Newsletter

It is expected that, in 2015, the administrative court of the Brazilian antitrust authority (Conselho Administrativo de Defesa Econômica – CADE) rules some important cases involving the sham litigation doctrine applied to intellectual property. It is expected that these cases will more accurately indicate what CADE understands as anticompetitive behavior and infringement of the economic system concerning the abuse of intellectual property rights.

CADE’s administrative court is a federal nonjudicial instance encharged with enforcing the constitutional economic principles, such as free enterprise, freedom of competition, social role of property, consumer protection and the restraining of abusive behavior. Among its institutional competences it can be mentioned the legally required prior consent to “acts of economical concentration”, such as mergers and acquisitions, and the application of sanctions to infringements of the economic order.

It is always worth remembering that the current Brazilian antitrust Act, differently from its predecessor, expressly considers the possibility of undue use of intellectual property rights as a hypothesis of infringement of the economic system. The administrative court forthcoming decisions this year will help to clarify what CADE understands as an abusive use of intellectual property rights.

The American doctrine of sham litigation, which forbids the abusive use of the judicial system as a way to constrain competitors by the lawsuit itself, regardless of the merits’ pertinence or chances of success, has already been applied by CADE in past decisions. The novelty this time falls within its application to intellectual property related cases.

A new resolution defining the legal concept of “associative contract”, which was issued last year by CADE (Conselho Administrativo de Defesa Econômica) – the Brazilian antitrust authority – came into force in January 2015. According to the Brazilian current antitrust law (Law n. 12.529/2011), once other legal premises are met, such as annual revenue standards, “associative contracts” must be previously notified to and approved by CADE before being performed by the parties despite the fact that the Law does not clarify the meaning of “associative contracts”. Therefore CADE’s Resolução n°. 10 de 29 de outubro de 2014 is expected to eliminate the former legal uncertainty on which kinds of commercial agreements had to be submitted to CADE, a doubt that used to reach intellectual property licensing agreements.

Brazilian antitrust Law establishes that “acts of economical concentration” must be previously submitted to CADE’s approval before coming into force whenever (a) the annual gross revenue in Brazil of one of the parties involved is of 750 million BRL or more and (b) the annual gross revenue in Brazil of the other party is of 75 million BRL or more.

In addition to these parameters, section 90 of the Law lists the strict cases which shall be considered “acts of economical concentration”, the majority of which are related to mergers and acquisitions. Exception made to item (IV) which provides for the prior consent of CADE to “associative contract, consortium or joint venture” though without defining the meaning of “associative contract”, which could reach several agreements with no repercussion on market competition.

As informed in our Newsletters # 2 (January 2014) and # 6 (August 2014), a serious controversy regarding the restoration of patents and of patent applications with annuities in arrears arose from the enactment by the Brazilian Patent Office (hereinafter “INPI”) of Resolution No. 113/2013 (hereinafter “INPI’s Resolution”). Such controversy is due to the contradiction between item 13 of INPI’s Resolution and Sections 86 and 87 of the Brazilian Industrial Property Act (Law No. 9,279/96 – IP Act): although the IP Act allows the restoration of the patent or of the application upon request of its owner within 3 (three) months from the publication of the forfeiture’s notice, INPI’s Resolution set forth that in case multiple annuities (two or more) are left unpaid, a patent or a patent application could no longer be restored.

Given that, on July 10, 2014, the Brazilian Association of Industrial Property Agents (ABAPI) filed a class action before the 25th Federal Court of Rio de Janeiro, aiming the invalidation of item 13 of INPI’s Resolution and the reversion of all the definitive shelving and extinction decisions that were based on such provision.

Recently, on January 13, 2015, Federal Judge Eduardo André Brandão de Brito Fernandes rendered his decision and granted ABAPI’s requests, determining that all shelving and extinction decisions based on item 13 of INPI’s Resolution are void and ordering that INPI complies with Section 87 of IP Act, i.e., patentees must be notified so that, if it is of their interest, they might be able to restore its patent or application by paying the proper official fees. Such decision also granted the injunction request to immediately suspend the effects of item 13 of INPI’s Resolution and, therefore, it will have immediate effect and the 9,745 patents and patent applications that had already been declared shelved and extinct by INPI must now be reinstated.

The Brazilian pharmaceutical regulatory agency ANVISA – National Sanitary Vigilance Agency recently approved new rules for the use of trademarks in pharmaceutical products, through RDC – Resolution of the Board of Directors No. 59, of Oct. 10, 2014.

Such new regulations are very important, inasmuch as all pharmaceutical products in Brazil must be registered with ANVISA for their sale to be allowed. ANVISA not only assesses the efficacy of the product and other health-related technical matters, but it also sets forth how the labeling should be done and it approves the use of trademarks in the package.

As in Brazil there is no linkage between the regulatory registration by ANVISA and the issuance of patents or trademark registrations by the Brazilian Patent & Trademark Office (BPTO), the rules approved by ANVISA are, in practice, the only rules that govern the approval for commercialization and labeling of pharmaceutical products. If there is a conflict between a decision by ANVISA and one by the BPTO (e.g. concerning the risk of confusion between two trademarks belonging to two competitors) it is usually up to the Courts to solve such conflict.

The main law regulating the health system in Brazil – Law #6,360 dated 1976 – establishes that each and every drug available in the pharmaceutical market must be approved by the Ministry of Health. Since the creation of the Brazilian FDA (called ANVISA), this autonomous autarchy subordinated to the Ministry of Health is in charge of issuing marketing authorization for drugs for human use and of establishing specific resolutions in order to regulate each of the existing categories of medicaments, such as the new drugs, generics, similars, biologicals.

According to ANVISA’s requirements, the documentation submitted by the manufacturers of both generic and similar drugs, upon applying for marketing approval, is significantly simplified compared to the reference product (the so-called “abridged process”), as only pharmaceutical equivalence and relative bioavailability/ bioequivalence assays are required to obtain approval for products pertaining to these categories.

It should be noted that, since the publication of Resolutions RDC #133 (new applications for marketing approval) and RDC #134 (similars, already approved), both dated May 29, 2003, ANVISA has begun to require proof of therapeutic equivalence also for similar drugs; therefore, it is estimated that all manufacturers of these products will have complied with such requirement by the end of 2014.

Accordingly, studies of pharmaceutical equivalence and bioavailability/bioequivalence became necessary in order to obtain marketing authorization for both generic and similar drugs, although the latter were not then yet considered to be interchangeable with the reference product.

As we informed in our Newsletter # 2, dated January 2014, in October 2013, the Brazilian Patent Office (“INPI”) enacted Resolution No. 113 to regulate the control of the payment of annuities by patent and patent application owners. Immediately, the Resolution triggered strong reactions from patentees and patent attorneys, in view of its item 13, which contradicts Sections 86 and 87 of the country’s Industrial Property Act (Law No. 9,279/96). It is estimated that such contradiction may have jeopardized the rights of applicants and patentees over almost 10,000 issued patents and 2,300 patent applications.

According to the IP Act, failure to pay annuities shall lead to the shelving of the application or the extinction of the patent (article 86). However, Section 87 allows the restoration of the application or of the patent upon request of the corresponding owner within 3 (three) months from the moment the INPI publishes the notification of shelving or extinction.

Launched on April 2012, the Brazilian Patent Office’s pilot program that establishes prioritized examination for the so-called “green patents” has now been extended for a further year, being available up to April 16, 2015.

This program’s purpose is to prioritize the examination procedures of patent applications involving “green technologies”, reducing the current average time for concluding the examination of patent applications – which currently takes more than 10 years – to a promised lag time of about 2 years.

Until now, only Paris Convention filed applications, or Brazilian originated national applications, were eligible to enter into this special program.

The big novelty in extending the “green patents” program is that, in this new phase, also Brazilian national phases of PCT applications can benefit from this prioritized route. These can be either new patent applications, still to be filed, or pending patent applications, already filed at the Brazilian Patent Office. For

Very recently, by means of Resolution 113/2013, the Brazilian Patent and Trademark Office, henceforth the INPI, declared a change in its interpretation of the restoration clause that was inserted by the legislators in Law 9279/96 — the Brazilian Industrial Property Law[1].

This restoration clause gives to those that did not pay an annuity during the regular and extended terms, the opportunity to revive their case after a notice communicating its forfeiture is published.

Until the advent of this new interpretation, a single notice could be published in connection with a set of unpaid annuities. Actually, as the INPI had very little control over the annuity fees that were paid, it was quite common that many years would pass before a notice was published. Therefore, whenever it came to be published, the notice would inform that the forfe

As of February 1st, when Federal Law No. 12,846 will come into force, Brazilian and foreign companies in the country will face a new and different scenario in their relations with public entities. This is because this law, which has been popularly known as the “anti-corruption law”, comes to combat and severely punish any and every act committed by companies, their representatives, suppliers and business partners who violate or cause damage and injury to the domestic or foreign public assets, against principles of public administration or against the international commitments assumed by Brazil.

On August 19, 2013 the Brazilian PTO published the Resolution number 17/2013, which sets the new rules for recognizing the highly reputed trademark status. This resolution will be enforced on the date of the publication of the new official fees for this procedure, but, until now, the BPTO has not estimated yet when it will be published.

The main innovation brought by this Resolution is the adoption of a standalone procedure, which allows the titleholder to require, at any time, the recognition of high reputation for its trademark before the Brazilian PTO. This request can be made when registering the mark, without the need of third parties' procedures.