The Suspension of the Application of the Sole Paragraph of Article 40 of the Brazilian Industrial Property Law
- Fernanda Tissot
- Apr 22, 2021
- 4 min read
Recently, Justice Dias Toffoli issued a preliminary ruling concerning the constitutionality of the sole paragraph of Article 40 of Law No. 9,279/1996, the Brazilian Industrial Property Law (LPI). The decision prompted significant debate regarding its grounds, with relevant arguments being raised both in favor of and against the constitutionality of the provision.
The sole paragraph of Article 40 of the LPI provides that the term of a patent shall not be less than ten years for an invention patent and seven years for a utility model patent, counted from the date of grant:
Article 40. An invention patent shall remain in force for a period of twenty years and a utility model patent for a period of fifteen years from the filing date.
Sole Paragraph. The term shall not be less than ten years for an invention patent and seven years for a utility model patent, counted from the date of grant, except where the INPI is prevented from carrying out the substantive examination of the application due to proven pending judicial proceedings or force majeure.
This provision was included in Brazilian legislation in order to remedy a certain “unfairness” caused by delays in patent examination by the Brazilian Patent and Trademark Office (INPI), commonly referred to as the patent backlog.
Patent applications take, on average, eleven years to be examined and granted, according to 2019 data, and in several technical fields the average period is even longer. The purpose of the provision was therefore to provide some degree of protection to inventors whose patentability examination was affected by delays at the INPI, ensuring them at least ten or seven years of protection following grant, regardless of the time taken to examine the application.
As previously mentioned, the legality of the sole paragraph of Article 40 has been the subject of considerable criticism, ultimately leading to the filing of Direct Action of Unconstitutionality No. 5,529 before the Brazilian Supreme Federal Court (STF), seeking a declaration that the provision is unconstitutional.
Those who support the unconstitutionality of the sole paragraph of Article 40, such as the late Professor Denis Barbosa, point out that, in the pharmaceutical sector, 92% of patents in this technological field benefited from the extension provided for in the provision,¹ meaning that what was intended to be an exception effectively became the rule.
On the other hand, authors such as Nuno Pires de Carvalho² emphasize that the issue of patent terms should be considered from the perspective that minimum patent protection was necessary for Brazil to gain access to international markets, enabling the country to join the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) in 1994 and the World Trade Organization (WTO), thereby contributing to Brazil’s subsequent economic development.
Still with regard to TRIPS, Article 33 of the Agreement provides that Members must ensure a patent term of no less than twenty years from the filing date, while Article 62.2 states that Members “shall ensure that the procedures for the grant or registration permit the granting or registration of the right within a reasonable period of time so as to avoid unwarranted curtailment of the period of protection.”
Notwithstanding the extensive debate surrounding the issue, the fact is that, in a preliminary ruling issued by Justice Dias Toffoli on April 7, 2021, and subsequently clarified on April 8, 2021, the Justice partially granted the request for urgent interim relief and suspended the effectiveness of the sole paragraph of Article 40 of the LPI solely with respect to patents relating to pharmaceutical products and processes and healthcare equipment and/or materials, with ex nunc effects, that is, prospective effects.
According to the decision:
“• Patents falling within this category that, as of yesterday (April 7, 2021), had already been granted with the extension provided for in the sole paragraph of Article 40 shall remain in force until a possible contrary decision by the Plenary Court, since the preliminary injunction does not have retroactive effect and, consequently, acts carried out under the provision shall remain unaffected for the time being;• As of today (April 8, 2021), when granting a patent falling within the category established in the decision, the INPI may no longer apply the extension provided for in the challenged provision. Accordingly, the exclusive right shall remain in force for the periods set forth in the main provision of Article 40 (twenty years for an invention patent and fifteen years for a utility model patent, counted from the filing date). This applies both to applications already filed and awaiting a decision by the INPI and to new applications.”
Following notification of the decision to the INPI on April 15, 2021, the Institute published the following statement in the Industrial Property Gazette, together with a list of the affected patents:
“In compliance with the preliminary ruling issued in ADI 5529 on April 7, 2021, by Justice Dias Toffoli, the provision contained in the sole paragraph of Article 40 of Law No. 9,279 shall not apply to patents granted from that date onward relating to pharmaceutical products and processes and healthcare equipment and/or materials. Patents relating to pharmaceutical products and processes shall be identified according to the classification applicable to Article 229-C, while healthcare equipment and materials shall be identified according to the claimed subject matter. […]”
Should the STF Plenary ultimately uphold the claims filed by the Office of the Prosecutor General of the Republic (PGR), several possible scenarios may arise. The one that attracts the greatest attention is a potential decision with ex tunc effects—that is, retroactive effects—without any modulation of effects, as Justice Dias Toffoli had already indicated might be his future position.
Such an outcome would certainly generate further debate regarding its impact on the pharmaceutical industry and on agreements already entered into for the exploitation of patents that, until then, remained in force.
We must therefore await the “next chapters” of this long-running discussion. What is already clear, however, is that, as of the April 8, 2021 decision, patents granted for pharmaceutical products and processes and healthcare equipment and/or materials will no longer benefit from the extension provided for in the sole paragraph of Article 40, whether in relation to new applications or those already pending before the INPI.
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