Availability of preliminary injunctions makes Brazil an attractive litigation venue for SEP owners
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Nokia v Oppo
WSOU v ZTE
VoiceAge v HMD et alDivX v Netflix
|Court||State Court of Rio de Janeiro|
|Cause of action||Patent infringement practised by unwilling licensees|
Brazil is firmly in the spotlight when it comes to SEP disputes. The country has continental dimensions and one of the largest digital markets in the world. The black letter of the law foresees effective remedies to protect the right to exclude. Preliminary injunctions and impartial court-appointed expert examinations are two examples of early relief often granted by the specialised IP courts in Rio de Janeiro. As a result, unwilling implementers try to secure venues that they believe would be more favourable for them. So far, these complaints have been unable to yield good results for infringers or discourage patent enforcement in the country.
Preliminary injunctions are readily available
Brazil is a civil law country. The right to exclude is the essence of patent protection, which is outlined in the IP Law, and this also applies to FRAND-encumbered assets. To deter infringement and ensure the effectiveness of patent protection, the Brazilian IP Law states that courts must immediately grant preliminary injunctions to stop patent infringement (Article 209, Section 1). This is the main legal remedy outlined in the IP statute to prevent irreparable harm to patentees, as the law does not provide for punitive or enhanced damages at the end of a lawsuit.
SEPs are no different – they must be treated the same as any other patent granted by the Brazilian Patent and Trademark Office. There is no discrimination or limitation to the right to exclude with regard to patents that are declared to be potentially essential to a standard. Most decisions rendered by state courts handling SEP enforcement have established that an SEP does not preclude its holder from exercising the right to obtain a preliminary injunction.
The FRAND commitment also does not prevent SEP owners from seeking and obtaining preliminary and permanent injunctions. It is treated as a contractual obligation and could be raised as a defence, with the burden of proof of such breach of commitment imposed on the implementer. FRAND contentions have not prevented the grant of preliminary injunctions.
The latest injunction to protect an SEP was granted in Nokia v Oppo, in which the Finnish organisation sued the Chinese company’s Brazilian entity along with its local partner – a retailer company. The Rio de Janeiro state court granted a preliminary injunction to prevent the sale of Oppo mobile phones that implement Nokia’s AMR-WB technology. The court stated that if the injunction was not granted, Nokia could face irreparable harm. It was undisputed that the previous licence had expired and that Oppo had failed to engage in meaningful negotiations, which indicated that it was an unwilling licensee. Oppo informed the court that it ceased sales of its devices in Brazil.
Expert examinations: another key remedy
Preliminary injunctions are not the only remedy to encourage unwilling implementers to play by the rules. Civil procedure in Brazil includes a discovery phase, in which a court-appointed unbiased expert conducts an examination. If the expert finds a case for infringement (invalidity is not considered in an infringement action), the final decision will include a permanent injunction on top of the compensation for proven past damages.
In 2023 alone, three expert examinations were conducted in key IT patent disputes. In WSOU v ZTE, VoiceAge v HMD et al and DivX v Netflix, three different unbiased experts found infringement. ZTE informed the court that it is negotiating a licence with WSOU, and only time will tell whether HMD and Netflix will follow suit.
Declaratory judgment suits on the rise
However, implementers are finding new ways to litigate against SEPs. Since the second half of 2022, two implementers have filed declaratory judgment (DJ) lawsuits, seeking non-infringement rulings based on non-essentiality (as most infringed patents are also found to be essential and vice versa).
Disney filed a DJ suit against DivX – the owner of a video-coding patent – concerning its Disney+ streaming service. It sought a declaration that “Disney's use of the HEVC standard, including on its streaming platforms, does not violate PI 0506163-6 [a DivX Brazilian patent]” soon after DivX launched three successful infringement campaigns based on this same patent. Disney decided to settle shortly after the suit, which did not move forward.
More recently, TCL filed a DJ lawsuit against three licensors from Access Advance’s HEVC patent pool. This was a clear demonstration of TCL’s concern about being sued in Brazil, where it is a frequent defendant with numerous injunctions against it. This suit is ongoing.
The road ahead
The Brazilian judiciary is a big stage where countless patent infringement disputes are taking place and its role in SEP/FRAND disputes is becoming increasingly prominent. It has offered quick solutions that generally encourage serious negotiations that lead to settlements.
Brazil has the sixth largest smartphone market and the second worldwide market for streaming services. The readily available nature of preliminary injunctions set forth in the black letter of the IP Law accentuates the country’s importance as a venue for SEP litigation.