Victor Torres: “Brazilian judges can be quite assertive and resolute”

JUVE Patent: Brazilian patent courts, particularly your court, have seen their importance in patent litigation grow enormously over the past year. Is this solely due to Brazil’s economic significance as a market for consumer goods?

Victor Torres: The size of our market plays a very important role. But there are bigger, more populated, and richer countries that are not as important as Brazil right now. What has an additional impact is our legal stability and a new procedure. It has been in place for a year and a half. It secures stability, predictability, and consistency, while also allowing disputes to be resolved within approximately five months without sacrificing the depth of the analysis. The parties have ample opportunity to produce evidence, present expert opinions, and fully develop their legal and technical arguments.

This new procedure – could you describe how it works?

After filing, the case lands on my desk within 24 hours or so. I quickly appoint a technical expert to assess whether the patent is valid and infringed. In SEP cases, I always initiate the FRAND question. The experts are usually able to provide me with an answer within four months. Of course, it is not up to the expert to determine whether a patent is infringed or valid, but their answers give me the elements to navigate these complex disputes and to make the final determination.

Before judgment, we have a hearing lasting up to seven hours, and both parties can cross-examine the expert. I get to ask questions to challenge their opinion to see if it sticks. And only after determining if there was an infringement, if the patent is valid, and that there was a FRAND offer that was not successful, will I grant a preliminary injunction based on the merits.

Since we began consolidating this procedural framework, the number of SEP infringement cases filed in Brazil is approximately twice the total number of cases filed during the entire preceding decade. The parties and lawyers are paying more attention now because they know we have a reliable process. They know the exact wording I am going to use in my decisions because it is the same template for all cases. It is very predictable, and I always warn them of what I am about to do before I rule on the issues. Again, parties can rely on stability, predictability, and speed in Brazilian patent proceedings.

What did not go well with the old system?

We used to have a quick preliminary injunction system, but they were often reversed. But now, under the new regime, the whole procedure from filing to preliminary injunction takes five months. The PI is almost a permanent injunction because it is a decision on the merits and not urgency-based. By the way, a decision under the new procedure has never been reversed by the appellate court. Never.

What else should companies know when filing a patent claim with the court in Rio de Janeiro?

Usually, I dismiss the necessity of posting a bond because most countries have treaties with Brazil to dismiss bonds. I also tell the parties that all records are going to be public. Brazil has a constitutional rule that our records must be public. Of course, if they have commercial secrets and contracts, they can keep them confidential in a special form of protocol.

We have a bifurcated system. Companies have to go to a federal court to challenge validity. But defendants can argue validity as a defence in the infringement case, because if I deem the patent to be invalid, I cannot enforce it. I will not void it. But defendants can use invalidity arguments against the injunction and its enforcement. And if it is an SEP, I often tell parties what is going to be considered FRAND and what is not, and how to submit a FRAND offer.

“Brazilian judges can be quite assertive and resolute”

When I grant the injunction, I always let the parties know what will happen if they try to stall the proceedings or do not comply. Brazilian judges can be quite assertive and resolute in ensuring that their decisions are enforced. They can impose a fine, they can send party representatives to jail, and they can seize all your products. Not complying with the court’s orders is a crime in Brazil.

Do you have a recent example of how rigorously you take action?

Yes. Two weeks ago, I had a streaming service case. Of course, you cannot seize streaming services. I told the defendant that if they did not comply with the order, I would give notice to all the app stores and all the manufacturers to shut down the app. So, we have judgments that are enforceable. That is another reason why Brazil is becoming increasingly important. And there is a further point — many cases settle before I need to grant an injunction. Sometimes, only by being consistent, we can accomplish the same result.

Victor Torres

SEP cases are always part of a global dispute. Therefore, it’s difficult to say whether they settled because of a potential injunction in Brazil or Germany, or a FRAND rate ruling in the UK.

Yes, but in some cases, they settle a day before the hearing in Brazil. It is too much of a coincidence to disregard.

SEP proceedings are currently playing the biggest role at your court. What other technologies are also often litigated?

I do have some interesting pharma and car technology cases, but we deal more with SEP and video streaming technology. In other states, we do have an enormous caseload concerning patents related to agriculture. Those patents are mainly litigated in Mato Grosso do Sul, São Paulo, or Paraná.

What role do patents and patent litigation play for Brazilians themselves and for Brazilian companies?

We have seen an increase in patent filings and grants in the last year, even an all-time high. I think that helps Brazilian companies to know that their IP will be protected when they are making business decisions, such as investments or developing technologies. To know that Brazil has a reliable court system, a very predictable procedure, and good protection of IP property helps our companies to trust that the returns on their investments in research and development are protected.

“Brazil has important biodiversity and a strong industry for aeroplanes and agriculture – patent protection is essential”

It is very important for Brazil, which has a very important biodiversity and a very strong industry for aeroplanes and agriculture, to have a reliable and predictable patent protection system. My grandfather was a pharmacist. In the 1950s, he went to the Amazon rainforest to study medicinal plants, and he concluded 70 years ago that a good part of our biodiversity had already been patented somewhere else by a foreign country.

Your decisions in SEP proceedings especially have attracted attention. Would you be keen to set a FRAND rate?

No, that will not happen. I am very reluctant to do that. Firstly, because I would argue that courts should be extremely reluctant to set royalty rates in SEP cases. As a matter of principle, they should not assume the role of determining the price of a licence unless it is generally unavoidable. We do not have the technical expertise or the market experience for that. Secondly, there is no undisputed methodological, scientific, or economic way to do it. Instead, we have comparables, top-down, and increased incremental value, and economists defend all of them. How are we supposed to replace the party’s discretion to dictate their negotiations and their price if there is no undisputed methodology to do that? I do not think courts should replace the party’s discretion in fixing the price.

“I do not think courts should replace the party’s discretion in fixing the price.”

In this scenario, rate-setting risks turning SEP litigation into a form of “guess the number I have in mind”. If the practical consequence of failing to accept a court-determined royalty is that the patent cannot effectively be enforced, the stakes become extraordinary. The difficulty becomes even more apparent when different courts, applying broadly similar legal and economic principles, arrive at substantially different royalty rates. The result may be considerable uncertainty for both licensors and implementers.

Recently, there has been a tug-of-war over jurisdictions in SEP lawsuits between the UPC and the UK High Court.

And it has come to Brazil, too. The UK court granted an injunction to proclaim itself the lead jurisdiction in a case that I was presiding over.

But you protected your jurisdiction?

They settled before I could say anything.

Would anti-suit and anti-anti-suit injunctions also be possible in Brazil?

No, we do not interfere with other jurisdictions and will not accept that other jurisdictions interfere with ours. We have a very important precedent from our Supreme Court that prevents us from accepting that. Of course, we are always open to dialogue. Just last week, a colleague of mine issued an order to establish a judicial dialogue. I think it is interesting, but it is not anti-suit injunctions.

Dialogue is probably what takes you to Europe next week to speak at the AIPPI. What are your expectations for the congress?

I expect to listen more and talk less. We need to exercise judicial modesty and judges should all present a united front, because parties will always try to game the system. They are always trying to find the best strategies to pit one court against the other. That is how the patent litigation game works. Therefore, judges should be united and cohesive.

“I will try to find out what can be best incorporated into the practice of my court”

We can do that by emphasising our shared values and core principles instead of talking too much about our differences. One jurisdiction has contractual law, the other jurisdiction says it is not contractual law, it is public law. Those are small differences that lead us to the same result because we have shared principles and core values. So, I will go to Hamburg to listen to what the relevant players in the market have to say, and I will try to find out what can be best incorporated into the practice of my court.

To me, that sounds like a modest approach. Is that how you see Brazil’s role in global patent disputes?

First of all, the AIPPI is a showcase for the global IP world. We can all learn from the best practices. But I think that Brazil is a relevant protagonist amongst global patent nations and has a seat at the table. In Brazil, we often get the first say in these parallel global disputes. Given that we are faster, sometimes we have the first say, and sometimes the parties settle here before they get the chance to be heard in the European courts. I therefore also have to exercise judicial responsibility. Being the first to rule does not mean that we should assume that we have the definitive answer. On the contrary, it means that we have an even greater duty to examine the case thoroughly, engage carefully with the arguments and evidence presented by the parties, and consider the international debate surrounding the issue.

To what extent do you take into account the rulings of other courts in Europe, the US or China?

We are developing our own approach. We do not only mirror what the Europeans, Americans, or Chinese are doing. But I must acknowledge that many questions have already been answered in these jurisdictions. Of course, I follow other courts’ arguments and reasoning to incorporate the history of precedents on the matter into my own answers.

“No judge should say that his or her court is the lead jurisdiction”

In the streaming case, for example, I was confronted with far-reaching questions regarding territoriality. These streaming services are in a cloud. Therefore, it is very hard to determine where they are located physically. The UPC and Munich Regional Court had already answered that exact same question. I listened to their arguments, reflected upon them and I made my own approach. It got me to the same result – every country where the content is available has jurisdiction – but the reasoning was very different. No judge should say that his or her court is the lead jurisdiction. We should listen and talk: work in coordination, not subordination.

At the AIPPI in Hamburg, Victor Torres will sit on the panel ‘Hot Pot: Spice it with Standard & Essential-SEP Recipe’ alongside Indian, German, and UK judges. 

The interview was conducted by Mathieu Klos.