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>[26.Feb.09] Trademarks - Exhaustion and Trademark Defense, LPG Cylinders Case
Source: Infomail ABREU, MERKL no. 24

The Federal Regional Court (TRF) of the 2nd Region is expected to analyze in the next months the admission of the appeals to the Superior Courts about a decision of its 8th Specialized Panel for the Civil Appeal No. 2000.51.01.009102-4 that maintained the lower court’s decision prohibiting a company from the State of São Paulo from marketing LPG (liquefied petroleum gas) cylinders bearing third parties’ trademarks (known in the market as “OM” cylinders).

The decision was based on the Resolution no. 15/2006 of the National Petroleum Agency (ANP), which prohibits the storing, bottling and marketing of cylinders bearing third parties’ trademarks and requires distributors or resellers, when receiving such cylinders from end users, to make the exchange with the trademark owner, in the shortest time possible (articles 21 and 25).

In a similar discussion, the National Confederation of Industry (CNI) proposed, in 2006, a Direct Unconstitutionality Action (ADIN no. 2359-4) against the Law no. 5.652/98 from the State of Espírito Santo. This law encourages the reuse of gas cylinders bearing other trademarks by the distributors or resellers as long as they identify the cylinders with their own trademark.

The CNI held the unconstitutionality based on article 5, section XXIX of the Federal Constitution, which gives protection to the ownership of marks. They also made reference to article 190, section II of the Brazilian Industrial Property Law (LPI – Law no. 9279/1996), which defines as a crime the conduct of those who import, export, sell, offer or expose for sale goods from their own industry or trade in a cylinder, container or package that bears someone else’s legitimate trademark.

The Supreme Federal Court (STF) denied the ADIN in favor of the free circulation of cylinders and the dynamism of the market in the supply of liquefied petroleum gas, agreeing that the Law no. 5652/98 protects the consumer when it establishes that the company must identify with its own trademark the reused cylinders.

Despite the fact that both decisions aimed to avoid the misleading of consumers, they rule in opposing directions. Therefore, the admission of the appeals and a final decision of the Superior Courts on the issue are very much expected.