The Intellectual Property Case of Greatest Repercussion in Brazil

The year of 2021 starts in Brazil with uncertainties and doubts, as well as in many other countries. The main reason lies with the COVID-19 outbreak, which still affects the entire world, mainly developing countries such as Brazil. However, the Brazilian Intellectual Property area was also recently affected by a decision from the Brazilian Supreme Court that considered as unconstitutional a legal provision that was in force for the last 25 years.

Brazilian IP Law no 9279 was issued in 1996, and provided a minimum term for patents in Brazil. Article 40 of the said law states that “an invention patent shall be in force for a twenty (20) year term, and utility model patent for a fifteen (15) year term, as from the date of filing”. The sole paragraph of this article determined that “the term shall not be less than ten (10) years for patents of invention and seven (7) years for utility model patents, as from the date of grant […]”.

This legal provision stated by the sole paragraph of article 40 of Brazilian IP Law guaranteed a partial compensation in connection with the intellectual property rights of the patentees in the event whereby the Brazilian Patent and Trademark Office – BPTO has taken more than 10 years to issue a decision granting a patent. Although Article 44 of the Brazilian IP Law detemines the retroactive effect of the patentee rights to the date of publication of the application, it is well established in court decisions that the patent rights only become enforceable when the patent is granted.

Constitutional Challenge ADI 5529 was filed in 2016 by the General Prosecution Office, aiming to remove the sole paragraph of Article 40 from the Brazilian IP Law. According to the lawsuit, the legal provision under discussion would transfer the administrative inefficiency of the BPTO to society, wich be affected by longer-term monopolies, thereby impairing free competition and raising product prices.

The Brazilian Supreme Court initiated the judgment in the beginning of April 2021, and entities of different sectors of the industry, such as agribusiness, generic drugs and the pharmaceutical industry, were mobilized and admitted as amicus curiae to present oral arguments defending their points of view.

The first legal act of this judgment was the issuance of a preliminary injunction by the Reporting Justice, which monocratically decided that as of the publication of his preliminary injunction, all health-related patent applications (including medical devices) to be granted by the BPTO will no longer benefit from the provision of the sole paragraph of Article 40 if the prosecution takes more than 10 years, when there is a 20-year term from filing.

The judgment session on the Constitutional Challenge ADI 5529 started on April 28th, 2021 and was concluded on May 7th, 2021 before the Brazilian Supreme Court. The full panel of the Supreme Court, voted by majority for the unconstitutionality of the minimum patent term of 10 years from granting. Their opinion was based on the idea that this legal provision would lead to an extension harmful for society, in the sense that it would cause instability as competitors would not be able to ascertain the exact date when the patent would lapse because the date of granting cannot be predicted.

In face of this decision, the provision of the sole paragraph of Article 40 in the Brazilian IP Law was declared void and null. However, considering the high number of patents granted within this legal provision, as well as the fact that dozens of lawsuits have been filed challenging patents (mainly medicaments), the Brazilian Supreme Court decided in view of the issuance of the Reporting Justice’s preliminary injunction on April 7th, 2021 that all patents already granted with the term of 10 years would be preserved and kept valid and in force, except in the following two cases: (i) patents whose term is already being challenged through lawsuits filed by April 7th, 2021 (the date of issuance of the Reporting Justice’s preliminary injunction); and/or (ii) patents for pharmaceutical products and processes and health-related products and materials, such as medical devices. The term of those patents within these exceptions will be reduced to 20 years from filing. The Brazilian Supreme Court understood that this approach would provide greater legal certainty to those patentees whose patents were granted with the term of 10 years from granting, while it would decrease the term of monopoly of medicaments that would represent higher costs for Brazilian public coffers.

The delay in examining patent applications by the BPTO is harmful not only to the society, but also to patent holders, who had their term of rights reduced due to this recent decision.

Recognizing the need to speed up the examination process, the BPTO has taken several measures in an effort to reduce its backlog.

Since 2017, many Patent Prosecution Highway (PPH) pilot programs have been issued by the BPTO with partner offices, such as those in the United States of America, Japan, Europe, China and United Kingdom. In December 2019, the previous PPH pilot programs were consolidated into a unique PPH pilot program encompassing all technological areas, including pharmaceutical products and processes.
The current PPH pilot program was issued in December 2020 and should be in force until December 2024, with the limitation of 600 requirements per year.

As another mesure to reduce the backlog, BPTO launched in 2018 the Pre-Examination Office Action Pilot Program, which was replaced by the Preliminary Office Action Pilot Programs in 2019. These programs use the search results issued by patent offices in other jurisdictions, and by international or regional organizations, to expedite the technical decision-making by the BPTO, and consequently the prosecution of patente applications. The Preliminary Office Action Programs are still in force and have proved to be an important weapon in combating backlog in Brazil, as the number of patent applications filed up to 2016 that lacked a decision was reduced by 60%.

Moreover, acknowledging the importance of the pharmaceutical and biopharmaceutical inventions, mainly during the current COVID-19 outbreak, a new Fast-Track Pilot Program for patent applications related to pharmaceutical products and processes, and health devices for the diagnosis, prophylaxis and treatment of COVID-19 was issued by BPTO in 2020.

Those and other actions taken bt the BPTO to combat the patent backlog have confirmed its effort to align with international standards the amount of time that is taken in Brazil to analyze patent applications.

In this scenario, we can say that we are moving toward a reality wherein such a legal provision stated by the sole paragraph of Brazilian IP Law Article 40, even though it was previously in force, will hopefully no longer be necessary due to the speed in examining patent applications in Brazil.

【The meaning of 縁(Enishi)】
“Enishi” refers to the bond created between people when encountering someone they were destined to meet. We have chosen this term as the title for our publication because we are all members of the Intellectual Property community, and the bonds created between us extend beyond national borders. We hope that you will use this informative publication to deepen the “Enishi” you have created with your IP Friends.