Friday, January 6, 2017

Mexico's 40% Rule of Thumb?

I was reading portions of the Global Patent Litigation treatise that I mentioned on this blog recently (here) when I came across this statement about patent damages in the chapter on Mexico authored by Saúl Santoyo Orozco and Jose Luis Ramos-Zurita:  ". . . it is important to point out that by statute, no damage award can be less than 40 percent of the public selling price of each infringing product since the first date of nonauthorized use of the patent" (p.26-22, citing article 221 bis of the Industrial Property Law).  See also p.98 table 9-1 n.10 ("Damages are fixed by statute at 40% of the retail price of the infringing product").  Here is the text of article 221bis, in the original Spanish and with my translation:
ARTICULO 221 BIS.- La reparación del daño material o la indemnización de daños y perjuicios por la violación de los derechos que confiere esta Ley, en ningún caso será inferior al cuarenta por ciento del precio de venta al público de cada producto o la prestación de servicios que impliquen una violación de alguno o algunos de los derechos de propiedad industrial regulados en esta Ley.
ARTICLE 221 BIS.  The repair of material damage or the compensation for damages and losses for the violation of the rights that this law confers, in no case shall be less than 40% of the retail price at which such product is sold or service provided in violation of one or more of the rights regulated by this law.
I confess that up until now I haven't given much attention to the law of patent damages in Mexico.  (In my defense, at p.26-4 the treatise states that there are fewer than thirty patent infringement actions filed annually in Mexico.)  But this strikes me as a really odd rule, especially in the modern world in which products often embody multiple patents.  (Imagine the havoc it would cause in the smartphone world.  I thought the Federal Circuit's interpretation of 35 U.S.C. § 289 in Apple v. Samsung--which required the disgorgement of the entire profit earned from sales of infringing phones notwithstanding the multiplicity of patents embodied therein--was bad policy, but it least it was limited to design patent cases, which are relatively scarce.)  If readers have any more information about this law and how it's applied, I'd appreciate hearing from you.

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