CASE CITATION: ADR 962/2021, Autofinanciamiento México, S. A. de C. V., Pleno de la Suprema Corte de Justicia de la Nación, 29 de enero de 2024. Ponente: Ministra Yasmín Esquivel Mossa. Secretario: Luis Enrique García de la Mora.
LINK TO THE DECISION IN SPANISH:
https://www2.scjn.gob.mx/ListaNotificacionE/NotificacionesEngrose.aspx?sala=3&fecha=04/06/2024
On June 4th, 2024, the Supreme Court of Justice of Mexico (SCJN) published a pivotal ruling in the case of Autofinanciamiento México, S.A. de C.V. (Autofin México) v. Autofinanciamiento de Automóviles Monterrey, S.A. de C.V. (Autofin Monterrey), affirming the constitutionality of Article 151, Section I, last paragraph of the Industrial Property Law. This decision maintains the long-standing principle that allows the annulment of illegal trademark registrations at any time.
This case, one of the few trademark law matters heard by the SCJN en banc in the last two decades, arose from a challenge to the constitutionality of the aforementioned legal provision, which has been a cornerstone of Mexican trademark law for over 40 years. Autofin México argued that the provision, which permits the annulment of a trademark registration without a statute of limitations, violated the principle of legal certainty.
Background
In 2015, Autofin Monterrey initiated proceedings to cancel the trademark registration “GRUPO AUTOFIN MÉXICO,” owned by Autofin México, citing Article 151, Section I, of the Industrial Property Law. This provision allows the annulment of a trademark if its registration was contrary to the law in effect at the time of registration. The relevant text of the article reads as follows:
Article 151.- A trademark registration shall be null when:
I.- It has been granted in contravention of the provisions of this Law or the law that was in effect at the time of its registration. (…)
The nullity actions derived from this article may be exercised within a period of five years, counted from the date on which the publication of the registration in the Gazette takes effect, except for those related to Sections I and V, which may be exercised at any time, and to Section II, which may be exercised within a period of three years.
Since the enactment of the “Law of Inventions and Trademarks” in 1976, the Mexican legal system has consistently allowed the annulment of illegal trademark registrations at any time, without being subject to a statute of limitations. The constitutionality of this provision has been questioned before the Supreme Court on at least three occasions prior to the current case[1]. However, in each instance, the justices upheld the provision, affirming that it conforms to the principle of legal certainty. The Court has consistently reasoned that a right granted in contravention of the law cannot be legitimized simply by the passage of time. This enduring legal principle underscores the importance of ensuring that trademark rights are both lawfully obtained and maintained, as the illegality of their origin renders them perpetually vulnerable to annulment.
In 2020, the Sixteenth Collegiate Circuit Court in Administrative Matters upheld the provision’s constitutionality, leading to an appeal to the SCJN. The case was eventually brought before the SCJN en banc to resolve the constitutional question.
This landmark decision by the Supreme Court was notably preceded by a controversial ruling issued by the Second Hall of the Supreme Court on December 9, 2020 in a case involving the same parties (ADR 8247/2019). In a narrow 3-2 decision, the Second Hall held that the provision in question was unconstitutional, arguing that it allowed an unreasonable and indefinite period to request the annulment of a trademark registration for any cause. This decision caused significant turmoil across the legal landscape, particularly in cases involving the annulment of trademark registrations on grounds of illegality.
Following the ruling, several lower federal courts began to adopt the Second Hall’s criteria, leading to the dismissal of numerous cases that otherwise had clear grounds for nullity. The resulting legal uncertainty and inconsistent application of the law underscored the need for a definitive resolution by the SCJN en banc. However, it took more than three years for the Supreme Court in full session to intervene and ultimately correct the precedent set by the Second Hall, reaffirming the constitutionality of the provision and restoring stability to the legal framework governing trademark annulments in Mexico.
Understanding this case is particularly crucial for companies involved in trademark litigation concerning annulment cases that were resolved within the last three years. These cases could have been significantly influenced by the decision issued by the Second Hall of the Supreme Court at the end of 2020, which declared the provision allowing indefinite annulment actions as unconstitutional. For some, this earlier decision may have resulted in definitive resolutions that established the unconstitutionality of the provision. However, other cases may still be subject to correction in higher instances through appeals, especially considering the recent Supreme Court en banc ruling that reaffirmed the constitutionality of this important legal principle. Companies impacted by such litigation should carefully review their cases to determine whether there is an opportunity to challenge or defend previous rulings based on this landmark decision.
Impact on Current Law and Trademark Owners
After a lengthy and heated debate broadcast live on television and through the Supreme Court’s media channels, the majority of justices voted to confirm that the nullity action under Article 151, Section I, of the Industrial Property Law is not subject to any statute of limitations. This landmark decision reinforces the longstanding legal framework in Mexico, which has empowered parties to seek the annulment of unlawfully registered trademarks, regardless of how much time has passed since the registration. The Court’s interpretation underscores the notion that the principle of legal certainty cannot shield rights that were acquired in direct contravention of the law. As the ruling makes clear, the passage of time alone cannot legalize an illegitimate trademark registration, ensuring that the integrity of the legal system is preserved and that unlawful actions are not rewarded.
For trademark owners, this decision highlights the critical importance of ensuring that their registrations fully comply with all applicable legal requirements from the outset. The risk of annulment is ever-present, even decades after a trademark has been registered, if it is found to have been obtained through illegal means or in violation of statutory provisions. This ruling reaffirms that the mechanisms available to challenge such registrations remain robust and effective, providing a strong deterrent against any attempts to circumvent the law during the registration process.
Moreover, the decision also serves as a cautionary tale for companies engaged in trademark litigation, particularly those whose registrations might be vulnerable to challenges based on the legality of their acquisition. The Court’s analysis suggests that legal practitioners and trademark owners alike must be vigilant in assessing the validity of their registrations and be prepared to defend them against potential nullity actions. This vigilance is especially crucial considering the Court’s emphasis on the non-negotiable nature of legal compliance in trademark matters, which reflects a broader commitment to upholding the rule of law.
Additionally, this ruling may have broader implications for the strategic considerations of companies involved in intellectual property disputes. The SCJN’s confirmation of the lack of a statute of limitation for nullity actions against illegal trademarks ensures that businesses cannot rely solely on the passage of time to secure their trademark rights if those rights were initially obtained through unlawful means. This decision could prompt a wave of reassessments and potentially even new challenges to older trademarks, as it opens the door for parties to revisit past registrations that may have been acquired improperly.
Ultimately, this decision strengthens the legal tools available to challenge trademarks that have been registered unlawfully, providing a clear and decisive precedent that will shape the future of trademark law in Mexico. It is a reminder to all stakeholders in the intellectual property landscape that compliance with the law is paramount, and that substantive deviations from legal norms, no matter how long ago it occurred, can be subject to scrutiny and correction by the courts.
Conclusion
The Supreme Court’s ruling in this case marks a significant moment in the ongoing development of trademark law in Mexico, reinforcing the principle that rights acquired in contravention of the law cannot be legitimized by the mere passage of time. It is important to note that with the enactment of the new Federal Law for the Protection of Industrial Property in 2020, the Mexican legal framework has continued to uphold this principle. Article 258 of the new law maintains the lack of a statute of limitations for the annulment of illegal trademarks but introduces a crucial clarification: annulment actions cannot be based on procedural grounds. This refinement ensures that only substantive violations—those that fundamentally contravene the law—can be the basis for annulling a trademark registration.
This distinction stresses the legislature’s intent to safeguard the integrity of trademark rights while also protecting against frivolous or procedurally-driven challenges. The clarity provided by the new law will likely contribute to a more stable and predictable legal environment for trademark owners, as it delineates the types of claims that can validly challenge a registration.
Regalado & Galindo Abogados represented Autofin Monterrey throughout this litigation process. After three years of work and legal argumentation before the Supreme Court, we are proud to have played a part in upholding the constitutionality of a rule that is foundational to the fairness and integrity of trademark law in Mexico. This outcome reaffirms our commitment to defending the rule of law and ensuring that justice prevails in the protection of intellectual property rights.
Footnote(s):
[1] The cases analyzing this matter were A.D.R. 2471/2011 -1st Hall of the SCJN-, A.D.R. 4872/2015 -1st Hall of the SCJN- and A.D.R. 4921/2016 -2nd Hall of the SCJN-.