Technology Transfer and Franchising Contracts

Why does it celebrate the agreement involving industrial property rights and technology?

In addition to protecting the industrial property assets, it would license them to a company or  obtain a license to boost your business. You can also acquire knowledge not based on industrial property rights. For these transactions to be safe and enable the payment abroad, these agreements must be registered at INPI.

The types of agreements registered at INPI are the assignments and licensing of patents, industrial designs, and trademarks, in addition to technical assistance services and adquisition of technology (know-how). Franchise agreements are also registered, thus ensuring a safe agreement and assigning validity before third parties.

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What kind of agreements does it register at INPI?

The agreements registered at INPI are:

License agreement for exploitation of patent and industrial design - agreements to authorize third parties to explore the object of the patent or industrial design.

Trademark  license agreement - agreement aimed at authorizing the effective use by third parties of a trademark duly filed or registered in the country.

Technology adquisition agreement - agreement that establishes the conditions for acquisition of knowledge and techniques not based on industrial property rights (know-how).

Technical and scientific assistance services - agreements that establish the conditions to obtain techniques, planning and programming methods, as well as researches, studies and projects intended for the execution or provision of specialized services. In these agreements, the detailed cost of daily fee or hour fee  per type of technicians, the term for provision of the service or the evidence that it has already been provided and the total amount of the provision of the service, even if it estimated, it shall be clarified.

Franchise - involves services, transfer of technology, and transmission of standards, in addition to the use of a mark or patent. The franchisee must prove his knowledge of the Franchise Offering Circular, a document generated by the franchisor, pursuant to article 3 of the Brazilian Franchise Law (nº 13,966/2019).

Assignment of a patent, industrial design, and mark - involves change in ownership and may be annotated when it involves remuneration and when the holder of the right is domiciled abroad.

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What are the effects of the registration of agreements at INPI?

• It legitimates the payment abroad  for the negotiated technology;
• It enables tax deductibility, when applicable, for the company receiving the technology with respect to the amounts paid as royalties and technical support;
• It produces effect with respect to third parties.

How is the agreement amount determined?

The royalties type of patent, industrial design, trademark and topography of integrated circuit licensing agreement are related to percentage of net sales price and price and fixed value for each unit sold. In the technology supply agreements, the remuneration is established according to the contractual negotiation, and the price levels adopted nationally and internationally in similar agreements must be taken into account.

In the technical assistance service agreements, the value of agreement is based on the daily fee or hour fee detailed by the expertise of the technician and the total value of the service must be specified, even if it is an estimate. In the franchise agreements, usually the following remuneration is determined: franchise fee and royalties.

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Is the registration of the franchise agreement at INPI mandatory?

The registration is necessary for the agreements whose franchisors are domiciled abroad and which establish payments, but it is optional for domestic agreements, ensuring a reliable agreement and making it valid before third parties.

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Which law does it regulates the franchise system? And what is the Franchise Offering Circular?

Law no. 13,966 of December 26th, 2019, regulates the franchise system.

The Franchise Offering Circular is one the requirements of the Brazilian Law no. 13,966/2019 (article 3). According this law, the franchisor needs to be available the Franchise Offering Circular to the franchisee until ten (10) days before the signature of the franchise agreement. This document must include a summarized history of the franchesor, balance sheet and financial demonstration of the franchise allocating company, the profile of the “ideal franchisee”, the status of the trademarks, patents and other intellectual property rights object of the agreement at the National Institute of Industrial Property – INPI, and other items.

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Is the trademark important in the franchise system?

Yes. The trademark is the franchisor’s asset.

In the franchise system, as well as in the unitary system, the trademark is the input for strategy of publicity and marketing of the business. It is the link of the franchise system. Any mistake of franchisee should be affected the business.

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Where can I file the application?

The application may be filed exclusively through a electronic protocol in the e-Contratos system, in the INPI’s website.

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Who may request registration of agreement at the INPI?

Any of the agreement parties.

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How much does it cost?

The fees related to the Requests for Registration of Agreements may be obtained by accessing the the website https://www.gov.br/inpi/pt-br/servicos/tabelas-de-retribuicao/tabela-contratos.pdf

Some procedures of registration have a discount of 60% in the amount of the fee to be obtained by: natural persons; micro-enterprises, individual microentrepreneurs, and small-sized companies, as defined in Complementary Law no 123 of December 14th, 2006; cooperatives, as defined in Law no 5,764 of December 16, 1971; education and research institutions; nonprofit entities, as well as public bodies, in case of their own acts.

What document must it be submitted in a request for registration?

To request the service, the applicant must provide the following documents:

• Registration electronic request form (duly filled out);
• Paid up Federal Tax Liability Payment Form  (GRU);
• Power of Attorney;
• Explanation letter;
• Agreement and amendment or invoice;
• Translations of all documents in a Foreign Language; and
• Registration form of the Brazilian Assignee Company(ies).

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What is the term of processing for INPI’s decision?

30 days of the date of publication of the petition or request for registration in Industrial Property Gazette pursuant to Article 211, sole paragraph of Law no 9,279 of May 14th, 1996.

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What are the services not characterized as transfer of technology?

Some technical assistance services do not characterize transfer of technology according to Art. 211 of Law no 9,279/1.996, they are not registrated by INPI. The non-exhaustive list of such services, according Resolution INPI/PR no 156/2015:

• Purchase agency, including logistic services (support to shipping, administrative tasks related to customs clearance, etc.);
• Services provided abroad without the presence of technicians of the Brazilian company that do not generate any documents and/or reports, such as, for example, processing of products;
• Homologation and certification of quality of products;
• Financial consultancy;
• Business consultancy;
• Legal consultancy;
• Consultancy for participation in a bidding process;
• Marketing services;
• Remote consultancy, with no generation of documents;
• Services of support, maintenance, installation, implementation, integration, implantation, customization, adjustment, certification, migration, configuration, parameterization, translation, or localization of software;
• Training services for the end user or another software training;
• License to use the software;
• Distribution of software;
• Acquisition of a single copy of the software.

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How can I make the payments abroad with respect to the approvals of the technology agreements by INPI? 

In order to make a payment in foreign currency involving industrial property rights, supply of technology, provision of technical support services and franchise services, the company is required to formalize an agreement and submit it for annotation by INPI.

After issuing the Certification of Annotation, the company may, pursuant to Resolution of the Central Bank of Brazil – BACEN no 3,844/2010 and Attached Regulation III, proceed with the Electronic Declaration Registration – Record of Financial Transactions (RDE/ROF) through transfer of technology by accessing the Central Bank System (SISBACEN) via a financial institution or through own means.

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