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Patent Damages in Brazil

In accordance with the Brazilian Industrial Property Law (Brazilian IPL), a patent shall confer to its owner the right to prevent unauthorized third parties from making, using, offering for sale, selling or importing for such purposes a product that is the subject matter of a patent, or a process or a product obtained directly by a patented process.

The patentee shall be guaranteed the right to compensation for the unlawful exploitation/use of the subject matter covered by the patent and for the exploitation which occurred between the date of publication of the application and the date of grant of the patent. Nevertheless, the patentee is only entitled to file an infringement court action against a third party after the patent is granted.

Patent infringement is a crime in Brazil and punishable by imprisonment or fine. The Brazilian IPL also establishes a statute of limitation of five years, from the date the offense or damage occurred, for the offended party to pursue indemnification related to infringement of industrial property rights.

According to Law, the loss of profits shall be determined by the criteria more favorable to the injured party, among the following: I) the benefits that the injured party would have gained if the infringement had not occurred; or II) the benefits that have been gained by the infringer; or III) the remuneration that the infringer would have paid to the patentee for the grant of a license which would have enabled lawful use of the asset. The extrajudicial notification can serve as proof of knowledge of the patentee that the infringing activities already occurred prior to the date of grant of the patent.

Civil penalties include damages for loss of income and opportunity and injunction. In practice, there is a possibility of the patentee to obtain an ex parte preliminary injunction against an alleged infringer. This possibility is provided for by Sections 273 and 461 of the Brazilian Code of Civil Procedure, combined with Section 209, §1, of the Brazilian IPL, which establishes:

“During the course of the action, in order to avoid irreparable damage or damage that is difficult to repair, the judge may determine, by means of an injunction, that the infringement or act that causes it shall cease, prior to the defendant being served with summons, and order the posting of a bond in cash or in securities, if he feels it is necessary”.

Preliminary injunction is not an isolated measure in Brazil. The patentee must file a court action in order to be allowed to request a preliminary injunction. This means that if the patentee presents reasonable evidence of the infringement, the Judge may grant a preliminary injunction to prevent the alleged infringer from selling the product, and it is very common to establish daily fines if the Judges order is not complied with.

Some Judges prefer to wait for the defendants answer to the action before analyzing the request for a preliminary injunction, but the best way to try to prevent the owner from obtaining a preliminary injunction is by suspending the patents effect, which is only possible through a nullity action in court, according to Section 56, §2, of the Brazilian IP Law, which reads:

“The judge may order, as a preventive or interlocutory measure, the suspension of the effects of the patent, provided that the appropriate procedural requirements are followed”.

If the Judge suspends the patents effects, then the patentee will have no grounds to request a preliminary injunction against the supposed infringer.

In litigating a patent infringement in Brazil, certain considerations are of strategic importance. The first of these is determining the appropriate court. In case of patent infringement, the matter will be judged by the State Court. As in most countries it is advisable to litigate in the larger cities, and away from the domicile of the defendant, if possible.

Carmen Sánchez-Puelles