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STJ: shopkeeper can demand accountability every 60 days

Category: Real estate

In the judgment of the Special Appeal 2.003.209/PR (REsp 2.003.20/PR), the STJ decided that the shopkeeper has the right to demand from the lessor the accountability of the amounts paid (rent, condominium, promotion fund, etc.) every 60 days.

The discussion began with an action filed by a shopkeeper against the administrator and the lessor of the shopping center demanding the accountability. The purpose was to verify if the charges made were right, under the allegation that the releases that were provided were not detailed.

Although the rental of stores in shopping centers have a special rule that prioritizes the freely agreed conditions between the parties and expressed in the lease agreement, such lease is still typical and is subject to the procedural rules provided for in the Leases Law.

The enterprising lessor of a shopping center must comply with the obligations imposed in the Lease Law (Law 8.245/91), including the accountability of the amounts paid and to exhibit  the proof of the expenses paid, when requested by the lessee. It is also the obligation of the lessor to detail the charges made to the lessee, which must be provided for in the shopping center budget and in the general rules of the enterprise.

In the present case, the lessee claimed that, although the lease agreement provided the payment of the expenses inherent to the shopping center, the carried out collection did not break down the charges paid.

The lessor was ordered to execute the accountability of the amounts in the first instance, but appealed on the grounds that the lessee could only require proof of expenses for the 60 days prior to the request. As the deadline was not respected, there would have been the loss of the procedural right and, therefore, the proof was no longer due.

In the judgment of REsp 2.003.20/PR, the STJ confirmed that the requirement of accountability by extrajudicial means is a faculty of the lessee. It also noted that due to the complexity of lease relationships in shopping centers, the deadline provided for in the legislation concerning lease agreements is only a minimum interval to be respected by the lessee between one and another request.

As for the loss of the procedural right, the 3rd Panel of the STJ understands that the preclusive period provided for in the Brazilian Civil Code for filing the action for accountability is unequivocal and that the term foreseen at the federal legislation concerning lease agreements is not applicable to demand accountability to the lessor.

We understand that the interpretation of the STJ was correct. Therefore, we recommend that entrepreneurial landlords of shopping centers that are not following this legal obligation organize their accountability procedures internally. In this way, they can prevent shopkeepers from judicially demanding that they present the accounts in a detailed and complete way.

Bibliography

BORGES, Marcus Vinicius Motter (coord.). Course in Brazilian Real Estate Law. Sao Paulo: Thomson Reuters, 2021.

SCAVONE, Luiz Antônio. Real Estate Law: theory and practice. 16. ed. – Rio de Janeiro: Forense, 2021.

SOUZA, Sylvio Capanema. The law of the tenant commented: article by article. 12. ed. – [2. Reimpr.] – Rio de Janeiro: Forense, 2021.

RenovaBio and decarbonization of the Brazilian energy matrix

Category: Environmental

Created to contribute to the reduction of greenhouse gases (GHG) in the production, commercialization, and use of biofuels, the National Biofuels Policy (Política Nacional de Biocombustíveis or “RenovaBio”), established by Federal Law 13,576/17 and regulated by Federal Decree 9,888/19, has proved to be one of the most important policies to promote the decarbonization of the Brazilian energy matrix.

In summary, RenovaBio is based on three pillars:

  • The fulfillment of annual mandatory GHG reduction targets by fossil fuel distributors, considered as obligated parties by RenovaBio. These targets are determined by the National Agency of Petroleum, Natural Gas and Biofuels (Agência Nacional do Petróleo, Gás Natural e Biocombustíveis or “ANP”) taking under consideration the carbon intensity in the fuel market projected by the National Energy Policy Council (Conselho Nacional de Política Energética or “CNPE”) for the period of ten years, as well as based on the participation of the distributor in the commercialization of fossil fuels in the previous year;
  • The certification of the efficient production or import of biofuels by inspection firms accredited by ANP. Inspection firms assess the products’ life cycle to verify whether biofuels emit less GHG than their substitute fossil fuels, which results in the issuance of an Energy and Environmental Efficiency Score (Nota de Eficiência Energético-Ambiental). Then, a Certificate of Efficient Production of Biofuel (Certificado de Produção Eficiente de Biocombustível) is issued, a document necessary for the participation of producers and importers of biofuels in RenovaBio; and
  • The issuance of Decarbonization Credits (CBIOs), which is considered the link between the two aforementioned steps. CBIOs represent one metric ton of carbon dioxide equivalent that was not emitted into the atmosphere. The calculation is made from the difference between the GHG emissions in the life cycle of a biofuel and the emissions of its substitute fossil fuel.

Credits are issued by biofuels producers and importers duly certified by ANP after fuels sales, based on the invoices of purchase and sale of the product. Subsequently, credits are traded on the Brazilian stock exchange. Fossil fuel distributors must acquire CBIOs to meet their goals.

In 2022, there was intense discussions about the CBIO market between stakeholders, including the change of the deadline for distributors to prove the fulfillment of individual goals. In July, Federal Decree 11,141/22 amended Federal Decree 9,888/19 and determined that fossil fuel distributors shall prove compliance with their targets by March 31 of the following year.

Exceptionally, the proof of compliance with the individual 2022 target has been extended to September 30, 2023. The change was justified mainly due to the impacts caused by the covid-19 pandemic on the fossil fuel, biofuels, and CBIOs markets.

Recently, CBIOs were again at the forefront of discussions related to GHG removals. On December 8, 2022, the Ministry of Mines and Energy (Ministério de Minas e Energia or “MME”) presented proposals of new rules for the transitional government within the Mines and Energy Market Initiative (Iniciativa Mercado Minas e Energia or “IMME”). Measures related to fuel, natural gas, and biofuels were included.

Among these instruments, MME presented a proposal to amend RenovaBio, aiming to establish, among others:

  • the creation of CBIOs+, considered fungible assets, allowing parties obliged by RenovaBio to meet their individual targets with investment in various GHG reduction projects, not restricted to emission reductions from the biofuels sector;
  • the gradual alteration of the obligated parties, replacing distributors with producers and importers of fossil fuels. In theory, MME argued that this replacement would make monitoring compliance with targets easier for the competent authorities; and
  • the possibility of the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários or “CVM”) supervising the CBIOs market, which could represent an important precedent for the Brazilian market.

According to the proposal and as a result of one of the public hearings with the largest number of contributions, CVM published, on December 23, 2022, CVM Resolution 175/22, which provides for the constitution, operation, and disclosure of information from investment funds.

Through this rule, which will come into force on April 3, 2023, CVM reinforced the understanding that CBIOs are financial assets, provided that they are registered in a system of registration and financial settlement of assets authorized by CVMor by the Central Bank of Brazil (Banco Central do Brasil), or traded in a market managed by an organized market management entity authorized by CVM.

It is important to mention that RenovaBio has been widely discussed in Brazil to ensure that national policies are coordinated with international negotiations.

This policy is especially important for Brazil to meet its GHG reduction targets. For instance, it was mentioned in the Brazilian Nationally Determined Contribution (NDC),[1] submitted to the United Nations Framework Convention on Climate Change (UNFCCC) following the United Nations Conference on Climate Change held in 2021 (COP 26).

In addition, there is growing international concern about energy issues. The last United Nations Conference on Climate Change (COP 27), held in Egypt in 2022, for example, had a day dedicated to the theme, called "Decarbonization Day". This undoubtedly influences countries' internal decision-making in relation to fighting climate change.

Considering the above and the importance given by Brazil to the matter, it is expected that the proposed amendment of RenovaBio will be debated throughout this year. In case Renovabio is amended, program participants and investors will need to adjust.

 


[1] NDCs are voluntary commitments made by countries that ratified the Paris Agreement to reduce GHG emissions. Brazil has committed to reducing its emissions by 37% by 2025 and by 50% by 2030 – taking as a reference the emission levels of 2005 – and achieving carbon neutrality by 2050.

Possession of leased property

Category: Arbitration

Aline Omena Gomes de Barros

The purchase of a property that is under a lease agreement may require legal action by the new owner to govern direct possession of the property.

Despite the recurrent use of an action to take possession to guarantee the purchaser's rights, the Tenancy Law (Law 8,245/91) expressly provides for the use of eviction proceedings in the event of the existence of a prior lease agreement.

It is established in the head paragraph of article 5 of the law that, in lease cases, eviction is the appropriate action to recover the property, whatever the reason for the termination of contract.

Article 8 of the same law, in turn, provides that, in the event of sale during the lease, the purchaser may terminate the contract, with the legally prescribed period for vacating.

The termination must be filed within 90 days of registration of the sale or commitment. If it is not done by this deadline, it will be assumed that there is an agreement to continue the lease.

If done correctly, respecting the deadlines and the appropriate form, the termination does not need specific grounds. It is the so-called empty termination. In other words, the purchaser will have no duty to respect the lease agreement entered into, whether or not for residential purposes, because he was not a party to it. He can, therefore, terminate the contract, giving a period of 90 days to vacate, without any justification.

There is, however, an exception: when the lease agreement is for a fixed term and contains a validity clause in the event of sale and is registered in the property's records.

These limits protect the tenant and transfer the lessor’s obligations to the purchaser, and also give the purchaser standing to bring the action.

The matter was recently decided by the Third Panel of the Superior Court of Appeals, in the case of Special Appeal 1.864.878/AM.

Reporting judge in the case, Justice Ricardo Villas Bôas Cueva emphasized that, "if there is no validity clause or registration, the new purchaser is not obliged to abide by the contract, and may freely exercise his right to terminate it, but, in order to take direct possession of the property, he must follow the appropriate procedural pathway, using an eviction proceeding.

A similar position has been taken by the STJ in other judgments: Special Appeal 1.590.765/RN and Special Appeal 265254/SP.

Considering that the contract's validity is a relevant point in the analysis of the choice for eviction, the form and term of the agreement must also be observed.

In residential leases entered into in writing for a term equal to or longer than 30 months, the termination of the contract will occur at the end of the term stipulated, regardless of notice or warning.

At the end of the agreed-upon term, if the tenant continues to be in possession of the leased property for more than 30 days without opposition from the lessor, the lease will be presumed to have been extended for an undetermined term and the other terms and conditions of the contract will be maintained. In the event of an extension, however, the lessor may terminate the contract at any time, giving him 30 days to vacate.

In the case of residential leases that were agreed upon verbally or in writing and have a term of less than 30 months, when the established term has ended, the lease is automatically extended for an indefinite period. The property, in this case, can only be repossessed in the case provided for in article 47 of the Tenancy Law.

Once the eviction action is granted, the judge will order the issuance of an eviction warrant, which will contain a 30-day term for voluntary vacating of the property, except if more than four months have elapsed between service of process and the trial ruling. In this case, the deadline will be 15 days.

Unconstitutionality of 50% fine on unapproved tax offsets

Category: Tax

The Federal Supreme Court (STF) concluded, on March 17, the judgment of Extraordinary Appeal 796,939/RS (Theme 736 of the General Repercussion) in the virtual plenary. At the time, the Court analyzed the constitutionality of the isolated fine of 50% provided for in article 74, §§ 15 and 17, of Law 9,430/96.

Under the terms of the law, the taxpayer who ascertains a credit related to a tax or contribution administered by the Federal Revenue Service that can be refunded or reimbursed – including credit resulting from a final court decision – may use it to offset their own debts, due or yet to fall due, within five years of the undue payment (article 168 of the National Tax Code – CTN).

This procedure is subject to the analysis and approval of the Federal Revenue Service. If the body does not recognize the credit claim, even partially, it will formalize the rejection of the tax reclaim or the non-approval of the offset made.

In case of non-approval, the amounts subject to offset will be charged, plus interest and a 20% moratorium fine (article 61, paragraph 2, of Law 9,430/96). This decision paves the way for administrative litigation and permits presenting a manifestation of nonconformity with suspensive effect (article 74, paragraph 9, of Law 9,430/96).

In addition, in a separate procedure, the Federal Revenue Service draws up a tax assessment notice to demand the collection of the isolated 50% fine on the credit that originated the unapproved offset request (Law 12,249/10), with interest accrual (article 74, §17, of Law 9,430/96).

The isolated fine is launched indistinctly, when there are no legal grounds for the penalty, and even before the final term of the administrative proceeding in which the legitimacy of the offsetting procedure is discussed.

The tax legislation itself determines that the taxpayer presents an offset request for subsequent approval by the Tax Authority but, at the same time, establishes the imposition of a punitive fine on any debt that may not be approved.

What was discussed, in addition to the creditory right, is that the application of an isolated fine in these situations represents a double penalty for the taxpayer, in breach of the right to full defense and to a fair hearing, as well as the right of petition provided for in article 5, XXXIV, paragraph “a”, of the Federal Constitution.

In that sense, it was argued that the isolated fine represents an undue political sanction that aims to prevent the taxpayer from recovering the amounts unduly collected from the tax authorities, constituting a confiscatory practice by the Public Administration, which is prohibited by the Federal Constitution (article 150, inc. IV, of CF/88) and by Precedents 70, 323 and 547 of the Federal Supreme Court.

The procedure would present an obstacle to the right to recover improperly collected taxes, capable of generating a very high financial risk to the taxpayer who acted in good faith when determining indebtedness before the Federal Revenue Service and proceeding with offsetting such amounts, as provided for in the tax legislation.

Not for any other reason, §17 of the law, in its original wording[1], determined that the penalty should be applied only to taxpayers who utilized the offsetting request to evade the collection of amounts owed, acting in bad faith, deceit, fraud or simulation.

In many cases, the non-approval of the offset results from the non-recognition by the tax authorities of rectifications in the fiscal bookkeeping (DCTF and SPED Fiscal – ECF and EFD-Contributions) by the taxpayers for mere mistake in the calculation basis.

The isolated fine, therefore, ends up discouraging the rest of the taxpayers who, in good faith, present offsetting requests, exercising the right to recover amounts unduly paid.

Thus, it was neither reasonable nor proportionate to impose the penalty, which, in reality, aims to increase tax collection and punish bad taxpayers rather than discourage them from engaging in improper offsets.

In line with the understanding mentioned above and confirming the Court’s historical position on this matter, in the judgment of RE 796,639/RS, STF dismissed the Union’s Extraordinary Appeal, recognizing as unconstitutional both the previously repealed §15 (Law 13,137/15) – relating to the imposition of an isolated fine on denied restitution requests – and the current §17 of article 74 of Law 9,430/96, as stated in the vote issued by Minister Rapporteur Edson Fachin.

Unanimously, the following judgment thesis was established: “It is unconstitutional for the isolated fine provided for by law to be levied based on the mere non-approval of a tax offset request because it does not consist of an unlawful act capable of automatically triggering a pecuniary penalty”.

As the rapporteur pointed out in his vote, the mere non-approval of the tax offset is not an unlawful act capable of motivating a tax sanction. Thus, there is a clear lack of correlation between the 50% fine and the administrative offsetting request, since this is considered a legitimate exercise of the taxpayer’s right of petition. In addition, the correlation violates due process and good faith.

On the same date, the judgment of the Direct Action of Unconstitutionality 4,905 (ADI 4,905) was also concluded, with Minister Gilmar Mendes serving as the rapporteur. By majority vote, §17 of Law 9,430/96 was declared unconstitutional. It was understood that “the application of an isolated fine for the mere non-approval of an offset request, without being characterized by bad faith, falsehood, intent or fraud, violates the fundamental right of petition and the principle of proportionality”.

Given this outcome, if the taxpayer faces the non-approval of an offset formalized before the Federal Revenue Service, only the moratorium fine of up to 20% provided for in article 61, caput and paragraph 2, of Law 9,430/96 will apply.

Considering that the Supreme Court, so far, has not modulated the effects of the decision, the precedent should be applied to all cases involving the imposition of the fine for non-approval of offsetting requests. The taxpayer may also claim the refund of amounts unduly paid in the last five years under the terms of Law 9,430/96.

 

[1] Art. 18. The official release referred to in article 90 of Provisional Measure 2,158-35, of August 24, 2001, shall be limited to the imposition of an isolated fine due to the non-approval of an offset request declared by the taxable person in the cases in which the practice of the offenses provided for in articles is characterized. 71 to 73 of Law 4,502, of November 30, 1964. (Text given by Law 11,051/04)

 

Art. 18. The official release referred to in Article 90 of Provisional Measure 2,158-35, of August 24, 2001, shall be limited to the imposition of an isolated fine due to non-approval of the offset request when the falsity of the declaration submitted by the taxable person is proved. (Text given by Law 11,488/07)

The existential minimum and the Over-indebtedness Law

Category: Arbitration

Débora Chaves Martines Fernandes, Bruna de Godoy Marques das Neves, and Barbara de Souza Braz

It is no surprise that in Brazil, where there are about 66.43 million delinquent debtors,[1] normative acts aimed at fighting the population's indebtedness are gaining popularity. An example of this is the discussions that surrounded Law 14,181/21, the so-called Over-indebtedness Law, which was received by the interpreters of the law and by consumers with optimism, but also with relevant doubts about its reach and practical application.

Law 14,181/21 made additions to the Consumer Protection Code (CDC) to introduce a consumer credit microsystem,[2] with the objective of preventing and treating the phenomenon of over-indebtedness. One of the pillars of the law is the safeguarding of the so-called "existential minimum”, that is, the amount that must be kept safe from creditors to ensure the debtor's livelihood. The Over-indebtedness Law, however, did not specify the amount of this existential minimum, leaving the task to complementary regulations.

Effectively, the existential minimum was regulated via Presidential Decree 11,150/22, promulgated on July 26, 2022, in the following terms:

"Article 3. In the scope of prevention, treatment, and administrative or judicial conciliation of situations of over-indebtedness, the existential minimum is considered to be the consumer's monthly income equivalent to twenty-five percent of the minimum wage in effect on the date of publication of this Decree."

This definition assigned to the existential minimum the nominal value of R$303, equivalent to 25% of the minimum wage at the time. This amount is fixed, since the decree itself established that minimum wage adjustments will not have an impact on the amount of the existential minimum (article 3, paragraph 2). It will be incumbent on the National Monetary Council to make any changes to the sum (article 3, paragraph 3).

On the one hand, the definition of a fixed value for the existential minimum provides predictability for both consumers and suppliers and defines objective parameters for application of the Over-indebtedness Law.

On the other hand, the amount of R$303 was the target of severe criticism on the other hand, because it is considered negligible and incapable of meeting the basic needs of Brazilian citizens, besides creating possible distortions between debtors who receive the minimum wage and those who receive much higher amounts.

Other criticisms were directed at debts that are not protected by the reserve of the existential minimum, such as real estate financing and debts related to entrepreneurial activity.[3] In the view of some scholars, this would harm lower income consumers.

The effervescence of the topic, in part, is linked to the heat of Brazil's political environment, and there are signs that the alternation of power that occurred in the 2022 elections may interfere with the limits of the consumer credit microsystem.

New political landscape and impacts on the amount of the existential minimum

Since the promulgation of Presidential Decree 11,150/22, members of the Legislative Branch had already been moving to change the provision that established the amount of the existential minimum. The main pivot of this movement is Legislative Decree Bill 306/22 (PDL 306/22), currently in progress in the House of Representatives.

This bill aims to suspend the effects of Presidential Decree 11,150/22, under the justification that the advances of the Over-indebtedness Law were compromised by the presidential normative act.

It is argued that, despite filling the gap left by the legislator in the Over-indebtedness Law, the decree impacts mainly on the poorest population in Brazil, since the amount guaranteed by law as a reserve for the consumer is very small and does not help in reducing family indebtedness, which had an increase of about 6.54% compared to 2021.

In addition, the author of the legislative proposal, representative Gustavo Fruet, considers that in a context of rising interest rates, rising inflation, high unemployment rates, and increasing extreme poverty, default rates have been steadily rising in Brazil, reaching about 4 out of every 10 Brazilians in 2022.

In the current economic circumstances, setting the value of R$303 for the existential minimum could compromise survival itself, by reducing family income, increasing indebtedness, and transferring resources from citizens to creditors. For these reasons, the proposal requests that the House of Representatives vote to annul the presidential act, seen as "clearly damaging to the public interest.”

PDL 306/22 has been in the progress since August 1, 2022. Currently, it awaits the designation of a reporting judge to be review by the Consumer Protection Commission. As it is an ordinary proceeding proposal, if approved by the commission in question, it will still be forwarded to the Constitution and Justice Committee for review of its constitutionality.

The text will then be put on the agenda for a vote on the floor of the House of Representatives. Once this legislative house has concluded its review, the proposal still has to be approved by the Senate before it can enter into effect.

During its course in the Congress, the proposal may be amended by the relevant subject-matter committees. It is therefore not possible to guarantee that the legislative decree intended will be enacted in the terms currently proposed, nor whether it will be enacted at all.

What we have is that, according to the terms of the proposal, the new legislative act would reestablish the status quo prior to the enactment of the decree, to reconstitute the legal gap in the definition of the existential minimum, which is also not the ideal scenario, since it creates legal insecurity regarding the parameters of the application of the law in each of the country's courts.

Besides the questions raised by PDL 306/22 and the possibility of a declaration of unconstitutionality or violation of a fundamental precept by the Federal Supreme Court,[4] the decree can also be revoked, extinguished, or changed by a new normative act of the same authority, that is, by a new presidential decree.

The head of the federal executive branch can establish a new value for the existential minimum by means of a presidential act. The new president can also simply revoke the act of his predecessor, in order to reestablish the previously existing legal loophole, to be closed by a new normative act.

There is news that the current government is studying the possibility of overturning the decree promulgated in 2022, as indicated by the head of the National Consumer Bureau, Wadih Damous.[5] The possible change in the existential minimum, if compatible with the government's objectives, would be part of the debt reduction program that the government intends to launch, called Desenrola Brasil [“Untangle Brazil”].

There are, therefore, at least three distinct and plausible ways to repeal or change Decree 11,150/22, each of them under the responsibility of one of the branches of the Government.

Aside from the discussion regarding the sufficiency of the amount of the existential minimum currently in effect, the indetermination of its continuation and its form of application has a direct impact on the implementation of public policies for the protection of indebted consumers, the main focus of the Over-indebtedness Law, and prevents all players in the consumer market from fully enjoying their rights.

The importance of the topic justifies the engagement of entities representing suppliers and consumers, in addition to the close and critical monitoring of interpreters of the law, such that a balance can be reached that is capable of guaranteeing consumer protection, without neglecting the impact of the policies implemented on the supply of credit, which is indispensable to the smooth running of the country's economy.

 

[1] Data from the Map of Delinquency and Renegotiation of Debts made available by Serasa.

[2] BERTONCELLO, Káren Rick Danilevicz.  “O processo judicial de repactuação das dívidas: modelo brasileiro de mínimo existencial instrumental” ["The judicial process of debt renegotiatio: a Brazilian model of the instrumental existential minimum”]. Revista de Direito Consumidor, Vol. 144/2022, pp. 17-35.

[3] DUQUE, Marcelo Schenk. “Parecer sobre a inconstitucionalidade do Decreto 11.150, de julho de 2022” ["Opinion about the unconstitutionality of Decree 11,150, of July of 2022”]. Revista de Direito do Consumidor, Vol. 143/2022, pp. 407-416.

[4] Currently up for completion is ADPF 1005 (reporting Justice André Mendonça) and ADPF 1006 (reporting Justice André Mendonça).

 

INPI approves major changes to the registrer of contracts

Category: Intellectual property
  • 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.

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