Brazil

How Brazilian courts approach IP damages in Brazil and what global companies need to know before pursuing infringement claims. Understanding damage caused by intellectual property (IP) infringement in Brazil is essential for any company expanding into or selling within the country. Protecting brands, inventions, and creative assets is a key component of growth, and Brazilian law provides robust mechanisms to prevent misuse and obtain compensation when rights are violated. In practical terms, courts may issue injunctions to halt the unlawful conduct and award monetary relief based on three primary benchmarks: (1) the rights holder’s actual losses (such as lost sales), (2) the infringer’s profits derived from the violation, or (3) a reasonable royalty representing what a license would likely have cost. These parameters are legally defined, but their application depends on the evidence presented in each case. As Brazilian law provides methods rather than fixed formulas, the final amount may vary. Courts generally consider factors such as the extent and duration of the infringement, the economic impact on the market, and principles of proportionality and reasonableness. Decisions may also consider the economic profiles of the parties, especially when evaluating deterrence and the practical effects of the infringement. Recent case law further shows that misuse of a brand can justify moral (non-economic) damages to reflect harm to reputation, although the amounts vary from case to case. As Brazilian law sets broad methods but not strict formulas, similar disputes may result in different compensations amounts — particularly when evidence of market impact is limited. Furthermore, it is important to understand how courts approach fairness, as awards may be adjusted in light of the parties’ economic profiles, the scale and duration of the misconduct, and the need to deter repetition of the behavior, which explains why similar infringements sometimes yield different outcomes. Regarding loss of profits, courts tend to be more receptive when the claimant presents a clear, data-backed account of what would have occurred in the absence of the infringement, supported by sales histories, pricing and margin records, independent market studies, and evidence connecting customer confusion or diversion to the unauthorized use. When granular data is unavailable, expert analysis can help estimate the infringer’s profits or anchor a reasonable royalty based on comparable licenses and industry standards, which improves credibility and settlement leverage. Timely action is also critical, as acting early reduces ongoing harm, supports injunctive relief, and signals to the court that the business is taking reasonable steps to mitigate losses. For foreign companies, the bottom line is pragmatic: meaningful recovery is possible in Brazil, but predictability depends on evidence and case specifics rather than fixed formulas. The most effective strategy is to build a clear, well-supported record that sets out the value of the IP, documents the nature and scale of the unauthorized use, and quantifies both financial and reputational impacts. Doing so not only improves the prospects of a favorable judgment — whether measured by actual loss, infringer’s profits, or a reasonable royalty — but also strengthens your position in negotiations and helps protect brand integrity through timely injunctions. HOOK Brazilian courts provide solid avenues for IP damage recovery — when supported by strong evidence. Understanding how judges assess these claims is key for foreign companies. See the main strategic insights. AUTORES Raïssa Simenes Martins Fanton — Partner, Civil Litigation Luíza Pattero Foffano — Associate, Civil Litigation

Learn how targeted due diligence in Brazil helps foreign investors identify deal-breaking risks, negotiate protections, and strengthen post-closing outcomes. Brazil’s dynamic market and evolving regulatory landscape continue to make it an attractive destination for cross-border M&A. For foreign investors acquiring or investing in Brazilian businesses, however, outcomes are often determined less by headline valuation and more by how effectively the parties identify and price local risks. In transactions involving Brazilian targets, due diligence is crucial to uncover issues that could materially affect enforceability, valuation, and post-closing integration. Red flags commonly arise across corporate, regulatory, labour, tax, environmental, and cultural fronts—and, when properly mapped, they shape the risk allocation and contractual protections that determine whether the deal will close smoothly and perform well after closing. Corporate findings are often the most critical, as they can directly compromise enforceability and closing mechanics. A well-conducted due diligence process should therefore go beyond confirming formal compliance and assess whether the target company’s legal form and governance model are fit for the purpose and compatible with the buyer’s group structure, internal controls, and compliance standards. In Brazilian corporations (sociedades anônimas), this typically includes a careful review of statutory books and corporate records to confirm that entries are complete and consistent, and that there are no missing, outdated, or improperly maintained books. Failures in record keeping or irregular records may undermine the validity of internal decisions, weaken the company’s position vis-à-vis third parties, delay conditions precedent, and increase the likelihood of post-closing disputes. Governance arrangements also require close attention, particularly shareholder agreements, internal policies, and restrictions on share transfers. Clauses such as rights of first refusal, tag-along and drag-along provisions, veto rights, and other transfer limitations can significantly affect control, closing conditions, and post-closing governance—especially when they are not properly documented or reflected in the company’s records. Another recurring issue concerns representation and signing authority. Brazilian law expects clear definition and proper registration of the individuals with powers to bind the company, including officers, directors, and attorneys-in-fact. Due diligence should confirm appointments, mandate validity, and any limitations on authority, while also verifying that the company’s signing powers are aligned with the transaction’s practical needs, for instance, approvals for disposal of assets, granting of guarantees, incurring debt, or entering into agreements with related parties. Where authority boundaries are unclear or inconsistently formalized, acts performed beyond the scope of authority may lead to validity challenges and create fertile ground for post-closing conflicts. Transactions involving controlling shareholders also deserve heightened scrutiny. Under Brazilian corporate law, controlling shareholders owe duties toward the company and minority shareholders, and abusive conduct can result in annulment, damages, and personal liability. For foreign investors, this translates into a need to examine historical related-party transactions, governance practices, and approval processes to assess whether past conduct — or the proposed structure — could trigger minority complaints or regulatory scrutiny. These risks are not merely theoretical: they often influence the drafting of closing conditions, the allocation of responsibility for known issues, and the negotiation of remedies. Outside the corporate perimeter, labor, environmental, and tax diligence frequently reveal issues with immediate financial and operational implications. Labor is a common source of material contingencies in Brazil, particularly where informal arrangements, improperly characterized service providers, flawed outsourcing structures, or commercial agency relationships exist. These scenarios can lead to significant liabilities, including retroactive recognition of employment relationships and joint or subsidiary liability. As a result, due diligence should test operational reality — not just documentation — by assessing evidence such as control, subordination, exclusivity, and integration into the business. Environmental and regulatory diligence, in turn, must reflect Brazil’s multi-layered framework across federal, state, and municipal authorities. Investors typically need to verify that licenses exist, remain valid, and cover all activities and sites, while also identifying administrative proceedings, fines, civil actions, and Conduct Adjustment Agreements (TACs). Environmental exposure can be financial, but it can also restrict operations and affect reputation — particularly relevant for groups with ESG commitments and strict compliance expectations. Tax diligence requires equal attention, given Brazil’s complex and decentralized system, and the variability of rules by activity and location. The review should focus on the sustainability of the target company’s tax positions and planning structures, especially those that may be reclassified under substance-over-form approaches, and should confirm the legality and ongoing compliance requirements of any tax incentives or special regimes. Failures in this area may trigger retroactive assessments, penalties, and litigation, often with direct impact on cash-flow. Even where the legal baseline is sound, cultural diligence can materially influence whether the deal will achieve its intended value. Leadership style, decision-making dynamics, and communication practices vary widely across Brazilian businesses and can affect integration speed, employee retention, and execution of the post-closing business plan. For foreign investors, evaluating management autonomy, the role of middle leadership, and internal communications can help anticipate integration friction and inform a more realistic integration roadmap. A constructive approach during negotiations — treating the target as a future partner rather than an adversary — often supports smoother integration, especially when paired with early planning for internal and external communications and objective metrics to track retention, engagement, and leadership alignment. Ultimately, the value of the due diligence lies in how effectively findings are translated into the definitive agreement — whether it is an SPA, QPA, or another instrument — and into practical protections that work in the Brazilian legal environment. The red flags identified should directly inform risk allocation, representations and warranties, indemnities, closing conditions, and price adjustments. Where meaningful contingencies exist, protections linked to the purchase price are commonly used to align incentives and reduce uncertainty. Holdbacks allow a buyer to retain a portion of the price for a defined period or until specific post-closing conditions are met, while escrow accounts — administered by an independent third party — require careful drafting around release criteria, claim procedures, dispute resolution, and related banking and tax considerations. Both mechanisms are most effective when tied to objective triggers and clear evidentiary standards. Brazil remains a high-opportunity market, but successful transactions tend to be led by investors who treat due diligence as a strategic deal tool — rather than a compliance formality — and who convert findings into disciplined risk allocation and enforceable protections. If you are evaluating an acquisition, minority investment, or asset carve-out in Brazil, a tailored due diligence and documentation roadmap can help you accurately assess risk, negotiate efficiently, and close the deal with confidence. KEYWORDS: due diligence; risk allocation; deal protections AUTHORS Andrea Tincani, partner in the Corporate Law area at FIUS Letícia Flaminio, lawyer in the Corporate Law area at FIUS

The promise of reducing accidents and revolutionizing sectors such as automakers and insurance companies faces an urgent challenge: creating clear rules to allow testing and safe circulation of autonomous vehicles on the streets. Thinking about autonomous vehicles may seem futuristic, but it is also a reflection on the present. In Europe, different countries have already regulated the development and introduction of the technology in traffic, such as Germany, the first country in the world to do so in 2021, and the United Kingdom, very recently. In the United States, a pioneer country for autonomous vehicles (“AV”), commercial AV based mobility service provider like Uber and Waymo are already on the market and in the US-States Texas and California local state regulation are already in place. Comparing the existing legal framework for AV vehicles globally for instance the liability for car crashes is regulated inconsistent. Further, research showed that the regulatory framework for AVs follows two different regulatory approaches: the pro-business approach, leaving the providers freedom and the regulatory approach which tries to eliminate the security risk of the AVs. In Brazil, the first car to travel on urban roads for more than 70 km was IARA in 2017, a technology developed by the Federal University of Espírito Santo. Today, it is applied in port operations and logistics through the Espírito Santo-based startup Lume Robotics, involving different companies in the sector and state entities. However, the regulatory scenario does not keep up with the speed of Brazilian innovation. Although Bill 1317/2023 is currently proceeding in the National Congress, although its current text has much to gain from the maturity of international experiences. Given the expectation that it will enhance traffic safety, grant mobility also for elderly or handicapped people, secure extra time to driver for emails or reading as well as have repercussions on several sectors of the economy, such as in-car entertainment providers and insurance companies, if the impact of autonomous driving is as significant as expected, it is essential to have clear rules that ensure precisely this purpose. It must be avoided that over regulation hinders the development of AV businesses by determining only allowed and prohibited safety limits. Further, inconsistent rules regarding the driver’s liability for car crashes caused or not by a malfunction of the driving system will discourage customers to rely on their driving system or pay extra for the auto pilot/driving assistant. This is because the promise that technology will increase traffic safety by reducing the human error factor, significantly lowering accident rates, has as a counterpart the relevant risk of system’s decision or failures that cause lethal or non-lethal accidents. Also, it cannot be ignored that traffic is an essentially human environment, filled with unpredictable and uncontrollable factors, such as a pedestrian crossing outside the crosswalk or countless other examples. In other words, the current moment in Brazil is not only important, but indeed essential and it represents an opportunity to allow autonomous driving to be truly safe in the Brazilian experience. So, what can we learn from international experiences? Changing traffic rules is a sensitive endeavor, with various implications and challenges related to social and institutional acceptance. From the perspective of international experience, we observe the conservative German approach and the British model, which already establishes preliminary liability for insurers. Within the scope of this brief reflection, we turn to the legal developments taking place in the United States. Despite the contrast between California and Texas laws, both states are concerned with identifying the human presence in the safe operation of autonomous driving. While California requires a human operator who, to some extent, monitors the circulating vehicles remotely or onboard, Texas law lacks clarity regarding continuous monitoring. However, it imposes duties on the manufacturer and the owner to keep the autonomous driving system (SAE levels 4 and 5[1]) operating in accordance with traffic laws. Despite their differences, both regulations aim to ensure safety and damage reduction measures, especially for the manufacturer. In other words, starting from the freedom-responsibility binomial as a premise, it is up to the manufacturer to do everything within their reach to ensure that autonomous driving is as safe as possible for passengers and the entire community. In other words, acting freely, because it is allowed or not prohibited by law, imposes duties and precautions whose noncompliance may lead to significant legal consequences. Just imagine an accident, caused or not by a malfunction in the system, resulting in serious injuries or even the death of one of the parties involved. Note that the same example may be applicable, for instance, to a hypothetical test on a highway and to a not-so-distant future of app-based passenger transport. Texas regulation generically imposes the duty of safety, requiring autonomous driving to comply with traffic laws and be licensed by regulatory agencies. California law, for example, requires that, during the testing phases, companies have a human operator who, in real time, monitors the operation of each of the vehicles. This remote operator, according to the text, must be able to take control of the vehicle remotely and place it in a minimum risk condition and be trained to “safely execute the duties,” including how to react to dangerous situations and potential accidents. Although imperfect, the experiences of California and Texas can serve as guidance, especially due to the importance of imposing, at the regulatory level, guidelines on safety duties and organizing the bureaucracy related to licenses and specific authorizations from regulatory agencies. In Brazil, the legal gap presents, on one side, the challenge of technological development under the risks of a lack of legal and regulatory support, and on the other side, the opportunity to discuss and propose the adaptation of this development to the Brazilian legal system. Companies already operating or planning to operate in Brazil face a complex scenario, in which the notion of safety and care must be suited to these circumstances. We have the chance now that we don’t just adapt a foreign legal regimes but discuss the different regulatory approaches and develop a tailored legal framework which suits best to the Brazil country. Rodrigo Sardenberg Senior Associate Compliance, Business Investigations and White-Collar Crime FAS Advogados in cooperation with CMS Martin Wodraschke Head of CMS Automotive & Mobility IFG CEE German Practice – CMS Law Firm [1] Society of Automotive Engineers – SAE is the international entity that, together with the International Organization for Standardization – ISO, develops technical standards for the development and circulation of autonomous vehicle technology. The automation levels listed by these entities range from 0 to 5. Level 3 defines conditional automated driving, while levels 4 and 5 differ between high and full driving automation, meaning that the driver's/passenger's level of attention is an important distinguishing factor.

The corporate and mergers and acquisitions team at Finocchio & Ustra Advogados advised Gran Capital Partners — a Brazilian private equity firm that partners with entrepreneurs by combining capital and management support to scale high-potential businesses — on a strategic investment transaction in STK Comércio de Alimentos S.A. (Aurok), a chain of high-quality meat boutiques with stores in Campinas and Indaiatuba and a vertically integrated operation with its own high-technology processing facility. This is the firm’s third recent investment, following Sterna Café and La Guapa. The transaction reinforces the ongoing professionalization of the specialized protein retail and gourmet grocery segments, with positive impacts on quality standardization, the shopping experience, and the expansion of the product portfolio for consumers. As a result, Aurok will be able to accelerate its growth and implement its expansion, with gains in operational efficiency and enhanced professionalization, thereby contributing to the consolidation of the segment in São Paulo. The transaction was led by partner Andrea Tincani, with the participation of Camila de Godoy Ferreira, Júlia Cristina Arruda Savioli, Carolina Zogaeb, and Enrico Abrahão Oliveira, all from Finocchio & Ustra Advogados.