The doctrine of legitimate expectations and industrial property rights

By Rodrigo de Assis Torres & Felliphe Pereira dos Santos, Dannemann Siemsen

The Public Administration’s acts, in particular, the ones practiced by the Brazilian Patent and Trademark Office (BPTO), are subject to the requirements of reliability and coherence, based on the principles of legal stability, good faith and the Doctrine of Legitimate Expectations. Accordingly, the BPTO can neither contradict its own acts/omissions with dissenting positions taken in similar pending applications cases, nor abruptly and without relevant justification review its previous positions.

The idea of precedence and the need to respect the legitimate expectations created by past behaviors/decisions is paramount for ensuring the validity of every subsequent acts and decisions issued by the Public Administration. This is the foundation for the legitimate expectation that public acts and policies are in accordance with the laws. It also provides stability, which is the cornerstone of the reliability of the Public Administration.

Unfortunately, the BPTO has, in some concrete and specific situations, ended up either practicing acts that were against previous and consolidated behaviors or deciding identical pending cases with divergent outcomes.

As a result, this lack of consistency and reliability may result in instability for all those involved and prevent companies and the associated parties from planning effectively.

Recently, the Brazilian Courts have been strongly enforcing the Doctrine of the Legitimate Expectations. As such, we highlight some important and recent decisions:

• BPTO v. DURECT COPORATION and others (“Mailbox system Patent”) Process number 0132260-18.2013.4.02.5101 – 25th District Court of Rio de Janeiro

In this case, the BPTO intended to modify the expiration term of agrochemicals and pharmaceutical patents, which, in practice, would reduce the time of protection originally granted.

In a decision issued on April 1, 2014, the Judge of the 25th District Court stated that, due to the long delay in granting a patent, the BPTO did not meet the Doctrine of Legitimate Expectations, which establishes that when an administrative act is perpetrated by the Public Administration, there is an expectation of this act will be continued:

“In other words this principle defends the possibility of maintenance of unlawful administrative acts, perpetrated with   appearance of legitimacy and which effects extend in time causing legitimate expectations of stabilization of effects that derivate of the Administrative conduct.”

• TIFERET v. BPTO and others – Interlocutory Appeal number 240671 2014.02.01.002875-0 – 2nd Federal Court of Appeals

In this case, the BPTO had allowed registration of three trademarks containing the name “RESERVA”.
Recently, the BPTO denied registration for the Plaintiff’s trademark which also contained the name “RESERVA” even though all of them were in the same class of products. This was done so under the argument that it would violate the aforesaid senior three trademark registrations.

The Federal Court, based on the Doctrine of the Legitimate Expectations granted the Plaintiff’s Preliminary Injunction:

“I consider to be plausible the allegations of the Appellant about the apparent lack of criteria of the BPTO, which would have accepted previous registers for mixed trademarks containing the name "RESERVA" and "RESERVA BRASILEIRA", to subsequently reject the registration for the Appellant’s trademark containing far distinct visual treat, under the allegation of inhibitive priority claim."

• YIELDING English School v. BPTO and others – Interlocutory Appeal number 0017485-64.2013.4.02.0000 – 2nd Federal Court of Appeals

The BPTO refused registration for the trademark concerned under the argument that another company had filed its application two months earlier. The BPTO, however, refused to consider that, in other previous lawsuits against third parties, in which the BPTO was a co-defendant, the Courts had already recognized the Plaintiff’s first use, affirming its rights over the trademark.

Therefore, the BPTO could not ignore what was decided in Court and, subsequently, deny Plaintiff’s first use, as affirmed in the preliminary injunction:

“(…) I verify that the question has no innovation, once the precedence of the use of the renowned trademark “YES” by the Appellant to distinguish language courses has been recognized by the Judiciary, in the lawsuits number 2002.51.01.511601-9 and 2005.51.01.522473-5.”

*****

The observance of the Doctrine of Legitimate Expectations by administrative entities, including the BPTO, is mandatory in Brazil. These examples show the international community that Brazilian Courts are ready to use the Doctrine of Legitimate Expectations as a general principal to protect Public Administration’s reliability and to secure stability to the industrial property system.

The legitimate expectations created by administrative acts are in the same baseline of the general standard of legality. Both are hermeneutical principles. Both deserve the same treatment when a concrete case is considered.

Accordingly, when analyzing a situation or case, the courts must determine what will offend the legal system less: (1) maintaining the effects of a Public Administration’s act/behavior that created a legitimate expectation or (2) cancellation of the act considering its possible illegality or further changing of the Administration’s understanding on the subject matter.