Patents and the Law of Technological Innovation

Law 10,973, sanctioned on December 2, 2004 and published in the Official Federal Gazette (Diário Oficial da União) on December 3, 2004, is commonly known as the Law of Technological Innovation. Although it went into effect upon the date it was published, nevertheless it still has not been regulated by decree.

Among the objectives of this law is the fostering of scientific production, with a corresponding reduction in technological delays for both the private and the public sectors.

The quantity of patent applications filed by a given country is a sign of technological expansion. In Brazil’s case, the number of Brazilian patents applied for, both within the country as well as overseas, is significantly lower than that of other developing countries such as, for example, South Korea, India or China. The Law of Innovation contains a number of ways to stimulate a greater number of Brazilian patent applications.

One feature of the law is the attempt to break the Brazilian academic culture of the disclosure of papers (scientific publications regarding a given development) before even a possible patent application filing, thus irretrievably damaging the novelty of possible inventions.

In Brazil, the paper : patent ratio currently is about 40 papers published for each patent application filed. It is interesting to observe that this ratio in developed countries is two patent applications per paper published. Articles 12 and 16 of the new law are an attempt to reduce the number of such academic disclosures.

Under Article 12, the creator, researcher or any other person involved in the development of a given technology by a Scientific and Technological Institution (ICT) may not divulge, report or publish information relating to such technology without the express authorization of the ICT. This provision will reduce leaks of information belonging to the ICT, thus insuring the preservation of novelty, which is a requirement for patent protection.

Additionally, the ICTs must maintain a technological innovation unit, as foreseen in the aforementioned Article 16. Through this unit, an opinion must be issued regarding both the publicizing of creations developed within the ICT as well as their possible intellectual protection. In other words, an appraisal of technology that has been developed will be carried out regarding its patent potential. For this, each innovation unit must have an intellectual property professional who can correctly conduct such an evaluation.

While the Law of Technological Innovation contains many other mechanisms to stimulate technological progress, the most attractive point for businesses is the provision on fiscal incentives, contemplated in Article 28, recently introduced in Provisional Measure (MP) No. 252 of June 15, 2005.

The relationship between the incentives and a mandatory filing of patent applications has not been defined. However, it is expected that the legislation will link the tax reductions to the intellectual protection of development, which would assure the return on investment by the government and the efforts of business to invest in research and development.