News

Potential changes in patent term extension mechanism in Brazil – Federal Supreme Court decision expected for April 7th

The Brazilian patent system was reformulated in 1996 with Law 9,279, that established in its Article 40 the now usual 20-year validity term for Invention Patents counted from the filing and 15-year for Utility Models. It also included a term extension mechanism that guarantee a minimum protection of 10 years counted from the grant for Invention Patents and 7 years for Utility Models. Term adjustment and extension mechanisms are present in many jurisdictions with the intention of avoiding that inefficiencies of patent authorities processes unreasonably reduce term of protection.

After almost 20 years in force, and some questioning in lower Courts in Brazil, the Federal Supreme Court received in 2016 a petition to declare unconstitutional such extension provisioning (ADI 5529). Initially motivated by implications to the public health system (impacted by pharmaceutical patents) of the long time it could take INPI to reach a decision – e.g., 11.4 years for biopharmaceutical back in that time, the petition argues that the provision generates indeterminate terms of protection, which leads to less competition and interference in consumer rights. The debate in favor and against the provision, since then taking place in the press and around 15 Amicus Curiae petitions filed by industry associations, will culminate in a Supreme Court session scheduled for April 7^th, 2021.

Companies / applicants need to be alert to implications of an eventual decision to consider the provision unconstitutional on April 7^th. From 2011 to 2019 more than 35% of the patents granted in Brazil had term extensions (75% in 2015), summing a total of 30,648 currently valid patents (as of March 9^th, 2021; source: INPI) granted with term extensions. They represent around 45% of the total of currently valid patents. Technologies related to telecommunications / electronics, pharmaceuticals and biotechnology would be particularly impacted, as prosecution time was worse than other fields during the 2010’s. More than 70% of the valid patents in these fields were granted with extensions. The extension term in more than 85% of the cases, however, is limited to 3 years. Additionally, other 8,394 patent applications are likely to have a decision in 2021 that, in case of grant, will include term extensions.

Implications for companies / applicants for potential outcomes from April 7^th session include:

• If term extension is declared unconstitutional with impact limited to new grant decisions (ex nunc): major impact in the long term, as companies will have to adjust their monetization strategies to incorporate a potentially shorter term period. To avoid such effect companies could seek ways to accelerate examination (e.g., fast track modalities)
• If term extension is declared unconstitutional with impact also on previous decisions (ex tunc): major impact in the short term, particularly for companies with patents granted between 2010 and 2013, that are likely to see their rights suddenly expiring and contracts needing revision/ negotiation. Scrutinizing their portfolios to detail such implications is urgent
• If term extension is not declared unconstitutional: no major impact. In fact given the result of a series of recent initiatives to reduce time for decision, currently at 7.9 years (2020) from filing, the provision is likely to be less used

In case of declaration of unconstitutionality, legislators will probably need to develop a substitutive provision so that requirements of Article 62 (2^nd paragraph) of TRIPS agreement, which Brazil is one of the first assignees, be respected.

To understand more about implications of the ADI 5529 judgment please contact us on brj@clarkemodet.com.br.

Claudio Castanheira