Newsletter November – I.P and Data Protection
26 / 11 / 2019
BRAZILIAN FEDERAL SENATE APPROVES NEW FRANCHISING LEGAL FRAMEWORK
On November 6, 2019, the Brazilian Federal Senate approved Bill of Law No. 219/2015, which updated the current franchising legal framework and revokes Law No. 8955, of December 15, 1994.
The bill of law, that was proposed in 2015 in, will now follow to sanction by the Brazilian president.
The new proposal maintained several rules and principles already provided for in the current Franchising Law, such as the broad contractual freedom; the obligation of the franchisor to provide the Franchise Disclosure Document (FDD) to the potential franchisee at least 10 days prior to the signing of the agreement or payment of the fees; and the maintenance of the sanctions for non-compliance with the delivery of the FDD to the franchisee.
However, the new bill of law provides important innovations, which aim to bring more legal certainty, transparency, simplification and expansion of the franchise system in Brazil.
Thus, please find below the main points of modification of the new bill of law:
- No consumer relationship: it is now expressly provided that there is no consumer relationship between franchisor and franchisee, as already established by the Brazilian court in several case laws.
- No employment relationship: there is no employment relationship between the franchisor and the franchisee, or the franchisee’s employees, even during the training period.
- Arbitration clause: the parties may elect arbitration to settle any disputes that may arise in connection with the franchise agreement.
- Public Franchises: the bill creates the possibility of public franchises, i.e., public companies, mixed economy companies and entities directly or indirectly controlled by the Union, states, Federal District and municipalities may now adopt the franchise system.
- Sublease of commercial spaces: it is established the possibility of subleasing commercial spaces of the franchisor, which can facilitate the process of expansion of franchise chains, especially in shopping malls.
- New mandatory information in the FDD: in addition to the mandatory information that must be in the Franchise Disclosure Document that is delivered to the franchisee, the FDD must contain new information, such as the existence or not of transfer or assignment rules and what are they; indication of contractual term and renewal conditions; and indication of the situations in which penalties, fines or indemnities are applied and the respective amounts, as established in the franchise agreement.
- Penalties: in addition to keeping the existing penalties for franchisors who fail to deliver the FDD with ten days in advance to the signing of the Franchise Agreement or payment of the fees, the new law also applies those penalties to franchisors who omit information required by law or include false information in the FDD.
After the sanction of the bill of law by the Brazilian president, the law will come into force within 90 days of its publication in the Official Gazette.
MADRID PROTOCOL COMES INTO EFFECT IN BRAZIL
On October 2, 2019, Decree No. 10.033/2019 was published enacting the Madrid Protocol in Brazil. From this date, INPI started to work with the World Intellectual Property Organization (“WIPO”) to enable the registration of international trademarks.
With the entry into force of the Madrid Protocol, individuals and corporations may apply for trademark protection in several countries simultaneously, significantly reducing bureaucracy and costs.
In addition to reducing costs and increasing the scope of protection of trademarks, the adherence to the Protocol will have a greater impact on the trademark registration process in Brazil given that, according to the Protocol, the registration process should take up to 18 months.
To enable compliance with the procedures of the Madrid Protocol, INPI published, in addition to Resolution No. 247/2019, which establishes the procedures for the trademark registration under the Madrid Protocol and entered into force on October 2, 2019, three other resolutions, namely: Resolution No. 244/2019, which establishes the division of trademark registrations and applications; Resolution No. 245/2019, which establishes the joint ownership of trademark registrations; and Resolution No. 248/2019, which regulates the multiclass system.
Resolution No. 244/2019
Division of trademark applications and registrations will now be possible and may be requested when an application is held in abeyance in one class, in the case of multiclass applications, and for trademark assignment purposes, provided that the requirements for the trademark assignment are fulfilled. In either case, a new registration or trademark application or registration will be created.
Resolution No. 245/2019
The joint ownership of trademarks will now be allowed, except for collective trademarks. The new system will allow the inclusion of more than one owner or applicant per trademark registration or application in regard to new or already existing applications and registrations. However, it is still necessary that holders effectively carry out the activities related to the products or services of the trademarks.
Also, with the exception of oppositions, administrative nullity processes and cancellation requests due to non-use, that may be filed by only one of the joint owners, all other acts concerning trademark registrations or applications shall be performed jointly by all of the owners or their attorneys-in-fact, or by a single attorney who represents all the owners.
Resolution No. 248/2019
In the multiclass system, the analysis of a trademark application is made separately, by class, so that the application may be granted (in total), when there are no prohibitions in any class; granted (partially), when there is a prohibition in any class(es); or rejected, when there are prohibitions in all classes.
In case on class is granted and the other is rejected, the owner may pay the final issuance fees and appeal the rejection decision simultaneously.
With exception of Resolution 247/2019, which establishes the trademark registration procedure under the Madrid Protocol, the other resolutions will only come into effect on March 9, 2020.
Finally, it is important to stress that the new changes will benefit not only international trademark applications and registrations via the Madrid Protocol, but also the national ones.
In case of any doubts about this subject, please do not hesitate to contact us.