Brazil changes intellectual property regulation applicable to technology agreements

On July 11, 2023, Brazil’s National Institute of Industrial Property (INPI) published Ordinances No. 26/2023 and No. 27/2023, in order to formalize changes to the administrative procedures and guidelines for the registration of technology transfer and franchise agreements, as well as the annotation of licenses and assignments of industrial property rights.

These changes formalize certain understandings disclosed by the INPI in December 2022, which were awaiting regulation to be effective, and reflect practices that have already been adopted on the international stage.

In simplifying the procedures for registering and annotating agreements, the INPI seeks to speed up the process and stimulate negotiations between local and international players. The changes also give private agents expanded autonomy, strengthening the Brazilian institutional environment and creating incentives for economic development.

Get to know the ordinances

Ordinance No. 26/2023 establishes new provisions that must be observed by those interested in the annotation of licenses and assignments of industrial property rights and the registration of technology transfer and franchising agreements. This ordinance expressly revoked the INPI’s Normative Instructions No. 16/2013, No. 39/2015 and No. 70/2017.

In turn, Ordinance No. 27/2023 modifies the examination guidelines for the annotation or registration of agreements to be observed by the INPI itself. It expressly revoked INPI’s Resolution No. 199/2017, which previously ruled such matters.

Key changes

Among the key updates the ordinances introduce, the following can be highlighted:

• Express recognition of the possibility of registering licensing agreements for the license of non-patented technologies (know-how) which must be registered under the “Technology Supply” category (Article 2, III, A of Ordinance No. 26/2023);
• The possibility of charging royalties on trademark application licenses (the application of this understanding to patent applications, industrial designs, and other assets was not recognized in the ordinance, as it still depends on evaluation by the INPI’s Federal Attorney Office (Article 14, IV of Ordinance No. 27/2023);
• Elimination of the requirement to mark the parties initials on every page of agreements and their annexes, which was previously required by Resolution No. 199/2017;
• Elimination of the requirement for two witnesses’ signatures in agreements with provisions for signing in Brazil, which was previously required by Resolution No. 199/2017;
• Elimination of the requirement to present the corporate documents of the legal entity acting as the assignee, franchisee or licensee, which was previously required by Resolution No. 199/2017;
• Elimination of the requirement to submit the Registration Form (“Ficha Cadastro”), which was previously required by Resolution No. 199/2017;
• Elimination of the notarization and apostille/consularization of documents signed outside Brazil via digital signature; and
• Acceptance of digital signatures without ICP-Brazil certification.

Immediately effective

The new ordinances have been in effect since their publication in the Industrial Property Gazzete (RPI) No. 2740, on July 11, 2023. Thus, new procedures for the registration and annotation of technology agreements performed since that date must follow the new guidelines presented.

Effects of registering or amending agreements

Registering or annotating agreements with the INPI ensures the production of effects against third parties and provides negotiations involving intangible assets with greater legal certainty. Furthermore, these procedures allow financial amounts paid as royalties to be tax deductible.

It is worth mentioning that Law No. 14,596/2023, which provides for transfer pricing rules and comes into effect on January 1, 2024, will revoke legal provisions that require technology agreements to be registered with the INPI for tax deductibility purposes. Moreover, since December 30, 2022, when Law No. 14,286/2021 (New Foreign Exchange Rate Framework) came into effect, the annotation or registration is no longer required to legitimize the remittance of royalties abroad, requiring only proof of the payment of the applicable income tax.

For more information on this topic, please contact Mattos Filho’s Technology practice area.