- Market experts answer five key questions on pre-litigation procedures
- While usually recommended, care needed when considering a cease and desist
- Data on market shares and product launches critical to action assessments
Brazilian Courts have been very active in deciding infringement and validity matters related to trademark rights. In the main cities of the country (São Paulo and Rio de Janeiro) there are specialised IP Courts before the first and second instances that deal with trademark conflicts. This scenario creates a secure environment and the development of a consistent approach to trademark litigation disputes. However, litigation success is ultimately rooted in an understanding of the law and the strategic approach adopted. In the first of a two-part article, João Vieira da Cunha and Jaddy M A P Messias of Gusmão & Labrunie answer five key questions about the pre-litigation phase.
Brazilian IP legislation comprises the Federal Constitution, Law 9.279/96 (the Industrial Property Law – or LPI) and international treaties that Brazil is a party to and have been internalised within our legal system, such as Paris Convention for the Protection of Industrial Property (CUP) and the Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS).
If a lawsuit encompasses a motion for damages, provisions set forth in the Brazilian Civil Code (Law 10.406/02) may apply jointly with LPI. As per litigation issues, the Brazilian Civil Procedure Code (Law 13.105/15) and the Brazilian Criminal Procedure Code (Decree Law 3.689/41) shall also apply.
All litigation proceedings in Brazil must be written in Portuguese and foreign documents must be submitted with a sworn translation into Portuguese in order to be used as proper evidence. In principle, plaintiff companies that are not established in Brazil must post a bond, unless there is a Brazilian company that is part of the same economic group and is also a solidary plaintiff (exceptions may apply according to international treaties).
Preliminary injunctions are available in infringement and non-infringement lawsuits. In Brazil, there are two types of injunctions: urgent relief (usually ex parte) and evidence-based relief. Strong evidence on the infringement is required and in case of urgent relief it is crucial to demonstrate the grounded risk of irreparable or hardly reparable injury.
The burden of proof in trademark litigation is borne by the plaintiff, and some judges, depending on the case, deem necessary expert examinations. If so, the length of the lawsuit will be extended, and related costs will be increased. A technical assistant to assess the technical exam and the court expert, in these cases, is also recommended.
Pre-litigation: Five key questions answered
1) What documents/information are needed to properly assess the legal situation?
The main recommended documents for pre-litigation matters are:
- information on the infringer (such as the seller or manufacturer of the counterfeit product)
- samples and photos of the product at issue
- the date of launch of the infringing good and detail relating to the places where it is offered for sale
- details of the IP owner’s rights (such as trademark registrations before the Brazilian office, and possibly in other jurisdictions)
- the launch date of the IP owner’s product
- the market share of the IP owner’s product, plus detail on the amount of investment in advertising, and any other marketing details that could be relevant to show the goodwill in the IP owner’s product.
2) What claims are available to the trademark owner in cases of infringement?
First, the trademark owner may request a preliminary injunction to immediately cease the infringement (in very clear cases an order for search and seizure and recall of counterfeit products may be presented). Besides the confirmation of the refraining order, the trademark owner may also present a motion for monetary and moral damages. Disclosure of information is available (the motion for preliminary injunction may encompass this claim), and the destruction of infringing goods may be requested, but it is likely that only after the final decision will said products be destroyed.
During the enforcement stage, the trademark owner can request the attachment of the infringer assets to assure the payment of any damages awarded by the final decision issued by the court.
3) Is it recommended to send a cease and desist letter in first instance (and to whom)?
Usually it is recommended to send a cease and desist (C&D) first, potentially avoiding the higher costs associated with litigation and enabling the adverse party to solve the case amicably. Nevertheless, there are exceptions, particularly in urgent situations (for instance in very clear violations where a preliminary injunction is very likely to be granted and where the adverse party is a well-known infringer and usually does not answer C&D letters).
Since the Brazilian IP Law allows the inclusion of all the entities responsible for counterfeit activities, it is advisable to send the C&D to both the producer and the distributor. In relation to distributors, it is very important to check with that there is no pre-existing business relationship with the business/trademark owner.
4) What measures does the Brazilian Law grant?
There are several measures to be adopted, not only through court proceedings (which may encompass a civil court proceeding and/or a criminal court proceeding, before a state or a federal court). These can include:
- a complaint regarding a medicine or a cosmetic before ANVISA, which is the health authority in Brazil
- a trademark opposition or nullity action before the office
- a request for the police to investigate a possible crime
- an administrative complaint before Registro.Br (the Brazilian Domain Name Authority) regarding domain name disputes.
In relation to trademark matters it is also possible to directly challenge the counterfeit products before the customs.
5) What limitation periods apply to bringing a claim (and what triggers a limitation period)?
The statute of limitations is variable depending on the subject matter of the claim. The term for the application of the statute of limitations is governed by the Brazilian Civil Code and specific civil laws (such as the Brazilian Industrial Property Law, for instance). The general rule – and maximum – limitation period is ten years. Any act of violation can trigger a limitation period.
- A claim for damages for a general violation of rights is subject to a three-year limitation period counted from the date of the infringement (damages for copyright and image rights infringement, for instance, would be subject to the three-year limitation period);
- A claim for damages for industrial property violation is subject to a five-year limitation period from the date of the infringement;
- A nullity claim regarding trademark rights is subject to a five-year limitation period from the date of the decision issued by the Brazilian PTO granting or rejecting a trademark registration.
However, there are some exceptional cases in which the limitation period may not apply, such as in situations where there is a continuous act of infringement. The initial term, in such continuous infringement situations, will only start from the date on which the infringing act has ceased.
Also, there are some other few cases defined by law in which the statute of limitation is not applicable, for example, when a third-party registers, in bad faith, a well-known trademark.
The second part of this series, available here, focuses on the handling of litigation in Brazil.