“While [recent] regulatory developments contribute to making the Brazilian market more attractive and competitive, they also attract companies with anti-competitive practices that take advantage of the ease of access to markets to exploit the intellectual property rights of others.”

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Did you know that Brazil’s medical device market is experiencing a surge, attracting billions in imports annually? This boom, however, is attracting not only legitimate businesses but also those looking to exploit loopholes.

On average, more than US$6.7 billion worth of products are imported annually, with around 14,000 new products being introduced every year. One example is the increase in sales of equipment for endoscopic surgeries, given the rise in the number of bariatric surgeries, which already exceeds 70,000 procedures per year.

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Regulatory Changes

At the same time, the Brazilian regulatory framework for medical devices has been developing to allow more simplified and less bureaucratic procedures. While it attracts legitimate businesses, it also creates opportunities for those willing to exploit loopholes. Foreign companies are increasingly using Brazil’s simplified regulatory framework to gain market access while infringing on the intellectual property rights of others.

For instance, Brazil’s health regulatory agency, ANVISA, issued resolution 751 of 2022, which became effective in March 2023 and classifies medical devices according to the intensive risk they pose to the health of the consumer, patient, operator, or third parties involved, into Classes I, II, III, or IV.

All non-invasive medical devices are in Class I, except for devices intended for the storage or conduction of blood, body fluids or tissues, liquids or gases intended for infusion, administration, or introduction into the body, which are in Class II. Furthermore, the vast majority of surgically invasive medical devices for transient use fall into Class II.

The classification within the risk categories is relevant as it determines which regulatory procedure the device will be subject to. Medical devices falling into risk classes I and II are subject to notification, while devices falling into classes III and IV are subject to registration.

The notification procedure is much more simplified, requiring the submission of notification forms, a declaration issued by the manufacturer for imported products, a Certificate of Conformity, and proof of compliance with the legal provisions determined in technical regulations. The most relevant point when it comes to the notification regime is that it is not necessary to present the results of clinical studies, nor clinical evidence of safety and efficacy.

The only situations in which the presentation of results from clinical studies conducted specifically with the product to be registered or with notification to be approved by the agency are required as a form of proof of its safety and effectiveness are: (a) innovative medical devices, regardless of their risk class (innovation in design, raw material, indication of use, among others); or (b) risk class III and IV medical devices that, due to their unique nature and performance closely linked to the material design and manufacturing process, require safety and efficacy verification using clinical data specific to the requested product.

While these regulatory developments contribute to making the Brazilian market more attractive and competitive, they also attract companies with anti-competitive practices that take advantage of the ease of access to markets to exploit the intellectual property rights of others.

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Development of Design Case Law

For this reason, the surge in economic development has been followed by an increase in medical device intellectual property litigation. The market’s size is drawing the interest of innovative companies and Brazil is emerging as a key jurisdiction for both enforcing intellectual property rights and building robust patent portfolios.

Additionally, we see an interesting interplay between patents and designs when protecting key innovative products. Companies dedicated to researching this sector are heavily invested in the development of innovative industrial designs that integrate diverse ergonomic and functional features besides the development of state-of-the-art technologies that enhance stability and precision in a multitude of medical procedures. This adds to the distinctiveness of each company that needs to establish a strong and reliable name in the market, given the sensitivity of each of the products developed and the consumers’ need to trust the devices they use, making protections such as trade dress extremely relevant for these manufacturers.

This forces courts to establish strong and clear case law for different branches of industrial property law: invention patents, industrial designs, and trade dress. Brazilian courts are currently facing this challenge.

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Key Cases

Grandesc Materials Hospitalares v. Bio Brasil Tecnologia

In 2017, the Court of Justice of the State of São Paulo upheld a trial decision condemning Grandesc Materials Hospitalares for infringing the industrial design registration held by Bio Brasil Tecnologia for a disposal box for infectious and sharp waste used in medical and dental facilities. (Lawsuit No. 2145624-61.2014.8.26.0000, Sao Paulo State Court, Grandesc Materiais Hospitalares v Bio Brasil Biotecnologia LTDA [2017]). Bio Brasil appealed to the Superior Court of Justice, which set aside the Appellate Court’s decision to order the State Court to assess the appellant’s defense thesis regarding the nullity of the industrial design registration.  (Appeal no. 1,383,973/SP, Superior Court of Justice, Grandesc Materiais Hospitalares v Bio Brasil Biotecnologia LTDA [2020]). However, when reassessing the appellant’s defense thesis in 2022, the Court of Appeal maintained its position that there was no record of annulment of the industrial design in an autonomous lawsuit before the Federal Court as determined by the Patent Statute and, in addition to the State Court not having jurisdiction to hear matters related to the nullity of industrial design registration, the appellant had not brought sufficient documentary evidence to convince the Court of the nullity of the registration, once again upholding the infringement decision. The lawsuit is now back in the Superior Court of Justice.

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Edward Lifesciences v. Endolife Importação

Currently, the São Paulo State Court is about to debate the expert evidence being produced in a lawsuit filed by Edward Lifesciences against Endolife Importação for violating the trade dress of a balloon-expandable transcatheter heart valve. (Lawsuit no. 1013752-47.2022.8.26.0100, Sao Paulo State Court, Edwards Lifesciences Llc v Doc Med Comercio Importação e Exportação LTDA [2023]).

Brazilian case law on trade dress is very recent and, with respect to medical device cases, even newer, so the next decisions will inform the court’s positions and add to the defense mechanisms that the industry can explore in Brazil. The court also granted a preliminary injunction at the end of last year to prevent Pro-Tech Industria de Equipamentos de Proteção Ltda. from continuing to manufacture and sell maintenance-free respirators that allegedly infringe patents held by 3M Innovative Properties Company. (“[T]he case requires the issuance of a prohibitive order, and the defendant must immediately refrain from producing and marketing the P1004V (S) and P1004 (S) respirators, in any form or by any means.” (lawsuit no. 1139236-38.2023.8.26.0100, São Paulo State Court, 3M Innovative Properties Company v Pro-Tech Industria de Equipamentos de Proteção Ltda [2023]).

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Johnson & Johnson v. Scitech

Another notable example is the trial decision issued by São Paulo State Court in the beginning of 2024. (Lawsuit no 1132420-11.2021.8.26.0100, Johnson & Johnson v Scitech [2024]).

Courts granted a permanent injunction request filed by Johnson & Johnson against Scitech on medical device patents and design covering a surgical stapler. The lawsuit has an interesting background.

In December 2021, Cilag Gmbh International, Ethicon Endo-Surgery INC., and Johnson & Johnson do Brasil LTDA filed an infringement lawsuit against Scitech Medical Products Ltd., accusing them of copying their surgical stapler’s design and patented technology. They sought to stop Scitech from selling the infringing product and demanded compensation for damages. Scitech is a local manufacturer of medical devices with a large presence in the Brazilian market.

The judge initially granted a preliminary injunction, but the appellate court reversed it, finding no immediate harm to justify the injunctive relief, given that the plaintiffs knew about the alleged infringement for a year.

After the evidence production stage, the court-appointed expert concluded that Scitech’s bariatric staplers infringe J&J’s patent and industrial design. The expert found that Scitech’s stapler has all the technical and functional characteristics of the plaintiff’s invention. It also concluded that the Industrial design was infringed, since the product’s ornamental features are closer to the object protected by the industrial design registration than the state of the art.

As a defense strategy, Scitech tried to argue before the State Court of São Paulo that the patent and industrial design were invalid. Simultaneously, 18 months after the infringement lawsuit began, Scitech filed two separate lawsuits in the Federal Court of Rio de Janeiro. These aimed to invalidate both the patent and industrial design. Scitech requested a preliminary injunction to stay the enforcement of the patent and the industrial design, effectively preventing a final ruling on the infringement case. However, the Federal Court rejected Scitech’s request due to its inability to demonstrate a strong likelihood of winning their claims.

In July 2023, four months after the expert report was issued, the trial judge in the infringement lawsuit ratified the expert report and dismissed Scitech’s additional clarification questions, moving the lawsuit to trial.

On January 16, 2024, J&J got the first favorable trial decision for a medical device company in Brazil this year. The São Paulo-based court issued a permanent injunction against Scitech confirming patent and industrial design infringement and ordering the recall of all infringing products currently in circulation on the market. The court also awarded J&J material damages, to be assessed later in the trial. The court said:

“Considering the content of the report produced in the case file, which states that the plaintiff’s right is likely to exist, and also considering the urgency inherent in the case discussed here, in order to avoid the perpetuation of the unlawful act by the defendant, I believe that it is appropriate to grant the request for urgent relief formulated by the plaintiff”.

In addition, the trial judge also granted moral damages caused by the infringement of J&J’s patent and industrial design. The awarding of moral damages is a relatively uncommon practice in Brazilian patent cases, not so often applied by trial-level judges. It means that the patent holder can preserve its intellectual property rights while ensuring that the infringing act per se is punished, serving as a strong deterrent against future infringements.

The judgment is an excellent sign for the medical device industry. The trial decision protects patent owners, demonstrating the efficiency of the enforcement system in cases of violation of intellectual property rights.