Legislative framework and causes of action

The Brazilian Constitution guarantees patent, trademark and copyrights as a means to secure the social and economic development of the country. Nevertheless, the use and registration of trademarks in Brazil are mainly regulated by the Industrial Property Act (Law 9.279/1996), which was enacted shortly after the ratification by Brazil of the Agreement on Trade-Related Aspects of Intellectual Property Rights. Brazil is also a signatory to the Paris Convention for the Protection of Industrial Property.

Brazil adopts the first-to-file principle, whereby the registration of a trademark will be granted to the first person who files the application. Therefore, the exclusive use of a trademark is acquired by means of a registration validly issued by the Brazilian Patent and Trademark Office (BPTO). There is no need to submit evidence of use, but third parties may request a declaration of forfeiture for non-use if, on the date of the request, use of the trademark in the country was not initiated or was interrupted for more than five consecutive years after registration, or was used in a modified form that implies alteration to its original distinctive character.

Under Brazilian law only trademarks that are visually perceptible may be registered, which poses some difficulties for non-traditional trademarks. The registration of slogans is also forbidden, but they may be protected under copyright or unfair competition law. ANVISA (the Brazilian Food and Drugs Agency) also regulates the registration of pharmaceutical trademarks.

Famous trademarks may enjoy special protection in all fields if the BPTO declares them ‘highly reputed trademarks’. This declaration may be obtained through a specific administrative proceeding before the BPTO. The certificate of highly reputed trademark is valid for five years and is renewable.

A trademark registration may be considered null and void if granted contrary to the provisions of the Industrial Property Act – for instance:

  • if the trademark lacks distinctiveness or is against morals; or
  • if a third party has prior rights over the sign through a trademark, civil or corporate name, geographical indication, artwork or industrial design.

As a general provision, the statute of limitations to request the invalidation of a trademark registration before the federal courts is five years from the issuance of registration. However, there are some notable exceptions to this rule: in view of Article 6bis of the Paris Convention, the statute of limitations does not apply to the registration of a well-known trademark which has been made in bad faith.

Under Brazilian law, trademark infringement is an unauthorised use of a trademark identical or confusingly similar to a registered trademark in connection with goods or services within the same field of activities and in a manner that is likely to cause confusion, undue association, deception or mistake about the source of the good or service.

Moreover, trademark infringement may also occur when a third party violates the material integrity and reputation of the trademark’s owner or of the applicant of a pending trademark application, as per Article 130 of the Industrial Property Act.

Trademark owners may take civil and/or criminal actions against infringers before state courts. Depending on the case, it is also possible to send a cease and desist letter before taking the matter to court. Parallel importation can be prevented through a civil action; it is crucial to present evidence that the trademark owner did not give the defendant its consent to use the trademark.

The statute of limitations to file a civil infringement lawsuit in order to prevent further infringement is 10 years. However, the statute of limitations does not apply in special circumstances such as the unauthorised use of a well-known mark made in bad faith in view of Article 6bis of the Paris Convention. For damages and recovery of losses incurred from actual infringement, the statute of limitations is five years.

Although Brazilian law grants exclusivity only to registered trademarks, it also provides remedies to parties that do not hold a trademark registration, especially under unfair competition law and mechanisms to protect well-known marks. Thus, unfair competition law may be used in cases of trade dress infringement or infringement of a mark whose registration is still pending. The general requirements to argue unfair competition successfully are:

  • likelihood of confusion and unlawful association between the marks among consumers; and
  • an attempt to divert customers (Article 195(III) of the Industrial Property Act).

An important statute concerning online trademark infringement is the Civil Rights Framework for the Internet (Law 12.965/2014, known as Marco Civil da Internet). According to its Article 19, an internet service provider (ISP) may be considered liable for not removing content only if it fails to comply with a court order to remove content available at a specific URL. That means that a trademark owner must identify the URL of the pages where the infringing content was posted in order to obtain the removal order. Thus, although the ISP may remove infringing content without a court order, it is not obliged to do so. This substantially differs from the ‘notice and take down’ system established by the United States’ Digital Millennium Copyright Act.

Alternative dispute resolution

Mediation and arbitration

As per Article 334 of the Code of Civil Procedure, parties to a dispute must take part in mediation or in a conciliatory hearing, unless the court provides otherwise. As a rule, the parties will be submitted to conciliatory hearings. However, conciliatory hearings may not occur where both parties so agree. Article 165 of the Code of Civil Procedure also created mediation and conciliatory centres.

Arbitration proceedings are regulated by Law 9.307 (September 23 1996). According to Article 4, Paragraph 1, the arbitration clause must be in written form, in either the main contract or another document relating to the contract. When it comes to trademark disputes, arbitration methods are not commonly used. However, arbitration is sometimes used in relation to IP agreements and franchising.

Alternative dispute resolution methods are widespread and several chambers of commerce and associations have mediation or arbitration centres, including for conflicts between trademarks and domain names.

SACI and domain names

Domain names under the top-level ‘.br’ can use the alternative dispute resolution system established specifically for them. SACI (the Portuguese acronym) was inspired by the Uniform Domain Name Dispute Resolution Policy of the Internet Corporation for Assigned Names and Numbers. Under SACI, a domain name may be cancelled, transferred or maintained by a panel composed of one or three panellists. The proceedings are held in Portuguese and are managed by institutions accredited by NIC.Br (the entity in charge of administrating the ‘.br’ domain). However, SACI’s decisions may be challenged in court.

Litigation venue and formats

Brazil is a federation and, as such, has 27 state courts, which have jurisdiction over infringement lawsuits. As a rule, civil infringement lawsuits must be filed in the venue where the defendant has its seat. However, there are some exceptions. If the plaintiff is able to collect evidence attesting that the infringement is taking place in a different venue, the lawsuit may be filed in that venue. If the dispute arises out of a contract that contains a clause regarding a choice of forum, that clause may be applied as an exception to the general rule as well.

There are state courts specialising in intellectual property in Sao Paulo (at second instance only), Rio de Janeiro (at first instance only) and Rio Grande do Sul (at second instance only). As the wealthiest states, Rio de Janeiro and Sao Paulo are the most important venues for infringement lawsuits.

Contrary to other federations, in Brazil there are no local procedural rules. The procedural rules are fully governed by the Federal Civil Procedure Code enacted in 2015 and the Federal Criminal Procedure Code. Although the procedural rules apply throughout the country, in view of local inequalities and the backlog of work in some courts, the average timeframe for a lawsuit varies significantly. The Sao Paulo state courts used to be among the slowest in the country, but have improved markedly after the implementation of digital dockets.

Under Article 175 of the Industrial Property Law, nullity actions fall under the federal jurisdiction; the BPTO (as a federal body) must be a defendant in this suit. This provision also applies to challenges brought against the decisions of the BPTO. In Brazil, the federal courts are divided into five circuits: the first has its seat in Brasilia, the second in Rio de Janeiro, the third in Sao Paulo, the fourth in Porto Alegre and the fifth in Recife. Among these circuits, the most important venues are Rio de Janeiro (where the BPTO has its headquarters) and Sao Paulo (because many co-defendants have their seat in this state). The lawsuits filed before federal courts tend to proceed more slowly than those filed in state courts because, as a state entity, the BPTO enjoys special deadlines.

Damages and remedies

Available remedies

Enforcement provisions allow trademark owners to take both civil and criminal actions against infringers. Criminal remedies include search and seizure, detention and imprisonment of three months to one year and payment of a fine.

The most common civil remedies are search and seizure, a restraining order to stop the infringement under penalty of a daily fine, destruction of product, and recovery of losses and damages.

Plaintiffs may seek both moral and material damages. When it comes to legal persons, moral damages are awarded when the court considers that the infringement harmed the good reputation of a trademark. Besides the general provisions regarding monetary remedies, Article 210 of the Industrial Property Act establishes that the loss of profits will be determined by the most favourable of the three following criteria:

  • the benefits that would have been gained by the trademark owner if the infringement had not occurred;
  • the profits made by the infringer through the undue use of the trademark; and
  • the remuneration that the infringer would have paid to the trademark owner if the parties had signed a licence agreement.

The court usually appoints an expert to establish the final amount of patrimonial damages. The civil compensation procedures are often time-consuming, and their success depends on the evidence of damages and the defendant’s financial situation.

With regard to nullity lawsuits, besides the nullity of a trademark registration, the plaintiffs may also request the adjudication of a trademark registration in some circumstances – namely, where the trademark was registered without authorisation by a local agent or representative (under Article 6septies of the Paris Convention and Article 166 of the Industrial Property Act).

Injunctive relief

Preliminary and permanent injunctions are available in both infringement and nullity lawsuits. The legal requirements for an ex parte injunction are set out in both the Code of Civil Procedure and the Industrial Property Act, as follows:

  • There must be a high probability of success in the lawsuit in view of the strong evidence collected by the plaintiff regarding its rights and the infringement in question; and
  • There must be a risk of unjust harm if the requested remedy is not implemented immediately.

Injunctive relief is available ex parte, but it is more common for the judge to wait for the defendant to present its defence and only thereafter decide on the request for relief.

Plaintiffs may request injunctions in order to obtain a specific measure (eg, a search and seizure and/or restraining order) and to protect and collect evidence. The new Civil Procedure Code also provides for the granting of injunctions in situations where, after the submission of the defendant’s brief, there is enough evidence attesting the right claimed by the plaintiff (tutela da evidência). In this case, there is no need to prove that there is a risk of unjust harm if the court does not grant the remedy immediately.

With regard to nullity lawsuits, Article 173 of the Industrial Property Act authorises the plaintiff to request the suspension of trademark registrations while the lawsuit is pending.

Evidencing the case

Categories of evidence

According to the Civil Procedure Code, parties may produce any kind of evidence that “is not contrary to the law” (ie, that is not obtained by unlawful means). In trademark litigation, parties submit mostly documentary evidence, such as invoices, affidavits, pictures and advertisements. Especially in cases related to distribution agreements, witnesses may be useful. If the case demands specific technical knowledge (eg, advertising practices in a specific market), the court may appoint an expert to produce an opinion. In this case, the parties are entitled to address their own queries to the court-appointed expert and to appoint their own experts, who will produce their own opinions and may agree or disagree with the court-appointed expert. Although the court-appointed expert is generally considered reliable, his or her opinion is not binding and the court may disregard it if other evidence contradicts the expert.

Contrary to common law jurisdictions, there is no discovery phase in Brazil and parties are not obliged to submit evidence requested by the other party, unless the court orders them to do so. To obtain evidence held by the other or a third party, the plaintiff may either request an injunction ordering the party to provide the requested evidence or start an early production of evidence procedure before starting the main lawsuit.

In general, plaintiffs are not allowed to amend their complaint briefs after the defendant has been summoned. However, if there is a request for preliminary injunction to collect evidence, the plaintiff may amend its complaint once the injunction has been granted.

The parties are not allowed to submit new evidence at second instance, unless the evidence aims to prove new facts that occurred after the filing of the appeal.

Survey evidence

Surveys may be useful in cases where it is important to prove whether there is a likelihood of confusion, or to confirm secondary meaning or dilution of a trademark. Surveys may also serve to prove that a trademark is well known in a specific field and, thus, deserves the special protection granted by Article 6bis of the Paris Convention. Surveys are mandatory in administrative proceedings to obtain a declaration of highly reputed trademark and are also important in lawsuits challenging decisions rendered by the BPTO on this regard.

It is rare for a court to order the submission of survey evidence. Generally, surveys are presented by the parties, which commission them from specialist local companies. Notwithstanding this, as with any other type of evidence, the judge will determine the need for or importance of survey evidence, although the plaintiff can file an infringement action together with survey results from the beginning.

Available defences

With regard to trademark infringement, one of the most common defences is arguing the nullity of the registration of the mark allegedly infringed. However, nullity lawsuits must be brought before federal courts, which leads to the awkward situation of having to litigate on two different fronts. Under the civil procedure rules, the state court that handles the infringement case may stay the proceedings for one year while awaiting the outcome of the nullity lawsuit.

Another popular defence is to claim dilution (ie, that the trademark has lost its distinctiveness because there are many similar signs or marks in the same field or market), or that the allegedly infringed trademark is weak (eg, it is an evocative or descriptive trademark). In such cases, the court may order for the similar marks to coexist.

Another common defence is the principle of specialisation. Under this principle, the protection enjoyed by a mark is limited to the goods and services for which its registration was granted. Thus, unless the trademark owner is able to prove the reputation of its trademark and the likelihood of confusion or undue association, it may not succeed in its allegations of infringement in view of the use of a registered mark for different products and services.

In cases of trademark infringement and unfair competition, another important defence is lack of distinctiveness of the prior trademark and lack of confusion between the marks. In order to demonstrate this, the defendant may argue that there are other similar trademarks peacefully coexisting in the same or a similar market. This argument emphasises that such trademark lacks distinctiveness. In addition, the defendant may claim that its trademark was used before the other trademark with no objection from third parties. In this sense, it is possible to allege that the trademark has been used in good faith.

In trade dress cases, defendants can try to show that their trade dress follows a pattern set by their own market and, thus, that the consumer does not perceive the plaintiff’s trade dress as distinctive. Parties are also allowed to present counterclaims.

Appeals process

The Brazilian procedure rules have been the subject of harsh criticism for allowing too many appeals. The new Civil Procedure Code has tried to address this issue by considerably reducing the possibility of lodging interlocutory appeals. Now interlocutory appeals are available only against some interlocutory decisions, such as those related to preliminary injunctions.

In addition, Brazil adheres to the principle of the ‘double degree of jurisdiction’ (ie, every party involved in the lawsuit has the right to appeal the decision rendered by the trial judge). Under the state jurisdiction, the decision of a trial court judge regarding trademark infringement may be appealed to the assigned civil chamber of that state court. As to the federal jurisdiction, with regards to trademark nullity actions, a decision rendered by a federal judge may be appealed to the federal court of appeals for the specific circuit.

The parties may lodge appeals against decisions on the merits rendered by the first-instance court. Appeals are heard by three judges. In case of a dissenting opinion, two more judges join the judgment hearing.

If a party believes that a second-instance decision violated an infra-constitutional law provision or differs from the jurisprudence in a similar case, it may lodge a special appeal to the Superior Court of Justice. The Superior Court of Justice has its seat in Brasilia and is in charge of standardising infra-constitutional law. Although the rulings of the Superior Court are not generally binding on other cases, they are very influential and provide some guidance to the lower courts, working as ‘persuasive precedents’.

If a party believes that a second-instance decision violated a constitutional law provision, it may lodge an extraordinary appeal to the Supreme Court. These appeals are extremely rare.

This article first appeared in World Trademark Review. For further information please visit www.WorldTrademarkReview.com.

Kasznar Leonardos Intellectual Property

Fifth to Seventh Floors

Rua Teófilo Otoni, 63

Rio de Janeiro RJ 20090-080

Brazil

Tel +55 21 2113 1919

Fax +55 21 2113 1920

Web www.kasznarleonardos.com

Claudio Barbosa Partner claudio.barbosa@kasznarleonardos.com

Claudio Barbosa heads the Sao Paulo office of Kasznar Leonardos. An expert in IP litigation and licensing agreements, he was responsible for the creation of the IP Alternative Dispute Resolution Centre Council, an institution controlled by the Brazilian Association of Intellectual Property (ABPI) which encompass an arbitration court, a mediation centre and a domain name dispute resolution centre.

He graduated in law (1994) from the University of Sao Paulo (USP) and has completed two LLMs: one in IP law from the George Washington University (2000) and the other in international law from USP (2001). He also has a PhD in commercial law from USP (2007) and a technical degree in computer programs and digital electronics (1988).

Nancy Caigawa Partner nancy.caigawa@kasznarleonardos.com

Nancy Caigawa is a lawyer and registered industrial property agent. She acts in IP litigation, trademark prosecution, IP consultancy, copyrights, unfair competition, technology transfer and franchising.

She has a law degree from USP (2001), a postgraduate diploma in corporate law from the Pontifical Catholic University of Sao Paulo (2004) and an MBA in innovation, information and technology from the Fundação Instituto de Administração (2015). She is a member of the ABPI and the Lawyers’ Association of Sao Paulo. She is a director of the Sao Paulo Association of Intellectual Property.

Rafael Lacaz Amaral Senior partner rafael.amaral@kasznarleonardos.com

Rafael Lacaz Amaral acts in IP litigation; consultancy on licensing agreements, patents, trademarks, copyrights and unfair competition; trademark prosecution; and IP arbitration and mediation. Since January 2014 Mr Lacaz Amaral has been the sole representative of the ABPI at the Anti-counterfeiting National Council, a governmental organisation jointly created by the public and private sectors to elaborate and maintain enforcement, educational and economic programmes to fight piracy in Brazil.