Brazil: The Europa Case & Other Trademark Developments in Brazil

The Europa Case

The amount of damages that are awarded by Brazilian courts for trademark infringement have normally been insignificant. One particular case has become an exception. The case involves use of the mark EUROPA by Fiat Automóveis S.A. (Fiat) from 1979 to 1981 to identify a line of cars. Mecânica Europa S.A. (Mecânica), which has held a registration on EUROPA since July 1976 for automobile parts, sued Fiat for trademark infringement in 1982, after having notified the company requesting that Fiat cease use of the mark or pay royalties of 3%. Mecânica was unsuccessful at first instance as the court accepted Fiat’s argument that it had not used EUROPA as a mark, but merely in a descriptive sense, notwithstanding that the word appeared on all advertising material and even on Fiat’s manual.

Mecânica appealed the decision insisting on damages equivalent to 3%. The appeal was sustained but the Court awarded damages of 1.5% of the value of the cars sold (during the three year period) by Fiat bearing the mark EUROPA. It was Fiat’s turn to appeal, but without success, and the decision was upheld, with Fiat being ordered to pay R$3.792.378,00 (around US$1,600,000.00) plus legal costs. Fiat then filed an appeal to the Superior Court of Justice on grounds of legal procedure, rather than the legal or factual basis for the decision. This appeal was dismissed in November 2001, with the Court deciding that there had been no violation of the Code of Civil Procedure, as Fiat had claimed. Fiat’s attorneys indicated in a written note shortly thereafter that all possible steps would be taken until the decision was overturned. However, the only possible appeal now would be to the Supreme Court, which would only hear the case if it could be alleged that Fiat’s constitutional rights had been violated. As such, Fiat may have little alternative but to pay the damages, which, after adjustments for inflation, now stand at R$8.500.000,00 which is around US$3,500,000.00.

While the introduction of the Eighth Edition of the Nice Classification may increase the costs of protecting a mark, depending on the services covered, discussions are now taking place in Brazil to encourage the country to join the Madrid Protocol promising to introduce major cost savings. It is known that under this system, administered by the World Intellectual Property Organization, a single registration gives protection in various jurisdictions. However, many important countries, particularly in the Americas, are not yet signatories of the Agreement, including, United States, Canada, Mexico, Argentina and Brazil.

The Madrid Protocol has introduced a number of changes to the Madrid Agreement which have made it more attractive to these countries, which are now expected to join. One of the major changes is that the basis for an international registration may now be an application rather than a registration. If this basic application is rejected in its country of filing within five years, or due to an action which was commenced within the five year period, then all the applications on which it was based die with it. This is known as the principal of central attack. However, what has become known as the "Dutch proposal" has softened this blow as the applicant may now apply in each individual country named in the refused international application, claiming the priority date of the basic application.

The time limit in which national PTO’s must advise the applicant of refusal may be extended from 12 months, as fixed by the Madrid Agreement, to 18 months, if the contracting country so requests. However, even the extended period of 18 months may not be sufficient for the Brazilian PTO, which is currently taking in excess of two years to advise applicants that an opposition has been filed, or that an application has been rejected ex officio, and over four years to advise of rejection where there has been a third party opposition.

Along with the United States and many other countries in the Americas, Brazil is currently considering signing the Madrid Protocol. However, even if it were considered in Brazil’s interests to join, the practicalities of the system would require significant restructuring of the Brazilian PTO, which would struggle to meet its obligations under the Madrid Protocol, particularly with regard to the 18 month period to inform of rejection. There would also have to be a major recruitment of

translators to deal with the immense volume of documents which would have to be translated from Portuguese into English or French, and vice versa.

The Eighth Edition of the Nice Classification was adopted by Brazil, along with the other signatories of the Nice Agreement, on January 1, 2002. The main change over the Seventh Edition is that Class 42, which is comprised of miscellaneous services, was divided into four distinct classes, as set out below:

Class 42: Providing of food and drink; temporary accommodation; medical, hygienic and beauty care; veterinary and agricultural services; legal services; scientific and industrial research; computer programming; services that cannot be placed in other classes.

Class 42: Scientific and technological services, including hardware and software development and legal services.

Class 43: Services for providing food and drink, and temporary accommodation.

Class 44: Medical services, for animals and humans including hygiene and beauty, and agriculture related services.

Class 45: Personal and social services rendered by other to meets the needs of individuals, and security services.

Applications filed as of January 1, 2002 must conform to the new classes, while applications filed before that date must be migrated to the new classes when the final issuance fees are paid, in applicable cases. Registrations will only be migrated to the new classes on renewal, which is every ten years.

On February 27, 2002, ANVISA, the Brazilian National Agency of Sanitary Control, issued an official communication to pharmaceutical laboratories and importers in Brazil advising that, based on Article 5 of Decree 79,094/77, as of April 8, 2002, it would no longer permit the importation and sale of immunobiologicals (which, in principle, include vaccines and immunoglobulins) identified by trademarks. According to the official communication, in order to obtain the necessary import licenses, the packagings, labels and directions for use that come with these products ("bulas") must use the generic name of the substances.

This long-standing requirement was originally introduced by Article 5 of Law No. 6,360, of September 23, 1976, and later implemented by Article 5 of the cited Decree 79,094, of January 5, 1977, according to which "pharmaceutical products which contain only one active ingredient, immunotherapeutic products, drugs and pharmaceutical raw materials will not be allowed to be identified by commercial names."

Thereafter, Law 6,480, of December 1, 1977, altered certain aspects of Law 6,360 by including, inter alia, a fourth paragraph in its Article 5, which provided that "... pharmaceutical products which contain only one widely known active ingredient, at the Ministry of Health's discretion, and immunotherapeutic products, drugs and pharmaceutical raw materials must be identified by the respective denominations which appear in the Brazilian Pharmacopoeia, and must not bear, under any circumstance whatsoever, a commercial name or trademark".

These legal provisions were also recently addressed in ANVISA's Resolution - RDC No. 92, of October 23, 2000, which deals essentially with generic products and which reaffirmed, in the fourth paragraph of its Article 4, that "immunotherapeutic products cannot, under any circumstance, have coined names or trademarks, as per Article 5, § 4,of Law No. 6,360, of September 23, 1976, altered by Law No. 6,480, of December 1, 1977".

Notwithstanding the fact that these legal provisions have been in effect for more than twenty-five years, they apparently have never been enforced by the Ministry of Health (MOH), since vaccines and other immunotherapeutic products have been extensively commercialized in Brazil under their respective trademarks throughout this period.

Furthermore, the Brazilian Patent and Trademark Office (PTO) has consistently granted trademark registrations for immunotherapeutic products, with no restrictions whatsoever. This is not only logical, but is also in conformity with Article 7 of the Paris Convention, which provides that "the nature of the product on which the trademark will be used shall, in no case, constitute a bar to registration". Moreover, exactly the same provisions were adopted by the TRIPS Agreement in Article 15, Section 2, relating to trademarks.

It should also be observed that the Brazilian Industrial Property Law (No. 9,279), of May 14, 1996, assures to the owners of validly issued registrations the exclusive use of the respective trademarks throughout the Brazilian territory.

Furthermore, use of a registered trademark in Brazil, as in most countries, is not discretionary, but rather compulsory. In fact, according to Article 143, of our IP Law, if use of a mark is not initiated within 5 years from the date of grant of the respective registration, or if such use has been interrupted for more than 5 consecutive years, the corresponding registration shall be cancelled at the request of any party with a legitimate interest.

Considering all the above and that Brazil is signatory to both the Paris Convention and the TRIPS Agreement, and considering further that Article 2 of the latter treaty states that Members shall comply with the provisions of Articles 1 to 12 and 19 of the Paris Convention (Stockholm Revision), there seems to be no doubt that the provisions which prohibit the use of trademarks for immunotherapeutic products are of no effect.

Accordingly, although ANVISA's communication is supported by a legal provision originally introduced in 1976, the implementation of more recent and comprehensive legislation, such as the Paris Convention, TRIPS and the Brazilian Industrial Property Law, should be sufficient to impede ANVISA from effectively implementing the regulations under discussion. Moreover, there seems to be no logical reason behind this legal norm that could justify its implementation, either at present or in 1976 when Law 6,360 was introduced.

Based on the above legal aspects, the Brazilian Pharmaceutical Industries Union – SINDUSFARMA -, filed an administrative appeal to ANVISA and, as a result, the effects of the official communication at issue have been suspended until ANVISA rules on the appeal.

In addition to the legal questions, SINDUSFARMA and the Brazilian Society of Immunization, which are the entities currently directly involved with this subject, are also discussing with ANVISA other practical and technical issues concerning this matter.

If the administrative actions currently underway are not sufficient to persuade ANVISA to revoke this official requirement and, in this case, if the legal norm is actually applied, then the company(ies) suffering from the effects of the prohibitions will have to question the matter in court, on a case-by-case basis, or collectively. In the latter circumstance, the action would have to be instituted through an association, such as SINDUSFARMA or ABIFARMA (Brazilian Association of Pharmaceutical Industries), which in June 2002 will be converted into a federation under the name of FEBRAFARMA.

The surprising decision rendered by the Brazilian Superior Court of Justice on the EUROPA case and the adoption of the Nice Classification of Goods and Services by the Brazilian PTO could be an indication that Brazil is effecting positive changes to improve the trademark system not only by restraining trademark piracy through heavy penalties, which has been unusual in the past, but also by streamlining administrative proceedings within the PTO. However, there is general concern amongst practitioners that the PTO is encouraging the Government to take steps to join the Madrid Protocol when it is a known fact that serious delays in the prosecution of trademark applications make this unrealistic. Also on a negative note is the interference of Brazil’s health authorities in matters relating to intellectual property.