ANVISA Calls for Compulsory Licensing of Registered Trademarks without Payment of Royalties

On August 17, 2006, Brazil’s National Health Surveillance Agency (ANVISA) published Public Consultation No. 46 concerning the proposal to change generic drug regulation. The proposal requires that the secondary packaging of these products clearly indicate the trademark of the corresponding brand name drug. After an initial extension, the period for submitting criticism or suggestions was to expire on October 18, 2006.

Extending Beyond Constitutional Legitimacy?
First and foremost, it must be noted that ANVISA, as part of the indirect public administration, does nothave the constitutional authority to change regulatory acts and institute requirements not provided for by law, or to expropriate or create exceptions to rights established under the law. Its regulatory acts derive from and must clarify existing regulatory content, defined by law; otherwise, they constitute a violation of the principles of separation of the three Powers and of legality.

The objective of ANVISA’s proposed text, however, is the implementation of a type of "compulsory licensing of registered trademarks," without payment of royalties; but there is no such legal institution in the Brazilian legal system. In fact, it is important to point out that, given the social interest and the country’s economic and technological development, the issue of exclusive rights over registered trademarks was raised to the constitutional status of fundamental rights and guarantees, as guaranteed by Article 5, (XXIX) of the Brazilian Federal Constitution.

As such, given that they contradict the rights assured by Industrial Property Law (IPL) No. 9,279/96, among others, the provisions contained in the Public Consultation under review are glaringly unconstitutional.

ANVISA Provision Likely to Be Challenged on Many Fronts
Likewise, this proposal imposes a restriction on ownership rights acquired with trademark registration that is not provided for by law, because it deprives the ownerof one of the faculties inherent in this right: exclusive use throughout the country. This guarantee is also provided in international agreements like TRIPS, and failure to honor it may entail serious consequences for the country with the World Trade Organization (WTO).

It should also be noted that the legislator classified the unauthorized use of a registered trademark as a crime in IPL Articles 189 and 190. The creation of criminal provisions, and of any exceptions thereto, must strictly comply with the principle of legality, and is the jurisdiction of the National Congress. If the President of the Republic himself may not pass criminal legislation through Provisional Measures, it is not very reasonable to expect the ANVISA to do so.

Moreover, use of a trademark by an unauthorized third party may cause serious and irreparable damage to the reputation of brand name drug manufacturers, who will be unable to exercise any manner of control over the specifications, nature and quality of the generic products identified with their trademarks, a right that is even granted to the owners of voluntarily licensed trademarks (IPL Article 139).

Furthermore, this would inevitably dilute the brand name drug’s trademark, which would then indiscriminately designate an entire line of generic products rather than indicate the origin of a specific product. The Public Consultation in question is inconsistent with the country’s own policy on generic products, one of the main objectives of which is to clearly distinguish such products from the brand name drugs.

In addition, some generic product packaging has illegally utilized design and figurative elements unnecessarily similar to those adopted by brand name drugs. Therefore, use of a brand name drug’s trademark would further contribute to deceiving consumers into purchasing a drug while believing it to be another, or even worse, that the brand name drug manufacturer guaranteed the quality and safety of the generic product.This too would conflict with the principles that form the basis of consumer law, most notably the principle of transparency.

The proposals contained in Public Consultation No. 46 not only overstep the limits of the regulatory powers granted to ANVISA, but they also contradict Brazilian legal order, infringing on the rights of both brand name trademark owners and consumers themselves. Ultimately, such proposals would prove to be a disservice to public health.