Branding Brazil: Plotting your trademarks strategy
Brazil has always been big. After all, it’s one of the largest countries by geographic area and one of the most populous democracies in the world. But for trademark owners seeking new markets of opportunity, Brazil is bigger than ever. Once hampered by high inflation and economic instability, Brazil today represents one of the most stable, dynamic and rapidly growing economies in the world, creating new opportunities across the industry spectrum—from energy and agriculture to consumer products.
“Brazil is definitely experiencing its best economic moment, at least since the 1970s,” says Sao Paolo intellectual property lawyer Leticia Provedel, a recognized authority on trademark law in Brazil and Latin America. “In the past decade, Brazil has gone from 30% inflation per month to about 5% per year. This has had a dramatic effect on consumers, significantly increasing consumer confidence and purchasing power.”
In April of 2008, Brazil crossed another hurdle when Standard & Poor’s upgraded its debt rating of Brazil to “investment grade,” reflecting the country’s positive fiscal and debt management performance in recent years.
Response to these developments by the global marketplace has been a major expansion in foreign investment. In 2007, that investment totaled about $30 billion—a 30% increase over the previous year.
That rapid rise in economic activity has had an equally impressive effect on trademark filings. Provedel says filings with the Brazilian Patent and Trademark Office (PTO) jumped from 32,000 during all of 2006 to more than 61,000 in just the first half of 2007.
Clearly, Brazil is generating tremendous market opportunities for brands. But Provedel says understanding Brazil’s unique trademark landscape is crucial for any company seeking to launch a new brand or expand an existing brand in Brazil.
FIRST TO FILE
Unlike the U.S., where common law rights prevail, Brazil has a “first to file” system of trademark protection. This means the first to file for trademark registration has legal protection—not the one who can demonstrate first use of the mark. However, Provedel notes that there is special protection for established trademarks that are well known in Brazil.
“Trademarks do not have to be previously filed as long as the owner can demonstrate it is a well known mark in its category and, therefore, the infringer could not fail to have knowledge of it,” Provedel says. “In these cases, the brand owner must first file the mark and then demonstrate that it is a well known mark to cancel the previously filed mark. If you cannot demonstrate the mark is well known, it is very hard to overcome the first to file system.”
For this reason, Provedel says trademark owners should be diligent in applying for trademark registration as early as possible to beat potential infringers.
“Filing early is critical, especially for new brands and those that are not well known in Brazil,” she says. “Filing first allows you to block any subsequent application that may infringe on your mark. Also, it helps ensure that you don’t infringe on another party’s rights. In both cases, filing early can save a lot of time and money, compared with the cost of enforcement.”
NEW ELECTRONIC FILING
Fortunately, filing for trademark registration in Brazil is a lot easier than it used to be, thanks to a new electronic filing system launched in 2006. Provedel says the new system makes filing faster and easier, reduces paperwork and helps ensure greater accuracy.
“With the electronic filing system, IP owners and lawyers can access the PTO from anywhere, anytime,” she says, noting that already 53% of new filings are going through the system. She adds that the system is working so well, it is being used as a model for other South American countries looking to go electronic, such as Argentina.
Brazil’s new electronic filing system has dramatically reduced the backlog for the PTO, resulting in much faster decision turnaround. Provedel says trademark filers in 2008 can expect a decision within 18 months of filing. “This is a miracle when you consider that it used to take four years,” she says.
Provedel notes, however, that the quality of those PTO decisions is still improving. “Because they are issued quickly, decisions may lack quality sometimes,” she says. “Trademark owners should carefully review decisions. If they see problems, owners can file an appeal or petition for reconsideration.”
CLEAR IT FIRST
Because the number of registered marks is large and growing rapidly, Provedel stresses the importance of clearing trademarks prior to filing in Brazil.
“Some owners are tempted to just file a mark and see what happens,” she says, noting that this approach can have negative and costly consequences. “You could receive a warning letter from someone else asserting their rights. You could be viewed as an infringer instead of a good faith applicant. In that case, you can end up spending much more money defending yourself than it would have cost to clear the mark prior to filing.”
Provedel says performing an identical screening search can be a good first step when clearing brands internationally, as part of a comprehensive trademark research strategy.
“Screening is a good initial step to get a sense of mark’s viability across multiple countries,” she says, noting a screening search can also be helpful during a naming process. “Once an owner has a clear intent to use a trademark in a particular country, they should always perform a full availability search for that country.”
THE RIGHT TOOLS
Like an increasing number of IP professionals around the world, Provedel says she relies on online tools as crucial to her work. However, she notes that not all online resources are created equal.
“The PTO search tool in Brazil is very weak. It’s not very flexible or user-friendly,” she says, noting that the tool does not allow users to combine classes or multiple trademark words in a single search, or to refine search results. “For this reason, the largest IP law firms in Brazil often develop their own databases.”
For those without the resources to develop their own databases, or for firms outside Brazil, Provedel says commercially available tools like Thomson CompuMark’s SAEGIS™ online screening are an attractive alternative. SAEGIS recently added a Brazil database to its complement of global screening databases.
“Having a robust, flexible and user-friendly online search engine for screening marks in Brazil can save IP lawyers and trademark owners a lot of time and effort,” she says.
BEWARE OF COUNTERFEITING
Despite improvements in the trademark registration process, owners should be mindful of risks to their brand in Brazil. Provedel says one of the major threats facing trademark owners is counterfeiting. The Brazilian economy has proven irresistible to producers of counterfeit products from both bordering countries and distant ones like China.
“Brazil has nearly 7,500 kilometers of coastline with more than 30 major ports, borders with 10 other countries—including Paraguay, a known counterfeiting hot spot—and the Amazon River,” she says. “This makes it very hard to control the influx of counterfeit goods.” Provedel says government studies estimate that 30 billion real ($18.2 billion USD) in taxes are lost each year due to counterfeits.
These realities have led to strong responses by the Brazilian IP Legal System, including the Brazilian Industrial Property Law enacted in 1997. Border and Customs directives have also been issued, allowing Customs authorities to seize, at entry points, all counterfeit goods or goods carrying infringing trademarks. Brazilian Customs can contribute effectively to stopping counterfeiting, but trademark owners must do their part to facilitate this, Provedel says.
“OWNERS MUST DO THEIR HOMEWORK AND PROACTIVELY INFORM BORDER, CUSTOM AND SEAPORT AUTHORITIES OF THEIR IP RIGHTS,” SHE SAYS. “THIS MEANS RECORDING DOSSIERS WITH CUSTOMS, BORDER PATROLS AND SEAPORTS TO GIVE THE AUTHORITIES KNOWLEDGE AS TO THE TRADEMARKS AND TRADE DRESS RIGHTS HELD.”
Of course, this assumes brand owners have properly secured those IP rights. “When it comes to enforcement of counterfeiting, if you don’t have trademark registration in Brazil, it’s so much harder,” Provedel says. “You will either have to demonstrate bad faith or that yours is a well-known mark, which can be difficult and costly. None of this is necessary if your mark is registered.”
As an example of how seriously the Brazilian government takes the issue of counterfeiting, Provedel points to a recent agreement between the Federation Internationale de Football Association (FIFA), the world sanctioning body for football (soccer), and the Brazilian National Institute of Industrial Property (INPI). INPI has pledged to cooperate with FIFA in the fight against unauthorized use of FIFA’s intellectual property in advance of the 2014 FIFA World Cup to be held in Brazil.
PROTECTING YOUR BRANDS
What else can trademark owners do to protect their brands in Brazil? Provedel recommends using Trademark Watching services, Web Monitoring services and Domain Name Searching services to identify potential infringements quickly.
“The good news is that in Brazil we have found that warning letters work in nearly 40% of infringement cases,” she says. “Many of theses infringers are small companies that do not want to go to court and will just accept the terms of a cease and desist letter without any further action.”
Provedel emphasizes that trademark owners should take a proactive approach to protecting their brands in Brazil, as in other dynamic markets.
“The more aggressive trademark owners are in securing their rights, the better protection their mark will have,” she says. “Owners should view thorough trademark research and monitoring as wise investments in their brand’s equity.”
Leticia Provedel is an intellectual property attorney specializing in international trademark law. A frequent speaker and published author, Provedel serves as Chair of the INTA Legal Education Committee and is a member of the Anti-Counterfeit Committee of the Marques Association and of the Intellectual Property and the Competition Committee of the International Chamber of Commerce. Her practice is based in Sao Paolo, Brazil.