On the cusp of change: patent landscape overhaul is good news for healthcare innovation in Brazil

The end of the minimum 10-year validity term for utility patents in Brazil not only gained the world’s attention in 2021 but also welcomed in a new chapter in patent-related discussions in Brazil. The Supreme Court’s decision in the ADI No. 5529, which declared the unconstitutionality of the sole paragraph of Article 40 of the Brazilian Patent Statute (Law No. 9,279/96), demanded the immediate reduction of the patent term for pharmaceutical products and processes, as well as for health-related devices and materials.

This outcome has undoubtedly impacted the life sciences industry, especially the companies investing in healthcare in Brazil, the largest healthcare market in Latin America. A storm of uncertainty and vulnerability has pummeled the main stakeholders and enthusiasts of innovation, clearing the way for the generics.

Regarding the practical effects of this decision – still in evolution – besides the perception of the weakening of patent rights before the judiciary, international rights holders may be aware that several initiatives introduced after the turmoil caused by the Supreme Court’s decision are aimed at clearing the way for innovation and making the largest economy in Latin America more hospitable to industrialisation once again.

Besides the inauguration of new wave of patent-related litigation in Brazil – the patent term adjustment lawsuits aiming to compensate the patent holders for unreasonable delays by the Brazilian National Institute of Industrial Property (BRPTO), together with recent decisions granting preliminary injunctions (PIs) to keep patents alive (eg, Vemlidy from Gilead, PI granted on 8 May 2023) until the case is ruled (even though the Federal Court of Appeals and Supreme Court’s prognostic is not good) – new bills directed to change the Patent Statute to expressly provide for the patent extension term have been proposed to Congress (eg, Bill No. 2056/2022 and Bill No. 1471/2023).

Furthermore, we have seen recent movements by the government to make the Brazilian patent system faster and more aligned with the most developed countries. Recently, especially within the past few months, the restructuring of the BRPTO, now belonging to the Ministry of Development, Industry, Commerce and Services (MDIC), and the measures adopted by the BRPTO aiming to be closer to the practices of the IP5 patent offices have been noteworthy.

Discussions on patent framework gained new relevance in 2022 in Brazil, after multisectoral groups formed by the Interministerial Group on Intellectual Property (GIPI) and started actively working on a revision of the Brazilian Industrial Property Statute (Law No. 9,279/96). This Statute establishes rules for patents, trademarks, industrial designs, geographical indications and appellations of origin, and unfair competition.

GIPI was created in 2019 to coordinate the federal government’s engagement in intellectual property-related matters and the implementation of the National Strategy for Intellectual Property (ENPI). Under the coordination of the former Ministry of Economy (now the MDIC) and composed by several public administration entities, the group implemented, in 2021, the first action plan of the ENPI, structured according to seven strategic axes, to achieve an effective and balanced IP system, as well as increasing competitiveness and economic andsocial development, both nationally and in relation to other jurisdictions. The seven strategic axes are:

1. IP for competitiveness and development;
2. dissemination, training and capacity-building in IP;
3. governance and institutional strengthening;
4. modernisation of legal and infra-legal frameworks;
5. compliance and legal security;
6. intelligence and vision for the future; and
7. insertion of Brazil in the global IP system.

GIPI’s most recent measure was the creation of the technical groups to: evaluate and identify points that could be updated in Brazil’s IP regulatory framework; and evaluate and present measures related to the control and traceability of the origin of the goods and services protected by geographical indications and to the mechanisms that monitor the use of the respective Brazilian stamps. For the purpose of coordinating the efforts on the revision of the IP regulatory framework, 13 thematic commissions were established, five of which focused on patent discussions.

GIPI recently released a final report summarising the themes discussed within the 13 commissions during July 2022 and January 2023, as well as highlighting the conclusions of the work. Several public and private entities were involved and collaborated to collect data, map provisions to be revised and draft conclusions.

The group analysed 46 suggestions for normative changes and 17 suggestions for administrative adjustments. There was a consensus among the various participants that the BRPTO must be guaranteed budget independency and certain financial conditions for it to perform its activities. Another common conclusion is that IP knowledge shall be a priority in Brazil and shall be disseminated through educational institutions. Moreover, incentivising new patent filings in the country shall be another priority measure.

Another sign of an advance in the IP system in Brazil is the recent initiatives being supported by the federal government on IP mentoring for women, small enterprises and other stakeholders. These programmes comprise the actions envisioned in the National Strategy for Intellectual Property.

On 11 April 2023, the BRPTO published the Management Report for 2022, which highlights the results achieved in view of the strategic objectives and priorities defined by the patent and trademark office in the action plan for that year. The landscape presented indicates advances, especially in projects focused on productivity in the activities of examination of applications for industrial property rights.

In the field of patents, 27,139 applications were filed, suggesting stability in relation to the previous year, in which there were 26,921 filings. Of these filings, 75.2% were made by foreigners (among these, the foreigners from the United States rank first, with 28.6% of filings, then China with 6%, followed by Germany with 5.9%).

As for the examination of the applications, there was a significant reduction in the length of decisions granting and rejecting applications compared to in 2021: considering the calculation in the examination request, the average time for BRPTO to reach a decision was 3.9 years (in the action plan for 2022, the target was only one-tenth less: 3.8 years), which represents a decrease of 22% compared to the previous year, in which the average was five years.

The figures positively reflect the patent and trademark office’s efforts to fight the patent backlog, which began in 2019. By the end of 2022, the BRPTO had examined more than 92% of the backlog of patent applications pending examination filed by 2016.

Recent efforts of the acting President of the BRPTO, Julio César Moreira, and the team running the office can also be noticed this year. On 15 May 2023, they had a meeting with the Chief Officer of the MDIC, Pedro Guerra, to present the Strategic Plan for 2023–2026. A compromise between quality and agility in the final decision was highlighted by the BRPTO’s President.

The nine strategic purposes of this plan are:

1. optimising quality and agility when granting and registering industrial property rights, and being referenced internationally;
2. promoting the culture and strategic use of industrial property for the competitiveness, innovation and development of Brazil;
3. consolidating the insertion of Brazil as a protagonist in the international system of industrial property;
4. raising knowledge and recognition of the value of the BRPTO to society;
5. deepening the digital transformation with a focus on improving performance and service to users;
6. ensuring sustainable financing for the modernisation and expansion of service delivery capacity;
7. ensuring the reconfiguration and retention of the workforce is scaled to meet growing demand and sustain high performance in the delivery of services;
8. providing efficient and sustainable economic support for logistics and infrastructure; and
9. improving governance and management practices, and institutional relationships.

Additionally, important developments are taking place inside the BRPTO to address some legal insecurities around the patentability issues. One example is the recent technical opinion issued by the BRPTO on 9 May 2023 (INPI/CPAPD technical opinion No. 01/2023), which provides guidance on the patentability of inventions related to transgenic plants, focusing on elite events.

The newly published technical opinion results from the revision of a technical opinion published in March 2022, which was submitted for public consultation. The main point that led to the public consultation was the interpretation that everything that has been inserted into a cell, including DNA molecules, would be part of a living being. If it was inside the plant, it would not be patentable. The BRPTO modified this wording, making it clear that DNA molecules, isolated or not, may be eligible to patent protection, provided they are different from natural molecules.

Additionally, as plants or parts thereof are not eligible for patent protection in Brazil, the BRPTO provided guidance on how patent applications directed to inventions in this technical field would be analysed. In this regard, the BRPTO created the concept of main and accessory inventions. The main invention is the plant itself, and other potentially claimed subject matter are the accessory inventions. It has been now established that, to evaluate the inventive step of accessory invention (eg, methods and constructs), it will be necessary to discuss the inventive step of the transgenic plant, which is the main invention and the core of the inventive concept. However, these accessory inventions would still need to be examined for the other patentability criteria.

Finally, unlike the initial wording that “it would always be necessary” to deposit seeds in an international depositary authority (IDA) when the accessory invention is related to transgenic plants, the technical note now clarifies that only when the application claims subject matter that, at the time of the deposit or priority, is obtained by processes involving randomness will it be necessary to deposit seeds or equivalents at an IDA for descriptive sufficiency purposes.

INPI/CPAPD technical opinion No. 01/2023 aimed to bring more clarity and homogeneity to the examiners on how applications pertaining to the plant biotechnology field will be examined, which can be considered highly positive, taking into account that agriculture has been one of the main bases of the Brazilian economy.

Regarding what to expect from the new federal government, especially as it is the beginning of the new tenure of President Luiz Inacio Lula da Silva, on 25 May 2023, Lula and the Vice President, Geraldo Alckmin, authored an article in the Brazilian newspaper Valor Econômico, in which they affirmed that deindustrialisation must be defeated, and they signaled that potential priorities for the government would be the health, defence, semiconductors and bio-innovation industries.

Sustainable development is at the core of all discussions, especially in the life sciences sector, including potential for low-carbon industries, bio-economy and the adoption of new technologies for the green transition. Projections are optimistic: for instance, according to studies from the Brazilian Bioinnovation Association, there is potential to achieve additional industrial revenues of around $284 billion per year by 2050, with the full implementation of the bio-economy in national production, provided that public policies, carbon market regulations and funding are duly coordinated, consolidating a national bio-economy strategy. This preliminary assessment does not consider the enormous economic potential existing in other forms of bio-innovation, based on the exploration of Brazilian biodiversity.

Conclusion

Brazil is becoming a more favourable jurisdiction for patentees, which is demonstrated by developments that could boost companies’ prospects in the country.

In the past few years, the BRPTO employed a great effort and has been successful in reducing its patent backlog by roughly 92%. Also, a significant reduction in the length for a decision on the grant or rejection of the application has been observed.

Initiatives to modernise the country’s patent system and foster the innovation ecosystem are being adopted as well. The 10-year ENPI actions are starting to bear fruit, with the results arising from GIPI’s efforts. The BRPTO has also announced its Strategic Plan for 2023–2026, highlighting a compromise between quality and agility in the final decisions.

Finally, the existence of bills (eg, Bills No. 2056/2022 and No. 1471/2023) seeking to introduce new patent term adjustment rights to allow companies affected by patent office delays to have the length of their exclusivities extended accordingly is also a positive development. These legislative initiatives, associated with the measures being adopted within the executive and judiciary branches, confirm the awareness regarding the importance to respect IP rights and to promote a secure environment for attracting innovative companies to bring their IP assets to Brazil and contribute to our country’s social, technological and economic development.