Understanding the ongoing discussion and the good to come 
 
Much – and even some contradictory information – has been published about the judicial action at the Brazilian Supreme Court regarding the unconstitutionality of the sole paragraph of article 40 of the Brazilian Industrial Property Law (Law Nº 9.279, of 1996) related to the term of protection by patents. The discussion led to a preliminary injunction decision on April 7th 2021 that caused a stir due to its surprising character and complex content that on the following day an issuance by the reporting justice was necessary to provide clarification on the concrete impacts of the decision. This blog intends to clarify some of this matter by means of an impartial point of view.
Brief historical context

Firstly, it is important to point out that the Brazilian IP Law came into force to properly align the national legal scenario to the TRIPS agreement, as performed by most of the countries in the world. In view of that, the patent term of protection was established for patent of invention at 20 years from the filing date, according to current article 40 of the Brazilian IP Law.

After long discussion, a provision was included to determine a minimum protection of 10 years from grant for patent of invention (sole paragraph of article 40), in a way to account for any delay of the public administration. It should be pointed out that, in the beginning, most technologies were not liable to protection in the country. So, when the legal framework included the possibility of protecting almost all technologies, there was a concern about the capability of the institute to perform the examination, and such provision would guarantee that, in case the examination took too long – more than 10 years from filing for patents of invention – the applicant would still get 10 years of protection from grant, ending up with more than 20 years of protection.

As is clear, the provision was to be used eventually, as an exception to the rule. However, for decades, the Brazilian PTO (INPI) was not provided with sufficient infrastructure, resulting in a backlog of cases pending examination (specially in some fields of technology, such as the pharmaceutical and chemical ones), and in the more frequent use of the minimum term of 10 years of protection. As a natural consequence, this provision ended up benefitting such fields of technology, being particularly useful for those inventions that take a very long time to become obsolete.

The critics of this provision are not new, but became more politicised amidst the pandemic scenario. Not to mention that the compulsory licensing – also a controversial subject matter object of misperception worldwide – is fully provided for in the Brazilian IP Law and could already be used to solve potential issue in this regard, if it was the case in question.

 

The court action at this point

The present judicial discussion about the unconstitutionality of the sole paragraph of article 40 (ADI 5529) is object of analysis by the Brazilian Supreme Court, and until the present date, is still ongoing.

Even with controversy, the complaint as presented led to the preliminary injunction from the Supreme Court’s reporting justice. According to this first isolated decision, the effects of the sole paragraph of article 40 of the Brazilian IP Law were to be suspended as of April 7th 2021, for pharmaceutical products and processes and equipment and/or materials for use in health.

The decision was expressly limited to applications yet to be granted after the date of the decision. The cases already granted were not affected. As a result, the Brazilian PTO, in compliance with such decision, has already started granting patents with a term of protection of “only” 20 years from the filing date, even for the cases which took more than 10 years to be granted (and would otherwise benefit from the minimum term of 10 years).

The matter is scheduled to be further discussed soon with the panel of the Supreme Court justices.

 

The criteria for eligibility for the pharma field

The Brazilian PTO is using the following criteria for the applicability of the preliminary injunction decision (after April 7th 2021 all the cases being granted have 20 years protection term from the filing date):

First group: applications sent to ANVISA1 (the Brazilian National Health Surveillance Agency), and for which dispatch:

  • Of prior consent (7.5) has been issued: these cases will be automatically included
  • Of those not related to the pharma field have been issued (7.7): these cases will undergo manual revision by the PTO.

Second group: applications which have been classified by the WIPO in the following categories: A61B, A61C, A61F, A61G, A61H, A61J, A61L, A61M, A61N, H05G, in any position: these cases will be automatically included.

Third group: applications which have been classified by the Brazilian PTO in the following categories related to human health: A61K 6/00 (preparations for dentistry); C12Q (diagnosis involving enzymes); G01N 33 (relating to diagnosis): these cases will undergo manual revision by the PTO.

 

Possible outcomes of the court action

Regarding the patent of invention term of protection, the following outcomes are possible in view of the Brazilian IP Law current dispositions:

  • Maintenance outcome: the legal provision disposed by the sole paragraph of article 40 of the Brazilian IP Law is constitutional, and nothing changes (that is, the patent of invention term is of 20 years from filing, not being less than 10 years from grant).
  • Outcomes that change the Brazilian IP Law current patent term understanding:

1. The legal provision is unconstitutional, and all patents ever granted with more than 20 years term from filing would be affected (ex tunc effect).

2. The legal provision is unconstitutional, but the decision would be modulated by the court in order to affect only future cases (ex nunc effect). The modulation of the effects could be divided into the following groups:

2.1. It could be applicable only to the cases filed after the decision

2.2. It could be applicable to the cases granted after the decision (currently in force due to the preliminary injunction decision of April 7th, 2021); or

2.3. It could be applicable only to cases that are in the examination line and under 10 years from filing at the decision date (that is, old filing cases would not be affected).

In this scenario, the possibility of limiting the modulation effect to only new filings (item 2.1 above) seems unlikely. The most probable outcome seems to be the applicability of the “only” 20 year term to all new granted cases, regardless of the time in line for examination (under or over 10 years from filing – item 2.2 above, currently in force).

But, in turn, the real outcome on the unconstitutionality of the legal provision in question will depend on the majority voting of 11 court justices, and the modulation of the effects, if it is the case, would have to be subject to new voting.

Regarding the technical field of the invention:

The preliminary decision refers to only pharmaceutical related matters, which is understood to be against the TRIPS agreement. Moreover, any final decision in this regard would have a serious impact on the countries’ objective at WTO (World Trade Organization) and OECD (Organization for the Economic Cooperation and Development).

Thus, what started out as a pharma issue, now involves other technology areas.

 

The Brazilian PTO

The first aspect to point out is the effort of the Brazilian PTO on fighting the historical backlog, a project started before the pandemic. The project to fight the patent examination backlog consists of the Brazilian PTO issuing simplified official actions called “preliminary official actions” comprising only documents retrieved in the prior art search (no technical opinion on the merits), either performed by foreign offices if it is the case, or by the Brazilian PTO itself, in case no corresponding foreign search is available. The applicant is requested to argue in favour of the patentability of the invention and/or to amend the set of claims in view of such documents. Afterwards, the Brazilian PTO may directly grant or definitely shelve the application (in case of lack of response), reject the application (in case of unsatisfactory response, being possible to file an appeal) or issue new official actions on the merits and with technical opinion.

By doing so, the project greatly reduced the applications pending examination (there is only about 40% of the backlog left after about 1.5 years of the project, according to the data provided in the Brazilian PTO’s website), and it is possible to affirm that it is undoubtedly succeeding. The cases are being examined faster than ever. The goal of the Brazilian IP Law is to reduce the number of applications pending decision by 80% by August 2021, in addition to reducing the average grant term to around two years. In any case, new measures to actually extinguish the backlog are already being implemented, and there are several routine and new ways to expedite the examination, if it of interest.

Thus, in theory, if it were not political, the discussion about the unconstitutionality of the sole paragraph of article 40 would not have been raised after being in force for 25 years.

But regardless of the outcome of the court action, the positive that resulted from it was the light cast on the financial resources of the Brazilian PTO, notably insufficient, which is now being closely analysed and consequently discussed, with it now being possible that improvements are to come soon. Any steps taken to guarantee more favourable conditions for the Brazilian PTO to process and decide cases will be a turning point for IP in Brazil.

Also, new bills are being discussed to speed up the Brazilian PTO’s proceedings, particularly regarding the need (or the lack of it) of the PTO to submit the applications related to pharma field to previous allowance by ANVISA, as disposed in article 229-C of the Brazilian IP Law. Indeed, removing such barrier would give the PTO complete control of the whole patent proceeding.

 
Conclusion

The question whether the minimum term of 10 years for patent cases is unconstitutional is still under discussion at the Supreme Court, but in the foreseeable future, the provision should become irrelevant, due to the efforts of the Brazilian PTO to overcome the backlog.

Also, the discussion opened questions around old issues that are now under the spotlight, such as the insufficient resources of the Brazilian PTO and the legal requirement for pharma-related applications to obtain the previous allowance by ANVISA, and can be properly dealt with.

It appears that, regardless of the outcome of the judicial action in question, it is very likely that some good will still come from this.

 

Further information

Brazil is an important market. Considering the recent measures by the Brazilian PTO that will soon solve the backlog issue – and the improvements that are to come – and the current economy which is greatly favouring strong currencies such as the Dollar and the Euro, Brazil is a favourable country for foreign investment.

 

Next steps
The judicial action regarding the term of patent protection in Brazil is expected to end in the coming weeks. The outcome and its consequences will be further discussed in an updated article.
To learn more about the Brazilian PTO’s project to fight patent examination backlog, please consult: https://www.gov.br/inpi/pt-br/servicos/patentes/plano-de-combate-ao-backlog.

 

How FICPI makes IP attorneys more effective
As a worldwide community, FICPI brings insights from its independent IP attorney members around the globe, enabling members to gain a wider perspective on developments outside their usual remit. A smoother process for patent grants will help businesses in the region and with economic interests in the region to further develop business opportunities and links.

 

Co-author

Isabella Katz Migliori: Isabella is a Senior Patent Specialist in the full service law firm Lobo de Rizzo, which has offices in Sao Paulo and Rio de Janeiro. She has wide experience in consulting services, and in the drafting, filing and processing of patent applications, with a focus on chemistry and life sciences. She holds a degree in Biological Sciences from Universidade Estadual Paulista (UNESP), 2007; Master’s and PhD degree in Science, with emphasis in Immunology, from Universidade de São Paulo (USP), obtained in 2010 and 2016, respectively; and specialised in Administration from Fundação Getulio Vargas (FGV-SP), 2013.

Email: isabella.migliori@ldr.com.br

Phone: +55 11 3058.8966

LinkedIn: https://www.linkedin.com/in/isabella-katz-migliori-312193a9/

 

Footnotes:

1According to article 229-C of the Brazilian IP Law, the grant of patent applications related to the pharmaceutical field will depend on the previous allowance by ANVISA, which role is to analyze possible public health issues and may comment about the patentability of the invention as third party observations to the Brazilian PTO.

 

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