The direct action of unconstitutionality No. 5529/2016, filed by the Attorney General of the Republic, discusses the constitutionality of the sole paragraph in article 40 of the Brazilian IP Law (henceforth, the “challenged rule”). This rule determines that patent validity dates "will not be inferior to ten years for invention patents and seven years to utility models, counted from its grant date, except in cases where the BPTO cannot move forward with the merit examination for pending litigations or force majeure"
The Attorney General claims that the validity of a patent counted from its grant date would be unconstitutional, considering that article 5, item XXIX of the Federal Constitution, determines that patent protection must be a “temporary privilege.” The Attorney General understands that such expression means that the term must be fixed and determines what would not be achieved when the validity is counted from the grant date. The Attorney General also argues that the patent application is protected during the administrative procedure before the Brazilian Patent and Trademark Office (BPTO) (article 44 of the IP Law—the right of indemnification for the period third parties used during the invention between the publication and grant date), so the challenged rule would allow that the total period of protection not be determined, since it could vary according to the time the BPTO takes to analyze the patent application.
The Attorney General also claims that the challenged rule violates the principles of isonomy (article 5 of the Federal Constitution); consumer defense (articles 5, XXXII and 170, V of the Federal Constitution); free competition (article 170, IV of the Federal Constitution); legal security (article 5 of the Federal Constitution); objective liability of the state (article 37, paragraph 6 of the Federal Constitution); efficiency of the executive administration (article 37 of the Federal Constitution); and the principle of reasonable duration of the procedures (article 5, LXXVIII of the Federal Constitution).
On the other hand, the doctrine defending the constitutionality of the challenged rule is also relevant. To these defenders, the expression “temporary privilege”, from article 5, item XXIX of the Federal Constitution, does not necessarily mean that the validity date of patents must be fixed and determined. They highlight that the protection offered by article 44 of the IP Law is not sufficient, considering that while a patent is not yet granted, there is no possibility of excluding third parties from using the invention. The defense of the constitutionality of the challenged rule note that the rule is meant to be preventative, in order to safeguard eventual inexcusable administrative delays. Therefore, it would not be isonomic that patent owners had widely different validity terms for the patents that were already granted.
Furthermore, the declaration of unconstitutionality of the challenged rule may allow those who invested time, knowledge and money never to be rewarded or receive compensation for an extremely low period. This would result in a failure to stimulate the invention processes, which, in turn, would result in a delay of technological development. The period of exclusivity warranted to the owner is one of the pillars of the patent system, consubstantiated with a fair reward for the work and investments used on the project of research and development of said product. At the end of the exclusivity period, the product can be freely explored.
One important aspect of this discussion is the BPTO’s backlog, which is the number of patent applications that are in the BPTO’s analysis “queue.” The backlog issue has achieved an exponential level in Brazil and was the main factor for an exaggerated application of the sole paragraph of article 40 of the BPTO instead of the general rule of the article (validity counted from the filing date). The Attorney General argues that the backlog itself is not completely negative, considering that it is a worldwide phenomenon resulting from the increasing flow of patent applications which overwhelms human limitation and capacity of patent offices.
However, in Brazil, this phenomenon has achieved unacceptable proportions, considering that the delay created damages to primary public interest and the Federal Constitution. It is noteworthy that the BPTO has initiated a backlog combat plan at the end of 2019, in order to adopt measures to reduce the number of backlogs, acknowledging the seriousness of the problem. The BPTO has already been able to decrease the backlogs from 147,743 pending applications on September 6, 2019, to 108,849 on June 2, 2020. There are also several Programs of Priority Patent Procedures, such as:
- procedures owned by the elderly, disabled or those with serious illnesses;
- procedures owned by small companies;
- procedures where the granting of the patent is a condition for releasing funds from development agencies or credit institutions;
- procedures whose object is a product for the treatment of diseases considered to be neglected by the Ministry of Health or for COVID-19;
- green patents;
- procedures whose object is at risk of being used improperly; and
- procedures whose object is considered patentable by a partner patent office (PPH - Patent Prosecution Highway).
The action is under Reporting Minister Luiz Fux and had been scheduled for trial on May 22, 2020. However, it has been withdrawn from the trial list due to the request of entry made by the Association of National Capital Pharmaceutical Industries (Farmabrasil Group), which was granted.
There is no new trial date predicted for the suit, but our litigation team in Brasília is following the procedures closely and can provide further information.