Q&A: key IP issues affecting licensing agreements in Brazil

Intellectual property issues

Is your jurisdiction party to the Paris Convention for the Protection of Industrial Property? The Patent Cooperation Treaty (PCT)? The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs)?

Brazil is a party to all three of the aforementioned treaties.

Can the licensee be contractually prohibited from contesting the validity of a foreign licensor’s intellectual property rights or registrations in your jurisdiction?

A contractual disposition that limits the free and ample exercise of a given right may be considered abusive by a Brazilian court. This includes conditions preventing challenges to the validity of a foreign licensor’s intellectual property rights (IPRs) or registrations.

However, it is generally accepted that a licensee may not impose undue obstacles on a foreign licensor’s IPRs or registrations. Also, it is advisable to contractually prohibit the licensee from applying for registrations of the licensed rights.

What is the effect of the invalidity or expiry of registration of an intellectual property right on a related licence agreement in your jurisdiction? If the licence remains in effect, can royalties continue to be levied? If the licence does not remain in effect, can the licensee freely compete?

The invalidity or expiry of registration of an IPR will usually be deemed cause for the termination of the licence. Accordingly, given that the right of the licensee to freely compete is not expressly regulated by Brazilian law, it will be bound to the terms and provisions of the licence agreement.

Is an original registration or evidence of use in the jurisdiction of origin, or any other requirements unique to foreigners, necessary prior to the registration of intellectual property in your jurisdiction?

No such registration or evidence of use is necessary. As a rule, Brazilian law does not make any distinction based on the nationality of the applicant for registration. The only requirement unique to foreign nationals is to appoint and retain an attorney who is duly qualified and domiciled in Brazil.

Registration and use in the country of origin becomes relevant when the priority right of the Paris Convention for the Protection of Industrial Property 1883 (Paris Convention) is applicable. Regarding trademarks, depending on the type of evidence that is provided, such factors could also support the application of article 6 bis and quinquies of the Paris Convention.

Can unregistered trademarks, or other intellectual property rights that are not registered, be licensed in your jurisdiction?

Unregistered trademarks may be licensed in Brazil. However, in order to license its use, the licensor must have at least filed an application for registration in Brazil. It is important to highlight that the remittance of payments from trademark licences will only be accepted after grant of a respective trademark registration by the National Institute of Industrial Property (INPI). Retroactive payments before the grant of the trademark registration are not allowed.

Likewise, a patent application may be subject to a licence agreement.

Insofar as copyrights are concerned, the economic rights of the author may be wholly or partly transferred by means of a licence agreement.

Are there particular requirements in your jurisdiction to take a security interest in intellectual property?

In accordance with the Brazilian Industrial Property Law (BIPL), the INPI shall register any limitation or onus that applies to applications, registrations or patents. The recordal of such limitations becomes effective regarding third parties on the date of publication in the Official Gazette. It must be highlighted that the recordal by the INPI is not a condition for the licence agreement to be valid between the contracting parties.

Can a foreign owner or licensor of intellectual property institute proceedings against a third party for infringement in your jurisdiction without joining the licensee from your jurisdiction as a party to the proceedings? Can an intellectual property licensee in your jurisdiction institute proceedings against an infringer of the licensed intellectual property without the consent of the owner or licensor? Can the licensee be contractually prohibited from doing so?

A foreign owner or licensor may institute such proceedings without joining the local licensee. However, the licensee may be contractually invested with powers to enforce the licensed right. Regarding patent, trademark and other technology transfer licences, the agreement will have to be registered by the INPI to legitimise a licensee’s standing to bring suit.

Without the express consent of the owner or licensor, the licensee will not be able to institute proceedings against an infringer. The licensee can also be contractually prohibited from doing so. It is advisable, however, that the licence agreement determines an obligation for the licensee to cooperate with the licensor to cease third-party infringements. Even when the licensee lacks standing, it would be possible to intervene in the form of assistant (amicus curiae) to the foreign owner or licensor.

Can a trademark or service mark licensee in your jurisdiction sub-license use of the mark to a third party? If so, does the right to sub-license exist statutorily or must it be granted contractually? If it exists statutorily, can the licensee validly waive its right to sub-license?

Sub-licensing would only be acceptable if provided for in the original licence agreement. As a rule, the right to sub-license does not exist statutorily and must be granted contractually.

If intellectual property in your jurisdiction is jointly owned, is each co-owner free to deal with that intellectual property as it wishes without the consent of the other co-owners? Are co-owners of intellectual property rights able to change this position in a contract?

In regard to the patents, the BIPL only indicates, in paragraph 3 of article 6, that the patent created jointly by two or more inventors may be applied for by all or one of them, by means of naming and identifying the others, to safeguard the respective rights. Since the BIPL does not provide further rules regarding co-ownership, provisions of the Brazilian Civil Code for condominium ownership are usually applied. In this sense, although there are some discussions on the application of such prescriptions to patents, the majority understands that the object of the patent cannot be freely licensed by one of the co-owners without the consent of the other co-owners, nor be partially sold to third parties when the other co-owners are interested in acquiring it. However, the majority also understands that each one of the co-owners of the patent can exploit the object without the consent of the other co-owners. A private contract among the co-owners may alter these rules.

For trademarks, the Brazilian Patent and Trademark Office prohibits co-ownership. However, the simultaneous use of a trademark through licence agreements is allowed, and the terms of such agreement can be freely stipulated among the parties.

Regarding copyright, the Brazilian Copyright and Neighbouring Rights Law (Law No. 9,610 of 19 February 1998) (BCL) prescribes in paragraph 2 of article 15 that any joint author whose contribution can be used separately shall enjoy all the faculties inherent in its creation as an individual work, provided that any use liable to prejudice the exploitation of the whole work is prohibited. Moreover, article 32 of the BCL prescribes that, when a work of joint authorship is not divisible, co-authors cannot publish nor authorise publication of the work without the consent of the other co-authors, under the penalty of having to pay damages. In this specific case, the BCL prescribes particular rules (ie, if the co-authors are in disagreement, they shall decide by majority vote; any dissenting co-author shall retain the right not to contribute to the cost of publication) on the understanding that he or she then renounces his or her share in eventual profits, and also the right to refuse to be named on the work; and each co-author may, independently and without the consent of the others, have the work registered and assert his or her own rights against third parties. The co-authors of a copyrightable work can, according to the provision of article 23 of the BCL, exercise their rights over the work by common consent (ie, as established in a contract).

Is your jurisdiction a ‘first to file’ or ‘first to invent’ jurisdiction? Can a foreign licensor license the use of an invention subject to a patent application but in respect of which the patent has not been issued in your jurisdiction?

Brazil follows a ‘first to file’ system regarding both patents and trademarks. Some specific exceptions are prescribed by the BIPL. For instance, a person who, in good faith, prior to the filing or priority date of a patent application, was exploiting the object thereof in Brazil may assert the right to continue the exploitation in the same manner and under the same conditions as before.

Another exception is found in relation to trademarks. Under the BIPL, a person who, in good faith, had been using an identical or similar mark in Brazil for at least six months before the filing of the application may claim the right of preference for the registration.

A foreign licensor may license the use of an invention subject to a pending patent application. The licensor will not be able to receive royalties until the patent is granted.

Can the following be protected by patents in your jurisdiction: software; business processes or methods; living organisms?

The BIPL expressly forbids patents over commercial, accounting, financial, educational, advertising, lottery and inspection schemes, plans, principles or methods. It also excludes from protection living organisms, in whole or in part, as well as biological materials found in nature, even if isolated therefrom. In contrast, the BIPL allows patents over transgenic microorganisms, which are defined as organisms that express, by means of direct human intervention in their genetic composition, a characteristic normally not attainable under natural conditions.

Software per se is protected under copyright, not patent. However, the INPI has admitted patents that include software for processes or that integrate diverse equipment, provided that the patentability requirements of novelty, inventive step and industrial application are met.

Is there specific legislation in your jurisdiction that governs trade secrets or know-how? If so, is there a legal definition of trade secrets or know-how? In either case, how are trade secrets and know-how treated by the courts?

Trade secrets are protected under unfair competition provisions in the BIPL. Among other conduct, a crime of unfair competition is committed by any person who discloses, exploits or uses, without authorisation, confidential knowledge, information or data that could be used in industry, commerce or service rendering, unless such knowledge, information or data is public knowledge or obvious to an expert in the relevant subject. The violator must have gained access to the trade secret through fraud or by means of a contractual or employment relationship, even after its termination. Therefore, if the object of the trade secret is discovered or developed by permissable independent means, no infringement will generally be found.

Know-how is not clearly defined by specific legislation. It is generally understood by local administrative and judicial authorities as knowledge or techniques not covered or registered as industrial property rights, which are used in the manufacture of goods or in the rendering of services.

Does the law allow a licensor to restrict disclosure or use of trade secrets and know-how by the licensee or third parties in your jurisdiction, both during and after the term of the licence agreement? Is there any distinction to be made with respect to improvements to which the licensee may have contributed?

Foreign licensors should be aware that the INPI does not admit temporary licensing of know-how. Rather, the predominant understanding is that non-patented technology is only subject to disclosure or permanent acquisition. Therefore, the INPI will not approve contractual dispositions prohibiting the local licensee to continue exploring the transferred know-how.

Non-disclosure clauses are generally admitted during the term of the licence agreement and for a reasonable period after termination. In many cases, the INPI has considered five years after termination as a reasonable confidentiality period.

What constitutes copyright in your jurisdiction and how can it be protected?

Copyright constitutes an arrangement of economic and moral prerogatives that the law recognises to creators of original works of authorship. The Brazilian Constitution determines that authors shall have the exclusive rights of use, publication and reproduction over their works. These exclusive economic rights may be transferred to the author’s successors, for a time fixed by law.

Traditionally, the author’s rights in Brazil were conceived as a part of the general legal branch of civil law, regulated in the former Civil Code of 1916. The protection was later regulated in specific norms. The most recent and in force are the BCL and the Brazilian Software Law (BSL).

Under the BCL, intellectual works subject to protection are original creations of the mind, whatever their mode of expression or the medium in which they are fixed, tangible or intangible, known or capable of invention in the future. Such protectable creations include literary works, musical compositions, films, photographs, drawings, paintings, sculptures, illustrations, animations, adaptations, translations, collections, compilations and computer software.

As a general rule, the BCL sets the duration of economic rights for a period of 70 years counted from 1 January of the year following the author’s death. The BSL sets the duration of the rights associated with computer software for a period of 50 years counted from 1 January of the year following publication or creation.

Protection of copyright in Brazil is not subject to registration, notice or any other formalities. The granting of copyright is automatic upon the creation of an original work of authorship, even if the work is not fixed in a tangible medium. Nonetheless, optional registration is recommended to evidence authorship and the date of creation of the work. Registration is performed by different official organisations, depending on the nature of the work. For instance, the registration of literary works may be filed at the Copyright Office of the Brazilian National Library, and the registration of computer software is requested at the INPI.

Law stated date

Give the date on which the information above is accurate.

6 January 2021