Civil processes and procedures in the Brazilian Courts have been increasingly expedited due to the digitalization of case files and the assignment of courts specialized in specific matters (for instance, in corporate and intellectual property law). But the timeframe for judicial disputes involving IP rights in Brazil can be expedited even more for foreign companies by complying with the following procedural requirements.
1) Standing / Who Should be Indicated as Plaintiff in a Court Action?
Any foreign or national company holding rights to an infringed trademark in Brazil has standing to file infringement actions before the Brazilian state courts or nullity claims in the federal courts, among other possible lawsuits.
The primary standing to file a court action belongs to the owner of the trademark – (it is not always necessary to be registered before the Brazilian Patent and Trademark Office (BPTO)). Licensed or affiliated companies with specific powers to protect the exclusivity and integrity of the mark can also claim standing to initiate court proceedings.
In terms of licensed companies, recent case law diverges on the acceptance of license agreements that have not been recorded at the BPTO, since the purpose of license recordal is to publicize the license as a prerequisite for enforcing them against third parties (Section 140, IP Law (Federal law no. 9.279/1996)). Therefore, although non-recorded license agreements may be accepted, it is advisable to have the license properly recorded at the BPTO to secure rights and enforce the trademark before the courts.
2) Formalities Regarding Power of Attorney
The foreign company must also be represented in court actions; thus, a Power of Attorney should be filed fulfilling the requirements of Brazilian Civil Law, namely, notarization and apostille (under the Hague Treaty), certifying that the signor of the power of attorney (POA) is entitled to grant the relevant powers to its acting Brazilian attorneys.
In IP cases, it is also a requirement that, prior to the litigation, the foreign entity holding applications or registrations at the BPTO has attorneys of record in Brazil, under the provisions of the Brazilian IP Law. There is a requirement to identify a legal representative in the Brazilian territory to be served and notified in case of any dispute involving the application or registration submitted at the BPTO.
In case the foreign entity files the court action alongside a Brazilian branch, subsidiary or licensee, the Brazilian company must also present POA, but no notarization or apostille is required. Simple signatures from its legal representatives and the company bylaws will suffice.
In both cases, when there is urgency, the POAs can be filed after the filing of the court action, as permitted under the Civil Procedure Law. Judges usually assign 15 working days after receiving the initial brief for the plaintiffs to submit the POAs.
3) The Bond (and How to Avoid It)
Foreign companies and individuals must post a bond to litigate before the Brazilian courts. This bond protects the opposing parties (such as the BPTO and private entities) and ensures that they are reimbursed for the official fees associated with the litigation in case it does not succeed. After payment of the costs due to an occasional loss, the remaining amount posted in the bond is returned to the foreign entity.
However, if the foreign company succeeds in its claims before the courts, it is entitled to recover the full amount with interest once the decision becomes final, together with the official fees, which will be reimbursed by the opposing parties.
There are a number of international cooperation treaties to which Brazil is a signatory that stipulate there is no need to post a bond for individuals and companies covered in these treaties. These include the Hague Convention and bilateral treaties between Brazil and other countries. It is always advisable to consult these treaties, and to carefully set them out in the initial complaint, in cases where the foreign entity is headquartered in a country covered by one of these cooperation treaties.
Also, designating a local co-plaintiff is an advisable measure to avoid having to post a bond to litigate in Brazil. This is because Brazilian civil procedure law provides that a bond is not required when a company files a court action with sufficient assets in Brazil to cover eventual costs arising from the dispute.
However, the co-plaintiff must be a licensee, an official branch, a subsidiary or a company belonging to the same business group to effectively observe the provisions in the civil procedure code. In this case, the judge can request evidence that the companies belong to the same group or are somehow associated, which can be proven by production of financial statements, reference in articles of incorporation, etc.
4) Preliminary Injunctions – Availability and Requirements
Due to the historical problem of backlog in the Brazilian courts, injunctions are widely available to ensure effectiveness of court actions, especially in cases involving IP rights.
There are legal provisions covering the availability and requirement for injunctions in Civil Procedure Law (general) and in the IP Law (specific). Further, there are three basic requirements to have preliminary injunction relief granted by the courts even before hearing the other party (ex parte):
1 – The likelihood of success on the merits: the plaintiff must demonstrate and provide relevant evidence in the initial complaint of the claim’s strength. Here, the plaintiff must show that it actually holds the rights over the relevant trademark (or other IP asset) and that the other party is infringing this right.
2 – Irreparable harm if the injunctive relief is not granted: the plaintiff must show at the initial complaint stage the urgency of its claim, indicating the damages caused by the infringement and the harm that will be suffered by the plaintiff, its business and consumers if it is not immediately ceased.
3 – No risk of irreversibility for the other party: the plaintiff must show that the sought injunctive relief may still later be reversed by the other party, since as a preliminary ruling it must be revocable if the claims are not ultimately granted on the merits.
Traditionally, preliminary injunctive relief is requested within the same court action/proceeding as the other claims concerning the merits of the case. Therefore, it is not necessary to file a separate lawsuit to pursue such injunctive relief.
However, since 2015, with the enactment of a new civil procedure law, it is possible to submit a separate lawsuit specifically requesting preliminary injunctive relief. This type of court action follows a different and more straightforward process, so that if the injunction is granted and not contested by the other party, it becomes definitive and the case is immediately closed. Otherwise, if the preliminary injunction is not granted, or if it is contested by the defendant, then the plaintiff has the option to convert the case into a regular lawsuit and include further claims.
5) Sworn Translations of Foreign Documents
Frequently, documents such as international certificates of registration, evidence of fame, agreements, etc., are in foreign languages, and the Brazilian Courts require these to be submitted in Portuguese (the official language of Brazil).
However, companies must submit the original foreign language documents, together with their respective sworn translations. The sworn translations can be provided after the filing of the court action. Usually, the judge will request the sworn translations under penalty of having the foreign language documents removed from the case file.
These are the main issues foreign companies and agents must be aware of before deciding to initiate a judicial dispute in Brazil. Additionally, it is always advisable to seek a local law firm to efficiently prepare the complaint in light of the documents gathered and reviewed, as well as to monitor, follow up and report the developments in the case for a cost-effective and time saving outcome in the court action.
Article published on IPWatchdog.