Two sides to every story: IP in Brazil

In September 2013, the Brazilian Patent and Trademark Office (INPI) filed 33 lawsuits seeking to cut the terms of more than 170 patents. Covering medicines or agrichemicals, the patents are owned by some big companies, including Merck, Monsanto and Bayer.

It is an unusual situation. On January 1, 1995, the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement was created, but at the time patents covering pharmaceutical and agrichemical products were banned in Brazil. So, until Brazil’s laws became TRIPS compliant on May 14, 1997, the INPI accepted patent applications for these products but stored them in a “mailbox”.

Brazilian law states that the “mailbox” patents can be protected for a minimum of 20 years from their filing date and at least 10 years after their grant date. But in September, the INPI argued that the 10-year provision should not apply to the patents, because they were given special treatment under Brazilian IP law. This may not seem like such a problem, but many of the patents have been granted only in the past few years and could have their lifetime pegged back to their filing date.

Otto Licks, partner at Licks Advogados, says the lawsuits represent “a major issue that has caught the attention of the international IP community”.

“The EU, US and industry groups are all trying to understand why the Brazilian government decided to make such strong attacks against the patent system.

“The decision is political. We are one year away from the presidential campaign and the politicians want money for running their campaigns,” he says.

For Licks, this is just the latest example of “anti-patent” behaviour by the INPI, following its approval of new rules on claim amendment and divisional practice in June. The rules limit the ability to amend claims and file divisional applications to after a patent has been filed. Since June, Licks says, the INPI has rejected more than 20 applications under the provisions.

"The current political environment is supported by the investment of Brazilian companies that have a business model supported by piracy and infringement of IP rights."

The lawsuits and regulations show that the government can use the INPI as a tool to implement policies that substitute IP owners for Brazilian importers, Licks says.

“The government has decided to support trade companies importing products from China and other countries instead of supporting local production and the development of Brazilian research and development.”

According to Licks, the problems in Brazil’s IP system are widespread. The INPI—a “weak” agency—is under-funded and doesn’t pay examiners well. It lacks motivation and a clear mission, he adds, while struggling to deal with a “severe” patent backlog.

Despite some obvious problems, however, it may not be all doom and gloom at the INPI. The agency has sought to reduce the backlog of patents, says Philippe Bhering, partner at Bhering Advogados, and it has had some success. In the past few years, there has been a continuing drive to hire more examiners, he says, in order to provide a faster and better service.

“There were 273 patent examiners in 2010 compared with just 112 in 2005. The number of examined applications consequently jumped from 9,643 in 2005 to 15,904 five years later.”

More recently, he adds, the INPI has announced plans to hire a further 455 examiners by 2014, taking the total to 728.

In March, the INPI introduced an online patent filing system to tackle the queues of patents waiting to be served. Bhering says the agency hopes that the system, twinned with the recruitment drive, will help to cut the average time for a final decision on a patent application from 8.5 years to four.

Specifically for pharma patents, there are measures aimed at reducing waiting times. Passed in April this year, the rules mean that Brazil’s Health and Surveillance Agency—Anvisa—no longer needs to approve patents covering pharma products ahead of the INPI. Now, Anvisa will need to analyse patents in only two situations: when a drug is of interest to public health policy or when it is banned in Brazil. If Anvisa gives an application the green light, it will return to the INPI for examination. If not, the application is shelved.

Bhering notes: “The main objective of this decision is to accelerate the examination of patent applications, as the INPI now has authority to automatically examine and grant a patent.”

There are also new patent examination guidelines, Licks explains, which are more aligned with those at patent authorities such as the European Patent Office.

“The attempts are still modest, but this can be seen as a move in the right direction and a good development regarding the INPI’s patent examination.”

The trademark scene

Attempts to improve patent examination are mirrored in the trademark world, where there has been a similar recruitment drive in the past few years, leading to a “significant and continuous increase” in decisions, Bhering says.

Between 2004 and 2006, the INPI granted nearly 63,000 trademarks. Fast forward to 2010 to 2012, the figure almost triples, to 183,300.

In addition, the INPI’s online filing system, introduced in 2006, has been particularly effective, notes Bhering. Shortly after the system launched, only 12 percent of applications were filed online; six years later, this figure had jumped to 74 percent.

“Trademark applications filed online are dealt with more rapidly, and at a lower cost to the applicant compared with paper applications,” says Bhering.

Perhaps the major improvement to the trademark structure in Brazil, he notes, was a resolution passed in August this year. Designed exclusively for well-known trademarks, it establishes a standalone procedure for requesting “famous” status.

Under the old system, companies seeking famous protection had to file either an ancillary application to an opposition or an administrative nullity action against a conflicting trademark application. Now, such a request can be made at any time during the mark’s lifetime, using a petition that includes all necessary information for proving famous status.

If approved, famous status now last for 10 years, rather than five under the previous regime, unless the mark is cancelled or the decision is reversed. At the end of the 10-year period, a new request seeking famous status can be made.

“Such improvements possess a great degree of importance,” Behring notes, “as they represent Brazil’s commitment to improving the protection of IP rights.”

Testament to these improvements and the trust placed in INPI, is the agency’s new role as a trademark mediator. Since July this year, the INPI, working with the World Intellectual Property Organization (WIPO), has been mediating trademark disputes pending before the office. WIPO says the service may be especially advantageous for international parties seeking to settle related disputes in multiple jurisdictions. By December this year, says Bhering, around 50 disputes should be heard under the service.

This relationship with WIPO is minor compared with the one that many Brazilian IP owners want to see established. For a long time, there has been discussion about whether Brazil will join the WIPO-administered Madrid Protocol. Now, with a draft accession agreement before the Office of the Presidential Chief of Staff, pendingsubmission to the National Congress, Brazil’s accession is looking more likely than ever.

If Brazil accedes to the protocol, which allows trademark owners to protect their marks in more than 90 jurisdictions by filing one application, it would be the last of the BRIC countries to sign up. Accession would not only be significant in IP terms, but would have economic advantages too, making it easier for foreign companies to operate (and invest in) Brazil.

In the past 10 years, Brazil’s economy has grown substantially, and without doubt, further development will be linked to the stability of the country’s IP regime.

As Bhering notes: “Brazil’s future and its possible leadership are intrinsically connected to the role that it plays in the international economy. Even though Brazil’s economy did not grow as expected in 2013, there is still plenty of space for improvement and development.

“However, although presenting a strong and fast-growing economy, Brazil may not be considered a leader in the area of IP. To reach that status, improvement is still needed, but with its growing investment in this field and the economy in general, Brazil should occupy a more prominent position on the global IP stage.”

For Licks, there is much to be done before Brazil can be considered an IP heavyweight.

“I regret that the government still misses opportunities to improve the IP institutional framework, answering politically motivated left extremists in the government and parts of the business community that fear losing money for better products and services.

“The next presidential run will say more about the future of Brazil in relation to IP. The current political environment is supported by the investment of Brazilian companies that have a business model supported by piracy and infringement of IP rights.

“As of today, Brazil is becoming a leader in anti-IP.”

The INPI can only work with the funding and support it has from government. Despite some clear constraints, the agency is showing positive signs that it is committed to upholding the highest standards. It might be some time, but maybe, one day, Brazil will become an IP  leader.