fash apparel

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Mexican Regulation Applicable to Fashion &Apparel

Gabriela Campos de Pablo

September 11, 2007

gcp@bstl.com.mx

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AGENDA

1. Fashion Business in Mexico

• Intellectual Property Protection. Design Protection.

• Manufacture and License Agreements,

• Maquila status

• Enforcement-Custom Regulations.

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Fashion Business in MexicoFashion Business in Mexico

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•Chain Fiber-Textile-Clothing. Strategic sector in Mexico.

•2001 - 1.2% of the total GDP and 7.1% of the manufacturing GDP.

•2006-2007 Mexican Production decreased due to importation.

•9 purchasing companies represent 40% of the total of clothing sold.

•Invertex (ZARA). 2nd largest market.

Maquiladoras in MexicoMaquiladoras in Mexico

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Since 2002, the production of clothing has decreased considerably in Mexico.

Future of Clothing Industry in Future of Clothing Industry in MexicoMexico

•Governmental and private bodies aware of situation and creating competitiveness programs.

•Counteracting illegal or unfair trade practices

•Recovery of domestic market.

•Clothing demand increase resulted from growing population.

•Higher quality standards

•Promoting Investment

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IP Statutory Regulation in Mexico

Federal Copyright Law Industrial Property Law

Administrative and Criminal Infringement Provisions

Trademark and Industrial Design protectionDesign Protection (to the

extent possible).

Customs Law

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Design ProtectionDesign Protection Industry Designs protected as an industrial Industry Designs protected as an industrial

property right.property right.

Fashion designs/copyrighted works. Fashion designs/copyrighted works.

No specific copyright provisions applicable No specific copyright provisions applicable to fashion design.to fashion design.

Foreign copyrighted designs protected in Foreign copyrighted designs protected in Mexico (Berne Convention)Mexico (Berne Convention)

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Future of fashion. Mexican Future of fashion. Mexican TrademarksTrademarks

To promote Mexican Designers and industry, by To promote Mexican Designers and industry, by promotingpromotingforeign investmentforeign investmentand “complete product”and “complete product”exportation.exportation.

New “fashion” culture (Aero-New “fashion” culture (Aero-Mexico-Macario JimMexico-Macario Jiménez)énez). . Mexican designers and brands.Mexican designers and brands.

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Licensing and Licensing and Manufacturing AgreementsManufacturing Agreements

•IP matters: ruled by Industrial Property Law or Federal Copyright Law.

•Breach of IP License Agreements could be brought before a). Civil (or commercial) Courts or b). Administrative or Criminal Courts regarding trademark or infringing actions.

•Damages: Ruled by Civil Courts but taking into account statutory minimum (40%).

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Intellectual PropertyIntellectual PropertyStatutory Protection:

• 1994 Industrial Property Law and its Regulation

• 1996 Federal Copyright (Author’s Right) Law and Regulation.

International Treaties

• Berne Convention for the Protection of Literary and artistic Works

• Paris Convention (Industrial Property)

• TRIPS, NAFTA.

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Some License-Related issues to Bear Some License-Related issues to Bear in Mindin Mind

•License Agreements must be recorded with MIIP to protect TM against improper use.

•Mexican TM required (i.e. Prada)

•Written Agreement required. Designation of whether a licensee is able to bring claims related to trademark infringement or not.

•Lack of registration may result in trademark cancellation (elapsing).

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License of Copyright and License of Copyright and Related RightsRelated Rights

•Only economic rights may be transferred-licensed

•No perpetual licenses.

•Formalities: Written Document

•Recordal before the Public Copyright Registry required in order to be enforceable beforethird parties.

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ENFORCEMENTENFORCEMENT•IPL includes broad and fast protection of IP rights.

•Criminal enforcement.

•FCL refers to IPL administrative procedures in case of economic right infringement.

•IPL includes administrative infringement and criminal provisions

•Federal Criminal Code include ©-related criminal provisions

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Enforcement (Administrative)Enforcement (Administrative)

Art. 214 (Administrative Infringement) Art. 214 (Administrative Infringement) manufacturing or performing any act manufacturing or performing any act leading the consumer to wrongfully believe leading the consumer to wrongfully believe that a third party has granted enough that a third party has granted enough authorization. authorization.

Unauthorized use of TM in similar Unauthorized use of TM in similar products.products.

Penalties in addition to damages caused.Penalties in addition to damages caused.

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Enforcement (Criminal)Enforcement (Criminal)

•TM Falsification, (willingly and in commercial Scale). Copied from NAFTA.

•Criminal conduct. Imprisonment and no bail is applicable (delito grave).

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Custom AuthoritiesCustom Authorities

Art. 148 Custom Law. Custom authorities shall be entitled to “suspend free movement of goods”;

Art. 50 TRIPS.

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Free Trade AgreementsFree Trade Agreements

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MaquilaMaquila

Maquiladora or in bond manufacure is a duty-excemption program, approved by the Ministry of Economy in order to incentive manufacturing in Mexico.

Companies are benefited from the Maquila program since the program exempts such Companies from the payment of import duties when importing temporary raw materials, machinery and equipment required to produce some products to be totally or partially exported.

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Q&AQ&A

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Gabriela CamposBarrera, Siqueiros y Torres Landa, S.C.Paseo de los Tamarindos 150-PBBosques de las Lomas 05120Mexico D.F. 11520