The (Lack Of) Encouragement To Technological Development In Brazil

The Superior Court of Justice (STJ) recently issued a decision involving the multinational company Unilever. This reversed forty years of economic policies and represents a significant discouragement to business and technological development in Brazil.

The decision by the judge-rapporteur, Justice Francisco Falcão, was doubly ineffective, in neither pacifying nor evolving a highly controversial subject in the legal field: the operating limits of the Brazilian Patent and Trademark Office (BPTO) in the registration of technology transfer agreements that involve the remittance of payments abroad.

Placing this into context: the BPTO was created in 1970, in the middle of the military dictatorship, by a law that impeded contractual clauses that were considered by the BPTO as onerous to the Brazilian party. In 1996, this law went through a significant change, which eliminated the legal duty of the BPTO to regulate technology transfer and established better conditions of negotiation and use of patents. Nowadays, the BPTO has a principal purpose to enforce, nationally, the rules that regulate industrial property, taking into account its social, economic, legal and technical function.

STJ issued its decision in a Special Appeal (REsp 1200528), which originated from a writ of mandamus brought by Unilever against the BPTO that, by the registering of technology transfer agreements between Unilever companies in Brazil and abroad, clauses were altered unilaterally that changed these agreements from being onerous to gratuitous. According to the companies, the BPTO made technology transfer impossible by impeding the initially estimated remuneration. They also claimed that, from 1996, the BPTO no longer had powers to intervene in what had been freely agreed between them.

Even though this understanding would be upheld by a large number of Brazilian jurists, the judge-rapporteur stated that the legislative alteration from the 1990s only removed from the BPTO the judgment of the advisability and opportunity of the contract - with the power remaining to repress clauses that the BPTO believed to be abusive. Therefore, it should be noted that the maintenance of the generic concept of "attending to social, economic, legal and technical functions" is sufficient to justify the intervention of the BPTO in private agreements.

A profound knowledge of the legislation is not required to infer that the rules of 1958 are ill-suited to the current reality. Brazil and the...