Patents

BIONEXO prevails over GTPLAN in landmark software registration invalidity case

By Gustavo Piva de Andrade and Amanda Martins Navegantes, Dannemann Siemsen

BIONEXO S.A. (“BIONEXO”) has secured an important victory before the Second Specialized Panel of the Federal Court of Appeal for for the Second Circuit (TRF-2) in what represents a landmark case concerning the invalidation of software registrations in Brazil.

By fully upholding the lower court’s judgment declaring invalid GTPLAN Prestação de Serviços de Informática Ltda.’s (“GTPLAN”) registration for the software entitled Software de Planejamento e Gestão de Demanda, Estoques, Compras e Operações GTPLAN, and ordering the permanent cessation of its commercial exploitation, the Court established important principles concerning copyright protection for software and, in particular, the methodology to be applied when comparing computer programs for purposes of assessing originality and unlawful reproduction.

The dispute arose out of an agreement entered into in 2013, under which a company belonging to the GTPLAN group developed a software program known as the “Planning Module” (Módulo de Planejamento) for SALOG S.A. The software was designed to manage hospital inventories, and all economic rights in the program were assigned under the agreement. GTPLAN subsequently applied to the Brazilian Patent and Trademark Office (BPTO) to register a computer program aimed at the same market segment, prompting the filing of the lawsuit.

Following extensive technical expert examination, which identified a high degree of similarity between the programs’ source codes, databases and key business rules, the Court upheld the judgment invalidating GTPLAN’s software registration and ordering the company to cease its commercial exploitation.

The significance of the case stems, first, from the unique position occupied by software within the Brazilian intellectual property system. Although computer programs are protected under copyright law — meaning that protection arises upon creation — Brazilian law also provides for their registration with the BPTO. Such registration is declaratory in nature and does not involve substantive examination.

This distinctive feature means that, unlike trademarks and patents, relatively few computer programs are registered with the BPTO. Consequently, disputes concerning the validity of software registrations before the Brazilian Federal Courts are extremely rare.

The first noteworthy aspect of the appellate decision is the clear distinction it draws between the existence of copyright protection in software and registration with the BPTO. The Court reaffirmed that protection for computer programs arises directly from the law and does not depend on registration, pursuant to Articles 2 and 3 of the Brazilian Software Law. A BPTO registration therefore neither creates the underlying right nor entails an examination of novelty or originality comparable to that conducted in the patent system. Rather, it is a declaratory registration based on information provided by the applicant itself.

This does not, however, render registration irrelevant. Quite the opposite. Although declaratory in nature, a software registration may be declared invalid when invoked to support a situation that is incompatible with a third party’s copyright. The precedent makes clear that the absence of substantive examination by the BPTO does not preclude subsequent judicial review of the validity of the registration where it is established that the registered program is not an original work.

The second important point is that computer programs differ significantly from other copyright-protected works because of their inherently technical nature. Software may comprise millions of lines of code, databases, algorithms, libraries, frameworks and numerous other technical elements whose examination requires highly specialized expertise. Unsurprisingly, a substantial portion of the appellate decision was devoted to describing the methodology adopted by the court-appointed expert.

The expert first developed a specific methodology for assessing the originality of the software, making a direct comparison of the source code, which constitutes the principal form of expression of a computer program. After all, copyright in software does not confer a monopoly over a particular functionality or method of processing information. What the law protects is the concrete implementation of that functionality — in other words, the specific form of expression through which the programmer has structured the commands, algorithms, routines and other elements that make up the program’s code. For this reason, the Court appropriately focused its analysis on the implementation of those functionalities rather than on their mere existence.

Another particularly significant aspect of the decision was its careful explanation of why certain elements of the programs had to be given less weight in the comparison. The expert report noted, for example, that both programs used the PHP programming language and had been developed using the ScriptCase framework. A significant degree of similarity resulting from the use of those tools was therefore to be expected and did not, in itself, establish that one program had reproduced the other.

This methodological distinction is particularly important because it avoids one of the most common pitfalls in software litigation: attributing legal significance to similarities that arise from purely technical features or are inherent in the technology itself.

Having established these parameters, the expert examination focused on the elements that could genuinely indicate copying of the developer’s intellectual creation. To that end, the court-appointed expert developed specific scripts to automate the comparison of millions of lines of code spread across thousands of files, measuring different levels of similarity between the programs. The analysis also encompassed the databases, the algorithms responsible for planning routines and the business rules implemented by the respective systems.

Ultimately, the expert examination established that the software registered by GTPLAN exhibited a high degree of similarity precisely in the elements most relevant to the operation of the so-called “Planning Module”. Based on this body of evidence, the Court concluded that the registered program substantially reproduced BIONEXO’s software, rejecting GTPLAN’s argument that the similarities merely resulted from the use of common tools and technologies.

In software litigation, evidentiary issues are often the greatest challenge precisely because of the high degree of technical complexity involved. By expressly identifying the parameters relevant to the assessment of originality, the appellate decision provides important guidance for future court-appointed expert examinations, thereby contributing to greater predictability and legal certainty in this type of dispute.

Finally, particular attention should be paid to the practical consequence that the Court attached to the invalidation of the registration. The appellate decision makes clear that invalidating a BPTO registration is not merely an administrative measure. Once it has been established that the registered program infringes a third party’s copyright, its commercial exploitation likewise becomes unlawful. An order requiring the cessation of use of the software is therefore a logical consequence of the judicial declaration of invalidity.

BIONEXO’s victory therefore extends well beyond the immediate interests of the parties. Rather than merely resolving an individual dispute, the precedent represents an important step in the development of legal protection for computer programs in Brazil. By establishing clear criteria for comparing software and reaffirming that registration cannot serve as a shield for the misappropriation of another party’s intellectual creation, the Court provides greater predictability for developers, companies and legal practitioners.

At a time when the digital economy plays an increasingly central role, decisions such as this help foster an innovation environment grounded in legal certainty, fair competition and effective respect for intellectual property rights.

Gustavo Piva de Andrade and Amanda Martins Navegantes are intellectual property lawyers and partners at Dannemann Siemsen.

Transparency note: The authors acted as counsel for the Plaintiffs in the lawsuit discussed in this article.