Building IP value
In Brazil, industrial property rights are ruled by Law No. 9279 of 14th May 1996 (Industrial Property Law), which contains guidelines to bar acts of unlawful competition, as well as other specific provisions regarding the acquisition, effects and extinction of trademark, patent and industrial design rights. The Industrial Property Law also establishes criminal penalties for several types of industrial property rights violation.
As a general rule, the acquisition of industrial property rights in Brazil is through an administrative procedure of registration conducted before the Brazilian Patent and Trademark Office (INPI). In fact, Brazilian law follows the so-called attributive system with respect to the acquisition of rights. Under this system, the grant of industrial property rights, such as trademarks, patents and industrial designs, takes place at the moment of the registration.
The registration procedure of industrial property rights in Brazil is initiated by the filing of an application before the INPI. The registration is normally granted after the INPI examines whether the application is in accordance with local requirements. As long as the applicant is a foreign company, Brazilian law requires that a local attorney-in-fact should be appointed for prosecuting the application and representing the entity in possible lawsuits concerning industrial property rights.
In Brazil, the Industrial Property Law protects any visible distinctive signs, not covered by certain legal prohibitions, which identify and distinguish goods or services in commerce. Brazilian law is concerned about protecting against consumer confusion and preventing acts of unfair competition.
Once a trademark application is filed with the INPI, it is published in the Official Gazette for opposition purposes. If no oppositions are presented, the INPI proceeds with a preliminary exam, by which it may accept or reject the mark. Where the mark is accepted, the applicant will be required to pay the official fees for the issuance of the certificate of registration.
The trademark registration is valid for 10 years and may be renewed indefinitely, upon request, for subsequent 10-year periods. If the owner fails to use a registered trademark in connection with its goods or services for a period longer than five years, such trademark may be cancelled by forfeiture by the INPI upon third party’s request.
Trademark owners may defend their rights by presenting oppositions to marks of third parties that may lead consumers to confusion. In case of trademark registrations that have been granted in violation of legal provisions, interested parties may file administrative procedures to nullify the attacked registration. If the administrative measures fail, trademark owners may seek to solve the case through legal actions.
A patent is a government grant that entitles its owner to prevent others from making, using or selling an invention. Under Brazilian law, both inventions and utility models are patentable. An invention is considered patentable if it fulfills the requirements of novelty, inventive step and industrial application. A patent for a utility model requires a practical function of the item, industrial application, and an inventive step resulting in a functional or manufacturing improvement.
Once a patent application is submitted to the INPI, it will be kept confidential for 18 months after the date of submission or, if the application is submitted within the period of priority established for foreign patents, from the date of the earliest period of priority. After the publication of the patent application in the Official Gazette, third parties wishing to contribute to the technical analysis may provide the INPI with reasons or evidence supporting their objection to the grant of the patent.
After the analysis, the INPI will issue a technical opinion providing its conclusions as to eligibility for the patent, which may result in: (a) the grant of the patent; (b) technical requirements for reformulating the application; or (c) denial of the application. When a patent is granted, the validity period for a patent of invention is 20 years and that for a utility model patent is 15 years, both counted from the date the application is filed with the INPI.
Patent owners may defend their prior rights administratively by submitting technical or legal arguments in the procedure of third party’s patent applications that do not comply with the legal requirements, such as novelty. Administrative procedures for nullity are also accepted where a patent is granted in violation of legal provisions. Legal actions are also possible to defend prior patent rights.
Industrial designs are protected in Brazil through a particular procedure of registration. Under Brazilian law, industrial design is an ornamental plastic form of an object or any ornamental arrangement of lines and colours, which may be applied to an industrial product. Once an industrial design application is filed, the INPI proceeds with a formal exam, and registration is automatically granted if formal requirements have been complied with.
Although no opposition procedure is available for industrial designs, interested parties may file administrative procedures for nullity where a registration is issued in breach of legal provisions. Owners of prior rights may also file lawsuits whenever a violation of their rights occurs.
Copyrights and software
Copyright law in Brazil protects original works of authorship, expressed by any means or fixed in any tangible medium of expression, according to Brazilian Copyright Law No. 9610, of 19th February 1998 (the Brazilian Copyright Law). Following the Berne Convention, registration of copyrights in Brazil is facultative and therefore not necessary for the enforcement of rights against third parties. In fact, copyright protection arises from the creation of the work itself. The copyright system in Brazil protects both moral and economic rights. Moral rights are not transferable and not assignable.
In addition to indemnification, violation of copyrights in Brazil is also subject to criminal penalties. Recently, the penalties for copyright infringement have been increased by Law No. 10695, of 2nd August 2003, which modified certain rules of the Criminal Code and the Criminal Procedure Code.
As established by the TRIPs Agreement, software in Brazil is considered as copyrightable subject matter, equivalent to a literary work. Software is currently covered by Law No. 9609, of 20th February 1998 (the Brazilian Software Law) and secondarily by the provisions of the Brazilian Copyright Law. Software is protected for a period of 50 years counted from the 1st January of the year following the software publication (release) or of its creation. Registration is not required for the protection of software copyrights. Software copyright violation is punished with criminal penalties, in addition to civil damages.
Litigating in Brazil
In Brazil, decisions are originally handed down by a single judge in the so-called first instance jurisdiction. The decision rendered by this judge may be challenged through an appeal addressed to the correspondent court of appeals. The appeal begins the so-called second instance. Finally, those decisions rendered by the Court of Appeals may be exceptionally subject to other appeals to the Superior Court of Justice (STJ) and to the Federal Supreme Court (STF). The Superior Court of Justice has responsibility for determining issues involving interpretation of infra-constitutional laws (federal law interpretation). The Federal Supreme Court has the responsibility of safeguarding the principles and rules established by the Federal Constitution.
In the first instance, an ordinary lawsuit may last from two to three years, depending on the complexity of the case. In the second instance, it may last from two to four years. For appeals addressed to the STJ and STF, this last instance may last from two to three years.
The Federal Republic of Brazil is formed by 27 states. Each state has its own judiciary and, therefore, judicial costs may vary from one state to another. Considering that courts located in the State of São Paulo rule the largest number of cases related to IP matters, the fees charged by São Paulo courts may be taken as an example to estimate the costs for litigating in Brazil.
Apart from the attorneys fees, plaintiffs must pay the following fees in São Paulo: (a) an initial fee to the court, which is usually set at 1% of the amount in dispute; (b) where an expert inspection is needed, the plaintiff shall pay expert fees (usually from R$5,000 to R$10,000, depending on the complexity of the case); (c) an appeal fee to the Court of Appeals that is usually set at 1% of the amount in dispute. Regardless of the state court in which the lawsuit is heard, the defeated party shall pay attorney-fees to the winning party. These are usually set as a percentage, which can vary from 10% to 20% of the amount in dispute.
Considering that in the end of the case a plaintiff may be obliged to pay attorney-fees to the defendant if latter wins the case, Brazilian law may require the presentation of a bail from plaintiff in the beginning of the lawsuit, once the following requirements are met: (a) the plaintiff is a foreign party; and (b) the plaintiff has no assets in the country.
Parties may seek the following remedies against the violation of their IPRs: (a) search and seizure of goods produced without proper authorisation; (b) injunction obliging the defendant to refrain from any violation (which is usually granted under threat of a huge fine); (c) indemnification for material and non-material damages; and (d) criminal penalties, such as imprisonment and fines.
The Brazilian Federal Constitution, enacted in 1988, states that every person is entitled to recover damages unlawfully caused by a third party. These damages may be either material or non material (which includes pain-and-suffering). The acceptance of punitive damages has been discussed in case law, but as a general rule non-material damages seldom achieve large amounts (court precedents scarcely set non-material damages over R$1 million).
It is also important to highlight that the damaged party must be able to prove both the existence and the amount of the damages suffered. Once both material and non-material damages are proved, courts shall grant indemnification on the grounds of violation of intellectual property rights.
Preliminary injunctions or interlocutory relief may be granted at the beginning of a proceeding aiming at a permanent injunction (cognitive proceeding) or by means of a special proceeding exclusively aimed at the concession of the preliminary injunction (provisional proceeding). There are basically two requirements for the concession of a preliminary injunction: (1) likelihood of success on the merits of the case; and (2) risk of irreparable harm. If the plaintiff can provide the court with enough evidence of these two requirements, the interlocutory relief is usually granted within a week.
It is also possible to solve disputes in Brazil through arbitration procedures. The Brazilian Arbitration Law was enacted in 1996, and has been successfully applied by local courts, which have affirmed the enforceability of arbitration clauses, provided that the dispute resolution is voluntarily chosen and the rights adjudicated may be disposed by the parties.
There is no arbitration court that specialises in IP matters in Brazil. However, IP disputes can be solved by some arbitration courts for trade law in general.
Industrial property disputes
In Brazil, although the Industrial Property Law expressly authorises the judiciary to create courts specialised in industrial property matters, there are no specific courts for bringing lawsuits regarding industrial property disputes. Such cases therefore follow common jurisdictional solutions.
Jurisdiction will depend on the nature of the lawsuit. For lawsuits that involve a dispute over the cancellation of an industrial property right, federal courts shall have jurisdiction. The reasoning for this is that the INPI, which is a federal government agency, is normally called to join the suit in these cases. On the other hand, industrial property disputes that are not primarily intended to cancel a specific right may be brought before state courts.
Copyright and software disputes
There are no specific courts for copyright or software disputes in Brazil. Lawsuits for infringements of such rights are brought before the state courts, according to the common jurisdictional rules. Since copyright violation is considered a crime, IP owners may file a criminal lawsuit, in addition to other civil remedies.
Through copyright civil lawsuits, IP owners may request the apprehension of unlawful copies or the suspension of the unauthorised distribution, in addition to an indemnification for civil damages.