Legislative framework and causes of action

The use and registration of trademarks in Brazil is mainly regulated by the Industrial Property Act (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.

In Brazil, 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 if a registered trademark is not used for at least five years.

Under Brazilian law, only trademarks that are visually perceptible may be registered, which poses some difficulties for non-traditional marks. 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) 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. Certification of highly reputed trademark status is valid for five years and is renewable.

A trademark registration may be considered null and void if it is granted contrary 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.

The statute of limitations to request the invalidation of a trademark registration before the federal courts is five years from registration. However, in view of Article 6bis of the Paris Convention, the statute of limitations does not apply to the registration of a well-known trademark made in bad faith.

Under Brazilian law, trademark infringement is the unauthorised use of a trademark that is 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 goods or services.

Trademark owners may take civil or criminal action 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 imports can be prevented through a civil action; it is crucial to present evidence that the mark owner did not give the defendant its consent to use the mark.

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 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 an attempt to divert customers (Article 195(III) of the Industrial Property Law).

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 Article 19, an internet service provider (ISP) may be found liable for not removing content only if it fails to comply with a court order to remove content available at a specific URL. This means that a mark 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 takedown’ system established by the United States’ Digital Millennium Copyright Act.

Alternative dispute resolution

Mediation and arbitration

As per Article 334 of the new Civil Procedure Code (which entered into force on March 18 2016), parties to a dispute must take part in mediation or in a conciliatory hearing, unless the court provides otherwise. A new act (Law 13.140/2015) was recently enacted to regulate mediation before and during court proceedings. As this legislation is so recent, there is no relevant case law yet.

Although Brazilian law welcomes arbitration in general, the use of arbitration in IP matters is rare. That is because many of the IP cases before the federal courts are in fact appeals against decisions rendered by the BPTO (under the Industrial Property Act, appeals against decisions of the BPTO must be brought before federal courts – see the section on litigation venues below for more on this issue). However, arbitration is sometimes used in relation to IP agreements and franchising.

The arbitration clause must be provided in a written document. State courts may refuse jurisdiction should a party insist on bringing the case to court.

SACI and domain names

Domain names under the top-level domain ‘.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 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 can 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 on forum shopping, that clause may be applied as an exception to the general rule as well.

There are state courts specialising in intellectual property in São 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 São Paulo are the most important venues for infringement lawsuits.

Contrary to other federations, in Brazil there are no local procedural rules. These 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 São 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 lawsuits are filed before the federal courts with the BPTO as a mandatory defendant. This also applies to challenges brought against decisions of the BPTO. In Brazil, the federal courts are divided in five circuits: the first has its seat in Brasília, the second in Rio de Janeiro, the third in São 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 São Paulo (because many co-defendants have their seat in this state). 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 mark owners to take both civil and criminal action against infringers. Criminal remedies include search and seizure, detention and imprisonment of three months to one year, or 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 products, and recovery of losses and damages.

Plaintiffs may seek both moral and patrimonial damages. When it comes to legal persons, moral damages are awarded when the court considers that the infringement harmed the good reputation of a mark. The basis to calculate any award of patrimonial damages is established by Article 210 of the Industrial Property Law and may be summarised as follows:

  • the benefits that would have been gained by the mark owner if the infringement had not occurred;
  • the profits made by the infringer through the undue use of the mark; and
  • the remuneration that the infringer would have paid to the mark 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 plaintiff may also request the adjudication of a trademark registration in certain circumstances – namely, where the mark was registered without authorisation by a local agent or representative (under Article 6septies of the Paris Convention and Article 166 of the Industrial Property Law).

Injunctive relief

Preliminary and permanent injunctions are available in both infringement and nullity lawsuits. The legal requirements for an ex parte injunction are:

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

The plaintiff may request an injunction in order to obtain a specific measure (eg, a search and seizure or restraining order) and to protect and collect evidence. The new Civil Procedure Code also provides for the grant of injunctions where, after the submission of the defendant’s brief, there is enough evidence attesting to 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 Law 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, of 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. The opinion rendered by the court-appointed expert 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 party 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 a preliminary injunction to collect evidence, the plaintiff may amend its complaint once the injunction has been granted.

The parties cannot 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 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 status and are also important in lawsuits challenging decisions rendered by the BPTO in 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.

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 the 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 alleging dilution (ie, that the mark has lost distinctiveness because there are many similar marks in the same field), or that the allegedly infringed mark is weak (eg, it is an evocative 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 it is registered. Thus, unless the mark owner can prove the reputation of its mark 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 mark and lack of confusion between the marks. 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 can also 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 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.

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 violates 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 Brasília and is in charge of standardising infra-constitutional law. Although the rulings of the Superior Court are not generally binding in other cases, they are very influential and provide some guidance to the lower courts.

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

Kasznar Leonardos Intellectual Property

5th-8th Floors

Rua Teófilo Otoni, 63 - Rio de Janeiro

20090-080 Rio de Janeiro RJ

Brazil

Tel +55 21 2113 1919

Fax +55 21 2113 1920

Web www.kasznarleonardos.com

Claudio Barbosa Partner claudio.barbosa@kasznarleonardos.com

Claudio Barbosa’s areas of expertise are litigation, trademark and consulting services on licensing agreements, patents, trademarks, copyrights and unfair competition.

He graduated in law from the University of São Paulo (1994) and obtained an LLM in IP law from the George Washington University (2000) and another in international law from the University of São Paulo (2001). Mr Barbosa also has a doctorate in commercial law from the University of São Paulo (2007) and a technical degree in computer programs and digital electronics from ETEP (1988). He speaks Portuguese and English.

Nancy Caigawa Partner nancy.caigawa@kasznarleonardos.com

Nancy Caigawa is the youngest partner of Kasznar Leonardos Intellectual Property. She holds a law degree from the University of São Paulo (2001) and a postgraduate diploma in corporate law from the Pontifical Catholic University of São Paulo PUC-SP (2004). She recently finished an MBA on innovation, information and technology at the Fundação Instituto de Administração (2015). She works mainly in IP litigation, trademark prosecution, IP consultancy, copyrights, unfair competition, technology transfer and franchising.

She is a member of the Brazilian Association of Intellectual Property and of the International Bar Association. She is one of the directors of São Paulo’s Association of Intellectual Property. She speaks Portuguese, English and Spanish.

Rafael Lacaz Amaral Partner rafael.lacaz@kasznarleonardos.com

Rafael Lacaz Amaral’s practice includes IP litigation, consultation services on licensing agreements, patents, trademarks, copyrights and unfair competition, trademark prosecution, anti-piracy programmes, and IP arbitration and mediation. He represents the Brazilian Association of Intellectual Property at the Anti-counterfeiting National Council, an organisation established by both public and private sector entities to develop and maintain enforcement, educational and economic programmes to fight piracy in Brazil. He also teaches IP law at several academic institutions in Brazil.

Mr Lacaz Amaral has a law degree from the Federal University of Rio de Janeiro (2000), a postgraduate degree in intellectual property from the State University of Rio de Janeiro (2002) and a postgraduate degree in civil procedural law (2009) from Universidade Cândido Mendes.

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