An unhealthy decision? When laws collide

Intellectual property and specifically patent law are two well-regarded areas of law in Mexico. The Mexican Institute of Industrial Property (IMPI) is one of the most efficient government bodies and with the recent development of a specialised chamber for IP matters within the Federal Court of Tax and Administrative Affairs (FCTA), Mexico is taking important steps forward in the complicated path of IP protection.

However, the path is never clear and setbacks may arise unexpectedly at any corner. In 2011, a controversial decision was issued by a First Circuit Collegiate Administrative Tribunal (one of Mexico’s highest courts and one of the most competent judicial bodies), and its ripples are still being felt within the IP community.

While the tribunal was requested to analyse the legality of an injunction brought against a company suspected of infringing patent rights, the decision went further and ruled that since the alleged infringer had been granted a sanitary authorisation by the Federal government, it had administrative authorisation to commercialise a product and therefore its commercial activities could not be considered illegal.

As a consequence, since the legality of the commercial activities of the suspected infringer could not be questioned, the patent could not be immediately considered as infringed and the injunction should be lifted.

The subject matter of the dispute was the infringement of a compound patent owned by a pharmaceutical company, but a wider interpretation of the decision may obstruct the issuance of effective provisional measures in IP infringement cases if the alleged infringer is granted a government authorisation of any kind.

During a patent infringement suit, the plaintiff requested the IMPI to grant an injunction to prevent further infringement by the defendant, which in this case included the withdrawal of infringing goods from the market and the prohibition to commercialise goods that may further infringe the patent of interest.

The injunction was appealed before a federal judge, who in turn lifted the injunction but requested the defendant to post a counter bond for securing the costs and damages that the plaintiff could suffer as a consequence of its decision.

The defendant appealed again, this time before a Collegiate Administrative Tribunal, which in turn decided to lift the injunction without requiring the defendant to post a counter bond. The decision relied strongly on the fact that a sanitary authorisation had been granted to the defendant, but we consider the decision questionable due to the unique nature and purpose of a sanitary authorisation, as opposed to the exclusivity protection granted by IP rights.

The ruling

A detailed analysis of the holding issued by the Collegiate Administrative Tribunal reveals key flaws in the reasoning that led to the decision.

• A sanitary registration confers rights equal to, or that can be compared with, a patent right.

• The existence of a sanitary registration granted to a third party weakens the rights of a patent holder.

• A patent infringement may not be evident if the alleged infringer holds a sanitary registration.

The line of reasoning described above fails to grasp both the nature and purpose of a sanitary registration—in fact, the Collegiate Administrative Tribunal inexplicably and arbitrarily strengthened the meaning of a sanitary registration, associating it with several elements that are closely associated with exclusivity rights.

A sanitary registration, as provided in the Mexican legal framework, is one of several administrative authorisations comprised in the Mexican General Health Law (MGHL). These administrative authorisations set the requirements for public or private entities to engage in activities related to human health.

Obtaining an administrative authorisation in the field of human health is a complicated process. The MGHL and its bylaws are technical regulations designed to prevent health risks and enforce the safety and efficacy of all goods and/or services related to human health and consumption.

The purpose and scope of the MGHL is carefully detailed in its first articles, asserting that the MGHL provides regulations and procedures to provide and safeguard the constitutional right to health that every individual is entitled to enjoy, as well as the conditions and requirements for healthcare services, either public or private, and the duties and obligations of the federal and local governments and agencies.

The MGHL does not grant or recognise claims of any kind regarding ownership of a product, compound, substance or molecule. The purpose of a sanitary authorisation and in particular, of a sanitary registration, is to verify the product’s safety and efficacy and ensure that society is not at risk if a health product is made available on the market.

In fact, the sanitary registration certificate includes a paragraph stating that the registration is a mere certificate of safety and efficacy issued by the Mexican government and also a mere requirement of, but not a full authorisation for, commercialising health products. The paragraph goes as far as stating that the issuance of a sanitary registration must not interfere with other laws or government agencies.

On the other hand IP and, specifically, patents have a different constitutional background and specific objectives which every IP professional acknowledges.

It may be said that the decision issued by the Collegiate Administrative Tribunal is not adequately founded and constitutes a flawed interpretation of the law, since it arbitrarily imbues a sanitary authorisation with characteristics that are not related to it.

Furthermore, it considers a sanitary registration as a de facto temporary shield against patent infringement, regarding the unauthorised use of a patent as not absolutely illegal, nor completely legal, until an infringement is finally declared. The rationale is the base for lifting an injunction without requiring the alleged infringer to post a back bond, as required by the Mexican Industrial Property Law (MIPL).

Unfortunately, the decision may complicate or even eliminate the possibility of obtaining an injunction against patent infringers holding a sanitary registration, since the requirements set forth in the MIPL specifically state that the plaintiff shall serve the IMPI with evidence that: