Mexican Supreme Court opens the possibility for the compensation of the life term of pre-USMCA patents due to unjustified delays in the granting process

October 23, 2020

On October 14, 2020, the Mexican Supreme Court issued this important precedent in a divided decision of three to two Justices, which opens the opportunity to compensate the life term patents, due to unjustified delays during patent prosecution. OLIVARES did not handle the case; however, there was a public version of the decision due to the issues of unconstitutionality of the Industrial Property Law (IPL).

The relevant rationale in the decision, as follows:

• Because in the current IPL (soon to be abrogated) there are no maximum terms for the Mexican Patent Office (IMPI) for the issuance of official actions and decisions during the patent prosecution, the effective 20 years of exclusivity is not fulfilled in all cases, since it will depend on the discretional time that it takes the authority to carry out the formal and substantive examinations.
• Although there are some rules for the maximum response times for the procedures presented before IMPI, they are provided in administrative decrees but not in the IPL, which is not congruent with the principle of hierarchy of the law.

In short, the Supreme Court concluded that it is suitable to compensate the life terms of the specific patent subject matter of that particular litigation, which was granted under the run out of NAFTA and the IP Law soon to be abrogated.

The Supreme Court ordered the Mexican Patent Office (IMPI) to issue an official communication and establish the term of validity of the specific patent in that particular case, according to the 17 years from the granting date, as established by NAFTA.

 

According to the applicable rules for these types of Supreme Court decisions, the ruling applies and benefits the complaining party only. The decision is not binding to IMPI; therefore, it is expected that IMPI will not adopt the criteria to compensate life term patents in similar cases without a court order. For the Mexican Courts, the precedent is not binding either, but it is highly persuasive.

There is some grade of expectation as to the manner in which IMPI is going to comply with this decision, as under the current law, there are no rules to provide this type of compensation.

The practical impact of this precedent should be analyzed in similar cases, taking in consideration the following: I) the unjustified delay in the particular case granted under NAFTA, II) eventual benefit in time, based on the term established in NAFTA of 17 years after granting, and III) time of litigation, as it is likely the case would require elevation to the Mexican Courts.

After November 5, 2020, patents filed and prosecuted will be compensated for delays according to the new IP Law. For reference:

https://www.olivares.mx/imminent-implementation-of-a-new-patent-linkage-system-of-patents-in-mexico/.

Minimal impacts from this precedent are expected in the rules established in the coming new IP Law, and in the event of a conflict between the USMCA and the compensation system, a complete new analysis by the Mexican Courts is expected to be required, because this recent decision, as commented, was based on the current IP Law, soon to be ineffective, and the expired NAFTA.