Volume 6, Number 2, Page 5

Use of Trademarks in Mexico, Licenses and Transfers

By Barrera Siquieros and Torres Landa, S.C.

The right to the exclusive use of a registered trademark in Mexico permits the holder to grant licenses to third parties, with respect to any or all the products or services encompassed by the trademark’s registry. However, steps must be taken to ensure that the licensee enjoys the same legal protection as the holder of the registered mark and that trademark’s registration is not allowed to lapse. In the case that a trademark is used through one or more licensees, it is necessary to have a Trademark License Agreement.

A trademark may be licensed during its term, meaning that the temporary right to its use may be granted without any change in actual ownership, with the option of reserving partial use for the trademark holder or granting exclusive use to the licensee.

In order for the licensee’s use of a given trademark to be acknowledged by the Mexican Institute of Industrial Property, as if the licensee were the holder of the trademark registration, it is compulsory to register the relevant Trademark License Agreement with the Institute, as well as for the Agreement to be applicable to third parties. It should also be noted that payment of royalties made without the previous registry of such agreement with Institute may not be treated as a tax deduction.

If the trademark is not used by its holder (e.g. the parent company) in Mexican territory or through exports, but through a licensee (e.g. the subsidiary company) lacking a license recorded before the Mexican Institute of Industrial Property, legal action against the improper use of the trademark shall be rendered ineffective, insofar as in the event of such action the defaulting party may assert the lapse of the trademark’s registration.

Therefore, it is of the utmost importance to execute a license agreement between the parent company and the holder of the trademark in Mexico and to register it before the Mexican Institute of Industrial Property. This provides legal recourse against third party infringement and avoids any lapse in registration. Trademarks that are in the process of registration are capable of transfer to third parties and of being licensed.

Failure to use the trademark in Mexico three years prior a third party’s questioning of the validity of the trademark shall entitle the Mexican Institute of Industrial Property to declare the registration lapsed, unless its holder is able to prove justifiable grounds for the failure to use the trademark. These may include circumstances beyond the holder’s control such as import restrictions or other governmental actions effecting the goods or services to which the trademark applies.

The non-use period of three years indicated by the Industrial Property Law as the prerequisite for considering a trademark lapsed is calculated as the three years preceding the date on which a third party challenges the trademark’s validity. Which is to say, if the claim were brought on October 29, 1999, the owner of the trademark would have to demonstrate the trademark’s use in Mexico at some point between October 29,1996 and the present

The Mexican Industrial Property Law does not provide an exact definition of what should be understood as the “use” of trademarks. In the author’s opinion, the Industrial Property Law utilizes the word “use” as a generic term referring to the fact that trademarks can be used in industry, commerce, or in services, which allows one to conclude that the word “use” is not limited to any one activity.

Section 62 of the Law does indicate some of the cases in which a trademark is found to be in “use,” which demonstrates that such Section is not comprehensive and allows other definitions of what should be understood as the “use” of trademarks. However, the Law does not indicate other cases in which one can determine that trademarks are in “use”, meaning that we will ultimately be subject to the judicial interpretation of the federal tribunals in case of a controversy.

Section 62 of the Regulation refers to Section 130 of the Law; the same that refers to the case in which a trademark may be declared lapsed when it is not used in Mexico.

Finally, trademarks registered in Mexico must be used with the “Marca Registrada” (“Registered Trademark”) legend, the “M.R.” abbreviation or the “(~)” symbol, in order to affirm that the mark is registered. The importance of these references is that for the exercise of civil and criminal actions deriving from the infringement of a right of industrial property, as well as for the implementation of protective measures stipulated in the Law (i.e. seizure of counterfeit products), the owner of the right must apply the above legends referred, or by other means having advise or make known to the public that the products or services are protected by a right of industrial property. n

Barrera Siquieros and Torres Landa, S.C. is a law firm locatied in Mexico City. They can be contacted at bstlmex@mail.internet.com.mx