Where is the real benefit?

Mexican President Andrés Manuel López Obrador recently announced the creation of the so-called “Tianguis del Bienestar” (Welfare Market), which main goal is to make products seized by the authorities available to the general public, mainly to low-income people. These products range from clothing, footwear, accessories and tools to electrical appliances and toys, among others. Most of these products come from illegal activities such as trafficking and piracy.

This program, apart from having the intention of “benefiting” low-income families, is intended to empty the warehouses where these items are stored, which would save billions of pesos in warehouse rent. This has raised concern and uncertainty in the field of Intellectual Property, due to the introduction in the Mexican market of goods that violate the rights of works protected by the Federal Copyright Law or that counterfeit registered trademarks protected by the Federal Law for the Protection of Industrial Property. In addition, it will promote illegality, without omitting that this will pose a health risk for end consumers, since obviously the quality of the products is not that endorsed by the holders of said intellectual property rights.

The following is mentioned to give context: in Mexico, eight out of ten Mexicans have consumed pirate products1. Although the consumption of counterfeit or pirated merchandise is a way of accessing certain products that, due to their high cost, would not be affordable for the majority of the population. It is also true that the lack of a culture of legality in our country has increased substantially the demand for counterfeit products in recent years.

Therefore, it can be understood that all types of businesspeople, as well as of the sectors in charge of protecting and defending industrial and intellectual property rights, are concerned, since projects such as this one not only violate the acquired rights that are framed by Federal Laws, such as the Constitution and International Treaties subscribed by Mexico along the years, for instance the Treaty between Mexico, the United States and Canada (USMCA) and the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS).

Also, because of the initiative of the executive branch itself, there would be an impact against fair competition and the protection of creators of this type of rights, as it is not possible to compete fairly with prices derived from an illicit activity. Even more so, is it impossible to plan economic development since companies cannot grow and expand in a sustainable manner.

1 https://www.amcham.org.mx/sites/default/files/publications/AmCham_Pirateria2.pdf Furthermore, one of the legal tools that have been implemented over the years to fight piracy is destroying the merchandise that is seized in the criminal or administrative proceedings. This destruction is the clearest message against this illegal activity, in addition to the fact that products that could be harmful to both health and the environment are taken out of the market. However, in order to reach this last stage, it is necessary to conclude the whole procedure, in which it is proved that such products are the result of an illegal activity and therefore their destruction is appropriate.

Thus, in the first instance, it should be clear that the goods made available at the “Tianguis del Bienestar”, are goods over which there should no longer be any legal action pending on the part of the holders of intelectual property rights.

Nevertheless, on many occasions right holders are not fully aware of the existence of these goods. Making them available for consumption becomes a violation of their intellectual property rights.

Therefore, it is of vital importance to verify the Mexican legal framework under which these “Tianguis” will be operating, given that could be violating intellectual property rights. If such is the case, it would have to be determined whether or not to take an action against such provision in order to ensure respect for the legal framework we have in Mexico.

While this is happening, our recommendation to all our clients is to continue with the surveillance and protection of their rights and to continue to file actions against those products that violate their intelectual property rights, so that as few products as possible enter the “Tianguis del Bienestar” program.

The key elements for companies to continue investing in Mexico are the creation of incentives and conditions that provide certainty to their investment, clear rules of operation, legal certainty and the Rule of Law, among others, which will allow them to boost their growth, as well to as strengthen the culture of legality in the field of Industrial and Intellectual Property in our country.

By Silvia Palomino

Author: Sesma