3.11 Selected topics
3.11.1 Licenses
The various types of licenses allowed under Brazilian legislation are provided for in Articles 61–74 of the LPI.
3.11.1.1 Voluntary license
Voluntary license is provided for in Articles 61–63 of the LPI. Under the legislation, the patent holder or the applicant may enter into a license contract for exploitation (Article 61 of the LPI). The license contract must be registered with the INPI so that it can produce effects in relation to third parties from the date of its publication (Article 62 of the LPI). However, for the purpose of validating evidence of use, this registration is not required (Article 62(2) of the LPI).
The licensee may be vested by the holder with all powers to act in the defense of the patent (Article 61(1) of the LPI). The improvement introduced in a licensed patent belongs to the one who makes it. However, the other contracting party is assured the right of first refusal for its licensing (Article 63 of the LPI).
3.11.1.2 Offer of license
Articles 64–67 of the LPI provide for the offer of license. A patent holder may request the INPI to place the patent on offer for exploitation purposes (Article 64 of the LPI). The INPI will then arrange the publication of the offer (Article 64(1) of the LPI). The holder may, at any time, before the express acceptance of its terms by the interested party, withdraw the offer (Article 64(4) of the LPI).
No voluntary license contract of an exclusive nature can be registered with the INPI without the holder having desisted from the offer, nor can it be offered (Article 64(2)–(3) of the LPI).
In the absence of an agreement between the holder and the licensee, the parties may request the INPI to arbitrate the remuneration (Article 65 of the LPI). The remuneration may be reviewed after one year from its establishment (Article 65(2) of the LPI).
The patent holder may request the cancellation of the license if the licensee does not begin effective exploitation within one year of the grant, interrupts exploitation for a period exceeding one year or if the conditions for exploitation are not met (Article 67 of the LPI).
3.11.1.3 Compulsory license
Finally, Articles 68–74 of the LPI provide for compulsory license. A patent holder is subject to having the patent licensed compulsorily if they exercise their rights in an abusive manner or engage in abuse of economic power, evidenced pursuant to the law, by means of an administrative or court decision (Article 68 of the LPI). Such licenses are always be granted on a non-exclusive basis, and sublicenses are not permitted (Article 72 of the LPI).
3.11.1.3.1 Compulsory license for lack of exploitation, commercialization, manufacturing full use or for insufficiency
Article 68 of the LPI, lists, as examples, certain situations that occasion compulsory licensing:
Paragraph 1. […]:
I – the non-exploitation of the subject matter of the patent in the Brazilian territory due to lack of manufacturing or incomplete manufacturing of the product, or, further, the lack of full use of the patented process, except in cases of economic impracticability, when import will be allowed; or
II – the commercialization that does not meet the market’s needs.
Paragraph 2. The license can only be requested by a person with a legitimate interest and who has the technical and economic capacity to efficiently exploit the subject matter of the patent, which must be intended, predominantly, for the domestic market.
3.11.1.3.2 Patent-dependent compulsory license
The compulsory license will also be granted when, cumulatively, the following circumstances are verified:
I – a situation of dependence of one patent on another is characterized;
II – the subject matter of the dependent patent constitutes substantial technical progress in relation to the previous patent; and
III – the holder does not reach an agreement with the holder of the dependent patent to exploit the previous patent. (Article 70 of the LPI)
The legislation defines a “dependent patent” as a patent for which exploitation obligatorily depends on the use of the subject matter of a previous patent (Article 70(1) of the LPI). A process patent may depend on its respective product patent or vice versa (Article 70(2) of the LPI). The holder of a patent licensed under the terms of this provision is entitled to a cross-compulsory license of the dependent patent (Article 70(3) of the LPI).
3.11.1.3.3 Compulsory license for national emergency or public interest
In cases of national emergency or public interest, declared in an instrument of the federal executive branch, and provided that a patent holder or their licensee does not meet the need, a temporary, nonexclusive compulsory license may be granted, at the judge’s own initiative, for the exploitation of the patent, without prejudice to the rights of the holder (Article 71 of the LPI). In these cases, the instrument for the granting of the license establishes its term and the possibility of extension (Article 71(1) of the LPI).
3.11.1.3.4 Cases for not granting the compulsory license
The compulsory license will not be granted if, on the date of the application, the holder:
I – justifies the non-use for legitimate reasons;
II – proves that serious and effective preparations for exploration have been carried out; or
III – justifies the lack of manufacturing or commercialization on the grounds of an obstacle of legal nature. (Article 69 of the LPI)
3.11.1.3.5 Administrative request
The request for a compulsory license must be made indicating the conditions offered to the patent holder.
Paragraph 1. Once the license request is presented, the holder will be notified to present his opinion within sixty (60) days, after which, if he does not present his opinion, the proposal will be considered accepted under the conditions offered.
Paragraph 2. The license applicant that invokes abuse of patent rights or abuse of economic power must attach documentation that evidences it.
Paragraph 3. [and, if the license is] requested on the grounds of lack of exploitation, the patent holder will be responsible for evidencing exploitation. (Article 73 of the LPI)
In the event an answer to the request is presented, the INPI may take the necessary measures, as well as designate a commission, which may include specialists who are not members of the INPI’s staff, to decide on the compensation to be paid to the holder (Article 73(4) of the LPI). The bodies and entities of the direct or indirect federal, state or municipal governments will provide the INPI with the information requested for the purpose of basing the decision on the compensation (Article 73(5) of the LPI). Once this information has been provided, the INPI will decide on the granting and conditions of the compulsory license within 60 days (Article 73(7) of the LPI). An appeal against a decision granting the compulsory license does not have an effect of supersedeas (Article 73(8) of the LPI).
Except for legitimate reasons, the licensee must begin exploiting the subject matter of the patent within one year of the license being granted, though an interruption for the same period is permitted (Article 74 of the LPI). If this does not happen, the patent holder may request the revocation of the license (Article 74(1) of the LPI).
A licensee is vested with all powers to act in the defense of the patent (Article 74(2) of the LPI). After the compulsory license is granted, its assignment is only allowed when performed jointly with the assignment, disposal or leasing of the part that explores it (Article 74(3) of the LPI).
Where a compulsory license is granted due to an abuse of economic power, the licensee, who proposes local manufacturing, is granted a term, limited to one year, to import the object of the license, provided that it has been placed on the market directly by the holder or with their consent (Article 68(3) of the LPI). In the case of such import or import for patent exploitation, the import by third parties of a product manufactured in accordance with a process or product patent is also admitted, provided that it has been placed on the market directly by the holder or with their consent (Article 68(4) of the LPI).
3.11.2 Pharmaceutical patents
3.11.2.1 Applications filed before the ratification of the treaty – the pipeline system
Specific considerations applied to patent applications that were filed before Brazil’s ratification of the TRIPS Agreement treaty and that became known as the “pipeline.” Law No. 10,196/0191 (formerly Provisional Presidential Decree No. 2006/99, which was reissued 15 times) amended the LPI, establishing in Article 229 that patent applications filed up to December 31, 1994, concerning chemico-pharmaceutical products and drugs, as well as processes for obtaining or modifying them, should be rejected. In turn, Article 229-A of the LPI imposed the rejection of patent applications for processes for obtaining chemico-pharmaceutical products and drugs if they were filed between January 1, 1995, and May 14, 1997.
Law No. 10,196/01 also created Article 229-C of the LPI, according to which the granting of patents for pharmaceutical products and processes must have the prior consent of the Brazilian Health Regulatory Agency (Agência Nacional de Vigilância Sanitária; ANVISA). This procedure gave rise to several discussions, to the point that the Brazilian Intellectual Property Association (Associação Brasileira da Propriedade Intelectual), which brings together companies, firms of industrial property agents, law firms and experts in intellectual property matters, amended its Resolution No. 2, of January 27, 2000,92 to state that requirement was a trespass of the INPI’s substantive jurisdiction as established in Article 240 of the LPI and, in addition, directly violated the provisions of Article 4(A)(1) of the Paris Convention.93
Here, there was an issue of objective and subjective jurisdiction regarding the regulation for patent granting. Subsequently, the Brazilian Intellectual Property Association published a resolution in which it stated that ANVISA could not analyze or review the patentability requirements (novelty, inventive step and utility) and should limit itself to verifying whether the patent application is harmful to public health.94
3.11.2.2 Prior consent by the Brazilian Health Regulatory Agency (ANVISA)
The debate consists of knowing whether the prior consent requirement has, in addition to assisting in the technical examination without the concern related to the power “to deny consent,” in view of Article 31 of the LPI (which already provides for the submission of documents and information by the interested parties to support the technical examination). The institute allows for prior consent, which has been deemed relevant for national policies on access to drugs and has also been implemented in the intellectual property legislation of countries in the La Plata basin, such as Paraguay.
Regardless of the limits of ANVISA’s rulemaking power regarding its prior consent, there are currently two other public institutions performing similar work. In addition to assessing patentability requirements, ANVISA also observes aspects relevant for public health, such as whether the granting of the patent will result in limited access to drugs.
In the event of a difference of opinion between the INPI and ANVISA regarding the granting of protection, the patent is not granted, and the process is stayed within the administrative scope of the INPI. The direct consequence of this is that, in the event of a delay in the granting of pharmaceutical patents in the country, the foreign companies (that hold a large part of the filings in the area) may have their patents extended, delaying the entry of generic products into the market.
Conversely, some legal remedies can be used to alleviate this situation, such as compulsory licensing, provided for in the LPI (in cases of abuse of economic power, lack of commercial exploitation, national emergency or public interest) and the “Bolar exception” (an exception to the extension of patent protection, which specifically addresses the use of a currently patented invention for research without the need for authorization from the patent holder). In the latter case, acts intended exclusively for the production of information, data and test results for obtaining the registration needed to market the patented product do not constitute infringement.95
This issue was settled with the ratification of Opinion No. 337/PGF/AE/2011, by the Office of the General Counsel for the Federal Government, according to which ANVISA’s authority was established as being solely to examine whether a pharmaceutical product or process submitted to the patent process is potentially harmful to human health, which could lead to the rejection of the application by the INPI, regardless of the verification of the other criteria of incumbent upon this ANVISA’s body.
3.11.2.3 New use and new therapeutic application
The LPI is silent on the protection of “use”: it does not provide for such claims expressly. For the INPI, second medical use claims are possible, provided that they are intended for a new and nonobvious therapeutic application and that the mechanism of drug action is different from that described for the first use. Thus, inventions related to substances or compositions that aim to protect use in the treatment of certain diseases, according to the INPI’s examination guidelines, can be one of two types:
- a product already known to be used outside the medical field has a new use as a drug, which is said to be the first medical use; or
- a product already known as a drug has a new therapeutic application, which is defined as a second medical use. Although legislation prevents the protection of products isolated from nature, such products are patentable when they are given practical use.
Regarding the second medical use, the solution found to disconnect the new use of a therapeutic method was to link that use to a drug manufacturing process. While claims for the use of the specific product are characterized for the treatment of a given disease, such uses are not considered inventions because they are therapeutic methods under our rules, though not according to the Treaty of Paris. Thus, claims in which the use of a specific product is characterized for the preparation of a drug to treat a given disease are accepted as well. This type of claim is known as a “Swiss formula,” and it aims to protect the second medical use of a known product.
Consequently, new and improved methods of extraction, purification, elucidation, synthesis or semisynthesis of natural compounds, the production of industrial drugs, and genetic engineering are considered patentable. When they are nonobvious, it is also possible to patent chemically modified natural compounds; pharmaceutical, nutraceutical or cosmetic compositions containing one or more natural or modified compounds; transgenic microorganisms and modified biological processes; and the first or second therapeutic use of a described compound. In addition, many patents, despite being granted, prove to be of little or no real value to their owners. This may be particularly true for patent applications for “new drugs,” especially those patented very early in their development process when there is still little certainty of their actual efficacy, low toxicity or economic viability.