Mexican IP Law states that industrial companies, traders and service providers may use their marks in commerce, and that the exclusive right to use the marks is obtained through a registration granted by the Mexican Trademark Office.
Based on those, brand owners have been attempting to invalidate trademark registrations in the name of individuals conducting no comercial activity and having no establishment address. In summary, they alleged that granting registration to individuals was against fair and effective competition and against one of the main purposes of a trade mark, which is to distinguish marks in commerce and serve as a source identifier in commercial activities.
The 4th and 7th Circuit Courts made contradictory decisions, so the dispute was brought to the Supreme Court. It said that it was not a formal requirement in law to have the status of an industrial company, trader or service provider in order to apply for and obtain a trade mark registration, so the invalidation actions on these grounds were meritless.
The ruling has highlighted a problema that has become particularly troubling for brand owners: that any individual may obtain all the benefits of a trade mark registration, knowing it to be the trade mark of a company, with the intention of causing damage or selling the registration to the real user of the mark. A trade mark may be blocked for at least the first three years and up to a period of 10 years without actual use in commerce, encouraging brand imitation and parasite registrations. The only remaining legal weapon brand owners have against parasite registrations is invalidation on grounds of prior use of the mark either in Mexico or abroad.