Patent Litigation 2019

Last Updated March 08, 2019

Contributed By Licks Attorneys

Trends and Developments


Authors



Licks Attorneys is known for handling complex litigation in Brazil, having been engaged in some of the most high-profile cases involving IP, life sciences and technology. The team acts for clients against the Brazilian Patent and Trademark Office, ANVISA (Brazilian Food & Drug Administration), CADE (Brazilian antitrust authority), and several bodies of the government. It also has substantial appellate experience, in both the Federal Court of Appeals and the State Court of Appeals. The firm operates out of offices in Rio de Janeiro, Sao Paulo, Brasilia and Tokyo, combining industry knowledge with legal expertise to assist a variety of Fortune 500 clients and hi-tech start-ups in Brazil.

Cross-border Litigation

Evidence-collection and enforcement tools available in Brazil

Cross-border litigation brings complex challenges for in-house and external lawyers in different ways. Fact-finding peculiarities and tools for enforcing foreign decisions are constantly under examination by legal scholars and play an increasingly important role in the globalisation era.

Structural or subtle differences among systems can become a major challenge between civil law and common law countries. This is the case for evidence-collection and witness-hearings rules, matters that often cause many conflicts of jurisdiction.

Success in litigation involving international companies may, to an extent, depend on the methods of cross-border evidence-gathering and foreign decision enforcement.

Disputes that appear to be entirely domestic may have the potential to generate transnational discovery, requiring companies to seize relevant documents, electronic files, depositions or forensic evidence abroad. For instance, an affiliate or subsidiary company might have relevant documents for litigation in a foreign jurisdiction.

The recent evolution of data protection rules internationally is establishing rights for individuals that may be enforced against companies worldwide. There are also criminal aspects and the interface with national security and competition issues. Any company with a global customer base or globalised operations is looking into cross-border gathering of evidence as a significant part of its litigation strategy. Being subject to discovery orders is also an important liability to be analysed early on.

In Brazil, tools such as the enforcement of foreign decisions and international legal co-operation instruments for evidence collection are receiving the attention of the Parliament, of the Courts and also of the Ministry of Justice, presided by Former Judge Sérgio Moro - an enthusiast of international legal cooperation mechanisms since the time he was in charge of the Car Wash Operation.

Enforcement of foreign judgments under Brazilian law

Brazil has signed several treaties granting reciprocal recognition and enforcement of foreign judgments.

Domestic practice has been established through difference sources. The Federal Constitution, the Federal Rules of Civil Procedure and specific rules created by the Superior Court of Justice (STJ) provide a detailed statute to the bifurcated system of recognition and enforcement of judicial or arbitral decisions issued abroad.

The first step is processed exclusively before the STJ, located in Brasilia. Brazil has adopted the Italian model for recognition of foreign judgments. Thus, the STJ verifies only formal requirements and whether the sentence is harmful to national sovereignty or public order. Justices tend to be highly deferential to foreign judgments and approval rates are over 85%.

Recognition takes, on average, less than eighteen months. After the foreign judgment is approved, the actual enforcement takes place before a Federal District Court. A trial judge will be responsible for decreeing compelling measures to enforce the decision. Enforcement proceedings can take from less than twelve months to over six years, depending on the circumstances and on the co-operability and solvency of the defendant.

For some Latin America countries, due to the Las Lenãs Protocol, the recognition and enforcement of foreign judgments may be achieved by way of Rogatory Letters or even through diplomatic or consular channels. In some instances, the disposition allows strategic litigation, covering main Latin American countries, to take place in Brazil, where the judicial system is more institutionalised. In addition to Brazil, the Convention applies to the following countries: Argentina, Paraguay, Uruguay, Bolivia and Chile.

Evidence-collection in Brazil and international litigation

The Brazilian fact-finding system, based on the civil law tradition, is instrumentally different from the United States system. Brazil does not support tools available in systems allowing broad discovery. From a Brazilian perspective, the US approach to discovery is way too broad and informal, given the fact that parties themselves gather the relevant files and depositions. In Brazilian proceedings, however, the judges themselves are responsible for presiding over the fact-finding process, handling both its systematic and practical aspects.

Brazilian Federal rules of evidence-collection

The practice around document exchange, evidence-collection and report-production prior to a main trial is defined by the judge, following strict rules of the Brazilian Code of Civil Procedure (sections 381 to 383). The advance collection of evidence is allowed only if: (i) it will likely become impossible or very difficult to verify certain facts in the course of the main action; (ii) the proof to be produced may enable alternative dispute resolution mechanisms; or (iii) the previous knowledge of the facts may justify or avoid the main lawsuit filing.

As a rule, documentary evidence is presented together with the plaintiff’s complaint and the defendants’ defence. The depositions and technical proofs are produced before a trial judge, during the litigation first phase. New evidence may be filed if it is intended to prove new facts or upon the court’s request.

The request for disclosure of evidence held by an opposing or a third party is regulated by the Brazilian Code of Civil Procedure, section 396. Due to the high standards imposed by the rules, it is difficult for the petitioner obtain wide evidences from this venue.

To request the disclosure of a document, the requesting party must specify the evidence, indicating the purpose of obtaining it and the circumstances suggesting that the party in question has it in his or her possession.

Under the Brazilian Code of Civil Procedure, the disclosure mechanism is also hindered by the burden of proof. The requested party may allege that the document concerns his or her private life, contains confidential information, or its disclosure would infringe a duty of honour. Furthermore, the defendant may say that he or she does not have the evidence requested and it may be very difficult to prove that this is not the case.

The judge cannot allow the defendant's refusal if:

  • he or she has a legal obligation to disclose information;
  • he or she has referred to the requested document as an evidence; or
  • the requested document is common to the parties.

International co-operation of evidence-collection

The Brazilian Code of Civil Procedure provides general standards for international legal co-operation. Besides that, Brazil has also adopted several bilateral and multilateral conventions regulating international legal co-operation tools, which have specific and detailed rules regarding the approach to the matter.

In any event, however, Brazilian authorities do not allow actions that contradict or produce results incompatible with the fundamental norms governing the country.

The Hague Convention on the service abroad of judicial and extrajudicial documents in civil or commercial matters ("Hague Convention") in Brazil

On 27 April 2017, Brazil enforced the Convention on the Taking of Evidence Abroad in Civil or Commercial Matter, more commonly referred to as the “Hague Evidence Convention” or “Hague Convention”. This is one of the most important treaties for relief in international discovery disputes.

The Hague Convention establishes a multilateral regime among its members for the service of legal documents abroad in "civil or commercial" matters: Chapter I defines the meaning of "judicial documents"; Chapter II deals with private documents not related to litigation; and Chapter III contains general clauses.

Section 23 of the Convention states that: “A Contracting State may at the time of signature, ratification or accession, declare that it will not execute Letters of Request issued for the purpose of obtaining pre-trial discovery of documents as known in Common Law countries”.

This provision is the result of a deadlock, well-explained by DM Edwards:

"Some of the difficulties which were encountered during the Conference resulted from the basically different approach to this subject by the civil law countries on the one hand and the common law countries on the other. Much greater freedom in the collection of evidence for use in foreign proceedings is found in the United Kingdom, the United States and other common law countries than in most civil law countries. The reasons for this are principally twofold. First, civil law countries regard taking of evidence as an act of the parties to the proceedings and in these circumstances such countries consider that the taking of evidence by diplomatic or consular agents or by commissioners constitutes an infringement of their judicial sovereignty. Secondly, consuls or commissioners can lead to abuse."(DM Edwards: Taking of evidence abroad civil or commercial matters; The International and Comparative Law Quarterly, Vol 18, p647)

By acceding to the Convention through Decree No 9.039/2017, Brazil has made the following reservations and declarations:

  • declaration on section 4, item 2: all Letters of Request sent to Brazilian authorities must be written in Portuguese or must be accompanied by a translation into Portuguese;
  • declaration on section 8:  judicial authorities of a requesting state may assist in the execution of letters in Brazil only if it has been granted by the executing authority;
  • reservation on Section 16, item 2: the evidence mentioned in Article 16 may not be obtained without the prior authorisation of the competent Brazilian authority;
  • reservation on sections 17 and 18: Brazil is not bound by the provisions of Articles 17 and 18, which refer to obtaining evidence by a commissioner without compulsion and to obtaining evidence by diplomatic representatives, consular officers and commissioners with compulsion; and
  • declaration on section 23: Brazil declares that it will not execute Letters of Request issued to obtain pre-trial discovery of documents, as they are known in common-law countries.

United States discovery and Brazilian legislation: voluntary engagement and enforcement of Letters of Request

The declaration withdrawing section 23 of Hague Convention prevents Brazilian authorities from enforcing Letters of Request to obtain pre-trial discovery, as it is known and practised in the United States. However, there is no legal obstacle for the voluntary engagement of people and documents located in Brazil and related to an ongoing US dispute, or a possible dispute in a pre-trial phase. This informal foreign proceeding is common for companies with Brazilian subsidiaries that are somehow involved in US litigations.

The opposing party may not always be willing to co-operate, however. If that is the case, two things are worth remembering. Brazilian judges only accept Letters of Request issued by foreign justices or other authorities nominated by international treaties signed by Brazil, and they are implemented in accordance with Brazilian laws and regulations (lex fori).

Regarding the collection of documentary evidence through Letters of Request, foreign petitioners must:

  • obtain a Letter of Request issued by the competent authority;
  • describe in detail the documents sought;
  • justify the reason and the need to obtain those documents; and
  • gather evidence that the opposing party owns them.

The petitioner then needs to:

  • file and obtain the “exequatur” of the STJ; and
  • enforce the Letter before a Federal trial judge.

The process is similar when it concerns depositions or technical evidence. If amicable, it can be done outside the courts, without international legal co-operation or domestic civil procedure requirements and bureaucracy. If the deposition is not amicable, foreign petitioners are obliged to:

  • obtain a Letter of Request issued by the competent authority; and
  • justify the goal and the need to obtain the deposition. After that, they need to:

i)  file and obtain the “exequatur” of the STJ; and

ii) enforce the Letter before a Federal Trial Judge.

To conclude, it is relevant to point out that the STJ does not consider that the discovery phase, as used in the United States, undermines foreign decisions. There is no judgment in the STJ that denies recognition and enforcement of a foreign judgment preceded by pre-trial discovery.

However, Brazilian judges do not enforce pre-trial discovery requirements, in the US standards and moulds. The options available are that it may be carried out by the parties involved outside the Brazilian court system on a voluntary basis, or that it may be processed by the regular channels of international legal co-operation, following the appropriate local procedures.

Licks Attorneys

Rua da Assembleia, 10/4108
20011-901 Rio de Janeiro RJ

+55 21 3550 3700

+55 21 3550 3777

info@lickslegal.com www.lickslegal.com
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Authors



Licks Attorneys is known for handling complex litigation in Brazil, having been engaged in some of the most high-profile cases involving IP, life sciences and technology. The team acts for clients against the Brazilian Patent and Trademark Office, ANVISA (Brazilian Food & Drug Administration), CADE (Brazilian antitrust authority), and several bodies of the government. It also has substantial appellate experience, in both the Federal Court of Appeals and the State Court of Appeals. The firm operates out of offices in Rio de Janeiro, Sao Paulo, Brasilia and Tokyo, combining industry knowledge with legal expertise to assist a variety of Fortune 500 clients and hi-tech start-ups in Brazil.

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