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Constitutional Challenge (ADI) 5529 and Patent Term Adjustment/Extension

by Cláudio França Loureiro e Victor Amaral Abreu Di Sessa

December 29, 2021

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1 Introduction – Constitutional Challenge (ADI) 5529

Filed on 17 May 2016, by the acting Federal Attorney General (“PGR”), Mr. Rodrigo Janot, the objective of Constitutional Challenge (ADI) 5529 before the Supreme Federal Court (“STF”) was to declare the sole paragraph of Article 40 of Law no. 9,279/96[1] – Industrial Property Law (LPI) – unconstitutional, which set forth that the term of validity for a patent for an invention should not be less than 10 years, and for a patent for a utility model 7 years, from the respective granting dates.

The challenge questioned extensions in the term of validity for patents in the event of administrative delay in the examination of applications at the Brazilian Patent and Trademark Office (“BPTO”) [National Institute of Industrial Property (“INPI”)], using the argument that the mentioned legal regulation authorised a perpetual exclusive right to the patented technologies. Notably, it is observed that the constitutional issue submitted to the STF for consideration consisted of ascertaining whether the term of validity for patents, with their dies a quo being the granting date of the privilege by the BPTO, was compatible with the constitutional regime set forth in the Federal Constitution (“CRFB”), which defined the rule that patent protection is temporary (Article 5, XXIX).

However, with the serious health crisis caused by the COVID-19 pandemic that devastated the world, the need for a decision on the constitutionality of the rule challenged by ADI 5529 became urgent, especially given the fact that the extension of the term of validity for patents related to pharmaceutical products and processes and to equipment and/or materials for use in health care, could, in theory, hinder access to essential medicines to fight the pandemic, since while patents belonging to laboratories that own technology are still valid, the local pharmaceutical industry would be impeded from producing generic medicines against the new coronavirus and its current and future variants.

Despite ADI 5529 having been filed in 2016, it was only on 24 February 2021 that the PGR requested the granting of a preliminary injunction, seeking the immediate suspension of the effects of the sole paragraph of Article 40 of the IPL.

Given the urgency imposed by the pandemic, the request for a preliminary injunction was partially upheld on the merits on 07 April 2021, through the a ruling handed down solely by Reporting Justice Dias Toffoli which suspended the effectiveness of the sole paragraph of Article 40 of the IPL for patents related to pharmaceutical products and processes and equipment and/or materials for use in health care, with ex nunc effects, that is, the ruling produced effects from then on.

However, given the complexity of the matter and in order to provide clarification on the actual effects that the rule already produced, a day after his ruling, on 8 April 2021, Reporting Justice Dias Toffoli ratified in a separate ruling his proposal to modulate the effects of the declaration of unconstitutionality of the sole paragraph of Article 40 of the IPL to be endorsed in the Plenary Session of the Supreme Federal Court.

The proposal consisted of:

(i) patents related to pharmaceutical products and processes and to equipment and/or materials for use in health care that, by the date of 7 April 2021, had already been granted with the extension set forth in the sole paragraph of Article 40 would remain in force, until a potential ruling by the Plenary Session to the contrary, since the injunction granted did not have retroactive effects and, consequently, acts carried out in light of the rule remained, for the time being, intact; and

(ii) from 8 April 2021, the BPTO, upon granting a patent in the categories established in the ruling, could not do so with the extension set forth in the questioned rule, so that the ruling affected both applications that had already been filed and new applications.

The judgment on the merits of ADI 5529, in turn, was initiated at the session on 28 April 2021.

In the session on 29 April 2021, the STF resumed the judgment of ADI 5529. In his vote, Reporting Justice Dias Toffoli drew attention to the worrying backlog at the BPTO and stated that the provision the constitutionality of which was being discussed had the objective of compensating the backlog of patent applications and the Office’s chronic delay in its examinations, a phenomenon that has existed for years without solution.

Notwithstanding these considerations, Reporting Justice Dias Toffoli voted to uphold ADI 5529 on the merits, and he was followed by the majority of the other Justices of the Court. Thus, at the judgment session on 6 May 2021, the unconstitutionality of the sole paragraph of Article 40 of the IPL ended up being declared by 9 votes to 2.

Subsequently, discussions were started on the modulation of the effects of the ruling in question, and in view of this, on 12 May 2021, the Plenary Session of the STF deliberated on the modulation of the effects of the declaration of unconstitutionality of the sole paragraph of Article 40 of the IPL, so that on that occasion the proposal presented by Reporting Justice Dias Toffoli was approved by 8 votes to 3 and it was decided to modulate the effects of the ruling by the STF.

Thus, in accordance with the ruling published on 1 September 2021, ex nunc effects were granted to the ruling, except for: (i) patents that are the subject matter of lawsuits filed up to 7 April 2021; and (ii) patents granted for a term based on the mentioned provision, related to pharmaceutical products and processes and to equipment and/or materials for use in health care. For these exceptional situations, ex tunc (retroactive) effects were maintained, so that the patents for the products and processes in question would no longer have the term counted in the form of the sole paragraph of Article 40 of the IPL, even though they were granted before the judgment of ADI 5529, notwithstanding only the concrete effects that had already been produced by these patents.

Even before the judgment of the Plenary Session was published, on 26 August 2021, the mentioned rule was expressly revoked with the enactment of Law no. 14,195/96 which, in Article 57, XXVI, also revoked Article 229-C of the IPL. (Article 57. The following are revoked: (…) XXVI – the sole paragraph of Article 40 and Article 229-C of Law no. 9,279/96.).

Incidentally, it is curious to see a rule revoked by a law after having already been declared unconstitutional by the STF.

 

2 The consequences of the sole paragraph of Article 40 of the IPL being declared unconstitutional

Article 40 and its sole paragraph of the IPL set forth two distinct terms for a patent for an invention: (i) twenty years, from the filing date (rule in the heading); or (ii) ten years from the granting date (rule of the sole paragraph).

The term set forth in the sole paragraph of Article 40 of the Industrial Property Law was a guarantee that inventors would exploit the subject matter of their patents for at least ten years. Indeed, the minimum period of ten years was an alternative – among several possible alternatives – to afford patent owners a reasonable period to benefit from their inventions.

The declaration of unconstitutionality of the sole paragraph of Article 40 of the IPL does not mean, however, that the STF has ruled that inventors are not entitled to a reasonable period to commercially exploit the subject matter of their patents. On the contrary, Justice Dias Toffoli stated in his vote on ADI 5529 that “the patent must remain in force for a reasonable period”.

With respect to this issue, we emphasise that the main intellectual property treaty, TRIPs (Agreement on Trade-Related Aspects of Intellectual Property Rights), sets forth that the validity of patents for inventions may not be less than 20 years from the filing date of the application.[2]

Thus, since the rule was declared unconstitutional, all owners of patent applications became true captives to a promise of speed and a reduction in the backlog by the Brazilian Patent and Trademark Office – BPTO, responsible for the substantive examination of the requirements for patentability of these applications. After all, the BPTO’s disproportionate and unjustified delay in granting patents cannot cause losses for the respective owners.

The situation is even worse in the context of pharmaceutical companies, since they suffer most losses due to the slowness of the analysis carried out by the BPTO, which, according to an audit carried out by the Federal Government Court of Auditors – TCU, takes an average of 13.16 years to complete the substantive examination for patents related to these products.[3]

In addition, the audit report prepared by the TCU[4] indicated that the average time that an application remains at the National Health Regulatory Agency – ANVISA for a preliminary examination of patentability to be carried out is approximately 13 months.

The situation was critical, so the revocation of Article 229-C of the IPL, which determined that pharmaceutical products should undergo a prior examination of patentability carried out by ANVISA came at a good time.

Thus, given the general circumstances, the average time for analysing the patentability of a patent application for pharmaceutical products from the filing date until a substantive decision is, on average, 15 (fifteen) years, and this is only if the product does not suffer any type of opposition or administrative invalidity/revocation proceedings.

This scenario in itself demonstrates that patents in the pharmaceutical sector are those most affected by the slowness of the administrative examinations.

The situation could be remedied if cases were dealt with homogeneously, when modulating the effects of the STF’s ruling, with the application of ex nunc effects for all patents, without exceptions, which guarantees the legal security arising from the acquired right for patents related to pharmaceutical products and processes and to equipment and/or materials for use in health care.

Such discrimination between certain technological fields is even prohibited by TRIPS:

“Article 27.1 of the TRIPS Agreement “explicitly requires that patents be made accessible, both for products and processes, and prohibits distinctions relating to the field of technology to which the invention belongs[5]

(emphasis added)

Article 62.2 “is intended to avoid excessively lengthy analysis and registration procedures. The importance of this rule can be illustrated in light of Article 33: the term of patent protection (at least 20 years) is counted from the filing date. This means that the time required for analysis of patentability will be deducted from the actual term of protection, to the detriment of the owner of the right. In order to prevent an “undue shortening” of the period of protection, this provision obliges Members to allow the granting or registration of a patent within a reasonable period of time” (emphasis added).[6]

However, even if the filing of a patent application consists of a mere expectation of a right, which is ineligible for allowing interested parties to prevent exploitation by third parties, owners of subsequently granted patents are guaranteed the right to obtain compensation for undue exploitation, between the publication date of the application and the granting date of the patent.

For this reason, even though it is a mere expectation of a right, patent applications generate effects as soon as they are filed with the BPTO, as Karin Grau Kuntz’s understanding corroborates:

“From a legal point of view, applicants for patents will only be the owner of rights (retroactive and non-retroactive) in relation to their inventions after the patent is granted.

From an economic point of view, on the other hand, applications for patents generate effects that influence the decisions to be taken by economic agents, whether inventors or not, since, once the patent is granted, the then owner of the right may retroactively demand compensation for acts that took place during the patent pending stage, in addition to the immediate cessation of any act of counterfeiting. This implies that it is not possible to determine during the stage that precedes the granting whether the economic exploitation of the invention is allowed or not (remember that the right to seek compensation is linked to the right to prevent, the exercise of which is not possible in the past).

Thus, just as inventors will only know in the future whether or not they can rely on the privilege and whether they will have to fight for the consumer’s preference by supporting imitating competition or are armed with a competitive advantage, competitors also will only know in the future if the economic exploitation of the solution for which the granting of the privilege was requested is or is not allowed/prohibited.”[7]

(our emphasis)

These circumstances already demonstrate that the revocation of the sole paragraph of Article 40 of the IPL, without, however, the enactment of a rule that, based on more objective criteria, compensates for the time spent on these lengthy examinations, is extremely harmful to the owner of an application for a patent and, also, to all those involved, whether potential competitors, potential investors, and even society as a whole.

Article 2, heading, of Law no. 9,784/99 sets forth that “The Public Administration will obey, among others, the principles of lawfulness, purpose, motivation, reasonableness, proportionality, morality, a full defence, adversary proceedings, legal security, public interest and efficiency”.

At the international level, Brazil may be subject to sanctions, for failing to ensure non-isonomic treatment applied to products from different branches of technology, due to their nature, as it undertook when signing the TRIPS Agreement.

Thus, a letters-patent is a title arising from an administrative act issued by the Federal Public Administration, and for this reason it must be issued with a reasonable period of validity for the exclusive enjoyment and exploitation of the respective owners, since the administrative process from which its granting derives must also run within a reasonable period of time, under penalty of violating the mentioned legal provision that regulates the federal administrative process.

It is no wonder then that first instance rulings have already been handed down at this time that held that the term of validity of patents could be adjusted in light of the ruling rendered by the STF, provided there is unmistakable documentary evidence of the occurrence of factors preventing the full enjoyment of the patent guarantee, at no fault of the filer.

Let us see, by way of example, the ruling handed down in Interlocutory Appeal no. 1028430-42.2021.4.01.0000, Reporting Federal Justice Daniele Maranhão Costa:

“It must be recognised that, at least in an initial analysis, the appellant’s case is not an administrative claim made long after the filing, or an act which seeks increased protection over time, but rather a guarantee due to the unjustified delay by the regulatory body. In this regard, I highlight that the vote of the Reporting Justice in ADI 5529 emphasised the need not to set a fixed term: ‘It is important to emphasise that I am not defending a unique term here. As demonstrated in the chapter of this vote concerning the international panorama, several countries adopt the possibility of extending the exclusive exploitation of inventions, but they do so in a non-automatic way, based on clear parameters and for defined terms, elements that provide greater rationality for the system, promoting greater security and predictability’. I note that, as shown in the case records from the first instance, the product was filed on 7 August 2001, and the application was published on 14 February 2002, with the issuance of the Letters-Patent on 20 March 2018, with a term of validity of 10 years. Facts that demonstrate, at least in a perfunctory examination, that the appellant party did not delay its administrative request in order to guarantee more time for its product, but that it was hampered by the delay on the part of the government office. I would also like to clarify that, despite the modulation of the effects, initially excluding pharmaceutical products and processes from a period of 10 years from the issuance of the letters-patent, the specific case must be analysed and the facts that brought about the delay in the issuance of the registration, giving rise to the need for the due adversary proceedings by the appellee. Hence, despite this exclusion, I point out that the end of the patent at this procedural time and without analysis of the adversary system, may in fact generate irreversible damage to the party, since even if its claim is subsequently upheld, the details in relation to its products will no longer be protected. Therefore, based on the general power of caution, and since there is a risk of imminent lapse of the appellant’s right, which may suffer irreversible damage with the end of the patent, I hold that it is appropriate to grant suspensive effects until an expression of opinion by the BPTO on the facts”. (emphasis added)

(BRASIL – Federal Regional Court of the 1st Region (TRF1). Interlocutory Appeal no. 1028430-42.2021.4.01.0000 – Federal Justice Daniele Maranhão Cosa. Published on 6 August 2021)

The guarantee of a reasonable term for patent owners to commercially exploit the subject matter of their patents is an essential measure to make the financial return on investments in research and development (R&D) of new products viable.

This is because, in the pharmaceutical industry, for example, the average time between the start of research and the commercial launch of a new product is on average 10 years. However, only one in every four thousand substances identified results in an approved and marketed drug, which could generate revenue for the laboratory that developed it.[8]

In addition to the investment in time, there is the financial investment. From isolating an active ingredient to regulatory approval for marketing, the development involves funds of approximately 2.6 billion dollars for each new molecule placed on the market.[9]

Applications for patents are filed at the initial stage of scientific research. The finished medicine depends on several clinical studies and must also obtain a registration from the health regulatory bodies — in casu, ANVISA. This means that the filing of an application for a patent does not coincide with the launch of a product on the market, and, therefore, the mere filing and even the granting of patents in this sector is not synonymous with economic gains by the respective owners.

Thus, the system for protecting industrial creations is directly responsible for the research and development (R&D) cycles of new products. In particular, the pharmaceutical sector is the most dependent on the patent regime to guarantee the economic viability of its investments in research and development.[10] This sector would suffer a great loss in R&D investments if the patent regime were eliminated, which could represent a drop of at least 2/3 in pharmaceutical products.[11]

In addition, the patent system was implemented with the aim of adapting the market and competition to technological progress and development, inasmuch as if companies investing in research and development (R&D) did not have their inventions and creations protected, so that its competitors could make use of such innovation without having contributed with any investment, there would not be enough funds coming from the public authorities that could encourage new research, which would directly affect the social interest and the technological and economic development of the country.

Such scenario, especially in the pharmaceutical sector, would represent serious losses to the entire community, especially for the next health challenges to be faced by humanity.

It is evident that the sustainability of future investment cycles in innovation from the invention of new products for health care depends on the protection of intellectual property and the legal certainty of the entire process for granting intellectual property rights through a guarantee of a reasonable term of validity for patents.

The fundamental principle of the Industrial Property Law is to guarantee the country’s technological and economic development, as set forth in Article 2 of the mentioned law  (“The protection of rights relating to industrial property, considering their social interest and the technological and economic development of the Country, is effected through: I – the granting of patents for inventions and utility models;”) and this understanding was confirmed by the Supreme Federal Court, as can be inferred from the following excerpt of the vote handed down by Justice Dias Toffoli in the judgment of ADI 5529:

“Patents are considered instruments to encourage innovation and technological development, as they allow inventors – that is, those who have dedicated time and resources to create something new and useful to society as a whole – to appropriate the economic results of their inventions, through stipulations by legal instruments intended to deter and repress, civilly and criminally, imitation and undue exploitation by third parties. They are, therefore, instruments that favour investment in research and development in the industry sector, by enabling a financial return to those who assumed the risk of innovating.”

The current pandemic proves that the world’s society depends on the launch of new drugs to prevent and/or fight serious diseases. These will certainly come through research carried out by the pharmaceutical industry and other entities and universities researching the subject.

In an environment of uncertain results, as is the case with research carried out by the pharmaceutical industry, the existence of a reasonable term for exploiting inventions is an essential guarantee for anyone dedicated to innovation, whether in the public or private realm.

Furthermore, it should be highlighted that the mere filing of an application for a patent does not afford any right to the owner. Before the patent is granted, the owner has a mere expectation of a right. This is what is set forth in Article 42 of the Industrial Property Law (“Patents grant their owners the right to prevent third parties, without their consent, from producing, using, offering for sale, selling or importing for these purposes”). And the Superior Court of Justice has already decided thus, in accordance with the ruling handed down solely by Justice RICARDO VILLAS BÔAS CUEVA.

“SUMMARY: CIVIL LAW. CIVIL PROCEDURAL. INTELLECTUAL PROPERTY. BPTO. FILING OF AN APPLICATION FOR A PATENT. TECHNICAL SOLUTION. CONFLICT OF FILINGS. PRIORITY AND PREFERENCE. NO EXCLUSIVE RIGHT. CLAIM REJECTED ON THE MERITS. APPEAL DISMISSED.

1. Article 7 of the Industrial Property Law: ‘If two or more authors have independently achieved the same invention or utility model, the right to obtain a patent will be assured to the one who proves the earliest filing, regardless of the dates of invention or creation’.

2. Priority analysis is impaired because there is no conflict of filing for the same subject matter.

3. The notion of a patent involves three elements: granting from the state; exclusivity of the privilege; and the requirements set forth in law (novelty, inventive step and industrial application). Exclusive exploitation results from an ‘agreement’ executed between the state and the creator of the invention through the granting of a patent.

4. Mere filing brings about an expectation of an exclusive right.

5. Claimant’s appeal dismissed. Unanimous ruling

“(…) Filing affords the appellant, in the event of a conflict of filings, the privilege of having preference, to the effect of having their application considered and not ensuring an exclusive right during the course of the administrative claim. Such exclusivity will only exist when the patent is granted, which, in this case, is shown to be a mere expectation of a right.

(…)”

(BRASIL. Superior Court of Justice. Appeal in a Special Appeal (AREsp) no. 559848/PE. Reporting Justice Ricardo Villas Bôas Cueva. Published 23 February 2016).

In addition, ensuring a reasonable term of validity for a given patent is also essential given the fact that laboratories cannot set, at their leisure, the price of certain medicines in Brazil. The pharmaceutical sector is heavily regulated, including with regard to the price of medicines.

Pursuant to Law no. 10,742/03, it is up to CMED (Medicine Market Regulation Chamber), a body linked to the Ministry of Health, to establish the maximum value for all pharmaceutical products[12] and what annual adjustments can be made.[13] Thus, a laboratory cannot compensate for a potential reduction in the duration of its patents by increasing the price of the medicine.

Thus, and as set out in a ruling handed down by the Federal Government Court of Auditors in an audit involving the BPTO’s role in the examination of applications for patents, the “high processing time for claims and the increase in the queue of applications have worrying effects, as it increases legal uncertainty and discourages investments, causing obstacles to technological innovation and the country’s economic development”.

Therefore, it is essential to enact a rule that, based on more objective criteria, compensates for the time spent on these lengthy examinations by the BPTO, as a way to meet the private interests and the interests of the entire community (public interest), since this would be a sign that it is worth investing in the research and development of new products to be launched in Brazil.

This is because the guarantee of a reasonable term to exclusively exploit a patent allows the protection of inventiveness to be harmonised with the fulfilment of the social function of property, which at the same time as it safeguards the rights of creators of inventions or utility models for a certain period, encouraging and remunerating investments in innovation, it guarantees the rest of industry and, ultimately, society, the possibility of appropriating the benefits afforded by the products of creativity when the privileges to exploit them have expired.

 

3 Possible solutions to mitigate the impact on the R&D sector (application by analogy of the Patent Term Extension (PTE) and Patent Term Adjustment (PTA).

The delay in analysing applications for patents is not just a national reality, but rather a phenomenon that exists in other countries. Notably, in different jurisdictions, the issue is solved differently, but always recognising that patent owners cannot suffer losses due to the delay in analysing their applications.

In the United States of America, for example, more than half of the patents granted by the US Patent Office in December 2019 were granted with an extended term.[14]

It is also noted that the commitment to respect intellectual property rights was assumed by Brazil through accession to the TRIPS Agreement, which, since it was incorporated into Brazilian law through Decree no. 1355 of 30 December 1994, became enforced throughout the country.

Therefore, owners of applications for patents in Brazil are guaranteed the right to be subject to procedures for analysing and granting a letters-patent within a reasonable period of time. The invocation of the Agreement as a source of law became viable, inasmuch as the safeguard corresponding to the sole paragraph of Article 40 of the IPL was declared unconstitutional and later curiously revoked by law.

It is thus possible to derive, from the Brazilian legal system, the legal basis for adjusting the term of a patent when there is a delay by the BPTO in examining an application, pursuant to Article 62.2 of the TRIPS Agreement.

As has already been mentioned, the STF, in the judgment of ADI 5529, took a stance against the automatic extension of patents set forth in the sole paragraph of Article 40 of the IPL.

“The study [by the Law and Poverty Group – University of São Paulo (USP)] concluded that the sole paragraph has no parallel in any of the jurisdictions studied. It is true that some jurisdictions in the world have additional exclusive rights, instruments, however, they are essentially different from the automatic and discretionary extension operated by Brazilian law.

These instruments follow an essentially different logic from that adopted by Brazilian legislation, as they have reduced application, are limited to specific cases and not automatic rights.

(…)

In fact, unlike what is often alleged in the case records of this lawsuit and the oral arguments made during the judgment session, a provision similar to that contained in the sole paragraph of Article 40 of the IPL is not inferred from comparative law, that is, one that sets forth an extension of validity that applies automatically (regardless of request, motivation or any burden) and generally (to all technological sectors). There are references in the case records to institutes that are similar to the one analysed here. However, none of them is as broad and indiscriminate as that set forth in Law no. 9,279/1996.

The comparative study drawn up by the Law and Poverty Group identified two categories for extending exclusivity, the first relating to Patent Term Extension (PTE), “referring to mechanisms that create some way of extending the protection originally granted by a patent through a separate (more limited) mechanism that guarantees a form of market exclusivity” (p. 24), and the second relating to Patent Term Adjustment (PTA), “aimed at ways (with certain limitations) to adjust the validity of a patent in view of the administrative prosecution” (p. 28).

The first category includes Supplementary Protection Certificates (SPCs), adopted within the European Union. European SPCs are described as a right to extend validity applicable to some pharmaceutical products and chemical products for agricultural use that need to be previously approved by regulatory authorities and, for that purpose, undergo periods of compulsory clinical testing.

(…)

I have ascertained that the European SPC differs from the Brazilian case, as, in addition to being directed at specific sectors, it seeks to compensate for the delay in processing at the health regulatory bodies of European countries and not the entire procedure for granting the patent. In addition, a request from the applicant is required for the extension to take place, since there is no automatic extension.

Among the jurisdictions that adopt PTA-type mechanisms, in turn, are Chile, Colombia, South Korea, the United States of America, Peru and Singapore.

In the United States, where the total term of validity is also 20 years, counting from filing, the Patent Law sets forth the Institute of Patent Term Adjustment (PTA), which consists of the adjustment by one day of the term, counting from 3 years of prosecution of the application, for each day of delay attributable to the patent office, excluding days of delay due to the fault of the applicant. There is also the Patent Term Extension (PTE) institute, applicable to products that require analysis by regulatory authorities before the decision by the patent office, as in the case of medicines. The extension depends on the interested party’s request and its duration is equivalent to the sum of the testing and approval periods for the product, up to a maximum of 5 years. (See 35 U.S.C. §154 and 35 U.S.C. §156. Available at https://www.uspto.gov/web/offices/pac/mpep/consolidated_laws.pdf, accessed 5 March 2021).

These are extension instruments that are different from those adopted by Brazil. In the case of the PTA, the accounting for the period added to the term of validity results from the measurement of the delay that is attributable to the patent office, minus the delay caused by the applicant itself, which means an analysis of each specific case, in accordance with the parameters indicated by law, and it is not an automatic extension. In turn, the PTE requires a request from the interested party, is directed to a specific technological sector and concerns the decision time of regulatory authorities, and not the entire process at the patent office.

(…)

The indefinite term has a practical consequence which is the absence, in fact, of temporal limitation for patent protection in Brazil. This is because the term of patents will always be a condition on an absolutely random variable, consisting of the prosecution time for the process at the BPTO.”

(some emphasis added)

On the other hand, the STF praised other forms of adjustment or extension to the term of validity of patents, as happens in other countries, such as (i) patent term adjustment (PTA) or; (ii) patent term extension (PTE), also known as supplementary protection certificates (SPCs).

Patent term adjustment (PTA) is a mechanism for adjusting the term of validity of a patent when there is an unjustified delay by the patent office in the examination and granting of a particular patent. Differently, patent term extension (PTE) (or supplementary protection certificate – SPC) is a mechanism for adjusting the term of validity of patents due to unjustified delay by the regulatory body, such as ANVISA, in granting authorisation (sanitary registration) to market  a particular product the technology for which is protected by a patent.

In fact, the STF did not take a stance, abstractly, against the adjustment of the term of validity of patents in cases of unjustified delay by the Public Administration to grant a patent, on the contrary, the conclusion of the vote by Justice Dias Toffoli signalled the need to adopt a more appropriate mechanism to be created in the national patent system “the instruments adopted abroad to extend the period of exclusive exploitation of inventions – in their various forms, terms and specific rules – contain mechanisms that prevent the period of validity of the patent from being extended for longer than necessary”.

In other words, the STF recognised that the adjustment of the patent term by the patent term adjustment (PTA) and the patent term extension (PTE) mechanism are legally valid measures, as they appropriately compensate the patent owner for the inefficiency of the Public Administration.

Bringing the reasoning for extensions used in other countries to Brazil, the declaration of unconstitutionality of the sole paragraph of Article 40 of the IPL, generated a legislative vacuum in the country. However, it should be recalled that Decree-Law no. 4,657/42 known as the Law for Applying Rules in Brazilian Law, in Article 4, sets forth that the judge may decide the case according to analogy, customs and general principles of law, in the event that the law is omissive.

Moreover, the principle of non liquet (Code of Civil Procedure (CPC), Article 140) is in force in our legal system, and judges are authorised to build the rule for the specific case, filling in the legal gaps and taking advantage of the general principles of law, analogy, good moral conduct, objective good faith, and always considering the principle of reasonableness.

Thus, based on international experience on the topic, which has no specific legislation in the country, it is possible to outline at least 3 (three) requirements for the owner of a patent to be rewarded for the delay by the office responsible for granting patents, which are:

  1. existence of a request by the owner of the right;
  2. delay in the administrative prosecution of the application for a patent;
  3. the responsibility of the BPTO for the delay– it is not attributable to the owner.

Accordingly, it is evident that the Brazilian reality demands a fair and reasonable compensation mechanism, which accurately compensates for the delays caused by the BPTO in the prosecution of applications for patents, under penalty of hindering the country’s innovative environment, in addition to serious losses for inventors and patent owners.

 

4 Conclusion. 

In light of the above, it has been demonstrated that the judgment handed down by the STF in ADI 5529 went against the automatic and unrestricted extension of the patent term for 10 years, recognising, however, the appropriateness of an analysis of the adjustment of terms based on an logical and reasoned analysis, as happens in other countries. This ruling, therefore, far from being an obstacle to recognising the possibility of adjustment in the term of validity for patents, supplies the necessary legal bases for (i) the enactment of a rule that, based on more objective criteria, compensates for the time spent on these lengthy examinations carried out by the Public Administration; and (ii) the analogical application of the legal mechanisms of patent term adjustment (PTA) and patent term extension (PTE), as they appropriately compensate patent owners for the inefficiency of the Public Administration.

Thus, parties that suffer losses due to the slow, and even unlawful, performance of the Public Administration in the examination of patents, can be appropriately “compensated” with a fair term of validity for their patent, affording them the privilege to which they are entitled.

It must be concluded that patents are directly responsible for the research and development cycles of new medicines. And that the sustainability of future innovation cycles depends on the existence of a reasonable term of validity for patents.

Patents would be useless if the respective owners did not have a reasonable term to exclusively enjoy the technology developed by them. In an environment of uncertain results, as is the case especially in the research pharmaceutical industry, the existence of a reasonable term to exploit patents is an essential guarantee for anyone dedicated to innovation, in the public or private realm.

 

5. References

ANVISA. National Health Regulatory Agency. Price List. Available at: www.gov.br Accessed on 19 August 2021

BEZERRA, Cynthia M. Santos and Kanarek, Marina and Calixto de Abreu, Thaís and Baruhm Diegues, Michelle and Castro, Bernardo and Caramalac, Pietra and Câmara, Maria Clara and Schneider, Gustavo and Ricarte, Joyce and Feitoza, Laura and Casanovas Reis, Paloma and Jarouche, Tárik and Fucci, Paulo and Kastrup, Gustavo and Barone, Victor and Ido, Vitor and Salomao Filho, Calixto and Portugal Gouvêa, Carlos, A Inconstitucionalidade do Artigo 40, Parágrafo Único, da Lei de Propriedade Industrial sob uma Perspectiva Comparada [The Unconstitutionality of Article 40, Sole Paragraph, of the Industrial Property Law from a Comparative Perspective] (8 December 2020). Available at: https://ssrn.com/abstract=3745372 or http://dx.doi.org/10.2139/ssrn.3745372. Accessed on: 19 August 2021

BRASIL [Office of the Chief of Staff]. Law no. 9,279, of 14 May 1996. Industrial Property Law, Brasília, 1996. Available at: http://www.planalto.gov.br/ccivil_03/leis/l9279.htm. Accessed on: 20 August 2021.

BRASIL [Office of the Chief of Staff]. Law no. 10.406, of 10 January 2002. Brasília, 2002. Available at: http://www.planalto.gov.br/ccivil_03/leis/2002/l10406.htm. Accessed on: 19 August 2021.

BRASIL [Office of the Chief of Staff]. Decree no. 1,355, of 30 December 1994. I enact the Act Agreement on Trade-Related Aspects of Intellectual Property Rights. Brasília, 1994. Available at: http://enagro.agricultura.gov.br/selecao/arquivos/AcordoTripsdaOMC.pdf. Accessed on 19 August 2021

BRASIL [Office of the Chief of Staff]. Law no. 10,742, of 6 October 2003. Brasília, 2003. Available at: http://www.planalto.gov.br/ccivil_03/leis/2003/l10.742.htm Accessed on 19 August 2021

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BRASIL. Federal Government Court of Auditors. Audit Report. Brazilian Patent and Trademark Office – BPTO presented in ADI 5529. Reporting Justice VITAL DO RÊGO – 13 May 2020 – Sheet 19

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IDS. Comentários à Lei de Propriedade Industrial [Comments on the Industrial Property Law]. Dannemann Siemsen Institute for Intellectual Property Studies. Rio de Janeiro/São Paulo: Renovar, 2005.

KUNTZ, Karin Grau. Study. Document 162 attached to ADI 5529 in progress before the STF. Puchheim, on 12 December 2020.p. 27/28.

LEGAL ADVANTAGE. A Practical Approach to Calculate Patent Term Adjustment. 17.10.2018. Available at: https://www.legaladvantage.net/blog/a-practical-approach-to-calculate-patent-term-adjustment-pta. Accessed on 12 September 2021.

LEVIN, R.; A. Klevorick; R. Nelson and S. Winter, 1987. Appropriating the returns from industrial research and development. Available at: https://core.ac.uk/reader/6252350. Accessed on 19 August 2021.

MANSFIELD, Edwin. Patents and Innovation: an empirical study E., 1986. Available at: https://www.jstor.org/stable/2631551?seq=1. Accessed on 19 August 2021.

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RODRIGO, Kleber. Governo libera preços de medicamentos isentos de prescrição [Government frees prices of medicines that do not require a prescription]. Available at: https://site.abcfarma.org.br/governo-libera-precos-de-medicamentos-isentos-de-prescricao/. Accessed on 19 August 2021.

UNCTAD-ICTSD. (2005). Frontmatter. In Resource Book on TRIPS and Development (pp. I-Iv). Cambridge: Cambridge University Press.


[1] Article 40. A patent for an invention will be in force for a term of 20 (twenty) years and for a utility model for a term of 15 years from the filing date. Sole paragraph. The term of validity will not be less than 10 (ten) years for a patent for an invention and 7 (seven) years for a patent for a utility model, from the granting date, except if the BPTO is prevented from carrying out the substantive examination of the application, due to pending judicial matters or force majeure.

[2] Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS agreement) 1994, Article 33: “The term of protection available shall not end before the expiration of a period of twenty years counted from the filing date”. TRIPS Agreement (1994). Availalbe at: http://enagro.agricultura.gov.br/selecao/arquivos/AcordoTripsdaOMC.pdf . Accessed on 19 August 2021

[3] BRASIL. Federal Government Court of Auditors. AUDIT REPORT. BRAZILIAN PATENT AND TRADEMARK OFFICE – BPTO presented in ADI 5529. Reporting Justice VITAL DO RÊGO – 13 May 2020 – sheet 14

[4] BRASIL. Federal Government Court of Auditors. AUDIT REPORT. BRAZILIAN PATENT AND TRADEMARK OFFICE – BPTO presented in ADI 5529. Reporting Justice VITAL DO RÊGO – 13 May 2020 – sheet 19

[5] Tradução dos autores a partir do texto do comentário ao art. 27.1 do Acordo TRIPS, contido na obra Resource Book on TRIPS and Development , Cambridge University Press, 2005, p. 356.

[6] Translation by the authors from the text for the comment on Article 27.1 of the TRIPS Agreement, contained in the work Resource Book on TRIPS and Development, Cambridge University Press, 2005, p. 356.

[7] KUNTZ, Karin Grau. Study. Document 162 attached to ADI 5529 in progress before the STF. Puchheim, on 12 December 2020.p. 27/28.

[8] Some laboratories report that they can search for 5,000 different compounds to get a new medicine approved. More information at: Roche – Clinical trials. Despite the large variance in available data, due to the dynamic nature of the sector, it is normal for thousands of compounds to be researched for each approved item. More information at: https://www.fda.gov/ForPatients/Approvals/Drugs/ucm405382.htm.

[9] Among the medicines approved for marketing, only about 15% generate enough revenue to cover the cost of their development and only a portion of this percentage becomes profitable to the point of covering not only its development cost, but also that of other drugs and loss-making compounds. OGBRU, Omudhome. Why Drugs Cost So Much. 2002. Available at: https://www.medicinenet.com/drugs_why_drugs_cost_so_much/views.htm. Accessed on 19 August 2021.

[10] LEVIN, R., A. Klevorick, R. Nelson e S. Winter, 1987. Appropriating the returns from industrial research and development. Available at:https://core.ac.uk/reader/6252350. Acesso em 19.08.2021

[11] MANSFIELD, Edwin. Patents and Innovation: an empirical study E., 1986. Disponível em: https://www.jstor.org/stable/2631551?seq=1. Accessed on 19 August 2021

[12] With the exception of medicines that do not require a prescription, such as cold/flu medicines, muscle relaxants, herbal medicines, which had their prices released from State control on 11 March 2020. 2020.RODRIGO, Kleber. Governo libera preços de medicamentos isentos de prescrição [Government frees prices of medicines that do not require a prescription]. Available at: https://site.abcfarma.org.br/governo-libera-precos-de-medicamentos-isentos-de-prescricao/. Accessed on 19 August 2021

[13] Ou seja, as farmácias e drogarias, assim como laboratórios, distribuidores e importadores, não podem cobrar pelos medicamentos preço acima do permitido pela CMED. A lista de preços máximos permitidos para a venda de medicamentos é disponibilizada para consulta dos consumidores online. Disponível em: www.gov.br. Acesso em 19.08.2021

[14] LEGAL ADVANTEGE. A Practical Approach to Calculate Patent Term Adjustment. 17.10.2018. Disponível em: https://www.legaladvantage.net/blog/a-practical-approach-to-calculate-patent-term-adjustment-pta. Acesso em 12.09.21.

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Cláudio França Loureiro

Partner, Lawyer, Industrial Property Agent

A degree in Law from the Pontifical Catholic University in São Paulo, specialisation in ind...

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Victor Amaral Abreu Di Sessa

Victor Amaral Abreu Di Sessa is a lawyer at Dannemann Siemsen Office.

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