- 1) Introduction
The Brazilian Patents and Trademarks Office (National Institute of Industrial Property “INPI”) has been executing, in recent years, important changes in relation to the registrer of contracts subject to its competence, such as contracts for licensing and sublicensing of industrial property rights (trademarks, patents, etc.) and technology supply.
On January 1st, 2023, the INPI became part of the structure of the Ministry of Development, Industry, Trade and Services. At the end of last year, at a INPI’s board meeting held on December 28th, with minutes published on the INPI portal on December 30th, proposals for relevant changes to the register of contracts subject to the competence of the INPI were approved, especially those involving technology transfer.
The changes aim to simplify bureaucratic procedures and update the historical positions of the INPI to recognize the private autonomy of contractors, continuing the INPI's tendency to reduce its interference in agreements between individuals.
In the table below we summarize the change proposals approved at the meeting and compared them with the previous positions of the INPI. After that, we will comment more closely some aspects of these change proposals:
|Current regime||Proposed changes|
|Register of know-how licensing agreement||Impossibility of registering a know-how licensing agreement. Recognition of the possibility of registering only technology supply contracts (transfer of ownership).||Permission of the registration of know-how licensing agreement, being recognized all its effects, including those arising from the INPI’s register.|
|Possibility of payment of royalties for the licensing of industrial property registers’ request, but not yet registered before the INPI||Impossibility of paying royalties abroad by simple registration request of industrial property rights. Registration of contracts’ certificates issued with the information that the contracts are executed on free of charge basis.||The INPI will not prevent the payments of royalties provided for in contracts that have as their object applications for registration of industrial property rights.|
|Procedures for the registration of technology contracts|| |
Digital signatures must be certified by ICP-Brazil and, if carried out by foreign parties, documents must undergo e-notarization and e-apostilation.
Mandatory signature (initials) on all pages of the contract.
All contracts with place of signature in Brazil must also be signed by two witnesses carrying Brazilian documents.
Mandatory presentation of corporate documents (statute, articles of association or constitutive act of the legal entity) and the last change of the consolidated corporate object and legal representation of the assignee, franchised or licensed legal entity, domiciled or resident in Brazil.
Acceptance of digital signatures without ICP-Brazil certificate, according to criteria still under evaluation. In the case of foreign digital signatures, e-apostilation and e-notarization will no longer be required.
Signature (initials) on all pages of the contract will be optional. Alternatively, the attorney will represent and warrant that he/she is liable for the authenticity of the information and documents.
End of requirement.
- 2) Acceptance of the registration of the know-how licensing agreement
Law 9.279/96 (Industrial Property Law – LPI) addresses technology transfer contracts in a very generic way, only mentioning, in article 211, that the INPI will register contracts involving technology transfer, franchise agreements, etc., to produce effects in relation to third parties. LPI does not conceptualize or define technology transfer agreements.
Law 10.168/00, of a tax nature, brings a definition of technology transfer contracts in its article 2, § 1. For the purposes of that law, technology transfer contracts are those relating to the exploitation of patents or the use of trademarks and those for the provision of technology and technical assistance.
Considering its institutional purpose provided for in Article 2 of Law 5.648/70, as amended by Article 240 of the LPI, the INPI began to enact norms dealing with the concept and definition of technology transfer contracts. And it did so, more recently, through Normative Instruction 70/17 (IN 70) and Resolution 199/17 (Resolution 199).
In Article 2, III "a" of IN 70, it was established that the contract for the supply of know-how would be framed as a type of technology transfer contract. Article 8, I of Resolution 199 defined that the technology supply contract is a type of technology transfer contract.
Also in Resolution 199, in its article 10, IV, it is stated that the parts of the technology supply contract are the assignor company, which owns the technology not protected under a right of industrial property, and the assignee company, which is the recipient of the technology.
According to this position of the INPI, the know-how would not be an industrial property right and could only be subject to a definitive transfer. Thus, it would not be appropriate to simply license or any form of temporary authorization of use.
The General Coordination of Technology Contracts of the INPI (CGTEC) makes this position clear, through the Technical Note/SEI 8/2020/INPI/CGTEC/PR, emphasizing that, because the know-how is not typified as an industrial property right, it would not be provided for in Brazilian law. Consequently, a know-how licensing agreement would be null and void in accordance with Article 166, II and IV of the Civil Code.
The Specialized Public Prosecutor's Office of the INPI (PFE), still in 2021, through the Opinion 00031/2021/CGPI/PFE-INPI/PGF/AGU, expressed its opinion in the opposite direction to CGTEC's understanding, because the mere fact that there is no express legal provision for the treatment of know-how as an industrial property right or express authorization for the contracting of know-how licensing would not mean the illegality and nullity of the respective contract.
For such illegality or nullity, it would be necessary that, in Brazilian law, existed a legal prohibition on the conclusion of this type of business, which does not exist. Thus, Article 425 of the Civil Code would apply, which allows the execution of atypical contracts, as well as Article 104 of the Civil Code, which establishes the possibility of concluding legal transactions whose object is not prohibited by law.
The PFE also recognized the impacts of the Economic Freedom Law (Law 13,874/19) on the Civil Code, especially with the inclusion of the single paragraph in Article 421, which establishes the principle of minimum intervention and the exceptionality of contractual review in private contractual relations, a device that must also be observed by the Public Administration and, consequently, by the INPI.
This was not the first time that the INPI has interpreted its role, including the independent way of amending the applicable legislation. The IN 70 itself and Resolution 199 changed the understanding that the INPI would act as a delegate agent of the Brazilian Internal Revenue Service (Receita Federal) and the Central Bank of Brazil. Currently, the INPI no longer examines applications for registration of technology transfer contract based on tax and remittance of capital abroad legislation.
This understanding of PFE and Opinion 00031/2021/CGPI/PFE-INPI/PGF/AGU were expressly cited at the meeting of December 28th and served as a legal basis for the proposal that the registration of the know-how licensing agreement could be unequivocally accepted by the INPI. We understand this proposal as very positive, for meeting the wishes of private sectors and the primacy of the will of the parties in legal transactions.
- 3) Recognition of the possibility of paying royalties for applications for registration of industrial property rights
The PFE, through Opinion 00035/2020/CGPI/PFE-INPI/PGF/AGU, analyzed the possibility of paying royalties for applications for registration of industrial property rights, a possibility historically not accepted by the INPI.
By analyzing the legal nature of trademark registration applications, PFE considered that these are intangible assets with property value, protected by Articles 130 and 195, III, of LPI. It also considered that they are possible rights, subject to the resolutive condition of not obtaining the register.
Thus, from the moment the trademark registration application is made, it becomes part of the assets of its owner and thus generate its effects. One of such effects is the possibility of concluding a license agreement.
IN 70 and Resolution 199 do not prohibit the registration of a license agreement with trademark registrater application. Resolution 199, in Article 13, § 3, and Article 14, IV, however, establishes some conditions in relation to the conclusion of its effects:
- the period for the beginning of the registration of applications will be the date of publication of the approval of the dispatch of the certificate of registration of the trademarkmark in the Journal of Industrial Property (RPI); and
- in relation to trademark registration applications, the certificate of registration of the contract shall be issued with the information that the license has been concluded on free of charge basis. Thus, Resolution 199, in practice, prohibited the payment of royalties for licensing or register applications.
In understanding that there is no legal basis for the prohibition imposed by the INPI, the PEF expressed itself in the following sense:
- the date to be considered by the certificate of registration as the initial date of the contract is that declared in the contract; and
- Articles 13, § 3, and 14, IV, of Resolution 199 shall be revised or repealed.
At the meeting of December 28, the understanding of PFE regarding trademark registration applications was cited and it was proposed that this understanding would be expanded to contracts whose objects are patent applications, industrial designs and other industrial property assets, as it should be, and a consultation with PEF should be forwarded in a short term on this possibility of extension of the understanding.
In RPI No 2716, of January 24, 2023, the order of the Presidency of January 23, 2023, which includes Opinion 00035/2020/CGPI/PFE-INPI/PGF/AGU, and the Approval Order 00137/2020/PROCGAB/PFE-INPI/PGF/AGU, were published to produce its effects and decisions related to the meeting on December 28.
That is, when performing the analysis of license agreements with trademark registers applications, the INPI should consider as the effective start date the date that was declared in the contract.
With regard to Articles 13, § 3, and 14, IV, of Resolution 199, it is still unclear whether the order of the presidency would have led to its repeal or revision. Opinion 00035/2020/CGPI/PFE-INPI/PGF/AGU does not clarify the issue (differently from what it did in relation to the initial of the agreement term to be considered), and the INPI needs to revoke or expressly revise Articles 13, § 3 and 14, IV of Resolution 199.
One way to understand this scope will be to monitor the Decisions of the INPI on the subject, which may reveal the adoption of this provision regardless of the revocation or express revision.
Even if it is necessary to take further measures to effect the change in practice, we understand that it is a positive change for the market, precisely because it respects the autonomy of private agents and their economic decisions, without harming the public interest and disrespecting the national legal system.
- 4) Procedural changes
The proposals for procedural changes aim to facilitate the registration of contracts in the INPI.
The possibility of using other digital certificates besides the certificates issued by the ICP-Brazil, according to criteria still under evaluation, and the removal of the mandatory e-apostilation or e-notarization of digital signatures by foreign parties are a natural result of the increased use of digital signatures caused by the pandemic.
The adoption of these measures by the INPI was already more than necessary. At the meeting of December 28, it was emphasized that immediate procedures for the implementation of this decision should be initiated by the technical area of the INPI.
The proposal to end the mandatory signatures (initials) on all pages of contracts aims to be compatible with procedures already adopted by the trademark and patent boards of the INPI.
At the meeting, it was established that the mandatory obligation of of singnatures (initials) in all pages of the contracts should be abolished immediately and that it will be up to the technical area of the INPI to immediately implement the functionality in the relevant electronic forms. Until implementation takes place, the attorney of the applicant for registration may present a statement warranting the authenticity of the information and documents, under the penalties of the law.
The insertion of signatures of two witnesses in private contracts is not a requirement of the Brazilian legal system, but only a possibility, and article 784, III of the Code of Civil Procedure is not applicable to this situation, since this rule concerns only extrajudicial executive titles. At the meeting, it was established that this measure should be implemented immediately.
The last proposal for a procedural change is about the end of the requirement to present statute, articles of association or constitutive act of the legal entity, as well as the last amendment on consolidated corporate object and legal representation of the legal entity of the transferee, franchised or licensed, domiciled or resident in Brazil. At the meeting of 28 December, it was assumed that the technical area of the INPI should, in the short term, adjust the systems of the INPI to this end.
- 5) Final considerations
We understand as very positive the changes related to the register of contracts in the INPI described in this article.
In addition to simplifying various procedures, these measures demonstrate more respect for private sector and contractual freedom and meet the historical longings of companies operating in the most diverse segments of the economy, both of foreign technology and national companies that receive technological knowledge often essential for their business.
These are important aspects in the evolutionary scale of the INPI's performance, which considers the current context of society, the global relevance of technology, the reduction of borders between countries and the creation of new forms of relationship, including legal relationships, between intellectual property developers and investors.
Although the expression "immediate" used at the meeting on December 28 could imply that the deliberations taken there would have direct effect and immediate application, we understand that, in fact, the use of the term, in that context, referred to the additional measures that the INPI should take immediately to give effect to the deliberations made during the meeting. An example was the publication of the order of the presidency, which dealt with the term of the license agreement for the application for registration of trademark.
We will continue to follow this matter and publish new developments through this channel.