Héctor Chagoya December 3 2018 USMCA or NAFTA 2.0: what's really new for intellectual property? Becerril Coca & Becerril SC | Intellectual Property - Mexico Héctor Chagoya Intellectual Property TPPPatentsPharmaceutical productsEnforcementTransitional periodCommentThe IP chapter of the recently negotiated US-Mexico-Canada Agreement (USMCA) is one of the most comprehensive of all of the treaties negotiated by the parties to date (eg, the Trans-Pacific Partnership and the North American Free Trade Agreement (NAFTA)). However, despite all of the criticism and buzz surrounding the chapter, will Mexico actually have to make that many changes to its existing patent system?TPPTrans-Pacific Partnership (TPP) negotiations ended in a rush, with an agreement on the IP chapter taking place minutes before the agreement was signed. Unsurprisingly, the TPP included a complex and poorly written chapter that required significant interpretation. The dissatisfaction with the chapter was evidenced by the fact that, after the United States opted-out of the TPP, the so-called 'TPP11' suspended most of the chapter's provisions.It was evident that the United States was going to be in a better position to negotiate with Canada and Mexico than it had been under the TPP. Under the TPP, IP systems (particularly patent systems) were more asymmetric and Mexico and Canada's positions resonated with countries that did not favour a much stronger patent system.As shown below, the negotiated text appears to be more of a compromise not to change than a commitment to change.PatentsTRIPS Agreement and public healthThe USMCA's IP chapter includes express references to the Agreement on the Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) and its flexibilities for public health matters. Of particular relevance is the USMCA's recognition that Mexico can define a 'national emergency' independently and that it must discuss any changes to the TRIPS Agreement that could contravene the USMCA with the United States and Canada.Reliance on IP treatiesUnsurprisingly, the USMCA includes a long list of IP treaties to which the parties have committed to adhere, ratify or consider. Relevant treaties from a Mexican perspective include the International Convention for the Protection of New Varieties of Plants 1991 and The Hague Agreement for the International Registration of Industrial Designs. Surprisingly, Mexico has also agreed to consider signing the Patent Law Treaty or at least introduce standards which are similar to those of the treaty.Patents, undisclosed tests or other data and trade secretsTRIPS standards were generally ratified in the USMCA in terms of subject matter eligibility. However, the USMCA expressly mentions that inventions derived from plants must be eligible to be patented. This confirms that the existing Mexican system is insufficient in this regard and must evolve in order to provide stronger protection to plants in the future.A key issue concerns the eligibility of second uses of known inventions in general, including methods of using such inventions or methods under which such inventions are used. Although Mexico already accepts such new uses in practice, this provision is significant, as Mexico's practice has previously had a relatively vague legal basis which is now expected to be enhanced.From a prosecution perspective, Mexico implemented a new law in August 2018 in order to make patent files publicly available as of an application's date of publication. As such, Mexico already complies with one of the provisions of the USMCA. However, the USMCA also includes an obligation to provide patent applicants with "at least one opportunity to correct or modify the claims". In practice, the Mexican Institute of Industrial Property (IMPI) does not provide applicants with such opportunity when it finds patentable an invention as originally claimed. Because Mexican law prevents changes once examination has finished and a notice of allowance has been issued, the USMCA's adoption will require IMPI to change the way in which it prosecutes patents.The USMCA provision on patent term extensions for delays attributable to IMPI may seem like an important change at first glance. However, this is not necessarily true because IMPI is highly efficient in practice. In fact, internal rulings require examiners to adhere to specific timeframes, expressly limited to a maximum of five years for examination. As such, there will be almost no need for a change in practice. Of course, the law will require some changes in order to implement the USMCA provisions with regard to cases that are unduly delayed, but the expectation is that there will be very few or none of these cases in Mexico.As regards undisclosed testing, the definition of 'agricultural products' has been amended to clarify that protection is available not only for chemical products, but also agricultural products that require a regulatory process which implies testing. In addition, the protection period for such products has been extended to 10 years.The trade secrets chapter of the USMCA contains perhaps the most dramatic changes with respect to NAFTA and Mexico's existing trade secrets law.Pharmaceutical productsAs regards the regulatory process for pharmaceutical products, the USMCA allows Mexico to maintain its current system. However, eliminating the listing process will no longer be possible, which has given much-needed certainty to pharmaceutical companies.EnforcementSignificant amendments must be made to the Mexican patent system with regard to enforcement. The TPP included provisions on customs measures for potentially infringing products that were difficult but possible for Mexico to implement, particularly with regard to trademarks. Under the USMCA, these will now extend to all IP rights.Also of note are the USMCA provisions concerning damages determination. This may have a significant impact in Mexico, where damages currently amount to a minimum of 40% of the goods' public net selling price. However, the obligation to make available a variety of methods for determining damages will likely be reviewed given the mounting pressure following a High Court decision on this minimum.The USMCA also contains a commitment to making proceedings more agile, which will require a change to Mexican law. At present, litigation is undertaken in tandem through IMPI by way of:an infringement trial, which has two instances of appeal; anda damages trial, with a further two instances of appeal.Transitional periodMexico has requested five years to implement most of the USMCA's pharma-related provisions. However, it cannot contravene the acquired obligations during the transitional period.CommentThe USMCA is largely a covenant to avoid taking a step backwards with regard to the patent system. However, it is also a powerful tool which provides more certainty that the current patent system will not be weakened and may even become a better tool for innovation and investment in Mexico.For further information on this topic please contact Héctor Elias Chagoya Cortes at Becerril, Coca & Becerril SC by telephone (+52 55 5263 8730) or email ([email protected]). The Becerril, Coca & Becerril website can be accessed at www.bcb.com.mx.