On June 15, 2022, our partner Pablo Torquato spoke to the Japanese Chamber of Commerce and Industry in Brazil on the importance of registering technology transfer agreements with the Brazilian Patent and Trademark Office (” INPI”), in particular on the legal particularities and the internal directives which imply this registration.
Pursuant to Article 211 of Brazilian Federal Intellectual Property Law No. 9.279/96, INPI is the body responsible for registering certain industrial property and technology transfer agreements.
“Art. 211. The INPI will register agreements involving a transfer of technology, franchise agreements, etc., so that they can produce effects with regard to third parties.
Registration has three important purposes: (i) to produce effects with respect to third parties; (ii) allow the tax deductibility for the licensee of the sums paid in respect of royalties and technical assistance; and (iii) to legitimize royalty remittances abroad.
In particular, registrations are made by the INPI’s Contracts Department according to an entirely separate procedure and not through the patent and trademark departments like other agencies around the world.
Certain agreements involving the licensing of industrial property rights, such as trademarks, patents, industrial designs and topography of integrated circuits, transfer of know-how technology, technical assistance services and franchising can be registered.
There are also several particularities that the parties must respect when negotiating agreements requiring registration with the INPI, such as:
- The agreements may be registered, at most, for the duration of the validity of the intellectual property rights, and require, from time to time, the renewal of the certificate of registration adapted to the intellectual property rights subject of this agreement;
- In the case of technology/know-how transfer agreements, these agreements are registered for a maximum duration of 5 years, renewable for an additional 5 years, the parties explaining why this technology was not transferred during the initial period 5 years;
- (i) Patent or Industrial Design royalties are retroactive to the start date of the license registration; and (ii) Trademark: it can only be invoiced from the date of grant of the registration of the Trademark;
- In all cases, the tax deduction and the payment of royalties can only be calculated from the date of filing of the application for registration with the INPI;
- INPI rules and formalities for the registration of agreements, including signatures and initials, complete specification of the intellectual property rights subject of the agreement, legalizations, etc. ;
- In the case of Technical Assistance Services, the INPI requires a breakdown of the number of hours/days worked by each technician, the daily rate (rate/hour or day) by type of technician and the total value of the service provided, even if estimated.
One of the most important purposes of recording agreements is to allow the transfer abroad of royalty fees for the exploitation of patents, use of trademarks, transfer of technology (know-how) and technical assistance, which must also follow the rules of ordinance 436/58 and articles 363/365 of the IRS tax RIR/18.
Finally, holders of intellectual property rights must be aware of the applicable local legislation and the regulations of the INPI, especially since there is a list of agreements exempt from registration because they do not characterize the transfer of technology by law, such as consultancy agreements and software-related agreements.