Bad Faith Trade Mark Filings in Mexico: Article 173, Section XXII

Mexico’s trade mark system has long grappled with opportunistic filings — applications made not to build a legitimate brand but to exploit, block, or profit from another party’s rights. The Federal Law for the Protection of Industrial Property (LFPPI), which came into force on November 5, 2020, addressed this directly by introducing bad faith as an express ground for refusal. Under Article 173, Section XXII, a trade mark shall not be registered if the application is made in bad faith. This provision gives IMPI and Mexican courts a powerful tool against abusive filings.

What Constitutes Bad Faith?

The LFPPI defines bad faith as conduct by the applicant that goes against good commercial practices, against the correct functioning of the industrial property system, or that is undertaken with the intention of obtaining an unfair advantage or benefit to the detriment of the legitimate trade mark rights holder.

This is a broad definition that encompasses various forms of commercial dishonesty. It does not require proof of criminal intent — it is sufficient to show that the applicant’s behaviour falls below the standards of acceptable commercial conduct as observed by reasonable participants in the relevant trade.

Common Scenarios of Bad Faith

Trade Mark Squatting

The most prevalent form of bad faith in Mexico involves squatting — filing a mark that the applicant knows belongs to a foreign brand that has not yet entered the Mexican market. The squatter’s objective is typically to block the legitimate owner or to extract a payment for transferring the registration. Mexico’s strategic position as Latin America’s largest market makes it a frequent target for this practice.

Filing by Former Agents or Distributors

Article 173 specifically addresses the scenario where a third party with a prior relationship to the legitimate trade mark holder — such as a legal agent, distributor, or licensee — files the mark without the express consent of the foreign owner. This captures situations where a former business partner attempts to hijack the brand they once represented.

Blocking Filings

Filing a trade mark with no genuine intention to use it, solely to prevent a competitor from entering the market or to create leverage in a commercial negotiation, may constitute bad faith. The introduction of the Declaration of Use requirement (discussed in a separate article) reinforces this, as marks that are not used risk cancellation.

Speculative or Opportunistic Filings

Filing marks that copy trending brands, viral names, or cultural phenomena — such as the names of television characters, sporting events, or internet memes — with the sole purpose of selling the registration to the legitimate owner or capitalising on their reputation, falls squarely within the LFPPI’s definition of bad faith.

Bad Faith as an Opposition Ground

Since November 5, 2020, all new trade mark applications in Mexico are published for opposition in the Industrial Property Gazette within 10 working days of filing. Any interested party has a one-month term from publication to file an opposition based on any of the grounds in Article 173 — including bad faith.

This gives legitimate brand owners an early opportunity to challenge suspicious filings before they proceed to registration. Previously, the only recourse was a post-registration cancellation action, which was slower and more costly.

Bad Faith as a Cancellation Ground

If a mark has already been registered, the legitimate rights holder can file an administrative declaration of nullity before IMPI on the ground that the registration was obtained in bad faith. The LFPPI allows partial nullity — meaning the registration can be invalidated only for the specific goods or services affected, while the remainder survives if it was filed in good faith.

There is no express statutory time limit for filing a nullity action based on bad faith, making it a powerful long-term remedy. However, applicants should act promptly, as delay can complicate enforcement and may be raised as a factor in the proceedings.

The Burden of Proof

The party alleging bad faith bears the burden of proving it. Because direct evidence of the applicant’s subjective intent is rarely available, bad faith is typically demonstrated through circumstantial evidence, including:

• The applicant’s knowledge of the earlier mark (through prior business dealings, industry presence, or the mark’s fame).
• The degree of similarity between the marks (copying with no independent justification).
• The absence of any legitimate commercial explanation for choosing the mark.
• The timing of the filing (e.g., immediately after learning of the legitimate owner’s expansion plans).
• A pattern of speculative or serial filings by the same applicant.

The Intersection with Famous Marks

Bad faith filings frequently target marks that are well-known or famous in other jurisdictions. While Mexico provides separate protection for famous marks (“marcas famosas”), the bad faith provision under Article 173 provides an additional, complementary ground for challenging such filings — even where the legitimate owner has not obtained a famous mark declaration in Mexico.

Appeal Options

If IMPI refuses an application on bad faith grounds, the applicant may appeal through:

• Review recourse (recurso de revisión): Filed before IMPI within 15 working days, decided by a superior officer. Rarely successful for substantive refusals.
• Nullity trial before the FCAA: Filed within 30 working days, decided by three administrative magistrates.
• Amparo suit: A constitutional remedy before a federal district court, available as a final appeal.

Strategic Recommendations

• For brand owners: Monitor the Mexican Industrial Property Gazette for suspicious filings. The one-month opposition window provides a cost-effective early intervention.
• For foreign brands entering Mexico: File your trade marks early, before a squatter can act. A proactive filing is far cheaper than fighting a bad faith registration.
• For applicants: Ensure every filing has a genuine commercial rationale and documented intent to use. Maintain records that demonstrate good faith.

Common Mistakes

• Assuming bad faith is impossible to prove: Circumstantial evidence — prior relationship, obvious copying, serial filing patterns — can build a compelling case.
• Failing to monitor the Gazette: The one-month opposition window is short. Without monitoring, it can pass before the brand owner is aware of the filing.
• Delaying action: The longer a bad faith registration remains on the register, the more damage it can cause. Act quickly.

Key Takeaway

The express inclusion of bad faith as a ground for refusal in the LFPPI represents a significant strengthening of Mexico’s trade mark system. It gives legitimate brand owners a clear legal basis to challenge squatters, opportunistic filers, and former business partners who attempt to hijack marks. Combined with the opposition system introduced in 2020, brand owners now have both preventive and corrective tools available — provided they act promptly and with proper evidence.