IP in business transactions: Brazil overview

A guide to intellectual property law in Brazil. The IP in business transactions Q&A gives an overview of maintaining an IP portfolio, exploiting an IP portfolio through assignment and licensing, taking security over IPRs, IP and M&A transactions, and the impact of IP on key areas such as competition law, employees and tax.

To compare answers across multiple jurisdictions, visit the IP in business transactions: Country Q&A tool.

This Q&A is part of the global guide to IP law. For a full list of jurisdictional Q&As visit www.practicallaw.com/ip-guide.

Luiz Henrique O. do Amaral, Dannemann Siemsen Advogados
Contents

Overview of main IPRs

1. What are the main IPRs in your jurisdiction? How are they protected?

Patents

Patents must be filed before the Brazilian Patent and Trademark Office (BPTO) (Instituto Nacional Da Propriedade Industrial (INPI)) and are regulated by Brazilian IP Law No. 9279/96.

An invention will be patentable if it meets the following requirements:

  • Novelty.

  • Inventive step (not obvious to a person skilled in the art).

  • Capable of industrial application.

A patent protecting an invention has a term of 20 years from the date of filing, and a utility model patent has a term of 15 years from the date of filing.

The term of protection will not be less than ten years for patents protecting an invention and seven years for utility model patents, counted from grant, except when the BPTO is prevented from proceeding with the examination as to the merit of the application, due to either a proven pending litigation or for reasons of "force majeure".

Patents are protected through letters patent for inventions and utility models.

Trade marks

Trade marks must be filed before the Brazilian Patent and Trademark Office (BPTO) (Instituto Nacional Da Propriedade Industrial (INPI)) and are regulated by Brazilian IP Law No. 9279/96.

Any visually perceptive and distinctive, original sign, when not prohibited from trade mark protection under the law, will be eligible for registration as a trade mark (section 122, Law No. 9279/96).

Brazil has the following categories of trade mark:

  • Trade mark or service mark.

  • Certification mark.

  • Collective mark.

A trade mark or service mark is a mark used to distinguish a product or a service from an identical, similar or related product or service of different origin.

A certification mark is a mark used to certify that a product or a service complies with certain technical norms or specifications, particularly concerning its quality, nature, the material used and methodology employed.

A collective mark is a mark used to identify products or services originated by members of a given entity.

Trade marks can also further be defined as falling into one the following four categories:

  • Word mark.

  • Word and design mark.

  • Design mark.

  • Tri-dimensional mark.

Section 124 of Law No. 9279/96 contains a list of items which cannot be registered as trade marks. The main items that cannot be listed as trade marks are as follows:

  • Reproductions or imitations which have a characteristic or distinguishing element of an establishment or business name which belongs to third parties, which are likely to lead to confusion or association with the other distinctive signs (section 124, V, Law No. 9279/96).

  • Signs of a generic, necessary, common, usual or merely descriptive nature, which are related to the product or service by its nature, nationality, weight, value, quality, method of production or service rendering, except when presented in a sufficiently distinctive manner (section 124, VI, Law No. 9279/96).

  • Signs or expressions used only as a means of advertising (section 124, VII, Law No. 9279/96).

  • Personal names, or signatures of those names, family or patronymic names and images of third parties, except with the consent of the proprietor, his heirs or successors (section 124, XV, Law No. 9279/96).

  • Reproductions or imitations, in whole or in part, even with additions, of a mark registered by a third party, to distinguish or certify a product or service that is identical, similar or akin and which is likely to lead to confusion or association with the mark of a third party (section 124, XIX, Law No. 9279/96).

The registration of a trade mark will have a protection term of ten years from the date of grant, after which date the trade mark can be renewed indefinitely for further ten-year periods (section 133, of Law No. 9279/96).

Marks registered in Brazil and deemed to be famous are afforded special protection in all fields of activity (section 125, Law No. 9279/96).

Marks that are well-known in their field of activity in accordance with Article 6 bis (I) of the WIPO Paris Convention for the Protection of Industrial Property 1883 (Paris Convention) enjoy special protection, whether or not they have been previously filed or registered in Brazil (section 126, Law No. 9279/96).

Copyright

The provisions concerning copyright are contained in Brazilian Law No. 9610/98.

Copyright arises automatically on the creation of the work. Although registration is not required, the author can register his work in order to establish the prior date of his creation.

Literary works must be deposited with the Copyright Office of the National Library for the purposes of controlling Brazilian literary heritage, as well as ensuring the defence and preservation of the national language and culture.

There is no specific central entity for the registration of all copyright works, since the copyright that applies will depend on the nature of the work. For example:

  • Musical works must be deposited with the School of Music.

  • Works of visual art must be deposited with the School of Beaux-Arts of the Federal University of Rio de Janeiro.

  • Audio-visual works must be deposited with the National Film Institute.

Section 7 of Law No. 9610/98 outlines which types of work can be protected by copyright. Section 8 lists those types of work that cannot be protected by copyright, which are as follows:

  • Ideas, normative proceedings, systems, methods, projects or mathematical concepts.

  • Schemes, plans or rules for mental acts, games or business.

  • Blank forms to be filled in with any type of information, scientific or otherwise, and instructions for filling in such forms.

  • Texts of treaties, conventions, laws, decrees, regulations, court decisions and other official acts.

  • Information which is in common use as calendars, agendas, registrations and subtitles.

  • Isolated names and titles.

  • The industrial or commercial use of ideas contained in works.

Generally speaking, the author's property rights last for 70 years as of 1 January of the year following the author's death (with some exceptions contained in Law No. 9610/98).

Only a natural person can be an author, but the patrimonial rights over a work can be transferred to companies. However, moral rights in a work cannot be either transferred or waived.

Industrial design rights

Industrial design rights can be filed with the Brazilian Patent and Trademark Office (BPTO) and are regulated by the Brazilian IP Law No. 9279/96.

A registrable industrial design is considered to be either an original, ornamental plastic form of an object, or any ornamental arrangement of lines and colours applicable to a product that provides a new and original visual result in its external configuration, that is capable of industrial manufacture. An industrial design is considered to be new when it is not comprised by the state of the art (that is, it is not comprised of a design already in the public domain), and it is considered original when it has a distinctive visual configuration in relation to other previously existing objects.

Generally, design rights are protected through registration, though unregistered design rights also enjoy a certain level of protection under the law on unfair competition.

Confidential information

Confidential information does not constitute a separate IP right, but it is protected under the law on unfair competition (section 195, Brazilian IP Law No. 9279/96).

Other

Other main IPRs that apply in Brazil include the following:

  • Utility models. These are protected by section 9 of the Brazilian IP Law No. 9279/96 and should be filed before the Brazilian Patent and Trademark Office (BPTO). An object of practical use, or a part of such an object, will be patentable as a utility model if:

    • it is capable of industrial application;

    • it presents a new shape or arrangement; and

    • it involves an inventive act that results in a functional improvement in its use or manufacture.

A utility model has a protection term of 15 years from the date of filing. The protection term cannot be less than seven years for utility models as from the date protection is granted.

  • Geographical indications. These are an indication of source or a designation of origin, and are regulated by section 176 of Brazilian IP Law No. 9279/96. Protection will extend to the graphical or figurative representation of a geographic indication, as well as to the geographic representation of the country, city, region or locality of its territory of which the name is a geographic indication.

  • Unfair competition. This area of law is regulated by section 195 of Brazilian IP Law No. 9279/96.

  • Computer programs. These are regulated by Brazilian IP Law No. 9.609/98 and can be registered with the BPTO.

  • International Union for the Protection of New Varieties of Plants (UPOV) . In Brazil, plant varieties are eligible for protection through IP rights under the Plant Variety Protection Law No. 9,456/97.

For further information about the main IPRs, see Patents, trade marks, copyright and designs in Brazil: overview ( www.practicallaw.com/1-519-8905) .

 

Maintaining IPRs

Search and information facilities

2. What facilities are available to conduct IP searches and obtain IP information on registered IP rights?

Patents

The Brazilian Patent and Trademark Office (BPTO) (Instituto Nacional Da Propriedade Industrial (INPI)) offer free online searches for:

  • Patents.

  • Trade marks.

  • Registered industrial designs.

  • Geographical indications.

  • Computer programs.

In addition, federal customs, the National Council for Combating Piracy and Offences Against Intellectual Property (Conselho Nacional de Combate à Pirataria e Delitos Contra a Propriedade Industrial) and the Joint Ministerial Group of Intellectual Property (Grupo Interministerial de Propriedade Intelectual) have searchable registries in their databases. These databases are for their own use. Trade mark owners can call these entities' attention to their trade mark rights.

Trade marks

See above, Patents.

Industrial design rights

See above, Patents.

Computer programs

See above, Patents.

 

Maintenance of main IPRs

3. What steps must a business take to maintain the registration and status of its main IPRs?

Patents

The applicant must pay the fee for the initial examination and registration of the patent, and must also make annual renewal payments (which must be paid from the beginning of the third year following the date that the patent was filed) (section 184, Law No. 9276/96).

The fees are as follows:

  • Filing fee: BRL260.

  • Examination fee:

    • for the first ten claims: BRL590;

    • for claims 11 to 15: BRL100;

    • for claims 16 to 30: BRL200;

    • for claims 31 and over: BRL500.

  • Annuity fee (before grant): BRL295 (from the 3rd to the 25th annuity fee).

  • Annuity fee (after grant):

    • BRL780 (from the 3rd to the 6th annuity fee);

    • BRL1,120 (from the 7th to the 10th annuity fee);

    • BRL1,645 (from the 11th to the 15th annuity fee);

    • BRL2,005 (from the 16th to the 25th annuity fee).

Trade marks

Trade marks have a protection term of 10 years as from the date of grant, and the trade mark registration period can be renewed indefinitely for successive ten-year periods.

Under section 143 of Law No. 9279/96, a trade mark registration can become forfeit on the request of any person with a legitimate interest if either, after five years from the date of its grant, on the date of the request, either:

  • The use of the trade mark in Brazil has not been initiated.

  • The use of the mark has been interrupted for more than five consecutive years, or if within that same time period, the trade mark has been used in a modified form that is different from its original character as found on the certificate of registration.

Copyright

Copyright protection arises automatically on the creation of the work. Although registration is not mandatory, it is advisable that the author register his work in order to establish its prior date of creation. Literary works must be deposited before the National Library for the purposes of controlling Brazilian literary heritage, as well as the defence and preservation of the national language and culture. There is no central entity for the registration of works, since registration will depend on the nature of the work to be registered. For example:

  • Musical works must be deposited with the School of Music.

  • Works of visual art must be deposited with the School of Beaux-Arts of the Federal University of Rio de Janeiro.

  • Audio-visual works must be deposited with the National Film Institute.

Industrial design rights

After an industrial design right is granted, a fee must be paid every five years to maintain registration. The five-year period commences from the date the registration was issued.

 

Monitoring infringement

4. What steps can a business take to avoid committing an infringement of another party's IPRs and to monitor whether a competitor is infringing its IPRs?

In order to both avoid committing an infringement of another party's IPRs, and to monitor whether a competitor is infringing its IPRs, it is recommended that businesses hire the services of specialised firms and law offices, who employ professionals who will monitor activity in this regard.

Of course, it is also possible for larger companies to employ their own IP department to monitor these matters.

 

Exploiting IPRs

5. What are the main steps in an IP audit in your jurisdiction to determine the content of an IP portfolio?

Generally, a business will take the following steps when conducting an IP audit:

  • Conduct a full search of both pending applications and IPR registrations that have been lodged with, or granted by, the BPTO.

  • Examine any current licensing agreements that are in place.

  • Identify internal confidential information/trade secrets, and evaluate the internal practices concerning these.

 

Assignment

Scope of assignment

6. On what basis can main IPRs be assigned?

Patents

A patent application or patent, the contents of which are indivisible, can be assigned in whole or in part (section 58, Law No. 9279/96). The assignment must be recorded with the BPTO.

Trade marks

Applications for registration as a trade mark, and trade mark registrations, can be assigned, provided that the assignment includes all of the registrations (or applications) in the name of the assignor for identical or similar marks relating to a product or service that is identical, similar or akin, as they otherwise run the risk that all of the registrations will be cancelled (or the applications will be shelved) (section 135, Law No. 9276/96). The assignment must be recorded with the BPTO.

Copyright

Patrimonial rights over copyrighted work can be assigned to a third party but this must always be done by way of a written instrument (section 49 II, Law No 9610/98). However, moral rights cannot be either assigned or waived. If there is no written contractual provision, the maximum period of the assignment will be five years (section 49, III, Law No. 9610/98).

Industrial design rights

An industrial design right can be assigned in whole or in part. The assignment must be recorded with the BPTO.

Confidential information

Confidential information can be assigned to a third party, but this assignment cannot be recorded with the BPTO.

Once any assignment is recorded with the BPTO, it is deemed to constitute public information. As a result of this fact, in order to keep the information confidential, a written assignment of confidential information should be made and kept between the parties to the assignment, solely for the purpose of evidencing its existence and, if necessary, enabling its enforcement.

 

Formalities for assignment

7. What formalities are required to assign each of the main IPRs?

Patents

Under section 59 of Law No. 9279/96, the assignment of a patent must be:

  • Made in writing.

  • Signed by both parties to the assignment.

  • Lodged with the BPTO, who will declare the validity of the assignment.

Trade marks

Under section 59 of Law No. 9279/96, the assignment of a trade mark must be:

  • Made in writing.

  • Signed by both parties to the assignment.

  • Lodged with the BPTO, who will declare the validity of the assignment.

Copyright

Copyright can be partially or completely assigned to a third party, but this must always be done by way of a written instrument (section 49, II, Law No. 9610/98). However, moral rights cannot be either assigned or waived. If there is no written contractual provision, the maximum period for an assignment will be five years (section 49, III, Law No. 9610/98).

Industrial design rights

Under section 59 of Law No. 9279/96, the assignment of an industrial design right must be:

  • Made in writing.

  • Signed by both parties to the assignment.

  • Lodged with the BPTO, who will declare the validity of the assignment.

Confidential information

There are no specific formalities for assigning rights in confidential information, but it is strongly advised that such assignments are made in writing.

 

Main terms for assignments

8. What main terms should be included in an assignment of IPRs?

It is strongly recommended that all the IPRs that are being transferred are clearly and correctly identified in the documentation assigning those IPRs.

 

Licensing

Scope of licensing

9. On what basis can the main IPRs be licensed?

Patents

A patent holder or applicant may enter into a licensing agreement to exploit the patent (or the application for a patent).

The licence agreement must be recorded with the BPTO in order to become effective against third parties (section 62, Law No. 9279/96). A patent can be licensed in whole or in part. The following details must be included in the licence agreement:

  • Patent number.

  • Title of the patent.

  • Conditions concerning the exclusivity (or non-exclusivity) of the licence.

  • Permission to sub-license.

Trade marks

The licence agreement must be recorded with the BPTO in order to become effective against third parties. A trade mark can be licensed in whole or in part.

The proprietor of a trade mark registration or the applicant of a trade mark application for registration can enter into a licence agreement for use of the trade mark, without prejudice to his right to exercise effective control over the specifications, nature and quality of the respective products or services (section 139, Law No. 9279/96).

Copyright

Copyright can be licensed through private negotiations between the parties to the licence. Copyright can be partially or totally licensed to a third party.

Industrial design rights

The licence agreement must be recorded with the BPTO in order to become effective against third parties. An industrial design right can be licensed in whole or in part.

Confidential information

Confidential information can be licensed through private negotiations between the parties. There are no specific formalities, although it is recommended that the licence be put in writing.

 

Formalities for licensing

10. What are the formalities to license each of the main IPRs?

Patents

The licence agreement must be registered with the BPTO in order to:

  • Become effective against third parties.

  • Permit the remittance of royalty payments to foreign IPR owners.

  • Qualify the licensee for any applicable tax deductions.

A patent can be licensed in whole or in part.

Trade marks

The licence agreement must be registered with the BPTO in order to:

  • Become effective against third parties.

  • Permit the remittance of royalty payments to foreign IPR owners.

  • Qualify the licensee for any applicable tax deductions.

Copyright

Copyrights can be partially or totally licensed to a third party. Under section 49, Law No. 9610/96, there are no specific formalities for the licensing of copyrights, but a licence agreement should be in writing. However, moral rights cannot be assigned or waived.

Design rights

The licence agreement must be registered with the BPTO in order to be effective against third parties. A design right can be licensed in whole or in part.

Confidential information

There are no specific formalities but it is recommended that the licence be put in writing.

 

Main terms for licences

11. What main terms should be included in an IP licence?

For both trade marks and patents, it is essential to ensure that the rights being licensed are clearly and correctly identified in the licensing agreement. For all IPRs, it is recommended that the licence be put in writing, and that the duration and cost of the licence are clearly identified in the licensing agreement.

 

Taking security

12. Is security commonly taken over IPRs?

Under Brazilian law, IPRs are not commonly secured, as IP assets/rights are difficult to subject to valuation. However, IPR titleholders can execute a security agreement specifying a particular interest in a specific trade mark or patent by providing the following information:

  • Specification of the serial number(s) of the trade mark(s) and/or patent(s) registered with the BPTO.

  • Amount of the credit, or an estimate of the amount of the credit, or its maximum amount.

  • Estimated term for payment.

  • Interest rate, if applicable.

 
13. What are the main security interests taken over IPRs?

For patents, a security agreement must be presented to the Patent Department of the BPTO for recording purposes, under the terms of Article 136 of Law No. 9,279/96 (Industrial Property Law), together with a petition and a sworn translation, in order to make the security interest effective against third parties. The BPTO will then publish the existence of a burden on the applicable patents in the Industrial Property Journal.

In the case of default, the creditor has the right to enforce its rights by means of a sale of the secured interest under a lawsuit. However, the creditor cannot automatically take over the secured property if the debtor is in breach of its obligations.

Further, Article 1428 of the Civil Code provides that clauses establishing that the creditor can take possession of the pledged property if the debt is not paid are void. In the case of default, the debtor is entitled, as an option of the debtor and not as an obligation towards the creditor, to give the security interest in payment of the debt (effectively ending the obligation under the security agreement).

Creditors owning a security interest in an IPR have priority over other creditors, with the exception of creditors related to labour, tax and social security aspects.

 

M&A

Due diligence

14. What IP-related due diligence is commonly carried out in both a share sale and an asset sale?

In both a share sale and an asset sale, the documents and information related to IP are the same. The following due diligence is usually carried out:

  • The competent government authority responsible for registering the IPR will be asked to analyse/confirm the ownership and status of each IP (whether the IP is an application or is already registered).

  • The competent government authority will be asked if there are any administrative or judicial proceedings involving the relevant IP.

This due diligence is conducted to ensure that:

  • The actual owner of each IP has been verified.

  • The IP is free from any liens/encumbrances that could in any way adversely affect the envisaged transaction.

 

Warranties/indemnities

15. What IP-related warranties and/or indemnities are commonly given by the seller to the buyer in both a share sale and an asset sale?

The following are the main sections and warranty clauses which would be used by the seller to the buyer in both an asset and a share sale:

  • An appendix is usually included, which contains a true and complete list of the owned IPRs. It should contain a true and complete list of all material agreements (whether written or otherwise) to which the selling company is a party, or is otherwise bound, granting or restricting any right to use, exploit or practice any intellectual property rights.

  • A warranty that the licensed and the owned IPRs together constitute all the IPRs necessary to, or used or held for use in, the conduct of the business of the selling company as currently conducted, and as proposed by the selling company to be conducted. There exist no restrictions on the disclosure, use, licence or transfer of the owned IPRs. All obligations under any licence of the licensed IPRs have been fully complied with and the consummation of the transactions contemplated by the transfer agreement will not alter, encumber, impair or extinguish any owned or licensed IPRs.

  • A warranty that the selling company has not infringed, misappropriated or otherwise violated any IPR of any third party. There is no pending or threatened claim or proceedings:

    • relating to the rights of the selling company in any of the owned and licensed IPRs; or

    • alleging that the selling company has infringed, misappropriated or otherwise violated any IPR of any third party.

  • A warranty that none of the owned and licensed IPRs has been adjudged invalid or unenforceable in whole or part, and all owned and licensed IPRs are valid, subsisting and enforceable.

  • A warranty that the selling company holds all right, title and interest in and to all owned IPRs and all of the selling company's licences under the licensed IPRs, are free and clear of any lien. All assignments have been duly recorded with the appropriate governmental authority. The selling company has taken all actions necessary or required by law to maintain and protect the owned IPRs, their rights in that IP, and their rights in the licensed IPRs.

  • A warranty that no person has infringed, misappropriated or otherwise violated any owned or licensed IPRs. The selling company has taken reasonable steps in accordance with normal industry practice to maintain the confidentiality of all confidential IPRs. None of the IPRs of the selling company that are material to the business or operation of the company, and the value of which to the company is contingent upon maintaining the confidentiality of that confidential IP, has been disclosed other than to representatives of the company all of whom are bound by written confidentiality agreements.

  • A warranty that all material trade marks included in the owned IPRs have been duly registered or applied for with the appropriate governmental authority in each applicable jurisdiction to the extent necessary to ensure full protection under any applicable law, as listed in the appendix. None of the trade marks included in the owned IPRs has been the subject of an opposition or abandonment or cancellation procedure. There are no circumstances which may result in the trade marks included in the owned IPRs being invalidated, cancelled, revoked or deemed abandoned.

 

Transfer of IPRs

16. How are the main IPRs transferred in both a share sale and an asset sale?

Share sale

In a share deal the object of the transaction is the target company's shares, and therefore all of the company's assets, including its IPRs, are already contemplated by the transaction, without the need to separately transfer the IPRs to the purchaser (unless the purchaser wishes to assign such IPRs to another party that it designates as part of the initial share sale).

Asset sale

In an asset sale, the seller and the purchaser must execute assignment documents so that the seller transfers the relevant IP assets to the purchaser. Such documents must be presented for registration at the BPTO. A trade mark assignment must include all that trade mark's registrations or applications, in the name of the assignor, for identical or similar marks relating to a product or service that is identical, similar or akin, as there is otherwise a risk that all such registrations will be cancelled (or all such applications will be shelved (see Question 6, Trade marks)).

 

Joint ventures

17. Is it common for companies to set up joint ventures in your jurisdiction to develop projects that heavily involve IPRs?

It is common for companies to set up joint ventures to develop projects that heavily involve IPRs. Common IP-related provisions included in joint venture agreements are as follows:

  • Ownership of each party's IPRs that ae setting up the joint venture.

  • Prohibitions on licensing/sub-licensing (as the case may be) to competitors.

  • Use of the IP to be restricted to the joint venture's purpose only.

  • Definition of ownership of any IP developed under the joint venture.

  • Use of the IP in the event that the joint venture agreement is terminated.

 

Competition law

Main provisions and common issues

18. What are the main provisions of your national competition law that can affect the exploitation of the main IPRs?

Law No. 12,529/2012 (Competition Law) regulates competition in Brazil and establishes rules concerning the abuse of a dominant position. The Competition Law lists those anti-competitive practices that may constitute a breach of the economic order and which, therefore, may have an impact on IP-related agreements.

The following contractual provisions could be regarded as anti-competitive practices:

  • Limiting or restraining market access by new companies.

  • Creating obstacles for the establishment, operation or development of a competitor company or supplier, purchaser, or financier of a specified product or service.

  • Imposing on distributors, retailers, or representatives of a specified product or service retail prices, discounts, payment conditions, minimum or maximum volumes, profit margins, or any other marketing conditions.

  • Refusing to sell products or services normally available for sale.

  • Tying the sale of one product to the acquisition of another or to the use of an additional service.

The Administrative Economic Protection Counsel (Conselho Administrativo de Defesa Econômica) (CADE) is the government body responsible for examining and assessing the occurrence of actions that may impair or limit free competition or result in the control of significant market shares.

Anti-competitive practices, especially the provisions listed above, are only characterised as such in the event that they are likely to do any of the following:

  • Unjustifiably limit competition.

  • Concentrate economic power.

  • Dominate markets.

  • Arbitrarily increase profits.

  • Impose abusive practices.

In light of the above, CADE considers specific aspects, such as the:

  • Peculiarities of the business in question.

  • Product or service involved.

  • Size of the market.

  • Characteristics of the commercial sector involved.

  • Nature of the transaction.

Since international IP agreements must be submitted for registration with the BPTO, that governmental agency's approval can be considered a prima facie confirmation that the relevant agreement complies with the anti-competition regulations, because otherwise the BPTO is obliged to forward the agreement to CADE for analysis prior to its regulation.

 
19. What are the most common national competition law issues that arise in the exploitation of the main IPRs?

Covenants restricting competition after termination are a common issue in IP-related agreements, especially as IP-related agreements commonly involve the disclosure of confidential privileged information and know-how regarding business techniques and methods.

Although the Competition Law establishes that any act that obstructs the establishment and operation of businesses in the local market is an infringement of the economic order, covenants that prohibit licensees from competing directly or indirectly with the licensor during or after the term of the agreement are usually deemed valid and enforceable.

The validity of such contractual clauses should be questioned when their effects lead to dominance in a relevant market for products or services, arbitrarily increase profits or lead to abusive control of a dominant position in the market, among other things, based on the principles set out in Brazilian Competition Law. In addition, covenants limiting competition must always provide for a specific duration and a specific territory in which the non-competition obligation applies.

Covenants not to compete during the course of the IP agreement are considered natural in IP agreements and can be agreed by the parties for the entire duration of the agreement and also cover any renewals of the agreement. Their enforcement is usually fairly simple, provided that the evidence of violation clearly shows the licensee's participation in the infringement.

Additionally, Law No. 9,279 of 14 May 1996 (Industrial Property Law) regulates the rights and obligations of parties relating to industrial property. It sets out that the disclosure, exploitation or use, without authorisation, of confidential knowledge, information or data, usable in industry, commerce or the providing of services (except those that are of public knowledge or that are obvious to a person skilled in the art) to which the person using that confidential information or knowledge has had access by means of a contractual or employment relationship, even after the termination of the contract, will constitute unfair competition practice.

 

Exclusions/exemptions

20. What exclusions or exemptions are available for national competition law issues involving the exploitation of the main IPRs?

As established by the Competition Law, the parties must submit to CADE any and all arrangements for market concentration in which both:

  • One of the participants is part of an economic group that has a gross annual turnover of or a total volume of transactions amounting to BRL750 million or more in Brazil, in the year before the respective arrangement.

  • The other participant is part of an economic group that has a gross annual turnover of or a total volume of transactions amounting to BRL75 million or more in Brazil, in the year before the respective arrangement.

As established by the Competition Law, the following are considered arrangements for market concentration:

  • Merger of independent companies.

  • Direct or indirect acquisition of the control or a portion of a company, by means of purchase, equity participation, titles, convertible securities or tangible or intangible assets.

  • One or more companies merged into another.

  • Two or more companies enter into any kind of affiliation or partnership, consortium or joint venture agreements.

The purpose of submitting these transactions to the anti-competition authorities is to allow an analysis of whether the transaction modifies, or could potentially modify, the market's structure, or could produce negative effects on social welfare as a result of the elimination of competition.

Upon its analysis of the relevant agreement, CADE can request that certain clauses and conditions be changed at its own sole discretion. Therefore, this analysis is made on a case-by-case basis, taking into account the principles of free competition and good faith.

 

Advertising

21. To what extent do advertising laws impact on the use of third party trade marks?

Comparative advertising is not expressly regulated by law in Brazil, but there is a provision on this subject in the Brazilian Advertising Self-Regulation Code (Code of Ethics). Under local practice, comparative advertising is accepted provided that:

  • The advertiser does not use a third party's trade mark.

  • The advertiser does not tarnish the reputation of the competitor.

  • The advertiser does not use subjective elements of comparison (as opposed to objective information about products/services).

In conclusion, a third party trade mark cannot be used without authorisation, even in comparative advertising. This is the position for the majority of the case law (although there are some dissenting precedents).

 

Employees and consultants

22. Who owns each of the main IPRs created by an employee in the course of his employment? Is compensation payable to the employee? What main steps can an employer take to ensure it owns each of the main IPRs?

Ownership

Article 88 of Law No. 9,279 of 14 May 1996 (Industrial Property Law) establishes that an invention or utility model belongs exclusively to the employer when it results from either:

  • A labour agreement executed in Brazil for the performance of research or inventing activities.

  • The nature of the services for which the employee was hired

Compensation

Despite the above provision, some Brazilian employers reward their employees by providing compensation, such as a bonus, in order to stimulate their employees' inventive activity. For tax and social security purposes, any such bonus paid will be considered to be part of an employee's salary, and will be subject to income tax, social security and so on.

Main steps

Although Article 88 of Law No. 9,279 of 14 May 1996 determines that an invention or utility model belongs exclusively to the employer, it is strongly advised that employers specifically include an assignment of IPR clause in the employment agreement for the avoidance of doubt concerning who owns the IPR.

 
23. Who owns each of the main IPRs created by an external consultant? What main steps can a business take to ensure it owns each of the main IPRs?

Ownership

Article 92 of Law No. 9,279 of 14 May 1996 (Industrial Property Law) establishes that the provisions of the preceding Articles (including Article 88), as far as they are applicable, apply to the relationship between an autonomous worker or a trainee and the contracting undertaking, and between contracting and contracted undertakings (see Question 22).

Main steps

Despite the provisions of Article 92, it is strongly advised that employers specifically include an assignment of IPR clause in any agreement with an external consultant for the avoidance of doubt concerning who owns the IPR.

 

Tax

24. What are the main taxes payable by a licensor on the licensing of the main IPRs?

Brazil has a highly complex tax system, divided into federal, state and municipal, and also taking into account the locality of each party and the nature and object of the licence agreement. The taxes payable by the licensor will therefore depend on all of these factors. Each case must therefore be considered on a case-by-case basis and specialist advice is recommended.

 
25. What are the main taxes payable by a seller on the disposal of the main IPRs?
 

Cross-border issues

26. What international IP treaties is your jurisdiction party to?

Brazil is party to the following international agreements:

  • Patent Cooperation Treaty 1970 (PCT).

  • WIPO Paris Convention for the Protection of Industrial Property 1883 (Paris Convention).

  • WIPO Berne Convention for the Protection of Literary and Artistic Works 1971 (Berne Convention).

  • Rome Convention on the law applicable to contractual obligations (1980/934/EEC) (Rome Convention).

  • WIPO Brussels Convention Relating to the Distribution of Programme-Carrying Signals Transmitted by Satellite 1974 (Brussels Satellite Convention).

  • WTO Agreement on Trade-Related Aspects of Intellectual Property Rights 1994 (TRIPS).

  • WIPO Madrid Agreement Concerning the International Registration of Marks 1891 (Madrid Agreement).

  • WIPO Performances and Phonograms Treaty (WPPT) 1996.

  • WIPO Strasbourg Agreement Concerning the International Patent Classification 1971.

  • International Convention for the Protection of New Varieties of Plants 1961 (UPOV Convention).

  • WIPO Vienna Agreement Establishing an International Classification of the Figurative Elements of Marks 1973.

  • Convention on Biological Diversity 1992.

  • UN Universal Copyright Convention 1952.

 
27. Are foreign IPRs recognised in your jurisdiction?

Patents

Article 16 of Law No. 9,279 of 14 May 1996 (Industrial Property Law) considers priority rights for filing an application in Brazil claiming a foreign priority date of a patent application filed in either:

  • A country that maintains an agreement with Brazil.

  • An international organisation, where that filing produces the effect of a national filing.

As a result, a patent application filed in a foreign country either through the WIPO Paris Convention for the Protection of Industrial Property 1883 (Paris Convention) or the Patent Cooperation Treaty 1970 (PCT)] can be filed in Brazil claiming the foreign priority.

Trade marks

Although proprietorship of a trade mark is acquired by a validly granted registration, trade marks that are well-known in their field of activity in accordance with section 126 of Brazilian IP Law No. 9279/96 and Article 6 bis (I) of WIPO Paris Convention for the Protection of Industrial Property 1883 (Paris Convention) will enjoy special protection, whether or not they have been previously filed or registered in Brazil.

Copyright

Copyrights are recognised irrespective of any registration.

 

Reform

28. Are there any proposals for reform?

The new Copyright Law (Marco Civil da Internet) (Law No. 12,965/14, which has been in force since 23 June 2014) and its main provisions concerning the neutrality rules and liability issues represents a significant area of reform for Brazilian IP law.

 

Online resources

Brazilian Patent and Trademark Office (BPTO) (Instituto Nacional Da Propriedade Industrial (INPI))

W www.inpi.gov.br

Description. The BPTO's website provides guidance on the application procedures for trade marks, patents, industrial designs, geographical information, and computer programs.



Contributor profile

Luiz Henrique O. do Amaral, Partner

Dannemann Siemsen Advogados

T +55 21 2237 8716
F +55 21 2237 8922
E amaral@dannemann.com.br
W www.dannemann.com.br

Professional qualifications. Graduated from the Cândido Mendes Law School, Rio de Janeiro,1985

Areas of practice. Litigation; corporate law; unfair competition; intellectual property (including copyright and trade marks); transfer of technology and licensing of rights; franchising; consumer law; geographical indications; information technology; competition law.

Languages. English, Portuguese, French

Professional associations/memberships.

  • Partner and Executive Committee Member of the Law Firm Danneman Siemsen Advogados and of the industrial property firm Dannemann, Siemsen, Bigler & Ipanema Moreira.
  • Leading litigator of the firm's enforcement and anti-piracy group and head of the licensing group.
  • President of the Brazilian Intellectual Property Association (ABPI).
  • President of the AIPPI Brazilian Group (Association Internationale pour la Protection de la Propriété Intellectuelle).
  • President of LIDC Brazilian Group (Ligue de Droit de la Concurrence).
  • Board Member of the Global IP Network.
  • General Counsel of the Brazilian Franchising Association (ABF).
  • Secretary General of the World Franchising Council (WFC) for 2009/2010.
  • Member of the CNCP (National Council for Piracy Combat of the Ministry of Justice).
  • Member of the Biotechnology Information Counsel (CIB).
  • Member of the Intellectual Property Committee of the American Chamber of Rio de Janeiro.

Publications. Franchising: Aprenda com os especialistas (Learn from the experts), Beto Filho et al, 1 ed, Rio de Janeiro, ABF-Rio, 2013.


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