Mexico: Counterfeiting: A Cultural Challenge

Last Updated: 22 June 2015
Article by Ernesto M. Meade

Mexican authorities should review not only the law, but also their interpretation of it in order to implement more efficient anti-counterfeiting policies.

In Mexico – as in m any other countries – 'counterfeiting' is understood as the production, reproduction, import, commercialisation, sale, storage, transportation, distribution and offer for sale of products which infringe IP rights, such as trademarks and copyrights.

Piracy and counterfeiting damage Mexican companies by up to $80 million a year, according to the National Chamber of the Transformation Industry, and result in the loss of 480,000 jobs a year. This has led the International Intellectual Property Alliance to include Mexico on its list of 25 countries under observation for failing to fight piracy and counterfeiting adequately and for allowing violations of IP rights to take place.

Despite amendments to the IP Law and the Copyright Law which set out harsher penalties for counterfeiting and piracy, the main impediments to combating counterfeiting remain technical and physical, rather than legal. Once a product has been manufactured, the copying and distribution process is simple, due to the extensive networks that have been developed by gangs of organised criminals.

This situation is particularly alarming as counterfeiting is not an isolated phenomenon that only affects rights holders. For many years, this type of illegal activity has been linked to other crimes, such as corruption, smuggling and tax evasion. More recently, links have been discovered between counterfeiters and drug cartels, suggesting that counterfeiting has become an instrument for funding other aspects of organised crime.

Despite this, counterfeiting has infiltrated all levels of society – many people are aware that it is a crime, but do not consider it to be damaging in the same way as other crimes.

New study

The results of a survey on the consumption of counterfeit and pirated goods published by the American Chamber of Commerce – Mexican Chapter indicate that eight out of 10 people have bought counterfeit products. When asked, respondents cited the low cost of counterfeits and the ease with which they can be found (eg, a t street markets, stands, informal stalls and flea markets) as the principal reasons.

In addition, 58% of respondents mentioned that they do not have a negative perception of counterfeiting – so much so that their principal reason for not buying fake products is the low quality of the goods, not that counterfeiting is illegal.

The survey also revealed that 50% of people buy counterfeit products every 15 or 30 days, 36% twice a year and 12% daily or once a week. The most frequently purchased products are CDs and DVDs of music, films and television series (94%), clothing and footwear (14%), software (13%) and books (10%).

The majority of respondents recognised that buying counterfeits affects the national economy and its industries, and promotes criminal activity.

Policing the borders

A new practice adopted by Mexican Customs may be encouraging the entrance of counterfeits into the country. This is the determination that merchandise in transit should not be intercepted or seized – even if it is counterfeit – unless it is clear that the products are destined for the Mexican market.

This practice prevents authorities from seizing merchandise unless they can demonstrate that it is destined for the Mexican market and therefore constitutes an illegal activity or harms rights holders. Even more worryingly, the practice could imply that the transit of illegal merchandise through Mexico is allowed.

In this regard, it is important to point out that the Customs Law is not supplemental to the IP Law, and thus that the whole concept of importation set out in the Customs Law does not apply to IP issues. Additionally, pursuant to legal precedents from the Mexican courts, the term 'importation' should be understood as the introduction of merchandise into the Mexican territory. Therefore, it is clear that counterfeit merchandise in transit violates IP rights in Mexico and that the authorities are legally empowered to stop its free circulation.

This latest practice of allowing the transit of counterfeits that are not destined for the Mexican market has been vigorously challenged by Mexican companies, not to mention the US government.

A new way forward

Taking this into account, the best way forward would appear to be to coordinate a strategy between all participants. The authorities should review not only the law, but also their interpretation of it in order to implement more efficient public policies. Companies should develop improved anti-counterfeiting strategies, as well as information campaigns aimed at educating all citizens.

Finally, and perhaps most importantly, citizens should try to become aware of and understand the problem, attempting to change their buying habits and trying to avoid justifying bad habits in favour of legality.

This article first appeared in World Trademark Review magazine issue 50, published by The IP Media Group.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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