Brazil: Siqueira Castro - Limits on the use of a Trademark: Parallel Import of Products Bearing Registered Trademark in Brazil
LIMITS ON THE USE OF A TRADEMARK: PARALLEL IMPORT OF PRODUCTS BEARING REGISTERED TRADEMARK IN BRAZIL
Parallel import is an act of importing and reselling in a country a non-counterfeit product without the previous consent of the intellectual property owner.
Several reasons are linked to parallel import so as to justify legal action against unauthorized importers and resellers, namely: different versions of products are launched for sale in different markets; different prices are set by companies in different countries without taking into account the commercial aspects and local costs to distribution and sales of the product in a specific market; parallel imported products compete unfairly with the regular/authorized products as many costs of commercialization of the products are not supported by unauthorized importer as example advertisement and SAC (customer services); among others.
On the other hand, parallel importers advocate that parallel import benefits consumers, empowering them to obtain competitively priced items and enhancing the free flow of information.
In spite of the arguments of parallel importers, damages supported by titleholder of the trademark are widely known as parallel importers do not contribute with the development of local markets and only intent to avoid distribution costs and, in fact, compete with the regular products placed in the internal market, disregarding rules of distribution and marketing established by the titleholder.
Concerning Brazilian Industrial Property Law (Law N° 9279 of 14th May 1996), the owner of a trademark may not prevent the free circulation of products placed on the internal market by himself or by another with his consent (article 132, I). In view of this provision, we may affirm that Brazil has adopted the principle of national exhaustion. It means that a trademark owner may prevent the importation and resale of a product in the market where he or she is the titleholder of the trademark and when the importation and resale of the products occurs without his or her consent.
Notwithstanding the requirements of item I of article 132, some decisions held by the Brazilian Court diverge from the necessary steps the titleholder should take to assure the right to prevent third party to import and resale a product bearing a registered trademark in Brazil.
Two sets of facts have been legitimated to support legal actions against parallel importers: (i) where there is recordal of a trademark license agreement before the Brazilian Industrial Property Office or (ii) when an exclusive distribution agreement has been signed between the trademark titleholder and a local distributor to place the products on the local market bearing registered trademark and respecting previous rules settled by the titleholder.
Legal enforcement of Parallel Import, however, is a sensitive issue in Brazil since the administrative seizure of parallel products has been a controversial theme to Customs Authorities. As the Federal Custom Decree n. º 6759 only provides that Customs Authorities may retain and seize counterfeit products as well as altered or imitated trademark and false indication of origin, some Customs Authorities, when they are dealing with parallel import, simply do not proceed with the notification of the titleholder as they understand that parallel import is not covered by mentioned Custom Decree.
Despite this, and until a consensus is not established by the local Customs, and in order to obtain rapidly the seizure of the parallel imported products, the allegation should be founded with the allegation of infringement of public health regulations and consumer issues beside intellectual property matters.
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