A thumbnail guide to IP rights for fintech businesses in Brazil

Intellectual property rights

Which intellectual property rights are available to protect software, and how do you obtain those rights?

Intellectual property rights for software in Brazil are regulated by Law No. 9,609 of 19 February 1998 (Software Law) and Law No. 9.610 of 19 February 1998 (Copyright Law). While the protection of software rights does not depend on any registration, it is possible to register a software with the National Institute of Industrial Property (INPI), which serves solely as an alternative to publicise the ownership of the software.

The copyright on software provides the holder with all related economic rights, independently of any previous registration. In respect of moral rights, except for the right to claim the authorship of the software, no other moral rights are applicable.

The owner is also assured the exclusive commercial licensing rights of the software and technology transference. In the latter case, the technology transfer agreements must be registered with the INPI to have effect in relation to third parties and to enable the remittance of royalties abroad.

As a copyright, software protection is independent of any form of registration, extending for 50 years starting from 1 January of the year following its creation, after which the work enters the public domain.

During the 50 years in which the computer programs are protected, only the owner can authorise its use by third parties by means of a licensing agreement. In the absence of a written licensing agreement, the tax invoice relating to the acquisition or licensing of a copy of the program will evidence the regularity of its use.

Who owns new intellectual property developed by an employee during the course of employment? Do the same rules apply to new intellectual property developed by contractors or consultants?

Law No. 9,609 of 19 February 1998, which provides for the rights and obligations for the protection of software’s intellectual property, states that the software ownership developed as a result of services provided within a specific contract will belong to the contracting party (an employer, a company or a public agency) unless it can be proven that the software was created without connection to the performance of the contract and without the use of resources, technological information, industrial or commercial secrets, materials, installations or equipment belonging to the contracting party.

The same provisions are applicable in the case of an employment agreement. Violations of those intellectual property rights may result in penalties.

Law No. 9,279/96, which provides for the rights and obligations related to industrial property (ie, trademarks, patents and industrial designs), sets forth that the patent or industrial design belongs exclusively to the employer when resulting from an employment contract executed in Brazil, the purpose of which relates to research or inventive activities, or that results from the nature of the services for which the employee was hired. The same applies for agreements with services providers.

Brazilian copyright law provides for the possibility for co-authorship of works. The co-authors (or joint owners) receive legal protection both for their individual contributions and for the entire work. They must exercise their rights by common agreement (unless otherwise agreed).

If the contributions of each author are not divisible (identifiable), none of the co-authors may publish or authorise the publication of the work without the consent of the others. However, each author may defend his or her right over the work without the consent of the others. The intellectual property produced by them will be an undivided part, assuming that each author will have equal and proportional participation in the software unless otherwise stipulated in writing.

When the work is made through an institution, organisation or legal entity, which is formed by the participation of different authors, whose contributions merge into a single creation, it is called a collective work. The Constitution also ensures individual participation in a collective work.

The legislation guarantees to the joint owner of a collective work his or her due remuneration and establishes the property rights over the collective work as a single right of the organisation. The contract with the organisation indicates the contribution of each of the participants and the remuneration and other conditions for its execution, such as licensing, charging and the assignment.

Unlike co-authorship, the collective work, despite being created from the collaboration of several people, becomes a unique work, and for this reason, the agreement establishes the participation of each author, and the conditions for the economic exploitation of it.

Are there any restrictions on a joint owner of intellectual property’s right to use, license, charge or assign its right in intellectual property?

Brazilian copyright law provides for the possibility for co-authorship of works. The co-authors (or joint owners) receive legal protection both for their individual contributions and for the entire work. They must exercise their rights by common agreement (unless otherwise agreed).

If the contributions of each author are not divisible (identifiable), no co-author may publish or authorise the publication of the work without the consent of the others. However, it should be noted that each author may defend his or her rights over the work without the consent of the others. The intellectual property produced by them will be an undivided part, assuming that each author will have equal and proportional participation in the software, unless otherwise stipulated in writing.

When the work is made through an institution, organisation or legal entity, which is formed by the participation of different authors, whose contributions merge into an autonomous creation, it is called a collective work, pursuant to section 17 of Federal Law No. 9,610/98. Article 5, item XXVIII, item ‘a’ of the Federal Constitution also ensures individual participation in a collective work.

The legislation guarantees to the joint owner of collective work his or her due remuneration and establishes the property rights over the collective work as a single right of the organisation. The contract with the organisation shall indicate the contribution of each of the participants, the remuneration and other conditions for its execution, such as licensing, charging and the assignment.

Unlike the co-authorship, the collective work, despite being elaborated by several people, becomes a unique work, and for this reason, the agreement shall establish the participation of each author, and the conditions for the economic exploitation of it.

How are trade secrets protected? Are trade secrets kept confidential during court proceedings?

Trade secrets are protected by the Industrial Property Law, which characterises as a criminal offence the ‘disclosure, exploitation or use, without authorisation, of confidential knowledge, information or data, usable in industry, commerce or the provision of services, excluding information which is publicly known or evident to a person skilled in the field, to which one has had access through a contractual or employment relationship. Penalties may include imprisonment of the offender, from three months to one year, or a fine. In addition, the company is liable for any proven damages as a civil violation.

The Industrial Property Law also assures injured parties ‘the right to receive compensation for the loss caused by acts of infringement of industrial property rights and by acts of unfair competition’.

To prove that one is the lawful holder of the violated rights, he or she must evidence that reasonable steps to maintain the confidentiality of the information were taken and that access to the information by the infringing party was fraudulent and unlawful, in breach of contractual or legal obligations.

The injured party may request judicial secrecy over the lawsuit. Furthermore, if a trade secret is disclosed ‘in the course of a court action in order to defend the interests of any of the parties, the judge must determine that the case proceed in judicial secrecy’, which implies restricted access to the case files and hearings only by the parties, their lawyers, the judge and his or her clerks.

What intellectual property rights are available to protect branding and how do you obtain those rights? How can fintech businesses ensure they do not infringe existing brands?

There are two ways of protecting branding rights in Brazil: the grant of industrial design registration and the grant of trademark registration (or brand registration). Both registration types are made with the INPI.

The industrial design registration protects the design of a product. The product should have a new aesthetic or an ornamental aspect that differs from existing products. The requirements are that the design should be new (when it has not been made public in Brazil or abroad before the deposit of the request to the INPI) and original (when it results from a distinctive visual configuration in relation to other previous objects, including those resulting from the combination of known elements). The registration grants ownership to a specific brand. The conditions for an application for registration can be found in articles 101 to 106 of the Industrial Property Law.

The trademark registration is related to:

• distinctive signs, such as company names or logos, products and service marks, used to distinguish them from their competitors
• certification marks, which are those used to certify that a product or service complies with certain technical specifications; and
• collective marks, which are used to identify products and services of the members of a certain entity.

The conditions for an application for trademark registration can be found in the Industrial Property Law.

Foreign businesses, including in the fintech field, may ensure that they do not infringe existing brands in Brazil by: (1) researching INPI databases to confirm the existence of any similar existing brands; and (2) properly applying for the registration of its own brand and industrial property before the INPI. The current legal protection of intellectual and industrial property in Brazil derives from the Agreement on Trade-Related Aspects of Intellectual Property Rights.

What remedies are available to individuals or companies whose intellectual property rights have been infringed?

Under Law No. 9,609 of 19 February 1998, the violation of a piece of software’s intellectual property is a criminal offence, punishable by the imprisonment of the offender from six months to two years or a fine, and a civil tort. The offender is also liable for all losses and harm suffered by the claimant when the offender acts in bad faith or with the intention of imitating the claimant, or commits a gross error by violating a third party’s intellectual property.

Crimes against brands and industrial designs may be found in the Industrial Property Law, accompanied by their respective penalties. The penalties usually involve a period of incarceration from three months to one year or the application of a fine. The application of fines for crimes against industrial design (patrimonial damages) does not require a delimitation of the economic loss. Damage caused to the owner are characterised by the violation of his or her protected rights.

Crimes or illicit activity that violates copyright can be found in Law No. 9,610 of 19 February 1998, which establishes the mandatory compensation for losses and damage as well as other applicable sanctions, such as the suspension of transmissions or product sales and the destruction of illicit copies, according to the type of violation.

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22 June 2020.