New Regulations have gone into effect in Brazil, which remove the requirement to record a royalty-free trademark license when the respective parties to the license agreement are “related”, as follows:
1) Recordation is not required for the purpose of adducing evidence of use of a trademark when the respective parties are “related or controlled companies”. The Corporation Act defines “related” companies as those companies that are connected by a 10% or greater stock participation, and it defines a “controlled” company as one in which the controlling company enjoys the direct or indirect right to elect directors of the former.
2) Recordation is also not required for the purpose of demonstrating evidence of use of a trademark when there is a parent/subsidiary relationship between the parties to the license agreement.
Pursuant to these Regulations, a cancellation action against a trademark registration, which is the subject of a license agreement, will not succeed where the cancellation action is based solely upon failure to record the license agreement.
However, recordation of a license agreement is still required to (a) pay and remit royalties, (b) effect fiscal deductions and (c) be effective against third parties [e.g., to permit the licensee to defend against trademark infringements, act against parallel imports, and preserve the licensee’s rights of use subsequent to the assignment of a trademark.
Another Regulation removes the requirement to rerecord a license agreement upon the renewal of a trademark registration which is the subject of an agreement. If and when such trademark registration expires or is canceled, the license recordal will be automatically expunged.