Patents in Brazil: Part 1 – enforcement

Before what tribunals can a patent be enforced against an infringer? Is there a choice between tribunals and what would influence a claimant’s choice?
As a rule of thumb, enforcement is a matter of state jurisdiction. Each Brazilian state has a state court system and therefore infringement lawsuits can be filed before any state court, provided that other rules of civil procedure are observed. As a general rule, infringement lawsuits must be filed in the state where the accused infringer has its principal place of business or in any place where acts of infringement occurred.

What must be done to commence proceedings, what court fees must be paid and how long does it generally take for proceedings to reach trial from commencement?
An infringement lawsuit starts with the filing of an initial brief, where plaintiffs must assert their claims of infringement alleging that the accused product infringes a patent. Usually, the burden of the proof falls on the plaintiff (except in the case of infringement of a process patent), which often presents documentary evidence upfront, including technical and legal options. After the defendant is duly served of the complaint, it usually has 15 days to file an answer where all possible defences, including counterclaims of invalidity, will be presented, together with the supporting evidence. In an infringement case, both parties may request the court to allow the submission of further evidence during the proceeding; most importantly, the production of technical evidence by an expert to be appointed by the court at a later stage. The plaintiff then has 10 days to file a reply brief, before the judge decides on the requests made by each party regarding production of evidence. At this stage, the court may also identify issues that are not under dispute and decide any preliminary argument raised by the parties. If the production of technical evidence is required, the judge will then appoint a court expert to prepare a technical report that will be used to assist the court. Parties may elect their own experts to interface with the court-appointed expert and provide any clarification which he or she may need. Parties may also submit technical questions to be answered by the court expert relating to infringement and validity. After the court-appointed expert files a report with the court, and parties submit their own arguments in relation to such report, the judge will then set dates for written closing arguments and trial. If no oral evidence is needed, the court may also render a final judgment without a trial. The pre-trial stage can take an average of eight months. In cases where any party contests the court-appointed expert’s nomination, and depending on the complexity of the case, this schedule may be substantially delayed.

Costs are generally borne by the losing party, in accordance with Article 20 of the Civil Procedure Code. The court may award loss of suit costs covering court fees and the expenses incurred by the prevailing party, as well as the fees of expert witnesses and other related costs of the proceedings. The award may also include an amount covering loss of suit attorney fees, stipulated by the court. Loss of suit attorney fees is normally fixed at 10% to 20% of the overall award of damages (if any) as per Article 20(3) of the Civil Procedure Code. The award of loss of suit attorney fees by the court is independent of the fee agreement reached between the parties and their attorneys; in other words, the prevailing party may still need to pay attorney fees even when the court makes an order for loss of suit fees in favour of his attorney.

Can a party be compelled to disclose relevant documents or materials to its adversary either before or after commencing proceedings, and if so, how?
Under Brazilian procedural law, there is no general obligation for a party to list or disclose documents, but the parties will usually submit documents which they consider relevant to support their own case. Documents are filed at court, but not served on the other side.

The plaintiff is required to attach to the brief or complaint the documents which support the case, and to allow for further evidence which it intends to adduce in the proceedings. The defendant then does the same when filing the defence, challenging the plaintiff’s arguments and evidence.

What are the steps each party must take pre-trial? Is any technical evidence produced, and if so, how?
Each side submits its written arguments and documentary evidence. Parties may submit almost any kind of evidence before trial, from prior art references to technical and legal opinions. Technical experts are frequently used in patent litigation. Most of the attorneys have no technical background in Brazil. This is because technical experts are key players in infringement and validity litigation. However, the judge may also appoint a court expert whenever the facts under discussion depend on technical or scientific knowledge, which is virtually the case in all infringement and validity lawsuits. Similarly, plaintiffs and defendants may also appoint technical assistants so as to provide guidance to the court-appointed expert, and to respond to the expert's technical conclusions.

In patent litigation, where almost every case involves technical issues, an outcome on merit will often depend on the knowledge of an expert, or sometimes several experts. However, the judge has the right to decide notwithstanding the conclusions of the court-appointed expert. In other words, the court expert’s report is not binding on the court’s ruling.

How are arguments and evidence presented at the trial? Can a party change its pleaded arguments before and/or at trial?
Ideally, when the trial is set, the court records are already completed, and the parties and the judge have read the briefs. During trial, the parties’ attorneys, their experts or witnesses will present evidence mostly orally. Each party may call up to 10 persons to testify, among witnesses and experts, but the judge may limit this number to a maximum of three for each side. The judge will question the witnesses separately and successively, starting with the plaintiff’s. The party’s representatives may also be called to put forward their evidence. The judge puts forward all questions and the parties may address the court with additional questions, besides the ones being made.

According to Article 264 of the Civil Procedure Code, a plaintiff cannot change its pleadings or causes of action (arguments) once the defendant has been served with the complaint, unless the defendant consents. The plaintiff cannot, under any circumstances, change its pleadings or causes of action after the judge renders a decision defining the issues in the case and the scope of the evidence production phase.

How long does the trial generally last and how long is it before a judgment is made available?
Trials generally take one day, but sometimes longer depending on the complexity of the case and on the number of experts and witnesses called by each party. After trial, the judge is expected to make a judgment in 30 days. However, this deadline is rarely met by the judge, who may take months to render a final decision, especially in more complex cases.

Are there specialist judges or hearing officers, and if so, do they have a technical background?
Specialist judges are not yet available. However, specialised IP courts have been created in recent years. In 2002 the Rio de Janeiro Federal Courts made some advances, creating four district courts (out of 47) with special jurisdiction to hear cases filed against the Brazilian Patent and Trademark Office (BPTO). These are still the only federal district courts specialised in IP matters in the country. At the appellate level, however, there have been developments. The Federal Court of Appeals for the Second Circuit, which has jurisdiction to decide appeals from Rio de Janeiro and Espirito Santo, for example, has two chambers (out of eight) specialised in IP cases. The Federal Court of Appeals for the First Circuit, with jurisdiction to decide appeals from the Federal District (Brasília) and 13 other Brazilian states, also has two chambers with jurisdiction to hear IP cases. Further, the Federal Court of Appeals for the Third Circuit, with jurisdiction in Sao Paulo and Mato Grosso do Sul, also has specialised IP chambers (three out of 10).

At state level, all major Brazilian cities have courts specialised in commercial and corporate law, including intellectual property. For instance, the Rio de Janeiro state court has seven state courts with jurisdiction to hear commercial law cases, including IP cases.

What interest must a party have to bring infringement, revocation and declaratory proceedings?
Infringement lawsuits must be filed by the patent owner or by its exclusive licensee vested with powers, against anyone who may be infringing the patent. As to revocation and declaratory proceedings, the law provides that “any legitimate interested party” may file them (Article 56 of the Patent Law). This requirement is interpreted by courts very broadly; sometimes, it suffices to be a competitor or to work in the same technology field.

If declarations are available, can they address non-infringement or claim coverage over a technical standard or hypothetical activity?
Yes. As long as there is uncertainty over a fact, and this uncertainty is causing an actual or imminent threat to the party’s right, a court may be requested to entertain a declaratory judgment, either affirmative or negative.

Can a party be liable for infringement as a secondary (as opposed to primary) infringer? Can a party infringe by supplying part of, but not all of, the infringing product or process?
Yes, a party can be held liable for contributory infringement or inducement. The Patent Law further provides that supplying a component of a patented product, or material or equipment for carrying out a patented process, provided that the final application of the component, material or equipment necessarily leads to the exploitation of the subject matter of the patent, is considered a crime of unfair competition.

Can a party be liable for infringement of a process patent by importing the product when the process is carried on outside the jurisdiction?
Yes. According to Article 42 of the Patent Law, a patent confers on its owner the right to prevent third parties from manufacturing, using, offering for sale, selling or importing for such purposes, without the owners' consent, a process or product directly obtained by a patented process. In addition, in the case of a process patent, the defendant has the burden to prove non-infringement, while in a product patent the burden of proof lies with the plaintiff.

Does the scope of protection of a patent claim extend to non-literal equivalents?
Yes. It is possible to establish direct infringement by the doctrine of equivalence. The Patent Law expressly provides that patent infringement may be found “even if the violation does not affect all the claims of the patent or if it is restricted to the use of means equivalent to the subject matter of the patent”.

Can a defence of patent invalidity be raised, and if so, how? Are there restrictions on such a defence (eg, where there is a pending opposition)?
Yes. Invalidity may be raised as a defence in any infringement lawsuit. Defendants often use this kind of defence argument, combined with a non-infringement argument, in their response brief. However, it may be raised at any time during the proceedings.

In order to revoke a patent with erga omnes effect, as from its filing date, a declaratory lawsuit of invalidity must be filed. In this kind of lawsuit, the BPTO is a mandatory defendant, together with the patentee. As the BPTO is a federal entity, the invalidity proceeding must be filed at the Rio de Janeiro Federal Court.

However, the defence referred to would be an infringer’s reply to an infringement lawsuit in the state courts. A spontaneous invalidity lawsuit will have to brought at the federal courts, as the BPTO is a federal entity, and consequently a mandatory co-defendant. Post-grant (administrative) oppositions, ex officio or at the request of third parties with legitimate interest, can only be filed within six months from the patent grant at the BPTO.

Other than lack of novelty and inventive step, what are the grounds for invalidity of a patent?
In general terms, a patent may be invalidated whenever it is in violation of the Patent Law. In addition to lack of novelty and inventive step, the most common grounds for invalidity are the following:

• lack of enablement (Article 24 – “[t]he specification must describe the subject matter clearly and sufficiently so as to enable a person skilled in the art to carry it out and to indicate, when applicable, the best mode of execution”); and
• lack of support in the specifications (Article 25 – “[t]he claims must be based on the specification, characterizing the particulars of the application and defining clearly and precisely the subject matter to be protected”).

Are infringement proceedings stayed pending resolution of validity in another court or the Patent Office?
As a general rule, yes. However, if the validity challenge is raised when the infringement case is already in a later stage, the court may reject this type of request.

What other grounds of defence can be raised in addition to non-infringement or invalidity?
The law guarantees protection to the person who, in good faith, has been exploiting the patented product or process before the date of filing or priority of a patent application. The prior user has the right to continue the exploitation, without onus, in the previous form and under previous conditions (Article 45 of the Patent Law).

In addition, although rarely, the laches doctrine in patent infringement lawsuits may be raised and accepted if the court is convinced that the patent owner knew about the infringing activities but delayed substantially the filing of the lawsuit, so as to increase potential damages.

Are preliminary and final injunctions available and, if so, on what basis in each case? Is there a requirement for a bond?

Yes, both kinds of injunction are available. Preliminary injunctions may be granted provided that substantive evidence is submitted, and the court is convinced of:

• the likelihood of success on the merits; and
• the need for an urgent decision from courts to avoid irreparable harm.

In granting a preliminary injunction, courts will balance the hardships and the effect of not doing so in cases where the injunction effects are irreversible. In order to avoid irreparable damages or damages that would be difficult to recover, the judge can even grant an injunctive order to suspend the violation or act of infringement before summoning the defendant (ex parte), ordering the plaintiff to post a bond or a fiduciary guarantee in cases where he deems it necessary.

Permanent injunctions are also available and are usually granted whenever a judgment of infringement is made, although a stay on the injunction may be determined by the Court of Appeals while the appeal is not decided by the court.

On what basis are damages or an account of profits assessed?
Under Article 210 of the Patent Law, loss of profits shall be determined by the most favourable of the following criteria:

• the benefits that would have been gained by the injured party if the violation had not occurred;
• the benefits gained by the author of the violation of the rights; or
• the remuneration that the author of the violation would have paid to the proprietor of the violated rights for a granted licence which would have legally permitted him to exploit the subject of the rights (Article 210 of the Patent Law).

It is possible to obtain compensation for acts of infringement which occurred between the date of publication of the application and that of the grant of the patent, or even before publication, if there is proof that the infringer has knowledge of the contents of application before publication (Article 44 of the Patent Law).

What other form of relief can be obtained for patent infringement? Would the tribunal consider granting cross-border relief?
In addition to damages, it is also possible to obtain search and seizure orders and other immediate reliefs, such as preliminary and permanent injunctions.

The tribunal will consider granting cross-border relief depending on the circumstances – for instance, shipment details, information on the importer, evidence that the incoming or imported product reproduces and/or infringes the patented product in Brazil. In the context of the patent, this is not a simple task for customs officials. A generic claim will not be sufficient to obtain relief.

How common is settlement of infringement proceedings prior to trial?
The Civil Procedure Code expressly provides for a conciliation hearing to encourage parties to reach an amicable settlement before the evidence phase and before the judgment in the infringement lawsuit. In addition, parties may, at any time, establish negotiations for an amicable settlement and request a conciliation hearing. However, the rights holder will prefer to send cease-and-desist letters to the infringing party to avoid litigation. Accordingly, a considerable number of patent infringement cases are settled via cease-and-desist letters.

After what period is a claim for patent infringement time-barred?
Although the Civil Code provides for a general three-year statute of limitations for filing damages lawsuits, the Patent Law establishes a five-year statute of limitations for patent infringement.

Is there a right of appeal from a first-instance judgment and, if so, is it a right to contest all aspects of the judgment?
Yes. Parties can appeal from the first-instance judgment and all aspects of the judgment may be reviewed by the Court of Appeals.

What are the typical costs of proceedings to a first-instance judgment on infringement and validity? How much of such costs are recoverable from the losing party?
Infringement or validity cases may cost from $60,000 in a straightforward case) to more than $250,000 in more complex cases, especially when infringement and validity are dealt with in the same case.

Are there any mutual recognition of judgments arrangements relating to patents, whether formal or informal, that apply in your jurisdiction?
No. The BPTO once considered harmonising patent examination proceedings among Latin American neighbouring countries, but this project has not materialised. At present, Brazil is more concerned with improving its IP system and reducing the backlog of patent cases.

"Patents in Brazil: Part 2 – amendment" will appear in the IAM Weekly next week.

An earlier version of this article first appeared in the seventh edition of The International Comparative Legal Guide to Patents published by Global Legal Group Ltd, London (www.iclg.co.uk).