IP LICENSING
Licensing has many advantages as a means of entering the market in Brazil, but companies should make sure they are familiar with all the appropriate restrictions and regulations. Alysson Oikawa explains.
Despite the implications of the recent international economic breakdown, Brazil remains one of the leading developing markets to attract foreign capital. It is frequently referred to as a country that has the capacity to expand the internal market for goods and services, while exerting a dominant position as a global supplier of raw materials. With the upcoming 2014 FIFA World Cup and 2016 Olympic Games, this fast-growing economy is expected to be boosted by ever-greater investment. In this positive outlook, licensing becomes an attractive alternative to enter local production chains and reach Brazilian consumers.
Licensing generally refers to the agreements under which the owner of an IP right grants authorisation to use without an effective transfer of ownership. It provides many financial benefits for the foreign owner, since a large proportion of investment in production and distribution is sustained by the local licensee. A licensor may grant a licence in Brazil to practically any intangible asset, including patents, industrial designs, trademarks, plant varieties and copyrights.
Te current Brazilian IP legislation was enacted in the mid-1990s to meet the most recent
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requirements of the TRIPS agreement. In addition to the WTO, Brazil is party to major international IP treaties, including the Paris Convention for the Protection of Industrial Property, the Patent Cooperation Treaty (PCT), the Berne Convention for the Protection of Literary and Artistic Works, the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, the UPOV Convention and the WIPO Convention.
Among federal laws, ministerial decrees and normative acts, there are many diverse norms that need to be understood to make licence agreements enforceable and to enable the resulting payments of royalties.
Official approval for technology transfer agreements
Te Brazilian Industrial Property Law presents the general provisions on technology transfer agreements, which are further regulated by Normative Act No. 135 of 1997 of the National Institute of Industrial Property (INPI). Normative Act No. 135 specifies the following categories of agreements that involve transfer of technology: licence of rights (use of trademarks or exploitation of patents or industrial designs),
acquisition of technological knowledge (supply of technology and rendering of technical assistance services) and franchise agreements.
Licensing agreements that involve transfer of technology must be submitted for INPI approval. Government endorsement is not a condition for the licence to be valid or even effective between the contracting parties. Nonetheless, the agreement will only become binding upon third parties aſter the approval is published in the INPI’s Official Gazette. Tis has a definite impact on the enforceability of the licensed rights and exclusivity clauses by the local licensee. Te INPI’s approval is also mandatory for the remittance abroad of payments and the tax deduction of such payments.
INPI performs a discretionary examination of technology transfer agreements, oſten applying interpretations that are internally consolidated but not found in any established legislation. One example imposes limitations on payments of fees, at least with respect to agreements between local subsidiaries and the foreign company with majority stake. Based on a complex set of tax rules with origins in the late 1950s, INPI restricts the remittance of payments to between 1 and 5 percent above the fixed price per unit sold or
World Intellectual Property Review May/June 2011 25
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