In a globalized world like the one of nowadays, it is hard to control the economic interaction between countries and even all the barriers to imports are not enough to control a phenomenon called parallel imports.
Parallel import is when a product is imported from another country without the permission of the intellectual property owner and in detriment of the local distributor. In order to understand better how it works, here is an example:
A German company exports its products with its trademark exclusively to this certain company in Brazil. No other company in Brazil will receive these products as there is an exclusivity contract. However, this foreign company has got distributors in other countries and nothing in the contract prevent them from exporting to whomever they want to. So they decide to export to another Brazilian company, interfering with the exclusivity contract signed between the German company and the previous Brazilian one.
If the contract signed between the German company and other foreign distributors do not determine where these foreign distributors could commercialize the German products, it is not necessarily illegal if they want to sell it to another Brazilian company, regardless on the contract between the owner of the intellectual property and the Brazilian company.
Parallel import may have its positive side as it expands the market and promotes access to this product in certain areas of Brazil that otherwise would have no access to it. However, this distribution is done without the permission of the owner of the intellectual property and directly affecting the official distributor.
What has to be done?
Due to the principle of exhaustion, once the product has been sold for the first time, the owner has no right over that trademark anymore and can not rely on exclusivity rights to prevent subsequent sales. To that extent, the very distributor in Brazil may be selling the trademark to potential competitors.
An attempt to avoid this problem is to establish exclusive license and distribution contracts always taking territorial limitations into account. This is the only way to avoid that other countries export to areas where the owner has not authorized the commercialization of his trademark.
How to Register the trademark?
The Industrial Protection Law establishes that in order to have the exclusive rights of commercialization of an item in Brazil, it is necessary to register a prior certificate at INPI, the National Institute for Intellectual Property.
The first step to get this license is to negotiate with the trademark owner. After the negotiation, a contract can be signed. This contract can be presented to INPI, so that it can be registered to third parties.
This registration authorizes a third party to effectively use the trademark registered in Brazil, consolidating the right to intellectual property. This document gives the distributor the exclusive right to explore the partnership with the foreign company and to commercialize that certain product in a certain place. This document is also necessary to make money transfers between the two parties and for tax deduction in the payment of royalties.
Other Related Articles
- Cost of Importing Services to Brazil
- Getting a Patent in Brazil
- Domain Disputes in Brazil
- Protecting Intellectual Property in Brazil