Picture this: An employee in your Mexican subsidiary recently left the company and has started a legal action for copyright and patent infringement against your company. Sure, the employee collaborated with the improvement of a machine and a few designs, but it was part of his job and clearly they do not belong to the employee. Or do they? According to your ex-employee’s claims, the company has no rights over HIS intellectual property and it will need a license if it wishes to continue using it. Do we have your attention yet?

One thing is for sure; to every legal battle there are two sides of the story. On one hand employers should recognize that employees may have certain rights over the IP they create. On the other hand –when properly advised– employers can secure rights over such IP. Moreover, it is important to differentiate between IP created by workers and IP resulting from a "work for hire" relation. In a nutshell, the problem is to identify the underlying relationship between the parties and the boundaries of protection granted to each concerning the ownership of IP.

But, whose IP is it anyway?

The topic is intricate, specially since it involves various statutes; among which the most relevant are the Copyrights Law ("CL"), Industrial Property Law ("IPL") and Federal Labor Law ("LL"), are significant for identifying ownership rights. Moreover, the fact that different types of IP may be qualify for different type of protection adds complexity to the topic. Clearly each case has to be analyzed separately; still, for your reference, below we describe some basic principles of Mexican IP law as it applies to the workplace.

  • Copyrights by an employee: Economic rights related to copyrights (including the right to sell, commercialize or otherwise exploit a work) will belong entirely to the employee who created a work, aside from his specified functions under the employment agreement and the employer would need to license such work in order to use it. However, if creations by an employee fall within the scope of the employment agreement, the employer and employee will have to share in equal parts the economic rights, unless it is not otherwise provided in the employment agreement.
  • Employee’s Patent Rights: The LL establishes a legal assumption that the employee has ownership over the economic rights derived from an invention if the corresponding employment agreement does not establish that his scope of work includes specifically the creation thereof. Moreover, even if a person is hired specifically do such kind of task, in some cases the employer should remunerate the employee. In any other case, the property of the invention will lie on the employee, however the employer will have a preferential right to acquire or use exclusively the invention.
  • Work for hire: The CL provides that the person who paid for a commission should be the owner of all economic rights, unless otherwise provided, and the independent contractor has a right to be acknowledged as creator. Although a contractor does not have a work relationship with the employer, by an extreme interpretation of the LL it could be considered an employee provided that certain assumptions could be made that the work was done through a subordinated relationship even if there is no agreement between the parties

Based on the above, employers should identify the potential risks and set up effective intellectual property protection strategies, not only to capitalize their IP assets, but also to increase awareness of its employee’s rights and obligations regarding IP. These strategies should be developed and implemented on all levels of the company, since IP generally arises in the most unusual places.

Based on our experience (and the experiences of many companies that did not seek our advice before getting in trouble) the first suggestions for companies when dealing with IP in the workplace could be summarized as follow:

  • Identify any potential IP assets.
  • Secure your IP, if it is not protected under Mexican law.
  • Review and revise any existing labor agreements with your Mexican counsel.
  • Make sure that the IP rights are duly assigned, if applicable.

And so the question remains … Whose IP is it? There is no right answer if you don’t have all the facts at hand. Mexico has specific provisions under law regarding this issue. A trustworthy intellectual property attorney jointly with a labor law specialist will have skills and tools necessary to: a) identify the IP, and b) review the nature and scope of the employment relationship with the employee. It is not advisable just to set forth policies and have your employees sign IP assignment agreements, it is important to review the situation on a case by case basis and take into consideration the specific type of intellectual property.

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.