Brazil: PTO’s role changes in judicial appeals concerning its decisions

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November 23, 2018

In Brazil, the courts, rather than the Brazilian Patent and Trademark Office (BPTO), have the final say about the registration or cancellation of a patent, design or trade mark.

In a different way from many common law countries, Brazilian courts are fully competent to review and overrule the registrar's decisions in their entirety. This authority of the courts means that IP holders do not have to settle for an unfavourable decision at the BPTO, whether involving their IP, or third-party cases, and can file judicial appeals seeking a different outcome.

The possibility of reviewing a trade mark or patent case in court has become very important in the context of the BPTO being pressured to speed up examination timelines without the need to maintain appropriate quality levels. Inevitably, there is a trade-off between speed and quality.

The purpose of this article, however, is to provide insight into Brazil's court system and the legal mechanisms available to challenge the BPTO´s decisions effectively. We will therefore give some context to the changes happening within the BPTO, in particular around trade marks, and how this affects the new litigation strategies.

Over the last two years, the BPTO has brought down the examination time of trade mark applications to almost 18 months (looking at joining the Madrid Protocol in 2019). Appeals that were waiting eight years for a decision, now take less than 12 months to be decided. The overnight change to the BPTO's pace has resulted in contradictory decisions, a problem that was highlighted by the controversial interpretation given by the BPTO to some aspects of Brazilian IP Law.

However, in a different manner to some other common law countries (such as the US and UK), decisions from the registrar are widely challengeable by judicial appeals to the Brazilian courts, which review all aspects of the case, including the technical grounds and arguments argued by the examiners.

Appealing to the courts has become so prevalent in Brazil that the Federal Court of Rio de Janeiro (where the BPTO is headquartered) has a group of judges specifically assigned to decide IP cases, both at trial and appellate level. These specialised IP courts handle an average of 500 new appeals involving BPTO decisions, every year.

Until very recently, the BPTO was a mandatory party to these proceedings, and as such had to bear the costs of being the losing side. In other words, every time a court reversed a BPTO decision, the registrar was forced to pay legal fees. And the bill started to rack up.

There are 500 new lawsuits against the BPTO every year. Statistics independently collected by our firm over the last four years indicate that 49% of the time Brazilian courts side with applicants to overrule the BPTO's decisions. This scenario created an uncomfortable situation for the BPTO, which had its public attorneys actively defend almost all of its challenged decisions, even when wrong, to avoid payment of legal fees.

Aware of the increasing number of lawsuits against the BPTO, the Federal Court of Rio de Janeiro recently issued a resolution changing the registrar's role in judicial appeals and making the rule around payment of legal fees more flexible.

Firstly, IP judges held that in nullity actions – to cancel the grant of a patent, design or trade mark registration – the BPTO would only be required to present a defence once the owner of the challenged IP responded to the plaintiff´s claims. If the BPTO agrees with the cancellation claim – therefore reviewing its decision at the administrative level – the registrar will be considered an assistant to the lawsuit, not a co-defendant, and consequently relieved from paying legal fees.

When a judicial appeal involves a claim to overrule the rejection of a patent, design or trade mark application, the BPTO will not be allowed to be an assistant, remaining as a mandatory defendant. However, if the registrar decides to agree with the plaintiff's claims – therefore reviewing its prior decision to now allow the subject IP to be registered – the courts will relieve the BPTO of the payment of legal fees.

The change to the BPTO's role may seem a small one at first, however, recent cases decided under this new resolution show the BPTO is more amenable to accept a plaintiff´s claims. The BPTO's attitude when confronting these judicial appeals has changed significantly. The BPTO's approach has become more neutral, and its response is no longer driven by fear of paying legal fees, but rather by the need to provide a more critical and technical review of the administrative decision to grant or reject an IP application.

In practice, the BPTO agrees more and more with claims brought to court. And this not only considerably increases the chances of success in the judicial appeal itself, but also gives room for a quicker turnaround for litigation.

With these recent changes, judicially appealing a decision from the BPTO has been consolidated as a natural continuation of the administrative prosecution of a patent or trade mark. The prospects of success in these judicial appeals are good, and because they do not involve the same complex legal procedures involved in conventional litigation, they are a financially efficient way to give that final push to secure certain IP rights in Brazil.

While the BPTO is on the path to improving its examination capabilities, applicants should be aware that challenging a BPTO decision is not frowned upon in Brazil, and that Brazilian courts are friendly to the idea of reviewing administrative decisions.