Wednesday, 23 June 2010

Brazil: billion dollar damages for improper use of software – will the Superior Court of Justice uphold the first instance decision?

The Third Chamber of the Superior Court of Justice (STJ) is hearing an appeal with the aim of changing compensation for inappropriate use of software that can reach the value of $ 1 billion - one of the highest ever of its kind in Brazil. The decision came from the Court of Justice of São Paulo (TJSP), which held that Rede Brasileira de Educação a Distância S/C Lta has breached the Centro de Estratégia Operacional Propaganda e Publicidade S/C Ltda’s intellectual property rights.

The Rede Brasileira has been accused of using, without authorization, a software authored by researchers from the Centro de Estratégia and distributing it to 10 Brazilian universities and 33 foreign universities. This, according to the news, represents access to the software of approximately 17,000 teachers and 190,000 students.

On one hand, the defence, asking the STJ to reduce the amount of the damages, asserted that "the amount escape all the standards already required in the context of justice." On the other hand, the Centro de Estratégia Operacional Propaganda e Publicidade S/C Ltda claims that the amount of compensation is calculated based on the universe of people who may have had access to the software.

Minister Sydney Benet, from the STJ, proposed in his vote, to form a committee of arbitration to make a calculation of the compensation more in line with reality. While I am not familiar with IP finance and the system of monetary compensation, I like the reasoning of Mr Benet. At the end of the day, I believe that the ‘reality’ check should be about market return and so, the actual compensation and not a theoretical one. Any thoughts?

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