Intellectual Property Theft Archives

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.

One of President Trump’s justifications for the trade war is China intellectual property theft: is the theft of intellectual property from American manufacturing companies.

These violations – which run from counterfeiting brands and stealing secrets to putting pressure on companies to share technology with local Chinese companies – has been a sore spot in trade negotiations and treaties between the two countries. As a result, companies that are considering having their products made in China are wary to do so for fear of having their products copied or outright stolen from them.

What is Intellectual Property Theft?

According to the World Intellectual Property Organization, Intellectual property (IP) “refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.”

“IP is protected in law by, for example, patents, copyright and trademarks, which enable people to earn recognition or financial benefit from what they invent or create. By striking the right balance between the interests of innovators and the wider public interest, the IP system aims to foster an environment in which creativity and innovation can flourish.”

China intellectual property theft violates this definition in a few ways: One, the Chinese government requires foreign firms to form ventures with local partners in China, which can result in the transfer of technology and product manufacturing designs. Two, the Chinese government actively encourages businesses to carry out their R&D activities only inside China.

It’s a catch-22: If companies do not agree to these terms, the Chinese government then restricts them from manufacturing in their company. If they DO agree to the terms, the companies are then effectively giving over their trade secrets to the Chinese firms and in turn, the Chinese government.

Is China Stealing Ideas from Manufacturers?

There seems to be plenty of evidence that they are: According to the Chicago Tribune, there are have been several high profile cases involving large American companies in just the last 5 years alone:

• Federal prosecutors charged in an indictment unsealed last month that the Chinese tech giant Huawei stole trade secrets from U.S. cellphone company T-Mobile and offered bonuses to employees who managed to swipe technology from other companies.

• Apple has been infiltrated by thieves trying to steal driverless car technology for a Chinese company, according to criminal charges filed in Silicon Valley.

• In November 2019, the Justice Department charged a government-owned Chinese company, Fujian Jinhua Integrated Circuit Co., and co-conspirators with stealing trade secrets from the U.S. semiconductor company Micron Technology.

• A year ago, a Chinese company, Sinovel Wind Group, was convicted in a federal court in Wisconsin of stealing technology —the electronic brains that run wind turbines — from its American partner, AMSC, formerly known as American Superconductor Inc.

According to a 2017 report by the United States Trade Representative, China intellectual property theft currently costs between $225 billion and $600 billion annually.

How do I protect myself from China Intellectual Property Theft?

If you have concerns about China intellectual property theft, there are a few steps that you can take to secure your product rights. It should be noted that you should consider doing all of the following suggestions BEFORE you begin manufacturing in China:

Engage legal counsel that has knowledge of patent law in the US & China.
Protect your designs in your home market (patent, trademark, etc.): Filing patents and trademarks can be expensive, but it is a worthwhile investment if you have to defend your right to the product later.
Get signed exclusivity contracts from your suppliers: Again, if you are dealing with sourcing in China (a common practice that is often demanded by Chinese manufacturers) this will be very difficult. If you are sourcing from the US, this will be less of a challenge.
Look at the customers of a factory: Don’t send sensitive designs to factories that have many larger customers that might want your product.
Use multiple factories for components and do final assembly somewhere else: This will keep companies who may steal from having access to all your parts, and knowledge on how you do the assembly for your product.

The Best Way to Protect Against China intellectual property theft: Manufacture in Mexico

All the reasons stated above will help you protect yourself against possible China intellectual property theft, but there is no guarantee that once your product is sent to China that it will happen anyway.

There is one sure-proof way to ensure that your manufacturing product can be safe from intellectual property theft: have it produced in Mexico with a reputable nearshore manufacturing partner like NovaLink.

Unlike firms in China, nearshore manufacturing partners like NovaLink will ensure that your product, and it’s intellectual property rights, will be protected. NovaLink will allow you to source your product from anywhere you like, work with our design engineers for production, have it assembled in our factories or with another partner, all while protecting your rights legally & with the strictest confidence.

Your intellectual property rights in Mexico are strengthened even more by the new USMCA agreement, with one of the main points of the new treaty being the protection of Intellectual property rights of products between the three countries. According to the Office of the United States Trade Representative:

“The United States, Mexico, and Canada have reached an agreement on a modernized, high-standard Intellectual Property (IP) chapter that provides strong and effective protection and enforcement of IP rights critical to driving innovation, creating economic growth, and supporting American jobs.”

The enforcement of these rights makes it very difficult, next to impossible, to steal intellectual property rights of companies manufacturing in Mexico.

NovaLink has the process of getting started with manufacturing in Mexico down to a precise science. Whether you are a large corporation or a business trying to start assembly in Mexico for their product, NovaLink has the process, consulting for supply chain, software, facilities and manpower to get your business up and running quickly and efficiently with minimal cost.

Do you need a nearshore manufacturing partner or solution for your business? Contact NovaLink today: 956-621-7362 or visit the NovaLink website.

Intellectual Property Protection Laws in Mexico Safeguard Innovation