MEXICO: An Introduction to Intellectual Property
In Mexico, the 2020 COVID-19 pandemic revolutionised the world we live in in every respect, having both positive and negative consequences for our lifestyles and day-to-day activities. Companies of every size and category had to react and evolve in terms of the way they did business and delivered their goods and services.
Thousands of people who lost their main income sources looked for new revenue streams, which led to the appearance of many new entrepreneurs and thus the involvement of new players in the e-commerce sector. e-commerce, which began with the internet boom in the 1990s, has reached an all-time high in the last five years; in Mexico alone, for example, the growth of online sales in 2020 was 81% according to the Mexican Online Sales Association, which means that the number of digital customers surpassed 50 million.
The growth of e-commerce and the surge of m-commerce – ie, mobile commerce, aptly named because it is carried out through mobile devices – created a need for companies and entrepreneurs to protect their commercial identities and adopt or develop platforms, both to offer their products as well as to receive payments, allowing consumers and companies to engage with a global market; this was something that had not been seen before.
As with every such evolution in business, challenges were created for intellectual property, specifically regarding trade marks, copyright and, above all, piracy. In a digital environment, where information spreads rapidly and transactions are almost instant, legal protection becomes even more critical. Statistics reveal that over 40% of online businesses in Mexico reported problems with unregistered brands and pirated products.
One of the issues for companies, and even for clients, is the increase in online piracy and falsified products, where on several occasions the main e-commerce platforms have allowed products that infringe trade marks or copyrights, such as music, movies, books and software, to be distributed easily and on a massive scale. Also, clothing, fashion accessories, electronics and even medicine can be sold through different sellers in large quantities, even by sellers who are not the legitimate holders of the trade marks or are not authorised distributors, directly violating trade mark rights and – even more seriously – posing a risk to consumer wellbeing. Many consumers base their purchase decisions on the price tag of products, favouring those that are below the price of the original product.
It is problematic that the different e-commerce platforms do not use a system that allows verification of the identity of those who claim to be the holders of trade mark rights, and that the products being offered are original.
In this environment, non-authorised third parties use names, logos or distinctive elements of known brands to “trick” consumers and sell products of inferior quality, making it difficult for consumers to detect the deception until they receive the product. Even more seriously, third parties have registered trade marks with the Mexican Institute of Industrial Property (IMPI) in bad faith, before proceeding to register platforms as the rightful holders of trade marks and thereby acquiring the capacity to decide who can and cannot sell products under said trade marks. There have even been cases in which the legitimate holder of trade mark rights has been prevented from selling their own products because a third party has already registered the trade mark on the platform.
Such practices not only affect companies, damaging their reputations and hindering their growth, but they also confuse consumers who purchase products in the belief that they are authentic.
Law enforcement in Mexico in relation to these problems faces multiple challenges. Even though there are specific legislations, such as the Federal Law of Copyrights and the Federal Law for the Protection of Intellectual Property, implementation in the digital environment continues to be quite limited, leaving the platforms themselves – and not the authorities – to resolve conflicts. The rapid spread of illegal content and the capacity of offenders to operate from international jurisdictions complicates the detection and punishment of these activities; furthermore, many companies lack the legal and technological resources to monitor and protect their intellectual property efficiently; although many companies have an active system to detect possible infringements, this is not viable for most of them. More than 80% of the companies in the retail sector have had problems with the protection of their trade marks online, making it crucial for organisations to adopt pre-emptive measures to protect their intellectual property rights.
The lack of co-operation between digital platforms and the Mexican authorities is another important obstacle, because even though some international platforms have systems in place to report infringements, their processes are usually slow and complicated. In the majority of cases, dispute resolution is inefficient or insufficient; claims are not fully resolved because platforms have systems operated by bots with pre-established reply parameters, taking a passive or neutral stance and thus allowing offenders to quickly operate again under new profiles.
All of the above demonstrates the need to strengthen the collaboration between authorities, companies and e-commerce platforms.
For companies and entrepreneurs looking to protect their intangible assets, we recommend, as a first step, thorough analysis of their intellectual and industrial property assets – and the proper registration of their trade marks – before launching their products on the market; this will prevent them from being easy prey for those engaged in unfair competition and piracy. It is also essential for companies and entrepreneurs to register their trade marks on on all e-commerce platforms, as well as with IMPI, and to provide their licensees and distributors with a detailed trade mark user manual , where such guidelines could be crucial in dispute resolution.
In conclusion, e-commerce is indispensable for the economy and the expansion of businesses, but it also exposes businesses to increasingly more significant risks related to intellectual property; this makes it crucial to improve legislation, strengthen its enforcement and promote collaboration between trade mark right holders and e-commerce platforms in order to efficiently fight piracy, protect intellectual property rights and offer a safe and trustworthy environment for consumers. Functional reporting mechanisms and the blockade of pirated products are important steps towards the consolidation of a digital marketplace that is fairer and more respectful of intellectual property.