IMPACTS OF THE MERCOSUR–EUROPEAN UNION TRADE AGREEMENT ON IP

Co-authored by Karlo Tinoco & Daniela Fernandes

The Mercosur Partnership Agreement (“Agreement” or “EMPA”) represents one of the most ambitious trade treaties signed by Brazil. Covering a potential market of over 700 million consumers, the agreement goes far beyond tariff liberalization, incorporating relevant commitments in sensitive regulatory areas, among which intellectual property stands out.

For the first time in a Mercosur trade agreement, intellectual property is treated in a systematic and cross-cutting manner, reflecting its strategic role in the knowledge economy, in attracting investment, in technology transfer, and in the competitive insertion of Brazilian production chains in international trade. Although it does not impose full harmonization with the European model, the agreement consolidates minimum protection standards and reinforces multilateral commitments already made, especially under the World Trade Organization (WTO) TRIPS Agreement.

In this context, an analysis of the agreement's impacts on the Brazilian intellectual property system reveals significant opportunities, but also regulatory, interpretative, and strategic challenges for companies, rights holders, and national authorities.

This article aims to analyze the main impacts of the Intellectual Property Chapter of the Association Agreement between Mercosur and the European Union on the Brazilian legal system, with special attention to patents, trademarks, industrial designs, trade secrets, and institutional enforcement mechanisms.

It seeks to examine the extent to which the agreement, by adopting a logic of continuity and incremental reinforcement of the international protection system, deepens principles already incorporated into the national legal system, while creating economic and institutional incentives capable of influencing business strategies, public policies, and administrative practices.

The intellectual property chapter of the Association Agreement between Mercosur and the European Union was structured based on a logic of continuity and incremental reinforcement of the international protection system, avoiding abrupt regulatory breaks with the national legal systems of the States Parties.

Instead of imposing rigid harmonization or the compulsory adoption of the European model of protection, the agreement favors the consolidation of minimum standards already established at the multilateral level, especially those derived from the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) within the World Trade Organization.

This option is particularly relevant for Brazil, whose intellectual property system has historically been built on progressive international commitments, combined with mechanisms to safeguard the public interest, competition, and national technological development. Among these structural principles, the following stand out: (i) national treatment, (ii) non-discrimination, (iii) preservation of the regulatory autonomy of States, and (iv) explicit recognition of the right to regulate.

The principle of national treatment ensures that intellectual property rights holders from one Party receive, in the territory of the other, protection no less favorable than that according to its own nationals. In the context of the Mercosur-European Union Agreement, this principle takes on renewed significance, as it now operates in an environment of deeper economic integration, characterized by the intensification of flows of goods, services, capital, and technologies.

The reaffirmation of national treatment helps to reduce regulatory asymmetries perceived by foreign investors, while strengthening legal certainty for European rights holders who wish to exploit intangible assets in the Brazilian market.

For Brazil, the importance of this principle lies less in the need for legislative change, since the Industrial Property Law (Law No. 9,279/1996) and copyright legislation already incorporate non-discrimination between nationals and foreigners, and more in its interpretative and symbolic function. The international commitment reinforces the expectation of uniform application of intellectual property rules by the BRPTO and the Judiciary, mitigating the risks of protectionist or inconsistent decisions in a scenario of greater presence of foreign rights holders.

Another central aspect of the agreement's intellectual property chapter concerns the preservation of the autonomy of the States Parties in defining the regime of exhaustion of rights. The treaty expressly recognizes that each country may adopt, in accordance with its public policies and economic interests, national, regional, or international exhaustion of intellectual property rights , in line with the flexibility enshrined in Article 6 of the TRIPS Agreement.

This option is particularly significant for Brazil, which has historically adopted, predominantly, the national exhaustion regime, especially in the field of patents and trademarks. Maintaining this margin of regulatory discretion allows the country to continue to calibrate the balance between protecting rights holders and promoting competition, access to essential goods, and technological diffusion.

The main exception to this logic of flexibility concerns copyright on digital content. In the case of protected works made available by electronic means, the agreement establishes that exhaustion applies only to tangible copies, ruling out the application of the principle to digital transmissions. This provision reflects a convergence with the traditional position of the European Union, which strictly distinguishes between the circulation of physical media and the online availability of protected works, with direct impacts on digital business models, streaming platforms, and licensing markets.

In addition, the agreement expressly enshrines the so-called "right to regulate," recognizing the legitimacy of the Parties to adopt measures to prevent abuses of intellectual property rights or practices that unduly restrict competition and technology transfer.

Although the Mercosur-European Union Agreement does not impose immediate structural changes to the current patent legal regime in Brazil, its indirect effects on the functioning and attractiveness of the national patent system tend to be significant. The impact of the agreement is manifested less through explicit regulatory reforms and more through the reconfiguration of the economic and institutional environment in which patents operate, especially in a context of greater productive integration, market expansion, and regulatory predictability.

Comparative experience shows that broad trade agreements, even if they do not substantially modify substantive patent law, have a significant influence on the strategic behavior of innovative companies, especially with regard to the decision of where to protect their technological assets.1In this sense, the agreement tends to reposition Brazil on the global innovation map, expanding its role as a relevant jurisdiction for patent protection.

The progressive reduction of tariff and non-tariff barriers, combined with the increased regulatory predictability resulting from the agreement, should make Brazil a more attractive destination for patent filings, especially by European companies. By strengthening the integration between the Mercosur and European Union markets, the treaty changes the economic calculation underlying the decision to protect or not protect certain technologies in Brazilian territory.

The Mercosur–European Union agreement tends to act as a catalyst for the gradual expansion of foreign fillings, especially by European companies that now see Brazil not only as a consumer market, but as a strategic production and logistics platform to serve an expanded market estimated at over 700 million people. In this context, patent protection ceases to play a purely defensive role and becomes part of broader strategies for productive investment, the establishment of local industrial units, technology licensing, and the formation of commercial and technological partnerships.

In addition, the reinforcement of regulatory predictability—a central element for long-term decisions in research and development—contributes to reducing the perception of risk associated with the protection of intangible assets in Brazil. By signaling a commitment to international standards of protection and enforcement, the agreement tends to stimulate not only European deposits, but also, in the medium term, deposits from companies in other regions that recognize the strategic importance of Brazilian territory in the new trade arrangement.

The most relevant impacts of the agreement on the patent system should be concentrated in technology- and capital-intensive sectors, in which patent protection plays a central role in structuring business models, attracting investment, and organizing global value chains. Among these sectors, the automotive, chemical and petrochemical, pharmaceutical, energy, biotechnology, and digital technology segments stand out, including artificial intelligence and advanced industrial solutions.

From an economic development perspective, this movement can contribute to greater technological diffusion and the strengthening of the national industrial base, provided it is accompanied by appropriate public policies for innovation, technical training, and research promotion. In this context, the patent system plays an ambivalent role: on the one hand, it protects the interests of rights holders; on the other, it acts as an instrument for technical dissemination and knowledge organization, allowing society to benefit, directly or indirectly, from innovations introduced to the market.

In the field of trademarks, the Mercosur-European Union Agreement places special emphasis on combating registrations obtained in bad faith, reinforcing the centrality of objective good faith as a structuring principle of the trademark system. Although Brazilian law already provides for the invalidity of trademarks that violate the rights of third parties or are used for purposes other than those for which they were registered, the agreement contributes to consolidating a more rigorous interpretation, in line with international standards, regarding the repression of opportunistic practices in trademark registration.

The express provision for invalidating bad faith registrations tends to influence both the administrative actions of the BRPTO and the jurisprudence of Brazilian courts, especially in cases involving so-called trademark squatting and the misappropriation of distinctive signs notoriously associated with third parties abroad. Although national legislation does not explicitly regulate the non-applicability of limitation periods to invalidity actions based on bad faith, the agreement may serve as a relevant interpretative element for strengthening an interpretation that favors the protection of fair competition and the distinctive function of the trademark.

From this perspective, the treaty contributes to reducing asymmetries between the Brazilian and European systems with regard to the repression of abusive conduct, increasing the confidence of foreign owners in the effective protection of their trademark assets in Brazil, without requiring immediate legislative changes, but promoting an interpretative evolution consistent with the international commitments assumed.

For example, Article 13.60(2)(a) highlights the importance of coordination between countries to prevent the export of counterfeit goods. This measure is essential to protect the intellectual property rights of Brazilian and international companies, as well as to ensure market integrity. For Brazil, this could mean progress in fighting piracy and counterfeiting, problems that negatively affect the economy and the reputation of domestic products.

With regard to industrial designs, the agreement expressly encourages Brazil's accession to the Geneva Act of the Hague Agreement, an instrument that aims to simplify and streamline the international registration of designs. Accession would allow owners to obtain simultaneous protection in multiple jurisdictions through a single international application, significantly increasing the efficiency of the system and reducing administrative and operational costs.

The incorporation of this mechanism tends to benefit design-intensive sectors in particular, such as fashion, furniture, consumer goods, the automotive industry, and industrial equipment, in which rapid and territorially broad protection of industrial designs is a key element of competitiveness. For Brazilian companies with an export focus, joining the Hague system can represent an important tool for internationalization, aligning the country with the major economies that are already part of the regime.

It should be noted that Brazil has already made significant progress in modernizing its trademark and industrial design system by acceding to the Madrid Protocol and fully adopting the Nice Classification. These pre-existing institutional movements reduce the costs of implementing the commitments made in the Mercosur-European Union agreement and demonstrate a consistent trajectory of the country's integration into the main multilateral intellectual property systems.

The effectiveness of intellectual property rights is central to the credibility and practical impact of any trade agreement that seeks to promote innovation, investment, and economic integration.

The Association Agreement between Mercosur and the European Union pays specific attention to institutional enforcement mechanisms, recognizing that the mere enunciation of protection standards is insufficient without the existence of instruments capable of ensuring their concrete application. The intellectual property chapter thus adopts a multifaceted approach, combining traditional enforcement measures with cooperative and regulatory governance mechanisms, in particular the creation of permanent technical bodies dedicated to monitoring and implementing the agreement.

For Brazil, these provisions are particularly relevant in that they can strengthen the institutional capacity of the national intellectual property system, promote greater legal predictability, and encourage the gradual convergence of administrative and interpretive practices with international standards.

First, the Agreement promotes significant advances in the protection of trade secrets by strengthening protection against unauthorized access, misappropriation, and unlawful disclosure of confidential information of economic value. By aligning itself with more rigorous international standards, the treaty contributes to broadening the spectrum of protection afforded to technical, commercial, and strategic data, especially in contexts of open innovation, technological partnerships, and global value chains.

One of the most relevant aspects is the possibility of a broader interpretation of unfair competition rules, allowing for the repression of unlawful conduct even in the absence of a direct competitive relationship between the parties involved. This approach is in line with contemporary trends in comparative law, according to which the protection of trade secrets is not limited to classic conflicts between competitors, but covers situations of breach of trust, industrial espionage, and misuse of information obtained in contractual or pre-contractual relationships.

In the Brazilian legal system, this interpretation may contribute to the evolution of the regime provided for in the Industrial Property Law, strengthening the protection of intangible assets essential to business competitiveness, without neglecting the limits imposed by competition and the public interest.

In terms of enforcement, the agreement introduces institutional and operational mechanisms aimed at strengthening the effectiveness of intellectual property rights. In this regard, it is worth highlighting the reinforcement of customs measures aimed at retaining and seizing goods suspected of violating trademarks, copyrights, and geographical indications, expanding the State's capacity for preventive action in border control.

Unlike an approach focused exclusively on sanctions, the Intellectual Property Chapter of the Mercosur–European Union Agreement adopts a multifaceted enforcement model that combines classic repressive instruments with institutional mechanisms for cooperation and regulatory governance, in particular through the Intellectual Property Subcommittee.

In addition, Article 13.59 of the Agreement establishes the adoption of an Intellectual Property Subcommittee, with strategic functions focused on the implementation, monitoring, and improvement of the provisions set forth in the intellectual property chapter. This initiative has the potential to generate significant impacts for Brazil, both in strengthening its internal policies and in integrating with the signatory countries.

One of the Subcommittee's main responsibilities is to monitor the implementation of the Agreement's provisions, ensuring that the commitments made by the countries are fulfilled effectively and harmoniously. For Brazil, this means continuously monitoring the legislative and regulatory changes necessary to align with international standards for the protection and enforcement of intellectual property rights. This monitoring can help identify challenges and propose solutions to improve the national system.

The Subcommittee also has the function of promoting technical cooperation between the EU and Mercosur. This includes the exchange of legislative experiences, enforcement practices, and strategies for enforcing intellectual property rights. For Brazil, this technical cooperation can be a valuable opportunity to train professionals, modernize processes, and adopt technologies that increase the efficiency of the institutions responsible for intellectual property protection.

An analysis of the Intellectual Property Chapter of the Association Agreement between Mercosur and the European Union shows that the treaty does not promote a normative break with the Brazilian protection system but operates through an incremental deepening of international standards already incorporated into the national legal system.

By prioritizing continuity, regulatory predictability, and the preservation of the state's role, the agreement reaffirms the structural principles of contemporary intellectual property, while repositioning Brazil in an environment of greater economic integration and global competitiveness.

The most relevant impacts of the agreement manifest themselves differently across the various branches of intellectual property. In the field of patents, although there are no substantial changes in the substantive legal regime, the treaty tends to significantly influence the strategic behavior of innovative companies, stimulating an increase in foreign filings and the use of Brazilian territory as a regional production and technology platform.

In the area of trademarks and industrial designs, the agreement reinforces the centrality of objective good faith, the distinctive function of signs, and the repression of opportunistic practices, contributing to an interpretative evolution of Brazilian law in line with international standards. The emphasis on combating bad faith and unfair competition, combined with the prospect of joining the international industrial design system, tends to increase the confidence of domestic and foreign owners in the protection of their intangible assets in Brazil.

Of note is the multifaceted approach adopted in enforcement, which combines traditional repressive instruments with institutional mechanisms for cooperation and regulatory governance. The creation of the Intellectual Property Subcommittee reveals a contemporary understanding that the effectiveness of intellectual property rights depends not only on sanctions, but also on technical dialogue, administrative coordination, and continuous monitoring. For Brazil, this structure may represent an opportunity for institutional strengthening and greater convergence with international best practices, without the immediate need for profound legislative reforms.

Ultimately, the successful implementation of the Mercosur–European Union Agreement in the field of intellectual property will depend on Brazil's ability to integrate the commitments made to a broader strategy of economic and technological development.

• 1CAMPI, Mercedes; DUENAS, Marco. Intellectual property rights, trade agreements and international trade. Journal of International Economics, Amsterdam, v. 112, p. 1–17, 2018. Available at: https://www.researchgate.net/profile/Mercedes-Campi/publication/319946388_Intellectual_Property_Rights_Trade_Agreements_and_International_Trade/links/59f27206a6fdcc1dc7bb1969/Intellectual-Property-Rights-Trade-Agreements-and-International-Trade.pdf.