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29 September 2014PatentsIgor Simões and Ana Góis

Patent reform: legal certainty is under threat

Two congressmen from the Brazilian House of Representatives intend to amend some of the main articles in the current industrial property law (IPL) as a way of reforming the patent system. According to the bill’s authors, Newton Lima and the politician known simply as Dr. Rosinha, both affiliated to the Workers’ Party, what is being proposed follows the example of other countries that have been adjusting their policies and procedures that hamper the granting of patents.

Their bill 5402/2013 is intended to initiate a legislative review of patent rights and other related measures. The main idea is to strengthen some principles that already exist. For example, two new items and a sole paragraph would be added to the non-statutory matter provided by Article 10:

• Article 10—The following are regarded neither as inventions nor as utility models:

- X—any new property or new use of a known substance or the mere use of a known process, unless the known process results in a new product;

- XI—new forms of known substances, which do not result in the enhancement of the known efficacy of the substance.

• Sole paragraph—For the purposes of this article, salts, esters, ethers, polymorphs, metabolites, pure form, particle size, isomers, mixtures of isomers, complexes, derivatives and other combinations of the known substance must be regarded as the same substance, provided that they do not differ significantly in properties regarding their efficacy.

The above cited amendment is worrying because it may cause the extinction of second medical use inventions. This will surprise industry, both nationally and internationally, as the exploitation of a known drug would no longer be allowed.

The Brazilian patent office (INPI) understands that the use of a medicament for the treatment of a certain disease cannot be industrially applicable and, as a result, it cannot afford patent protection.

Notwithstanding this, the INPI currently holds that the use of a compound or composition for the preparation of a pharmaceutical composition is considered to be industrially applicable and patentable, provided that the claims are drafted as the Swiss style of second medical use: “use of compound X for the preparation of a pharmaceutical composition for the treatment of disease Y”.

The proposed amendment would incur much larger costs because to create a new drug it is necessary to create a new molecule, and to create a new molecule hundreds of millions of dollars have to be spent. Following this line of thought, an amendment to Article 229-C proposes that the granting of patents for pharmaceutical products and processes depends on the prior approval of the Brazilian Health Surveillance Agency (ANVISA) in the light of public health. This, along with the INPI’s slowness, will cause an even bigger delay in administrative procedures for applications.

Change of emphasis

The requirements of “novelty” and “inventive step” also get a new understanding, stating that only high-quality patents must be granted. It means a specific amendment to Articles 13 and 14, adding that:

• Article 13—An invention shall be regarded as involving an inventive step when, in the judgement of a person skilled in the art, it neither evidently nor obviously derives from the state of the art, and if it represents a significant technical advance over the state of the art; and

• Article 14—A utility model shall be regarded as involving an inventive act when, in the judgement of a person skilled in the art, it neither commonly nor ordinarily derives from the state of the art, and if it represents a technical advance over the state of the art.

These amendments directly affect the granting of patents in Brazil as the requirements for an invention to be considered novel will be much more demanding. It is something that will concern applicants who wish to file patent applications in Brazil.

Needless to say, such amendments do not find support in international treaties signed by Brazil, such as the World Trade Organization’s TRIPS Agreement, and would cause fewer patents to be granted, provoking an even bigger delay in the development of the country, a decrease in investments and a waste of time and money for the companies that file patent applications and may not have them allowed.

Another important issue is the amendment to Article 31, which argues that after the patent application is published and until the end of the examination, an opposition can be filed by any person at any time, even after the patent is granted. It may affect the applicant in the same way as it would result in delay and obstruction, hindering the granting of patents once more.

Patent term

What is being questioned most, however, is the revocation of Article 40, which establishes the patent term of patents of invention and utility models. According to the current IPL, the invention patent term is limited to 20 years from the filing date as provided by the TRIPS Agreement.

However, Brazilian IPL as currently drafted determines that the term of a patent shall not be less than ten years from the date it is granted, except for cases where the INPI is prevented from examining the application due to lawsuits or for force majeure reasons:

• Article 40—A patent of invention will have a term of 20 years and a utility model patent a term of 15 years, counted from the filing date.

• Sole paragraph—The term will not be less than ten years for patents of invention and seven years for utility model patents, counted from grant, except when the INPI is prevented from proceeding with the examination as to the merit of the application, due to a proven pendente lite or for reasons of force majeure.

"If a company does not feel supported by a legal system that properly regulates conduct with certainty, it will not be interested in bringing its inventions to the country."

Considering the revocation of Article 40, the minimum patent term of ten years counted as from the granting date would also be abolished. This means that if the applicant filed a patent application in Brazil on August 13, 2014, and the INPI took 13 years to analyse the application, without external obstruction, and finally granted the patent, its term would be of seven years, which is how long it takes to reach 20.

According to the provisos of the sole paragraph of Article 40, the expiry date would be three years more. The big issue of this proposed amendment is that patent owners would end up paying for someone else’s mistakes. The real reason why a patent takes so long to be granted in Brazil is the lack of investment in the Brazilian patent office, causing a reduced number of examiners and a huge backlog.

These changes have raised doubts concerning one essential concept for foreign companies wishing to file applications in Brazil: legal certainty. If a company does not feel supported by a legal system that properly regulates conduct with certainty, it will not be interested in bringing its inventions to the country.

There must be an assurance that the decisions made are lawful and fair, and if changes in the law keep happening out of nowhere, the legal uncertainty will most definitely remain.

As the patent will have a reduced and unfixed term (which is what makes it unknown), the product may or may not have a significant time in the market. This instability causes difficulties when it comes to the exploitation of the product by competitors, and may reduce investment and technological and scientific development.

Brazil is in a presidential election year and, although that makes it difficult to predict how the law will be drafted in future, it is important to note how the different candidates intend to change the IP system.

If the current president, Dilma Rousseff, who is affiliated to the Workers’ Party, as are the authors of the bill, is re-elected, the amendments to the law have a higher chance of being approved, as the party in question is fortified by the support of the country’s leader.

This bill would cause, in many ways, a setback for the country’s economy and might put Brazil in an even more unfavourable position regarding patent applications. If the new amendments are approved, the doubt (and, especially, the fear) arises: how much will we regress? 

Igor Simões is a managing partner at the IP firm Simões Intellectual Property. He can be contacted at: isimoes@simoes-ip.com.br

Ana Góis is an associate at Simões Intellectual Property She can be contacted at: agois@simoes-ip.com.br

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