19 Nov
2020

Héctor Chagoya

Becerril, Coca & Becerril, SC

What key skills do you need to succeed in your role?

Effective patent management and licensing require strategic thinking and the ability to align protection strategies with market needs and the business goals of the patent holder. Understanding how intellectual property can be leveraged to increase a company’s competitive position is one of the most important skills in this role, which is why patent portfolios cannot be successfully managed and monetised from a legal perspective.

However, this does not mean that a deep understanding of international patent law is unimportant. On the contrary, a leading professional in this sector must understand the universal fundamentals of patent and contract law, while also having a sense of the rules in the relevant markets.

Further, a strong grasp of the financial basics of tech projects and licensing is fundamental. One of the most important tasks is identifying when and how technology can add monetary value to a business and then communicating this to the assignee’s business or a potential licensee.

How do you negotiate a licensing agreement that suits both sides?

By finding the interests of both parties and where these converge in order to build a relationship between them. This win-win attitude must prevail in every negotiation so that the interests of both parties are met in the long term. Parties should not see finalising and signing a contract as the main objective, but rather should look beyond the contract’s effective date to its whole term and consider what their duties and rights will be for the full duration that it is in force.

If both parties are willing to concede enough to meet the interests of the other, then the relationship will last for a long time and they will achieve both individual and common objectives after the contract has come into effect. If they do not compromise, problems may arise immediately after signature – if they even reach an agreement – and in the best case scenario it is highly likely that they will end up with an early termination.

That said, in order to understand and identify these interests, both sides need to prepare thoroughly for the negotiation. Negotiations where both parties have diligently analysed the relationship and the available information are generally the ones that create lasting agreements.

What are some of the biggest challenges that your clients face when it comes to protecting their rights from infringement?

The intensity of global commerce means that infringement can occur collaboratively in multiple jurisdictions. Infringement per se implies an unauthorised use of intellectual property. When there are multiple activities performed in many territories by various parties, which result in sales in another region, the complexity of the challenge grows due to the differences in legal systems, the scope of protection and whether the relevant legislation includes the concept of contributory infringement.

When digital technologies are involved, the challenge becomes even more complicated. This is due to the ubiquitous nature of cloud computing technologies, as infringing activities can occur in a number of territories concurrently with a technological complexity that makes the infringement feasible to detect, but difficult to enforce due to differences in legal systems and the fact that a server’s territory can be easily changed.

Which key decisions have had the biggest impact on your practice over the years and why?

The first patent litigation that I was involved in led to decisions in Mexico, the United States and the EPO concerning the validity of the disputed patent portfolio and the alleged infringement activities that occurred in Mexico. The case was complex in both technical and legal terms and I had the opportunity to apply many patent litigation concepts such as inherency, equivalency and attorney-client privilege, not only as provided for under Mexican law, but in comparison with US and EU rules, which included nullity systems that were very different. From these decisions I was able to not only learn about the different legal patent systems, but also understand the impact that such decisions can have on the businesses of both an alleged infringer and a patent holder depending on the strength of the patent.

What changes, if any, would you like to see made to patent eligibility requirements in Mexico?

The new Law for the Protection of Industrial Property, which was published on 1 July 2020 and is due to enter into force on 5 November 2020, includes patent eligibility requirements to modernise the Mexican patent system. On the one hand, there is a significant change in relation to biotech inventions, with more objections to patentability being filed with regard to ethical considerations in this field of research. One example is that the Industrial Property Law, which the new law abrogates, included a restriction to obtain patents for “human or animal body and parts thereof”. This is absent in the new law, which now includes restrictions on obtaining patents for cloning human beings, manipulating human embryos and changing the genetic identity of animals without substantial medical or veterinary benefit.

Another change is that mathematical methods and other ineligible, similar subject matter under the former law will now be considered ineligible only if claimed per se. Although the interpretation of this new provision remains to be seen, it does provide more certainty for the protection of new technologies in the field of computer-implemented inventions.

I think that the only remaining eligibility issue concerns AI-related inventions, which are a worldwide challenge and require further development and example cases in order to highlight the criteria that may need particular eligibility rules or even a different approach for protection.

What do rights holders need to know about building a strong case before the Mexican Institute of Industrial Property (IMPI)?

As of 5 November 2020, the litigation system will be changing and the civil courts will be able to hear litigation cases as an alternative to the administrative litigation system before IMPI. However, the IMPI route will still be available and as the courts begin to build their IP litigation skills, particularly with regard to patents, it is possible that commencing proceedings at IMPI will remain the preferred choice among parties. Nevertheless, as with all patent cases, the strongest will be those where the substantive issues of the litigation are effectively communicated in non-technical language for Mexican judges, which requires a strong set of questions put to expert witnesses who can support the case.

How can patent practitioners better promote IP awareness and innovation in Mexico?

Practitioners can raise awareness by showing the social benefits and positive impact of patents on people’s lives. The global battle against covid-19 has underlined more than ever the need for innovation, the size of investment necessary to develop vaccines and drugs that are key to global social and economic welfare, and the fact that no matter how developed, organised or standardised an industry is, there are no obvious answers. The solutions to many global issues must be patented, not only because they deserve protection, but because intellectual property is a tool to provide certainty, prevent abuse and promote fairness in the market, rather than to create a monopoly, which is typically associated with greed rather than social welfare.

What effect has the United States-Mexico-Canada Agreement (USMCA) had on patent activity among clients?

Mexico already had a system that complied with international standards for patent protection. The biggest impact of the USMCA with regard to patents is the availability of supplement certificates for unreasonable delays by the patent office, which have also been enacted in the new Law for the Protection of Industrial Property.

However, the main driver for patent activity in Mexico will be the expected increase in commercial activity in the region, along with updated rules on enforcement, which are making Mexico a better venue for patent litigation.

The rule for minimum damages of 40% of the public price that was included in the Industrial Property Law has been changed to a standard ‘legitimate value indicator’, but with the minimum still based on 40%. This legitimate value indicator must be proven by the rights holder, but can now include statutory provisions of the value of the infringed goods or services based on the market or retail price, profit loss, undue profit of the infringer or royalty damages. These standards were mandated by the USMCA and are expected to have an impact on patent activity in the region.

What technological trends are having the biggest effect on licensing activity in Mexico?

Mexico is no exception to the global trend of the application of the Internet of Things, Big Data and AI across all technologies. Further, over the years Mexico has fostered an environment for skilled biotech researchers and, as a result, biotech in food and health research, particularly in agriculture, seems to be driving the licensing landscape in the country.

Finally, the covid-19 pandemic is having a huge impact on several aspects of the market, resulting in the development of products with increased hygienic properties to new products for self-isolating at home. In particular, e-commerce technologies have grown significantly in Mexico. As a country with a strong tradition of bargaining on the street, people have been pushed to buy products in a digital marketplace that was previously highly incipient.

What more can be done to improve the licensing landscape in Mexico?

Thanks to public policy, technology transfer offices at universities have been well promoted and established over the past decade. However, the new change in government has created an impasse with regard to the future of these offices, which have been effective in increasing the number of patents filed by Mexican assignees from around 700 prior to 2007 to around 1,500 in the past two years.

It seems that the new government wants to keep technology transfer as a tool to improve the impact of government investment in R&D. A decided effort to strengthen technology transfer offices with skilled people and resources will certainly improve the licensing landscape in Mexico.

Further, with regard to the market, incentives and financial support for Mexican companies to acquire new technologies with good IP asset management practices (eg, freedom to design and freedom to operate) will help Mexican companies to understand the importance of technology in increasing their competitive value. Although this strategy requires importing technology, by combining imports with local strengths, licensing dynamics may change if local universities can to start to collaborate with tech companies to meet local needs with technologies that are at first available only in Mexico but that may eventually be exported.

In order to do this, the Mexican government must implement an innovation policy that supports patenting by universities and public research centres not only in Mexico, but in the relevant markets abroad, so that the technologies developed in Mexico can be monetised through licensing further afield.

Héctor Chagoya

Senior Partner
[email protected]

Héctor Chagoya is senior partner and patents and technology director at BC&B, where he manages the patents practice and services for leveraging value from IP assets. With a background in chemical engineering and over 20 years’ IP experience, he is a Certified Licensing Professional (the first in Mexico) and has been consistently recognised as a leading patent practitioner in several international surveys since 2005. Mr Chagoya has held multiple positions in professional associations related to his practice in Mexico and internationally.

Click here to see his IAM Patent 1000 2020 profile. 

Becerril, Coca & Becerril, SC

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