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1 May 2012Big PharmaOtto Licks and Marcela Trigo

On the right track: the road to innovation in Brazil

Currently the world’s sixth-largest economy and one of the most promising for the 21st century, Brazil is now facing a big challenge to ensure innovation and intellectual property grow at a similar rate, key to a solid economic growth and to ensure the country will be able to keep up with other players in the global economy. IP laws and practices are on the top of the Brazilian government’s agenda.

In a recent public speech during a meeting with business leaders, Brazil’s President Dilma Rousseff promised to “modify and modernise the INPI [Brazilian Patent Office]”. Although the Brazilian IP laws are considered good, obtaining and enforcing IP rights still seems difficult, with a major impact on investment and innovation by local Brazilian companies and foreigners.

In the patent procurement area, for instance, the average time for obtaining a patent before the INPI is approximately seven years. And for some technologies such as software-implemented inventions and biotechnology, it takes more than 10 years, despite the small backlog of approximately 170,000 pending patent applications. Between March and May 2012 the INPI granted patents that had been filed in these years:

  • 2000—2001 for electronics and telecommunications
     
  • 2000—2002 for pharmaceuticals and cosmetics
     
  • 2003—2005 for mechanics, chemistry and medical devices
     
  • 2004—2005 for other engineering arts, including oil driling.

In addition, there is still a severe anti-patent policy within the government and the National Congress, which are constantly lobbied by local interests. The national industry still fights against the counterfeit mentality that floods the local markets.

According to the INPI, the problems of time and backlog are not a consequence of low productivity (on average, there are fewer than three decisions a month per examiner), but the result of a shortage of human resources and infrastructure. The situation is so severe that the INPI does not even make its issued patents available to the public. In Brazil, only the patent owner will receive a hard copy of its issued patent. No printed copies or electronic files are made available to the public, even for a fee.

Nevertheless, while the European Patent Office has about 4,000 patent examiners and the US Patent and Trademark Office has 5,500, the INPI has 273. And it is worth mentioning that this number has almost doubled in the last few years. The number of patent filings per year has stabilised at about 30,000 but the number of issued patents per year is around 3,000.

Despite the current situation, improvements have been made in the past few years, especially within the INPI.

The most recent and visible development was the modernisation of the INPI’s headquarters. On May 10, 2012, the Minister of Development, Industry and Foreign Trade inaugurated the office’s new address, and on the same date the minister announced that administrative measures will be taken and a tender to hire 250 new public servants will take place later this year. Among them, 100 will be patent and trademark examiners.

“OF NEARLY 30,000 PATENT APPLICATIONS TO INPI PER YEAR, 6,000 ARE NATIONAL. THE INPI ESTIMATES THAT BETWEEN 2007 AND 2009, 10 PERCENT OF NATIONAL PATENT APPLICATIONS WERE GREEN.”

Another initiative of the INPI to reduce the backlog and also contribute to foster innovation is the Green Technology Highway, launched on April 17, 2012. This is a pilot programme for green patents, in which the period of examination of patent applications related to clean technologies will fall to less than two years. Eighteen applications have already been enrolled in the Green Technology Highway, which promises a response in two years.

According to the INPI’s programme manager, the office will consider only technologies that “reduce the impact of climate change, withdraw or emit less CO2 from the atmosphere”. Besides having to follow those precepts, the inventions should be related to waste management, alternative energy, agriculture, and transport or energy conservation.

Only 500 applications will be accepted, not including applications made through the  Patent Cooperation Treaty (PCT)—the majority of international patent applications. The restriction aims to encourage Brazilian companies and inventors. Of nearly 30,000 patent applications to the INPI per year, 6,000 are national.

The INPI estimates that between 2007 and 2009, 10 percent of national patent applications were green. Most inventions were related to alternative energies such as biofuels, waste water treatment (industrial and domestic waste) and water reuse.

For the near future, the commissioner has announced that the INPI’s budget will be reviewed and funds will be released in order to allow the entity to maintain a portfolio of strategic projects to work on the backlog forecast for this year. The current goal is having a patent granted within four years (average time).

Starting on May 15, 2012, patent applications filed in Brazil will have the same search report and preliminary examination report provided by the PCT to international patent applications. This will allow national patent owners better to predict the patentability of their inventions, allowing for more flexibility and planning.

Also from this date on, utility models will have preferential treatment in the examination line. New guidelines for examining them are currently being discussed in a public consultation. Utility model patents relate to inventions directed to new shapes or arrangements and involve an inventive act that results in functional improvement in its use or its manufacturing, corresponding to 20 percent of all patents and 50 percent of those filed by Brazilian nationals.

From July, online patent filings will be possible. Today, the INPI only accepts paper for patent applications, which contributes to the backlog. With electronic filing, the whole process is computerised and, therefore, faster. The e-Patents system, which will allow patenting via the Internet, is being developed based on the European model.

These and other recent advancements in the IP area have already been noted by the international community. A recent report prepared by the American Chamber of Commerce reveals an increase of 10 percent in positive evaluations of the INPI by industry in the last year, although delays are still listed as the worst problem by 46 percent of the interviewed users.

Further, after several years on the US Trade Representative's priority watch list, the US removed Brazil from the list of priority countries under observation with regard to violations of IP, noting that advances have been made.

However, many changes remain to be done. While the INPI seeks modernisation, the Brazilian National Congress has two pending law proposals seeking to exclude from patentable subject matter second use of known compounds and polymorphs. This can be seen as a regression, especially taking into consideration that, in developed countries, a prevailing tendency seems to exist in the patent laws to enlarge patent-eligible subject matter.

Also important is the attack on the constitutionality of the remaining pipeline patents, which is currently pending before Brazil's Supreme Court. A decision declaring the unconstitutionality of the pipeline patent system would affect approximately 400 pipeline patents still in force and 121 pipeline applications, many of them covering blockbuster drugs.

This would have a great impact on the research-based pharmaceutical industry and also create lots of uncertainty in the international community regarding Brazil’s IP system as a whole.

Another important point is the ambiguity regarding the term of protection of data package exclusivity. The necessary tests to have a marketing approval granted for a reference drug are the result of considerable effort and investment of economic resources, besides several years of research to ensure compliance with the requirements of safety and efficacy.

Brazil pledged to provide protection to this data by signing the WTO TRIPs Agreement and also included a specific provision in its current Patent Act in this regard. Nevertheless, the Brazilian Food and Drug Agency (ANVISA) explicitly infringes data package rights. This discussion is also pending before Brazil's Supreme Court and promises to set the law in this area.

Otto Licks is a partner at Licks Advogados. He can be contacted at: otto.licks@lickslegal.com

Marcela Trigo is a partner at Licks Advogados. She can be contacted at: marcela.trigo@lickslegal.com