The Repeal of the Sole Paragraph of Article 40 of the Brazilian Industrial Property Law: The Supreme Federal Court’s Decision

In our previous article, entitled “The Suspension of the Application of the Sole Paragraph of Article 40 of the Brazilian Industrial Property Law,” we discussed the preliminary injunction issued by Justice Dias Toffoli in Direct Action of Unconstitutionality No. 5,529, which was then pending before the Brazilian Supreme Federal Court (STF).

The matter was ultimately resolved on May 12, 2021, when the Court, by majority vote, declared the sole paragraph of Article 40 of the Brazilian Industrial Property Law (Law No. 9,279/1996) unconstitutional, with prospective adjustment of the effects of the decision.

Justice Toffoli’s proposal concerning the modulation of effects was accepted by the majority of the Court and will have the following practical consequences:¹

According to the decision (pp. 11–12):²

“The Office conducted a survey of the total number of patents currently in force whose terms had been extended pursuant to the sole paragraph of Article 40 of the Brazilian Industrial Property Law, based on a projection through December 31, 2021 (that is, a conservative calculation was made, including situations in which, if the patent were granted by the end of the year, its term would be extended), resulting in a total of 30,648 patents (Doc. 232, p. 27). Therefore, this is the total number of patents that may be affected by the declaration of unconstitutionality of Article 40 of the Industrial Property Law, already approved by a majority vote. Of the total 30,648 patents in force with an extended term resulting from the sole paragraph of Article 40 of the Industrial Property Law (according to the INPI’s estimate), only 3,435 (11.21%) relate to the pharmaceutical sector. The remaining 27,213 (88.79%) relate to all other technological fields, for which I propose the modulation of effects. This distribution is clearly shown in the following chart presented by the INPI (Doc. 232, p. 27). Indeed, when determining the modulation of effects, we cannot disregard the factual circumstances underlying the application of the provision. We are dealing with a provision that remained in force for 25 years, and it is therefore essential to consider the systemic risks arising from a declaration of unconstitutionality in this case, as noted by my fellow Justices during the discussion held at the end of the May 6, 2021 session, when the required majority was reached to declare the sole paragraph of Article 40 unconstitutional. For this reason, I propose modulating the effects of the declaration of unconstitutionality of the sole paragraph of Article 40 with respect to all other situations (27,213 patents – 88.79% of the universe considered herein), granting the decision prospective effects (ex nunc), that is, from the publication of the minutes of this judgment onward.”

Accordingly, in compliance with the Brazilian Supreme Federal Court’s decision, the INPI has been gradually adjusting the terms of the affected patents, publishing and making available amended letters patent and, in some cases, declaring the expiration of patents that had previously remained in force under the rule established by the sole paragraph of Article 40.

¹ Available at: http://portal.stf.jus.br/processos/detalhe.asp?incidente=4984195² Ibid.