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Judgment Day: the term of Patents in Brazil

Summary: in a judgment initiated on April 7, 2021, the Brazilian Supreme Court decided to immediately suspend the validity of all patents for “pharmaceutical products and processes, and equipment and/or material to be used for health purposes” that are currently in force, and were filed longer than 20 (twenty) years ago. Patents already issued with extended term in other technological areas are not affected.
 
On April 7, 2021, the Brazilian Supreme Court initiated the judgment of the lawsuit filed by the Public Prosecutor Office (PPO) regarding the term of patents in Brazil. The subject matter of the discussion is whether patents in Brazil are valid only for a term of 20 years counted as from filing of the application (as it is usual all over the world), or if patents shall continue to enjoy a minimum term of 10 (ten) years counted as of the issuance of letter-patent by the Brazilian Patent & Trademark Office (BPTO).
 
In fact, as a remedy against the delay in examination by the BPTO, the Brazilian Patent Act (Law 9,279, of 1996) guarantees such minimum term of 10 years after issuance. Due to several reasons, the BPTO has consistently taken longer than 10 years to examine patent applications, thus triggering the adoption of such minimum term by issued patents. This has been a common situation in the technological areas with the longest delays in examination, such as pharmaceutical, chemical and telecommunications, where thousands of patents are valid for 25, 30 years after filing, and sometimes even longer than that.
 
However, there was always criticism against such provision, especially due to the political sensitivity of the protection of pharmaceutical drugs. Brazilian generic producers and sectors of the public health system argue that the longer protection afforded by the Patent Act unduly increase the price of medicines, thus inhibiting the access by the population to health treatments and demanding larger expenditures by the government than it would otherwise be the case, if the patents had all expired 20 years after filing.
 
The case being now decided by the Supreme Court is a special type of lawsuit (the “Direct Plea of Unconstitutionality No. 5529”), filed by the PPO in 2016, seeking the declaration that the Sole Paragraph of Section 40 of the Brazilian Patent Act infringes the Brazilian Constitution (enacted in 1988) and, as such, it is not a valid provision, and should be considered stricken of the Act:
 
Section 40. A utility patent will have a term of 20 (twenty) years and a utility model patent term of 15 (fifteen) years, counted from the filing date.
 
Sole paragraph – The term will not be less than 10 (ten) years for utility patents and 7 (seven) years for utility model patents, counted from grant, except when the BRPTO is barred from proceeding with the substantive examination of the application, due to proven pending judicial decision or to ‘force majeure’ reasons.
 
There are several amici curiae intervening in the lawsuit, both in favor of the PPO’s position and against it. Those who defend that the provision should be upheld argued that the Brazilian Constitution does not rule which should be term of patents, that the real problem is the lack of adequate funding for the BPTO to examine patents speedily, because all patent owners would prefer to have their patents examined and granted in only a few years, rather than receive the additional term of protection because the examination lasted longer than 10 years.
 
Furthermore, one of the reasons for the length of the examination of patent applications in the pharmaceutical sector is the double examination of patents made by both the BPTO and the Brazilian Sanitary Agency “ANVISA” (equivalent to the U.S. FDA), which does not exist in the rest of the world, but is mandatory in Brazil due to an amendment made in 1999 to the Patent Act.
 
Brazil did not allow pharmaceutical patents from 1945 until the approval of the 1996 Patent Act, which was a direct result of the 1994 TRIPs Agreement, an international treaty that is part of the accords that created the WTO – World Trade Organization. According to TRIPs, it is not allowed that a WTO Member-Country refuse to grant patents in any technological area. Consequently, the law changed in Brazil, not without protests from the well-organized Brazilian generic producers. Since then, the debate over pharmaceutical patents has great weight in all discussions about patents in Brazil, even though, nowadays, pharmaceutical patents amount to only 7.8% of the total patents filed in Brazil.
 
After an unsuccessful attempt before the Brazilian Congress to approve a bill to revoke the Sole Paragraph of Section 40, a Brazilian association of generic producers (ABIFINA) filed the Direct Plea of Unconstitutionality (“DPU”) No. 5061 in 2013, which was dismissed by the Supreme Court for formal reasons (i.e. the lack of standing of ABIFINA to file such special type of lawsuit), something that triggered the filing of DPU 5529 by the PPO in 2016, basically repeating the lawsuit previously filed by ABIFINA. It is, thus, DPU 5529 that began to be decided on April 7, 2021.
 
Nowadays, in Brazil there are approx. 32,000 patents in force with the minimum term of 10 years after issuance, and approx. 39,000 patents in force that were examined in less than 10 years, and which are valid for 20 years after filing. In other words, the delay of the BPTO resulted that 45% of all issued patents enjoy the term extension of the Sole Paragraph of Section 40. (For comparison, each year the BPTO receives approx. 27,000 new patent applications.)
 
Since the beginning, there were several possibilities for the outcome of DPU 5529: for example, should the attacked provision (the Sole Paragraph of Section 40) be considered valid, nothing would change. But if it were considered invalid, the Supreme Court would still have to decide whether all patents that were issued with the extended term, and that are currently in force, would be cancelled, or not, and, furthermore, if such cancellation would be retroactive or not.
 
The case will be eventually decided by the 11 Justices of the Supreme Court: such open hearing was initially scheduled to happen on April 7, and it will probably take place within the next few weeks. There was a postponement due to need of the Court to decide another case, with greater urgency. 
 
However, the Reporting Justice, Mr Toffoli in light of such postponement and based on his understanding that the matter of the term of patents is of utmost importance, decided to grant a preliminary injunction immediately suspending the effects of all patents filed longer than 20 years ago in the following areas: “pharmaceutical products and processes, and equipment and/or material to be used for health purposes”. The decision is not retroactive, i.e. it only produces effects from now on.
 
Mr Toffoli advanced his opinion on the merits of the case, stating in a long brief why he is convinced that the Sole Paragraph of Section 40 infringes the Brazilian Constitution. Mr Toffoli’s decision shall remain in force until the whole Court is able to convene to render a final decision on the matter.
 
In his opinion, Justice Toffoli also holds the standpoint that patents already issued with extended term in other technological areas, such as telecommunications, chemical and others, should have their full term preserved and not be affected by the decision. (This is the so-called “modulation of effects” of the Supreme Court.)
 
A few last remarks: it is true that, at least in Brazil, infringements of pending (i.e. not yet granted) patents very rarely occur. Thus, despite the ruling in favor of the PPO by the Supreme Court, we predict that the normal 20-year-from-filing term will continue to last without infringements by third parties. And, if an infringement does occur, there are some remedies available to the patent applicant, even though the property right (and the exclusive rights) in fact only arise after examination, upon the issuance of the patent by the BPTO.
 
Once issued, patents are a very strong legal title in Brazil, adequately enforced by the Courts. Despite the setback for patent owners brought by this judgment so far, we are confident that the raised awareness about the activities performed by the BPTO, that is one of the consequences of this lawsuit, will motivate the government to invest more resources in the examination of patent applications, ultimately contributing to the reduction of the delay in examination in Brazil.
 
Do not hesitate to contact us should you need any additional information herein. Please feel free to contact your regular spokesperson in our firm, or send a message to mail@kasznarleonardos.com.
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