Brazilian court prohibits royalty collection for public domain technology

On the last working day of the Judiciary before the court recess (a period during which legal deadlines are suspended and no procedural developments are expected), Judge Célia Vidotti issued a ruling in the class action filed by the Association of Soy and Corn Producers of the State of Mato Grosso (APROSOJA/MT) against Monsanto.

Case No. 1011982-53.2021.8.11.0041, filed in April 2021, sought the term adjustment of patents PI0016460-7 e PI9816295-0 held by Monsanto covering the INTACTA RR2 product and the reimbursement of royalties paid after the expiration of patents.

Throughout the proceedings, there were several procedural incidents, including a Constitutional Complaint filed by Monsanto against a decision that had granted preliminary injunctive relief. This decision required the company to make a judicial deposit of one-third of the amount paid as royalties for the INTACTA technology, benefiting producers who had paid royalties based on the technology covered by the expired patents.

In the Constitutional Complaint, the effects of the decision by the Brazilian Supreme Court (STF) in ADI 5529 were revisited. It was determined that the retroactive effects of the STF decision would apply to patents PI0016460-7 and PI9816295-0. This automatically adjusted the term of the two patents to 20 years from their grant date, resulting in patents expiring on December 12, 2020, and March 3, 2018, respectively.

The ruling issued on December 20, 2024, upheld the claims made by APROSOJA to:

– Declare the nullity of royalty charges related to patent PI0016460-7 from December 13, 2020, and patent PI9816295-0 from March 4, 2018, at a proportion of one-third for each patent of the amounts charged as royalties for the “INTACTA RR2 PRO” technology.

– Order the immediate cessation of proportional royalty charges for the INTACTA RR2 PRO product concerning the two Monsanto patents in question, which are now in the public domain.

– Require Monsanto to reimburse the rural producers for amounts improperly paid, with the values to be adjusted for inflation based on the INPC index and subject to default interest of 1% per month.

The ruling highlights important considerations for patent holders, particularly regarding the identification of assets protected by industrial property, the definition of royalties applied to protected technologies, the drafting of respective licensing agreements, and the necessary care in communicating about a company’s intangible assets.

It is important to monitor the developments of this matter in the Judiciary, especially given the expectation that Monsanto will attempt to overturn this decision through an appeal, as well as the new discussions that will arise in the second instance before the Court of Justice of the State of Mato Grosso (MT).

The team of specialists at Kasznar Leonardos is available to address any questions regarding the specific case, as well as to assist you and your company with the best contractual practices and the management of intellectual property assets.

If you would like to receive a copy of the ruling in Portuguese or English, please contact us at mail@kasznarleonardos.com.