Protecting Intellectual Property in the Digital

Environment:

The View from Mexico Robert M. Kossick, Jr., Esq., USCB

Presented at the University of Miami Inter-American Law Review Symposium:

"The Internet in Latin America: Barriers to the Protection of Intellectual Property"

Miami, FL • March 22, 2002

I. Introduction: Legislative FrameworkNational

1. Ley de la Propiedad Industrial

2. Reglamento de la Ley de laPropiedad Industrial

3. Acuerdo por el que se Da a Conocer la Tarifa por los Sevicios que Presta el IMPI

4. Ley Federal del Derecho de Autor

5. Reglamento de la Ley Federal del Derecho de Autor

6. Codigo Penal Federal

International

1. Paris Convention, 19032. Berne Convention, 19673. PCT, 19954. Nice Agreement, 20015. Vienna Agreement, 20016. Brussels Convention, 19797. WCT, 19978. WPPT, 19979. TRIPS, 199510. NAFTA, 1994

I. Introduction: Persistent Problems

A. Unclear Substantive & Procedural Provisions of National LawsB. Non-Compliance of Certain Provisions of National Law with TRIPS &

NAFTAC. Ineffective EnforcementD. Existence of Technological, Social & Economic Conditions that Give Rise

to Piracy:1. Ease of making and distributing copies on internet2. Advances in broadband and modem speed capacity 3. Reduced cost of reproduction equipment 4. Increased presence of organized crime 5. Cheap cost of official protection6. Growing demand for high-tech products7. Economic appeal of obtaining something for free (or pennies on the dollar) in country with average per capita GDP of $US5,000

I. Introduction:Costs & Consequences

A. To Extent that Weak IP Protection Makes Corporations Reluctant to Enter Mexican Market:1. Forgone tax revenue, job creation, & technology transfers 2. Debilitated developmental and innovation prospects3. Non-tariff barrier to hemispheric trade and investment

B. If Company Nonetheless Enters Mexican Market, Subsequent Piracy Results in: 1. Trade losses2. Dilution of corporate good will, brand

C. Mexico's Citizens Confronted with:1. Inadequate worker protection2. Exposure to inferior or unstable products

II. Domain Names:Registration

A. gTLD Options Available in ccTLD ".mx"

1. .edu 4. .org

2. .com 5. .gob

3. .net

B. Determine Availability of Desired Domain Name:

1. Check NIC-MX's database "WHO IS"

C. Electronic Registration with NIC-MX:

1. "Contact" information required

2. Cost is US$70 for first two years, US$ 35 thereafter

3. No special presence requirements

II. Domain Names:Dispute Resolution

A. Disputes: Mandatory Administrative Proceeding, if Claim:

1. Domain name is identical or deceptively similar to registered mark

2. Registrant has no right/legitimate interest in domain name

3. Domain name has been registered and used in bad faith

B. Rules: NIC-MX Uses LDRP:

1. DR provider is WIPO Arbitration & Mediation Center

2. Panel has broad power to manage evidence & proceeding

C. Resolutions: If Panel Determines Bad Faith Registration:

1. Can order cancellation or transfer of domain name

D. Benefits of Administrative Proceeding:

1. Relatively fast and inexpensive

II. Domain Names:Alternative Protection Strategies

A. Alternative Domain Name Protection and/or Dispute Avoidance Strategies:

1. Preemptively register gTLDs & ccTLDs where foreseeable interest

2. Preemptively register parodies & hate-motivated variants

3. Use secure, encrypted means of communicating with

NIC-MX

a) Prevent transfer of domain name in connection with bad faith use of unauthenticated

identity

III. Trademarks:Scope & Nature of Protection

A. LPI Protects as a Mark:1. Any visible sign that distinguishes products or services from others of the same type or class2. "Sign" includes:

a) Figures and denominationsb) Tridimensional formsc) Commercial or personal names

3. Slogans or phrasesB. LPI Provisions Not Technology Neutral:

1. Application of concept assured, however, by TRIPS and NAFTA 2. Record indicates no registration discrimination with respect to names, figures, and slogans appearing "online"

III. Trademarks:III. Trademarks:Registration Benefits & LimitsRegistration Benefits & Limits

A. Registration of Mark not Pre-Condition to Offering of Goods & Services in Mexico, but Beneficial:1. Registration gives rise to right of exclusive use of mark2. Required for creation of security interests in IP3. Facilitates IP audits in conjunction with mergers and acquisitions, private equity deals, or strategic alliances

B. Registration Limitations:1. Technical names of common use2. Usual or generic words3. Descriptive or non-distinctive words, figures, or elements4. Denominations and figures which deceive or induce error regarding nature, components, or quality of good or service5. Well known marks

III. Trademarks:Registration Procedure

A. Clear Rights Using Subscription Based "Sistema de Marcas"

1. No linkage with WIPO's Trademark Database Portal

B. Submit Completed Registration Form & Payment to IMPI:

1. No electronic filing or payments

2. Indicate date of first use (but prior use not pre-requisite)

3. Indicate good or service's international classification

4. Previous U.S. filing date prioritized, where appropriate

C. Examination of Form & Substance

D. Registration, Issuance of Constancia, Publication in Gaceta:

1. First response within 6 months, though Gactea delays

2. Mark protection relates back to date of filing

3. Registration effective throughout Republic for indefinitely renewable 10 year periods

III. Trademarks:Loss or Limitation of Rights

A. By Reason of Non-Renewal within Specified Time

B. By Reason of Non-Use:

1. Mark's registration may be object of cancellation action after 3 consecutive and unjustified years of non-use

C. By Declaration of Obligatory Use:

1. LPI establishes conditions under which the use of a mark may be compulsory

a) Mark associated with monopolistic practices

b) Use of mark impedes efficient distribution, production, or commercialization of

goods or services

c) In event of national emergency

III. Trademarks:Infractions & Crimes

A. Administrative Infractions Relevant to the Digital Environment:1. Unauthorized use of mark, slogan or commercial name that

is identical or confusingly similar to one previously registered in connection with similar goods or services2. Commercial acts that deceive or confuse the public by wrongfully suggesting a relationship between a third party and a right holder or which result in unfair competition3. The disparagement of products or services

B. Criminal Offenses Relevant to the Digital Environment:1. Repeated Infractions2. Intentional falsification of marks, on commercial scale 3. Intentional production, storage, or commercialization of objects bearing falsified marks, on commercial scale

C. Collectively Responsive to Framing, Deeplinking, & Metatagging

III. Trademarks:Dispute Resolution

A. Administrative Proceeding with IMPI: 1. Good preliminary injunctions and provisional remedies, including inspections and seizures (from LPI)2. Good discovery provisions (from LPI)3. Relatively fast, but compensating damages unavailable (i.e., only sanctions)

B. Civil or Criminal Action (must display "M.R.," "®," or words):1. Obtain prior administrative declaration of infraction, where

appropriate 2. Courts use provisional remedy and discovery provisions

set forth in LPI 3. Minimum damages established (at least 40% sale price) 4. Actions slower, judges not always familiar with subject matter

III. Trademarks:Treaty Compliance & EnforcementA. Compliance of LPI Dispute Resolution Provisions with TRIPS/NAFTA:

1. Availability of provisional remedies on ex parte basis unclear, in violation of TRIPS/NAFTA2. Necessity of pursuing multiple time and money consuming

proceedings before different competent authorities in order to obtain adequate provisional remedies and damages

violates TRIPS/NAFTA prohibition against unnecessarily complicated, costly, and delay-inducing procedures

B. Enforcement:1. IMPI and PGR actively conduct raids and seizures2. Serious fines and convictions have not been forthcoming3. This situation, to extent leaves piracy market in place and

unrepentant, violates TRIPS/NAFTA requirement that penalties have deterrent effect

III. Trademarks:Alternative Protection Strategies

A. Use & Prominently Display Protective Notices

1. Provide link to information regarding scope of rights, use policies, and restrictions

B. Outlink Carefully

1. Use linking agreements where appropriate

C. Monitor Registered Marks

1. Use in-house "brand cop" or out-sourced service

D. Obtain Insurance Policy Endorsement for Protection of Marks

E. Notify U.S. Customs of Mark's Registration

1. Protect against entry of pirated or counterfeit goods

IV. Copyrights:Scope & Nature of Protection

A. LFDA Protects:

1. Original literary and artistic works from moment of fixation in material support

2. Term of protection usually life of author plus 75 years

3. Terms of LFDA expressly technology neutral

B. LFDA Provides Explicit Protection for Works Destined for Digital Environment:

1. Literary 6. Computer Programs

2. Musical 7. Compilations

3. Films 8. Databases

4. Audio-Visual 9. Other images

5. Radio/TV

IV. Copyrights:Scope & Nature of Protection

C. LFDA Bestows Following Rights:

1. Moral

a) Author is original holder of rights

b) Author has power, inter alia, to take work out of commerce

2. Economic

a) Economic right holder (may or may not be author) has power to authorize or prohibit reproduction,

publication, fixation, communication, transmission, distribution, sale, use, or exploitation of work

IV. Copyrights:Registration Benefits & Procedure

A. Registration: Not Required, But Beneficial:

1. Ensures juridical certainty by creating legal presumptions regarding facts and acts associated with work

2. Enhances value of IP assets, facilitates IP audits, fuels investment and transfers of technology

B. Registration Procedure before INDA:

1. May be eligible for automatic protection under Berne Convention if within designated timeframe, but

nonetheless advisable to register

2. No electronic filing

3. Relatively quick turn-around; inexpensive

IV. Copyrights:Infractions & Crimes

A. Administrative Infractions Relevant to Digital Environment:

1. Unauthorized production, reproduction, storage, distribution, public communication, use, exploitation, or commercialization of work with purpose of making either a direct or indirect profit

B. Criminal Copyright Offenses Relevant to Digital Environment:

1. Knowingly exceeding authorized number of copies

2. Intentional & unauthorized use of protected work for purpose of making profit

3. Intentional & unauthorized production, storage, distribution, sale, or rental of protected work on commercial scale

4. To knowingly publish a work having changed information identifying author

IV. Copyrights:Dispute Resolution

A. Administrative Proceeding:1. Competent authority is IMPI, not INDA 2. Good preliminary injunctions and provisional remedies, including inspections and seizures (from LPI)3. Good discovery provisions (from LPI)4. Relatively fast, but compensating damages unavailable

B. Legal Action (prior declaration of infraction not required):1. Criminal action, through Ministerio Publicoa) No recourse to provisional remedy and discovery provisions of LPI (must use CFPP)b) Minimum damages established (40% sale price) c) Actions significantly slower2. Civil actions possible, but not used in practicea) CFPC applies, no minimum damages established

IV. Copyrights:Treaty Compliance & EnforcementA. Compliance of LFDA Dispute Resolution Provisions with

TRIPS/NAFTA:1. Uncertainty regarding availability of provisional remedies

on ex parte basis violates TRIPS/NAFTA2. Necessity of pursuing multiple time and money consuming

proceedings before different competent authorities in order to obtain adequate provisional remedies and damages

violates TRIPS/NAFTA prohibition against unnecessarily complicated, costly, and delay-inducing procedures

B. Enforcement:1. IMPI and PGR actively conduct raids and seizures2. Serious fines and convictions have not been forthcoming3. This situation, to extent leaves piracy market in place and

unrepentant, violates TRIPS/NAFTA requirement that penalties have deterrent effect

IV. Copyrights:Alternative Protection Strategies

A. Update Copyright Registrations to Reflect Changes in Content

B. Select Appropriate Distribution Model:

1. Reduce temptation to illegally copy works

C. Implement DRM System & Anti-Circumvention Measures:

1. Product registration/activation

2. Embed copyright information, serial numbers, and/or digital watermarks into code, text, and images

3. Prominently display "©" symbol or word, together with link to additional information regarding ownership & use policy

4. Use secure, encrypted "containers" to deliver IP sensitive content

IV. Copyrights:Alternative Protection Strategies

D. Ensure Network Security Against Hacks, Fraud, Digital Theft:

1. Assure adequacy of firewalls, intrusion detection systems

2. Assure interoperability of all systems and programs

3. Submit to independently conducted systems vulnerability assessment

4. Regularly monitor and update systems

5. Carry anti-hacking insurance ("network security policy")

E. Implement Internal & External Copyright Policies:

1. Clarify rights and procedures with employees through use of written policies, confidentiality agreements

2. Use written work-for-hire agreements, where appropriate

IV. Copyrights:Alternative Protection Strategies

F. Inaugurate Educational and Advocacy Campaigns:

1. Educate consumers, private sector, and local government about dangers, risks, and costs of piracy

2. Form industry "watchdog" associations

3. Make it easy for consumers to report piracy

4. Establish formal and informal working relationships withlocal counsel and government officials

5. Lobby (U.S. or Mexico), where appropriate

6. Conduct Special 301 trade diplomacy, where appropriate

V. Concluding Recommendations

A. Clarify & Strengthen National Laws and Mechanisms:

1. Clarify timing of trademark based legal actions

2. Clarify damages available in civil copyright action

3. Clarify and strengthen provisional remedies available under CFPC and CFPP

4. Make INDA the competent authority in copyright related infracciones en materia de comercio

5. Introduce DMCA type "take down" mechanism

6. Use technology to make administration of IP system more efficient and transparent

7. Create specialized federal level IP court

V. Concluding Recommendations

B. Improve TRIPS/NAFTA Compliance:

1. Bring national laws into compliance with respect to the issues of the availability of ex parte provisional remedies, the mandatory registration of agreements that transfer rights, compulsory licensing, and moral rights

2. Harmonize inconsistent provisions regarding the scope of the well known mark limitation, mark terms, and the non-use

of marks

3. Create mechanism whereby a right holder is able to obtain both injunctive relief and compensatory damages without having to go through multiple proceedings before different competent authorities

4. Shift focus of enforcement activity from street vendors to producers; impose penalties with deterrent effect

V. Concluding Recommendations

C. Other Recommendations:

1. Mexico:

a) Emphasize development of more jurisprudence dealing with copyright, in particular, and IP in the digital environment, in general

b) Expand use of open source programs as means of reducing governmental use of pirated programs

2. Right Holders:

a) Be prepared for acts of terrorism involving computer networks

a) Back up all information, correspondence, and other documentation pertaining to registration and ownership of IP