The fashion industry can find great tools within Brazilian legislation to protect and enforce Intellectual Property Rights (IPRs). Industrial Property Law (Law 9.279/96) or Copyright Law (9.610/98) are able to protect intangible investments as well as the creative market. Both are compliant with the minimum standards of the Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPs), which creates a fairly reasonable environment to face counterfeiting and piracy. Brazilian legislation also protects innovation and investments in the fashion industry against free riders.

Industrial Property Law (Law no. 9.279/96) sets the rules for trademark protection, which is valid for 10 years from the grant date, renewable for equal periods of time. Registered marks must be used in the country and the owner can begin the use in Brazil within five years from the grant date and it cannot be discontinued for more than five years, otherwise, the mark can be cancelled for non-use.

Trademarks must meet the following requirements of Article 122: visually perceptible, distinctiveness, and lawfulness. Therefore, some non-traditional trademarks, such as sound, smell, and taste, are not visually perceptible and cannot be registered in Brazil. If the non-traditional trademark meets the visually perceptible requirement, there is a possibility of being registered (3D trademarks or position marks, for example, if dissociated of their necessary forms).

Color marks. Individual colors cannot be registered according to Article 124, VIII of the Industrial Property Law. If the color is combined with others or arranged distinctively, the color mark might be accepted by the Brazilian PTO.

Black and white marks. Black and white marks or grayscale can be protected. This option is an alternative for marks where the owner does not want to claim a color. Besides, the protection is broader compared to marks that claimed color.

Pattern marks. If the pattern is distinctive, it can be registered as a device or a figurative mark. Patterns must have distinctive character in the class it identifies (secondary meaning).

Shape marks. If the shape mark is not common or a necessary shape for the object, it can be registered as a 3D or figurative trademark. 

Made In. Indústria Brasileira (Made In Brazil) must be present in manufactured products originally from Brazil (Decree no. 7.212/10). The wording needs to be clear and visible in the packaging.

Position marks. A new legislation on position marks came into force in the end of 2021. 

According to the Brazilian PTO’s guideline, a position mark is the application of a sign in a singular and specific position of a certain support, which will become a distinctive set. The analysis of distinctiveness is made with the combination of sign + position. Besides the sign being distinctive, the position should also be singular to provide distinctiveness to the mark. 

The first decisions on position marks were issued in April 2023. As of January 2024, only one registration has been granted, while 57 had a refusal decision. Most of the decisions so far have been based on Article 122 (visually perceptible, distinctiveness, and lawfulness).

The protection for designs applies to 2D and 3D works that are:

• manufactured on an industrial scale; 
• visually new and original; and/or
• plastic form or an ornamental set of lines and colors. 

Hence, some fashion items that can be protected by designs are prints, jewelry, handbags, decorations, and footwear. These requirements are set in the Industrial Property Law (Article 95).

Specifically for clothing, the requirement of originality and novelty is an obstacle for most designs. However, if the designs are filed to protect only the distinctive aesthetic parts of it, such as fasteners or even zippers, the Brazilian PTO might accept for registration. It is important to say that the Brazilian PTO does not proceed automatically with the examination of the design. In case of request by the owner, Brazilian PTO will proceed with the examination regarding the novelty and originality of the design (Article 111 of the Industrial Property Law). 

Design protection is limited to 15 years (five years and extendable up to three times) and items that were disclosed more than six months from the application date cannot be protected through design because it lacks novelty. Different from EU countries, Brazil does not have unregistered design rights, but this protection can overlap with copyright protection if the item can both have aesthetic requirement and artistic value.

Copyright is regulated by Law no. 9.610/98 and grants exclusivity over original works that are materially supported or expressed in the artistic, literary, and scientific field. The protection is from the creation of the work to 70 years after the death of the author.

Although the Copyright Law does not have a closed list of protected works, most court rulings and doctrine consider fashion goods functional and not protected by copyright. Some fashion-related creations can be protected because of their artistic nature, such as fabrics and textures, prints, and photography.

Exception is made for works of applied arts that can have dual protection (design and copyright). A ground-breaking court ruling in Brazil understood that the Birkin bag (from Hermès) was protected by copyright and the Defendant’s products infringed copyright and the sales were an act of unfair competition (Tribunal de Justiça de São Paulo, Case No. 2016.0000585133).

According to this leading case, most fashion collections are based on trends and are not considered artistic work. On the other hand, iconic and lasting fashion goods can be artistic work — Birkin, for example, which was considered an iconic product. In the world of fashion, accessories and articles are considered artistic. Therefore, the Birkin bag had artistic value because consumers did not buy or use it because of the functionality, but due to the artistic design, being protected by copyright.

Traditional knowledge and expertise of certain regions are protected through Geographical Indications. Documents that might be required are the technical specifications and the territory that the GI delimits. Besides the required documents, foreign applicants must have obtained the registration in their country of origin or obtained the recognition by an international institution.

The supply chain of fashion products is complex and for some fashion companies, it is easier to find specialized industrial factories to assist in the manufacturing. Brazil has many factories that assist the domestic and international fashion industry, with significant presence in denim, textile and footwear manufacturing. In 2022, Brazilian denim and knit manufacturing were considered the fourth largest manufacturer in the world and also the fifth largest consumer market (www.abit.org.br/cont/perfil-do-setor).

License agreements 

License agreements allow rights owners to grant use of its IPRs for a third party. Licenses have a maximum percentage of royalty according to the IPR (1% for trademarks, according to Rule 436/58 of the Ministry of Finance, if the new transfer price law in 2023 is not adopted). The new transfer price law no. 14,596/23 provides for more flexible regulation on recordation of license contracts from January 1, 2024.

Once the new law enters in force, the registration of technology transfer contracts, including licenses, before the Brazilian PTO will no longer be required for tax deductability purposes. 

However, the procedure of registration with the Brazilian PTO will be maintained and can be useful to achieve the effects of: 

• setting the agreement to erga omnes status, making its obligations owed toward all; and 
• obtaining the Brazilian PTO’s endorsement on the classification of the contract and establishing a presumption of non-violation of the economic order (despite the tax deductibility effect, while the new Transfer Pricing rules are not in force).

Non-disclosure Agreements (NDAs)

Usually, included in the license agreement, is a non-disclosure clause to keep information and know-how confidential. However, there can also be a separate agreement, secondary to the main contract. For the purposes of a NDA, confidential information is the one not available to the public and consumers in general. In any case, it must specify what is confidential information and limit who is going to have access. According to Brazilian practice, non-disclosure clauses and agreements usually establish a maximum of five years after the end of the agreement. For patent licenses or secret technology this period can be longer.

Subcontract agreements with suppliers/in-house manufacturing

Subcontract agreements allow the contractor to assign part of the obligations from the supply chain or to receive raw material for the manufacture of products or provide services. These agreements should establish how, when and where the products or services will be supplied, as well as quality factors, which bind both parties. In case of breach of contract, penalties can include material and moral damages on top of the invested and the possible profit.

It must have an IPR license clause if the contract involves IPRs from the contractor.

The distribution of fashion products can be in several different contract modalities, including direct distribution or agents’ distribution. 

Agency agreement 

Through an agency agreement, the agent carries on business and sales of goods on a regular basis in exchange for a value. The contract must determine the geographical area and effective period in which the agent will act on behalf of another party (principal), according to Article 710 of the Brazilian Civil Code. 

Essential clauses that should be in an agency agreement are:

• Exclusivity clause, establishing:
  • if the agent will be the only distributor; and
  • if the agent can only distribute for the principal.
• Clause with a minimum quality and performance criteria for the agent when selling the products, which also contains the quality when providing customer service and technical assistance.
• IP license clause, including if the use of the mark is authorized in stores, layouts, and advertisements; as well as prohibition to file similar trademark and to have a competing business to the principal.
• A common practice is the principal providing, at no costs, advertisement material of the products, which usually are the only advertisement that can be done to preserve the brand reputation. 

According to Brazilian Civil Law (Articles 714-718), the agent has the right to the agreed value even when the sales are done by the principal or a third party, if in the same zone or in case the principal terminates the relationship without fair reason. In case of breach of the contract, some possible sanctions are penalty of a percentage over the annual revenue of sold products, and cumulative material and moral damages suffered by the agent.

Selective distribution online in high-end fashion and trademark protection

Selective distribution is not very common in Brazil. Considering that Brazil does not have this common practice, the selective distribution follows the same rules as a distribution contract with further restrictions and criteria for selecting the distributors from those commonly regulated in the applicable legislation.

Co-branding and co-marketing 

Co-branding agreements are common when designers or two brands associate to launch a new collection with the same purpose, to expand the consumer range. These collaborations allow brands to be known in markets that are not their usual.

Due to the similar structure and end of allowing the commercial use of trademarks, these agreements have as foundation license agreements. Both parties must authorize the use of the trademarks and must follow the rules about deductibility and royalty remittance, or choose payments based on sales or alternative arrangements.

A unique characteristic of co-branding is that, even with the license, the parties are free to use their trademarks as usual and create agreements with other parties, without breaching this first agreement. The scope of the agreement should be restricted and foreseen any use to not conflict with other contracts both brands might have.

Important clauses establish the obligations of each brand, including who will manufacture, who will commercialize and by which channels.

Franchising and alternative sales model agreements 

Brazil has a specific franchising law — Law no. 13.966 from December 26, 2019. Before entering a franchising agreement, the franchisor must provide a Franchise Offer Circular, a disclosure document with specific information regarding the agreement at least 10 days before the execution of the contract.

The Franchise Offer Circular is an essential document because it must contain all details and obligations of the agreement, including the outline of the business, financial information of the franchisor, exclusivity, know-how, IP involved, among others. 

International franchising agreements must follow similar rules of licensing and be recorded at the Brazilian PTO for deductability and royalties.

Alternative models of sales, such as pop-up stores which are very popular to test the chances of a brand in a certain region, are through rental agreements, with specific peculiarities, such as a shorter period of time and less bureaucracy.

Advertising in the fashion industry reaches different levels with social media players: while Instagram is still relevant for fashion companies, TikTok has taken the world by storm. Moreover, digital fashion has grown substantially over the last years, with developments on the metaverse and with Artificial Intelligence.

Employing fashion models 

There is no specific legislation for employing fashion models. The applicable law is Law no. 6.533/78, that outline works of artists and show technicians, and the Decree-law no. 5.452/43 (Consolidation of Labor laws). Even when employing through agencies, there should be a specific agreement or declaration with the model authorizing use of the image, including the scope of use and promotion, as well as where the image will be shown. Image, voice, name and nicknames are personality rights and protected by Brazilian Federal Constitution. All contracts must be interpreted restrictively, whatever is not licensed or provided by the person cannot be interpreted extensively.

Social media, influencers and brand ambassadors/celebrities 

When drafting agreements with influencers and brand ambassadors, the parties should consider the following special clauses for this relationship:

• IPRs clause: regarding the image and the content of the ambassador, the sponsor must clarify how the image is going to be used, for what period and if the copyright remains with the sponsor or the influencer. Moreover, the object of the promotion should be well outlined to avoid issues with copyright infringement. 
• Conduct clause: outlines certain conducts that if taken by the influencer during the period of relationship, could damage the image of the brand and its products. Usually, the behaviours are related to possible involvement in lawsuits or social scandals. The clause can last for the whole period of the contract and even a certain period after. 
• Exclusivity clause: the influencer or ambassador, during a certain period, can be exclusive to the brand and not work with similar brands in the field or competitors. Exclusivity clauses might require additional compensation because this restricts the work of influencers.

Besides the clauses and requirements above, contracts with influencers and social media posts must follow the guide for influencers of December 08, 2020, from the Advertising Standard Counsel (CONAR). An important requirement is that all posts must have hashtags that identify the post as an advertisement, such as ‘#publi’, ‘#publicidade’, ‘#publipost’, otherwise sanctions will most probably be imposed. 

Advertising standards, relevant authorities and advertising practice 

The Advertising Standard Counsel (CONAR) has its own guidelines — Advertisement Brazilian Code (CBAP). Although it is not a governmental regulation/federal law to be enforced, the guidelines are strongly followed by advertisers in any media, fashion houses, agencies, or influencers. The relevant set of guidelines fashion houses follow is Annex U about sustainability affirmations and environmental responsibility of companies. 

Any company that affirms having sustainable practices must have adopted such actions beforehand in the company, with the possibility of verifying the veracity of the actions. If it is a future action, this information should be clear in any advertisement.

E-commerce regulations in Brazil include the Consumer Protection Law (no. 8.078/90), Civil Code, E-commerce normative act (no. 7.962/13), and LGPD – Data Protection Law (13.709/18).

The Data Protection Law is quite recent in Brazil, so companies are adapting and changing their internal and external data policies such as the GDPR phenomenon. For their e-commerce, fashion companies should provide a clear, transparent, and objective privacy policy, to protect consumers and data owners.

Consumer data cannot be used for different purposes than the authorized — having a clear consent management, with options to “Opt In” and “Opt Out” can avoid several issues with consumers (Articles 7 and 11, LGPD, Data Protection Law).

Consumer protection is regulated by Law no. 8.078/90. The law rules every aspect of the consumer’s rights in the physical and online sets, together with the Decree no. 7.962/13.

E-commerce must ensure that a customer service and a communication channel are available to consumers (Article 17, Law no. 8.078/90 and Article 4, Decree no. 7.962/13), including social media platforms. The channel must be available for consumers that want to change their privacy settings or cancel the consent and access to their data.

According to both applicable regulations, description of products, clear information, and pictures must be true to the actual product, under the risk of being considered misleading advertisement or false information, which are illicit acts that entitle consumers to damages. 

Online shopping has a specific rule that any sale can be returned in seven days without reason by the consumer (Article 49, Law no. 8.078/90).

Architectural projects of stores are protected by Copyright Law (Article 7, X). Online stores can seek protection through the Software Law (Law no. 9.609/98) to protect the code-font or copyright and trademarks to protect icons, such as in the case of apps.

Another possible protection for both physical and online stores is through trade dress, which is considered an act of unfair competition regulated in the Industrial Property Law. Trade dress is related to the appearance and specific characteristics of a product or the commercial establishment, considering all aspects, from the colors to style and layout.

The downside of trade dress is that it can only be claimed and declared through court actions. However, Brazilian courts recognize the protection of store layouts through trade dress, such as in the leading case of the footwear store Mr. Cat v. Mr. Foot (4th Civil Court of Goiania, no. 1101/97, between Calypso Bay Arrendamento de Marcas Patentes Ltda. X Vipi Modas Ltda e Calçados Pina Ltda).

The regulation applicable to unfair competition is Article 195 of the Industrial Property Law (Law no. 9.279/96). Several dishonest trade practices are exemplified in the Article as acts of unfair competition, such as:

• Acts that bring confusion or association for consumers between products, services, or establishments from different businesses to mislead consumers.
• Acts that try to harm the reputation of the business, including revealing trade secrets and releasing false information.

The imminent risk of damage is sufficient for evidence of acts of unfair competition. Claims of unfair competition are often seen in the fashion industry, where there is limited protection for fashion goods.

Lolitta, a Brazilian clothing brand, was successful in a court action, ceasing the sales of infringing products of its famous clothing. The courts recognized that even though, in general, clothing does not have a protection through copyright or trademarks, the creative process of the designers should be recognized and unfair competition applied considering the reputation of the brand and the characteristics of the clothing (State Court of São Paulo, no. 1066278-93.2019.8.26.0100, between Lolita Zurita Hannud and Malharia E Confecções Rosana Zurita Ltda X Confecções Esmeral Ltda).

The topic of ESG has become especially relevant for the fashion industry over the past few years, with consumers pressuring businesses to position themselves and be transparent about their supply chain and have clear conducts on sustainability and governance. 

Brazil has a few regulations that relate to ESG, some highlighted below:

• Resolution 59/2021 from CVM establishes that listed companies must provide information on several topics of ESG.
• National Policy of Payment for Environmental Services (Law no. 14.119/2021).
• National Policy for Solid Residues (Law no. 12.305/2010).
• Environmental Criminal law (Law no. 9.605/1998).

As mentioned above in Question 4.1, consumer regulation requires that companies are transparent to consumers and provide true information about their products. This also extends to the supply chain and whether it is an ethical and sustainable production.

One way for fashion companies to be transparent is to find a sustainability certification. There are international certifications recognized in Brazil, such as Certified B Corporation, Bluesign, PETA and Credle to Cradle, and national certifications, such as ABR for cotton and Selo Qual, a certification for sustainable and quality standards targeted to the textile industry and JEANS DO BRASIL, for denim manufactured in Brazil.

In Brazil, ISO certifications are recognized as well. ISO 14000, for example, measures the international standards related to the environmental management of companies. 

Certification and collective marks can identify products or services from entities or conformity to certain standards, including sustainability. These marks must be filed with the regulations of the owners or the applicable standards for certification. Only applicants with no direct commercial or industrial interest in the product or service can apply for certification marks (Article 128 § 3).

Customs monitoring in Brazil requires a close relationship and non-stop dialogue with official anti-counterfeiting agencies and the Internal Revenue Service, which is the main authority when it comes to anti-counterfeit measures.

Right owners can register their trademarks at the National Trademark Owners Directory created by the Brazilian PTO. The directory allows authorities to access those trademarks that often are counterfeited (www.gov.br/inpi/pt-br/projetos-institucionais/combate-a-falsificacao-de-marcas).

Border measures are available to assist in the control of counterfeited products arriving in the country. Usually, Customs proceed with sampling process due to the extensive border of Brazil. If the Customs suspect that the products are counterfeited, it is retained for inspections. Although retention is mainly done by the sampling process of ex officio by Customs, right owners can request to retain certain products if there is evidence of IPR infringement. Once the counterfeited products are retained, the right holder or its legal representative will be contacted to collect the samples and confirm in 10 working days whether the products are counterfeited.

There are two available measures once the products are confirmed to be counterfeited: customs administrative procedure or judicial remedy.

In case of counterfeited products in the online market, claims must be brought to civil and criminal state courts and in some cases, to federal courts with clear evidence of the connection between the counterfeited products and the defendant. 

We found third parties incorporating our brand and trade dress in their domain name and websites. Which is the most useful tool?

Brazil has a practical system to file complaints against domain names. The Domain Name Chamber of ABPI with the CSD (www.csd-abpi.org.br) is a center to solve any dispute related to .br domain names. Their procedure is straightforward and very aligned with WIPO procedures recognizing bad-faith practices. 

This procedure allows the Plaintiff to cancel the domain name or request the transfer. Bad-faith must be evidenced, but in certain cases, just the status of well-known marks and presence worldwide can be enough.

How are digital products being protected in Brazil?

Digital products, such as NFTs, have been using a similar rationale as their physical products. As there aren’t many cases yet, a lot of companies are using the traditional ways of protecting through trademark, design or claim as copyright, if required. Classes 09, 38, 35 and 42 are usually chosen to extend trademark rights and represent the “downloadable” digital products. 

However, considering the intricacies these products have, including hashs and codes, other types of protections should be considered, such as through blockchain in order to validate and certificate the origin and date of creation.

Does Brazil have any antidumping measures?

Brazil has Decree no. 8,058/13 which regulates antidumping measures. The procedure starts with an investigation which checks if the case qualifies as dumping and must be concluded in 10 months. After that, it will start the procedure for verifying and applying antidumping measures.

Antidumping is extremely helpful as a measure to battle against unfair competition in exportation/importation cases.