Doing Business in Brazil

4.8. Piracy, border measures and antiparicy judicial proceedings in Brazil

10/05/15

4.8.1. Introduction

The main proposition of this article is to present to members of SWISSCAM how the Brazilian legal system regulates the principal coercion measures to offenses against intellectual property assets, gender of which piracy is a specie, particularly boarder measures and antipiracy judicial proceedings – criminal and civil – due in case the holders’ rights are violated.

Initially, for better understanding on the main purpose of the article, we understand as fully reasonable some comments about piracy, its genesis and its current international situation.

4.8.2. Piracy

As stated Mr. Luiz Paulo Barreto, Chairman of CNCP (National Council to Combat Piracy and Crimes against Intellectual Property) and Executive Secretary of the Department of Justice, “Piracy is the 21st Century crime”. According to Interpol, the falsification of goods generates around US$ 520 billion per year around the world.

The term “piracy”, according to its modern conception, arose in the XV Century, in the context of maritime trade. The term was better applied to stateless individuals, who used to attack ships and misappropriate merchandise shipped by the States or by assemblage of companies assured by the former. The concept of piracy was so embedded into the assumption of a law related to the commercial domain that the European ships often used to consider as lawful its predatory feature over the local merchants.

Within the XVI and XVII centuries, the venetian and english laws granted printing monopoly to specific publishers and established the control from the Rule of Law (for instance, censorship). During the XIX century, the term “piracy” was repeatedly applied to publishers who used to copy books for its personal profit purpose, without the authors consent nor the payment of royalties. Most debates at that time focused on the non-authorized reproduction of works in foreign countries, in which local legislation had no jurisdiction. There is a correlation between the ancient use of the term and its new meaning, since both refers to the violation of a property or an exclusivity right.

This new use of the term “piracy”, related to violation of intellectual property’s rights, was widespread during the twentieth century. Although it was applied (and is until nowadays) to many other goods and products, such as books, medicines, shoes, clothing, etc., it is also commonly used in reference to illegal copy of computer programs as well.

Nowadays, the battle against “piracy” – in the new use of the term – takes place in the knowledge domain transmuted into property. The law and the rhetoric of unlawful use, distribution and production of property concentrate on policies gradually more protectionist ruling incorporeal property, such as trademarks, patents and copyrights.

To copy, reproduce or sell third parties products, disrespecting their rights and the will of their primary trademark creators and owners, leaving no doubt that these products are not original. This, basically, constitutes the modern definition of piracy, an illegal practice that still coexists with the ancient practice – specially in Africa’s Eastern Coast – and that has been quite disseminated and object of important debates and discussions lately, although the subject bothers the society for centuries, at least since the reproduction rights on literary works were time limited. Some of the greatest inventions of mankind were not only subject to dispute of authorship but copied by many people as well, all of them trying to obtain legal, intellectual and/or financial recognition on the works.

The “piracy” directly affects inventors, artists, musicians, writers and other intellectual property owners rights, whom were given the exclusive right of exploitation or to license theses rights in order to perceive, for a limited period of time, others to do so right to perceive, for a limited period of time, payment of its  to receive the right to receive, for a given period of time, a financial compensation for their creation.

However, the social problems engendered by “piracy” around the world are deeper than just the financial loss of the holders of exploitation rights: it creates a black market that generates informal jobs, without any protection or guarantee to the workers, the “pirate products” fail to collect taxes, in detriment to the whole society. Besides, it is said that this activity finances other illicit practices and increasingly sophisticated, such as drug trafficking and the exploitation of slave labor and / or child labor.

The Governments are increasingly demanded for modern, timely and effective measures. “Piracy” is a concept for illegal performance, which distinguishes by the creativity and lies safely due to the legal insecurity which some institutes inspire and, mainly, the weakness of some legal systems.

4.8.3. Brazilian Legal System  

Just like in Switzerland, Italy and Germany, Brazil adopts the Civil Law legal system, which essential source are statutes produced by the Legislative Branch. This system is opposed to the Common Law, system adopted by countries like England, Australia and United States, which essential sources are customs recognized by judicial precedents with binding force over Courts and society.

As a Civil Law country, Brazil has its intellectual property law found in written statutes, beginning with its fundamental law – the Republic Constitution – and going by codes, specific statutes and international treaties. The legal core of Brazilian intellectual property law is in:

• The 1988 Republic Constitution, which recognized the rights over intellectual property as fundamental rights in its article 5th, item XXIX;

• General Federal statutes, such as the Criminal Code, the Code of Criminal Procedure, the Civil Code, the Code of Civil Procedure and the Consumer Defense Code;

• Specific Federal statutes, such as the Brazilian Copyright Act, the Software Act and the Industrial Property Act (LPI); and

• International treaties, such as Paris Convention and the TRIPs, implemented in Brazil by Federal statutes.

Over the last decades Common Law and Civil Law systems seem to have been converging. The first increasing the use of statutes – the 1999 UK Rules of Civil Procedure, for example – and the second implementing ways so that judicial precedents became binding for future cases.

This convergence has been also happening in Brazil, with the adoption of “súmulas vinculantes” – rules extracted from Brazilian Supreme Court reaffirmed precedents, which become biding for future decisions in all Brazilian Courts. Up to now there is no “súmula vinculante” regarding intellectual property law. However, it is likely that the reaffirmed precedents in this matter give cause to its edition in a near future.

4.8.4. Measures for Protection of Intellectual Property 

Brazilian law provides a series of remedies against intellectual property violation both in civil and criminal jurisdictions, which can be classified as: (a) preventive measures, such as administrative border measures, to prevent importation of pirate goods, or search and seizure judicial suits in illegal manufactures, which prevent the fabrication or even the distribution of counterfeit products; (b) repressive measures for ceasing the use, fabrication, commercialization, distribution or importation of counterfeit products, destruction of counterfeit trademarks on the products and criminal punishment for the violators and (c) reparatory measures for damages’ reward. As a way of protection for defendants, Brazilian Law also provides that the assumed victim respond civilly and criminally for any excesses committed during the enforcement of judicial measures.

4.8.4.1. Administrative border measures

Although the border measures are not specifically judicial, its importance in the general context of piracy justifies the presence in this article.

In order to restrain the flow of non original goods before they reach the market, it is of increasingly importance the proceeding defined by TRIPs in its articles 51 to 58 (implemented by Brazilian Decree no. 1,355/94) and reproduced in the article 198 of LPI, according to whichthe possibility of apprehension – with or without interested party request – by the customs authorities, during checking in, upon arrival in ports, airports and borders in general, of products branded with false, altered or imitated marks or with false indication of origin.

In complement, the articles 605 to 608 and 689 of the Customs Regulation states the administrative procedure for retention, apprehension and destruction the counterfeit goods. By taking notice of the cargo suspect of counterfeiting, the Customs authority will notify the intellectual property owner to take samples of the cargo and to present a complaint with a technical report attesting that the goods are counterfeit, if the case. After the importer is notified and present its defense, the Customs authority may decide for the cargo’s destruction or liberation. Due to the absence of specific regulation about the procedure causes, some Brazilian Customs posts are demanding a judicial decision (civil or criminal) in order to authorize the destruction of the goods.

The delay in prosecution measures and the high costs (if compared to administrative procedures) are discouraging factors to owners to continue with the administrative border measures in defense of their intellectual property rights.

4.8.4.2. Criminal proceedings

Criminal proceedings related to violations of intellectual property assets and other legal measures to prevent counterfeit products to reach the market, such as search and apprehensions, are ruled by articles 196 to 206 of the LPI. In general, these measures are adopted when fast answer from the authority is necessary.

Search and seizure procedure was originally created to raise evidence of the offense and also to allow the patent holder right to obtain the report, from an expert, on the existence of patent infringement, since the expert examination on the seized goods is mandatory in this procedure. Usually, the initial phase of the procedure runs without the offender participation, which is often surprised by the diligence at the time of its completion.

According with the article 200 of LPI, the criminal prosecution and the preliminary measures of search and seizure in crimes against industrial property shall be ruled by the Criminal Procedure Code, which provides, in article 525, for an expert examination on the seized goods that constitute the corpus delicti for the complaint receipt and, in article 527, the need for two experts accompanying the execution of a search and seizure in order to attest the grounds for the seizure and to prepare the report attesting or not the authenticity of all the goods.

The search and seizure proceeding may intend one of two main results: (a) the seizure of all the counterfeit goods, causing their illegal distribution and commercialization immediate stoppage; or (b) seizure of a sufficient number of goods only to guide the judicial expert examination, in order to determine if there is falsification on the seized goods.

In the first case – if there is strong evidence of offender’s unlawful conduct and the facts are clearly described – the intellectual property owner may seek for a search and seizure preliminary warrant in the time of the criminal action file, on the grounds of LPI article 199. In the second case – if the intellectual property violation is doubtful and there is need of further investigation – the search and seizure warrant is granted as a preparatory measure for an eventual criminal action to be eventually filed.

In practice, in a matter of hours, judges may grant injunctions and search warrants and seizure, as long as the plaintiff demonstrates the risk of an adjunction and the good chances of success on merits. Formed the corpus delicti to emergency measures, follow-up measures, Crime Complaint of a private nature – that is, to be initiated by the holder of intellectual property rights – in search of the offender’s sentence to deprivation of freedom, in accordance with the provisions of Articles 189 to 195 of the IPL, ranging between one month and one year of detention.

As a matter of criminal policy, as a rule, the sentence of imprisonment not exceeding four years tend to be converted to a fine or an obligation to pay certain basic, which ends up representing a stimulus to the practice and repetition of the practice of piracy.

Few arrests are the relevant agents guilty of infringement of intellectual property. Usually, the criminal judge merely to halt the misuse of the intellectual and the civil sphere and leaves the composition of compensation die-disciplining offenders.

In terms of legislation, some proposals have been discussed to expedite prosecution. The Law No. 8.052/2011 currently awaiting consideration by the House of Representatives, proposes changes to the Code of Criminal Procedure to allow the expertise for sampling, dispensing with experts in the individual analysis of all the seized products, and to authorize the destruction of early goods seized, which solves the problem of storage of goods in cases where the prosecution can not be started because we do not have knowledge of the perpetrator of the crime of piracy.

4.8.4.2. Civil Proceedings

The judicial measures in civil sphere may have preventive, repressive or punitive nature, as long as the imposition of penalties to the violators are not involved (since they are reserved to the criminal sphere). Actions to restrain the use of a trademark, search and seizure proceeding and request for damages are examples of civil suits regarding intellectual property’s rights violations. The most common suit is to oblige the defendant to cease manufacture, use or any other undue exploration of counterfeit good, generally combined with request for damages.

The same proceeding may be applied to judicial proceedings aiming at the stoppage of non-authorized use of intellectual property with civil character, analogously to what happen to search and seizure proceedings with criminal character.

In general, the aggrieved parties, when seeking civil actions for stoppage of use of intellectual property, claim for the search and seizure of the fake property; they take as principle possible prior expert examinations or even proven facts that incontestably appoint infraction to the injured party’s intellectual property.

Notwithstanding such feasibility, the scope of such civil proceedings is to stop, immediately and definitely, the non-authorized use of intellectual property and, commonly, such injunction is achieved in an advanced manner in case of provisional remedies, by means of restraining orders or preliminary injunctions.

The provisional remedies are found established in Articles 796 and sequentes of the Code of Civil Procedure, and may be, at any time, claimed by way of preparation to the principal action for acquaintance.

The injunction to be obtained by provisional remedies derives from a judgement of probability and, therefore, special conditions have to be noted so as a preliminary injunction can be adopted and then granted by the Judge.

Once the need of provisional remedy on emergency basis is considered, elements susceptible to demonstrate such need are required so as the Judge, inaudita altera parte, can evaluate and so advance the effects of the judgement.

Hence, one must prove the existence of the elements fumus boni iurisand pericullum in mora in order to demonstrate the need of grant for preliminary injunction to achieve the effects of the judgement on merits.

The purpose of the preliminary injunction is to assure the result of the final decision, to be given at principal action.

LPI establishes, on its turn, in paragraphs of its article 209, the feasibility of grant for preliminary proceeding in order to avoid irreparable injury or injuries whose redress is hard to achieve, preliminarily establishing the removal of the infringement or act giving ground thereto prior to the service of process for the defendant upon, if necessary, cash bond or personal security.

Should the infraction remain obvious, the Judge may sentence the seizure of all goods, products, objects, packages, tags and other items bearing the brand that is fake or counterfeited (Article 209, Paragraph 2o of LPI).

On the other hand, the preliminary injunction, object of Article 461 of the Code of Civil Process, means satisfaction as to the right claimed, once such right pre-exists in relation to the final jurisdictional decision.

It is worth to mention that the foregoing means that the preliminary injunction is always satisfactory, and the examination as to the granting of the right assured is carried out without the need of evidence instruction.

The preliminary injunction, due to being satisfactory and capable of guaranteeing the new equilibrium of the right to be claimed for the injured party, is already required in the principal action, although one shall consider that the injunction is not a preparative result, but the right itself that someone is claiming for.

In Brazil, the preliminary proceedings are legislative creations in response to the delay as to the obtainment of legal definition on matters invocating the Judicial Power.

As once said, the claim for stoppage of undue use of intellectual property is accumulated in addition to damages by virtue of injuries caused by the infraction.

According to LPI, the injuries (future earnings) may be settled taking into consideration the most favorable manner for llowing criteria shall be observed:the injured party, for that the fo

(a) the benefits that the injured party would have received should the infraction had not occurred;

(b) the benefits that were received by the defendant, responsible for the copyright infringement; or

(c) the compensation the author of the quoted infringement would have paid the holder of the right infringed for the granting of a license allowing he/she to legally exploit the property.

All things considered, even in the case of the violator not submitting the financial documents whereby the volume of products manufactured and/or commercialized infringing the patent, it is possible to define the injuries by using other criteria predetermined by law.

The several judgements concerning the field are based upon the legislation already referred to, that is, upon the LPI, the Civil Code – mainly as regards the provisions on the liability.

4.8.5. Case Law 

The Brazilian Judicial Power has held essential role towards comprehension and development of the matter concerning crime against intellectual property, even in a system that adopts the Civil Law.

Because of the growing interest of the useful Brazilian Society in relation to the benefits which followed innovation, creativity and technology, culminating in protection by means of property of intellectual property, our Judges have developed their abilities and the judgements aggregating elevated technical, juridical quality are already present in the records of the Jurisprudence.

For purposes of instances, we deem as pertinent to bring up for discussion some judgements that discourse about the current set of problems involving piracy and its harmful effects to Brazilian consumers.

4.8.5.1. Civil Proceedings

INDUSTRIAL PROPERTY – Stoppage of use of brand – Compensation for pain and suffering and pecuniary damages – Sell of fake toys “MAX STEEL” with no authorization for use of brand and copyright – Judgement sentencing the defendant to stoppage of use of the said brand and copyright and compensation for damages, whose amount will be determined in execution of judgement – Allegation of absence of malice – acquisition through peddler at 25 de Março Street – Unfounded. 

Civil Appellate Review 425.535-4/5-00 – 4o Private Law Chamber of the Supreme Court of the State of São Paulo – High Court Judge Reporter Ênio Santarelli Zuliani – Sentenced on February 12th, 2006.

COPYRIGHTS. Sell of fake product. Undue use of brand pertaining to the plaintiff. Prohibition to act on the contrary, under threatening penalty. Future earnings to be settled according to subsection II, Article 210 of Law no. 9,279/96. Denial of remedy. 

Civil Appellative Review 2006.001.00391/06 – 2o Civil Court of the Supreme Court of the State of Rio de Janeiro – High Court Judge Reporter Leila Mariano – Sentenced on January 18th, 2006.

ORDINARY LAWSUIT. PIRACY OF SOFTWARE – DUE COMPENSATION – MARKET VALUE OF THE SOFTWARE – SETTLEMENT OF DAILY FINE – FEASIBILITY. 

The compensation due because of infringement of software creators’ copyright shall take place taking into account the relevance of damages effectively examined. The settlement of daily fine for the case of new copyright infringement is lawful. Remedy partially granted.

Civil Appellate Review 1.0251.008576-2/001 – 10o Civil Court of the Court of the State of Minas Gerais – High Court Judge Reporter Roberto Borges de Oliveira – Sentenced on August 21st, 2007.

4.8.5.2. Criminal Proceedings

CRIME AGAINST INDUSTRIAL PROPERTY – Maintenance of fake products at the market – criminal permanent and continuous offense that cannot be split by bringing suit of provisional remedy before the Civil Court – Bringing suit of criminal action after six months as of knowledge of infraction – Laches – Remedy not granted – Vote subdued.

The maintenance of fake products at the market as well as the permanence of using tags considered as similar to those recorded by the injured party constitute permanent crime and continuous crime, whose permanence and continuation cannot be split by bringing suit of provisional remedy before the Civil Court, but only with entering an action. Article 529 of the Code of Penal Procedure does not contain an exception to the provisions in Article 103 (then Article 105) of Penal Code, but it should be applied along with that. 

Remedy (Complaint) 407.669-2 – 4o Chamber of the Supreme Court of São Paulo – High Court Judge Reporter Barreto Fonseca – Sentenced on February 26th, 1986.

Crime against the incorporeal property – Copyright infringement – Copy, for purposes of commerce, videophonograms without the creator’s authorization – in principle behavior conforms to Paragraph 1o, Article 184 of Penal Code – Thus, hypothesis of public criminal action – Search and seizure of the tapes, action determined by the policy authority when proceeding to examination – Admissibility – Inapplicability of Articles 525 and sequentes of the Code of Penal Procedure – Application of Articles 186, final portion, of Penal Code and 240 of the Adjective Code.

Copy of phonograms for purposes of commerce without the creator’s authorization conforms, generally speaking, to the crime of copyright infringement, which takes place upon public criminal action, according to Article 186, in fine, of Penal Code, reason why the policy authority shall, when becoming aware of the notitia criminis, proceed to examination, invoking the search and seizure proceedings, pursuant to rule of Article 240 of Code of Penal Procedure, and not pursuant to Articles 525 and sequentes, which address to crimes against incorporeal property and take place upon complaint.

Appeal by Judge’s own motion 62.027-3/88 – 2o Criminal Chamber of the Supreme Court of São Paulo – High Court Judge Reporter Renato Talli – Sentenced on June 06th, 1988.

CRIME AGAINST THE INCORPOREAL PROPERTY – Copyright infringement – Criminal action – Criminal action of public criminal constitution – Barring – Admissibility – Manager of commercial establishment who has exposed for sale T-shirts unduly bearing trademark without holders of right’s authorization or license – Fact that does not conform to crime provided for in Article 184, Paragraph 2o of Penal Code – Infraction that injures the rules of Law no. 9,279/96, condemnable upon private criminal action entered by means of complaint.

Habeas Corpus 293.946-3/1 – 2o Criminal Chamber of the Supreme Court of the State of São Paulo – High Court Judge Reporter Cabuçu de Almeida – Sentenced on September 27th, 1999.

4.8.6. Conclusion

Notwithstanding the development of intellectual property systems in the Country, some points are required to be ameliorated yet. Perhaps one of the primary points concerns the need of more rigorous judgements in respect of application of the fine, search and seizure of goods and mainly as to the expert examination per sampling.

Nowadays, the greatest punishment applied to violators of intellectual property, excepting few cases, is payment of basic-needs grocery packages. For the great part of the cases, the violators perpetrate crimes while they aware of how ease and swift he/she can escape from the expected punishments. The work for reprehension of piracy has not been a factor capable to encourage the Company injured or the police, which has a scarce system for accounting and storage of the goods susceptible to seizure.

Recently the Brazilian National Forum against Piracy defended the creation of an expert examination per sampling. The major advantage of such methodology is the reduction noted for those problems caused by storage of goods seized during long periods.

Finally, it is obvious to testify that nowadays it is a profitable practice the crime of piracy in Brazil, considered all the problems already mentioned. Therefore, we support that the theme shall be dealt more rigorously.

The Commission of Constitution, Justice and Citizenship (CCJ) recently approved an amendment to the Bill 2,729/03, of Representative Leonardo Picciani (PMDB[Party of the Brazilian Democratic Movement]-RJ), which typifies the crime of piracy against intellectual composition, phonogram, videophonogram, software and applications.

The original proposal foreseen, besides the typification, the worsening of the penalties for crimes of piracy. The reporter, in his amendment, noticed that the worsening of the penalties “is irrelevant and is not proportional in relation to the penalties foreseen for the other crimes against property or offense against the human person”.

Furthermore, the Reporter excluded from the text the feasibility of the criminalization of persons who acquire fake work. According to him, not doing that would occasion to the construction under which the mere purchaser of original or copy of intellectual and audiovisual composition would be subject to criminal penalty. Pursuant to the text approved, the purchaser of fake product will only be criminally punished when it is evident the intention of direct or indirect profit.

Piracy, of any kind, ruins employment, decreases tax collection, strengths organized crime, distorts the image of the official products and nevertheless deceives the consumers. Some factors use to ease such practice, for instance unemployment and subsequent search for informal work, pilferage, corruption of agents, amelioration of gang of thieves and the Brazilian taxation system, which several times causes the manufacturing of goods to be excessively expensive.

The problem worsens due to the popularization of the Information Technology, which propagates and makes digital piracy easier. All legal, political and economic efforts which may be used in order to have such practice duly controlled probably will be not enough in front of the urgent need of a global policy concerned with the problem, as borderless as Internet itself.


Author: Alexandre Fragoso Machado
Revisor: Flávia Tremura Polli Rodrigues

Kasznar Leonardos Advogados

Rua Teófilo Otoni, 63- 5º andar – Centro
20090-080 Rio de Janeiro- RJ
Phone: +55 (21) 2113 1919
Fax: +55  (21) 2113 1920
E-mail: [email protected]

Av. 9 de Julho, 3.147 – 7º e 11º andar
Jardim Paulista
01407-000 São Paulo – SP
Phone: +55 (11) 2122 6600
Fax: +55 (11) 2122 6633
E-mail: [email protected]

Internet: www.kasznarleonardos.com