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1 May 2012AmericasHedwig Lindner and Manuel Morante

A question of fairness: preliminary injunctions in Mexico

In Mexico, patent and other intellectual property infringement actions are litigated, in the first instance, before the Mexican Institute of Industrial Property (IMPI). Since 1994, IMPI has been authorised to grant various forms of provisional relief, including preliminary injunctions against the manufacture, sale and distribution of allegedly infringing goods.

Under Article 199 bis.1.I of the Industrial Property Law, a plaintiff seeking provisional relief must “prove his ownership of the rights”, as well as “the existence of an infringement of his rights”; “the imminence of the infringement of his rights”; “the existence of the possibility of irreparable damage being sustained”; or “a justified fear that evidence might be destroyed, concealed, lost or altered”.

In other words, the plaintiff is typically required to show that it is likely to prevail on the merits before provisional relief can be granted. Alternately, the plaintiff can demonstrate the possibility of irreparable harm, or show that evidence is likely to be lost or destroyed—but this is usually not the case in patent infringement cases.

Despite the clear wording of the statute, IMPI frequently grants preliminary injunctions in patent infringement cases without considering the merits of the case at all. Requests for preliminary relief are routinely granted as long as the plaintiff shows that it owns a patent and that all maintenance fees have been paid. IMPI does not undertake a detailed analysis of the scope of rights conferred by the patent, and the plaintiff’s allegations of infringement are generally taken at face value.

This is a particularly serious problem in cases concerning pharmaceutical patents. The inventions covered by such patents are often marginal improvements on drugs that have entered the public domain, and questions of infringement cannot be fairly determined without a detailed analysis of the defendant’s product and the prior art.

A plaintiff seeking a preliminary injunction must “provide sufficient security to cover any damages that might be caused to the person against whom the measure is sought …”. If the defendant eventually prevails on the merits, it can recover against the bond any damages caused by the wrongful granting of the preliminary injunction.

Alternatively, it can have the preliminary injunction lifted while the case is still pending by posting a counter-bond. Historically, IMPI required the amount of the counter-bond to be double the amount of the bond posted by the plaintiff.

“BEFORE GRANTING SUCH RELIEF, IMPI MUST CAREFULLY CONSIDER WHETHER IT IS NECESSARY OR PERMITTED BY LAW … AND WHETHER LESS DRASTIC MEASURES MIGHT PROTECT THE LEGITIMATE INTERESTS OF THE PLAINTIFF.”

Unfortunately, this procedure has been frequently abused in pharmaceutical patent infringement cases. The plaintiffs in such cases are usually large multinational companies, and the defendants are, typically, small or medium-sized generic drug manufacturers with fewer financial resources.

Often, plaintiffs post extremely large bonds, wholly out of proportion to the value of the claim, to make it impossible for the defendant to raise the funds necessary to post a counter-bond.

In June, 2010, congress amended Article 199 bis.1.I to curtail this abuse. The amount of the counter-bond is now limited to the amount of the original bond, plus 40 percent. However, the possibility of abuse remains as long as patent holders continue to post exorbitantly large bonds without any scrutiny by IMPI.

One recent appellate decision concluded that in determining the propriety of preliminary relief and the amount of security to be posted by the plaintiff, IMPI must consider (i) whether the defendant has engaged in an unlawful activity related to the plaintiff ’s patent; and (ii) whether there is objective data which support the amount of the bond being offered by the plaintiff. Regularly, this admonition has not been heeded by IMPI.

Defendants in pharmaceutical patent cases have argued that IMPI must require plaintiffs to:

  • Demonstrate the scope of rights conferred by their patent. Simply requiring plaintiffs to submit a copy of the allegedly infringed patent is not enough. Plaintiffs should be required to provide credible evidence that they are likely to succeed on the merits of their infringement claim—that is, evidence that their patent has been infringed or is about to be infringed by the defendant.

    This is particularly important in cases where the plaintiff’s patent does not cover an active ingredient, since the scope of rights conferred by secondary patents is often unclear;
     
  • Prove, and not merely allege, specific and irreparable harm that will occur in the absence of preliminary relief; and
     
  • Justify the amount of the security being proposed, so that the plaintiffs cannot use the preliminary injunction procedure to destroy legitimate competition.

On December 3, 2009, the Fourth Collegiate Circuit Court in Administrative Matters for the First Circuit decided Case No. 311/2009. In May and June of 2011, the Seminario Judicial de la Federación published a series of non-binding tesis aisladas, or points of law, from the decision, which provide a series of minimum standards for the granting of preliminary relief under Article 199 bis.1. Specifically, the court held that the plaintiff must:

  • Identify the particular right conferred by the patent or registration at issue that is being violated by the defendant;
     
  • Offer prima facie evidence that the defendant has committed an infringement;
     
  • Demonstrate that the alleged infringement began prior to the request for preliminary relief or the plaintiff seeks to prevent imminent harm; and
     
  • Show that the relief ultimately granted by IMPI will be ineffective if the alleged infringement is allowed to continue until a decision on the merits.

In addition, the court held that IMPI must carefully consider the plaintiff’s likelihood of success on the merits, the suitability or necessity of preliminary relief, whether less drastic relief would accomplish the same purpose, and the relative hardship to the parties if relief were granted or denied, particularly in cases involving two presumably valid rights.

As stated by Carlos María Correa (Medidas cautelares en el regimen de patentes): “The exclusion of the presumed infringer from the market constitutes a drastic measure, which should only be taken in exceptional cases, since it alters the state of facts and rights [of the parties] existing at the time relief is granted, and amounts to a finding that the plaintiff is likely to prevail when the case is finally decided.”

Further, preliminary relief “causes certain and direct damage to those who will be deprived of medication at an accessible price while the measures are in force. It must be remembered that in the pharmaceutical field we have arrived at a situation where in many cases patents are not sought for genuine inventions, but rather for the purpose of suppressing competition, at least temporarily”.

The Industrial Property Law allows IMPI to grant drastic forms of preliminary relief, which remain in effect for long periods of time due to the delays in resolving cases before IMPI and its reviewing courts. Before granting such relief, IMPI must carefully consider whether it is necessary or permitted by law, whether there is a likelihood of irreparable harm if relief is not granted, and whether less drastic measures might protect the legitimate interests of the plaintiff.

While IMPI must grant effective provisional relief in appropriate cases, it must also recognise the prevalence of frivolous infringement claims.

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Hedwig Lindner is a partner at Arochi, Marroquín & Lindner, SC. She can be contacted at: hlindner@aml.com.mx

Manuel Morante is an associate at Arochi, Marroquín & Lindner, SC. He can be contacted at: mmorante@aml.com.mx


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