INPI targets patent owners

The cases are akin to a US-style declaratory judgment complaint. Despite having the statutory authority (Article 56 of the patent statute) to seek the invalidation of a patent it has issued, the Brazilian patent and trademark office (INPI) has never exercised that right since its creation in 1970.

The justification given by the government is a mistake made by the INPI when granting the patents that afforded a patent term of 10 years from grant, instead of 20 years from the filing date. Brazilian patent law statutorily provides both terms, but the INPI alleges that patents filed between January 1, 1995, and May 14, 1997, known as ‘mailbox’ patents, should not be entitled to 10 years from grant.

(The term mailbox refers to the requirement of the TRIPS Agreement applying to WTO members which do not yet provide product patent protection for pharmaceuticals and for agricultural chemicals. Since January 1, 1995, when the WTO agreements entered into force, these countries have to establish a means by which applications of patents for these products can be filed.)

The mistake was acknowledged by the INPI on September 10, after it issued a biding opinion recognising that some terms of granted patents were established as 10 years from grant by mistake. The INPI states in the opinion and in the 33 lawsuits that the Brazilian IP association and some patent agents published comments agreeing with its new interpretation of the statutes.

On December 31, 1994, Decree 1.355 implemented Article 70.8 of the TRIPS Agreement, introducing mailbox patents into the Brazilian patent system, between the date of entry into force of the WTO Agreement, on January 1, 1995, and May 15, 1997, when the Brazilian patent law became effective. Before 1997, Decree 1.355 was the statutory basis for INPI regulations and fees for mailbox patents, as well as the means to enforce TRIPS Article 70.9 covering exclusive market rights by federal and state courts in Brazil.

The courts will have to decide if the statute of limitations will bar the INPI from seeking the invalidity of the patents based on an incorrect term.

The mailbox system grew in importance for the patent community when the Brazilian courts established that Articles 65.1 and 65.2 of the TRIPS Agreement were also self-implementing under Decree 1.355. The decisions delayed the implementation of the substantive standards of the TRIPS Agreement until January 1, 2000.

When the Brazilian patent statute became effective in 1997, all pending applications, including the so-called mailbox ones, benefited from the same patent terms established by the statute: 20 years from filing date or 10 years from date of grant.

However, in 1999 the Brazilian administration enacted an amendment to the patent law establishing that mailbox patents would receive preferential treatment for examination, like a fast track (Article 229-B of the patent law, as amended) with them all being examined by 2004. The same amendment established that those applications would not receive 10 years from the date of grant (Article 229, sole paragraph of the patent law, as amended).

The violation of the law that the INPI calls a mistake started when it failed to comply with the statute by not examining all mailbox applications before 2004. Years went by and most applications were not granted until around 2010.

The situation created by the Brazilian government discriminates against patent rights on the basis of the field of technology, which is not allowed by domestic legislation and by international treaties.

Due to the failure of the Brazilian administration to comply with the country’s laws, the new interpretation of the INPI suggests that the 1999 changes to the patent law resulted in a lesser degree of consistency with the provisions of Article 27 of the TRIPS Agreement.

The acts of the Brazilian government and what is being asked by the INPI amount to a violation of the country’s commitments under the TRIPS Agreement Articles 71.1; 33.1; 65.5; 70.2; 70.4; 70.7; and 70.8.

The courts will have to decide if the statute of limitations will bar the INPI from seeking the invalidity of the patents based on an incorrect term, as declaratory judgment actions in Brazil are limited by Article 47 of the patent statute at causes of action relating to the validity of the claims.

The lawsuits have been perceived as a message to the patent community about the current policy of the Brazilian administration. Now, the rule of law and the courts will have an important role in showing that the country is able to have a functional patent system.