This is an update to our posts on April 8, 2021, March 15, 2021 and March 10, 2021. As readers are aware, the Brazilian Supreme Court was scheduled to decide the constitutional challenge involving Article 40 of the Brazilian Intellectual Property (IP) Statute (ADI 5529), on April 7, 2021; however, the hearing was delayed due to a discussion in another case.
Yesterday, the Brazilian Supreme Court issued its decision, with a majority holding the 10-year patent term unconstitutional (Article 40, sole paragraph). Nine Justices issued opinions stating that 10-year patent term, even in view of the backlog of patent applications waiting to be examined at the Brazilian Patent and Trademark Office (BRPTO), violates the country’s Constitution. The Justices also decided that the general provision of 20 years from the date of filing provides a suitable and sufficient term of protection for patent owners.
The decision was based on 5 reasons that can be summarized as it follows. Specifically, according to the Court, the challenged provision:
- Constitutes a “term extension” that affords disproportionate protection to patent owners;
- Undermines the temporary nature of a patent as provided by the Brazilian Constitution;
- Provides automatic compensation to an applicant without assessing the applicant’s responsibility in contributing to the delay in examination;
- Finds no parallel in any other IP regimes abroad (namely, the fact that patents automatically receive a patent term of 10-years from the date of grant); and
- Raises drug prices in the Brazilian market by creating monopolies thereby impacting society’s access to drugs and public health social policies.
Justice Barroso, followed by Chief Justice Fux, issued dissenting opinions, arguing that pending patent applications do not provide any type of protection for patent owners, therefore, there is no protection prior to grant. Only granted patents provide protection. In their view, if patent owners are not provided a 10-year patent term, they might not have sufficient term to protect their inventions. Additionally, Justice Barroso stated that if the BRPTO is examining applications at a faster rate as a result of the backlog combat plan, the 10-year patent term will soon be unnecessary and would not need to be declared unconstitutional or revoked. Therefore, in his opinion, Congress should focus on improving the BRPTO.
Chief Justice Fux also stated that it was necessary to observe the consequences of the decision and its impact in the economy.
Is the Decision Retroactive?
The Supreme Court will decide next week whether the decision applies retroactively. Justice Toffoli is proposing not to apply the decision retroactively to all patents issued before the publication of the final decision with two notable exceptions. Specifically, under Justice Toffoli’s proposal, the decision would be retroactive for: (i) patents directed to pharmaceuticals (including both products and medical devices); and (ii) in specific cases where the constitutionality of Article 40 was argued in lawsuits already in progress (which would include non-pharma patents). However, several of the Justices expressed concern that the decision should not be retroactive or should be tailored only to pandemic related products (versus all pharmaceutical products).
After some debate, the Justices decided to postpone a final decision on the retroactive effect of its decision until Wednesday, May 12th session.
Please continue to watch BRICS & Beyond for continued updates on the Supreme Court decision.
This post was written by Lisa Mueller and by Rob Rodrigues and Luisa Saraiva from Licks Attorneys