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March 24, 2017
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In a decision published on March 10, 2017, the 2nd Panel of the Brazilian Superior Court of Justice unanimously upheld decisions issued by the Appellate Courts that the Brazilian Patent and Trademark Office (BPTO) is legitimate to intervene in technology transfer agreements. The ruling was issued in reply to a special appeal filed by Unilever Brasil Ltda. and Unilever Bestfoods Brasil Ltda. against an unfavorable decision issued in a writ of mandamus filed against the BPTO.
The applicants argued that, with the amendment of Law no. 5,648/70, the Brazilian agency no longer has the legitimacy to intervene in technology transfer agreements. Therefore, the BPTO would have exceeded the boundaries of its institutional roles by issuing a Certificate of Recordal without providing the payment of royalties, thus modifying a contractual clause that established a remuneration for the technology transfer.
The modification made by BPTO stemmed from the fact that there was a previous payment-bearing trademark license agreement signed by Unilever Brasil Ltda. and Unilever Bestfoods Brasil Ltda., which, according to the Federal agency, would prevent simultaneous payments for the technology transfer.
Although he did not analyze the merits regarding the possibility of simultaneous royalty payments, in his vote the Rapporteur, Minister Francisco Falcão, clarified that, despite the amendments to Law no. 5,648/70, the BPTO’s main purpose is to give effectivity to industrial property rules in Brazil, without losing sight of their social, economic, legal and technical functions (article 240, caput, of Law no. 9,279/96, which amends article 2 of Law no. 5,648/70).
In other words, according to the Rapporteur, the Brazilian PTO is obliged to adopt measures capable of establishing better negotiation conditions and use of patents, as well as having the power to intervene in contractual conditions established for technology transfer, in order to comply with its infra-constitutional guidelines.
Still according to the Rapporteur, the Brazilian State must ensure that its agencies have the necessary instruments to carry out their activities. Therefore, in order to enable the BPTO to perform its regulatory and monitoring functions in a full and effective manner, the Government must guarantee effective mechanisms of action.
It is important to reiterate that the decision did not discuss whether the imposition of a royalty-free technology transfer agreement between companies of the Unilever Group would or would not meet the economic interests of Brazil, or if the prohibition of simultaneous payments – according to the BPTO interpretation – would have legal grounds or not.
Thus, the Superior Court of Justice, in an unprecedented decision, understood that the BPTO is competent to intervene and modify clauses and conditions related to technology transfer agreements made in Brazil.
Despite this precedent, which confirms in a broad manner the legitimacy of the BPTO to interfere with and even modify certain clauses and contractual conditions, it is important to bear in mind that, as a body of the Public Administration, the agency is subject not only to the principle of legality, in accordance with article 37 of the Brazilian Federal Constitution, but also to the obligation to motivate/ justify all its administrative acts, pursuant to article 50 of Law 9,784/99.
In this sense, if the BPTO intervenes or modifies certain clauses and contractual conditions, its action must be motivated and justified from a legal perspective. Therefore, despite this ruling, we understand that any interventions of the Brazilian PTO must be carefully examined vis-a-vis the motivation and the legality of the act.