WorldTrademark

Review

2012Anti-counterfeiting

A Global Guide

Supported by

BrazilContributing firm Kasznar Leonardos – Intellectual Property

BrazilContributing firm

Kasznar Leonardos – Intellectual Property

Legal frameworkThe growth of the Brazilian market andeconomy is parallelled by the increase ofcounterfeiting activities. The enforcement ofIP rights involves planning, technology,intelligence, training and coordination, withsupport from a number of laws and treaties,as well as the relevant rules of the FederalConstitution, the Civil Code, the CriminalCode, the Civil Procedure Code, the CriminalProcedure Code and administrativestatutory instruments.

The legal framework for anti-counterfeiting includes:• the Industrial Property Law (Law

9,279/96);• the Copyright Law (Law 9,610/98); and • the Software Law (Law 9,609/98).

In addition, Brazil is a signatory to the

AuthorsElisabeth Kasznar Fekete, GabrielFrancisco Leonardos andClaudio Roberto Barbosa

main international IP instruments, such as:• the Paris Convention for the Protection

of Industrial Property (as reviewed inStockholm in 1967);

• the Agreement on Trade-Related Aspectsof Intellectual Property Rights (TRIPs);

• the Berne Convention for the Protectionof Literary and Artistic Works;

• the Washington Copyright Convention;• the Universal Copyright Convention;• the Rome Convention for the Protection

of Performers, Producers of Phonogramsand Broadcasting Organisations; and

• the Geneva Convention for theProtection of Producers of Phonogramsagainst Unauthorised Duplication ofTheir Phonograms.

With regard to trademark and copyrightpractice, the following acts are consideredviolations of IP rights in both the civil andcriminal spheres:• trademark infringment;• geographical indication infringement;• unfair competition practices; and• copyright and software violations.

Enforcement provisions allow rightsholders to take civil actions in order toprevent further infringement and to recoverlosses incurred from actual infringementand criminal actions, with a view toconvicting the infringers and imposing thepenalties established by the law. However, inpractice, prison sentences are not imposedon counterfeiters.

The lawsuits usually take place beforestate courts and the federal courts are usedfor actions seeking to declare void anindustrial property right issued by theBrazilian Patent and Trademark Office.

In Brazil, the rights holder, the licenseeand some associations (eg, copyrightcollecting associations) have legal standingto bring civil lawsuits for IP infringement.

Border measuresThe following statutory instrumentsregulate border measures in Brazil:• Article 198 of the Industrial

Property Law; • Articles 605 to 608, item III and 803 of

the Customs Regulatory Act (Federal

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Decree 6,759/09); • the TRIPS Agreement; and• certain other laws and rules.

Such regulations set forth the generalguidelines for inspecting and retainingmerchandise suspected of being counterfeitand establish the administrative proceduresfor final seizure and destruction.

Due to the great extension of thecountry’s borders, monitoring of importedmerchandise by Customs occurs bysampling processes.

Retentions are made ex officio or on therights holder’s request when there is primafacie evidence of violation. Thus, customsofficers can hold for inquiry goods suspectof infringing trademarks and copyrights.Once the merchandise has been held, therights holder or its trademark attorney iscontacted to collect samples and to state, bymeans of a formal declaration and within 10business days, whether the goods aregenuine. If they are genuine, the productsare released to the importer.

If the goods are suspected of beingcounterfeit, in most states the rights holdercan choose between the customsadministrative procedure to suspend therelease of the goods or a judicial remedy. Inthe first case, a complaint based on atechnical report must be presented beforeCustoms, requesting the definitive seizureand destruction of the goods, and theimporter is notified to reply. In the secondcase, the rights holder seeks to obtain apreliminary injunction requiring Customsto disclose the name and address of theimporter, since this data is treated by theauthorities as privileged and covered by taxprivacy, and then files a lawsuit against theimporter, requesting the seizure anddestruction of the infringing merchandise.The importer is summoned to reply.

Some customs agencies interpret the law to mean that judicial action ismandatory, and release the goods if it is not commenced.

A central database system for therecordal of trademark rights is underdevelopment. Currently, only a generalrequest for surveillance can be filed at theCustoms General Management Office, butrights holders can also express theirconcerns and ask customs officials directlyto carry out inspection and monitoring,training them with regard to the features oftheir brands and products. Therefore,personal contact with and the training ofcustoms agents to identify infringing goodsare usually recommended.

A complete border measure programmein Brazil should cover preventive andrepressive actions to be taken at maritimeports, airports, land borders and Post OfficeCustoms. The central database system willrepresent a breakthrough in the enforcementof trademark rights, helping an increasednumber of rights holders to preventcounterfeiting and piracy effectively.

Criminal prosecutionLawsuits on the grounds of trademarkinfringement are prosecuted before statecourts and through private criminalprosecution brought by the rights holder.However, most acts of copyrightinfringement (with the exception ofsoftware infringement) are prosecutedbefore state courts by means of criminalactions, which are initiated by publicauthorities.

While the penalty for trademarkinfringement ranges from imprisonment ofthree months to one year or a fine, thepenalty for copyright infringement (wherethe violation has economic consequences)may vary from imprisonment of two to four

years and a fine. Before the criminal prosecution for

trademark infringement is initiated, theillegal activity must be proved. Thus, beforefiling a lawsuit seeking detention of theinfringer, the rights holder must proceedwith a preliminary criminal search andseizure action, where a court-appointedexpert will seize and examine samples ofthe products. If the infringement isconfirmed, the expert’s opinion ishomologated by the criminal judge and the rights holder will have 30 days to file the criminal action.

In cases of copyright infringement, thepublic authorities can initiate the publiccriminal action ex officio or on request ofthe rights holder. In both cases, thecopyright owner may participate in theaction as assistant to the public prosecutor.

The law also grants enforcementauthorities the discretionary power toconduct police raids against piracy andcounterfeiting activities since, as statedabove, they are regarded as criminaloffences. Raids are usually conducted in cityareas with many street peddlers or storesselling counterfeits and suspects are takento the police station for testimony.

Following the seizure of themerchandise in such raids, the products areanalysed by police experts, a final report isprepared and the rights holder and/or thepublic authorities are required to file thesubsequent criminal actions.

Police and criminal actions are effectiveenforcement remedies in manycircumstances and the equipment andmachinery used for the counterfeitingactivity can also be seized and destroyed. Anadvantage of police raids is that they can beconducted against many infringerssimultaneously, and even against infringerswho have not previously been identified.

Kasznar Leonardos – Intellectual Property

Most acts of copyright infringement (with the exception ofsoftware infringement) are prosecuted before state courts bymeans of criminal actions

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Civil enforcementThe Industrial Property Law establishes thatindependent of the criminal action, theaggrieved party may file a civil lawsuit,seeking interim injunctive relief anddamages. Both the Industrial Property Lawand the Civil Procedure Code allow thegranting of ex parte preliminary restrainingand/or search and seizure orders. To obtaininjunctions of this nature, the followingprocedural requirements must be met bythe rights holder: • evidence of the plaintiff’s right; • substantial and unquestionable proofs

of the infringement; and • elements that may demonstrate a

reasonable degree of risk of damage ifthe injunction is not granted.

In some enforcement circumstances, it isrecommended to issue a cease and desistletter before going to court.

Regarding software violations, theSoftware Law sets out a specific procedure.Before the civil lawsuit for damages is filed,the software owner must file a preliminaryinspection action with an injunction request.If granted, two experts appointed by thecourt will inspect the computers, servers andrelated devices in search for illegal licences.Thirty days later, the software holder mustinitiate the civil lawsuit for damages and,based on the contents of the court expert’sopinion, request an injunction for thedefendant to be ordered to refrain from usingthe infringing software under penalty ofpaying a daily fine.

As regards copyright infringement, theCopyright Law compels the infringer tosurrender to the rights holder all infringingcopies that it still possesses and to pay forthe remainder of the copies that it produced,at the price at which they were sold or wouldhave been sold. It also states that if thenumber of illegal copies is unknown, theinfringer must pay the value of 3,000 copiesin addition to those seized.

The Brazilian legal framework also foreseesother types of civil enforcement remedy for IPrights infringements. One procedure oftenused is the preliminary action for the earlyproduction of evidence, which is normallyused in cases where the evidence of theinfringement may disappear or be modified.Similarly to the procedure for softwareinfringement, upon the homologation of thecourt expert report, the rights holder must filethe civil lawsuit for damages based on thecontents of the court’s opinion.

Finally, the violation of any IP rightcreates an obligation to pay damages. To thisend, the Industrial Property Law rules that

the damages will be calculated based on themost favourable criteria to the injured party,as follows:• the benefits that would have been gained

by the injured party if the violation hadnot occurred;

• the benefits gained by the party whichviolated the rights; or

• the remuneration that the violatorwould have paid to the rights holder fora licence which would have permitted itto exploit the rights legally.

Punitive damages can also be claimed,but are seldom granted.

The civil compensation procedures areoften slow and time consuming, and theirsuccess depends on the evidence ofdamages, the circumstances and thedefendant’s financial situation.

Anti-counterfeiting online Although Brazil has no specific statutedealing with online IP infringement, thelegal framework provides protection againstonline counterfeiting activities. Case lawdealing with online infringement states thatBrazil has jurisdiction over disputes arisingfrom facts occurring or having effect withinBrazilian borders.

Online infringements are litigatedbefore civil and criminal state courts. Onlyindustrial property rights validity claimsand specific international onlineinfringements fall under federal jurisdictionand must be litigated before a federal court.

The complaint must present evidence ofthe infringed right, the facts and theconnection between these and thedefendant (eg, website administrator orinternet service provider (ISP)). Theidentification of the party responsible forthe alleged infringement, although notmandatory, is recommended and usuallyrequired in order to bring effectiveness toany judicial decision. Previous decisionshave established the ISP’s responsibilityregarding the information available onwebsites, especially if the ISP fails to respondor provide a remedy after receiving a firstnotice from the rights holder.

An alternative dispute resolutionproceeding was recently established by theBrazilian domain name registrationauthority. After a test period, thisproceeding is expected to be as successful assimilar international mechanisms, reducingtime and costs and leading to effectivedomain name protection.

Preventive measures/strategiesBesides registering trademarks, certain

preventive measures should be taken inorder to enhance the chances of success ofan anti-counterfeiting campaign.

Under Brazilian law the use of local legalcounsel is mandatory when a complaint isfiled before the courts. The chosen counselshould be experienced in IP matters, as wellas civil, police and customs remedies. The useof investigators is common and important asin Brazil, the burden of proving theinfringement relies on the plaintiff in bothcriminal and civil cases, as the defendant isalways entitled to withhold from the plaintiffany self-incriminatory evidence.

It is also vital that certain precautions betaken by the rights holder in its relationshipwith third parties (eg, licensees, localmanufacturers or distributors). Due to theinformation and the materials that theyreceive, these companies will be in a uniqueposition to infringe the IP right(s) shouldthey wish to do so. Therefore, it is highlyrecommended to select local partnerscarefully in order to deal only with localbusinesspeople with a strong ethicalbackground, and to initiate the businessrelationship only after a proper contract hasbeen executed, which includes all basicclauses for the protection of the IP right andthe rights holder.

Whenever possible, the use ofauthentication technology, such as securitylabels, to fight counterfeiting is helpful, andthe use of such technology is increasing inBrazil. Continuous monitoring of possiblecounterfeiters is a basic necessity, and thesellers of the original goods should betaught to identify counterfeit goods, receiveincentives to do so, report the infringementsand receive feedback.

Cooperation with official anti-counterfeiting agencies is indispensable inorder to implement and maintain asuccessful anti-counterfeiting programme.Several agencies are responsible in this area,depending on the nature of trade (eg,Customs for imported goods and goodsalready in the Brazilian market, and in somestates the specialist anti-piracy police) anddepending on the nature of goods (eg,ANVISA for medicinal drugs). The dialoguewith the competent authorities must neverstop; if the rights holder so desires, suchdialogue can be conducted throughassociations dedicated to fightingcounterfeiting formed by companies withsimilar activities. WTR

Brazil

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Claudio Roberto BarbosaPartnerclaudio.barbosa@kasznarleonardos.com

Claudio Roberto Barbosa is a partner ofKasznar Leonardos - Intellectual Property,which is one of the successors ofMomsen, Leonardos & Cia. He works inlicensing and litigation, including theonline infringement of intellectualproperty. Admitted to the Brazilian BarAssociation in 1995, he holds a JD, and anLLM and an SJD from the University ofSao Paulo Law School. He also has an LLMdegree from the George WashingtonUniversity Law School. He is a member ofthe board of the Brazilian Association ofIntellectual Property (ABPI).

Elisabeth Kasznar FeketeSenior partnerelisabeth.fekete@kasznarleonardos.com

Elisabeth Kasznar Fekete is a partner andthe head of Kasznar Leonardos’s Sao Paulooffice. Kasznar Leonardos is one of thesuccessors of Momsen, Leonardos & Cia,and has offices in Rio de Janeiro and SaoPaulo. Holding a doctorate in commerciallaw from the University of Sao Paulo, MsKasznar Fekete has over 30 years’ practicein intellectual property, covering bothlitigation and counselling in the areas oftrademarks, anti-counterfeiting, unfaircompetition, copyrights, IP contracts,innovation law and trade secrets. Hermain expertise is in the strategicplanning of IP-related litigation and theestablishment of anti-counterfeitingprogrammes. Ms Kasznar Fekete isrecognised as the author of the leadingBrazilian treatise on trade secrets andmany articles, including papers on bordermeasures. As an active member of leadingIP associations, she is vice president ofthe ABPI and regularly coordinates andteaches in IP courses. She also speaks atseminars both in Brazil and abroad.

Gabriel Franciso LeonardosSenior partnergabriel.leonardos@kasznarleonardos.com

Gabriel F Leonardos is a partner ofKasznar Leonardos - Intellectual Property,which is one of the successors ofMomsen, Leonardos & Cia. Mr Leonardoshandles licensing agreements, litigationand arbitration in IP cases. Admitted tothe Brazilian Bar in 1986, he completedpostgraduate studies in German law atthe Ludwig-Maximilian University,Munich, and was a guest research fellowof the Max-Planck-Institute, Munich. Healso has an LLM degree from theUniversity of Sao Paulo. Mr Leonardos isranked among the top attorneys for IPmatters in Brazil in several specialistpublications. He is a member of theInternational Federation of IntellectualProperty Attorneys, honorary president ofthe Brazilian-German Chamber ofCommerce of Rio de Janeiro and amember of the board of directors of theRio de Janeiro Bar, where he chairs theIndustrial Property and PiracyCommittee. Mr Leonardos is also vicepresident of the Brazilian Association ofIndustrial Property Agents (ABAPI).

Biographies Kasznar Leonardos –Intellectual Property

Kasznar Leonardos –Intellectual PropertyRua Teófilo Otoni, 63 – 5th to 8th floors20090-080 - Rio de Janeiro, BrazilTel +55 21 2113 1919Fax +55 21 2113 1920Web www.kasznarleonardos.com

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