringement of his rights”; “the imminence of the infringement of his rights”; “the existence of the possibility of irreparable damage being sustained”; or “a justified fear that evidence might be destroyed, concealed, lost or altered”.
In other words, the plaintiff is typically required to show that it is likely to prevail on the merits before provisional relief can be granted. Alternately, the plaintiff can demonstrate the possibility of irreparable harm, or show that evidence is likely to be lost or destroyed—but this is usually not the case in patent infringement cases.
Despite the clear wording of the statute, IMPI frequently grants preliminary injunctions in patent infringement cases without considering the merits of the case at all. Requests for preliminary relief are routinely granted as long as the plaintiff shows that it owns a patent and that all maintenance fees have been paid. IMPI does not undertake a detailed analysis of the scope of rights conferred by the patent, and the plaintiff’s allegations of infringement are generally taken at face value.
This is a particularly serious problem in cases concerning pharmaceutical patents. The inventions covered by such patents are often marginal improvements on drugs that have entered the public domain, and questions of infringement cannot be fairly determined without a detailed analysis of the defendant’s product and the prior art.
A plaintiff seeking a preliminary injunction must “provide sufficient security to cover any damages that might be caused to the person against whom the measure is sought …”. If the defendant eventually prevails on the merits, it can recover against the bond any damages caused by the wrongful granting of the preliminary injunction.
Alternatively, it can have the preliminary injunction lifted while the case is still pending by posting a counter-bond. Historically, IMPI required the amount of the counter-bond to be double the amount of the bond posted by the plaintiff.
“BEFORE GRANTING SUCH RELIEF, IMPI MUST CAREFULLY CONSIDER WHETHER IT IS NECESSARY OR PERMITTED BY LAW … AND WHETHER LESS DRASTIC MEASURES MIGHT PROTECT THE LEGITIMATE INTERESTS OF THE PLAINTIFF.”
Unfortunately, this procedure has been frequently abused in pharmaceutical patent infringement cases. The plaintiffs in such cases are usually large multinational companies, and the defendants are, typically, small or medium-sized generic drug manufacturers with fewer financial resources.
Often, plaintiffs post extremely large bonds, wholly out of proportion to the value of the claim, to make it impossible for the defendant to raise the funds necessary to post a counter-bond.
In June, 2010, congress amended Article 199 bis.1.I to curtail this abuse. The amount of the counter-bond is now limited to the amount of the original bond, plus 40 percent. However, the possibility of abuse remains as long as patent holders continue to post exorbitantly large bonds without any scrutiny by IMPI.
One recent appellate decision concluded that in determining the propriety of preliminary relief and the amount of security to be posted by the plaintiff, IMPI must consider (i) whether the defendant has engaged in an unlawful activity related to the plaintiff ’s patent; and (ii) whether there is objective data which support the amount of the bond being offered by the plaintiff. Regularly, this admonition has not been heeded by IMPI.
Defendants in pharmaceutical patent cases have argued that IMPI must require plaintiffs to:
