Trademark and the fuels market — "so did the ANP create the white-label pump?"

I. Introduction

For a long time, federal regulation oversaw this commercial relationship between resale stations and distributors, establishing that branded resale stations could only purchase the fuel resold at their establishments from the distributor holding the rights to the brand they displayed.

With the advent of ANP Resolution 858 of November 5, 2021, the regulatory agency chose to stop overseeing this commercial relationship, removing from the regulatory framework the provisions that required a branded station to purchase fuel solely from the distributor that owned the commercial brand displayed at the establishment.

Does this mean branded resale stations are now free to sell fuel of any origin, despite displaying the distinctive brand of a given distributor? This article is dedicated to answering that question — starting from certain interpretive premises on trademark and its relationship to consumer protection.

II. Basic notions of trademark

A trademark is an intangible asset: it has no tangible existence, but it must be materialized in perceptible things (corpus mechanicum) to be perceived by the senses. A trademark, isolated from its materializing context (container, product, holding company, commercial establishment), does not constitute an object of legal protection, because, strictly speaking, it represents nothing in isolation.

The trademark holder does not necessarily hold the same right of absolute exclusivity over the sign itself, but only in relation to a defined class of products or services — what is known as the rule of trademark specialty. But the union between sign and product is only one facet of trademark: it lacks a psychological ingredient, which is the identification produced in the consumer's mind upon observing that union. The ultimate consolidation of a trademark depends, in the final analysis, on the other major protagonist of the formative process: the consuming public.

III. Functions of trademark

Before setting out the functions of trademark from a legal standpoint, it is worth noting the role it plays in the economic sphere. The 1976 Memorandum of the Commission of the European Communities on the creation of a Community trademark already highlighted the informational role of trademark: it is the mechanism that enables the identification and subsequent selection of products, making it viable and transparent for the consumer to choose among products of the same class offered by countless producers.

III.I. Function of indicating business origin

This is the primary and fundamental function of trademark: upon seeing a trademark associated with a product or service, the consumer logically assumes it originates from a particular company. Even if the consumer does not know the trademark holder's name or domicile, the trademark guarantees that products bearing that distinctive sign, once purchased, will have the same business origin as products previously purchased.

III.II. Function of indicating quality

Trademark gives the consumer information about a relatively constant level of quality of the product or service they consume. Trademarks reward the manufacturer that produces high-quality goods, encouraging economic progress; without this protection, manufacturers would have little incentive to maintain or raise the quality of existing products.

III.III. Function of condensing goodwill

From the holder's perspective, this is the most important function: trademark is the mechanism through which, over time, a good reputation with the consuming public is condensed — the reasonable expectation that the product or service will be repeatedly purchased because it carries public backing.

III.IV. Advertising function

Once a trademark gains notoriety, it also becomes an effective advertising instrument: it eases consumer choice and drives product sales — a vector that also bears on the prohibition of unauthorized trademark use.

IV. The Consumer Code and case law on the regulatory oversight of trademark

Article 4 of Brazil's Consumer Protection Code (Law 8,078/90) establishes, among the objectives of the National Consumer Relations Policy, the efficient curbing and repression of all abuses committed in the consumer market, including unfair competition and the improper use of trademarks and trade names that may cause harm to consumers.

Under the sector-specific regulation then in force, the Sixth Panel of Brazil's Superior Court of Justice (STJ) already held that so-called "brand-breaking" confuses the end consumer and makes it harder to control fuel origin, favoring companies that distribute fuel irregularly and compromising not only vehicle integrity, but the environment and public health (Special Appeal 475220/GO, Rapporteur Justice Paulo Medina, Sixth Panel, decided 6/24/2003).

An earlier precedent from the Third Panel (Special Appeal 188947/PR, Rapporteur Justice Menezes Direito) had already held that, if a retail station sells fuel whose origin does not match its brand, "it is deceiving the consumer and unjustly enriching itself at the expense of the trademark holder." Thus, under both the Consumer Code and the STJ's case law, selling fuel whose origin does not correspond to the displayed brand constitutes a way of deceiving the consumer and unjustly enriching oneself at the trademark holder's expense.

V. The correct interpretation of current regulation, in our view

Given the ANP's new regulation, the question arose: did the ANP create the "white-label pump"? Regarding informing consumers of fuel origin, Article 25 of ANP Resolution 41/2013 (as currently in force) provides that the retail reseller must inform the consumer of the fuel's origin in a clear and easily visible manner at each pump. The agency merely gave up overseeing the relationship between distributor and resale station, but kept the obligation to clearly inform consumers about the origin of the products.

The doubt actually stems from § 2 of Article 18 of ANP Resolution 858/21, whose wording — admittedly poorly positioned within the resolution — gave rise to interpretations suggesting that a resale station is now permitted to have a pump for fuel of another brand. Faced with this controversy, the ANP itself issued a Clarification Notice stating that the term "white-label pump" does not appear in ANP's rules, and that the practical effect of the current rule is merely the "end of regulatory oversight" of branding — not authorization to deceive consumers about the origin of the product.

The ANP did not create the "white-label pump," nor could it have done so without violating the Consumer Protection Code. It is possible to understand that § 2 of Article 18 was created in furtherance of the principles of the National Consumer Relations Policy, addressing an issue that was already happening in the market — branded stations acquiring fuel originating from suppliers other than the holders of the brands they displayed —, a practice that was illegal before the regulatory change and remains illegal today.

A pertinent doubt arises from this: how will ANP enforcement catch, in the act, a station selling product from a supplier other than the brand holder displayed? It is quite likely that the ANP, with § 2 of Article 18, created a provision that is essentially unenforceable from a practical oversight standpoint — which does not, however, remove the illegality of the conduct itself.

It is also worth dispelling a common factual error among advocates of total freedom of sale: the notion that the primary source of most fuel products sold (gasoline and diesel) is always the same (Petrobras), which would make origin irrelevant. No fuel product reaches the station exactly as it left the producing source — gasoline receives a variable blend of anhydrous ethanol and diesel a blend of biodiesel, both the distributor's responsibility. Once a station displays a distributor's distinctive brand, that distributor bears full responsibility for the quality of those products.

VI. Conclusions

The protection of trademark rights carries benefits for its holder, but its main function is rooted in consumer protection. It cannot be accepted that the ANP, through the regulation mentioned, created the notorious "white-label pump." It is a fact that the agency gave up overseeing the contractual relationship between distributors and resale stations from the standpoint of trademark use, under the influence of CNPE Resolution 12/2019. It is also a fact that the wording of § 2 of Article 18 of ANP Resolution 41/2013 was not drafted with the best technique and has a strong chance of proving ineffective.

But this cannot result in the consumer market being left exposed to doubts about the improper use of trademark. The existence of a white-label pump operating within a station characterized by a given brand is, based on STJ case law, a form of improper use of trademark — a way of deceiving the consumer market that cannot be tolerated. Given the doubt generated by the current regulatory treatment, perhaps the best solution would be for the ANP to stop addressing this trademark issue altogether, referring its treatment to the legal instruments already in place on the subject — starting with the Consumer Protection Code itself.