Parallel Imports in Brazil

The Brazilian Trademark Law which became effective on May 15, 1997 has adopted the exhaustion of rights principle, stating that the trademark owner cannot "prevent free circulation of a product placed on the domestic market by the owner or by another party with the owner's consent".

Many court actions have been brought before Brazilian courts involving parallel import issues but none yet seem to have cleared the air on the subject and no higher court has ruled effectively. As early as 1959 a case was brought before Brazil's Supreme Court and the decision was to the effect that the mere fact that the imports were not authorized would not constitute a violation of trademark rights. The decision went on to state that there would only be unlawful importation if there had been violation, in the country of origin, and since there had been no such violation and the product was legitimate, importation should be permitted. What is interesting to note from the 1959 Supreme Court decision is that it inferred that trademark rights do not create a right of exclusivity in commerce, that is, such rights do not include a right of exclusive distribution.

The fact is that globalization and the need for the free flow of goods, particularly amongst nations of the same economic block, has changed the picture and, to illustrate this point, the Harmonization Protocol of the Mercosur (Argentina, Brazil, Paraguay and Uruguay) states that "The registration of a trademark shall not prevent the free circulation of the products identified by the trademark, legally introduced into commerce by the owner or with his consent."

Court disputes involving parallel imports in Brazil demonstrate the difficulties the courts have in reaching consistent decisions. In 1997, in Brother International Corporation do Brasil Ltda. vs. Surlorran Indústria Têxtil e Comércio de Máquinas Ltda. the court considering parallel imports touched on the question of the exclusive distribution of goods. The court confirmed that evidence was presented to the effect that there was an exclusive distribution agreement and having alluded to the provisions of the current Trademark Law, ruled that since Brazil adopted the principle of national exhaustion of rights and not international exhaustion there was indeed a need for the trademark owners consent to place the goods in the domestic market. The court further added that it was not fundamental to determine whether or not there had been an exclusive...