On January 29, 2024, the plenary session of the Supreme Court of Justice ("SCJN") or "The Court" uphold that section I, last paragraph, of article 151 of the Industrial Property Law ("LPI") (repealed), is constitutional and thus actions to claim the nullity of the registration of an illegally granted trademark could be exercised at any time because the mere passage of time cannot remedy the illegality of its grant.
Facts.
Two companies, Autofinanciamiento de Automóviles de Monterrey, and Grupo Autofin Monterrey, both public limited companies with variable capital, submitted a petition before the Mexican Institute of Industrial Property to request the nullity of a trademark and to revoke its registry.
On the one hand, the petition to revoke the trademark registry of Grupo Autofin México y diseño was requested, as this trademark belongs to Autofinanciamiento México, S.A de C.V. The petition to revoke the registry was recorded with file number P.C.1083/2015 (C-330) 9471 and the petition to revoke the trademark registry of Grupo Autofin México y diseño, that belongs to Autofinanciamiento México, S.A. de C.V., was recorded with file number P.C. 1976/2015 (N-562) 18184.
Both applications were admitted for processing and subsequently joined, and a resolution based upon article 151, section I, last paragraph of the LPI was issued so that any action to request revocation of a trademark registry granted illegally, may be exercised at any time even if the LPI law has been repealed.
In other words, legal action never expires. Based upon this resolution, the Divisional Deputy Director of Industrial Property Processes of the Mexican Institute of Industrial Property declared the nullity of the trademark registration of GRUPO AUTOFIN MEXICO and design; as well as the administrative process P.C. 1083/2015 (C-330) 9471.
Dissatisfied with the resolution, Autofinanciamiento de Automóviles de Monterrey, and Grupo Autofin Monterrey, filed a lawsuit against the decision that vacated the administrative process P.C 1083/2015 (C-330) 9471 and likewise, Autofinanciamiento México, filed an administrative lawsuit regarding the declaration of nullity of its trademark registry Grupo Autofin México y diseño.
On October 1, 2018, the Specialized Chamber recognized the validity of the contested administrative resolution and Autofinanciamiento México filed a direct amparo lawsuit asserting several claims, but most importantly, the unconstitutionality of Articles 151, section I, last paragraph, and 90, section XVII, of the LPI because, in his opinion, they violate the fundamental right of legal certainty.
Issues.
The legal issue for the SCJN was to decide whether or not Article 151, Fr. I, last paragraph, and Article 90, section XVII, of the LPI, violated the fundamental right of legal certainty.
Holding.
The Court held that section I, last paragraph, of article 151 of the repealed LPI, is constitutional.
This section of the law provides that legal actions to declare null a trademark registration that was illegally granted may be exercised at any time.
The Court upheld the judgment of the Collegiate Circuit Court ("TCC") and granted an amparo to the complainant, against the judgment issued in October 2018.
Consequently, the Specialized Court in Intellectual Property Matters of the Federal Court of Administrative Justice, had to vacate its previous judgment and issue another judgment in the same matter analyzing whether all the legal elements concerning the use of the trademark "Grupo Autofin México" were met.
Rationale.
The plenary of the SCJN analyzed and argued the following:
The Court analyzed whether Article 151 of the LPI, which provides for the right to bring a lawsuit to revoke an illegally registered trademark, regardless of the time elapsed since their registration; was constitutional.
The Court argued that for a trademark registry to be null and revoked, the plaintiff should challenge aspects of special importance related to essential requirements of the trademark.
The Court held that legal operators should consider the seriousness of the illegality committed in the trademark registration in order to determine whether or not it should be rendered ineffective, even after several years.
The ruling recognizes that the absence of a deadline to claim the revocation and nullity of a trademark does affect legal certainty of those who have the registration. However, the ruling provides that in the case of serious breaches, it is valid that lawsuits can be filed at any time.
Likewise, the Court held that the status of limitations does not apply to the action to claim the revocation and nullity of trademark registration that was illegally granted, and that the lack of expiration to file a claim in this particular case is a proper way to achieve the constitutional purpose of the article, as it refers to rights that would have been granted illegally, and thus no person should benefit from a right granted against the Constitution.
The SCJN deemed the article adequate as it prevents the unfair practice that is intended to be eradicated from acquiring finality or definiteness and, therefore, the lack of a set statute of limitation to bring this claim is justified, and it is necessary to correct the non-observance of the law.
In addition, the Court held that the legislative measure is proportionate to the purpose sought. In this regard, the court held that the degree of protection arising from the lack of a time limit to file for revocation and nullity action is related to the lower degree of protection and the need for greater publicity of the trademark.
Why is this Court ruling relevant?
As a general rule, in Mexico, the statute of limitations for commercial proceedings varies depending on the nature of the action, under the Mexican Commerce Code, actions regarding a corporate charter and shareholder actions, and actions against liquidators of a corporation lapse in 5 years and in civil matters.
The most common statute of limitation is 10 years and a two-year period to claim damages, fees, salaries, wages, among other remuneration for the rendering of any service.
This ruling is important because the Supreme court held that there is no statute of limitations for legal actions against illegally granted trademarks, and thus foreign companies or their Mexican affiliates or subsidiaries could bring a claim to revoke a trademark in the country if such were granted illegally many years ago.
For further information, please contact us at contacto@dha.mx, our litigation and business law practice group will be able to assist you.
Disclaimer: This note does not constitute legal advice. Before making any decision, you should seek expert advice.
