Brazil is the largest country in Latin America, with a population of 169.6 million and a very peculiar geographical situation, since it has approximately 10,492 miles of border with 10 (ten) other South American countries. In view of its continental dimensions and its huge consumer market, Brazil has always being a target for counterfeited products.
In the year 2000, the loss to Brazilian industry due to counterfeiting was estimated at US$ 956 million. Per year, there is a loss of approximately US$ 2.8 billions in taxes and the counterfeiting industry costs the Brazilian market 1.5 million jobs, since 70% of the pirated products are manufactured in Asia (most of them, crossing the Brazilian borders with its neighboring countries). In the year 2002, the estimate is that the counterfeiting industry in Brazil will make a profit of US$ 20 billions, which corresponds to 1/3 of all exports from the country for the same year.
In view of this dramatic scenario, the Brazilian Government has developed a legislative effort to boost combat against piracy in the country, and to comply with the new provisions of TRIPS. In 1996, the Brazilian Congress enacted the new Industrial Property Law (Law 9.279/96), which creates new and faster judicial mechanisms to enforce industrial property owner’s rights against infringers and counterfeiters. The new Law has established more severe penalties for trademark and patent infringement and much more efficient procedural measures.
According to the new Law, the industrial property owner may seek to stop the counterfeiting or the infringement of its rights by means of both a civil and a criminal action (in Brazil, both counterfeiting and infringement of an industrial property right is a criminal offense). Moreover, based on the provisions of the new law, the IP owner may quite easily obtain ex parte TRO’s and preliminary injunctions to cease the violation. Such preliminary injunctions may be obtained in several different circumstances, since Judges have the power to grant general orders with very satisfactory and immediate effects, these including orders for the search and seizure of products, for the freezing of assets and also simpler orders to cease infringement under penalty of payment of heavy daily fines.
In 1998, the Brazilian Congress enacted two other important bills: the Software Law (Law 9.609/98) and the Copyright Act (Law 9.610/98). Both laws establish more severe penalties against infringers and counterfeiters, providing the authorities and the IP owners with strong new tools to combat piracy, such as the authorization of the destruction of counterfeited goods, molds, machines, etc. and the interception of codified signs and the circumvention of copy-protection tools).
However, the increase in the counterfeiting problem has obliged the Brazilian Government to seek more than legislative solutions to create an effective anti-piracy combat program. Therefore, in 2001, the Interministerial Committee for Combat of Piracy was created. This Committee is composed by several Governmental members and its remit is to enforce intellectual property rights. However, due to a misconception at the time of creation of the program, the Committee does not deal with trademark and patent infringement issues.
In the same year, the Brazilian Government enacted a Normative Act (number 52 of May 08, 2001), authorizing the customs authorities to retain goods that infringe intellectual property rights, without any court order. After this retention, the customs authority should notify the IP rights owner. The retention of the presumed infringed goods would take no longer than 90 days and, in this period, the violated rights owner should take the legal measures that it deems fit. This mechanism is indeed extremely important, and it will be quite helpful in the combat of counterfeiting in Brazil, since 80% of the illegal products commercialized in this country come from foreign countries (specially China and Paraguay). Also, it is worth noting that this Normative Act is clearly TRIPs compliant regarding border enforcement rules.
In 2002, the Brazilian Government enacted a Normative Act (number 555 of April 30, 2002), regulating the destruction of counterfeited cigarettes and other tobacco products; toys; goods seized due to intellectual property infringement; disks; magnetic tapes; and cartridges containing works infringing the Copyright Act. The main reason for the enactment of this Normative Act is the pressure of these industries due to the losses suffered by piracy in Brazil (the tobacco industry loses US$1.2 billion per year and the software industry loses US$ 900 million per year). For instance, the market in counterfeited toys in Brazil corresponds to 12% of the entire toy market in the country, which means losses for this industry to the amount of US$ 31 millions per year. In fact, due to piracy, the toy industry in Brazil refrains from generating 80,000 jobs per year, which is a huge number, especially in a country where there are 11 million unemployed.
Furthermore, in 2002, the Brazilian Congress enacted a new Law creating the Police Precinct for the Repression of Crimes Against the Phonographic Industry (including audio and video). The creation of this new Precinct is a consequence of the huge losses of the phonographic industry in Brazil due to counterfeiting (this industry loses US$ 850 million per year, and 95% of the audio tapes commercialized in Brazil are counterfeited, which made the industry cancel the production of audio cassettes).
In spite of all the efforts of the Brazilian Government to combat piracy, there are still several measures that can be taken in order to decrease the astonishing numbers mentioned above. The first one, and maybe the most important of all, is the necessity to educate the authorities as to the importance of the enforcement of intellectual property legislation, and of the protection of intellectual property rights.
Another paramount measure to avoid the distribution of counterfeited products would be the creation of a centralized Brazilian Customs system (broaden the existing internal system called Siscomex, which is aimed solely at controlling fiscal issues), since, as commented before, the large majority of counterfeit goods enter the internal market via Brazil’s borders. Another recommendation would be to review the commercial relationship with Paraguay which, between 1997 and 2001 has decreased US$ 1 billion. On the other hand, the amount of counterfeited products that cross the borders from Paraguay to Brazil corresponds to US$ 1.2 billion per year, which is four times more than the legal market between these countries.
Finally, the creation of more specialized police precincts and the education of consumers (in order to avoid buying counterfeited products) would also be recommended measures to be taken in a joint effort of the several affected industries.
In summary, in spite of the fact that Brazil is TRIPs compliant in relation to anti-piracy legislation (as a matter of fact, the Brazilian legislation is one of the most modern of the World), there are still several steps that need to be taken in order to definitely solve the piracy problem. These steps should focus on the enforcement of existing legislation, and the Brazilian Government has recently shown the will to accomplish this step, in order to better fit Brazil in the global economy.
