1) A Brazilian sportswear manufacturer filed a lawsuit against another manufacturer for breach of an exclusive trademark licensing agreement. 2) The agreement granted the defendant exclusive rights to produce and sell products branded with the plaintiff's trademark for five years. 3) The plaintiff alleges the defendant failed to manufacture and promote the licensed products as required, prompting the plaintiff to terminate the agreement and file suit seeking damages. 4) The case may involve antitrust issues as the defendant's alleged actions reduced competition in the market for certain sportswear products.

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Intelleetual Property - Brazil
Lawsuit Filed Against Sportswear Manufaeturer
Contributed by Stroeter, Royster & Ohno - Advogados Associated with Steel Hector & Davis
LLP
September 9 2002
In 1999 São Paulo Alpargatas, Brazil's biggest footwear manufacturing company (with a 22% share
of the sports footwear market), signed an exclusive trademark Iicence agreement with San Remo
Empreendimentos Comerciais for use of the laUer's DRIBLE trademark.
DRIBLE was first registered in 1958 and has a long-standing reputation in the football goods
market, particularly for footwear and balls. (Football king Pele scored his 1,00Oth goal with a Drible
ball.) Alpargatas owns the trademarks TOPPER and RAINHA, and is the exclusive licensee in
Brazil for the trademark MIZUNO, ali well-known names in the domestic sports footwear market.
Under the exclusive trademark licence agreement, Alpargatas agreed to manufacture, sei I and
promote 23 types of sporting goods under the trademark DRIBLE for at least five years, with the
possibility of automatic renewal for another five years.
In return for the investments that Alpargatas expressly agreed to make in the trademark, San
Remo was prevented from manufacturing and selling, directly or through a third party, any product
bearing the trademark DRIBLE during the term of the agreement. In addition, an indemnification
was established for transference of the DRIBLE trademark by San Remo to any third party, and
another of R4 million for termination caused by breach of either party.
Soon after the first anniversary of the agreement, San Remo claimed that Alpargatas had breached
the contract's terms by failing to manufacture, sell and promote the goods listed in the agreement.
Alpargatas denied the breach. Six months later, San Remo terminated the agreement based on the
conitinuing breach of the agreement by Alpargatas.
San Remo filed a civil law suit which is being tried before the 22nd Civil Court of São Paulo. San
Remo ciaims payment of the R4 million indemnification, as well as damages and profits that it lost
as a result of the agreement.
The case is likely to turn on antitrust matters (albeit with ramifications for IP owners), since
Alpargatas allegedly produced a restrictive effect in the market by withdrawing a product that was
aimed at a certain sector of the economy (Drible products are aimed at the lower-middle and
working economic classes, while Alpargatas's products are targeted at the upper-middle and upper
economic classes).
For further ínformation on this topic p/ease contact Erica Aoki at Moreíra Lima, Royster & Ohno
Advogados with Steel Hector & Davís LLP by telephone (+55 11 2832077) or by fax (+55 11 283
2078) or by emai! (eaoki@stee!hector.com).
http://www.internationallawoffice.com/ld .cfm?Newsletters_Ref=5566 9/23/02

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