Problems relating to Trade and Investment on Brazil
18. Demands for technology transfer |
|||
Issue |
Issue details |
Requests |
Reference |
| (1) Restricted Validity Period of Technical Licence Agreement | - Technical Licence Agreement (TLA) is valid, at the longest, for 10-years, after which the terms and conditions including the provisions on confidential information protection expire. Thereafter, the licencee is free to use the technology at no cost. (In Brazil, there is no notion that use of the licenced technology is disallowed upon the TLA's termination.) Moreover, INPI does not authorise inclusion of grant back provisions in TLA as regards improved technology developed by the licencee. - "Law on foreign capital and remittance abroad, etc." restricts up to 5-years (or maximum 10-years by special extension request) the term of the know-how agreement. Due to this provision, valuable know-how even past 5 (10) years by right, cannot be collected (remitted); moreover, confidentiality protection can be guaranteed only for 5-years. |
- It is requested that GOB authorises conclusion of technical licence agreement. - Restrictions as described in the left column have already been repealed in many countries, and Brazil departs from the international trend. It is requested that GOB causes the law to be amended and improves its implementation by the authority. |
- Section 355 Income Tax Regulation ("Regulamento do Imposto de Renda") - Section 74 Law 36.470 of 1958 - Section 12 Law 4.131 of 1962 - Section 6 Decree-Law 1.730 of 1979 - "Law on Foreign Capital and Remittance Abroad", etc. |
| (Action) - In Brazil, "Law on Foreign Capital and Remittance Abroad" provides the cap of 5-years on deduction from the taxable income of royalty payment based on Agreement for Transfer of Technology (ATT)(Know-how Agreement). Normally INPI approves ATT Registration only under this cap, effectively limiting the ATT term to 5-years. As to Patent Licencing, royalty payment may be collected throughout the term of the Agreement. - INPI is entitled to extend for a further 5-year period, deduction of royalty payment from the taxable income, as empowered by CMN (National Monetary Council.). However, it is the basic understanding in Brazil that the technology is completely transferred within the period of 5-years. To get extension by another 5-year period, it is prerequisite to convince INPI as to its necessity. In practice, this is a difficult task and many such requests have been denied. Collection of royalty over a long-term has become a difficult ordeal. - From the 1st Japan-Brazil Joint Commission Meeting for Trade and Investment of February 2009 to the 6th Meeting of November 2012, Japan side successively requested improvement on the rate of royalty and the period for protecting confidentiality. |
|||
| (Improvement) - From July through September 2010, METI and Brazilian Ministry for Development of Commerce and Industry mutually agreed on the two issues, making a step forward: (1) INPI may, regardless of the confidentiality protection provisions for 10-years or more, register contract (2) INPI will show sufficient reasons for refusal of registration in writing, signed by Deputy Minister or his/her equivalent. (2013 Report on Compliance by Major Trading Partners with Trade Agreements). - At the First Japan-Brazil Joint Commission's Meeting on Promotion of Investment and Industrial Cooperation in October 2013, it was agreed to include repeal of the validity term of the overseas technical licence agreement, including the know-how licence on operational technology on agenda. (The 2015 Report on Compliance by Major Trading Partners with Trade Agreements). |
|||
| (2) Short Protection Period for Transferred Technology | - In provision of Technological Transfer in Brazil, the Contract Term is specified as 5-years in principle. Because of such short protection period, Member Firm cannot help being hesitant about giving technological transfer to its Brazilian company with a positive stance. | - It is requested that the Brazilian Authority repeals the current Contract Term of 5-years, and replaces it with the provision, "for the Contract Term as mutually agreed between the parties" concerned. | - National Institute of Industrial Property (INPI) - Decision No.22 of 27 February 1991 - Normative Order No. 120 of 17 December 1993 |
| (3) Requirements for Domestic R&D Investment and Collection of Investment in Nationalisation Certification | - As part of Nationalisation Certification, GOB compels manufacturers' investment into R&D in Brazil in the amount representing 4% of sales, as well as collection of the invested amount. | - It is requested that GOB repeals the requirement for technical transfer. | - 8248/1991 - 10176/2001 - 11077/2004 - 12431/2011 |
| (4) Concern Over Introduction of Plain Packaging Regulation on Tobacco Products | - GOB contemplates introduction of Tobacco Plain Packaging Legislation (TPPL) on tobacco products as has been introduced in Australia. If it is introduced, it could materially reduce the identification capabilities (between the products), being the essential faculty of trademarks, materially destructing the "brand value", and consequently damaging the sound market competitions. More precise concerns include, without limitation, purchasers unwittingly purchase unintended products from the difficulty of making distinction, move to lower priced products, and finally, closing the door for new entry into the market. In addition, simpler packages facilitate counterfeiting activities, resulting in the growing counterfeits in the market. (Note) TPPL, a measure to standardise configuration, colour, etc., of individual tobacco package, largely restrict the space on the packaging by the mandate to print specifically, "warnings with photo" (in the 75% of the total area front, and 90% back). |
- As described in the left column, TPPL infringes upon intellectual property right of business operators, consequently hinders the industrial development through sound market competitions. On the other hand, prevention of juvenile smoking is deemed possible through education, with tightened penalties, etc. It is therefore requested that GOB implements the regulation based on the principle of proportionate general rules - GOJ is requested to take positive measures by fully grasping the thrust of the issues elaborated in the left column. |
- Undecided. (Minister of Health expressed gob's intent to introduce TPPL). |
<<BACK |