In the past decade, There has been an increase in patent cases in BrazilAs the local economy grows and stabilizes. As more companies view Brazil as a strategic country for the protection of intellectual property, the patent system is being scrutinized more and more complex patent cases are being filed.

On 12 June 2024, the Supreme Court of Justice (Supreme Court de JusticaThe STJ, Brazil’s highest court with jurisdiction over unconstitutional matters, issued a decision allowing the invalidity defense in an industrial design infringement case. Although the case concerns industrial design, the court’s opinion contains statements that are not applicable to patent cases.

This decision is in line with ongoing discussions between the Federal and State Courts in Rio de Janeiro, which have formed a working group coordinated by Federal Judge Marcia Barros to discuss potential cooperation on intellectual property matters. The working group organized a seminar on August 2, 2024, with the participation of academics and institution representatives. National Property Industry Institute (INPI)/Brazilian Patent and Trademark Office (BRPTO)) and leading lawyers met to discuss proposals for collaboration, including how to improve the interface between infringement and invalidity disputes.

Background and Legal Framework

As a rule, there is a bifurcated system for patent cases in Brazil; While infringement cases fall under the jurisdiction of state courts, federal courts have the authority to hear patent invalidity challenges.

This division arises from the personal jurisdiction rules set out in the Brazilian Constitution, which establishes that federal courts have jurisdiction over disputes involving federal institutions, including INPI, which is a mandatory party in invalidity proceedings under Article 57 of the Intellectual Property Code (Law 9.279). /96). This legal provision also reinforces that invalidity challenges must be brought before a federal judge.

However, it has long been a matter of debate whether the law also permits the assertion of invalidity of a patent (or industrial design) as a statement of defense in an infringement action before a state court.

At the center of this debate is paragraph 1 of Article 56 of the Intellectual Property Regulation; In this article, “the invalidity of the patent may always be claimed as a statement of defence.” The statement is included. Article 118 provides that Articles 56 and 57 apply to industrial design disputes. The apparent contradiction between Articles 56, 57 and 118 has led to different interpretations in the case law.

Supreme Court of Justice Decision

STJ decided in the banc Motion filed as a statement of defense against a decision made by the STJ Fourth Panel (Appeal #1.332.417/RS) rejecting the possibility of a claim of invalidity of an industrial design in an infringement action.

According to the Brazilian Code of Civil Procedure (Codego de Processo Civil – CPC), when a decision made by one Bench on an appeal to the STJ differs from another decision made by a different Bench, the losing party may file a motion to have the case reheard by a larger group of Judges.

The hearing on the motion lasted two days. Reporting Judge Nancy Andrighi wrote the basic opinion confirming that the legal provision of paragraph 1 of Article 56 of the Brazilian Intellectual Property Code, together with Article 118, authorizes the defendant to claim invalidity as a statement of defense in an industrial design infringement case. Therefore, there would be no infringement of the jurisdiction of the federal courts, as “the participation of the BRPTO (in an infringement proceeding) would not constitute a legal requirement.”

The opinion also states that the decision made in the invalidity case will affect third parties (i.e. erga omnes effects), a recognition of the invalidity of an industrial design in the context of an infringement lawsuit will only apply to the parties involved in that dispute as a basis for dismissing the infringement claim.

Impact of STJ decision

Defendants in infringement cases will now be able to assert invalidity as a statement of defense without the need for a separate federal lawsuit. This makes it easier and potentially less costly for defendants to challenge the validity of patents they are accused of infringing.

However, asserting a claim of invalidity in an infringement action will give the patent owner the right to file a federal lawsuit seeking a judgment based on a finding of validity. Because federal courts erga omnes If it has jurisdiction, the state court in this case should no longer be allowed to address the invalidity claim; Otherwise, there is a risk of contradictory decisions.

Similarly, if the alleged infringer asserts invalidity in an infringement action in state court and also files an invalidity claim in federal court, the state court must also decline to hear the invalidity claim.

In this sense, the jurisprudence of the Court of Appeals of the State of Sao Paulo confirms that if there is an invalidity case pending before a federal court, the state court should not conduct an independent validity analysis but await the outcome of that dispute (e.g., Appeal # 1008081-96.2017.8.26.0624.)

Federal and State Courts Willing to Cooperate in Validity Arguments

The STJ’s jurisprudence leading to this decision shows that the courts are concerned with the opposite consequences of the bifurcated system. In other words, those who claim infringement are obliged to file a new lawsuit to challenge the validity of the patents.

Such concerns are also shared by lower courts. In 2023, as part of broader efforts by the courts in Rio de Janeiro to improve judicial cooperation, a working group was created to seek solutions to intellectual property issues. This working group is coordinated by Federal Judge Marcia Nunes de Barros; other members are Federal Judge Laura Bastos Carvalho, Rio de Janeiro State Judge Paulo Assed, and clerk Raineri Ramalho.

The working group supported an academic seminar in early August. The first panel discussed cooperation between courts, universities and BRPTO. BRPTO President, Mr. Júlio Cesar Moreira, was part of this panel and emphasized the importance of integration between the patent office and the courts “to avoid the problems we face when we receive notification of (new invalidity) cases.” He also advocated for regulation of the patent attorney profession.

In the second panel, innovation and cooperation opportunities in the field of intellectual property were discussed. This panel discussed business and criminal issues related to intellectual property disputes, with the participation of the federal chief prosecutor of the BRPTO, Mr. Antonio Cavaliere. One of the panelists, Professor Christiano Fragoso (UERJ – State University of Rio de Janeiro), criticized the lack of a legal provision in the criminal code regarding trademark infringement. Given the importance of intellectual property to the economy, Professor Fragoso argued that the law should change to create sanctions proportional to the severity of crimes committed against intellectual property rights.

The bifurcated system was discussed in the third panel moderated by Judge Assed. Ms. Elizabeth Kasznar, an intellectual property litigant, spoke about the alleged risks in granting injunctions because they are provisional and granted under duress, without analysis of the merits. Professor Pedro Barbosa (PUC-Rio – Pontifical Catholic University) focused on issues related to the publicity of cases and the values ​​​​attributed to the subject, and argued that it is not uncommon for the plaintiff to seal the case in order to maximize the litigation. injunction amendments. Therefore, he argued, “the smartest way to do this is to separate the relevant documents (which need to be preserved) and keep the rest (of the files) fully public.”

Finally, in the fourth panel moderated by Judge Carvalho, the production of evidence in collaboration was discussed. One of the issues discussed was the creation of a unified list of experts that state and federal judges would use when deciding who to appoint for impartial technical reviews. Professor Allan Rocha de Souza (UFRJ – Federal University of Rio de Janeiro) emphasized in this context that “there is a much more widespread disconnect between the expertise of court-appointed experts and the objective of the review than is thought”.

Another issue discussed during this panel concerned the possibilities for cooperation between state and federal courts in the production of evidence in infringement and invalidity cases. Patent litigant Ms. Tatiana Alves observed that it may not be possible to order a jointly appointed expert review by the court when the infringement and invalidity cases are not at the same stage. Moreover, Ms. Alves emphasized that although there is a point of contact between infringement and invalidity, the scope of production of the evidence is not the same.

Looking Forward

The STJ decision raises several important questions that need to be clarified by the court in the future. Although this decision has now opened the doors of state courts to claims of industrial design (and patent) invalidity, there is a possibility that the court will restrict the scope of this interpretation in the future. Ultimately, the STJ did not undertake a more in-depth examination of the risks of conflicting decisions and the legal uncertainties this understanding could create.

An important point to emphasize is that in Appeal #1.332.417/RS, the only option left to the defendant in the infringement case is to claim invalidity. Since the industrial design had expired, the defendant could no longer file an invalidation suit. According to Article 56, an invalidation action can only be filed in federal courts during the term of the patent (or industrial design). This case therefore creates a specific pattern of facts that could lead to discrimination in other ongoing cases.

Regardless, lower courts’ initiatives to increase cooperation in intellectual property disputes, especially between federal and state courts, mean changing paradigms for intellectual property litigation in Brazil. Understanding these changes will be crucial for those who view Brazil as a relevant jurisdiction for patent activity.

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Author: alexeynovikov
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