Brazil in a trade war in the pharmaceutical sector? Why were foreign patents summarily extinguished?

Article 40 of Law 9,279/96: Decision of the Direct Action of Unconstitutionality (ADI) 5,529 – STF.

From the decision of the Federal Supreme Court, all patents for equipment and/or materials for health use, as well as those related to medicines, which benefited from the term provided for in the sole paragraph of art. 40 of the Industrial Property Law, fall into the public domain, enabling, for example, the manufacture and sale of generic drugs by competition. With respect to other market segments, only patent applications not yet granted by the INPI or patents that are already the subject of a lawsuit with such discussion will be affected by the STF’s decision.
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In 2021, the Federal Supreme Court (STF) declared, by nine votes to two, the unconstitutionality of article 40, sole paragraph of law 9.279/96, which concerns the Industrial Property Law. Through the Direct Action of Unconstitutionality (ADI), which determines whether a law or part of it contravenes the Federal Constitution, the minimum term of exclusivity of patents granted by the National Institute of Industrial Property (INPI) was determined. Decreed in article 40, the new term defined is at least ten years, counting from the grant date, for invention patents; for utility models, as well as international legislation, the term is at least seven years.

The main reason for this new deadline was to remedy the delay in the analysis of patent applications by the INPI. Before, the invention patent had a validity period of twenty years, and, in cases of utility model, 15 years – both counted from the date of filing with the institute. In addition, this property system aims to promote free competition, sustaining the development of society in the current economic, political and social model.

In this scenario, the Attorney General’s Office understood that the wording of the sole paragraph of article 40 made the term of patent protection indefinite, which would be unfair and unconstitutional, as it privileges the private interest to the detriment of the collectivity. With the stipulation of this new minimum term of exclusivity, companies, entrepreneurs and inventors will be able to increase their efforts and investments for the development of new technologies, with the certainty that they will obtain a return.

The decision, therefore, gives this guarantee, and strengthens the patent system. Thus, when a certain technology meets the requirements of the law, the National Institute of Industrial Property grants temporary exclusivity for the invention. Without this, any company could use technology created by another, deliberately taking advantage of the work of third parties. And, consequently, this would generate unfair competition, since the appropriator would offer the same product for a lower final cost, without the need to recover the invested resources.

This decision, according to the STF, is valid for any and all category of invention, encompassing, in addition, both applications already filed and awaiting a resolution from the municipality, as well as new applications.

In addition, it is important to note that, in relation to pharmaceutical products and processes and health equipment and/or materials, due to the injunction granted, the INPI is prohibited from granting patents in this category to the extent provided for in the sole paragraph of article 40. of LPI. The debate, started especially from the scientific development during the process of fighting the coronavirus, involves a series of privileges for more developed countries.

According to experts, it is possible to identify positive and negative aspects of the decision. The first of these is the fact that it takes up to ten years for them to have the guarantee of granting their patents, with a period of validity restricted to a period shorter than that stipulated by law. This would be a “disincentive” to technological and scientific development, especially on the part of private companies and richer countries, which have superior productive capacity compared to those who wish to release and break patents.
However, on the other hand, the decision also expands the population’s access to generic drugs, which are more popular for their low cost – and which, consequently, increases access to health care and reduces public spending.