By Gabriel Francisco Leonardos

In the trial of Special Appeal # 1.512.647 (decided on the 13th of May and published on the 5th of August), the Superior Court of Justice (in charge of standardizing the jurisprudence in Brazilian Courts) provided some guidance on liability of ISP in case of copyright infringement – an issue that was not codified by the Civil Basis for the Internet (“Marco Civil”). In the case at stake, a video producer filed a lawsuit against Google demanding the removal of several Orkut communities that were offering for sale a range of unauthorized copies of educational videos. The producer also requested the payment of damages. According to the producer, Google failed to remove the Orkut[1] communities after receiving a cease and desist letter, whereas Google alleged that such C&D letter did not inform the URLs of the infringing pages.

The Special Appeal was lodged by Google against a decision rendered by the State Court of Appeals of Minas Gerais[2]. This decision ordered the company (i) to pay damages to the producer in an amount to be fixed by an Expert or, in case that was not feasible, in accordance with article 103 of Brazilian Copyright Act[3]; and (ii) to remove the infringing pages. In brief, Google alleged that the company company could not comply with the Court order, as the producer did not inform the URLs of the infringing pages. Moreover, the company argued that it was a case of subjective liability and Goggle did not perform any activity that was deemed as copyright infringement.

Although this case happened before the Civil Basis for the Internet entered in force, the Reporting Justice Luís Felipe Salomão understood that it was desirable to render a decision that was in line with the principles enshrined by that Act. Therefore, he confirmed that it was a case of subjective liability, and underlined that, since the matter was not codified by the Civil Basis for the Internet, the Brazilian Copyright Act applies.

[1] A social network that was owned by Google.

[2] A State in Southeast Brazil.

[3] That establishes a presumption of selling of 3,000 (three thousand) infringing copies.

The Superintendency of the Brazilian antitrust authority (Conselho Administrativo de Defesa Econômica – CADE) has dismissed a case brought against the holder of essential patents related to an international standard in cell phone technology. According to the

bureau, there was no infringement of the economic order concerning the abuse of intellectual property rights.

CADE's Superintendency is the first federal instance to analyze acts of economic concentration, such as mergers and acquisitions, and the occurrence of infringements of the constitutional economic order. CADE, the national antitrust watchdog, is encharged with enforcing the constitutional economic principles, such as free enterprise, freedom of competition, social role of property, consumer protection and the restraining of abusive behavior.

In the present case, the patentee of the international standard cell phone technology was accused of sham litigation and patent misuse, since it had sued the denouncing company, which tried to obtain the due licenses, for patent infringement.

Practical Law – Life Sciences / 2015

Practical Law – Life Sciences / 2015

The administrative court of the Brazilian antitrust authority (Conselho Administrativo de Defesa Econômica – CADE) has very recently fined a major pharmaceutical industry in over 36 million Brazilian reais (approx. 11 million American dollars) for sham litigation involving the patent application in Brazil of a blockbuster drug used in the treatment of cancer. Although this is not the first millionaire fine imposed by CADE on a pharmaceutical company, cases like this are still rare and the case law of the bureau’s administrative court, which is a federal nonjudicial instance encharged with enforcing the constitutional economic principles, such as free enterprise and free competition, is still being built.

In the present case, the accused company has filed a patent application for a procedure to produce the abovementioned drug before the TRIPS Agreement had come into force in Brazil (later it has broadened the application’s claims to include the drug itself). As it is of common knowledge, Brazilian Law did not admit the patentability of chemical and pharmaceutical compounds until the issuance of the new Industrial Property Act in 1996, which was passed by Congress in order to comply with TRIPS. Notwithstanding the foregoing, by the time the applicant has requested the examination of the invention before the Brazilian Patent Office (BPO), the TRIPS agreement had indeed come into force.

As we informed in our previous newsletters # 2, of January, 2014, and # 6, of August, 2014, the Brazilian Patent Office (“INPI”) enacted Resolution No. 113 in October 2013 ordering that all patents with 2 (two) or more annuities in arrears should automatically be definitely shelved and extinct, without the possibility of restoration. Such resolution aimed primarily at reducing the backlog of pending patent applications and also served to the general goal of increasing the realm of the public domain in Brazil, but many understood that INPI's resolution was in direct violation of Section 87 of Brazil’s Patent Act, according to which the shelving or extinction of a patent can only be decreed by INPI after the patentee has failed to apply for the restoration of the patent (paying the annuities in arrears with a penalty) within the deadline of 3 months after being summoned to do so through a publication in the Official Gazette.

INPI’s Resolution 113 had the potential to swiftly shelve or make extinct over 10,000 patent applications and issued patents, and on July 2014 the Brazilian Association of Patent & Trademark Agents (ABAPI) filed a class action against INPI seeking its revocation. On January, 2015 the 25th Federal Trial Court of Rio de Janeiro ruled in favor of ABAPI and ordered INPI to immediately halt the mass shelving or extinction of patents and to overturn all shelving and extinction decisions that by then had already been published by INPI.

It is expected that, in 2015, the administrative court of the Brazilian antitrust authority (Conselho Administrativo de Defesa Econômica – CADE) rules some important cases involving the sham litigation doctrine applied to intellectual property. It is expected that these cases will more accurately indicate what CADE understands as anticompetitive behavior and infringement of the economic system concerning the abuse of intellectual property rights.

CADE’s administrative court is a federal nonjudicial instance encharged with enforcing the constitutional economic principles, such as free enterprise, freedom of competition, social role of property, consumer protection and the restraining of abusive behavior. Among its institutional competences it can be mentioned the legally required prior consent to “acts of economical concentration”, such as mergers and acquisitions, and the application of sanctions to infringements of the economic order.

It is always worth remembering that the current Brazilian antitrust Act, differently from its predecessor, expressly considers the possibility of undue use of intellectual property rights as a hypothesis of infringement of the economic system. The administrative court forthcoming decisions this year will help to clarify what CADE understands as an abusive use of intellectual property rights.

The American doctrine of sham litigation, which forbids the abusive use of the judicial system as a way to constrain competitors by the lawsuit itself, regardless of the merits’ pertinence or chances of success, has already been applied by CADE in past decisions. The novelty this time falls within its application to intellectual property related cases.

A new resolution defining the legal concept of “associative contract”, which was issued last year by CADE (Conselho Administrativo de Defesa Econômica) – the Brazilian antitrust authority – came into force in January 2015. According to the Brazilian current antitrust law (Law n. 12.529/2011), once other legal premises are met, such as annual revenue standards, “associative contracts” must be previously notified to and approved by CADE before being performed by the parties despite the fact that the Law does not clarify the meaning of “associative contracts”. Therefore CADE’s Resolução n°. 10 de 29 de outubro de 2014 is expected to eliminate the former legal uncertainty on which kinds of commercial agreements had to be submitted to CADE, a doubt that used to reach intellectual property licensing agreements.

Brazilian antitrust Law establishes that “acts of economical concentration” must be previously submitted to CADE’s approval before coming into force whenever (a) the annual gross revenue in Brazil of one of the parties involved is of 750 million BRL or more and (b) the annual gross revenue in Brazil of the other party is of 75 million BRL or more.

In addition to these parameters, section 90 of the Law lists the strict cases which shall be considered “acts of economical concentration”, the majority of which are related to mergers and acquisitions. Exception made to item (IV) which provides for the prior consent of CADE to “associative contract, consortium or joint venture” though without defining the meaning of “associative contract”, which could reach several agreements with no repercussion on market competition.

As informed in our Newsletters # 2 (January 2014) and # 6 (August 2014), a serious controversy regarding the restoration of patents and of patent applications with annuities in arrears arose from the enactment by the Brazilian Patent Office (hereinafter “INPI”) of Resolution No. 113/2013 (hereinafter “INPI’s Resolution”). Such controversy is due to the contradiction between item 13 of INPI’s Resolution and Sections 86 and 87 of the Brazilian Industrial Property Act (Law No. 9,279/96 – IP Act): although the IP Act allows the restoration of the patent or of the application upon request of its owner within 3 (three) months from the publication of the forfeiture’s notice, INPI’s Resolution set forth that in case multiple annuities (two or more) are left unpaid, a patent or a patent application could no longer be restored.

Given that, on July 10, 2014, the Brazilian Association of Industrial Property Agents (ABAPI) filed a class action before the 25th Federal Court of Rio de Janeiro, aiming the invalidation of item 13 of INPI’s Resolution and the reversion of all the definitive shelving and extinction decisions that were based on such provision.

Recently, on January 13, 2015, Federal Judge Eduardo André Brandão de Brito Fernandes rendered his decision and granted ABAPI’s requests, determining that all shelving and extinction decisions based on item 13 of INPI’s Resolution are void and ordering that INPI complies with Section 87 of IP Act, i.e., patentees must be notified so that, if it is of their interest, they might be able to restore its patent or application by paying the proper official fees. Such decision also granted the injunction request to immediately suspend the effects of item 13 of INPI’s Resolution and, therefore, it will have immediate effect and the 9,745 patents and patent applications that had already been declared shelved and extinct by INPI must now be reinstated.

The Brazilian pharmaceutical regulatory agency ANVISA – National Sanitary Vigilance Agency recently approved new rules for the use of trademarks in pharmaceutical products, through RDC – Resolution of the Board of Directors No. 59, of Oct. 10, 2014.

Such new regulations are very important, inasmuch as all pharmaceutical products in Brazil must be registered with ANVISA for their sale to be allowed. ANVISA not only assesses the efficacy of the product and other health-related technical matters, but it also sets forth how the labeling should be done and it approves the use of trademarks in the package.

As in Brazil there is no linkage between the regulatory registration by ANVISA and the issuance of patents or trademark registrations by the Brazilian Patent & Trademark Office (BPTO), the rules approved by ANVISA are, in practice, the only rules that govern the approval for commercialization and labeling of pharmaceutical products. If there is a conflict between a decision by ANVISA and one by the BPTO (e.g. concerning the risk of confusion between two trademarks belonging to two competitors) it is usually up to the Courts to solve such conflict.

As we informed in our Newsletter # 2, dated January 2014, in October 2013, the Brazilian Patent Office (“INPI”) enacted Resolution No. 113 to regulate the control of the payment of annuities by patent and patent application owners. Immediately, the Resolution triggered strong reactions from patentees and patent attorneys, in view of its item 13, which contradicts Sections 86 and 87 of the country’s Industrial Property Act (Law No. 9,279/96). It is estimated that such contradiction may have jeopardized the rights of applicants and patentees over almost 10,000 issued patents and 2,300 patent applications.

According to the IP Act, failure to pay annuities shall lead to the shelving of the application or the extinction of the patent (article 86). However, Section 87 allows the restoration of the application or of the patent upon request of the corresponding owner within 3 (three) months from the moment the INPI publishes the notification of shelving or extinction.

The growth of the Brazilian market and economy is paralleled by the increase in counterfeiting activities. The enforcement of IP rights involves planning, technology, intelligence, training and coordination, with support from a number of laws and treaties, as well as the relevant rules of the Federal Constitution, the Civil Code, the Criminal Code, the Civil Procedure Code, the Criminal Procedure Code and administrative statutory instruments.

The legal framework for anti-counterfeiting includes:

• the Industrial Property Law (9,279/96);

• the Copyright Law (9,610/98); and

• the Software Law (9,609/98).

In addition, Brazil is a signatory to the main international IP instruments, such as:

• the Paris Convention for the Protection of Industrial Property (as reviewed in Stockholm in 1967);

• the Agreement on Trade-Related Aspects of IP Rights (TRIPs);

• the Berne Convention for the Protection of Literary and Artisti

1 What are the principal statutes regulating advertising generally?

The legal basis for the provision of advertisement regulation is set forth by the 1988 Brazilian Constitution, which determines that the law will provide for special rules on the advertising of products and services that may offer health and environmental risks, such as tobacco, alcohol and medicines (section 220, paragraph 3, II, and paragraph 4).

Revista Marcasur. Suplemento Brasil Al Día. Março, 2014.

La inseguridad jurídica que existe en Brasil es tanta que un dicho burlesco dice que “en Brasil hasta el pasado es incierto”. Un ejemplo de reciente conducta del Instituto Nacional da Propriedade Industrial (INPI) que generó perplejidad fue la presentación de acciones de nulidad de las patentes mailbox.