Intellectual propertyi Brand search
As a general rule, Brazil is a first-to-file country with regard to trademarks. Also, under Brazilian law, proprietorship of a trademark arises with registration, which is of utmost importance for enforcing trademark rights in the country.
Hence, before entering the Brazilian market, it is advisable to run a trademark search within the database of the INPI to check for potential conflicts.
A trademark search is particularly important in Brazil if the title-holder intends to use the mark before a final decision by the INPI. Although the INPI has significantly reduced its backlog in the past couple of years, a trademark application still takes around 18 months to be decided. Given this time frame, searches become an important tool to assess potential risks in the country and guide possible investments.
Also, in an exception to the first-to-file rule, Brazilian law recognises priority rights for senior local users who can prove bona fide use for at least six months before the filing of the conflicting third party's trademark. Unfortunately, given the size and economic particularities of the country, it is very difficult to conduct a wholly reliable use search in Brazil.
In addition, while Brazil has adopted the International (Nice) Classification of Goods and Services system, there are still registrations featuring Brazil's former classification system of 41 classes. Furthermore, although the INPI has adopted the latest 45-class edition of the Nice Classification, applications filed under the previous editions have not been updated and coexist with current registrations.
The coexistence of these different classification systems and editions of the Nice Classification may be particularly problematic with respect to restaurant and hotel services, an area of significant importance to the franchise business.ii Brand protection
Despite advanced discussions within the Brazilian Congress, Brazil is not yet a member of the Madrid System, so trademark applications must be filed directly with the INPI. Nevertheless, Brazil is a member of the Paris Convention, so it is possible to file local applications with priority claims based on foreign applications, as long as the Convention requirements are met. Under Brazilian law, trademarks must be subject to visual representation, so that some non-conventional trademarks are not eligible for registration in the country, including sounds and fragrances.
The INPI has adopted several improvements in digital technology in the past few years and almost 100 per cent of trademark applications are currently filed online, and all submissions are available online as well. Similarly, all certificates of registration are now issued electronically, in PDF format, making the trademark department at the INPI a virtually paperless office.
It is important to bear in mind that foreign applicants must have a local representative, according to Brazilian intellectual property (IP) law. Therefore, although theoretically title-holders are allowed to file their trademark applications directly, applications filed by foreign companies without local representation will be summarily dismissed. Local representatives must also have the authority to take receipt of summonses from local courts for any disputes arising from IP rights.
In addition, Brazilian law stipulates that applicants are only allowed to seek registration for trademarks in the fields of activity in which they are lawfully engaged.
As mentioned above, local applications are usually decided in no less than 18 months, in the absence of an opposition. Also, irrespective of oppositions, local examiners undertake an assessment on both absolute and relative grounds.
In Brazil, a trademark registration is valid for 10 years, counted from the date of its grant, and may be indefinitely renewed for subsequent 10-year terms. While use is not required for securing a registration, a trademark registration becomes vulnerable to a non-use forfeiture action after five years from the date of its grant.iii Enforcement
Other types of intellectual property rights are also afforded protection under Brazilian law, and franchisors may benefit from a wide array of legal statutes regulating protection and enforcement of these rights.
Brazil is a member of the Berne Convention on copyrights and the Universal Copyright Convention, which require signatory countries to give national treatment to copyrightable works created in other signatory countries (including the United States). Under the Brazilian Copyright Law, copyright protection exists by law as of the time the work is created and expressed in any way or fixed in any tangible or intangible support. Copyright registration is not mandatory.
The Software Law also came into effect in February 1998 and governs software and computer programs. Software is also protected by copyright and although registration at the INPI is not mandatory for property purposes, it is allowed and advisable. The Software Law provides heavy penalties for infringers (including imprisonment and fines), as infringement has been rampant in Brazil.
Goodwill is defined in Article 1142 of Law No. 10,406 of 10 January 2002 (the Civil Code) as comprising all the necessary tangible assets (i.e., real estate property and chattels) and intangible assets (all sorts of intellectual properties) duly organised to fulfil the company's activities. Briefly, Brazilian legal doctrine considers the franchisor's trademark the most valuable intangible asset to attract clientele, along with the know-how, trade dress and other particular elements of the franchise system that pertain to the franchisor and will ensure a consistent level of quality of its goods and services.
The Brazilian Industrial Property Law also broadly protects the intellectual property assets of a franchise. Pursuant to Article 195 of the Law, it is a crime of unfair competition to disclose, exploit or use without authorisation confidential knowledge, information or data usable in industry, commerce or the providing of services, to which one has had access by means of a contractual or employment relationship, even after the termination of the contract; or to which one has had access by fraud; or where obtained directly or indirectly by illicit means.iv Data protection, cybercrime, social media and e-commerce
The Brazilian Consumer Protection Code (CDC) establishes that consumers shall have access to information on existing records, bookmarks, registers and personal and filed consumer data on them, as well as to the sources of this information. Consumer data and records must be objective, clear, true and easily understandable, and may not contain any negative information from any period over five years old.
The CDC provides consumers with the right of access to (1) information held in databases; (2) the sources of origin of these records; and (3) to identify the recipients of the content of information maintained in databases.
On 30 November 2012, the country's first law on cybercrime was issued. Law No. 12,737/2012 sets out that accessing a third-party computing device, whether or not connected to the internet, in improper violation of a safe mechanism and with intention to obtain, tamper or destroy data or information without the express or implied owner's authorisation, or to install a vulnerability to gain unfair advantage, is a criminal offence, punishable by imprisonment of three months to one year plus a fine. Law No. 12,737/2012 also expressly stipulates that the observance of Brazilian law is mandatory in respect of any operation of collection, storage, retention and treatment of personal data, or of communications data by connection providers and internet application providers, where at least one of these acts takes place in Brazil, including with regard to the rights to privacy, protection of personal data and secrecy of private communications and of logs.
Moreover, Decree No. 7,962/2013 regulates the end consumers' rights foreseen in the CDC on e-commerce. In short, the Decree has formalised and confirmed the applicability of existing consolidated principles and case law to the commercial relationship between consumers and providers of services and goods in online transactions.
Furthermore, the Decree stipulates that suppliers shall inform consumers in a clear and conspicuous manner how to exercise the right to cancel their online purchase using the same tools available when hiring the services, and that the conditions of delivery, deadlines, quantity and quality set out during the offer shall be honoured and the provider should use effective and safe payment methods and data protection mechanisms, among other obligations and rights.
On 14 August 2018, federal Law No. 13,709/2018, the first Brazilian General Data Protection Law (LGPD), was enacted. The LGPD shall apply to any natural or legal person, whether public or private, who performs data collection processing operations in Brazil, aiming to offer the supply of goods or services or simply collecting data of individuals located in the Brazilian territory. The LGPD will not enter into force until the beginning of 2020.