© 2011 Dannemann Siemsen. All rights reserved. Patent Infringement in Brazil, including cross-border considerations Date: 5th April 2011 Name: David Merrylees Date: 5th April 2011 Name: David Merrylees

© 2011 Dannemann Siemsen. All rights reserved. 2 Cross-border patent infringement  Acts carried out in more than one jurisdiction considered to be the infringement of patent rights granted in one of the jurisdictions  Problems encountered in the implementation of internet and computer systems and software when individual process steps or installations are located in different countries  This concept is not widely recognised in Latin America in general and in Brazil, in particular  Acts carried out in more than one jurisdiction considered to be the infringement of patent rights granted in one of the jurisdictions  Problems encountered in the implementation of internet and computer systems and software when individual process steps or installations are located in different countries  This concept is not widely recognised in Latin America in general and in Brazil, in particular

© 2011 Dannemann Siemsen. All rights reserved. 3 BRAZIL  Article 42 of the IP law defines the patentees civil right to prevent unauthorised: - importation, use, manufacture or sale of a patented product or of a product directly obtained from a patented process, the burden of proof being reversed in the case of a process  Article 184 defines the crime of patent infringement to include importation or exportation for economic gain of a patented product or of a product obtained by means of a process patented in Brazil  Conclusions: 1. Infringement may include acts carried out abroad; 2. If such acts are partial and the patented process is completed in Brazil, there is still infringement.  Article 42 of the IP law defines the patentees civil right to prevent unauthorised: - importation, use, manufacture or sale of a patented product or of a product directly obtained from a patented process, the burden of proof being reversed in the case of a process  Article 184 defines the crime of patent infringement to include importation or exportation for economic gain of a patented product or of a product obtained by means of a process patented in Brazil  Conclusions: 1. Infringement may include acts carried out abroad; 2. If such acts are partial and the patented process is completed in Brazil, there is still infringement.

© 2011 Dannemann Siemsen. All rights reserved. 4 BRAZIL  Article 42 of the IP law also determines the patentee’s civil right to prevent prevent unauthorised: -contributing to the manufacture of a patented product or a product obtained by a patented process  Article 184 defines the crime of patent infringement to include importation or exportation for economic gain of a patented product or of a product obtained by means of a process patented in Brazil Conclusions: 1. Since the law is normally more restrictive when it comes to criminal aspects, it can be argued that article 42 should also apply to exportation. 2. Therefore if a product is only partially manufactured or a patented process only partially carried out in Brazil, for completion abroad, by corollary contributory infringement by the Brazilian party could certainly be argued.  Article 42 of the IP law also determines the patentee’s civil right to prevent prevent unauthorised: -contributing to the manufacture of a patented product or a product obtained by a patented process  Article 184 defines the crime of patent infringement to include importation or exportation for economic gain of a patented product or of a product obtained by means of a process patented in Brazil Conclusions: 1. Since the law is normally more restrictive when it comes to criminal aspects, it can be argued that article 42 should also apply to exportation. 2. Therefore if a product is only partially manufactured or a patented process only partially carried out in Brazil, for completion abroad, by corollary contributory infringement by the Brazilian party could certainly be argued.

© 2011 Dannemann Siemsen. All rights reserved. 5 Geographical situation of Brazil Brazil has borders with 10 countries, a total extension of 16,886 Km Brazil has a coastline of 7,491 Km Border Countries: Argentina, Bolivia, Colombia, French Guiana, Guyana, Paraguay, Peru, Suriname, Uruguay, Venezuela (except Chile and Ecuador)

© 2011 Dannemann Siemsen. All rights reserved. 6 Brazil ideal for entry of illegal goods  Population – (March 2009 est.)  This continental size gives to Brazil the inevitable condition of being an important international route of counterfeit products in South America, since it facilitates transshipment, illegal transit and smuggling of goods  73% of the Brazilian population bought counterfeit products in the last 12 months

© 2011 Dannemann Siemsen. All rights reserved. 7 Border Control - Most Common International Routes Rio Grande Vitoria Rio de Janeiro Santos Paranaguá Itajaí Ciudad del Este

© 2011 Dannemann Siemsen. All rights reserved. 8 BRAZIL – Current Situation  Products coming from China can reach Brazil directly or through routes using Paraguay, Uruguay, Argentina, Chile, Bolivia, Colombia, Venezuela and Panama  The customs regulation does not have any provision expressly authorizing the seizure of parallel imports  There is no standard customs retention procedure  Products coming from China can reach Brazil directly or through routes using Paraguay, Uruguay, Argentina, Chile, Bolivia, Colombia, Venezuela and Panama  The customs regulation does not have any provision expressly authorizing the seizure of parallel imports  There is no standard customs retention procedure

© 2011 Dannemann Siemsen. All rights reserved. 9 BRAZILIAN LEGISLATION General Comments Brazilian Customs is allowed to seize any product in violation of Intellectual property rights, ex officio or at the request of an interested party IPR holder may file inspection requests to General Coordination of Customs Administration (COANA) and to major Brazilian ports and airports What is needed: PoA, certificates of registration delivered by the Brazilian Patent and Trademark Office (INPI) and names of the companies that have authorization or license to import the related goods If Customs know exactly the products and properties they have to seize, the overall result will obviously be better

© 2011 Dannemann Siemsen. All rights reserved. 10 RETENTION PROCEDURE If and when a shipment is retained, the IPR holder is immediately notified to examine existing samples in order to verify their origin Upon submission of an affidavit attesting the illegal origin of the products, Customs send the IPR holders a formal notification with additional information regarding the retention In the same notification, the Customs Authorities may ask the IPR holder to file a court action requesting the definitive seizure and destruction of the infringing goods (deadline: ten working days) Procedure is based on the provisions of the TRIPS

© 2011 Dannemann Siemsen. All rights reserved. 11 RETENTION PROCEDURE The absence of a standard procedure allows the IPR holder to obtain at certain ports and airports an earlier destruction of the goods as per an administrative decision, without the need of filing the court action Penalties: loss of the products and fine Destination of products: incorporation, donation, destruction

© 2011 Dannemann Siemsen. All rights reserved. 12 How companies can obtain effective results  Know the country well and its particularities  Make their important IP known to the key-people  Organize training programs  Keep exchanging useful information with all ports, airports and “dry ports”  Give all necessary support to allow Customs to work better (product information, laws, samples etc.)  Know the country well and its particularities  Make their important IP known to the key-people  Organize training programs  Keep exchanging useful information with all ports, airports and “dry ports”  Give all necessary support to allow Customs to work better (product information, laws, samples etc.)

© 2011 Dannemann Siemsen. All rights reserved. 13 Patent infringement in Brazil – 2 specific cases on the same patent - TECHNIP Brazilian Patent PI The question of infringement depended in both cases on the interpretation of “substantially vertical” in the main claim which defined Technip’s now well known VLS – Vertical Lay System – for laying flexible flowlines and risers

© 2011 Dannemann Siemsen. All rights reserved. 14 TECHNIP – CASE 1 In 2002 TECHNIP detected that the vessel TOISA PERSEUS had been contracted by Brazilian oil companies to operate in the Bay of Campos “Substantially Vertical” in the alleged infringing vessel was na inclination of a little over 10°. Action taken: 1.Criminal Preliminary measure which resulted in the court experts finding infringement 2. Civil infringement action based on finding of the expert of the criminal court Case settled in 2004, favourable to TECHNIP

© 2011 Dannemann Siemsen. All rights reserved. 15 TECHNIP – CASE 2 In 2007 TECHNIP detected that the vessel PERTINACIA had been contracted to operate in the Bay of Campos “Vertical” in the alleged infringing vessel was inclined by some 10%. Action taken first by the contracting party in Rio de Janeiro where it filed a declaratory non- infringement action. The allegation was that in the case of the PERTINACIA the axis in question was “inclinable” and not “substantially vertical”

© 2011 Dannemann Siemsen. All rights reserved. 16 TECHNIP – CASE 2  TECHNIP then filed a criminal preliminary measure in Vitória on the argument that the “inclinable” system of PERTINACIA only worked effectively when it was in the “substantially vertical” configuration.  After a favourable court expert’s opinion from the criminal court based on equivalence, TECHNIP filed a civil infringement action in Rio de Janeiro, requesting a preliminary cease and desist injunction on the pain of an extremely heavy fine RESULT  The injunction was granted  The case was settled in 2007 in favour of TECHNIP.  TECHNIP then filed a criminal preliminary measure in Vitória on the argument that the “inclinable” system of PERTINACIA only worked effectively when it was in the “substantially vertical” configuration.  After a favourable court expert’s opinion from the criminal court based on equivalence, TECHNIP filed a civil infringement action in Rio de Janeiro, requesting a preliminary cease and desist injunction on the pain of an extremely heavy fine RESULT  The injunction was granted  The case was settled in 2007 in favour of TECHNIP.

© 2011 Dannemann Siemsen. All rights reserved. Thank you for your patience!