15 April 2015Jurisdiction reportsRodrigo Navarro

Low fines inhibit infringers

This article was formed with the aim of, among others, avoiding unfair competition and granting IP owners certainty regarding the protection and enforcement of their rights.

Once an infringement action is decided by the Mexican Institute of Industrial Property (IMPI), and if the authority finds irrefutable evidence of infringement arising from any of the types of conduct contained in article 213, the IMPI can impose a penalty on the infringer.

The penalties for infringement regulated in article 213 range from fines of up to 20,000 days (approximately $100,000) based on the minimum salary per day in Mexico City, to temporary or permanent closure of the infringing business, and even administrative arrest for 36 hours. However, the IMPI has imposed fines as common practice.

Furthermore, according to statutory provisions, the IMPI is obliged to take into consideration the intention of the act or omission that constitutes infringement, the economic conditions and circumstances of the infringer, and the seriousness of the infringing conducts.

It is worth mentioning that in most cases the IMPI sanctions infringers with insubstantial fines. But this can mean that IP right owners are in some cases discouraged from filing infringement proceedings because infringers are fined only a small amount—in most cases this is not proportional to the infringement, bearing in mind that fines can amount to 20,000 days of minimum salary in Mexico City.

"IP right owners are in some cases discouraged from filing infringement proceedings because infringers are fined only a small amount."

It is important to recall that one of the main purposes of the MIPL is to promote and enforce IP rights so that companies invest in Mexico. Unfortunately, these types of decisions indirectly discourage foreign investment. Consequently, the IMPI should re-evaluate the imposition of fines, taking into consideration that in most cases infringements are intentionally and illegally violating protected inventions, trademarks and other IP rights.

If the IMPI continues with its common practice of sanctioning infringers through a fine, in this author’s opinion it should seriously consider raising the amount of the fines imposed in order to properly discourage illegal behaviour.

On the other hand, it is important to mention that recently the Federal Court for Tax and Administrative Affairs decided that IP right owners have no legal standing to appeal against the level of the fines imposed by the IMPI. The court argued that the fines imposed by the IMPI are sanctions that correspond only to the state, so therefore the IMPI is the only one with the authority to decide the amount of the fine to be imposed.

The party affected by an infringer (the IP right owner) should be allowed to request the imposition of representative fines when it considers that the sanction imposed is not sufficient to enforce and protect its IP rights. The current position must be changed or reversed by the Federal Circuit courts, allowing right owners to appeal against the imposition of fines that are not proportional to the infringement.

Rodrigo Navarro is a litigation attorney at  Becerril, Coca & Becerril. He can be contacted at: rnavarro@bcb.com.mx

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