Brazil Becoming a Relevant Forum for Telecom Patent Litigation

Brazil is one of the leading countries deploying 5G technology. It is expected that Information and Communications Technology (ICT) industry will bring to the country USD 25 billion in investments in the coming years. The country has more active smartphones (242 million) than people (214 million), and this number is predicted to increase as companies are introducing more products in the market.

Continued economic development has been followed by an increase in telecom patent litigation. Brazil is becoming a key jurisdiction to enforce patents as well as stacking defensive portfolios. The size of the market together with the availability of strong remedies in patent litigation (preliminary and permanent injunctions) are factors attracting the attention of innovative companies.

Unlike other jurisdictions, injunctions in Brazil are no equitable remedy. There is no discretionary power of the court to decide whether to grant a permanent injunction upon the finding of infringement at the end of the proceedings. Injunctive relief is the primary remedy, and it can only be substituted by financial damages at the election of the plaintiff.

Preliminary injunctions, on the other hand, are subjected to the discretion of the courts—and must pass a test of balance of hardships. According to the Brazilian Code of Civil Procedure, to obtain a preliminary injunction, the plaintiff must prove there is a likelihood of prevailing on the merits and a risk of irreparable harm. The evidence package is of paramount importance at this stage to maximize the patent holder’s chances of success in obtaining a PI. Typically, patent holders will seek expert reports attesting infringement, as well as market reports to counter defense claims on the impact of a PI. On their turn, defendants in infringement suits will come forward with their own set of expert reports.

The decisions denying PI requests in Brazil are justified based on the need of an unbiased technical examination, conducted by a court-appointed expert. The production of evidence followed by a court-appointed expert report on infringement is becoming a relevant step in patent litigation in Brazil. Upon finding of infringement, the permanent injunction becomes an imminent threat that defendants can no longer ignore.

This is what happened in WSOU Investments, LLC v. ZTE. WSOU filed the lawsuit before Brazilian courts in Rio de Janeiro in October 2020, seeking both injunctive relief and damage compensation. The method patent asserted is related to the Automatic Neighbor Relation (ANR) feature in 4G base stations. The PI was granted by the trial judge, but later vacated by the appellate court in an interlocutory appeal—grounded on the need of an unbiased technical examination addressing infringement.

Following a lengthy pleading phase, which included a mediation hearing, the trial judge issued a case management decision in late January 2022, appointing a court expert. The parties submitted their questions for the technical examination, and in late November 2022, the court expert was summoned to start working on the report.

After a few rounds of hearings between the court expert and the parties’ technical assistants/lawyers, on April 20, 2023, the court-appointed expert issued an opinion concluding that ZTE’s base stations infringe WSOU’s patent. The court expert applied the doctrine of equivalents—which, in Brazil, has statutory grounds. According to Article 186 of the Brazilian IP Statute, there is infringement even when the implementer is employing equivalent means. In the WSOU v. ZTE case, the court expert understood that the three characterizing elements of independent claim of WSOU’s patent are implemented in ZTE’s base station with minor differences that are equivalent in function, form, and result.

On April 24, 2023, WSOU filed a motion seeking injunctive relief and asking the case to be moved to trial. Following that plead, parties filed briefs asking the case to be stayed pending negotiation of a final settlement. On August 7, WSOU and ZTE settled their worldwide dispute.