Mailbox lawsuits and its recent developments

Background

Under the former Brazilian IP Law (Law # 5,772/71), agrochemical compounds as well as pharmaceutical products and their respective processes were not considered patentable subject matters.

Such technologies have become patenteable subject matter in Brazil under current Brazilian IP Law (Law # 9.276/96) enacted on May 15, 1997.

Nevertheless, patent applications directed to pharmaceutical products or agrochemical compounds were filed in Brazil between January 1, 1995, when the TRIPS Agreement became effective in this country and May 15, 1997, when the current local legislation was enacted, in light of article 70.8 of TRIPS.

The aforesaid article 70.8 mandated that when a Member of TRIPS held pharmaceutical or agrochemical products as an unpatentable subject matter, such Member should develop means to accept patent applications directed to these matters for subsequent prosecution under its new IP Law adapted to the TRIPS provisions.

These applications filed in Brazil based on article 70.8 of TRIPS were designated as “mailbox” applications, due to the fact that they were stored in “mailboxes”, while awaiting the present IP Law entering into force in 1997.

Two years later, in 1999, the Brazilian IP Law was amended by a Provisional Measure, which later matured into Brazilian Law # 10,196/2001, in order to include, among others, provisions regarding “mailbox” patent applications (“new” articles 229, sole paragraph, and 229-B), with the purpose of regulating the prosecution of such applications filed based on article 70.8 of TRIPS.

Based on these “mailbox” provisions, the pending patent applications covering pharmaceutical products or agrochemical compounds filed between January 01, 1995, and May 15, 1997 (the effective date of the current IP Law) should be:

• examined and granted under the provisions of this IP Law (which allows patentability of these matters) until December 31, 2004; and

• granted with a 20-year term of protection counted from their respective filing dates.

Since these specific provisions basically addressed the case where the “mailbox” applications would have to be decided by the Patent Office up until December 31, 2004, and the respective patents would have a 20-year term from the filing date, these provisions have never revoked or violated the general rule in the IP Law, which applies to all situations, and expressly determines that the patent term will be of at least 10 years from the date of grant or 20 years from the filing date.
 
 

Accordingly, those “mailbox” patents granted before December 31, 2004, received a 20-year term from their respective filing dates (according to the specific rule for “mailbox” patents). On the other hand, the “mailbox” patents granted after December 31, 2004, in view of the huge backlog of work at the PTO, received a 10-year from their granting dates (minimum term guaranteed by the general rule).

Around 250 “mailbox” patents have been granted after December 31, 2004, with this 10-year term from granting.

BPO filed several court actions against “mailbox” patens having a 10-year term from granting date

In 2013, i.e., 8 years after the issuance of the first “mailbox” patent with this 10-year term from the granting date, the Patent Office surprisingly modified its understanding by issuing a legal opinion stating that the term of “mailbox” patents would be limited to 20 years from the filing date, irrespectively of their granting dates (either before or after December 31, 2004).

After the issuance of this legal opinion, the Brazilian PTO has filed several court actions challenging the validity of almost all “mailbox” patents granted with this 10-year term. The Patent Office has alleged that the correct term would be 20 years from their filing dates. The vast majority of these lawsuits have been filed at the Federal Court of Rio de Janeiro, where there are four Courts specialized in IP.

We have had the opportunity to represent several clients in these litigations, and our main argument against such claim are as follows:

• since the Patent Office failed to comply with the specific rule (“mailbox” patent was granted after the deadline of December 31, 2004), the general rule (minimum 10-year term from granting date) should be applied to the “mailbox” patents; and

• This PTO’s request directly contravenes the principle of legitimate expectations, which has the purpose of keeping the past effects of an administrative act previously performed, even if in contradiction to the law.

So far, two of the four Specialized Courts at the Federal Court of Rio de Janeiro (first instance Court) have rendered decisions on the merits maintaining the 10-year term from granting date for “mailbox” patents, and refuting the arguments of the Patent Office. In a nutshell, the first instance Courts have ruled that:

• due to Brazilian PTO’s long delay in examining and granting the “mailbox” patents, the Patentee had a legitimate expectation that their patents would be granted with a 10-year term from granting date; and

• based on the principle of legitimate expectation, the PTO could not simply modify its understanding of a legal provision, even in case such understanding would be “illegal”.

However, as expected, the BRPTO has filed appeals on the merits against these decisions at the Federal Court of Appeals, essentially arguing that:

• the delay in granting the “mailbox” patents was caused by the aforementioned Provisional Measure of 1999, which has benefited the patentees because their patents would never be granted without these specific provisions for “mailbox” patents;

• the principle of legitimate expectations could not be applied in the present case since:

•  patentees would never have a certainty that the decision that granted their “mailbox” patents would not be modified in the future, since a patent can be declared null at any moment, as provided in the Brazilian IP Law;
•  the purpose of these lawsuits is to modify the term of the “mailbox” patents, and, therefore, the consequences of this change would apply from now on; and
•  the principle of legality should prevail in view of the social interest since the grant of a patent with a longer term than the one defined in the Law would be detrimental to the general public.

Our counter-arguments to the Patent Office’s appeal, aiming at maintaining the decision on the merits issued by the first instance Courts, are essentially the following:

• the present “mailbox” patents have not been granted with a longer term than the one defined in the Brazilian IP Law, because the general rule should be applied once the PTO failed to comply with the specific rule (granting the patents until December 31, 2004);

• since the term of these “mailbox” patents are completely legal, there is no harm to the society, and, therefore, the social interest is fully met;

• there is a clear delay since the PTO had taken more than 2 years for starting the examinations of these “mailbox” applications, and around 10 years for granting these patents; and

• the principle of legitimate expectation is fully applied and should prevail in the present case, since the Patent Office cannot simply modify its understanding of a legal provision, even though such understanding would be “illegal”, because:

•  the “mailbox” patents have been granted under a legitimate interpretation of the current Brazilian IP Law;
•  the patent owners are not responsible for the illegality on the patent terms alleged by the PTO; and
•  many “mailbox” patents have been granted with a 10-year term by the Patent Office until last year.

In view of this, we expect that the Court of Appeals will maintain and confirm the present decisions issued by the first instance Courts, and, therefore, the law will ultimately prevail, i.e., the patent owners will not be harmed by Patent Office’s backlogs and incorrect interpretations of the IP Law.

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