Brazil is a country with an established civil law tradition. Under its statutory provisions, standard essential patents (SEPs) must be treated as any other patent granted by the Brazilian Patent and Trademark Office (BRPTO). There is no special treatment for SEPs, nor any limitations to the exclusionary rights granted to their holder. The Brazilian IP Law (Law 9.279 of 1996) does not require prior negotiation of licences or notice before the filing of a lawsuit seeking the enforcement of a patent. The FRAND commitment may be raised as a defence in patent enforcement lawsuits and will be addressed by the courts, being treated as a contractual obligation. In the case of foreign contracts, they will be interpreted according to the law of the country in which the obligations were constituted, and foreign law is treated as a matter of fact by Brazilian courts.
The Constitution of the Federal Republic of Brazil of 1988 establishes as fundamental (ie, cannot be changed or amended) the rights of inventors of industrial creations (article 5(XXIX)). The Brazilian IP Law provides that a patent constitutes the right of preventing unauthorised third parties from using, offering for sale, selling or importing any patented product or process (article 42). Indeed, the right to exclude is the essence of the protection conferred by patents in Brazil. The Brazilian IP Law also provides that courts must grant preliminary injunctions to stop patent infringement (article 209, section 1), which is the remedy chosen by law to provide effective patent protection, since there are no punitive or enhanced damages available at the end of the lawsuit.
The Constitution provides general protection for free competition in article 170(IV). The Brazilian Antitrust Law (Law 12.529 of 2011) establishes as antitrust violation any conduct that prevents the exploitation of industrial property rights or amounts to an abuse of industrial property rights (article 36, section 3 (XIV and XIX)).
There is no provision under any Brazilian law establishing that the enforcement of an SEP constitutes an antitrust violation or any type of abuse of a dominant position. In fact, there is also no presumption of a dominant position for holders of SEPs.
The Brazilian antitrust authority (CADE) stated its position on the enforcement of SEPs in Brazil in the TCT v Ericsson case. TCT filed a representation before CADE complaining that Ericsson was committing antitrust violations, as well as sham litigation, by enforcing SEPs in Brazil. CADE rejected TCT’s claims and found that an SEP enforcement case is a private matter to be resolved in a private dispute, not warranting the interference of the government as it does not harm competition:
It is therefore noticeable that the facts presented before this authority are linked to a private relationship of the parties, which means that, although the Defendant’s acts may have impacted the economic activities of the Plaintiff and, possibly, the financials of the company, this is a result of reasonable grounds and arguments, and could not be interpreted as an infringement to the economic order, as it could not lead to anticompetitive effects on the market.[1]
Another recent representation filed before CADE is the Lenovo v Ericsson case, in which Lenovo and Motorola accuse Ericsson of seeking a preliminary injunction in an infringement action to abusively force Lenovo into making excessive and premature payments for the use of Ericsson’s essential patents. While Ericsson has defended itself by refuting these claims and accusing Lenovo of employing a holdout strategy to operate in the market without paying royalties, CADE has yet to issue a decision on this matter. Nonetheless, it is expected that CADE will uphold its previous understanding that such disputes are private matters between the parties and do not constitute an infringement of economic order.
Decisions and precedents arrived at in foreign jurisdictions have limited persuasive effect in Brazil. Judicial decisions rendered by Brazilian trial and appellate courts in patent enforcement lawsuits are not binding and lawsuits are decided on a case-by-case basis. The great majority of decisions rendered by state courts handling the enforcement of SEPs consider that an essential patent does not detract from its holder the right to obtain the injunctive relief provided by the IP Law (article 209, section 1).
There are several examples of preliminary injunctions awarded to SEP holders in Brazil. The first-ever infringement lawsuit filed in Brazil regarding SEPs was the TCT v Ericsson case, where trial and appellate courts consistently granted injunctive relief to the patent holder enjoining the implementer from importing, manufacturing, offering and selling the accused handset devices in Brazil. The same outcome was reached in the Vringo v ZTE case, where the sales of the implementer’s accused infrastructure devices were banned.
In recent years, the number of SEP enforcement cases filed in Brazil has grown exponentially. Brazilian courts have consistently granted injunctive relief to SEP holders that managed to show strong evidence of infringement and that the implementer was causing irreparable harm (eg, as a result of hold-out strategies). See, for example, JVC v TCL, Dolby v TCL, Ericsson v Apple, Ericsson v Lenovo, Nokia v Oppo, Nokia v Amazon, Nokia v HP, Mitsubishi v TCL, NEC v TCL, Ericsson v Blu Products, DivX v Samsung, DivX v Netflix and DivX v Amazon.
A notable case is DivX v Netflix, which reached an unprecedented stage for tech patent disputes in Brazil at the end of 2023, when a final decision on the merits was rendered and Netflix was found to have violated DivX’s patent. The Fifth Business Court of the Rio de Janeiro State Court confirmed the preliminary injunction and granted a permanent injunction to – effective immediately – enjoin Netflix from violating DivX’s patent.
Netflix was ordered to compensate DivX for the material damages equivalent to the unpaid licensing fees, plus a US$4 million fine for contempt of court for failing to comply with the preliminary injunction.
This outcome is critical as it marks the first time that a permanent injunction has been awarded in a tech patent case in Brazil. Implementers usually settle with the patent holder when the preliminary injunction is stabilised or enforced.
DivX is also currently asserting the same patent against Amazon (action filed in 2022) and a court-appointed expert has already concluded a court-ratified report attesting the infringement. Based on this expert report, which found clear evidence of DivX’s patent violation, the Fifth Business Court of the Rio de Janeiro State Court granted a preliminary injunction to enjoin Amazon from infringing DivX’s patent. This injunction was upheld at the appellate level, given the expert report identified the presence of DivX’s patent elements in the H.265/HEVC standard used by Amazon.
In another significant case, in November 2023, the Third Business Court of the Rio de Janeiro State Court granted Ericsson a preliminary injunction against Lenovo and Motorola in the Ericsson v Lenovo case over two SEPs related to security procedures in 5G networks. The implementers were enjoined from implementing Ericsson’s patented technology on their cellular devices compatible with the 5G standard under a daily fine per act of non-compliance. The injunction was upheld twice at appellate level and remains fully in force.
Similarly, in the case Nokia v Oppo, Nokia filed a SEP infringement lawsuit against Oppo and a preliminary injunction was granted the following day to enjoin Oppo from commercialising smartphones equipped with its speech codec patent – which is essential to the AMR-WB standard – under penalty of a daily fine. The injunction was confirmed twice at the appellate level, and Oppo left the Brazilian market. In January 2024, the parties reached a global licensing agreement.
A recent highlight from Brazil is the utilisation of a simplified expert examination to confirm the essentiality of the plaintiff’s patent to the standard. In the case Dolby v TCL, asserting a patent related to a data-hiding technology in the High Efficiency Video Coding (HEVC) standard, the court ordered the simplified expert examination to confirm the essentiality of Dolby’s patent to the HEVC standard. This was the first time that a procedure of this type was carried out in a SEP/tech case, and the expert confirmed the essentiality of Dolby’s patent. This outcome strengthened the preliminary injunction and enabled the patent holder to request stronger enforcement measures. The preliminary injunction decision was praised by the appellate court.
The above cases highlight Brazil’s growing attractiveness for patent holders and the Rio de Janeiro Appellate Court’s consistency in adjudicating tech patent cases, providing effective protection for patent holders.
In disputes filed by implementers before federal courts seeking to limit the rights granted by SEPs, the decisions confirmed that the law does not discriminate essential patents. According to Federal Judge Márcia Maria Nunes de Barros, ‘There is no legal provision that the essentiality of a patent has been recognized or declared, the Brazilian PTO must make such a note in the respective register.’[2]
Brazil is a jurisdiction that gives great importance to innovation and IP rights where, since 2012, FRAND commitments are considered as not being an impediment to the grant and enforcement of injunctions and preliminary injunctions in the great majority of the lawsuits seeking the enforcement of SEPs.
As mentioned above, Brazil has no statutory provision setting forth different legal requirements for the enforcement of FRAND-encumbered patents and a FRAND commitment does not prevent the granting and enforcement of injunctions. Implementers usually try unsuccessfully to misconstrue the nature of the FRAND commitment, arguing that the SEP owner foregoes the right to exclude when it declares its patent before the standards-setting organisation (SSO).
Recently, in the case JVC v TCL, Appellate Judge Ricardo Alberto Pereira of the 15th Chamber of Private Law of the Rio de Janeiro State Court made it clear that the status of a patent as essential does not imply a waiver of the right to exclusive use or permit the technology’s unrestricted use by any company without compensating the patent holder. He further emphasised that companies are expected to negotiate licences and calculate royalties according to the FRAND principle, wherein the patent holder agrees to license their technology under fair, reasonable and non-discriminatory terms, while licensees are responsible for bearing the cost of the licence.
A FRAND defence takes place in the context of breach of a foreign contract. The implementer, as a third-party beneficiary, might bring a claim of breach of the commitment between the SEP owner and the SSO. In this case, the implementer has the burden to prove that the SEP owner was not prepared to grant a licence (ie, did not make a FRAND offer). Brazilian courts do not apply foreign facts automatically and foreign law (statutory and case law) is treated as a matter of fact. Brazilian courts treat foreign decisions as arguments for persuasion, but they do not broaden the legal requirements for enforcement or the right to exclude established in the Brazilian IP Law. According to the Brazilian antitrust agency and judiciary, enforcement of FRAND-encumbered patents is a private matter.
Injunction is the specific remedy provided by Brazilian law in the face of patent infringement (article 42 of the IP Law) and SEP cases are no different. The FRAND commitment does not prevent the SEP owner from seeking and obtaining preliminary and permanent injunctions. It falls to the implementer to prove that the SEP owner breached its FRAND commitment, but even then such breach would not result in a limitation of the SEP owner’s right to exclude.
The Brazilian IP Law (article 209, section 1) further establishes that:
The judge may, during the course of the proceedings itself and in order to avoid damage that is irreparable or difficult to repair, provisionally order the suspension of the violation, or of the act that gives rise to it, prior to summons for the defendant, and in case he considers it necessary, order the posting of a cash bond or a fidejussory guarantee.
The Brazilian Superior Court of Justice, which is the highest court in Brazil for matters concerning federal law, has explicitly decided that, due to political circumstances in Brazil, an injunction is the only adequate remedy against patent infringement of any kind:
It is notorious that Brazil did not adopt the punitive system of civil reparations. [… Brazil] succeeded in establishing the prevalence of preliminary injunction, aimed at achieving the result equivalent to compliance of the protected right. This is because it is understood that preliminary injunction is the most effective way to protect […] legal interest, since subsequent reparation is not capable of restoring the parties to the real status quo ante. [...] At the same time, it established the judge’s duty to avoid irreparable damages or damages that would be difficult to repair, pursuant to article 209 of the aforementioned law.[3]
In the case Ericsson v Apple (filed in 2022), Ericsson sought a preliminary injunction to enjoin Apple from infringing its 5G SEPs in Brazil. The Rio de Janeiro Court of Appeals partially granted Ericsson’s injunction request, ordering Apple to either pay directly to Ericsson the recurring amount that was being paid under the previous global patent licensing arrangement (GPLA) or to refrain from using Ericsson's 5G patents in Brazil. The injunction order was appealed to the Superior Court of Justice and, in December 2023, the 4th Panel, by unanimous decision, partially confirmed the injunction, only modifying the alternative amount (to keep selling) to US$3 per device sold in Brazil. Shortly thereafter, the parties reached a licensing agreement.
This means that a preliminary injunction must be entered every time a patent (including SEPs) is found to be infringed.
The IP Law establishes that any patent holder has ‘the right to recover damages as compensation for losses caused by acts that violate industrial property rights’ and that such compensation must ‘be determined using the most favourable criterion to the aggrieved party’.
However, as there are no punitive or enhanced damages according to Brazilian statutes, the compensation for damages is limited to past acts that could not be prevented with a preliminary injunction, for example, acts of infringement practised before an injunction has been entered or acts practised before the patent was granted – the IP Law provides for compensation of damages caused by infringement while the patent application was being prosecuted by the patent office up to five years prior to the filing of the lawsuit.
Brazilian courts have never been asked to set a global FRAND rate or to declare if an offer is FRAND. SEP infringement lawsuits filed in Brazil seek the grant of the remedy established by the local law, namely, preliminary and permanent injunctions, as well as compensation for past damages.
Brazil is the world’s sixth most populated country and fourth largest smartphone market behind China, India and the United States. As South America’s largest country, Brazil’s population accounts for half of the continent. Combined with a 46 per cent smartphone penetration rate, Brazil is a key market for both app developers and original equipment manufacturers, and numbers are likely to continue to soar in the years ahead.[4]
When it comes to internet use, Brazil is a globally significant leader. According to recent statistics, Brazil had 178,100,000 internet users in June 2022, which represents a penetration of 82.8 per cent in a population of 215,016,658. In other words, it is in the national interest to ensure legal security regarding the IP sphere as it will further enhance economic interests.
The Brazilian IP Law is consistent about the duties of holders and implementers of intellectual property rights, as well as the availability of injunctive relief as the main remedy against patent infringement. There is no requirement of prior notice to the implementer before the filing of a patent infringement lawsuit. The bifurcated system allows for infringement lawsuits focused on straightforward evidence of patent infringement, in which FRAND contentions may be raised as a matter of defence consistent with alleged breach of a foreign contract.
There are concrete ways for SEP holders to fight hold-out through the remedies available in Brazil. Non-practising entities (NPEs) are not discriminated against, and the importance of innovation fostered by IP is well recognised. In addition, there are no ‘Huawei framework’ requirements or presumptions of dominant positions in relation to SEPs. Infringement of one independent claim is enough for courts to grant injunctive relief, as proven by recent cases.
In most SEP cases infringement is established over the relevant part of the standard. There is no discovery, depositions, cross examinations, hot-tubbing, company personnel involvement or jury trials regarding patent litigation. The decisions are rendered by judges. There are no juries, only bench trials. In invalidity lawsuits, the BRPTO is a mandatory co-defendant and there is no automatic stay of infringement lawsuits, which would be treated as an exception.
With a large middle-class population, a pro-market government and a sizeable domestic market,[5] Brazil already owns one of the largest markets worldwide and is becoming increasingly relevant in global patent disputes.
The Brazilian judiciary relevance as venue for patent infringement disputes is swiftly increasing, including the ones dealing with SEP/FRAND contentions. Brazil has continental dimensions and is one of the largest digital markets in the world – as evidenced by the number of searches on Google.com. Brazilian law provides for effective remedies to protect the rights of patent owners, encouraging good faith negotiations leading to settlements.
In the case Philips v TCL, an infringement lawsuit filed before the Rio de Janeiro State Court, a preliminary injunction was granted against TCL. Described by the court as ‘frequently sued before Brazilian courts for patent infringement’, TCL was enjoined from equipping its devices with the technology protected by Philips’ PI 031552-8 patent, related to the HEVC standard. TCL filed an interlocutory appeal to revoke the preliminary injunction, but this request was denied by the Rio de Janeiro Court of Appeals. TCL also tried to invalidate the enforced AAC audio coding SEPs (a common practice among infringers in Brazil), but the BRPTO confirmed the validity of both patents. The parties reached a licensing agreement soon after.
Another noteworthy case is Nokia v Amazon, wherein Nokia seeks to stop the infringement of its skip mode patent, which decoding claims are essential to the H.264 video coding standard, by Amazon devices and services. The Rio de Janeiro State Court issued a decision enjoining Amazon from implementing the patented skip mode technology in all its H.264-compliant devices and in the videos streamed by the Prime Video platform, under a daily penalty. The judge also ordered Amazon to inform, within 15 business days, what measures it had adopted to comply with the injunction and present its accounting documents. Amazon filed an interlocutory appeal seeking to revoke the preliminary injunction; however, the 21st Private Law Chamber of the Rio de Janeiro State Court upheld the injunction.
While preliminary injunctions are highly relevant due to their potential to compel implementers to engage in meaningful negotiations, the fast-paced discovery phase performed by an unbiased court-appointed expert also leads to a relevant ‘settlement opportunity’. The expert presents their report on infringement, which is not binding but is very persuasive for a final decision on the merits at trial level.
In 2023 alone, three expert examinations have been conducted in key IT patent disputes. In WSOU v ZTE, VoiceAge v HMD et al and DivX v Netflix, three different unbiased experts found infringement of patents related, respectively, to the 4G, EVS and HEVC standards. Recently, WSOU and ZTE settled their worldwide dispute and engaged on a worldwide patent licencing agreement soon after a court expert found for infringement, showing the importance of this milestone in Brazilian procedures for global disputes.
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