What is unfair competition? How to proceed in Brazil if my competitor practices unfair competition?

The unfair competition is a crime provided in the Brazilian Industrial Property Law. It is committed by anyone who:

  • employs fraudulent means to divert customers of others, to his own or another party’s advantage;
  • publishes, by whatever means, false statements to the detriment of a competitor, for the purpose of obtaining any advantage;
  • uses, unduly, a third party’s trade name, business name or insignia, or sells, displays or offers for sale or has in stock a product bearing these references;
  • and others hypothesis provided in the law.

 

 

Acts of unfair competition are generally characterized by bad faith, fraud and deceptive trade practices.

The penalty for unfair competition crimes in Brazil is imprisonment of 3 (three) months to 1 (one) year, or a fine.

The perpetrator also must be processed, to pay all the damages caused. A suit might result in an order of monetary damages and an injunction against the guilty party if continue with such actions.

A prompt action against the competitor is important to avoid damages, confusion or association by the customers.

We emphasize that is important to be assisted by professionals specialized in intellectual property in these cases. Our office monitors your intellectual property rights and possible violations. Contact us for more information.

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Author: Luciana Santos Fernandes, Junior Associate at Peduti Advogados.

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“If you want to learn more about this topic, contact the author or the managing partner, Dr. Cesar Peduti Filho.”
“Se quiser saber mais sobre este tema, contate o autor ou o Dr. Cesar Peduti Filho.”

Unfair competition in the Fashion Industry

time at a fashion industry

The 1st Reserved Chamber of Business Law of the São Paulo Court of Justice (TJ-SP) dismissed the appeal brought by one company of the Apparel Industry accused of copyright infringement.

Copyright infringement is a pinnacle problem in the fashion industry. It’s not new that the fashion design sector suffers with unfair competition, but there are legal mechanisms to restrict this practice.

The lawsuit was filed by two related companies against one Brazilian luxury clothing brand.

The plaintiffs companies complained that they had clothes that were being imitated by the defendant company.

Although the plaintiffs companies do not have industrial design registrations of their creations, the following rule provided by TRIPS Agreement is applicable:

Article 25 Requirements for Protection:

“2. Each Member shall ensure that requirements for securing protection for textile designs, in particular in regard to any cost, examination or publication, do not unreasonably impair the opportunity to seek and obtain such protection. Members shall be free to meet this obligation through industrial design law or through copyright law.”

 

time at a fashion industry

 

In the first instance, the judge interpreted that the act of the Defendant was a practice of parasitic competition, taking benefit from the goodwill and reputation of a Brazilian luxury clothing brand.

On appeal, the defendant maintained that the similarities come only from the observance of global trends.

However, the Court maintained the sentence, based on the understanding that the rules of the article 195 of Brazilian Industrial Property Law (Law nº. 9.279, of May 14, 1996) can be applied to the case at hand.

According to the rule laid down in article 195, items IV and V, of the IP Law:

“A crime of unfair competition is committed by the one whom:

  1. uses another person’s advertising phrase or sign, or imitates it, in order to create confusion among the products or establishments
  2. uses, improperly, another person’s trade name, title of establishment, or insignia, or sells, displays, offers for sale, or has in stock a product bearing these references;”

On June 02, The Justice Court of São Paulo, in a unanimous decision, dismissed the Appeal filed by Defendant. The Court maintained the position of the first instance in the sense that the Defendant, when imitating garments, parasitically took advantage of the plaintiff’s brand.

The unlawful conduct practiced by the defendant allows the presumption of damage to the plaintiff’s morals due to the violation of the industrial property right.

The Defendant can still appeal the decision but, according to the understanding of the majority jurisprudence, the chances of success are reduced.

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Author: Sheila de Souza Rodrigues, Associate Lawyer at Peduti Advogados.

Source: TJSP reconhece a contrafação de modelos de roupas como prática de concorrência desleal (TJSP recognizes the counterfeiting of clothing models as a practice of unfair competition)

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“If you want to learn more about this topic, contact the author or the managing partner, Dr. Cesar Peduti Filho.”
“Se quiser saber mais sobre este tema, contate o autor ou o Dr. Cesar Peduti Filho.”

BMW wins Lifan in case of unfair competition.

Those who follow the auto market will surely remember the case involving the Mini brand, which is represented by BMW do Brasil, and Lifan, the Chinese car brand.

In 2010, Chinese automobile manufacturer Lifan launched the Lifan 320 model on the Brazilian market, and started na unfair competition war with the already famous Mini Cooper model, manufactured by BMW.

In 2012 BMW of Brazil filed a lawsuit seeking the immediate suspension of sales of this Model due to existing unfair competition. Although BMW was granted with early relief, the Court of Justice overturned the lower court’s ruling, “allowing” even preliminary, the continued sale of the Lifan 320 model.

7 years after filing the lawsuit, Rio de Janeiro Court of Justice finally ruled the case, and sentenced Lifan for unfair competition, ordering compensation for moral and material damages to BMW of Brazil.

The problem is the time that such ruling took. The Lifan 320 model has not been sold in Brazil since 2014, and the last units were model 2013. That is, the sentence arrived five years late for BMW.”

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Lawyer Author of the Comment: Vittória Cariatti Lazarini

“If you want to learn more about this topic, contact the author or the managing partner, Dr. Cesar Peduti Filho.”
“Se quiser saber mais sobre este tema, contate o autor ou o Dr. Cesar Peduti Filho.”