The following legislation governs counterfeiting in Mexico:

  • the Industrial Property Law;
  • the Federal Criminal Code;
  • the Copyright Law; and
  • the Customs Law.

Depending on the matter involved, these laws – alone or in combination – provide rights holders with the necessary tools to take legal action against counterfeiting and seize illegal merchandise, obtain preliminary injunctions and prosecute criminal, administrative and civil actions to seek appropriate remedies against infringement.

Border measures

Customs officers inspect the contents of containers that have Mexico as their final destination or that pass through the country in transit in order to detect counterfeit merchandise.

On July 29 2011 an amendment to the General Rules of External Trade was published in the Oficial Gazette which, among other things, created the Official Database for Mexican Trademark Registrations of the Mexican Customs. Through the creation of the database, all rights holders in Mexico are entitled to ask Customs to record information about their registered trademarks in Mexico in that database so that such administrative authorities can identify the import of counterfeit goods that violate registered trademarks.

Before the amendment, Customs had no official database to consult to review rights holders' information; instead, it used an informal database containing information collected from past actions and details that trademark owners had provided informally about their portfolios. Therefore, with the creation of the official database, Customs can review the information provided by rights holders to identify the import of counterfeit goods.

It is optional for a rights holder to request the recordal of information about a particular trademark in the database. The request process became operational on January 2 2012.

The creation of the official database should make the process more efficient, giving Customs immediate access to detailed information about rights holders, licensees and their representatives. This in turn will allow rights holders and their representatives to be contacted promptly so that they can initiate the appropriate legal actions.

Additionally, in 2011 training for customs officers continued throughout Mexico. This was to enable rights holders and their representatives to educate officers about the relevant issues that should be considered when determining whether merchandise is genuine, as well as information about importers, distributors and countries of origin of counterfeits. Such training and information allows officers to identify counterfeit merchandise more easily; therefore, it is likely that it will be repeated.

Customs cannot take action against counterfeit goods unless the rights holder has initiated a corresponding legal action to seize the goods. It must be swift in contacting the rights holder, since it has only limited time to detain the merchandise if a legal action is not initiated. It is therefore crucial that rights holders provide Customs with details of their trademark portfolios, as well as information on who can take action on their behalf, so that their representatives can be contacted promptly and in sufficient time to move swiftly against any counterfeit merchandise that is detected at the borders.

Criminal prosecution

The Industrial Property Law, together with the Federal Criminal Code, establishes which activities related to counterfeiting are considered to be crimes. All criminal actions must be initiated before the General Attorney's Office, which will prosecute and integrate the official file before it is sent to a federal court.

According to Mexican law, some counterfeiting crimes can be prosecuted ex of icio and some can be prosecuted only if the injured party complains to the competent authorities. In light of this, if a rights holder becomes aware of the existence of counterfeit goods that directly affect its mark, it must file a criminal petition with the General Attorney's Office.

During 2010, an amendment to the Criminal Code and the Industrial Property Law was made granting the General Attorney's Office the authority to act ex of icio against counterfeiters selling goods bearing counterfeit trademarks if these are stored or sold in street markets or in commercial establishments.

Criminal actions are typically initiated: where counterfeit goods are detected by Customs, with the object of seizing the consignment and preventing the goods from entering the Mexican market; and once counterfeit goods have already entered the market – raids are conducted at specific premises where the counterfeit goods are being stored or sold.

In a criminal action the merchandise is provisionally seized as soon as it is detected and remains in custody until a final decision has been issued ordering its destruction.

Once the action has been initiated and the merchandise seized, a prosecutor at the General Attorney's Office will investigate the merits of the case, recovering all information, evidence and expert opinions necessary to decide whether to prosecute. If the prosecutor decides that the case should proceed, the official file will then be submitted to a criminal federal court, which will review all of the evidence in order to determine whether a crime has been committed. As the federal judge will base his or her decision on the file submitted by the General Attorney's Office, it is crucial that this be created properly and include all possible evidence and information in support of the rights holder's position.

A key advantage of a criminal action is that the counterfeit merchandise is seized at the very outset. Therefore, even if the decision takes some time to be issued, the rights holder will have succeeded in keeping the counterfeit merchandise off the market.

The main remedies available in criminal actions are destruction of the counterfeit goods and imprisonment of the counterfeiters, depending on the crime.

Civil enforcement

According to the applicable legislation, civil actions against violations of industrial property rights can be initiated only once the Institute of Industrial Property has issued an administrative decision declaring the infringement of an industrial property right. Such a decision is the consequence of a full administrative proceeding prosecuted as a kind of trial, and must be definitive and beyond appeal.

In this regard, the rights holder must initiate an administrative action against the infringer before the Institute of Industrial Property before it can commence a civil action. Only in the case of copyrights is it possible to pursue a civil action to claim damages before a definitive administrative decision has been issued by the Institute of Industrial Property.

Enclosed with the initial brief, or even before the brief is filed, the rights holder can request preliminary measures. In the case of counterfeit goods these might include the seizure of the suspect merchandise or a prohibition against their sale or distribution.

Different types of preliminary injunction can be requested before, at the same time as or after the administrative action has been filed. These will be granted and implemented by the Institute of Industrial Property if the rights holder satisfies the following requirements:

  • It posts a bond to cover possible damages to the infringer in case it fails to obtain a declaration that an infringement has been committed.
  • It proves the existence of its IP right.
  • It proves that:
    • the IP right has been violated;
    • it is highly probable that the IP right will be violated;
    •   the evidence proving such violation will be destroyed; or
    • irreparable harm may be suffered as a result of the violation.
  • It provides the authorities with the information necessary to identify the counterfeit merchandise.

As in criminal actions, even if the administrative proceeding takes a long time to be decided, the preliminary injunction imposed at the outset will prevent the infringer from continuing to distribute and sell the illegal merchandise. However, in administrative proceedings the infringer is entitled to file a counter¬bond to suspend the effects of the preliminary injunction. This can be filed at any time after the preliminary injunction has been implemented.

The criteria for determining the amount of the bond and the counterbond are not stated in the applicable law. Consequently, the Institute of Industrial Property determines the amount of such bonds depending on the merits of the case. The counter¬bond is usually set at double the amount of the original bond filed by the rights holder. In the case of administrative proceedings, it is thus possible that the preliminary injunction can be suspended if the infringer files a counter¬bond, but this counterbond is intended to cover possible damages to the rights holder that may be caused by this suspension.

This type of administrative proceeding takes at least three years to be finally decided. Once the administrative decision has been issued, it is then possible to initiate a civil action to seek damages from the infringer for violation of the IP right.

The applicable legislation expressly states that damages for IP infringements must be at least 40% of the products' sale price. This rule should therefore be taken into account by civil judges when they calculate the amount of damages to be awarded for IP rights violations.

As the civil action is prosecuted through a full trial with further instances of appeal, it may take some time for the rights holder to obtain a final decision. However, there are sufficient tools available for the recovery of damages.

Anticounterfeiting online

Although Mexican law does not recognise specific online counterfeiting crimes or provide specific penalties for such activities, it is still possible to take action against online IP violations. Certain provisions in the applicable

legislation can also apply to online counterfeiting and may be used to combat such activities. However, the appropriate strategy must be evaluated on a case by case basis in order to determine the most suitable action.

Preventive measures and strategies

Rights holders and their representatives must move swiftly as soon as a violation is detected because of the short timeframe they have to take action before the authorities are required to release the merchandise; they cannot continue to detain suspected counterfeit goods if a legal action is not initiated. It is thus recommended that both rights holders and their representatives have ready all information and documentation necessary to take action at any time (eg, the proper power of attorney, information on licensees and distributors, details of the ports where original merchandise normally enters the country, and full details of the trademarks and the products they protect).

The representatives must also be familiar with the particulars of genuine merchandise, so that they can easily and timely determine whether merchandise is counterfeit. Such a prompt reaction will enable the rights holder to be informed quickly of instances of counterfeiting and reduce the risk of counterfeit merchandise being mistakenly reported as genuine.

Rights holders and their representatives should also communicate closely with Customs, in order to teach officials about the characteristics of genuine or fake merchandise and keep them updated of any changes to or new information about their IP portfolio. Participation by rights holders, through their representatives, is highly recommended, as they are best placed to explain key differences between genuine and counterfeit products and to provide samples of both.

Finally, rights holders and their representatives should also ensure that they tackle the most important cases, in light of the size of the consignment or other factors (eg, if the counterfeit merchandise is offered for sale at a location that might harm the rights holder's image and prestige). A cleverly thought¬out strategy will help rights holders to keep the costs of anti¬counterfeiting initiatives down, while still ensuring that such activities are as effective as possible.

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.