• Best nation brand in Latin America by brand value and strength
  • US still top for Mexican applicants but South America catching up
  • Growing focus on services, overtakes goods for first time in 2016

In World Trademark Review’s latest country data report, we take a look at Mexico and how brands fare in the country. We will be examining key filing statistics, the top industries and the performance of the Mexican trademark office (IMPI) to determine areas of opportunity and risk.

The strongest and most valuable nation brand in Latin America

Mexico is very much a branding force: in the latest annual report of the world’s most valuable nation brands by Brand Finance, released earlier this month, the country ranks 13th overall and is not only the most valuable nation brand in Latin America, but also the strongest. It also appears among WIPO’s top countries for trademark registration activity and is marked for its huge potential in economic growth, alongside other key Latin America jurisdictions. The appeal of Mexico as a location of business has helped to draw in myriad brand owners hoping to expand their influence in the country and the wider Latin America region. Indeed, in our previous data reports, we revealed that Korean trademark applications in Mexico have recently doubled, while the country has of late been a key target market for Nike, Adidas and those in the wider sports industry. Bloomberg has even recently named it the most alluring emerging market for investors and according to several projections, Mexico is on track to be the fifth largest economy in the world by 2050.

Despite this, few Mexican brands appear in Brand Finance’s 500 most valuable brands – only Pemex and Telcel appear on the 2017 list. However, its top brands have demonstrated reliable growth, with seven of the top ten having increased in brand value compared to the previous year. OXXO also received the highest rating possible for brand strength – an achievement that only ten of the world’s 500 most valuable brands have.

Top ten brands in Mexico by Brand Value (Brand Finance Mexico 50 2017):

The new appearance of Pemex at the top of the table follows Mexico’s recent reform of the energy industry, which ended a 75-year ban on foreign involvement, ending Pemex’s monopoly on the oil and energy sector – this has meant the state-owned petroleum company is now comparable to other brands across the globe. The opening of the market to global competitors will no doubt prove to be a challenge for Pemex, but it is equally an opportunity for international brand owners in the energy sector hoping to expand their influence in Latin America – especially as Mexico’s oil production has declined and the country is predicted to be a net importer of oil by 2020.

The country also passed new laws in 2014 to increase competition in the telecommunications market, which saw AT&T – the most valuable brand in this space – enter the local market. This has put pressure on local companies, especially on fellow telecom giant Telcel. The alcoholic beverages, banking and retail industries also feature prominently among high-powered Mexican brands, with the retail sector generating more brand value than any other industry. Mexico is a diverse market for brand owners, but businesses in the above sectors have proved to be especially effective.

A vigorous filing market

Given Mexico’s diverse sectoral strengths and potential as a promising emerging market for international rights holders, it comes as no surprise that trademark filings have been consistent and robust, as seen below:

Applications by origin at IMPI – 2009-2017 (view full-size here):

With the exception of a slight dip in foreign filings in 2016, IMPI has enjoyed strong year-on-year increases of roughly 8% in both domestic and foreign filings. The dip in filings in 2016 can at least be partially attributed to the election of Donald Trump, given that the drop came principally from US applicants, which make up by far the largest proportion of foreign applicants (see graph below). Trump’s protectionist policies caused some to fear that Mexico’s economy would suffer a significant setback; however, since that time, domestic demand has remained resilient, while the aforementioned opening of specific markets to international competitors has helped to keep foreign filings looking healthy. In fact, filings from US applicants are on course to increase back to the 2015 level again this year, and the government has just presented a budget proposal with a boosted growth outlook for the country. This is good news, particularly for domestic and international law firms here that rely chiefly on their prosecution practices for revenue generation and those with a strong US client base. However, the unpredictability of the current US administration continues to hang over Mexico: Trump’s attack on the North American Free Trade Agreement (NAFTA) continues to threaten stability in all of North America.

Applications by foreign applicants by nationality at IMPI – 2017 (view full-size here):

It is worth pointing out that 23 of the top 30 filers so far in 2017 are domestic brands (with 5 of the remaining 7 being US brands), showing the strength of local businesses in the branding sphere. Although, as seen from the previous year’s applications, the list has fluctuated greatly.

Top 10 applicants (Source: CompuMark)

2017 YTD

2016

Grupo Bimbo (Mexico)

349

541

Target Brands, Inc. (US)

310

60

Televisa (Mexico)

232

479

Mexicana de Lubricantes (Mexico)

199

326

Coppel (Mexico)

194

766

Curacreto (Mexico)

161

0

Citigroup Inc., Banco Nacional de Mexico (US)

159

17

Corporativo Vasco de Quiroga (Mexico)

147

135

Operadora de Cinemas (Mexico)

142

16

Amazon Technologies, Inc. (US)

141

104

In terms of where Mexican trademark owners are looking toward, proximity clearly plays a major role, as the figures are dominated by IP offices in the Americas (see graph below). The US remains the most popular destination for Mexican brands, although applications there have remained fairly stable. Meanwhile, there has been sharp rise in preference for Argentina, Brazil and Guatemala. It is also worth noting that China is the only country among the top locations outside of the Americas, and that filings there are on an upward trajectory, highlighting the importance of China as a target market for brand owners in Mexico, as it is for rights holder all around the world.

Mexican filings by foreign IP office – 2010-2017 (view full-size here):

Although many countries have observed a gradual shift from the production of goods to the provision of services, this change has been particularly pronounced in Mexico, which has been reflected in the trademark filings, with the number of marks for services overtaking goods for the first time in 2016:

Applications of goods vs services by percentage – 2010-2017 (view full-size here):

This shouldn’t be too unexpected, considering that services play a critical role in Mexico’s economy and, including the government sector, make up approximately 63% of the country’s GDP. The country’s lively start-up scene also revolves around the provision of services. This is a trend that is unlikely to reverse, so parties interested in expanding their rights in Mexico should bear this in mind. A report by the International Trademark Association’s (INTA) Impact Study Committee has further identified 19 trademark classes that correspond to trademark-intensive activities in Mexico:

Nice Class

Category

Goods

1

Chemicals

3

Detergents

5

Pharmaceuticals

8

Hand Tools and Implements

10

Surgical Equipment

14

Precious Metals

16

Paper Products

18

Leather

20

Furniture

25

Clothing

26

Dressmaking Supplies

27

Rugs

28

Toys

Services

35

Business Services

38

Telecommunications

40

Treatment of Materials

41

Education

42

Scientific and Technological Services

44

Medical Services

The economic activities associated with these 19 trademark classes have a share of 20% of total employment. This figure is higher than the other countries (Colombia, Panama and Peru) profiled in the report, with the exception of Chile, and also greater than the corresponding figure for the US (16%), demonstrating the importance of brands in Mexico. Although the same activities only made up 15% of total GDP (compared to the approximately 30% share of more developed countries), the study notes that the significant difference in economic pattern of Latin America countries should be kept in mind for context. For example, important commodities sectors are not as trademark-heavy. For Mexico specifically, oil, infrastructure and storage services contribute almost 25% of total GDP.

The chart below illustrates the percentage of filings in Mexico across all 45 Nice classes, compared to the average class filings across 185 registers. The emphasis on services (classes 35-45) is again apparent, with filings in virtually all of those classes surpassing the average. This is especially true for classes 35 (advertising and administration) and 41 (education and entertainment services), the two most popular filing classes in the country. Although class 9 (computer software and hardware) is noticeably lower in Mexico than the average, it is also the most popular class for US applicants in Mexico (making up almost 10% of filings by US applicants). Robert Reading, Director of Custom and Managed Solutions at CompuMark, suggests this could be about protecting a manufacturing base rather than a sales market. Class 13 (firearms) is the least used class (and practically unused by US applicants). Although this may initially seem surprising since firearms are legal on both sides of the border, this is likely due to Mexico’s strict gun laws and the fact that there is only one store in the country where customers can legally purchase firearms – the store is also barred from advertising itself and to receive a gun, one must overcome numerous bureaucratic obstacles.

Percentage of filings by trademark class – 2017 (view full-size here):

Room to improve for IMPI but progress is being made

Much of the success of Mexico’s trademark landscape can be credited to IMPI’s efforts; however, there is clearly room to improve for the office. In World Trademark Review’s innovation index of IP offices, IMPI places below the IP offices of Chile, Brazil, Colombia and Argentina, as well as many others. In particular, it was held back by its lack of regular release of trademark research and its only partial success regarding regular liaison with enforcement agencies. Indeed, concerning the latter, Mexico has been identified as the main source of infringing alcoholic beverages being shipped into the European Union and it was also placed under the ‘Priority Watch List’ of the US Trade Representative’s (USTR) 2017 Special 301 Report.

However, there is reason to be hopeful about IMPI’s long-term prospects. In its 2016 annual report, the office emphasises that although the figures have mostly remained constant (with trademark applications having grown), it has been a year of achievements, having implemented several planned initiatives. Among these initiatives, it has continued to increase its trademark promotion efforts and the level of collaboration with other agencies. It has also participated in more activities on an international scale. On another positive note, the difference in its income and expenditure has remained consistent, with both being on the rise:

IMPI total Income and expenditure – 2011-2016 (view full-size here):

Improvements have also come in the form of legal and administrative developments. It has been just shy of five years since Mexico acceded to the Madrid system and one year on since the country introduced its formal trademark opposition system. However, both systems have not been without their share of issues. For the Madrid system, complaints have been directed at its cost effectiveness. The new trademark opposition procedure has mostly been received well, but commentators note that it leaves much to be desired. Jorge León, attorney at law at C&L Attorneys avers: “It has become a cost-effective tool for trademark owners to assist examiner attorneys, but its effectiveness remains questionable since the examiner attorney may simply not consider the arguments contained in the opposition.” Alberto Huerta Bleck, partner at Calderon & De La Sierra, adds: “The system could be further improved by including the suspension of the procedure, an extension of the term to be able to gather and submit evidence and recognising the opposer as a party.” According to CompuMark, roughly 5,000 applications have been opposed so far. However, IMPI only publishes the application number and opposer, and not the mark or applicant, which compounds the problem of ineffectiveness.

Despite continued uncertainty over Mexico’s relationship with the US, and specifically the uncertainty at the moment regarding NAFTA, the country has proven to be a dynamic and healthy market for trademark owners. The solid growth of both domestic and international filings will provide local firms with consistent revenue, while the scope for economic progress is positive. Global rights holders also benefit from the market continuing to open up to foreign competitors, which makes Mexico an appealing option for those hoping to break into and expand in the Latin America region.

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