Siemsen, Peter D.

English

California Western School of Law

RECENT DEVELOPMENT OF INDUSTRIALPROPERTY RIGHTS IN BRAZILPETER D. SIEMSEN*JOSE ANTONIO B.L. FARIA CORREA**Brazil is one of the founding members of the Paris Convention of1883 and has ratified the Revisions of this Convention up to theHague Revision in 1925. None of the later Revisions of the Con-vention were ratified by Brazil.In the 1970's, Brazil was one of the leading countries requestinga revision of the Paris Convention to make its contents more palat-able to the developing countries by including more advantageousconditions for such countries. After several years of meetings, theGeneva discussions reached a deadlock in 1984.One of the most crucial problems lies in Article 5A which pro-vides for penalties in the case of abusive "nonworking" of the pat-ented invention. The industrialized and developing countries havebeen unable to reach an understanding on such penalties. Presently,the Paris Convention provides for compulsory licenses and, if this isinsufficient, for cancellation of the nonworked patent.Two problems arose in the course of discussions regarding thelast revision. One was the demand of the developing countries forcompulsory licenses to be granted with exclusivity, a claim whichobviously was unacceptable to the industrialized countries. An ex-clusive license excludes everyone, including the inventor, from ex-ploiting the invention. On the other hand, the developing countriescontended that compulsory licenses without exclusivity are useless.In a country with a lack of capital, where means to industrializeare still in an early stage, it would be nearly impossible to establishan industry capable of competing with the large international enter-prises. Exclusivity is necessary to guarantee the success of such anew local industry.There was less heat in the discussions concerning cancellationdue to nonworking. While the industrialized countries expressed the* Lawyer and patent agent practicing in Rio de Janeiro, Brazil, senior partner atDannemann, Siernsen, Bigler & ipanema Moreira.00 Lawyer practicing in Rio de Janeiro, Brazil, at the office of Dannemann, Siemsen,Bigler & lpanerna Moreira.1Siemsen: Recent Development of Industrial Property Rights in BrazilPublished by CWSL Scholarly Commons,PROPERTY RIGHTS--BRAZILdesire to eliminate totally any type of cancellation, the developingcountries maintained a position in favor of the existing provisions ofthe Paris Convention.What the deadlock showed is that both sides have justifiable ar-guments but, either because of political reactions, emotional reac-tions or lack of imagination, practically no efforts were made tofind new solutions which could have overcome the deadlock andwhich could have benefited all parties involved.Suspicions of the patent systems, and consequently of the ParisConvention, began in the 1960's, raised mostly by those developingcountries which began industrializing. Brazil was one of them. In1961, Brazil provoked the study by the United Nations called "TheRole of Patents in the Transfer of Technology to Developing Coun-tries." 1 The study was concluded in 1964 and became one of themost important documents evaluating the advantages of the patentsystem. However, the reaction continued in Brazil and, in the late1960's, went as far as contemplating eventual withdrawal from theParis Convention. At the same time, patents for pharmaceuticalsand food stuffs were abolished.Only reform of the industrial property system in the early 1970'sstarted to change Brazil's outlook. Agreements with WIPO andwith other patent offices abroad, mainly with the German PatentOffice, provided for personnel training. Services became more effi-cient and decisions gradually improved.The major problem with the Patent Office during this period wasits tendency to ignore most of the provisions of the Paris Conven-tion, limiting itself to applying the national law in the areas of pat-ents, firm names, well-known marks, surnames and unfair competi-tion. Fortunately, the courts carefully scrutinized this approach andmore and more questionable decisions of the Patent Office were ju-dicially reversed.'The approach of the French Government, which was extremelyconcerned about the increasing piracy of well-known French markswas interesting. The lack of application of the provisions of theI. UNITED NATIONS DEP'T OF ECONOMIC AND SOCIAL AFFAIRS, REPORT OF THESECRECTARY GENERAL ON THE ROLE OF PATENTS IN THE TRANSFER OF TECHNOLOGY TODEVELOPING COUNTRIES, New York, 1964. This report originated from a project in 1961 byProfessor Alberto Guerreiro Ramos, a member of the permanent Brazilian delegation to theXVI General Assembly.2. Concordia Indastria de Roupas Ltda. vs. INPI. Appeal in writ of Mandamus no.98.865. Decision rendered by the Federal Court of Appeals, Judicial Gazette of Mar. 3,1983, page 1886.198712California Western International Law Journal, Vol. 17, No. 2 [], Art. 11https://scholarlycommons.law.cwsl.edu/cwilj/vol17/iss2/11CALIFORNIA WESTERN INTERNATIONAL LAW JOURNALParis Convention by the Brazilian Patent Office resulted in a situa-tion undoubtedly favoring attempts of pirates to unduly acquirethird party marks. The Brazilian Government was then approachedby the French Government and an agreement was negotiated in1983 through which the Brazilian and the French Patent Officeswould maintain continuous relations, including two annual meet-ings between their officers to discuss and solve problems of mutualinterest in the area of industrial property.3 The effect of this agree-ment was extremely positive. Officers of both sides became moreaware of the problems and peculiarities of each other's country sothat the quality of the decisions improved within a very shortperiod.Until the middle 1960's, the Brazilian Patent Office, on the ad-ministrative level, took the Paris Convention into consideration, in-terpreting its provisions and applying it when deciding cases. Asstated, after the reform of the industrial property laws, the PatentOffice became very hesitant in applying the Paris Convention andthis hesitation has been maintained until now. The result has beenan increase of court actions requesting revision of decisions ren-dered by the National Institute of Industrial Property. The purposeof such actions is to have the courts apply the provisions containedin the Paris Convention.Regarding trademarks, the rulings of the courts have been in-creasingly favorable in recognizing the validity of the concepts con-tained in the Paris Convention; however, this has not been the casein the area of patents. Before we comment on some of the mostrecent decisions, it has to be said that the conflicts about the work-ing of patents are really more of a political nature than of a juridi-cal one.The requirement to work a patent in a country where the patentwas granted is one of the formal obligations placed on the patentee,as has been expressly stated since the original version of the ParisConvention. The controversies concerning patents generally refermore to sanctions and, therefore, the critical issue concerns inter-preting Article 5 of the Paris Convention to determine when sanc-tions are to be enforced.The Paris Convention, in the Hague text, provides that cancella-tion is only applicable if compulsory licensing is insufficient to avoidnonworking abuse by the patentee without justification. There has3. Agreement on Industrial Property, Mar. 3, 1983, Brazil-France, Decree no.88.145, Official Gazette of Mar. 4, 1983, page 3546.[Vol. 173Siemsen: Recent Development of Industrial Property Rights in BrazilPublished by CWSL Scholarly Commons,PROPERTY RIGHTS--BRAZILonly been one decision of first impression in Brazil, a ruling thatcancellation for nonworking is only appropriate if it has been veri-fied through a legal administrative procedure that the grant of acompulsory license to exploit the patented invention would not solvethe problem." This decision was later reversed by the Federal Courtof Appeals.The Brazilian law treats compulsory licensing separate from can-cellation due to nonworking.' A compulsory license may be grantedwithin the first three years from the grant of the patent when pub-lic interest so demands or when the invention has not been effec-tively worked. Cancellation after four years can be due to nonwork-ing or after five years can be due to nonworking if a voluntarylicense has been granted. Absence of working must be justified with"force majeure" reasons.Therefore, the Patent Office and the courts have interpreted thelaws to mean that sanctions are appropriate when the patent be-comes subject to cancellation procedures and the time for compul-sory licensing has already passed. The penalty is applicable becausenonworking of a patent is considered a hindrance to economic de-velopment, thereby affecting public interest.6 There has only beenone case where the Patent Office revised a first instance decisioncancelling a patent for nonworking. In the appeal, the justificationduly demonstrated was that it was inviable economically to exploitthe patented invention in Brazil." Contrary to this decision, theINPI cancelled a patent covering a method of manufacturing of acomposition because the method was not worked in the country.The composition was formulated with imported ingredients, butjustifications of an economic nature for not working this procedurewere not considered acceptable. 8The most unfortunate decision was one where a patentee had of-fered its patent for exploitation to various interested parties, butnone of the negotiations came to a successful conclusion in spite of4. C. Van der Lely N.V. and Lely do Brasil S.A. vs. INPI. Writ of Mandamus toreinstate patent no. 63.874, Official Gazette of Dec. 15, 1976, page 66. Reversed by theFederal Court of Appeals.5. INDUSTRIAL PROPERTY CODE, arts. 33-38, 48, 49, 52-54 (Braz.).6. Merck & Co., Inc. vs. INPI. Writ of Mandamus no. 86.426. Decision rendered bythe Federal Court of Appeals, Judicial Gazette of Mar. 31, 1985, page 3514; Bayer AG vs.INPI. Civil Appeal no. 58.205. Decision rendered by the Federal Court of Appeals, JudicialGazette of Mar. 21, 1985, page 3514.7. FMC Corp. vs. Biagro Velsicol Produtos para Agricultura Ltda.-Brazilian patentno. 82808. Decision published in the Patent Journal of Nov. 11, 1980.8. Monsanto Co. vs. Agricur Defensivos Agricolas Ltda.-Brazilian patent no.6677387. Decision published in the Patent Journal of June 4, 1985.198714California Western International Law Journal, Vol. 17, No. 2 [], Art. 11https://scholarlycommons.law.cwsl.edu/cwilj/vol17/iss2/11CALIFORNIA WESTERN INTERNATIONAL LAW JOURNALthe patentee's efforts. The courts accepted neither the arguments ofjustified reasons nor "force majeure" to excuse the inaction of thepatentee to work its patent and confirmed the decisions of the Bra-zilian Patent Office cancelling the patent for nonworking.'Two types of compulsory licenses have been granted in recentyears: one for reasons of public interest1 and one for nonworking ofa patented invention composed of a manufacturing process of anactive ingredient and compositions formulated with that ingredient.In one case in the latter category, the process of manufacturing theactive ingredient was not being executed in the country and thecompositions were formulated with imported active ingredients.Once again, the Patent Office did not accept arguments trying toshow justified reasons, nor accepting them as "force majeure."' 1In the area of trademarks and firm names, the courts have takena much more comprehensive stand. The first important decision ap-plying Article 6bis of the Paris Convention was rendered by theSupreme Court in 1963. The decision recognized rights from awell-known trademark ("DAUM"), which had not been registeredin Brazil, avoiding its undue appropriation by third parties.More recently, protection of surnames and names of firms estab-lished abroad were recognized by the courts in the cases of"LACOSTE" and "CARELLO." s The recent decision in the caseof "CARTIER" confirmed the "LACOSTE" and "CARELLO"rulings that "CARTIER," being a surname, is entitled to protec-tion under Article 8 of the Paris Convention."'Some comments regarding the treatment of trade secrets and9. John McMullen Associated, Inc. vs. INPI. Writ of Mandamus to reinstate patentno. 78.584. Decision rendered by the Federal Court of Appeals, Judicial Gazette of May 12,1977, page 3041.10. Certificate of Recordal no. 5196/76-Patentee: National Research DevelopmentCorporation. Licensee: Instituto Riograndense de Febre Aftosa Ltda. Patent no. 71.767 for"Process for the Culture of Virus for Vaccines." Decision published in the Patent Journal ofAug. 3, 1976, page 184.1I. Monsanto Co. vs. Nortox Agro-Quimica S.A. Request for compulsory license. Bra-zilian patent no. 7107076.12. Daum & Cie. vs. Carnevale & Cia. Ltda., Marco de Bellis & Cia. and the Union.Civil Appeal no. 9.615. Decision rendered by the Supreme Court, Judicial Gazette of Sept.19, 1963, page 881.13. La Chemise Lacoste vs. Textil Lacoste Ltda. Civil Appeal no. 68.352. Decisionrendered by the Federal Court of Appeals, Judicial Gazette of Dec. 9, 1982, page 12721;Fausto Carello & C.S.P.A. vs. Dinafloy Carello S/A Metalurgica. Civil Appeal no. 27.261-I.Decision rendered by the Court of Justice of the State of Sao Paulo, Judicial Gazette ofMar. 22, 1983.14. Cartier Soci6t6 Anonyme and other and INPI vs. Silvids Vestuirios Ltda. andother. Civil Appeal no. 98.531. Decision rendered by the Federal Court of Appeals, JudicialGazette of Dec. 12, 1985.[Vol. 175Siemsen: Recent Development of Industrial Property Rights in BrazilPublished by CWSL Scholarly Commons,PROPERTY RIGHTS-BRAZILsoftware in Brazil may be of interest. The concept of trade secretsis expressly contemplated in the Brazilian legislation on unfaircompetition." Subsection XI of this statute refers to confidentialinformation in the industrial area, while subsection XII refers tocommercial secrets.The unauthorized disclosure of confidential information by a per-son to whom it has been entrusted is defined as a crime and mayresult in imprisonment for a period ranging from three months to ayear. Besides the criminal proceedings, the injured party may alsoclaim losses and damages under section 189 of the Decree law inquestion and section 159 of the Civil Code."6 Due to a lack of juris-prudence in this area, there is no clear definition regarding the as-sessment of losses and damages for the violation of a trade secret.On its face, these statutes provide that the obligation of secrecyis only binding on the persons to whom the confidential informationhas been entrusted. Such an obligation may be expressly providedin an agreement, result from the nature of the service or may beimplicit in a situation in which, by virtue of service, one has accessto confidential information.In Brazil, trade secrets do not actually come under the concept ofproperty rights. The concept is that the holder of a secret enjoys theright erga omnes to claim its observance by all those to whom ithas been disclosed on a confidential basis. As regards licensing, itshould be noted that although the concept of trade secrets is ex-pressly recognized by the Brazilian legislation, the INPI does notadmit the possibility of characterizing "know-how" as secret. Itonly considers the information confidential for five years countedfrom the date the given information has been released. Under thecurrent practice, royalty rates for "know-how" agreements mayreach a maximum of five percent of the net sales price, dependingon the area involved and on the local demand for such technology.On the other hand, no defined rules exist in Brazil with respect tocomputer software. Although in principle copyright protectionshould be available, in practice, serious objections have been raisedto the enforcement of such a copyright, primarily a result of eco-nomic reasons. Consequently, the Brazilian authorities hesitate torecognize this right. So far, Brazilian courts have not handed downany decision on the few pending cases. While the matter is not dulyregulated by law, the Brazilian authorities in this area have been15. Decree law no. 7.903, art. 178, subsecs. Xl & XII (Braz., Aug. 27, 1945).16. C.C. § 159 (Braz. 1916) & Decree law no. 7.903, art. 189 (Braz., Aug. 27, 1945).1987]6California Western International Law Journal, Vol. 17, No. 2 [], Art. 11https://scholarlycommons.law.cwsl.edu/cwilj/vol17/iss2/11CALIFORNIA WESTERN INTERNATIONAL LAW JOURNALtreating the importation of computer software in the category oftransfer of technology. For this reason, any agreement providing forthe licensing of computer software between a foreign company anda local company is subject to approval by a joint commission com-posed of representatives of the Special Bureau for Informatics andthe INPI. These contracts are subject to the usual requirementsapplying to transfer of technology agreements which are basicallydefined in Normative Act no. 15/75.At the moment, studies for legislation to protect software arewell advanced and, in spite of the usual contradictions met in manycountries on the juridical nature of software, it is expected that abill will be presented to Congress soon.Another area of interest is the studies relating to protection ofbiogenetic inventions. Although these studies are still in a veryearly stage, biogenetic research is growing in the country in bothuniversities and private enterprises. The Brazilian Patent Office isconsequently aware of the importance of the subject and a commit-tee has been formed to examine together with other governmentalentities potential solutions.The above comments give a brief summary on the present statesof the protection of industrial property in Brazil. These new areasare already receiving attention from governmental authorities whoexpect to define the respective legal situations in the near future.[Vol. 177Siemsen: Recent Development of Industrial Property Rights in BrazilPublished by CWSL Scholarly Commons,

Recent Development of Industrial Property Rights in Brazil

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Recent Development of Industrial Property Rights in Brazil

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