When people think about Brazil they often imagine just another country in South America, like Argentina or Chile. The truth is that the Brazilian economy is bigger that the rest of the subcontinent put together. Also, although Brazil is the only country in South America which speaks Portuguese, there are more Portuguese speakers than Spanish speakers in South America as Brazil’s population is greater than the rest of South America combined. It is also the most advanced economy in the region with nuclear power stations and heavy industry ranging from shipbuilding to the world’s third largest producer of commercial jets.
Brazil is a top nine GDP country with over 205 million consumers that multinational companies ignore at their peril. With high barriers to entry and high interest rates, competition in Brazilian markets is generally quite relaxed, leading to high profit margins which can be a vital source of revenue to multinational companies in troubled times.
The most compelling reasons to trade in Brazil are financial. Few major companies can afford to ignore the Brazilian market. Brazil is the fourth biggest market for Coca-Cola, Mobile phones and the fifth biggest market for motor vehicles. Truly an interesting and even vital market for most major multinational companies.
Companies Entering Brazil?
Before starting to trade in any country, it is import to conduct trademark searches to verify if the trademarks the client intends to use are free for registration and use. Failure to conduct trademark searches could result in the need to rebrand products if a trademark is not available for registration. Worse still is the possibility of a third party filing a court action for trademark infringement if it has a registration on the trademark that the client started using in Brazil. As well as an award of damages, the trademark owner may be also able to obtain a preliminary injunction that would stop sales of products or services with the contested trademark. This would be particularly vexing if the client feels that it is the true owner of the trademark in question, as it was the first to start using the mark in its country of origin, but the third party registered it first in Brail.
As well as companies entering the Brazilian market for the first time, established companies should also conduct searches whenever they launch a product with a new or altered trademark. It can often cost millions of Dollars to prepare new packaging and advertising for a new product launch, which could be stopped in its tracks if the new mark were too close to a prior mark on the Brazilian PTO register for similar goods or services. Again, use of someone else’s registered trademark could results in a preliminary injunction and millions of Dollars in damages.
Benefits of Searching
One of the main reasons it is so important to conduct trademark searches in Brazil is that Brazil is a first to file country. As such, the first company to file an application for a trademark will become the owner of that trademark. Having the earliest filing date is extremely important even though a company may have been using the same mark in their country of origin well before the third party mark. If a multinational company does not file in Brazil, another party may do so, and unless their mark is discovered and challenged, they could earn exclusive rights to the trademark in question.
Exception to First to File
Brazil is a first to file country, but there is an exception. Brazilian IP Law states that “Any person who, in good faith, on the priority date or the filing date of the application, was using for at least six months in Brazil an identical or similar mark to distinguish or certify identical, similar or related products or services shall enjoy a right of precedence in registration.” As such, a party that has been using the trademark in good faith for six months before filing may claim priority.
That means that if company A has been using a trademark in Brazil since January 2014, and company B files an application for that trademark in August 2014, company A may claim priority before the PTO because it was using the mark in Brazil more than six months before company B filed its application for that mark. However, company A only gains the right of priority before the PTO. If company A does not take any action and company B’s application issues to registration then it is company B that can file an infringement action against company A’s use. Searching the PTO database to ascertain the situation and filing an application for a trademark a company intends to use is the best defense against this type of situation.
However, the right of precedence is only before the PTO. That means that if a company that is using a trademark in Brazil does not challenge an application filed by a third, and it issues to registration, the owner of the trademark registration will have gained exclusive rights to the mark and will be able to file a court action to stop the first company using the mark. The right of precedence does not extend to the courts and so it does not matter how long the defendant has been using a certain mark; if the plaintiff has a registration it has exclusive rights, which it may use to gain a preliminary injunction and or damages.
When evaluating whether a mark is available for use in Brazil absolute grounds must also be considered. An assessment of absolute grounds should be included in every trademark search. The Brazilian PTO are very strict in their interpretation of what constitutes a descriptive or generic mark; or what they consider to be an advertising slogan. As such, local knowledge is essential. A trademark may be perfectly registrable in the United States or the United Kingdom, but may be rejected by the PTO as being descriptive or an advertising slogan.
As a rule of thumb, any sequence of words that make sense in English, Portuguese, or any recognizable language may be considered either descriptive or an advertising slogan by the PTO. If it is short sequence of words it may be considered descriptive; long sequences of words are more likely to be considered advertising slogans. The Brazilian PTO have issued many eyebrow-raising decisions that are difficult to overturn on appeal. With the correct advice in a search report such rejections may be avoided by simple techniques, such as filing the trademark in a composite form, or together with a house mark.
Along with descriptive or necessary words being unsuitable for trademark protection, the PTO will also reject design trademark applications for the necessary, common or usual form of a product or packaging, or a form that cannot be dissociated from a technical effect. As such a regular bottle with no distinguishing features or flourishes would be rejected. A trademark search would not necessarily reveal this, but companies should bear in mind that that a trademark application for an object that is protected by registration as an industrial design in the name of a third party would also be rejected.
Peculiarities in Brazil
Any trademark search in Brazil should also inform the client of any potential problems caused by some of the less common absolute grounds envisaged by Brazilian IP Law, and also of the Portuguese language.
Crests, flags, emblems, and monuments, as well as their respective names, may not be registered, when they are of an official or public character, whether they are Brazilian or international. As such not just Brazilian landmarks are protected, but also international ones, such as the statue of liberty. The following trademark was rejected on these grounds:
Similarly, acronyms for public entities may not be registered, unless applied for by the entity itself.
Isolated letters, numerals and dates, may not be registered, unless displayed in a sufficiently distinctive form. Nor can individual colors be registered, although combinations of different colors or a single color combined with a distinctive shape may be registered.
Expressions, or drawings that are contrary to public morality may not be registered in Brazil. Whereas drawings that offend public morality should not be difficult for foreigners to understand; nor profanities in English, profanities in Portuguese may be rather more difficult. May words that appear innocuous in English may be profane in Portuguese. MURDER may be a simple English word, but it is pronounced the same as MERDA, which is the Portuguese word for FECES. When determining registrability the context here is particularly important. Whereas DIAL M FOR MURDER would be registrable, but perhaps not QUE MURDER É ESSE?
Company names may not be registered, unless by the company itself. The PTO will not conduct searches of company names, but oppositions based on company names may be successful. While trademark searches do not themselves extend to company names, specific company name searches area available. These company names searches are not offered by all law firms because they must access company names on individual registries from Brazil’s 26 states (and the Federal District).
Names, awards or symbols of official sporting, artistic, cultural, social, political events are also protected and may only be registered by the organizer of the event. The legal names, signature, family names and images of third parties are protected, and may not be registered without the consent of the owner, their heirs or successors in title. This can cause a problem where an individual starts a company or launches a product identified by their surname, and later sells or loses control of the company. The Brazilian PTO have demanded the consent of the person whose name is being used by the company as a trademark, even if they are no-longer involved in the company. Where the person does not give their consent, the applications for a mark incorporating their surname or signature may be rejected.
Similarly, the well-known pseudonyms or nicknames or collective artistic names, may not be registered, except by consent of the owners, their heirs or successors in title. Obvious examples here are THE BEATLES or PELE (which is the nickname of a rather famous Brazilian footballer).
As is the case in many other jurisdictions, geographical indications liable to cause confusion, or a sign that may falsely lead to a geographical indication, may not be registered. Also, any sign that leads to a false indication as to origin, source, nature, quality or utility of the products or services for which the mark is intended is also likely to be rejected.
The issue of copyright is very much a dual edged sword in Brazil, and may be a great advantage or a hindrance depending if the client is the owner of the copyright. Under Brazilian IP Law “literary, artistic or scientific works, as well as titles that are protected by copyright and are liable to cause confusion or association, except by consent of the author or owner.” No registration of copyright is necessary in Brazil. Trademark searches can show if a third party has registered a character name or fanciful place as a trademark, which is often the case when a book is made into a film. The company launching the film may be frustrated in its attempts to sign lucrative merchandising deals if a third party has already registered a character name or place from the original book. If the registration is over five years old not even a court action may be filed to annul the registration – unless there was clear bad faith in registering the trademark.
Conversely, the PTO will allow copyright as the basis for an opposition against an application or recently granted registration, irrespective of the copyright owner having filed a trademark application. Other benefits to using copyright as the basis to attack trademarks is that no registration or use is required, and it is not limited to a particular class or similar goods or services.
Another reason that it is important to employ a Brazilian attorney to consider the trademark search results is that of classification. Many of Brazil’s registrations and even some applications still bear the former Brazilian Classification and so it is essential to conduct searches through a conduit which understands the correlation between the Brazilian Classification and the Nice International Classification which was introduced in 2000. There are four editions of the Nice Classification currently in force in Brazil: 7, 8, 9 and 10. The Brazilian Classification is quite different from the International Classification. For example, Brazilian Class 12 is similar to International Class 07. Also, much can depend on the Brazilian Subclass. Brazilian Class 09.55 identifies computers from International Class 09, but Brazilian Class 09.15 identifies medical equipment from International Class 10. The service classes can also be confusing. Brazilian Class 40.15 identifies retail services, which is the equivalent of International Class 35; yet Brazilian Class 40.34 identifies software development services found in International Class 42.
Brazil is a massive market, but it also has a massive Trademark Register. With over 150,000 applications filed each year, and there is a current backlog of 474,656 applications awaiting examination; and almost 100,000 new registrations are granted each year. The vast majority of which are filed by Brazilian companies and so will not be found on other trademark registers in other countries. This means search results from Brazil will often be very different than the results from other countries. The Brazilian register is a very busy place and the classification makes navigating it particularly complicated.
In the information age when news about new products and services travels around the world in a matter of minutes rather than months (POKEMON GO anyone?), trademark searches and filing programs are more important than ever.