Brazil

1.1 Summary of IPRs

The fashion industry can find great tools within Brazilian legislation to protect and enforce IPRs. Industrial Property 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, and 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. Use cannot be discontinued for more than five years, otherwise, the mark can be cancelled for non-use.

Under Article 122, trademarks are required to be visually perceptible, distinctive, and lawful. 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, it is possible for it to be registered (3D trademarks or position marks, for example, if dissociated from 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. However, since now it is possible to request the recognition of secondary meaning (or acquired distinctiveness) for a trademark in the country, this recognition may, in certain cases, extend to colors or combinations of colors, provided there is substantial public recognition linking those elements to a single commercial origin. This new development allows applicants to demonstrate that a sign, although originally non-distinctive, has acquired distinctiveness through extensive and consistent use in the market.

Black and white marks. Black and white marks or grayscale can be protected. This option is the most recommended alternative for marks for which the owner does not want to claim a color. Furthermore, 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. The pattern must have distinctive character within its class (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.

Famous marks. In Brazil, it is possible to obtain a specific recognition of a trademark as a “famous mark”, which grants enhanced protection across all classes of goods and services, regardless of the classes for which the mark was originally registered. This recognition is granted by the Brazilian PTO through a dedicated administrative proceeding, upon submission of robust evidence demonstrating the mark’s reputation, distinctiveness, and widespread recognition among the general public. Once approved, this status ensures broader exclusivity and safeguards against dilution or unfair advantage taken by third parties. This recognition is extremely important for a company, especially for those in the fashion and luxury markets, given their exclusivity among consumers, and extensive public exposure. It not only reinforces the prestige and distinctiveness of such brands but also provides stronger protection against potential infringers. Some of the marks that have already obtained this recognition in Brazil include Nike, Lacoste, Rolex, Vogue, and Chanel.

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

According to the Brazilian PTO’s guidelines, a position mark is the application of a sign in a singular and specific position on a given medium, which will become a distinctive set. The analysis of distinctiveness is made based on the combination of sign plus 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 received a refusal decision. Most of the decisions so far have been based on Article 122 (visually perceptible, distinct, and lawful).

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

• manufactured on an industrial scale;
• visually new and original; and/or
• in 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 for originality and novelty is an obstacle for most designs. However, if the design is filed to protect only the distinctive aesthetic parts of it, such as fasteners or even zippers, the Brazilian PTO might accept it for registration. It is important to say that the Brazilian PTO does not proceed automatically with examination of the design. If requested by the owner, the Brazilian PTO will examine the novelty and originality of the design (Article 111, 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 they lack novelty. Unlike EU countries, Brazil does not have unregistered design rights, but this protection can overlap with copyright protection if the item can be perceived to have both aesthetic and artistic value.

Copyright is regulated by Law no. 9.610/98, which grants exclusivity over original works that are materially supported or expressed in the artistic, literary, and scientific field. The protection extends 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 as 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.

An exception is made for works of applied arts that can have dual protection (design and copyright). A ground-breaking court ruling in Brazil recognized that the Birkin bag (from Hermès) was protected by copyright (as it was considered a piece of art), 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). Several additional cases concerning the application of copyright principles to fashion-related works are under judicial scrutiny on a case-by-case basis. 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 — the Birkin bag, for example, 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 its functionality, but due to its artistic design, which was protected by copyright.

Traditional knowledge and expertise of certain regions are protected through geographical indications (GIs). Documents that may be required are the technical specifications and the territory that the GI delimits. In addition to the required documents, foreign applicants must have obtained registration in their country of origin or 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 2024, Brazil was ranked the fifth largest manufacturer and consumer of denim worldwide, and the fourth largest producer of knitwear (www.abit.org.br/cont/perfil-do-setor).

License agreements

License agreements allow rights owners to grant use of their IPRs to a third party. Licenses have a maximum royalty percentage 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 into force, the registration of technology transfer contracts, including licenses, before the Brazilian PTO will no longer be required for tax deductibility 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)

License agreements usually include 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 an NDA, confidential information is defined as information not available to the public and consumers in general. In any case, the agreement must specify what is confidential information and limit who can have access. In Brazil, non-disclosure clauses and agreements usually establish a timeframe of 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 some 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 cases of breach of contract, penalties can include material and moral damages on top of the investment and the expected profit.

There must be an IPR license clause if the contract involves IPRs from the contractor.

Several different types of contract can be used for fashion product distribution, including direct distribution or agents’ distribution.

Agency agreement

Through an agency agreement, the agent carries on business and sells goods on a regular basis in exchange for a fee. 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 included in an agency agreement are:

• An exclusivity clause, establishing:
  • if the agent will be the only distributor; and
  • if the agent can only distribute for the principal.
• A clause with minimum quality and performance criteria for the agent when selling the products, which also defines a quality standard when providing customer service and technical assistance.
• An IP license clause, stating whether the use of the mark is authorized in stores, layouts, and advertisements, as well as prohibiting the filing of a similar trademark and having a competing business to the principal.
• A common practice is the provision by the principal, at no cost, of advertising material for the products, which is usually the only advertising that may be carried out and is done to maintain the brand’s reputation.

According to Brazilian Civil Law (Articles 714–718), the agent has the right to the agreed value even when the sales are made by the principal or a third party, if made in the same zone or in case the principal terminates the relationship without fair reason. In case of breach of contract, possible sanctions include a penalty based on a percentage of the annual revenue received from sales, plus any cumulative material and moral damages suffered by the agent.

Selective distribution online in high-end fashion and trademark protection

Selective distribution is not common in Brazil. Given that this is not common practice in Brazil, selective distribution agreements follow the same principles as general distribution contracts, with further restrictions and criteria for selecting the distributors that are commonly regulated in the applicable legislation.

Co-branding and co-marketing

Co-branding agreements are common when designers or two brands collaborate to launch a new collection with the same purpose: to expand the consumer range. These collaborations allow brands to become known in unfamiliar markets.

Because of their similar structures and their common objective of allowing the commercial use of trademarks, co-branding agreements are modelled on license agreements. Both parties must authorize the use of the trademarks and follow the rules on deductibility and royalty remittance, or must choose payments based on sales or alternative arrangements.

A unique characteristic of co-branding is that, even with a 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 to ensure any use does not conflict with other contracts either of the 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 into 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 deductibility and royalties.

Alternative models of sales, such as pop-up stores, which are very popular for testing the chances of a brand in a certain region, include rental agreements, which have peculiarities, such as a shorter period of time and less bureaucracy.

Advertising in the fashion industry has been transformed by the advent of social media; although Instagram is still important for fashion companies, TikTok has taken the world by storm. Moreover, digital fashion has grown substantially over the last years, with developments in the metaverse and the use of artificial intelligence.

Employing fashion models

There is no specific legislation for employing fashion models. The applicable law is Law no. 6.533/78, which regulates the professions of artists and show technicians, and the Decree-law no. 5.452/43 (Consolidation of Labor laws). Even when models are employed through agencies, a specific agreement or declaration should be made with the model, authorizing the use of their image. The agreement should define how and where the image will be used as well as the extent of its promotion. Image, voice, name and nicknames are personality rights and are protected by the Brazilian Federal Constitution. All contracts must be interpreted restrictively; anything that is not licensed or provided by the individual cannot be interpreted extensively.

In the case of virtual fashion shows (internationally referred to as “virtual runways”), compliance with the General Data Protection Law ((LGPD) Law No. 13,709/2018), the Brazilian Internet Civil Framework ((MCI) Law No. 12,965/2014), and the rights of image and voice (all protected under human dignity principles, as enshrined in the Federal Constitution and Civil Code) must be ensured. Compliance also encompasses copyright issues concerning the creation of avatars (graphic and audiovisual design) and related rights for the production of virtual shows, in accordance with the Copyright Law (LDA) Law No. 9,610/1998).

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. The sponsor must clarify how the image of the brand ambassador or influencer will be used and for what period of time, and whether the copyright remains with the sponsor or the influencer. Moreover, the purpose of the promotion should be clearly outlined to avoid issues with copyright infringement.
• Conduct clause. This outlines certain types of conduct, which, if exhibited by the influencer during the period of the relationship, could damage the image of the brand and its products. Usually, such behaviors are related to involvement in lawsuits or social scandals. The clause can last for the whole period of the contract and even for a period after the contracted has ended.
• Exclusivity clause. This clause specifies that the influencer or ambassador must be exclusive to the brand for a certain period, during which they may not work with similar brands in the field or with competitors. Exclusivity clauses might require additional compensation because this restricts the work of influencers.

In addition to the clauses and requirements above, contracts with influencers and social media posts must follow the guidelines for influencers issued by the Brazilian Advertising Self-Regulation Council (CONAR) on December 8, 2020. An important requirement is that all posts include hashtags that identify the post as an advertisement, such as “#publi”, “#publicidade”, “#publipost”, otherwise sanctions are likely to be imposed.

Advertising standards, relevant authorities and advertising practice

CONAR has its own guidelines (the Brazilian Advertising Self-Regulation Code (CBAP)). Although CBAP is not a government regulation/federal law that must be enforced, its guidelines are widely adhered to by advertisers, fashion houses, agencies, and influencers across all media. The set of guidelines relevant to fashion houses is Annex U, which concerns sustainability affirmations and environmental responsibilities of companies.

Any company claiming to have sustainable practices must have implemented these beforehand, and their authenticity must be verifiable. If the practices are planned for the future, this information should be clear in any advertisement.

Consumer protection is regulated by Law no. 8.078/90. This law, together with Decree no. 7.962/13, rules every aspect of consumers’ rights in both physical and online settings.

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 on social media platforms. The channel must be available for consumers who want to change their privacy settings or cancel consent and access to their data.

Both these regulations require that descriptions of products, information, and pictures accurately reflect the actual product. Otherwise, the advertisements may be considered misleading or providing false information, which are unlawful acts that may entitle consumers to compensation.

Online shopping is governed by a specific rule that any purchase may be returned within seven days without reason by the consumer (Article 49, Law no. 8.078/90).

Stores’ architectural projects are protected by Copyright Law (Article 7, X). Online retailers can protect their code-font through the Software Law (Law no. 9.609/98), and may also use copyright and trademark protection for icons, as in the case of apps.

Trade dress protection is also available for both physical and online stores. This is designed to prevent unfair competition and is included in the Industrial Property Law. Trade dress refers to the appearance and specific characteristics of a product or the commercial establishment, and includes all aspects, from color to style and layout.

The downside of trade dress protection is that it can only be claimed and declared through court action. 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).