Your Brazilian Employee Invented Something. Who Owns It?
Under Brazilian law, employee inventions are split into three categories with very different ownership outcomes. Here is what foreign companies with R&D teams in Brazil need to know before it becomes a problem
6/5/20264 min read
You hired a software engineer in São Paulo. Or a chemist in Campinas. Or a product team in Recife. They work for your company, they use your tools, and one of them has developed something patentable.
In the United States or the UK, you would likely assume the answer to ownership is simple: you own it, because they work for you, and your contracts say so. In Brazil, that assumption is wrong in ways that are easy to miss and expensive to discover late.
Brazilian law divides employee inventions into three categories, each with a different ownership outcome. The category that applies depends not on what your contract says, but on the facts of how the invention came to be.
The Three Categories Under Brazilian Law
Brazil's Industrial Property Law (Law No. 9.279/1996) sets out the rules in Articles 88 through 91. They are not optional. Parties cannot simply contract around them.
Category 1: Belongs entirely to the employer (Article 88)
The invention belongs exclusively to the company when it arises from an employment contract whose specific purpose is research or inventive activity, or when the invention results directly from the nature of the work the employee was hired to perform.
A researcher at a pharmaceutical company hired to develop new drug formulations. A software engineer at an AI company whose role is to develop new algorithms. An engineer at a manufacturing firm whose job is to improve production processes. These are the clear cases. The employer owns the result, and unless the contract says otherwise, the employee gets nothing beyond their agreed salary.
There is one important wrinkle: if the employee files a patent application within one year of leaving the company, the law presumes the invention was developed during the employment relationship. The burden of proof is on the employee to show otherwise.
Category 2: Belongs entirely to the employee (Article 90)
The invention belongs exclusively to the employee when it has no connection to the employment contract and was developed without using any of the company's resources, data, materials, equipment or facilities.
The employee who builds a mobile app at home, on weekends, with no overlap with their work responsibilities and no use of company equipment, owns that invention. The company has no claim to it.
This is the category that surprises foreign employers the least in the abstract, but causes friction in practice. The line between what is "within the scope of employment" and what is not is not always clear. An engineer who uses their own laptop but develops something adjacent to the company's core product is in contested territory.
Category 3: Shared ownership (Article 91)
This is the category that catches foreign companies off guard. When an invention results from the employee's personal contribution but also involves the use of the employer's resources, data, means, materials, facilities or equipment, ownership is shared equally between employer and employee.
Equally. By default. Unless the contract expressly states otherwise.
The employer retains the exclusive right to exploit the invention commercially. But the employee is entitled to fair compensation for that exploitation, and the law does not set a formula for how that compensation is calculated, which means disputes go to court.
If multiple employees were involved in the invention, their collective share is divided equally among them, again unless agreed otherwise in writing.
Why Foreign Companies Get This Wrong
The most common mistake is treating Brazilian employment contracts like US or UK IP assignment agreements. Foreign legal teams draft what looks like a comprehensive invention assignment clause, translating their standard PIIA into Portuguese, and assume the problem is solved.
It is not.
Brazilian labor courts apply LPI Articles 88 through 91 regardless of what the contract says. A clause that purports to assign all inventions to the employer, including inventions made outside working hours and without company resources, is unenforceable against the employee for those inventions that fall into Category 2. Conversely, a clause that tries to establish 100% employer ownership over mixed inventions (Category 3) without the express contractual agreement required by Article 91 will be challenged.
The second common mistake is misidentifying which category applies. Companies assume all software engineers fall under Category 1 because they work on technology. But the question is more specific: was this particular engineer hired to perform research or inventive activity, or hired to perform a defined technical function, like maintaining a system or building features to specification? The distinction matters. A frontend developer who creates an unexpected technical solution on the side may not fall into the employer-owns-everything category.
The third mistake involves timing. The one-year presumption in Article 88(2) works in the employer's favor while the relationship is active, but it is a presumption, not a rule. A former employee who can show the invention was genuinely developed after leaving, using independent resources, can rebut it. Companies that do not maintain clear documentation of what was developed, when, and using whose resources find themselves litigating that question.
The Due Diligence Problem
This issue has a way of surfacing at the worst possible moment: during M&A due diligence, a funding round, or an IP audit. An investor or acquirer's legal team identifies that the Brazilian team developed key technology, finds that the employment contracts do not adequately address Article 91, and flags the IP chain of title as uncertain.
Uncertain IP title at that stage is not a paperwork problem. It can affect valuation, delay closing, or require the company to go back to former employees to obtain written assignments or acknowledgments, which becomes complicated when those employees have already left.
The framework issue is that many foreign companies apply their global IP policy to Brazil without local law review. A policy designed for US, UK or German employment law will not map cleanly onto the Brazilian three-category structure.
What to Do
The starting point is a contract clause that expressly addresses Article 91. If your Brazilian employment agreements do not specifically regulate the ownership and compensation framework for mixed inventions, the statutory default applies: 50/50, with fair compensation to be negotiated or litigated.
For companies with genuine R&D activity in Brazil, the contracts should go further: identifying the nature of the research role, establishing the compensation framework for Category 3 scenarios, and defining what constitutes use of company resources clearly enough to reduce the grey zone.
It is also worth mapping which employees are in roles where Category 1 applies clearly versus those in roles where the category is ambiguous, and addressing that ambiguity in writing before a specific invention exists, not after.
Finally, for companies that have been operating in Brazil for some time without addressing this, a backward-looking review of what was developed, by whom, and under what conditions is more useful than hoping the issue does not come up. It tends to come up.
Reis Araujo Advogados advises foreign companies on IP strategy and employment contract review in Brazil, including employee invention frameworks. Contact us to discuss your company's situation.
