If a judge demanded the postal service hand over an image of every envelope processed, it must comply -- even though no such images exist?
Where does it end?
The problem with the attitude of the Brazilian courts in regards to Whatsapp is that they are not a telco. The abomination that is the Marco Civil, which is being used as a justification to enforce the court request and says data should be retained by companies for one year, does not help.
This was passed in 2014, so the main allegation from the Brazilian courts is that Whatsapp should have this data, anyway. There is nothing "retroactive" there.
It's illegal to open the envelope, but hey - who knows?
But the basic idea is yes, you must comply with all laws. If you can prove it violates the constitution you can have a court invalidate the law (but before that it would be illegal to violate it). There are often laws that you could argue conflict with this law and get out of it that way.
Often if you have lots of money you can influence the enforcement of laws. That doesn't exempt you from a law but often it isn't really an issue of what the law allows but what the regulator or prosecutors decide to enforce. And if you can't do that you can fight the attempts by the regulators and prosecutors (and law enforcement officials) and argue they have not legal right to do what they are seeking to do. See Apple, for a recent example.
Your rights are often not just a matter of the law but of to what extent the government and law enforcement are bound by laws. In the recent experience in the USA we have examples of the Bush and Obama administrations seeking to avoid accountability for authoritarian overreaching. They often seem to get away with it. The recent attempt to push around Apple was stopped mainly due to Apple's lawyers and leaders refusing to be pushed around.
I do not know if the Brazilian example is one where the government and/or judge are attempting to compel behavior not legal in Brazil (either not what the law requires, using a non-legal punishment or neglecting another legal requirement that would override the law being used to compel the behavior). But I do think it would be possible to have such a law and have the judges actions be legal.
Certainly laws can compel companies to do things that they are not now capable of doing. Normally if some new law were to be created the regulatory framework and notice would be publicized and companies would be aware of the requirement (say to keep records or whatever sort). And then if they failed to do so that isn't a justification to fail to comply since they failed to do what was required in order to be able to comply with a further requirement. Their lawyers may also be able to argue the law was unrealistic in expecting compliance because even though we wanted to comply it just wasn't possible to do so. And making a case that they are doing everything they can may be taken into account to say that while they are not fully compliant yet, they are taking all reasonable action and therefore to the extent the judge has leeway they could make adjustments to the consequences.
While it is sometimes annoying the reality is there are so many complications it is often a matter of judgement for whether something is or is not ok and even if it isn't ok, what is a reasonable consequence. When the legal system is working well it makes these judgement in a sensible manner even if it leaves many people unhappy. And then you have things like the Eastern district of Texas making a mockery of abuse of society by patent trolls.
I certainly do believe the legal system can be systemically broken. And those failures can be left unaddressed by our representatives for decades. Could that be similar to what is happening in this Brazil case? Yes. Could it also be that this Brazil case is just a matter of a bad law and the legal system is properly carrying out the consequences of that law? Yes.
I am not aware of any law in the US ( talk on US laws because you discuss it later in your comment) that requires by business to keep sales records for the purposes of recalls, the only businesses required to do that are business that sell regulated goods, (firearms, explosives, Drugs, certain chemicals, etc)
Normal Consumer Goods are recalled all of the time with out the Manufacturers, or Retailers having a master list of every person that bought that item.
I don't happen to think the law mentioned is a good one. And I have no idea how the law is actually worded. Depending on how it is worded maybe it is ok to just not keep records so you don't have to provide them. But it is certainly within the power of governments to demand companies operate in a manner that requires them to do certain things and you can't avoid that by for example not keeping the records you are required to.
I sure hope the USA stops the leadership of authoritarian overreaching on laws relating to technology. But it is not at all surprising that others are following the lead of the USA into horrible authoritarian and Orwellian laws given the USA's behavior. Few countries seem willing to put liberty ahead of authoritarianism. The USA is far from perfect but it is a country that has above average potential for promoting liberty.
But the last Bush and Obama administrations have been horrible and both political parties are pushing for horrible laws. A few decent advocates (such as Senator Ron Wyden) for fighting this trend exist but they are not common yet.
This promotion of authoritarian state power is a very dangerous trend that may well have incredibly bad consequences for us. Our history shows authoritarian governments abuse power and I am worried about the last two administrations strong support for increasingly powerful spying abilities of government.
I would hope countries like Brazil lead away from the path the USA is pushing the world down. Unfortunately I don't see much good happening in that way. I hope I am just not aware of good things other countries are doing but I worry that isn't the reason I don't hear about good moves to thwart the dreams of authoritarian regimes.