Unfair competition in Brazil: what qualifies in practice

Aggressive competition is legal. Dishonest competition is not. The line between the two, in Brazil, is drawn primarily by the Industrial Property Law and reinforced by the Consumer Protection Code and self-regulatory bodies. Knowing where that line sits — both as the party defending market position and as the party being accused — determines whether a competitive move is a sound business decision or a litigation risk.

This article covers what the LPI lists as unfair competition, how the typical disputes unfold, and the procedural paths available to a party that has been harmed.

What the LPI lists

Brazil's Industrial Property Law (LPI, Law No. 9,279/1996) addresses unfair competition in Article 195. The article enumerates specific conducts, including:

• Publishing false statements about a competitor
• Providing false information for advantage
• Using another's company name, establishment name, or insignia to create confusion
• Substituting one's own name for the manufacturer's
• Unauthorized use of a trademark
• Receiving money or benefit to cease using a trademark, company name, or geographical indication
• Selling adulterated product
• Receiving, holding, or using product known to be the object of fraud
• Bribing a competitor's employee
• Disclosing or exploiting industrial or business secrets (without authorization)

The list is exemplary, not exhaustive in spirit. The doctrinal test underlying all of it is whether the conduct diverts clientele dishonestly — beyond the legitimate exercise of competitive activity.

Article 195 is criminal in nature, with penalties established. Civil action for damages runs in parallel under general civil liability rules and the LPI's own provisions.

The typical disputes

Slavish copying and trade dress

A competitor produces a product that visually resembles another — packaging, color scheme, layout, distinctive non-functional features. The legal question is whether the resemblance creates consumer confusion about origin.

Brazilian case law has consolidated principles for trade dress disputes:

• Distinctiveness must be demonstrated — through use, market recognition, advertising investment
• The features being protected must be non-functional (functional features fall under patent protection, where applicable)
• The risk of confusion is assessed from the typical consumer's perspective
• Even without trademark registration, trade dress protection is available under LPI Art. 195

Courts have ruled in favor of trade dress protection in cases involving packaging, industrial design, and consistent visual identity systems where the copying went beyond legitimate inspiration into confusion-creating reproduction.

Employee poaching and confidential information

A key employee leaves for a competitor and operations there shift in suspicious ways — customer relationships transferred, product roadmap mirrored, technical approaches reproduced. The legal question is whether confidential information was misappropriated.

Two regimes operate in parallel:

• Contractual — if the employment contract included confidentiality and/or non-compete clauses, enforcement under those clauses
• Statutory — under LPI Art. 195, disclosure of business secrets or confidential information acquired through employment relationship

Post-employment non-compete clauses are enforceable in Brazil with three boundaries: reasonable term, defined territory and activity scope, and consideration (the employee must receive compensation for the restraint, not just the salary already received).

Systematic poaching — recruiting multiple competitor employees in coordinated fashion to disorganize the competitor's operation — is itself recognized as unfair competition in Brazilian doctrine.

False statements about competitors

Comparative advertising is permitted in Brazil but operates within strict rules:

• Statements must be truthful and verifiable
• Comparisons must be objective (not denigrative)
• The comparison must serve consumer information, not damage the competitor

False statements about a competitor — whether in advertising, sales conversations, or distribution-channel communications — fall under LPI Art. 195 and may also implicate the Consumer Protection Code (Art. 37, misleading advertising).

Improper trademark use

Using a competitor's registered trademark without authorization is both trademark infringement (LPI Arts. 189 et seq.) and unfair competition (LPI Art. 195). Common patterns:

• Keyword bidding on competitor brand terms with ads designed to confuse (vs. clearly comparative ads)
• Domain squatting with competitor brand names
• Social media handles mimicking the competitor

Brazilian courts have addressed these in successive cases as digital channels evolved.

Procedural paths

When unfair competition is identified, the response can run along several tracks, often in parallel.

Preliminary injunction

The most time-sensitive move. A judicial order for immediate cessation of the conduct can be granted (tutela de urgência) when documentation is solid and harm is ongoing. This stops the bleeding while substantive litigation proceeds.

Civil action

Substantive action for damages and definitive injunction. Damages calculation considers:

• Material damages — actual losses (sales diverted, costs incurred)
• Profit obtained by the offender from the unfair practice
• Royalty equivalence — what the competitor would have paid in arm's-length licensing
• Moral damages to the legal entity, where reputational harm is established

Criminal action

LPI Art. 195 conducts are criminal. The criminal complaint runs in parallel to civil and produces a different effect — personal liability of the individuals responsible, criminal record, and reputational consequences beyond the corporate entity.

CONAR (advertising self-regulation)

For false or misleading comparative advertising, the CONAR (Conselho Nacional de Autorregulamentação Publicitária) provides a faster channel. CONAR decisions are not legally binding on courts but tend to be respected by the advertising industry and media vehicles, producing rapid de facto takedown.

Administrative — CADE (antitrust)

When the unfair competition involves market structure issues (predatory pricing, exclusive dealing arrangements, abuse of dominant position), CADE (Conselho Administrativo de Defesa Econômica) is the competent authority for antitrust analysis, separate from the LPI Art. 195 framework.

Documentation and evidence

Effective unfair competition cases are won on documentation. Practical practices:

• Capture in real time — when a competitor's questionable conduct is observed, document it with timestamps (screenshots, ata notarial, customer reports)
• Preserve the chain — the original capture, the URL or reference, the corroborating evidence
• Quantify the damage — sales records, customer feedback, market research demonstrating impact
• Build the timeline — sequence of events showing intent and pattern, not isolated incident

Cases brought without solid documentation tend to fail at the preliminary injunction stage — and once the urgency is gone, the substantive litigation becomes a slower, less effective remedy.

What this means for operators

For a business defending its market position:

• Maintain trademark registrations current and renewed
• Document distinctive trade dress through advertising investment, recognition, market positioning
• Implement confidentiality agreements with employees, consultants, suppliers
• Monitor the market for competing activity — early identification of unfair practices preserves remedies

For a business expanding aggressively:

• Distinguish between aggressive competition (legitimate) and unfair competition (illegal)
• Avoid using competitor confidential information acquired through hires or other channels
• Run comparative advertising through legal review before publication
• Build distinctive identity rather than approximating competitor visual identity

Unfair competition law in Brazil is robust but not punitive against legitimate competitive activity. The line is honest competitive effort versus dishonest diversion of clientele.

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Author

Monika Hosaki

Managing Partner and founder of Hosaki Advogados. Practice in intellectual property, digital law, and creator economy. Over 10 years at the intersection of technology and law.

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