Franchisor enforced the post contractual noncompetition clause, and claimed not only material damages and the penalty established in the agreement for intellectual property infringement, but also moral damages.
The Superior Court kept the Court of Appeals'decision in which the former franchisee was condemned to pay a penalty on daily basis for the intellectual property infringement and also for moral damages.
The moral damages were agreed to franchisor based on the fact that the taste and the quality of the food were different from the original, and consumers were attracted by the confusingly similar "trade dress", harming franchisor's reputation. It is the first decision the Superior Court confirms moral damages to a legal entity in a franchise case.

Pedro Eichin AMARAL, IDI Country Expert for Brasil.

The text of the judgement, together with other interesting case-law on agency and distribution contracts, can be found in the Brasilian page of the Reports Section of the website, while the relevant legislation concerning agency and distribution agreements in Brasil can be found in the Legislation Section of the Website.

E-mail this article to a colleague.

Printable version