Structuring and legal considerations

Key laws and regulations

What are the key laws and regulations implicated in technology M&A transactions that may not be relevant to other types of M&A transactions? Are there particular government approvals required, and how are those addressed in the definitive documentation?

The key laws applicable to technology M&A transactions are those related to industrial property, that is, trademarks and patents (Law No. 9,279/1996) and copyright (Law No. 9,610/1998). Matters specifically concerning software are governed by the Software Law (Law No. 9,609/1998).

Data privacy and internet regulation could also be relevant, which are conveyed in the Internet Law (Law No. 12,965/2014) and other sparse regulations and the recently enacted (which will be in force as of August 2020), the Brazilian Data Protection Law (Law No. 13,709/2018).

Government rights

Are there government march-in or step-in rights with respect to certain categories of technologies?

Brazilian government has no step-in or march-in rights in intellectual property rights. The right to exclusive use of industrial property and copyrights, including software, is time-limited and after the expiration of such term, the intellectual property goes into the public domain.

Legal assets

How is legal title to each type of technology and intellectual property asset conveyed in your jurisdiction? What types of formalities are required to effect transfer?

Legal title to industrial property derives from the registration of such Intellectual property asset with the Brazilian Trademark and Patent Office (INPI). Proof of title is conveyed in the certificate of registration issued by INPI (after performing a preliminary analysis of the application).

Legal title to copyrights (including software) derives from the authorship of the work and is subject to the legal requirements provided by specific law (eg, a software developed by an employee under the scope of its employment agreement should be deemed as employer’s property). Copyright does not depend on registration, differently from what is required by the industrial property regime. Copyrights may be registered as a proof of its date of creation in face of third-party intellectual property rights.

Registration in the case of copyright (with the exception of software registration) has as its principal registration body the National Library, while registrations related to software must be filed with INPI.

Intellectual property transfers are done by means of an assignment agreement. The effectiveness of industrial property assignment agreements depend on their filing with INPI. It is possible to transfer ownership of an already registered property as well as an application.

Due diligence

Typical areas

What are the typical areas of due diligence undertaken in your jurisdiction with respect to technology and intellectual property assets in technology M&A transactions? How is due diligence different for mergers or share acquisitions as compared to carveouts or asset purchases?

Due diligence should confirm the target company’s title to its main technological assets and whether they are subject to any outstanding dispute. The legal analysis of the ownership of intellectual property assets should include the review of the certificates of registration with INPI (if it is an industrial property) and assignment agreements (in contractor or employment agreements). The use of third-party intellectual property rights or open source software should also be reviewed since it may negatively affect or restrict ownership.

Carve-outs or asset purchases may depend on the conclusion of the transfer of intellectual property by INPI, if it is considered an industrial property. Trademarks have specific regulation that may restrict the ability to perform an asset purchase (eg, the purchaser must have a corporate purpose compatible with the activities to be performed under the trademarks).

Customary searches

What types of public searches are customarily performed when conducting technology M&A due diligence? What other types of publicly available information can be collected or reviewed in the conduct of technology M&A due diligence?

INPI’s public databases are usually searched for applications and certificate of registration of industrial property. Court records are also publicly available for verification whether the asset is subject to any legal disputes.

Although domain names are not strictly considered an asset under Brazilian law, due diligence process usually reviews the domain name registration at (the agency responsible for registration of domain names in Brazil).

Registrable intellectual property

What types of intellectual property are registrable, what types of intellectual property are not, and what due diligence is typically undertaken with respect to each?

All types of intellectual property are registrable, although, the registration is not always necessary. Intellectual property is classified in two big groups: copyrights, whose registration is merely declaratory; and industrial property, whose registration is mandatory and necessary to ensure its ownership. It is worth noting that copyright falls upon artistic, literary and scientific creations in which protection is conferred to protect the author’s own personality, while industrial property rights, on the other hand, falls upon assets linked to corporate activity, such as trademarks, patents, industrial designs, integrated circuit topography and geographical indications.

In respect of copyright, the following actions are typically taken:

  • assessment on the process of creation and modification of the intellectual property used by the target to understand the ownership of assets;
  • analysis of the employment contracts with developers of intellectual property works searching for clauses that guarantee to the target the ownership of assets produced by its employees;
  • assessment on the ongoing legal disputes (if any); and
  • analysis of licensing and assignment agreements.

In respect of industrial property, the following actions are typically taken: (i) search on the public records of INPI to assess the ownership of assets; (ii) the ongoing legal disputes (if any); and (iii) analysis of licensing and assignment agreements.


Can liens or security interests be granted on intellectual property or technology assets, and if so, how do acquirers conduct due diligence on them?

Liens or security interests may be granted on intellectual property. The due diligence process may change slightly depending on the type of intellectual property, but generally should cover certificates of registration of the relevant intellectual property, which should evidence any liens and collateral agreements disclosed by the target company.

In terms of process for perfecting, recording liens or security interest over intellectual property, the general rule is that the collateral agreements must be filed with the registry of deeds and documents and with INPI, as the case may be.

Collateral agreements regarding copyright, software, trade secret and know-how, in particular, may face enforceability limitations as such rights may not be fully or precisely described in the financing agreements given their confidential status.

Release of liens and security interests on intellectual property follow the recording steps required for the perfection of the lien (ie, the relevant release instruments must be filed with the registry of deeds of documents and with the INPI, as applicable).

Employee IP due diligence

What due diligence is typically undertaken with respect to employee-created and contractor-created intellectual property and technology?

It is highly advisable to verify the agreements entered into by the target company and its employees and contractors that have developed or performed maintenance services of the technology (mainly the source code of a software). Lack of proper contractual protection over the intellectual property asset may trigger future legal disputes over the ownership of the asset and indemnification claims for undue use of third-party intellectual property rights.

Transferring licensed intellectual property

Are there any requirements to enable the transfer or assignment of licensed intellectual property and technology? Are exclusive and non-exclusive licences treated differently?

Transfer and assignment of industrial property are subject to registration with INPI. There is no difference in the legal treatment of exclusive or non-exclusive licences.

Software due diligence

What types of software due diligence is typically undertaken in your jurisdiction? Do targets customarily provide code scans for third-party or open source code?

To assess the unchallenged ownership of the software, due diligence typically covers:

  • review of developers’ agreements;
  • use of open source software and respective licences, since such licences may be subject to copyleft or somehow adversely affect the ownership of the software by the target;
  • use and integration with hired-party intellectual property and respective licences;
  • outbound licensing agreement; and
  • review and assessment of risk of loss of the legal disputes.

Code scans are usually recommended to be conducted by specialised technical companies.

Other due diligence

What are the additional areas of due diligence undertaken or unique legal considerations in your jurisdiction with respect to special or emerging technologies?

Due diligence covering legal aspects of special or emerging technologies is still quite unusual in Brazil.

Purchase agreement

Representations and warranties

In technology M&A transactions, is it customary to include representations and warranties for intellectual property, technology, cybersecurity or data privacy?

It is customary to include representations and warranties in M&A agreements concerning the target company’s intellectual property, proprietary technology, cybersecurity. With the enactment of the Brazilian Data Protection Law, it has also become customary to add representations and warranties covering data privacy matters.

Intellectual property representations tend to cover ownership rights of proprietary intellectual property as well as absence of litigation. It would cover rightful and compliant use of a third party’s intellectual property by the target company, as applicable.

Representations regarding proprietary technology are expected to cover the rightful ownership, but also confidentiality of trade secrets and assignment of rights by third-party contractors and even employees.

Data privacy warranties could be quite long, but, in summary, would explicitly cover compliance with applicable law and privacy policy, as well as the absence of events of data violation as a result of leakage by the company or breach by third parties.

Cybersecurity representations are less common than the other representations described above, but usually intend to cover absence of breach or leakage of trade secrets, data and other confidential information and also the adoption of minimum standards of data security.

Customary ancillary agreements

What types of ancillary agreements are customary in a carveout or asset sale?

The most common types of ancillary agreements seen in technology M&A transactions are licence agreements concerning carved-out assets (trademarks and software in great part) and transition services agreements with respect to software and platforms.

Asset sales could be quite unusual in M&A transactions in Brazil mainly owing to tax inefficiencies and succession liability.

Conditions and covenants

What kinds of intellectual property or tech-related pre- or post-closing conditions or covenants do acquirers typically require?

The most common types of covenants concerning intellectual property within M&A transactions are the following: delivery of source codes; performance of open source or other technical due diligence; execution and delivery of intellectual property rights assignment by third parties; filing for or registration of intellectual property with applicable government authorities; transfer of intellectual property ownership within group companies or persons; execution of ancillary intellectual property agreements.

Survival period

Are intellectual property representations and warranties typically subject to longer survival periods than other representations and warranties?

If intellectual property is deemed as a key asset within the transaction, the representations should watch the statute of limitations periods: 10 or even 20 years for patents.

On the other hand, if the target company’s intellectual property is not a critical asset within the transaction, the survival period of the representations and warranties of that nature would usually be set alongside with the general commercial and business representations (three years average).

Breach of representations and warranties

Are liabilities for breach of intellectual property representations and warranties typically subject to a cap that is higher than the liability cap for breach of other representations and warranties?

Not necessarily. Cap conditions can vary a lot from deal to deal.

Are liabilities for breach of intellectual property representations subject to, or carved out from, de minimis thresholds, baskets, or deductibles or other limitations on recovery?

No, except if the intellectual property representation is deemed as a fundamental representation in the agreement.


Does the definitive agreement customarily include specific indemnities related to intellectual property, data security or privacy matters?

Yes. Indemnities for losses related to intellectual property, data security and privacy matters would be expected to be indemnified in full, subject to limitations that may be provided in the definitive agreements. Losses related to certain intellectual property should also cover loss of profits.

Walk rights

As a closing condition, are intellectual property representations and warranties required to be true in all respects, in all material respects, or except as would not cause a material adverse effect?

This provision may vary significantly among transactions, but, in general, if the relevant agreement stipulates a walk right, the buyer would be allowed to walk away from the deal only if a breach or update of a representation occurred before closing would be deemed as a material adverse event to the company or the business. In any case, in the event that a representation is updated or corrected before closing, the losses or damage that the company or buyer may suffer as a result of such new fact or event could be indemnified by the sellers, subject to the terms and conditions of the definitive agreement.

Updates and trends

Key developments of the past year

What were the key cases, decisions, judgments and policy and legislative developments of the past year?

Key developments of the past year20 What were the key cases, decisions, judgments and policy and legislative developments of the past year?

In 2019, Brazil solidified its data protection national policy and initiatives by passing a new law that created the National Data Protection Authority. The NDPA is made up of a board of directors, with five members, a National Data Protection and Privacy Council, with 23 representatives, as well as other internal administrative bodies. It will oversee compliance with the data protection law, apply sanctions and issue rules and guidelines to the general public concerning data protection. The members of the NDPA have not yet been appointed. The law will come into effect in August 2020.

The Brazilian government also passed a law in 2019 that allows companies to use client financial data for positive credit rating - the law is commonly referred to a Positive Credit Rating Law (or Cadastro Positivo). The Positive Credit Rating Law provides that, in general, only information regarding the regular payment of financial operations and certain commercial transactions that may entail financial risk may be used, which includes data arising from recurring services such as water, light and telecom services. The law sets out several obligations for database controllers as well as terms and conditions for the collection of data from data subjects. Authorisation for databases with information sourced in financial institutions will be granted by the Central Bank. The law still requires supplementary regulation with respect to certain matters.

Brazil also ratified the Madrid Protocol in 2019 where it accedes to the Madrid International Trademark System, which should expedite the registration, transfer and management of trademarks in Brazil as well.