Brazilian Antitrust Authority dismisses investigation into alleged “term extension” of pharmaceutical-related patents, indicating position in favor of patent holders

August 22, 2023

Recently, the Brazilian Antitrust Authority (Administrative Council for Economic Defense – CADE) decided to dismiss a complaint filed by Apsen Pharmaceutical against Astellas Pharmas, for alleged misconduct of (i) defensive patenting in the form of patent clustering, ring-fencing, and patent thickets; and (ii) patent misuse through the division of patent applications and the filing of lawsuits that supposedly aimed to increase the term and scope of protection, including a lawsuit seeking to adjust the term of a pharmaceutical patent due to the alleged unjustified delay by the BRPTO in examining the patent application ("PTA" lawsuit)1.

In the last ordinary trial session (August 16, 2023), CADE’s Administrative Court decided not to accept the request for second review of the administrative investigation on the alleged extension of the monopoly privilege of pharmaceutical patents, proposed by CADE's Commissioner Lenise Prado. The Brazilian Antitrust Authority, therefore, reaffirmed the position of CADE's General Superintendent Office (SG-CADE) – the administrative body responsible for investigating the alleged anti-competitive conduct – dismissing the complaint.

It is important to note that Commissioner Lenise Prado had proposed the second review of the case based on the argument that it would be crucial for CADE to analyze the decision by the Brazilian Supreme Court (STF) on the Constitutional Challenge(ADI) # 5529 to correctly apply it.

However, during the aforementioned session, the other Commissioners concluded that there is no patent thicket misconduct (since there is only one active patent) and that the tests which led to the conclusion of no sham litigation conduct were duly applied. In addition, it was considered that there was no bad faith in the lawsuits filed after the trial of the ADI #5529 by the STF. Following this decision, deliberation within the Judiciary Branch is ongoing regarding the actual implications of the declaration of unconstitutionality of the sole paragraph of article 40 of the Brazilian Patent Statute (Law #9.279/1996). This includes exploring whether any adjustments to the decision are feasible for specific cases in which the examination of the patent application was delayed by the Brazilian Patent and Trademark Office (BRPTO). Therefore, such lawsuits cannot be considered baseless claims.

In July, the SG-CADE had already issued a legal opinion to fully dismiss the investigation at hand, since the described conduct did not meet the necessary requirements for the conduct of sham litigation or abuse of industrial property rights. Specifically, regarding the aforementioned "PTA" lawsuit, SG-CADE concluded that it cannot be considered as lacking legal grounds or being evidently groundless since there are preliminary injunctions still in-force "extending" the term of pharmaceutical-related patents in similar PTA cases. In addition, SG-CADE indicated that this discussion is recent at the courts, and assessing plausibility of the arguments raised in PTA lawsuits does not meet CADE's jurisdiction, which was reaffirmed by CADE's Administrative Court.

This decision clearly showcases CADE's position of not favoring an analysis of anti-competitive biases in lawsuits seeking compensation or term adjustment for drug patents due to the BRPTO's unjustified delay in processing the administrative granting procedure. This could result in the filing of new lawsuits with the same object before the Federal Trial Court.

Furthermore, CADE's position tends to favor patent holders during the analysis of requests for injunctive relief in lawsuits that are still at the trial court level. This highlights the importance of the decision not only as a milestone in the field of competition law but also as a determining factor for the dynamics of patent disputes in the Judiciary Branch.

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1 The Civil Action #1089502-15.2021.4.01.3400, in course before the 21st Federal Trial Court of the Judiciary Section of Distrito Federal. This lawsuit was named in the complaint as a "PTA" action, in reference to the Patent Term Adjustment mechanism, which is adopted by several countries and aims to compensate the applicant in the event of a delay in the granting of the patent application by the respective office.