Latin America - Brazil joins the Madrid Protocol: A happily-ever-after tale?

On May 22 the Brazilian Senate Plenary approved, via the Legislative Decree 49/19, the texts relating to the Madrid Protocol. After President Bolsonaro’s signature on the adhesion treaty and its receipt by the World Intellectual Property Organization (WIPO) early July, the enactment of the Madrid Protocol will be effective in Brazil within 90 days; thus, the Madrid system will enter into force in Brazil on October 2, 2019. The Protocol has now 105 members, covering 121 countries, which are responsible for more than 80% of the world trade.

The adhesion to the Madrid Protocol by Brazil adds a major world economy to the (WIPO)-administered international trademark system. It also marks the end of a nearly 20-year-long controversial process in Brazil.

The Protocol will only apply to international trademark registrations filed after coming into force in Brazil (i.e. only to international registrations filed after October 1^st of this year). Furthermore, the Brazilian Trademark Office, Instituto de Propiedade Industrial (INPI) has a transitional 18-month period (via the Legislative Decree 49/19) to examine any international registration designating Brazil, as opposed to the regular 12 months under the Madrid system. After the expiration of this 18-month period, any international trademark application will be regarded as accepted unless express rejection by the INPI.

Brazil’s joining of the Protocol will not only introduce international trademark registration procedures under the Madrid system, but also brings the perfect opportunity to amend certain aspects of the Brazilian Industrial Property Law. To that end, draft Law 10.920/18  was presented at the end of 2018 to the House of Representatives, updating the Law 9.279/96 of Intellectual Property to the Protocol standards and also amending some substantive trademark law provisions. Bearing in mind that the draft Law has not yet been enacted, we can still expect some major modifications to Brazilian trademark law to come soon.

The most relevant changes in the context of the Madrid Protocol implementation are:

1. The possibility of filing in the “multi-class” system, in which a single trademark application can be presented for products and/or services;
2. The possibility of division or merger of the basic trademark application, the registration resulting therefrom, or the basic registration;
3. The possibility of co-ownership of trademarks;
4. The publication of the application in Spanish or English , for opposition purposes (Until now only the use of the Portuguese language was allowed);
5. The automatic approval of the application for registration if its regular examination is not completed within 18 months of the date of the filing. This would apply regardless the trademark application is filed directly before the INPI or via the Madrid system.

Therefore, the advantages of the Protocol for EU SMEs with an interest in the Brazilian market, could be summarized as follows: (i) the possibility to replicate the protection of your brand in several countries, by filing only one application at one trademark office, along with a reduction in costs (ii) the certainty of having a maximum period of 18 months for the examination of trademark registrability; (iii) a further significant reduction in your costs, because of the multi-class system; (iv) the possibility of trademark co-ownership in Brazil; (v) de-bureaucratization of the process for protecting your trademark in Brazil, and (vi) the easing of the trademark registration strategy in general.

As indicated above, draft Law 10.920/18 will also bring new amendments to the Brazilian trademark law that go beyond the Protocol implementation and that are particularly noteworthy for foreign trademark applicants:

1. Reversal of article 135. This provision states that the assignment of trademark applications or registrations must always include all the same or similar trademark registrations or applications of the same owner, related to identical or similar product or service, under penalty of cancellation of the registrations or filing of the applications not assigned. This would not be any longer the case in Brazil.
2. Secondly, although the Madrid Protocol does not impose any obligation to demonstrate the use of a trademark to ensure its validity, the proposed law includes a new obligation to demonstrate use of the trademark in Brazil. A declaration of use must be submitted to the INPI on both the sixth (6) year and last year of validity of the trademark, or it will be cancelled ex-officio by the INPI. In the case of non-use of the trademark, the owner must provide a justification for it in order to retain ownership.
3. It extends the current rule to prevent trademark piracy to applications made by foreign companies via the Protocol. In other words, under the current law, Brazilian companies can only apply for trademark registration of products related to their activity. Thus, a clothing manufacturer cannot register a trademark of a car, for example, if this is not its current trade activity. This rule would also apply to foreign applicants using the Protocol.
4. Lastly, foreign applicants of trademarks in Brazil via the Protocol or not, would have to appoint a legal representative in Brazil as to decrease bureaucracy in potential trademark opposition procedures.

Once again, it is important to bear in mind these changes have not yet been approved and the proposed law is still in process. However, as the same draft includes the mandatory amendments to implement the Protocol in the national legislation, it is likely that most of them go forward. Hence, EU SMEs are advised to prepare ahead and keep an eye on the upcoming developments of Brazilian trademark law.

The implementation of the Madrid Protocol comes with some major challenges for the INPI as well. Historically, the average examination period for an application for registration in Brazil has been 3 to 4 years. However, since the Protocol states that the maximum time for processing an application should be 18 months, the INPI has to reduce its time limits. The INPI must also adjust its computer system in order to become compatible with the multi-class system, the official languages (English and Spanish besides Portuguese), the co-ownership regime and the division of trademark applications and registrations.

In any case, it is hoped that none of the changes that still need to be implemented will have a negative impact on the good operation of the INPI’s electronic system. According to the INPI’s latest statistics (dated June 2019), 112,136 new applications were filed between January and June 2019, representing an increase of 11.4% trademark applications compared to the same period in 2018. These figures are expected to rise after the Madrid Protocol comes into effect. Therefore, it is key that the INPI gets ready in the best possible way.

Brazil’s accession to the Madrid system might resembles a “happily ever after” ending. The Madrid Protocol was signed in 1989 to modify and update the Madrid Agreement Concerning the International Registration of Marks of 1891, an international trademark registration system denounced shortly after it was signed by several countries, including Brazil in 1934.

It wasn’t until 2001 that the Brazilian government started contemplating whether to participate in the Madrid Protocol, and it has taken decades of political and legislative debate. Those against were primarily professionals working in the area of intellectual property, lawyers, industrial property agents and some entrepreneurs, mainly represented by the Brazilian Intellectual Property Association (ABPI) who made their concerns public in the Resolution No 23 in 2002. The main core of its arguments laid on the alleged unconstitutionality of the Protocol, including the violation of the principle of equality and the unequal treatment between Brazilians and foreigners who owned trademarks abroad and want to register them in Brazil. According to them, the Protocol would be incompatible with the Brazilian legal framework. Some have said that many of these points were raised because of the feeling of a threat to a labour market that had been exclusive for some for many years.

Brazil’s intended accession was defended by its national registration office, the Instituto Nacional da Propiedade Industrial (INPI), whose main arguments were based on the simplification of the international trademark application, together with the lowering of its cost, all in all, reducing the complexity and time for obtaining a trademark registration in several countries. Shortly after INPI’s endorsement of the Protocol, the Federation of Industries of the State of São Paulo (FIESP) and the Federation of Industries of Rio de Janeiro (FIRJAN) hosted seminars to explain the benefits of the Protocol, with the participation and support of several national and international organizations. Members of both federations stayed the Protocol citing as benefits the simplification of the trademark registration process through a single international application, the reduced cost for registration and the wide territorial coverage, concluding that it would increase the number of applications for registration made in Brazil if it adhered to the Protocol.

The adhesion to the Protocol by the United States in 2002 and the European Union in 2004, both amongst Brazil’s largest trading partners, ended once and for all the mistrust of those who questioned the country’s delay in its accession. Nevertheless, it wasn’t until April 9, 2013, that the Brazilian Chamber of Foreign Trade of the Federal Government (CAMEX), approved Brazil’s accession to the Madrid Protocol. The proposal for accession to the Protocol under consideration in the Chamber (PDC 860/17) was approved by the Committee on Economic Development, Industry, Trade and Services in November 2018, and passed by the Senate in the Legislative Decree 49/19 this past May, 2019.

Happily ever after or not, adherence to the Protocol may stimulate foreign investments in Brazil, since the protection of registrations under the Protocol will be equally guaranteed and the costs for protection will decrease, as well as we may see an increase of Brazilian product exports and brand internationalization. Considering the importance of the intellectual property system for economic and social development, and Brazil’s medium and long-term objectives, such as joining the Organization for Economic Cooperation and Development, adhesion to the Protocol brings the country one step closer to the international standards for protection of trademarks and benefits brand owners across the globe.

Last but not least, if you are interested in expanding your trademark portfolio to Brazil or to any Latin American countries and have any queries on the information of this blog entry, do not hesitate to contact the Latin America IPR SME Helpdesk. Our Helpline service provides you with professional IP advice – customized, straightforward, and free of charge- within 3 working days. Also, feel free to browse through our library for any other practical IP materials.

Author:

Dr. Begoña Glez. Otero

IP Researcher and Consultant