28 March 2024

Sports Betting And Its Regulation In Brazil: New Possibilities For Trademark Registration

Online sports betting is booming all over the world, not only in traditional markets such as the United States and the United Kingdom, but also in emerging countries such as Brazil.
Brazil Media, Telecoms, IT, Entertainment
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Online sports betting is booming all over the world, not only in traditional markets such as the United States and the United Kingdom, but also in emerging countries such as Brazil.

Brazilians have a long tradition of passion for sports, especially soccer, which naturally extends to sports betting.

A study conducted by SimilarWeb identified that betting sites generated 14.2 billion hits worldwide in 2022. Brazil tops the list with 3.2 billion hits, which represent almost 25% of the total indicated in the survey.

Most sports betting in Brazil take place online, with a significant presence of international sports betting sites that accept players from Brazil.

Until recently, sports betting was considered as a "gambling game" and therefore an illegal service, for which it was not possible to apply for a trademark registration before the Brazilian Patent and Trademark Office – "INPI".

In 2018, sports betting became legal in Brazil by means of Law #13.756/2018, but still in a very embryonic way.

Law #14.790/2023, also known as the Sports Betting Law, came into force on December 30, 2023, and modified Law#13.756/2018, establishing a new legal framework for the operation of fixed-odds betting in the country, the so-called sports betting.

Law #14.790/2023 establishes the bases for the operationalization, as well as the detailed regulation of sports betting, both in physical and online environments, as well as tax, inspection, anti-fraud counter measures, player protection and social impact aspects.

One of the main conditions for international players to operate in the Brazilian betting market is to be a legal entity dully incorporated under Brazilian law. It is also mandatory for a company to be resident in the country. Foreign companies may be authorized to operate fixed-odds lotteries by setting up a subsidiary in Brazil.

Additionally, permanent or fixed-term licenses/ authorizations must be requested from the regulatory authorities by submitting documents and information demonstrating that it complies with all the criteria and requirements established by Law #14.790/2023.

Brazilian government is still structuring itself to start the process to grant licenses/ authorizations for sports betting operations, having determined in January 2024 the creation of a Secretariat of Prizes and Betting (SPA) under the Ministry of Finance (MF), to monitor and manage the sports betting and online gaming market in the country (still in the implementation and testing phase).

Brazil's goal is to establish a healthy market for all players. From the bettors' point of view, the intention is to avoid compulsive gambling and exposing the public to fraud through a strong monitoring system, which will generate benefits for companies, government, and players.

With the regulation of the commercial exploitation of the "betting market" in Brazil, the concerned market becomes safer and more attractive, creating a competitive environment as new commercial opportunities open.

In this scenario, the expectation is that companies will create strong and distinct trademarks to become prominent in this competitive market, which, naturally, will result in a race for trademark registrations at the INPI.

According to the Brazilian Industrial Property Law (Law # 9.279/96 – IP Law), it is worth remembering that any visually perceptible distinctive sign can be registered as a trademark at the INPI, if it is not included in the legal prohibitions.

Under said legal prohibitions´ perspective, trademark applications aimed to identify products and services considered illegal in Brazil must be rejected by the INPI on the basis of article 124, III, IP Law, which prohibits the registration as a trademark of "expressions, figures, drawings or any other signs that are contrary to morals and standards of respectability or that offend the honor or image of persons or attempt freedom of conscience, belief, religious cult or ideas and feelings worthy of respect and veneration", as well as article 128, §1 of IP Law, which states that "Persons under private law may only apply for a trademark registration that relates to the activity in which they actually and lawfully engage, either directly or through companies they directly or indirectly control, declaring that condition on the application itself, under the penalties of law".

Historically, trademarks that sought to identify betting services in Brazil were undoubtedly rejected by the INPI. Currently, with the advent of laws regulating the matter, in most cases the INPI publishes the following office action:

"Provide clarification regarding the services claimed on the TM filing application, considering the legislation on the exploitation of gambling game/ game of chance in force in the country, as well as the provisions of §1 of art. 128, IP Law. Alternatively, submit a specification deleting the items mentioned or replacing them with services compatible with the class claimed and considered lawful under the legislation in force on the date of this requirement." (This office action concerns application #926129660, claiming "provision of online gaming services [computers]; Gambling or betting services" – Office action published on 20FEB2024).

It would be possible to comply with this office action, restricting the services of "games of chance or betting" to only "sports betting services", without failing to draw the INPI's attention to the new law in force regulating sports betting services in the country.

Nevertheless, the problem is that, despite the fact that the commercial exploitation of sports betting has become a legal activity in the country since 2018 (although only regulated in 2023), INPI' examiners still do not seem to be completely familiar with the subject, in addition to the fact that there is still no formal guidelines from the Trademark Board of Directors on the subject, leaving a track of contradictory decisions at the administrative level. For this reason, decisions such as the one mentioned below, and published on 07MAR2023, are not uncommon:

"Clarify whether wishing to keep the item "Online betting", which is considered illegal under Brazilian law, or whether choosing to replace it with other items that do not fall under this condition. Please note that trademarks containing lottery services can only be filed by Caixa Econômica Federal (a Brazilian Federal Bank). However, the Nice International Classification, NCL's Auxiliary List of Services(11) includes the legal service of "selling lottery tickets", which can be requested if a change in specification is desired. As for services related to "betting in general", be advised that with the exception of betting on horse races, the service is illegal, according to art. 50 of Decree #3688/41"' (Application #925652865, claiming "organization of competitions [education or entertainment]; organization of sports competitions; provision of online, non-downloadable electronic publications; provision of services for electronic games; provision of services for online games [computers];entertainment services; award services; organization of electronic sports competitions; organization of entertainment events; organization and presentation of sports events; electronic sports services; online betting games" – Office action published on 07MAR2023).

Of course, final decisions can always be appealed, and we know that the INPI has been working to avoid controversial decisions like the one above. In contact with the INPI, we were informed that to avoid office actions or rejections, it is necessary that the application claims only "sports betting" or "betting service (only sports betting)", in class 41.

Within this context, the regulation of sports betting in Brazil brings the need for companies to legalize an activity that, until then, operated in an environment of uncertainty or through international platforms, and this includes applying for a license or authorization before the Ministry of Finance (MF), as well as trademark protection before the INPI, among other regulatory aspects.

The process of obtaining authorization to operate in the Brazilian betting market, as well as registering the corresponding trademarks, can be complex and requires careful preparation and daily updates, including, in many cases, a review of trademarks portfolio strategies and regulatory authorization, as well as consulting local experts.

Considering this new legal framework and guidelines, players in the Brazilian betting market from now onwards may not only successfully navigate the regulatory and operational environment, but also contribute to the ethical growth of the sector in the country. The key to success involves combining the legal aspect with technological innovation, marketing and a commitment to social responsibility.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

28 March 2024

Sports Betting And Its Regulation In Brazil: New Possibilities For Trademark Registration

Brazil Media, Telecoms, IT, Entertainment


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