Mexican Court Decisions Clarify Trademark Invalidation Burdens, Copyright Royalties

The Mexican courts recently handed down several important decisions affecting both trademark and copyright owners. These decisions concern the burden of proof in trademark nullity proceedings, a constitutional challenge to pro- visions prohibiting the registration of trademarks that are identical or confusingly similar to an already registered mark, and the effect that new TV broadcast licensing rules have on the rights of copyright holders to obtain royalties.

New Criteria for Nullity Action Based on False Data.

In July, the Judicial Plenary in Administrative Matters in the First Circuit issued a binding decision, concerning con- tradictory rulings from the Sixth and Tenth Circuit Courts of Appeals, related to nullity actions based on false data contained in trademark applications.

The Judicial Plenary ruled that when a nullity action is based on a claim that the application was based on false data, the petitioner must prove that the information was false at the time the application was filed at the Mexican Patent and Trademark Office; otherwise, the nullity action shall be denied.

Article 151, Section III, of the Industrial Property Law states that a trademark shall be in invalidated when ‘‘ the registration was granted on the basis of false information contained in the application.’’

The statute does not state whether it is the petitioner who must prove the information was false, or the trademark owner who must prove the information submitted was true.

Previously, the non-binding criterion observed by the authorities was to impose the burden of proof on the owner of the trademark registration that was under attack. In other words, the defendant had to demonstrate the veracity of the information provided in the trademark application in order to avoid nullification. The authorities held this criterion based on the fact that the owner of the mark had the elements to proof that the information stated in the application was true.

However, the Judicial Plenary changed such criterion with its ruling. It said that the petitioner of a nullity action must observe the principle of burden of proof, which states that the person who makes an assertion must prove the grounds of the same. In this regard, the petitioner of the nullity action has to demonstrate the falseness of the information allegedly in the trademark application.

Constitutionality of Provision on Confusingly Similar Trademarks.

The First Chamber of the Mexican Supreme Court, in its August 17, 2016 session, upheld the constitutionality of the trademark law’s prohibition against the registration of marks that are confusingly similar or identical to an earlier reg- istered trademark (Case No 2008/2016, parties not made public). In the decision, the court clarified the concept of ‘‘confusingly similar or identical’’ under Mexico’s trademark law.

Article 90, Section XVI, of the Industrial Property Law states that a trademark cannot be registered if it is ‘‘identical or confusingly similar to another in respect of which an application has been filed earlier and is awaiting registration or to another that is already registered and in force, and is applied to the same or similar products or services. However, a trademark identical to one previously registered may be registered if the application is made by the same owner for use in connection with similar products or services.’’

In the case the plaintiff asserted that the article is unconstitutional since it does not explain what shall be understood by ‘‘identical or confusingly similar.’’ Therefore, this provision is abstract, since it gives the Mexican Patent and Trademark Office power to arbitrarily decide what is identical or confusingly similar, the plaintiff argued.

The Court rejected the challenge. It said that the concept can be obtained from the law. To be identical or confus- ingly similar means that the marks are similar to the point that convey to the consumers the wrong idea that they are similar or related.

In the same resolution, the Supreme Court determined that the registration of a mark has the purpose of penalizing unfair competition, which involves attempts to unduly confuse, take advantage, dilute, weaken or associate the prestige of recognized marks. Therefore, to impede individuals or companies from using an already registered trademark does not mean a monopoly of said the registered mark, but the protection for the consumers to avoid deviations in the market by mistakes, the court explained.

Must Carry-Must Offer Versus Copyrights.

Another case ruled on the relationship between the new ‘‘must-carry offer’’ requirements for broadcasters and the copyright holders’ right to royalties. The decision from the Second Chamber of the Supreme Court at the end of June, held that the amendments to the articles 164 of the Broadcasting and Telecommunications Federal Law; and 27 and 144 of the Copyrights Federal Law were valid.(Court Case No. 1238/2015).

The amendments to the Articles 6, 7, 27, 28, 73, 78, 94 and 105 of the Mexican Constitution, published in the Federal Official Gazette on June 11, 2013; 164 of the Broadcasting and Telecommunications Federal Law; and 27 and 144 of the Copyrights Federal Law, brought several legal disputes. These cases were brought by broadcasted television licensees to determine issues of constitutional validity and questions related to the human rights protected by international treaties signed by Mexico, since such modifications apparently violated rights of the authors to receive royalties as compensation for rebroadcasting their works through restricted television licensees without additional costs.

The new legal provisions imposed the obligation for restricted television licensees to rebroadcast, without additional costs, content which the broadcasted television licensees must provide without cost. These obligations are known as must carry-must offer requirements.

The Second Chamber of the Mexican Supreme Court held that the amendments were valid. Furthermore, the Supreme Court stated that such amendments only confirm the obligation for the broadcasted television licensee to make the content available to the restricted television licensees without cost. It also ruled that the authors will continue to get royalties from the broadcaster, and also that their rights to claim further royalties from the rebroadcasters continue to exist. In sum, the Supreme Court concluded that with the simultaneous free retransmission of the signal from the broadcasted television licensees, the restricted television systems are only being included into the signal already broadcasted, in order for the people to receive the services through both licensees, enjoying equal conditions.