Brazil: An Update of the Most Relevant Events for Pharmaceutical Companies in 2014: Part 2 of a 5-Part Series

This is part 2 of a 5-part series providing updates on: 1) mailbox patent litigation; 2) the constitutional challenge filed by Abifina against the 10 year patent term guarantee; 3) prior approval challenges and ANVISA; 4) a new Productive Development Partnership (PDP) rulemaking draft proposal; and 5) an opinion issued by the Brazilian Antitrust authority (CADE) regarding sham litigation. Part 1: Mailbox patent litigation can be found here

Constitutional Challenge: The 10 year minimum patent term under attack 

The sole paragraph of Article 40 of Brazil’s Industrial Property Law (Article 40) guarantees a minimum patent term of 10 years from the date of grant in those instances where the Brazilian Patent Office (INPI) takes more than 10 years to examine and grant a patent. At the time Article 40 became effective, it was expected that its use would be limited. However, quite the opposite has occurred. 

Due to the tremendous backlog of patent applications, it is normal for patent prosecution in Brazil to take longer than 10 years. By way of example, thus far in 2014, INPI has granted 2043 patents. Of these, 1312 have issued with a term of 10 years from the date of grant (meaning that patent prosecution took longer than 10 years), while 746 have issued with a term of 20 years from the date of filing. This data demonstrates how the backlog is impacting the term of patents in Brazil.  What is even more disturbing is that in some technical areas, such as hi-tech, patent prosecution may take as long as 18 years. Similar delays are frequently encountered with pharmaceutical patent applications. In a recent event, the Director of the Patent Board of the INPI, Mr. Júlio César Moreira, stated that if the backlog scenario does not change, within the next 4 years, Article 40 will be applied for every patent granted. Detailed information about the event with Mr. Moreira please can be found here

With respect to pharmaceuticals, since the enactment in 2012 of Ordinance 1,065/2012, INPI and the National Sanitary Vigilance Agency (ANVISA) have instituted a new workflow wherein INPI will send a patent application claiming a pharmaceutical product or process prior to examination on the merits to ANVISA for a prior approval analysis pursuant to Article 229-C. The problem with this workflow is that in the past, it has sometimes taken INPI approximately 8 years to send a patent application to ANVISA for prior approval analysis. Therefore, under this new workflow, the odds are very high that a majority of pharmaceutical patent applications will take longer than 10 years to be granted. In such instances, these patent applications will be entitled to a minimum term of 10 years from the date of grant. 

Given this scenario, Abifina and the Brazilian generic industry (collectively, Abifina) have attacked Article 40 through a number of different mechanisms. For example, Abifina has attacked Article 40 through the “Patent Reform” Bill (#5402/2013), which is presently being discussed by the Brazilian Congress. The Patent Reform Bill contains a number of anti-patent provisions, including one that would eliminate the 10 year minimum patent term. 

In addition, at the end of 2013, Abifina filed an unconstitutionality lawsuit before the Brazilian Supreme Court against Article 40. Interestingly, Abifina appears to be sparing no expense with regard to this lawsuit. In addition to filing a 60-page brief containing several constitutional arguments with the complaint, Abifina submitted two legal opinions from prominent authorities in Brazil, namely, Justice Eros Grau (who retired. from the Supreme Court in 2010) and Professor Denis Borges Barbosa (who is one of the most influent scholars in Industrial Property in Brazil).   

To summarize, in its brief, Abifina argues that Article 40 provides patent exclusivity for an undefined term. Specifically, according to the Abifina, the failure to include a definition of patent term in the statute is contrary to Article 5th, XXIX, of the Federal Constitution, which establishes that inventions provide “temporary protection”, with the word “temporary” being the key. Additionally, Abifina argues harm to free competition and to the national development of the Brazilian industry, among other arguments. 

The government (namely, the Legislative, Executive and the Brazilian Attorney-General’s Office) filed briefs defending the constitutionality of Article 40. The briefs reminded the Supreme Court that many Brazilian companies which invest in innovation, such as Petrobras and Embraer, would be harmed if Article 40 was declared unconstitutional. 

However, in July 2014, in an unusual turn of events, the Office of the Prosecutor General (Prosecutor General) submitted a brief agreeing with Abifina on the unconstitutionality of Article 40. According to the Prosecutor General, the possibility of an uncertain patent term is not compatible with the social purpose of industrial property, nor with the constitutional protection of the consumer. Moreover, in the Prosecutor General’s opinion, it also brings negative consequences to social rights, such as health. 

Because Brazil does not provide any regulatory data protection for pharmaceutical drugs for human use, there is no doubt that Article 40 is an important and necessary tool needed to protect the pharmaceutical industry’s research and development investments. Interfarma has already submitted a brief in the above action defending the constitutionality of Article 40. However, thus far, the generic industry has clearly shown that it will use all and the best weapons available in this fight. 

Abifina recently filed another opinion from Professor Heloisa Helena Barboza, a renowned scholar in Private Law and an expert in the interface of public health and law. Professor Barboza’s opinion focused on demonstrating how the guarantee of the 10 year minimum term of protection for patents affected the public interest, postponed the entrance of generic products in the market and damaged the poor people in Brazil that need low cost drugs. 

We expect Justice Fux to start to hear Abifina’s unconstitutional challenge in 2015.​ 

Please continue to watch the BRIC Wall Blog for further updates on the 10 year minimum patent term and this constitutional challenge. 

This post was written by Lisa Mueller and Roberto Rodrigues of Licks Attorneys.

The Brazilian Patent Office places the fight against the patent application backlog as its top priority

On October 30, 2014, the Director of the Patent Board of the Brazilian Patent Office (INPI), Mr. Júlio César Moreira, made a presentation to patent agents and attorneys to discuss the measures that INPI is implementing to reduce the patent application backlog. The backlog, as highlighted by Mr. Moreira, is currently the biggest issue plaguing INPI. Problems with the scanning of documents and the processing and examination of applications are creating a backlog of approximately 10 years in every art division.

For Mr. Moreira, one problem that has contributed significantly to the increase in the backlog has been INPI’s transition to a paperless system. Since 2013, hundred of thousands of petitions and patent applications have been sitting waiting to be scanned. Two companies hired by the INPI to assist with the scanning have gone bankrupt leaving the job unfinished. According to Mr. Moreira, a third company was recently hired to help with the scanning.

The second problem is the processing and publishing of PCT applications entering the national phase in Brazil. According to Mr. Moreira, Brazil receives approximately 22,000 application per year; however, INPI’s staff is only able to process approximately 10,000 applications per year. Therefore, approximately 12,000 applications per year are added to the backlog. INPI’s proposal to solve this problem is to focus on the publication of applications that are complete (namely, those applications that do not contain any missing documents). Applications that are not complete and have formal irregularities will be put aside and revisited in the future. At some point, an office action will issued requesting correction of the irregularities. In view of this, it is recommended that Applicants make certain that their applications comply with all formal requirements when entering the national phase in Brazil in order to avoid being placed in the backlog queue of “incomplete applications”

The backlog associated with substantive examination remains a big issue. Mr. Moreira stated that the average time until the beginning of examination is approximately 10 years. Unfortunately, the telecom division has the largest backlog. In this division, it takes approximately 13 years for examination just to begin and an additional 1 year for examination to be completed and a patent granted.  

Mr. Moreira also spoke of INPI’s concern over the backlog in view of the 10 year minimum patent term as established by Article 40, sole paragraph (Article 40), of the Patent Statute, and the consequences of this article for Brazil (especially in connection with public health). According to Mr. Moreira, currently, 63% of all patents granted by INPI have a 10 year minimum term. Unless something changes quickly, within four years, all patents granted in Brazil will have the 10 year minimum term. In view of this, INPI has been forced to take aggressive measures to try and reduce the backlog.

Mr. Moreira announced that the INPI will soon launch a program called “Promoted Withdraw”. According to Mr. Moreira, this program will allow an Applicant to abandon an “old” pending patent application and refile it as a new application which would be placed much higher in the queue for examination. INPI believes that this program will encourage Applicants to keep alive only those applications that they have a real interest in and this will help reduce the number of patent application currently under examination.

All in all, Mr. Moreira is very positive regarding INPI’s future. He stated that INPI is planning to hire an additional 400 examiners until 2018. He believes that the hiring of these new examiners will speed up the processing and examination of applications, thus contributing to the reduction in the backlog.

Mr. Moreira also stated that other measuring being taken to reduce the backlog include improvements in the training of the current INPI staff and streamlining administrative routines in order to increase productivity.

Please continue to watch the BRIC Wall Blog for further updates on the reduction of the application backlog at INPI. 

This post was written by Lisa Mueller and Roberto Rodrigues and Breno Souza of Licks Attorneys.