In an era of increasing economic disruption, intellectual property protection laws in Mexico safeguards companies’ most precious asset.
Innovation does not exist in a vacuum. It needs to be protected by a coherent set of rules that nurture it. For decades, intellectual property protection laws in Mexico have provided a framework to incentivize innovation, mobilize development, and protect the IP of foreign companies doing business there.
Intellectual property protection laws in Mexico have been part of the nation’s legal system since its founding in the early 1800s. Today, Mexico ranks in the top 10 Latin American and Caribbean economies providing IP protection. This is according to the International Intellectual Property Index. The Index is an annual report issued by the US Chamber of Commerce.
Meanwhile, countless cutting-edge industries have been gradually establishing themselves in Mexico, including advanced manufacturing, biopharmaceuticals, creative content, and technologies that are a part of the digital economy. This development is due to the high level of protection that intellectual property enjoys in the country.
Mexico’s intellectual property regime is modeled on laws similar to those in the United States. As a result, it undoubtedly leads the way in the region in fostering IP-driven foreign investment. This is the case even though Mexico can still improve its protective framework. Therefore, it is essential to consider how Mexico achieved its high ranking in the Index published by the US Chamber of Commerce and what challenges must be addressed to become a leading IP-driven investment powerhouse.
Intellectual Property Protection Laws in Mexico
Mexico’s competitive advantage for IP-intensive industries dates back to the days of the North American Free Trade Agreement (NAFTA). The NAFTA was a high-level agreement that strengthened the legal and regulatory framework for domestic and IP-intensive industries that migrated to the country due to increased foreign direct investment (FDI).
The reduction of trade barriers and the greater access to North American markets provided by the Agreement led to an increase in FDI and a more significant contribution of exports and investment to Mexico’s gross domestic product (GDP). These factors, when combined, led to an improvement in the productivity of the Mexican national economy and its global competitiveness.
Some 25 years later, the United States-Mexico-Canada Agreement (USMCA) provided an opportunity to harmonize further and strengthen trade in the region. Entering into force of law on July 1, 2020, the USMCA revised the original NAFTA to provide 21st-century legal protections. In addition to recognizing the benefits of effective intellectual property protection to the North American economy, the USMCA also included provisions to strengthen Mexico’s IP policy framework.
As defined in Chapter 20 of the new trade agreement, The USMCA provided for an improved variety of regulations regarding intellectual property. The chapter includes protection for trademarks, trade secrets, and online copyright enforcement. Together, the past 25 years have created a clear competitive advantage for Mexico and a roadmap for the protection of intellectual property in Latin America.
With the implementation of some of the USMCA’s intellectual property commitments, Mexico’s score in the 2022 IP Index improved. In fact, Mexico received only a 12.38% overall score out of a possible 100% in the inaugural edition of this Index in 2012.
In the most recent edition in 2022, Mexico demonstrated a noteworthy improvement in the Index. The US Chamber of Commerce issued an overall score of 58.98%. As a result, the country now ranks in the top half of the economies evaluated by the US Chamber of Commerce’s Index. It occupies the twenty-third position out of the fifty-three nations that are considered. Mexico leads the way in the region, ranking ahead of the other Latin American economies included in the annual report.
However, it is essential to remember that what lies behind the facts and figures in the US Department of Commerce document is a crucial point: Why is it important for Mexico to continue its investment in more robust intellectual property protection? Mexico currently demonstrates a vibrant startup community, a growing and skilled workforce, a rapidly expanding creative community, and an environment that protects the intellectual property of foreign-based manufacturers that have invested in the robust Mexican economy.
Mexican officials are fully mindful that investing in adequate intellectual property protection is essential to support the growth and health of each of these sectors.
The 2022 Index illustrates that countries with the most effective developed intellectual property frameworks are most likely to reap various socio-economic benefits. For example, those countries with robust intellectual property systems are 38% more likely to attract venture capital and private equity, which will be critical to the growth of startups, manufacturers, and other vital businesses in Mexico. Similarly, the workforce employed in knowledge-intensive sectors is 54% higher in countries with effective IP ecosystems.
This will be essential to continue growing and diversifying Mexico’s workforce. As the country looks to expand the reach of its cultural and creative industry and attract more advanced manufacturing investment, a solid intellectual property framework can deliver the protections necessary to grow jobs in each area.
For Mexico to continue reaping the many benefits that effective intellectual property systems provide, the Mexican government must continue to make the conscious political decision to invest in intellectual property and implement its pending commitments outlined in the USMCA.
Almost two years have passed since the international agreement entered into force in Mexico, but many critical provisions regarding intellectual property remain to be implemented in its national laws. For instance, life sciences innovators await the application of USMCA commitments on patentable subject matter, biopharmaceutical patent enforcement mechanisms, and patent term restoration.
The protection of the creative content industries could be further strengthened through greater clarity on the responsibility of Internet Service Providers (ISPs) to deal with illegal and infringing content (without hampering legal trade).
Mexico is projected to become the world’s seventh-largest economy by 2050. A truly effective and modernized intellectual property ecosystem is essential for the country to achieve that goal.
Suppose Mexico succeeds in continuing the measurable progress it has made in this critical area of the economy. In that case, the country can continue to serve as an example to other regional economies. It can also be viewed as a model for emerging markets of how innovation and creativity, fueled by intellectual property, can support economic growth. These things promote global competitiveness and encourage emerging markets to compete with the world’s largest and most highly-developed economies.
This article first appeared on the Shoreview Management Advisor’s blog.