Brazilian Patent Statute under attack: Generics Industries lobby the Brazilian Supreme Court and Congress to change the Patent Statute and to shorten the patent term (Part II)
November 10, 2017

by Otto Licks and Felipe Mesquita The term of protection available for a Patent has always been a hot topic in Brazil. The enactment of the World Trade Organization’s TRIPs Agreement increased the patent term from 15 to 20 years, generating a wave of patent term extension lawsuits. More recently, lawsuits filed by the Brazilian Patent and Trademark Office (BRPTO) seeking to reduce the term of mailbox patents1, further show the adversarial position taken by both patent owners and the anti-patent industry. The main reason for this contentious position is that article 40 of the Brazilian Patent Statute (Law 9,279/96) allows for two possible patent terms. While the main provision in Article 40 grants patents a term of 20 years from filing, its ‘parágrafo único’ (sole paragraph) provides a specific term of 10 years from grant when the Brazilian PTO (BRPTO) takes more than 10 years to examine an application. Therefore, the provision of a 10-year patent term from the date of grant, provides a remedy for patent owners in cases where the BRPTO takes excessively long to examine an application. This position is controversial, as the agency seldom analyses and grants applications before 10 years (This is illustrated in the table below provided by the BRPTO in October 2014).

Since patent law retroactively provides protection from the date of filing of the patent regardless of the term granted, anti-patent IP authors have criticized the provision and claim it provides exclusivity for an undefined term. They argue that this position is contrary to Article 5, XXIX, of the Constitution establishing that inventions are entitled only to “temporary protection”. At the end of 2013, ABIFINA filed a lawsuit (ADI #5061) before the Supreme Court seeking to declare the ‘parágrafo único’ (sole paragraph) of Article 40 of the Patent Statute unconstitutional. ABIFINA is the one of the most active Gx associations in Brazil. It has filed several patent invalidity lawsuits, a number of amicus briefs in ‘pipeline patent’ lawsuits as well as other high profile patent cases. In fact, the association appears to be the most prominent voice in declaring that the Brazilian Pipeline Patent system is unconstitutional. ADI #5061 was assigned to Justice Fux, a highly respected civil procedure specialist with no previous background in IP matters. Meawhile, the Brazilian National Congress, the Office of the President and the Brazilian Attorney-General’s Office have all defended the constitutionality of the relevant statutory provision, and have reminded the Supreme Court that many Brazilian companies invest in innovation and would be harmed if the ‘parágrafo único’ (sole paragraph) of Article 40 was deemed unconstitutional. On the other hand, the Office of the Prosecutor General appears to agree with ABIFINA’s position. According to the Prosecutor General, the possibility of an uncertain patent term is incompatible with the social purpose of the IP system and with the constitutional protection provided to the consumer. Moreover, the statutory provision has a negative effect on several social rights, including the right of access to public health. Political arguments will certainly dominate the discussion regarding the constitutionality of the 10-year from grant term provision. The Prosecutor General’s opinion is on par with a legal paper presented by Professor Heloisa Helena Barboza, a renowned scholar in Private Law and an expert in the area of public health and law. Professor Barboza is a former Rio de Janeiro State Prosecutor and is currently lecturing in civil law at the State of Rio de Janeiro University (the most prestigious law school in Rio de Janeiro where Justice Fux also lectures ).Professor Barboza has completed two Ph.Ds. (one in civil law and another in public health) and has written more than 80 publications. Her opinion examines how the 10-year minimum term of protection for patents affects the public interest by postponing the entrance of generic drugs in the market and by preventing the access to low cost medication. According to Professor Barboza: (i) Once a patent application is filed and granted, there is an expectation by the public that after 20 years from filing, the subject matter of such patent can be explored. The constitution grants patent protection in order to promote social interest and the technological and economic development of the country. In light of these considerations, a patent´s term must be for an exact date as an undefined patent term for an invention will violate the constitutionally protected social interest. This is especially true when dealing with pharmaceuticals. (ii) Studies show that prices of pharmaceuticals drop more than 70% after patent protection expires. The current position as per the Patent Statute (granting a minimum of 10-year term to patent owners in light of the BRPTO´s inefficiency to examine applications in due time) does not sufficiently take into account certain constitutional rights such as the right of access to public health. The Supreme Court decision on such cases has an “erga omnes” effect, meaning that rights and obligations arising as a result of the decision are owed towards all and enforceable against anybody infringing those rights. In general, a statutory provision declared unconstitutional by the Supreme Court is considered null with an “ex tunc” effect (from the outset, never existed). If the political, social or economic impact of the decision is too powerful, the court can choose to declare a provision unconstitutional with an “ex nunc” (from now on) effect. There is no date set for a hearing as of yet, but an unfavourable decision in this lawsuit will affect all patents granted under the terms of the ‘parágrafo único’ (sole paragraph) of Article 40 of the Patent Statute. Meanwhile, ABIFINA, along with other anti-patent associations and NGOs (such as Doctors without Borders) are lobbying before the National Congress to pass a bill that would amend the Patent Statute and exclude the ‘parágrafo único’ (sole paragraph) of Article 40. Two of the proposed bills, #3944/2012 and #5402/2013 specifically remove ‘parágrafo único’ the (sole paragraph) of Article 40 from the Patent Statute. Bill #3944/2012 was shelved, but on February 3rd, 2015, the rapporteur, Jandira Feghali, requested its reopening and continuance of the proceeding before the National Congress. Bill #5402/2013 is much broader and is considered a “Brazilian Patent Reform”. The proposals include provisions eliminating patent term extensions, enabling the easier grant of compulsory licences, restricting patents on new uses and new forms of existing medicines, tightening the inventive step requirement, allowing pre-grant opposition and enabling the Brazilian FDA to analyse patentability requirements during its prior approval proceedings established by Article 229-C of the Patent Statute. The proposed changes are said to incorporate TRIPS-compliant flexibilities into Brazilian patent law in order to protect domestic interests and to amend Brazil’s “mistake” in prematurely enacting IP protection beyond that which was required by TRIPs. Comparisons have been drawn between the proposed reforms and India’s patent system (e.g. restriction on patents for new forms and uses and a higher standard for inventive step) and with similar actions by other low and middle-income countries seeking to maximise TRIPS-compliant flexibilities to increase access to generic medicines. Bill #5402/2013 has been pending since May 22nd, 2013, and is currently with the Commission of Constitution, Justice and Citizenship. Both congressional representatives that were sponsoring the bill and the anti-patent reform were not re-elected and are no longer in the House of Representatives. Congressman Felix de Almeida Mendonça Junior, a politician from the State of Bahia who was re-elected to a chair in the House of Representatives in 2014 and is a member of the Labour Democratic Party, will now act as the rapporteur of the Bill. We have information that he might ask the congress to host a public hearing on the matter in the second semester of 2015. Before the lower Federal Trial courts, the applicability of the ‘parágrafo único’ (sole paragraph) of Article 40 to mailbox patents is currently being challenged by the BRPTO and by the Gx industry associations (such as ABIFINA) with regard to mailbox patents. Since October 2014, the BRPTO filed 47 lawsuits seeking the invalidity or patent term reduction of 222 mailbox patents. The BRPTO´s argument is that the 10-year from grant term, established by the ‘parágrafo único’ (sole paragraph) of Article 40 of the Patent Statute, was wrongfully given to these patents. According to the agency, only “regular” patents can enjoy such a term and since mailbox patents are a unique transitory system for pharmaceutical and agrochemical inventions filed between January 1st, 1995, and May 14th, 1997, the law under Article 70.8 of the TRIPS Agreement and under the main paragraph of Article 229 of the Patent Statute, bars the applicability of the 10-year from grant term to such patents. What the BRPTO disregards is that Article 229-B of the Patent Statute established a mandatory deadline for examination of all mailbox applications by December 31, 2004, with which the agency never complied. Thus, instead of applying the transitory provision of the ‘parágrafo único’ (sole paragraph) of article 229, which bars the applicability of the 10-year from grant term to mailbox patents, the BRPTO must apply the general rule of Article 40 and its ‘parágrafo único’ (sole paragraph). Not to mention, of course, that the BRPTO´s delay in examining the mailbox applications violated several constitutional principles, which guide the Public Administration and which require it to act in good faith and to respect the trust it generates with its conduct. It is advisable to file a counterclaim against the BRPTO in mailbox lawsuits, and to seek reparation due to non-compliance with the December 31, 2004 statutory deadline in case the term is reduced by the court in future. In the Federal Trial Courts of Rio de Janeiro, there have been 21 final decisions on the merits in mailbox cases, 11 for the patent owners and 10 for the BRPTO. However, three different Judges (Hon. Brandão, Netto and Someson, from the 25th, 31st and 9th federal courts, respectively) support the patent owners, while only Judge Nunes (from the 13th Federal Court) supports the BRPTO´s position. There have been no further decisions on the merits from other federal trial courts yet. The Appellate Court’s interpretation will certainly influence the decisions by the trial courts going forward. This is the second article regarding the changes proposed in bill #5402/2013 and others for reforming the Brazilian Patent Statute. Click here to see the previous article and do not miss our next issues.If you have any questions or need additional information, please contact us at prevail@localhost/licks/site.

1 Please see our article “Renewed hope for the patent system: a stop to the PTO´s inconstancy” from our first newsletter (link: http://teste.localhost/licks/site/publications/articles/renewed-hope-for-the-patent-system-a-stop-to-the-ptos-inconstancy/).

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