There are two types of assets when it comes to determining the commercial value of any company. On the one hand, we have the tangible assets, which are easily detectable, such as real estate, raw materials, and final products. On the other hand, we find the intangible assets, that because of their nature, are more difficult to identify, but that are equally or even more important than the first ones. In said field we find trademarks, patents and trade secrets, amongst many others.

Within the world of intangible assets, we find trademarks, which are paradoxically as simple as they can be complex. Trademarks are signs perceptible by the senses, which distinguish goods or services of a certain company, from those of its competitors. Their function is to distinguish their quality and reputation, so that consumers can select them from the wide range of options that the global market offers. Now, it is not mandatory to register a trademark to use it, however, its registration its important since it provides their owners an exclusive right that allows them to restrict any third party to use it without their authorization.

It is important to consider that not all trademarks meet the requirements, formalities, and good practices to be registered nor to obtain an exclusive right to use them, even if that goes against the commercial and economic competition spirit of their existence. Here we find the so-called “bad-faith trademarks”

In Mexico, the Federal Law for the Protection of Industrial Property classifies “bad faith” as both a registration refusal and a nullity action against trademarks filed in bad-faith; however, the only definition that we find in said law states that bad faith is "filing a distinctive sign application with the purpose of obtaining an unlawful benefit or advantage against its legitimate owner". This is such an extremely wide concept that leaves us with more questions than answers, since neither the law, its regulations, nor any other supplementary code or case law provides factual guidelines to determine a case of bad faith in trademark applications. 

Fortunately, there are international authorities that have tried to regulate complex figures in the trademark field, such as the definition of public order, morals, good customs and, of course, bad faith.

As our main references we have the Court of Justice of the European Union (CJUE), which is the only court of last instance in the world to have issued a ruling that provides a definition of bad-faith trademarks; the European Union Intellectual Property Network (EUIPN) which has issued several editions of its "Manual of Good Practices regarding bad faith trademark applications", as well as the TM5 (international forum of the five most important trademark offices in the world) which has published several compendiums of contingencies, opportunity areas and good practices detected by its affiliated offices, to serve as a constructive reference for other IP Offices around the globe.

Although it is possible to address international guidelines to try to identify a case of "bad faith trademarks" in a national matter, it is a certainty that we are facing an immense challenge to safeguard the interests of legitimate trademark owners in Mexico, who can be affected by these bad practices, due to the lack of a suitable regulation. Therefore, it is imperative that our IP legislators and authorities intend to adjust their standards to the international picture in order to safeguard the interests of innovation, technology, and industrial development, seizing this opportunity to evolve our current and obsolete IP regulation, to encourage good practices in commerce, and to ensure the protection of rights for the legitimate owners of intangible assets in our country.

That is why at VILA we are experts in providing legal advice to our clients.

We remain at your disposal for any further assistance or questions related to the report.

For more information please contact:

Arturo Mondragón 

arturo.mondragon@vila.com.mx