Patent term compensation controversies in Mexico

Prior to November 5, 2020, Mexican laws and regulations did not provide any mechanism for patent term adjustment for unreasonable delays by the granting authority, the Mexican Institute of Industrial Property (IMPI).

However, on July 1, 2020, as a result of the entry into force of the United States-Mexico-Canada Agreement (USMCA), the new Federal Law for Protection of the Industrial Property was enacted. The new IP law represents an important legislative change, as it is aimed at matching the domestic law with the standards set by the new trade and cooperation agreements signed by Mexico in recent years, and it finally came into force on November 5, 2020.

The new Federal Law for Protection of the Industrial Property already provides for the issuance of a “supplementary certificate” for those cases where during the processing of a patent with the IMPI, there are unreasonable delays, directly attributable to IMPI that translate into a period of more than five years, between the filing date of the application in Mexico and the granting of the patent, which may be granted at the request of the interested party to adjust the validity of the same.

It is clearly stipulated that the validity of the complementary certificate may not exceed five years and that IMPI will determine the period of days that corresponds to the unreasonable delay, which will result in a supplementary certificate valid for one day for every two days of unreasonable delay. This certificate will take effect the day after the expiration of the 20-year validity period of the patent and will confer the same rights as the patent from which it derives. However, this provision is only applicable to patents filed and prosecuted with IMPI after November 5, 2020.

Not unanimous nor binding

Back in October 2020, the Mexican Supreme Court issued a relevant judgment related to patent term adjustment due to unjustified delays during patent prosecution prior to the USMCA, that is, patents filed and prosecuted before November 5, 2020.

This ruling concluded that if there is evidence of an unjustified delay during the patent prosecution, the term of protection should be compensated in accordance with article 1709, section 12 of the North American Free Trade Agreement which establishes that the term of patents cannot be less than 20 years counted from their filing date, or rather, 17 years from the granting date.

In application of the principle of “greatest benefit” in the constitutional venue where the case was studied, the Supreme Court considered as a remedy that the compensation in that specific case should be 17 years from granting.

This precedent was not unanimous, and it is not binding, meaning that IMPI will not adopt the criteria to compensate life term of patents in similar cases without a court order. For the Mexican Courts, the precedent is not binding either, but highly persuasive in similar cases.

Currently, there is a controversy mainly on the remedy of the 17 years from granting as compensation and the rationale behind the terms to consider a delay during patent prosecution established in said decision, since the ambiguity on the decision has resulted in frivolous compensation petitions even when there are no delays during patent prosecution.

While we agree with the Supreme Court ruling in the sense that a delay in the patent prosecution by IMPI should be compensated, we consider that such decision failed to clarify the period that must elapse between the date of application and granting for it to be considered that IMPI in fact incurred a delay during its processing and the way in which said compensation must be granted. This is mainly because said precedent could give rise to petitions for compensation where there is no true delay attributable to IMPI and which could be considered an abuse of the right of its titleholder.

That is why we consider that the suitability of a request for patent compensation under the precedent of the Supreme Court of Justice must be grounded on the verified existence of a delay of five years or more in accordance with the current criteria and provisions of the USMCA and IP law, which as mentioned above, states that an unreasonable delay directly attributable to IMPI translates into a period of more than five years, between the filing date of the application in Mexico and the granting of the patent.

That is, in both cases the remedy of the compensation cannot be excessive, since the new IP law already establishes the parameter for the patent prosecution delay and the rules to adjust or compensate the patent term, which may be applied by analogy to those patents prosecuted before November 5, 2020, and not the other way around, since the remedy and the lack of delay parameters established in the Supreme Court’s decision could exceed the current legal parameters in violation of the statutory law and would contradict the entire patent system and its current term adjustment.

Likewise, a possible granting of the requested compensation without there being a delay of five years and the actions eventually exercised under said compensation against third parties may be the subject of subsequent litigation and claims for damages by said third parties when it is demonstrated that it was unduly granted, since as set forth above, this would imply an abuse of the right of its titleholder.

It is expected that said criteria and considerations will be defined shortly due to pending litigations with the Courts.

Daniel Sanchez is a partner at Olivares and co-chairs the firm’s litigation and patent teams. He can be contacted at  daniel.sanchez@olivares.mx

Karla Olvera is an associate attorney at the litigation department of Olivares ​and is a member of the life sciences group. She can be contacted at  karla.olvera@olivares.mx