Volume 5, Number 6, Page 2

Copyright Enforcement in Mexico

the new law: one year later

by Richard E. Neff

Most copyright industries — film, recording/music, software and publishing — welcomed Mexico’s enactment of the new Copyright Law and Penal Code Amendments in December 1996. The amendments appeared aimed at modernizing the law and preparing for the digital age. However, language in the new law, which went into effect March 24, 1997, seemed to exclude phonograms (sound recordings) from penalties, and severely limited criminal enforcement of computer software and other copyright violations. These concerns led to technical amendments that took effect last April.

The new copyright law, the second major reform of this Mexican law in five years, did something unique with respect to enforcement of copyright violations. It assigned enforcement of “commercial copyright violations” to the Mexican Industrial Property Institute (IMPI), formerly the Patent & Trademark Office. While IMPI previously had no involvement with copyrights, it had carried out its trademark enforcement authority with considerable distinction. IMPI Director Jorge Amigo Castañeda commanded respect both within the Mexican Administration and the foreign copyright community. By contrast, the Mexican Copyright Office, now called National Copyright Institute (INDA), had neither enforcement authority nor much respect.

However, several important industries were worried about the decriminalization of copyright because copyright violations were placed within IMPI’s administrative jurisdiction and, therefore, became administrative violations rather than crimes. The 1997 corrective Technical Amendments specified that the following commercial-scale copyright violations would continue to be crimes:

• Whoever produces, reproduces, imports, stocks, transports, distributes, sells or rents copies of works, phonograms, videograms or books, protected by the Federal Copyright Law, with intent, on a commercial scale and without authorization that the cited Law grants to the copyright or neighboring right holder pursuant to the terms of the cited Law.

• The same sanctions will be imposed on whoever uses with intent, on a commercial scale and without authorization corresponding works protected by the mentioned Law…

A copyright crime is one that is carried out on a commercial scale, with criminal intent. "Commercial scale” is not defined by Mexican jurisprudence. In addition, "use" with intent on a commercial scale would also constitute a crime. It is of particular importance to the computer software industry that "use" rather than "sale" of pirated materials is only necessary to prove a violation of the law.

The primary importance of continuing criminal enforcement of copyright violations is that such enforcement has greater deterrent effect than administrative enforcement. The deterrence relates both to fear of being involved in a criminal proceeding, as well as the prospect — however remote — of imprisonment for the most egregious copyright crimes.

While only certain copyright industries (such as the computer software industry) welcomed more streamlined IMPI prosecution (inspections of defendants occurring within 10 days of the filing of a complaint), all industries wished to keep the deterrent of criminal prosecution. Therefore, copyright industries generally have been pleased that the Federal Attorney General’s Office (Procuraduría General de la República or PGR) has continued to prosecute copyright violations. Moreover, the PGR has accepted the position that commercial scale use of pirated copies of a work constitutes a criminal violation, thus assisting the computer software industry’s war on piracy by legitimate “user” corporations that tolerate internal copying of computer software.

In addition, the PGR has kept intact the Office of the Special Prosecutor for Intellectual Property, headed up by Ernesto Soriano, who has been vigorously prosectuing large pirate markets (containing videocassettes, audiocassettes, and computer software), primarily in and around Mexico City.

It has come as a disappointment to the copyright industries that after a year since the copyright law took effect, IMPI has not carried out any commercial copyright inspections, having virtually no copyright inspectors on staff. Initially the recording industry and a few others brought a series of copyright cases before IMPI, but when the cases failed to proceed, the flow of complaints stopped. The Mexican government has stated that if the copyright industries brought more cases to IMPI, IMPI would be given more enforcement resources. But it is really up to the Mexican government to ensure that IMPI has the necessary resources to carry out its mandate.

Mexico has had adequate copyright protection laws since 1991, but enforcement has always been more problematic. Historically, the PGR was a cumbersome bureaucracy, plagued by corruption, inefficiency and burdensome, non-transparent procedures. However, the PGR has functioned in a more professional manner in the past year under the leadership of Attorney General Madrazo, Deputy Attorney General of Penal Procedures Moreno Cruz, and Special Prosecutor Soriano. Mexicans and foreigners alike hope the reformist tendencies of the current PGR administration result in permanent structural reforms.

Perhaps the leading problem with Mexican enforcement has been the poor record of the Mexican judiciary in intellectual property cases.

Mexican judges often refuse to grant search warrants despite strong evidence of criminal conduct. In a recent case, despite clear language in the new copyright law, a Federal judge in Guadalajara refused to grant a search warrant in a piracy case with the astounding observation that “I don’t think it’s a crime. Everybody in Guadalajara does it.” This demonstrates a further problem with Mexican judges, a lack of knowledge about intellectual property and technology.

Various remedies to this kind of problem have been suggested. Most interesting is the one involving the creation of Specialized Intellectual Property courts, where specially trained judges could preside over and resolve intellectual property cases.

Another suggestion would involve the creation of an office in the Mexican government responsible for proposing judicial reforms and encouraging development of Mexican intellectual property industries.

In the fight against intellectual property violations the Mexican Government has been substantially engaged by Mexican and foreign (largely U.S.) industry. President Zedillo is personally committed to the antipiracy battle, as he has assured various industry leaders such as Bill Gates of Microsoft. Moreover, various Mexican Cabinet ministers appear to be inspired by Business Software Alliance’s Price Waterhouse Study on the impact of piracy on the packaged software industry in Latin America. The study demonstrated the magnitude of this significant industry’s role in the Mexican economy, highlighting the losses to Mexico caused by piracy.

Although Mexico’s intellectual property laws are adequate to protect Mexican and foreign industry, there are a few notable exceptions. Civil litigation is not a viable alternative to parties seeking to enforce intellectual property rights, in part because there is no civil injunctive and ex parte search remedy available to plaintiffs.

The challenge for the Mexican Administration is to spur development of Mexican copyright and information industries through improving and fine-tuning its enforcement regime. This will not only benefit Mexican industry, but will lead to increased foreign investment, create jobs and help sustain the impressive growth that Mexico has achieved over the past year.

Richard E. Neff, formerly legal adviser to the Mexico-US Business Committee and a co-author of NAFTA’s precursor, the Bilateral Framework Agreement on Trade and Investment between Mexico and the United States, is now Legal Adviser to the BSA and to the IDSA (Interactive Digital Software Assn.), and manages their Mexican enforcement programs (as well as enforcement programs in other Latin nations). He is a principal of Neff & Associates of Los Angeles.