Trademark agreement precludes parallel imports

In Brother v Surlorran, the São Paulo Court of Appeal has ruled that despite Brazil's new Trademark Law, an unregistered trademark-use agreement may preclude third parties from importing parallel products into Brazil.

Brother International Corporation do Brasil Ltda (Brother Brazil) has an exclusive trademark-use agreement with its parent company, Brother Industries Ltd of Japan (Brother Japan), to import and sell in Brazil sewing machines marked with the BROTHER trademark. Brother Brazil brought a complaint against Surlorran Indústria Textil e Comércio de Máquinas Ltda for importing BROTHER sewing machines without its consent and selling them at lower prices.

Surlorran argued that Brother Brazil's action was without merit, as under Brazil's new Trademark Law, a trademark owner may only prevent parallel imports if a relevant trademark-use agreement is registered with the Patent and Trademark Office.

The appellate court disagreed with Surlorran, holding that the case involved contractual rights and that Brother Japan had granted exclusive trademark-use rights to Brother Brazil in relation to sales in Brazil. As a result, Surlorran was infringing those rights. The court ordered Surlorran to cease importing BROTHER sewing machines or face a $1,000 fine for each machine. Brother Brazil was also awarded damages.

Normally, under Brazil's Trademark Law, trademark-use agreements must be registered with the Patent and Trademark Office to be enforceable against third parties. This case demonstrates that, in certain circumstances, the Brazilian courts are willing to bend the law to give effect to such agreements even though the formal requirement of registration is not met.

Denis Allan Daniel, Daniel Advogados, Rio de Janeiro