[Guest Post] The Brazilian Supreme Court defines the effects of the decision declaring the unconstitutionality of the sole paragraph of article 40 of the Industrial Property Law

IPTango is pleased to publish a guest post by Pedro Matheus and Leonardo Cordeiro (Gruenbaum, Possinhas & Teixeira), discussing the modulation of the effects of the decision declaring the unconstitutionality of the sole paragraph of article 40 of the Industrial Property Law of Brazil. Read here their post on the Direct Action for the Declaration of Unconstitutionality of such provision.

On 12 May 2021, the Supreme Court defined the modulation of the effects of the decision that declared the unconstitutionality of the sole paragraph of article 40 of the Industrial Property Law (LPI).

The decision was issued in relation to the Direct Action for the Declaration of Unconstitutionality No. 5529 (ADI No. 5529) concerning the provision mentioned above, which established the minimum validity term of 10 years for patents and 7 years for utility models (counted from the granting date) to compensate for an excessive delay of the Brazilian National Institute of Industrial Property (INPI) to grant them.

The modulation of the effects of the decision

As readers are aware, on 7 April 2021, Justice Dias Toffoli (rapporteur) issued a preliminary injunction suspending the validity of the sole paragraph of article 40 regarding “patents related to pharmaceutical products and processes and medical equipment and/or materials for use in healthcare”, effectively preventing the INPI from granting them according to the challenged rule.

On 6 May 2021, the Supreme Court decided that the sole paragraph of article 40 is unconstitutional by a majority of votes.

The Court began analyzing the proposal to modulate the effects of the decision, i.e., if the decision would have retroactive or prospective effects and if they would be applied to patents and utility models in all technological areas. However, it was decided to resume the discussion on 12 May 2021.

During the session held on 12 May 2021, Justice Dias Toffoli proposed that the final decision should have retroactive effects (ex tunc effects) with immediate applicability regarding patents for pharmaceutical products and processes and medical equipment and/or materials, as if the sole paragraph of article 40 of the LPI had never been enacted.

He also proposed that patents whose validity was already being judicially questioned based on the sole paragraph’s unconstitutionality before 7 April 2021 should also be immediately affected by the Court’s decision with ex tunc effects [i.e., retroactive effects].

In the remaining cases, i.e., patents unrelated to the pharmaceutical/medical areas and/or that were not being judicially challenged until 7 April 2021, the validity terms should not have changed by the decision (no retroactive effects are applicable).

Moreover, the decision should only apply to new patents and utility models granted by the INPI with ex nunc effects [i.e., no retroactive effects]. Accordingly, a patent will be valid for 20 years and a utility model for 15 years from the filing date.

The modulation of effects proposed by the rapporteur was voted by the Court’s eleven justices and confirmed by eight votes against 3.

INPI publishes the list of patents affected

A few days after the Court’s decision, the INPI published a list of patents allegedly affected already considering the general rule of a validity term of 20 years counted from the filing date, regardless of whether excessive delays occurred to grant them. Those applications were filtered based on their International Patent Classifications (IPCs).

However, the list included IPCs not directly related to pharmaceutical products and processes or medical equipment or materials for use in healthcare, and there were some inconsistencies in dates, which gave the Court’s decision a broader scope than the defined in the judgement.

In this sense, some IP entities have already sent questions to the INPI regarding the scope of the patents that are being affected and that will have their validity terms automatically adjusted according to the Court’s decision, but undoubtedly, the Office will have to be more careful to avoid similar issues that affect the rights of patent holders.

Comments

The Court’s decision may have a broader impact than only on the rights of those patents affected by the unconstitutionality of the rule, since it might lead to uncertainty about the Brazilian IP system, in light of the inconsistencies found in some recent decisions in which the INPI granted patents, which hopefully will soon be corrected.

Moreover, it remains to be seen whether the Court’s decision may impact positively on the backlog of INPI and the acquisition of COVID-19 vaccines, which were the main reasons argued by the parties in favour of unconstitutionality and the justices who voted in that sense, which resulted in the immediate applicability of the decision regarding healthcare patents.

Anyhow, like a pebble thrown into a pond, the Supreme Court’s decision to declare the unconstitutionality of the sole paragraph of article 40 of the Industrial Property Law (LPI) that had been applicable for 25 years, might generate a ripple effect that, over time, might be felt by society in a greater or lesser extent. However, only time will reveal how and to what extent everyone will be directly affected.

Credits:

First image by succo from Pixabay.

Second image by Steve Buissinne from Pixabay.