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PATENT NEWS FROM BRAZIL

PIPELINE PATENTS, EXCEPTION TO PATENT RIGHTS AND


GENERICS*
Rana Gosain**

This article will give readers an update as to developments in patent rights in Brazil, and takes a look
at how recent interpretations and Government meddling may have benefited or penalised foreign
applicants.
PIPELINE PROTECTION TERM
Brazils Patent Law was enacted on May 15, 1996, but the full provisions of the Law only went into
effect on May 14, 1997. During this interim period the transitional provisions of the Law enabled
foreign companies to file applications covering inventions directed to chemical, pharmaceutical and
food products, as well as processes for the manufacture and/or modification of the pharmaceutical and
food products. This transitory procedure became known as Pipeline protection which was afforded
under Article 230 of the Patent Law. Once the Law went into effect on May 14, 1997 the Pipeline
ceased to exist.
Article 230 required pipeline applicants to indicate, in their filing petition, the date of the first
application made with the further condition that the corresponding foreign application would have to
issue as a patent. In the absence of the corresponding foreign patent, no patent rights would be granted
in Brazil. The patent eventually granted in Brazil would be assured a term equal to the remaining term
of protection granted in the country where the application was first filed, to be counted as from the
filing date. In Brazil a patent term is limited to 20 years.
The Brazilian PTO has recently examined pipeline cases where the first application filed in the country
of origin has either been abandoned or withdrawn in favour of a second application which eventually
proceeds to grant, as frequently occurs in the United States, Europe and Japan. In such cases, the PTO
has taken into consideration the following provision (freely translated) of the Patent Law:
Article 7 sole paragraph: The withdrawal of an earlier application, which has not produced effects,
shall confer priority on the immediately subsequent application.
It can be seen, then, that a patent application which has not generated any effect can be withdrawn
and filed again at a later date. To further strengthen this understanding an opinion rendered by the
Attorney General on June 20th of 2000 allowed that the first application referred to by the Law is that
which has in fact been prosecuted and for which a patent has been issued in the country of origin. The
President of Brazils PTO has agreed with the opinion and confirmed that where a second application
Rio de Janeiro: Av. Repblica do Chile, 230/6 floor - Centro - Rio de Janeiro/RJ - Brazil
CEP 20031 -170 Tel: (55 21) 2524 -4212 Fax: (55 21) 2524 -3344
S o P a u l o : Rua Iguatemi, 192/73 Itaim Bibi - So Paulo/SP - B r a z i l
CEP 01451 -010 Tel/fax: (55 11) 3079 -9107
law@daniel -advogados.com.br g www.daniel -advogados.com.br

has replaced an application of no effect, and a patent has issued on the former, the term of protection
of the patent, shall start from the filing date of the second application.

In short, pipeline applications have gained an additional term of protection in those cases where the
original foreign application has been replaced by a second application with a later filing date in the
country of origin.
PTO officials have also let it be known, off the record, that in similar circumstances previously granted
pipeline patents could also benefit from the Attorney Generals opinion and that the Letters Patent
would have to be submitted for endorsement.
PATENT RIGHTS EXCEPTION
Article 43 of the Patent Law, which deals with exceptions to the enforcement of patent rights, was
recently altered by a Presidential Provisional Measure through the inclusion of a new item. The
amendment (Item VII), freely translated, states that acts related to an invention protected by a patent,
carried out by unauthorised parties, and intended exclusively to obtain information, data and test
results, for the purpose of obtaining commercial approval in Brazil, or elsewhere, for the production
and sale of the patented product after the expiry of the terms set forth in Article 40 of the Law shall not
infringe the rights conferred to the patent owner.
This amendment looks to enable manufacturers, and particularly generic manufacturers, to access
regulatory data so that once the patent expires they can be ready to register and sell generic products in
the local market. Item VII is consistent with the United States Bolar exemption ruling which provides
that such acts do not constitute infringement. Europe has also seen at least one similar Court decision
based on the Bolar vs. Roche case.
A Brazilian Presidential Provisional Measure, a constitutional relic of darker days, carries a 30 day
validity term and is immediately effective for all legal purposes. A Provisional Measure is subject to
Congressional approval or rejection but its validity can be extended by simple renewal every 30 days
until the Congress gets around to voting the respective measure, which may take years or even,
theoretically, never.
In issuing this amendment the Brazilian Government may or not have considered the important related
issue of extension terms for pharmaceutical patents to which these exemptions have been considered
related.
As is well known, several countries have amended legislation to provide 5 year extensions to
pharmaceutical patentees in compensation for the excessive delays incurred in obtaining registration.
At the same time several countries, Australia for example, have also introduced the spring board
provisions, thus enabling generic manufacturers to obtain early registration during the 5 year extension
term of the original patent. Such countries have apparently looked to stimulate both the innovative and
generic manufacturers.
Brazils position on patent extension for pharmaceutical patents is not clear and it seemingly has only
taken the side of the generic manufacturer thus providing fertile ground for dissension in future rulings
by the PTO and the Courts.
2

GENERICS
There is no denying the Brazilian Governments desire to provide the legislation that will allow
cheaper medication to be made available to the countrys majority poor population. Nor, it must be
said, can the lobbying strength of the pharmaceutical generic manufacturers be underestimated.
In February 1999 the Generic Law was enacted to regulate the manufacture and generic versions of
patented drugs that have come off patents. A generic pharmaceutical is defined as being a product
similar to a standard reference medicine or to an innovative product, and may be interchangeable with
the latter.
The generic product should only be produced following the expiry of the respective original or
innovative products patent. Apart from the requirements that will guarantee generic product quality,
safety and efficacy, which are dealt with below, Brazil has imposed other measures to ensure the
success of the law. For example, pharmaceutical companies must indicate on the packaging of a
medical product the name of the active ingredient in a size of print that cannot be less than 50% of that
of the actual trademark name of the product.
The Achilles heel of the Governments efforts has turned out to be the mandatory safety requirements
for generic pharmaceuticals. The required bio-equivalency and bio-availability tests, which determine
qualitative and quantitative drug composition for the former, and speed and degree of absorption for
the latter, are becoming prohibitively expensive for the manufacturers. The absence of fully qualified
laboratories and state-of-the-art equipment, capable of providing the necessary analysis and
certification, have resulted in a drastic reduction in the Governments original expectations of a flood
of cheap, generic medication. Since the introduction of the Law only a little over forty generic
products have reached the market and the Government has now declared an intention to import
generics from abroad.
It would seem that in practice, and in the short term, generic pharmaceuticals have not produced the
originally envisaged immediate economic threat to traditional pharmaceutical manufacturers. However
it must be remembered that a majority of Brazils population may be considered poor, and it is more
than likely that the Government will look to take further measures to increase the availability of
cheaper generic medication.
BRAZIL AND TRIPS
Foreign pharmaceutical industries have been discouraged by the Brazilian Governments posture of
thwarting already secured patent rights and stalling the concession of pending IP rights. These
developments have led to local representative associations strongly contesting the constitutionality of a
previous Presidential Provisional Measure which not only does not acknowledge January 1, 1995 or
January 1, 2000 as the applicability dates of TRIPS in Brazil, but which also alters an important
transitional provision of Brazils Patent Law, namely, Article 229. The amended wording of the article
as it stands has placed in jeopardy a great number of important patent rights in the pharmaceutical
industry and other vital technological sectors.

International dissatisfaction at Brazils position on working requirements has also arisen and recently
the US Department of Commerce affirmed that Brazils Patent Law violates the TRIPS Agreement.
This opinion was based on the fact that patentees are required to work their Brazilian patents through
local manufacture.
In fact Brazils Patent Law does appear inconsistent with Article 27.1 of the TRIPS Agreement, which
does not oblige a member country to produce locally the product protected by a patent in the respective
country. TRIPS provides that the patentee may import the patented product, subject to satisfactory
working requirements. Brazils Patent Law requires that if a patentee does not arrange local
manufacture of the product within three years of the date of issue of the patent then it must,
obligatorily, concede a license to a third party to manufacture the patented product in Brazil.
This looks to be an issue which will have to go to the WTO for final arbitration and so, as long as such
a decision is not forthcoming, foreign pharmaceutical industries cannot expect much comfort in this
matter.
CONCLUSION
Brazils 1996 Patent Law was designed to bring legislation up-to-date and in line with international
legislative trends. Other major benefits to the country would be to boost investment in local R&D and
the attraction of additional foreign investment. The concession of pipeline protection and some
generosity in granting patent protection in essential but controversial technological sectors, in spite of
strong local lobbying, appeared to indicate a less xenophobic approach to foreign applications. The
present measures, which involve a more rigid stance by the Brazilian government with regard to
compulsory licensing and access to regulatory data do not necessarily show an intent to retreat on this
policy. Rather they appear to relate to the specific question of pharmaceutical product prices, which is
a delicate political issue requiring that the government provide the population with competitive
alternative sources for pharmaceutical products.