Patent Litigation 2021

Last Updated February 15, 2021

Brazil

Law and Practice

Authors



Kasznar Leonardos Intellectual Property provides tailored solutions to the most complex IP issues, both nationally and internationally, with a deep understanding of different cultures and business industries. Specialised in the management of intellectual assets, the team has 25 partners and more than 240 employees, with correspondents in every state of Brazil and a broad international network. It acts as legal adviser on contractual matters, as industrial property agent with the Brazilian Patent and Trade Mark Office, and its lawyers, arbitrators and mediators act in litigation and extrajudicial dispute resolution. The firm's main areas of practice are patent and trade mark prosecution, industrial designs, regulatory law, life sciences, digital law, marketing and entertainment law, sports law, biodiversity, copyright, unfair competition, technology transfer, geographical indication, trade secrets, franchising and licensing, fashion law, licence compliance and anti-piracy.

The protection of rights relating to inventions in Brazil shall be assured by means of the issue of patents for inventions or for utility models. Both types are based on statutory law, specifically the Brazilian Industrial Property Act (Law No 9,279/96).

According to Sections 8 and 9 of the Brazilian Industrial Property Act, an invention shall be patentable if it meets the requirements of novelty, inventive step and industrial application. On the other hand, an object of practical use, or part thereof, shall be patentable as a utility model if it is intended for industrial use, presents a new shape or arrangement and involves an inventive step, resulting in functional improvement in its use or manufacture.

In both cases – concerning a patent for inventions or one for utility models – the protection of rights relating to industrial property shall be assured by means of the issue of patents by the Brazilian Patent and Trademark office (BPTO).

Length of Grant Procedure

Currently the issue of a patent takes from eight to 12 years, depending on the area of the patent. The issue of patents for the area of telecommunications still takes approximately 12 years. Nevertheless, on August 2019, the BPTO begun a special procedure to curb the backlog, according to which a fast-track grant is available to patent applications filed in Brazil that have identical claims to those already granted abroad. For such purpose, office actions are being published in large numbers giving applicants the opportunity to adapt their claims. As over 80% of all patent applications filed in Brazil are from foreign applicants that have already had their applications examined abroad, this new procedure is expected to reduce the examination delay in Brazil to four to six years, by mid-2021.

Representation

The patent application may be filed by the inventor or the right-holder or by the inventor or right-holder’s attorney (Brazilian Industrial Property Act, Section 216). In this instance, a Power of Attorney shall be submitted. A person domiciled abroad is required to have a duly qualified attorney domiciled in Brazil, with powers to represent such a person or entity administratively and judicially. The attorney also has the right to receive summons.

Fees

Usually, the following fees are due (bearing in mind an exchange rate of approximately USD1 = BRL4).

  • Approximately USD45 when the patent application is filed before the BPTO (for a patent for an invention or for a utility model).
  • Approximately USD150 for a patent for the request for examination of an application for a patent (for a patent for an invention containing up to ten claims).
  • Approximately USD100 for a patent for a utility model.
  • For the annuities within the ordinary term:
    1. for a patent for an invention:
      1. pending application – approximately USD75;
      2. granted patent, 3rd to 6th year – approximately USD200;
      3. granted patent, 7th to 10th year – approximately USD300;
      4. granted patent, 11th to 15th year – approximately USD410; and
      5. granted patent, 16th to 20th year – approximately USD500;
    1. for a utility model:
      1. pending application – approximately USD55;
      2. granted patent, 3rd to 6th year – approximately USD100;
      3. granted patent, 7th to 10th year – approximately USD200; and
      4. granted patent, 11th to 15th year – approximately USD300.
  • Approximately USD75 when the patent application is granted by the BPTO (for a patent for an invention or for a utility model).

Patents are granted for 20 years as from the filing date or ten years as from the date of issue and utility models are granted for 15 years as from the filing date or seven years as from the date of issue, whichever is of greater benefit to the owner.

A patent shall afford its owner the following principal rights.

  • To prevent others from producing, using, offering for sale or importing for such purposes, without his or her consent, a product that is the subject matter of a patent or the process or product directly obtained by a patented process.
  • To prevent third parties from contributing to anyone in carrying out the acts mentioned above.
  • To be indemnified for unauthorised exploitation of the subject matter of his or her patent, including exploitation that occurs between the date of publication of the application and the date of issue of the patent.
  • To be indemnified for the damages in respect to acts that infringe industrial property rights.

In return, the patent owner’s obligation is to pay the annual patent fees and use the patent in a lawful manner within Brazil.

There is no further protection available. At the end of the term of protection the object of the patent enters into the public domain.

Third parties may oppose the granting of a patent by submitting relevant documents and information that would render the invention not patentable. This can be done:

  • between the publication of the application and the end of the examination by the Patent Examiner (Brazilian Industrial Property Act, Section 31);
  • within a period of 60 days after publication of any administrative appeal filed by the applicant from a first instance decision by the Patent Examiner (Brazilian Industrial Property Act, Section 231); and
  • in an administrative nullity proceeding, to be filed within six months counted from the grant of the patent (Brazilian Industrial Property Act, Section 51).

According to Section 212 of the Brazilian Industrial Property Act (Law No 9,279/96), any decision rendered by the BPTO can be challenged through an administrative appeal. Where the Patent Examiner issues a decision rejecting a patent application it is possible to present an administrative appeal addressed to the President of the BPTO within a period of 60 days after the publication of the decision.

Moreover, the Brazilian legal system also permits any decision of the public administration to be discussed before the courts within a period of five years. This is because all decisions (eg, the decisions rendered by the BPTO) are subject to the doctrine of judicial review, which provides that all legislative and executive actions are subject to review by the judiciary. Thus, a final decision rendered by the BPTO in refusing the patent application may be challenged in the federal courts by way of an appeal for an annulment.

According to Section 84 of the Brazilian Industrial Property Act (Law No 9,279/96), the applicant and patent owner shall be required to pay annual fees as from the beginning of the third year after the date of filing for the patent. The payment of the annual fee shall be made within the first three months of each annual period, but it may also be made, in an extraordinary term, within the following six months on payment of an additional fee.

In the case of a failure to make payment of the annual fee in accordance with the provisions mentioned above, the application will be shelved or, if already granted, the patent will be extinguished (Section 86 of Law No 9,279/96).

Regarding the measures available to remedy such consequences, note that the patent application or a patent may be restored at the request of the applicant or patent owner within three months after notification of the lapse of the patent.

To obtaining the patent restoration, the owner must pay a restoration fee (approximately USD185) as well as any previous fees due. If this procedure is not followed the application will not be valid.

According to Section 50 of the Brazilian Industrial Property Act (Law No 9,279/96), the nullity of a patent already granted by the BPTO can be can be requested through an Administrative Nullity Procedure.

In addition, said provision establishes the circumstances in which a patent is declared null, such as:

  • the absence of any of the statutory requirements;
  • the insufficiency of the description report;
  • the unsupported claims;
  • the extent of the contents of the application as originally filed; and
  • the absence of any of the essential formalities.

The administrative post-grant proceeding must be filed within six months counted from the grant of the patent and can be instituted ex officio by the BPTO or requested by any third parties with a legitimate interest (Brazilian Industrial Property Act, Section 51).

During the Administrative Nullity Procedure, the BPTO will issue a new opinion regarding the granted patent and will notify the patentee and the applicant to reply within a common period of sixty days (Brazilian Industrial Property Act, Section 53). Then the procedure will be decided by the President of the BPTO, finishing the administrative instance (Brazilian Industrial Property Act, Section 54). It is important to clarify that the patent does not have its effects suspended during the procedure, meaning that the patentee has enforceable rights while the nullity procedure is pending.

Finally, it is important to comment that is also possible to seek the annulment of a patent through a judicial nullity action, which can be filed at any time during the term of a patent by BPTO or by any legitimately interested party. Patent nullity actions should be brought before the federal courts and the BPTO’s participation in these actions is mandatory (Brazilian Industrial Property Act, Sections 56 and 57).

It is possible to file a civil action or a criminal action. The right-holder may choose between the two or even opt for both.

As Brazil has state and federal jurisdictions, it is important to stress that enforcement is a matter of state jurisdiction, thus patent infringement actions, civil or criminal, are within the competence of state courts. In general, these lawsuits must be filed before the court of the place where the defendant has his or her main business or where the infringement happened, provided that other civil procedure rules are observed.

The main remedies available are the post-grant review, the annulment lawsuit and the action for a compulsory licence.

Post-grant Review

The administrative post-grant review may be instituted ex officio by the BPTO or at the request of any person having a legitimate interest, within six months of the issue of the patent. In this case, a patent is declared null if:

  • any of the statutory requirements have not been met;
  • the description does not describe clearly and sufficiently the object;
  • the claims are not supported on the description report;
  • the subject matter of the patent extends beyond the contents of the application as originally filed; or
  • any of the formalities essential for issuance were omitted during prosecution.

Annulment Lawsuit

The annulment lawsuit may be filed before the federal courts at any time during the term of a patent by the BPTO or by any party having a legitimate interest.

Compulsory Licences

Regarding compulsory licences, Section 68 of the Brazilian Industrial Property Act determines that the patent owner shall be subject to compulsory licensing of his or her patent if he or she exercises his or her rights therein in an abusive manner of if he or she uses it to abuse economic power according to the law in force, under the terms of an administrative or judicial decision.

The following also may be grounds for a compulsory licensing request.

  • Failure to exploit the subject matter of the patent within the Brazilian territory or failure to manufacture or incomplete manufacturing of the product or failure to fully use a patented process, except in cases of economic non-viability, in which case importation shall be admitted.
  • Commercialisation that does not satisfy the market’s demand.

The compulsory licence may be requested only by a party with a legitimate interest and with the technical and economic ability to effectively utilise the subject matter of the patent for the predominant purpose of the internal market. In this case the exception contained under item one above shall not apply.

Patent infringement lawsuits fall within state jurisdiction, while nullity actions should be submitted before federal courts (due to the mandatory presence of the Brazilian Trademark Office as a defendant).

Therefore, the courts with jurisdiction are:

  • at first instance, the trial judge (state or federal);
  • at second instance, the board of appeals (state or federal); and
  • at third instance, the Superior Court of Justice (STJ) and the Supreme Court of Justice (STF).

Currently, there is one specialised chamber for dispute resolution in Brazil regarding IP matters, including domain name conflicts, named CSD–PI, related to the Brazilian Association of Intellectual Property (ABPI).

There are no prerequisites to filing a lawsuit. However, warning letters are usually issued by right-holders and have the advantage of defining the date on which the offender was informed of the violation for indemnification purposes in a future lawsuit.

Parties in intellectual property matters must be represented by a lawyer. The parties cannot act as plaintiff or defendant before Brazilian courts without a lawyer.

Interim injunctions are available. An interim injunction may be granted by the judge when there is both a likelihood of success for the complainant and the need for an urgent decision.

The judge must also weigh up the hardship caused by the decision granting the injunction, as opposed to the hardship caused by not granting it. The plaintiff may be required to provide a bond or a fiduciary guarantee, if the judge deems it necessary.

A potential defendant may appeal against an interim injunction. It is also possible to require a bond to be posted by the owner, but it is important to clarify that it will be up to the judge to determine whether the party should submit a bond, and its value.

Additionally, it should be noted that, according to the Brazilian Civil Procedure Code, the party that requests the injunction is responsible for the injury that the enforcement of the injunction causes the other party.

Alternative steps that may be taken by the potential opponent are to:

  • file a non-infringement declaratory action, aimed at obtaining a court decision attesting that there is no infringement; or
  • file a separate patent annulment lawsuit before the federal courts, aimed at obtaining a court decision attesting that the patent is null.

Special limitation provisions do apply in intellectual property matters. According to Section 225 of the Brazilian Industrial Property Act, proceedings for damages suffered because of industrial property rights may not be brought after five years, while the usual deadline for legal action in the Brazilian Civil Code is ten years.

The Brazilian legal system does not have mechanisms by which a party to an intellectual property matter can obtain relevant information and evidence from the other party or a third party. There is no discovery proceeding in Brazilian procedural law. However, plaintiffs can ask the court to determine the search and seizure of relevant documents as well as the infringing products.

There are no special provisions for lawsuits in intellectual property proceedings, the same pleading standards as in other civil litigation apply.

The Brazilian legal system does permit class actions for patent proceedings in certain situations. If damage is caused to the public as a whole or to the honour or dignity of a racial, ethnic or religious group, a civil action may be filed by public prosecutors or by any public group that is affected (Act No 7,347/85). The decision in this civil action will bind everyone, unless the decision is to dismiss the action on grounds of lack of proof, in which case anyone can file an individual complaint.

Section 45 of the Brazilian Industrial Property Act establishes that a person who in good faith benefited from the patent within Brazil, prior to the filing or priority date of a patent application, shall be entitled to continue receiving such benefits under the same form and conditions, without incurring liability. Thus, the owner of the patent cannot prohibit the use of the patent by a third party acting in good faith.

In addition, Section 43 of the Act establishes certain acts and circumstances that the patent owner cannot preclude.

  • Acts carried out privately and with no commercial purpose by unauthorised third parties, provided that these acts do not prejudice the economic interests of the patent owner.
  • Acts carried out by unauthorised third parties for experimental purposes, if related to studies or scientific or technological research.
  • The preparation of a medicine in accordance with a medical prescription in individual cases, and carried out by a qualified professional, or the medicine thus prepared.
  • A product manufactured in accordance with a process or product patent that has been placed on the internal market directly by the patent holder or with his or her consent.
  • Other persons who, in the case of patents related to living matter, use the patented product, without economic purpose, as an initial source of variation or propagation in order to obtain other products.
  • Other persons who, in case of patents related to living matter, use, place in circulation, or market a patented product that has been lawfully placed on the market by the owner of the patent or his or her licensee, provided that the patented product is not used for commercial multiplication or propagation of the living matter concerned.

The complainant can be the owner of the intellectual property or the licensee, when the patent licence agreement expressly foresees it and if the agreement is recorded by the BPTO. The defendant is the alleged infringer.

A direct infringement occurs when all the patent claims granted by the BPTO are violated and an indirect infringement occurs when, although not all claims of the patent are literally infringed, the offender uses equivalent means to the subject matter of the patent.

The Brazilian Industrial Property Act establishes that inventions shall be assured by two types of patents: for inventions or for utility models.

A process is patentable as a patent for invention when it is susceptible of industrial application and meets the requirements of novelty and inventive step (Brazilian Industrial Property Act, Section 8).

In addition, Sections 10 and 18 of the Brazilian Industrial Property Act determine that the following processes are not considered to be inventions:

  • mathematical methods;
  • methods of a commercial, accounting, financial, educational, publishing, lottery or fiscal nature;
  • operating or surgical techniques and therapeutic or diagnostic methods, for use on the human or animal body;
  • natural biological processes; or
  • processes for obtaining or modifying substances, matter, mixtures, elements or products of any kind, when they result from the transformation of the atomic nucleus.

According to Section 42 of the Brazilian Industrial Property Act a patent confers to its owner the right to prevent third parties from manufacturing, using, offering for sale, selling or importing for such purposes a process or product directly obtained by a patented process or from contributing to the practice of these acts by other parties, without their consent. Therefore, a process patent infringement occurs when a third party uses means or processes that are the subject matter of a patent of invention, without the authorisation of the patentee.

It is important to stress that, in a process patent infringement lawsuit, the burden of proof is shifted to the accused party, which will be required to prove that the process is different from that protected by the patent (Brazilian Industrial Property Act, Section 42).

The scope of protection of a patent is determined by the claims as granted by the BPTO. However, it is possible to establish an indirect infringement by the doctrine of equivalence. This is because the Brazilian Industrial Property Act provides that a patent infringement may be established even if the violation does not affect all claims under the patent or if it is limited to the use of means equivalent to the subject matter of the patent.

The usual defences involve:

  • prior use rights,
  • products or processes are different;
  • nullity of the patent;
  • own patent rights;
  • compulsory licence; and
  • patent exhaustion.

It is very common that parties request the judge to nominate a court expert to give evidence in patent infringement and invalidity lawsuits. This is because patent claims usually involve complex discussions and it is common to find Brazilian judges who do not have any expertise in the matter.

The court expert will be required to provide the judge with a full report with his or her opinion on any questions raised by the parties (and accepted by the judge) and also on questions possibly raised by the judge him or herself. After the judge nominates the court expert the parties can indicate their own technical assistants, who will co-operate with the court expert to better understand the matter before he or she prepares his or her technical report.

The courts tend to give much credit to the expert’s opinions, although judges are not obliged to follow the expert’s understanding when ruling the case.

In Brazil, separate procedures for construing the terms of the patent's claims do not exist. The Brazilian Industrial Property Act provides that the term of patent is 20 years as from the filing date or ten years as from the date of issue and the patentee may not extend this term.

A patent may be invalidated if granted contrary to any of the provisions of the Brazilian Industrial Property Act, particularly if it lacks novelty, inventive step, or an industrial application or does not disclose the full contents of the invention.

There are two possible ways of obtaining the declaration of nullity of a patent.

  • By way of an administrative nullity action at the BPTO, to be filed within six months of the issue of the patent.
  • By way of a judicial nullity action at the federal courts, to be filed at any time during the life term of the patent.

Partial revocation or cancellation is possible. According to Brazilian Industrial Property Act, Section 47, the nullity of a patent may apply to all the patent claims or to part of the claims. However, in case of a partial nullity it is necessary that the remaining claims constitute patentable subject matter in themselves.

Amendment is possible in revocation or cancellation proceedings, but it is unusual. According to Section 32 of the Brazilian Industrial Property Act, the amendments may be proposed by the applicant until the time of the request for examination of the patent application. However, the amendments may be only reductions of the scope of the claims.

Revocation or cancellation and infringement cases are not heard together, infringement lawsuits should be filed before the state courts while annulment lawsuits are filed before the federal courts. This is because in annulment lawsuits the BPTO must participate as a mandatory defendant together with the patent owner, and in Brazil the competent court to hear cases in which the BPTO is a party is the federal court.

Therefore, it is common that there is a difference in timing between decisions in these actions.

The Brazilian Industrial Property Act lays out certain special procedural provisions for lawsuits in patent proceedings, such as:

  • according to Section 56, paragraph 2, the judge may grant an injunction suspending the effects of the patent as long as appropriate procedural requirements are met upon registration;
  • according to Section 57, annulment lawsuits shall be tried by the Brazilian Federal courts and the BPTO is a mandatory defendant, together with the patent owner; and
  • according to Section 57, paragraph 1, there is a longer term (60 days, instead of the standard 15-day term) for the patent owner to submit its reply to an annulment lawsuit.

A trial judge will preside in a first instance case. He or she is not usually a technical expert. The decisions issued by the trial judge may be questioned before state courts and the superior courts.

The parties have no influence on trial judges, state courts or the superior courts. It is important to mention that the Civil Procedure Code provides that if the party has any personal connection with the judge, the judge must be replaced.

The parties may reach an agreement to settle the case at any time during the course of the lawsuit. Furthermore, according to new Brazilian Civil Procedural Code (in force as of 18 March 2016), after the plaintiff files the complaint, and unless the plaintiff expressly states that there is no interest in a possible conciliation, the defendant will be summoned to appear in a preliminary conciliation hearing/conference, where the judge will try to settle the case.

This conciliation hearing, however, may only take place in infringement cases and not in invalidation lawsuits. Only private parties and not the BPTO are permitted to enter into such agreements.

Pending a validity decision of the BPTO, an infringement proceeding may be suspended, but it is not mandatory. Any of the parties can request suspension and the judge may determine it ex officio.

The same procedure is followed when there is an annulment lawsuit and an infringement lawsuit in progress: the parties may request the suspension of the infringement lawsuit until the final decision of the annulment lawsuit and the judge can determine it ex officio, but it is not mandatory.

The main remedies available for the patentee in infringement lawsuits are search and seizure orders, restraining orders and other kinds of injunctions, plus damages. In Brazil, judges can only order remedies based upon the request of the interested party.

The prevailing defendant is usually entitled to receive court fees and other expenses incurred during the case, including the court-appointed expert’s fees.

All remedies are available for all kinds of intellectual property rights, regardless of type.

If the first instance judge reaches the conclusion that the patent is valid and the defendant has infringed it, the judge will most probably rule in the plaintiff’s favour and will grant an injunction to order the defendant to stop using the product or process covered by the patent immediately. Naturally, the defendant will be in a position to not only appeal against the merits of the decision but also to try to suspend the effects of the injunction while the appeal is pending.

There are no special provisions concerning the appellate procedure for intellectual property right proceedings. All appeals follow the same path and procedure.

The appeal implies a full review of the facts of the case.

In Brazil, lawsuits are usually preceded by warning letters. A party may also take various steps to build a strong case, such as hiring an independent expert and commissioning a technical report confirming the validity of the patent and the infringement perpetrated by the opposite party. All these costs are paid by the interested party and are not recovered in a lawsuit.

Costs are calculated by each court, taking into consideration procedural expenses and other mandatory fees, which also vary by type of action (eg, a nullity lawsuit, an infringement lawsuit, etc). Court fees, even though they might be different in each state, are usually low, and seldom exceed USD2,000.

If the plaintiff is a foreign plaintiff, he or she may be ordered to post a bond in Brazilian currency before the court to secure the payment of judicial expenses. This bond is usually set in the amount of 20% of the value given to the lawsuit. However, if the plaintiff is successful, this bond is returned and duly adjusted according to the official inflation rates in Brazil.

Regarding the court fees and expenses, the losing party is responsible for reimbursing the winner for all the disbursed expenses incurred in the course of the lawsuit by the winning party.

In Brazil, attorneys’ fees are not reimbursed by the losing party.

Alternative dispute resolution (ADR) is not commonly used to settle patent cases or even intellectual property cases.

Through Resolution No 84 of 11 April 2013, the BPTO formally adopted a mediation procedure that was organised jointly with the World Intellectual Property Organization (WIPO) and had, as its main goal, enabling the parties in a trade mark dispute to mediate that dispute. However, the BPTO insisted that after a successful mediation, the settlement agreement would not be binding on it and that it could still reject a trade mark application despite the fact that the opponent had already consented to it. As a result of the lack of effectiveness of the procedure, this form of mediation did not become popular, but it is still possible to use the system.

Domain Name Disputes

ADR is commonly used for domain name disputes, as Brazil has an administrative domain name resolution system (commonly known by its acronym in Portuguese, SACI) that is based on ICANN’s Uniform Domain-Name Dispute-Resolution Policy (UDRP) but incorporates several other causes for action, and a complaint under SACI may be based not only on trade mark rights (as is the case with the UDRP), but also on other intellectual property rights.

Litigation

As for the use of ADR in litigation, one must differentiate between invalidity and infringement lawsuits. Invalidity lawsuits must be filed before the federal courts, where ADR is not allowed because the BPTO understands that only a court of law may decide on the validity of rights. Infringement lawsuits must be filed before the state courts and are disputes between private parties that may be negotiated freely. The new Brazilian Civil Procedure Code that recently (on 18 March 2016) entered into force, created a mandatory conciliation pre-dispute phase and it is now expected that more disputes will be settled at this early stage, before the defendant has even presented his or her defence.

Mediation is only now slowly starting to become more popular in several areas of law in Brazil. Since Brazilian law is based on civil law, legal professionals lacked a statutory basis for mediation, despite the obvious fact that mediation may be solely based on contract law. A Mediation Act was recently passed as Law No 13,140 of 26 June 2015. Nevertheless, in practical terms mediation is still not being used to solve patent disputes.

Arbitration is also not commonly used in patent disputes, despite the development in the use of arbitration in other areas of law in Brazil. However, Brazil’s Arbitration Act was enacted through Law No 9,307 of 23 September 1996, and the past two decades have seen a significant increase in the use of mediation in Brazil.

According to the Brazilian Industrial Property Act, a patent application or a patent, the contents of which are indivisible, may be assigned in whole or in part.

Regarding patents, the BPTO may make the following recordals (entries to the trade marks database).

  • Assignment, stating full particulars of the assignee.
  • Any limitation or condition placed on the application or patent.
  • The changes to the name, headquarters or address of the applicant or the owner; regarding third parties, recordals shall have effect as from the date of their publication in the Official Gazette.

It is important to note that the assignment between a foreign company and a Brazilian company when onerous must be recorded by the BPTO to obtain the corresponding recordal certificate, otherwise the Central Bank of Brazil will not authorise the payment of royalties of remittances abroad.

For the assignment recordal, the following documents are required by the BPTO.

  • A transfer petition, completed with the data of the assignee.
  • Proof of payment of the governmental fee.
  • The assignment document, which should contain:
    1. the complete qualification of the assignor and the assignee;
    2. the powers of representation of the signatories of the assignment document and their signatures (the representatives’ signatures need to be notarised by the Notary Public and the signature of the Notary Public then needs to be legalised by apostille or by the Brazilian Consulate); and
    3. the application number or the number of the patent and the date on which the assignment document was signed.
  • The Power of Attorney of the assignee.
  • A sworn translation into Portuguese of documents that were created in a foreign language.

After reviewing the relevant documents in accordance with the requirements discussed in 10.1 Requirements or Restrictions for Assignment of Intellectual Property Rights, if they are all in order, then:

  • the assignment fee is paid;
  • the assignment petition is completed, together with the data of the assignee, the application or the number of the patent and related documents;
  • the petition is sent to the BPTO, which will generate a protocol number;
  • the assignment petition is analysed by the BPTO; and
  • the notice of assignment is published on the Official Gazette.

The Recordal Certificate attesting to the assignment is then issued.

Licence Recordal

It is important to mention that in Brazil a patent owner or applicant may execute an exclusive or non-exclusive licensing contract for exploitation with a third party. To be enforceable against third parties the licence agreement must be recorded at the BPTO.

The recordal of a patent licence agreement by the BPTO is mandatory for the following purposes.

  • To obtain presumption of knowledge of the contract by third parties (Brazilian Industrial Property Act, Section 62).
  • To authorise, when the agreement expressly allows it, the licensee to act by himself or herself before Brazilian courts in defence of the licensed patent.
  • To authorise the remittance of royalty payments to abroad.
  • To allow royalty payments to be deductible for withholding income tax purposes.

Note that, in general, freedom to contract prevails, but the BPTO may provide some limitations.

  • The BPTO only authorises the remittance of royalty payments for a patent registration, not for patent applications.
  • In the case of a patent application, it is possible to deposit the due royalties from the filing date of the agreement before the BPTO into an escrow account in Brazil, but the remittance will only be authorised by the BPTO after the grant of the licensed patent; when the patent is issued, the applicant shall request the up-to-date corresponding certificate of the recordal, asking for payments to apply retroactively to the filing date of the recordal of the agreement.
  • The BPTO limits tax deductions in order to limit the remittance of payments among companies that have any shareholder relationship; if the licensor and licensee have any shareholder relationship, besides taking into consideration the usual rates of the market, the deductibility ceilings established by Law No 4131/62 should be observed and Ordinance of Treasury Ministry 436/1958, as well as Article 50 of Law No 8383/91.
  • Usually, a patent licence agreement will be in force in accordance with the periods of validity of the licensed patents (20 years as from the filing date of the patent application or ten years as from the date of issue).

Regarding improvements, the Brazilian Industrial Property Act determines that an improvement made to a licensed patent shall belong to the person who has made it and the contracting party shall be afforded a preferential right to a licence.

Documentation Requirements

For the licence recordal, the following documents are required by the BPTO.

  • The BPTO’s forms duly filled in by the parties:
    1. the recordal application form (Requerimento de Averbação); and
    2. the entity’s register data (Ficha Cadastro de Entidade).
  • Proof of payment of the government fee.
  • Power of Attorney of either party.
  • Simple translation into Portuguese of documents in a foreign language.
  • The licence agreement notarised and legalised (for apostille or the Brazilian Consulate) - all pages of the agreement must be countersigned.
  • A letter briefly justifying to the BPTO the reasons that led the parties to formulate the patent licence agreement.

Compulsory Licensing

Finally, it is important to mention that patents may be subject to compulsory licences. Section 68 of the Brazilian Industrial Property Act determines that the patent owner shall be subject to compulsory licensing of his or her patent if he or she exercises his or her rights in the patent in an abusive manner, or if he or she uses it to abuse economic power according to the law in force, under the terms of an administrative or judicial decision.

The following also may be grounds for a compulsory licensing request.

  • Failure to exploit the subject matter of the patent within Brazilian territory or failure to manufacture or complete manufacturing of the product, or failure to fully use a patented process, except in case of economic non-viability, in which case imports shall be admitted.
  • Commercialisation that does not satisfy market demand.

This compulsory licence may be requested only by a party possessing a legitimate interest and having the technical and economic ability to effectively use the subject matter of the patent predominantly for the purposes of the internal market, in which case the exception above, to do with economic non-viability, shall not apply.

After execution by the parties and two witnesses, the notarised and legalised licensed agreement must be submitted to the BPTO, which conducts a review and, upon acceptance, issues to the licensee a "certificate of recordal", enabling the licensee to pay royalties (if this is the case). Subsequently, a very short extract with basic information about the contract is published in the BPTO’s Official Gazette but the contract itself remains confidential and the BPTO does not furnish copies to third parties.

Kasznar Leonardos Intellectual Property

Teófilo Otoni St
63/ 5º-7º floor
20090-080

+55 21 2113 1919

mail@kasznarleonardos.com.br www.kasznarleonardos.com
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Gusmão & Labrunie is one of Brazil’s leading intellectual property firms and has been helping clients – including Unilever, BASF, Roche, Libbs, Ford, GE, and Transocean – achieve their ambitions in securing and enforcing vital patent assets for over 30 years. Its team of attorneys and patent specialists has unrivalled technical expertise and experience, and provides strategic guidance and services regarding patent counselling and prosecution, as well as crafting patent strategies to be used in various court proceedings. The firm has been involved in cutting-edge cases that have shaped the Brazilian intellectual property landscape as well as contributed to the development of legal strategies later implemented in other countries by clients. In this sense, it is worth mentioning, for instance, that Gusmão & Labrunie was a pioneer in enforcing intellectual property rights with regard to TV formats as well as in litigating second medical use claims and injunctions related to 3G SEPs.

Current Institutional Landscape

The INPI patent backlog plan and its positive results

The global concern related to patent applications pending examination by local IP offices (the so-called patent backlog) has acquired, in Brazil, the status of unsolvable problem in recent decades. After several years of discussion, with numerous proposals on the table, the Brazilian patent and trade mark office (Instituto Nacional da Propriedade Industrial, or INPI) introduced, in 2019, a new programme for handling this matter, through Resolutions 240 and 241, of 3 July 2019, jointly issued by its Presidency and the Director of Patents, Computer Programs, and Topography of Integrated Circuits (DIRPA).

These Resolutions aim to tackle a challenging backlog reduction target of 80% in two years. For that, two preliminary requirements (Orders 6.21 and 6.22) were established with the rationale of optimising the examination by means of the issuance of standardised priority search reports.

The first complete year of the programme (2020) has yielded tangible results. Of the nearly 150,000 applications mapped in the beginning of the programme (August 2019), around 75,000 had already been examined by December 2020, a remarkable (and symbolic) reduction of 50% in about 18 months.

The first projected consequences of the overcoming of such a critical and historical problem are:

  • bringing the patent examination timeframe within reasonable parameters; and
  • a new and promising perspective for national and foreign entrepreneurs and companies intending to protect their IP in Brazil, therefore attracting investment and fostering a more productive and competitive ecosystem in Brazil.

Another expected side effect of the massively increased examination of patent applications is a rise of litigation related not only to compliance with patentability requirements (nullity actions) but also to infringement claims pertaining to patent rights.

INPI’s other promising initiatives

It should be noted that the battle over the patent backlog (which was also judicially challenged by some INPI staff unions but is, up to this moment, considered compliant with the law) is part of a larger reform agenda. INPI has clearly adopted a new position in relation to society and innovative ecosystems, one that is more proactive and ultimately more efficient.

INPI is consistently striving to excel in terms of operational performance as well as to strengthen its position as an agency which effectively assures protection for technical works.

The massive investment in information technology and teleworking proved to be the right choice, especially within the context of COVID-19. Indeed, although application terms were temporarily postponed (to allow applicants time to adapt to the new reality), regular activities and services were handled normally. Partnerships with other IP offices were established during 2020. INPI also created additional areas of priority examination, focusing on start-ups, technologies invested in by public institutions, COVID-related solutions, etc).

Two other notable initiatives were the creation of the Observatory of COVID-related technologies and the INPI Business which, respectively, are intended to raise the level of technological information available to the community (for instance, concerning patents and technologies related to lung ventilators, respiratory disease treatments and vaccines) and to provide mentoring and know-how transfer to public universities, research centres and start-ups engaged in the development of technological solutions, including those related to COVID-19.

Such commendable initiatives have been catalysed by the new national intellectual property strategy (Estratégia Nacional de Propriedade Intelectual, or ENPI), officially launched by the Brazilian government in December 2020, as part of the celebration of INPI’s 50th anniversary, which proposes 210 initiatives to transform the Brazilian IP system in the next decade.

Other COVID-19 issues and predicted litigation impacts

It is worth noting that, despite an undesirable breakdown in federal and local governments’ communication during the fight against the COVID-19 pandemic, the Brazilian public R&D system has proved to be highly resilient and responsive. The unique universal coverage offered by the Brazilian healthcare system (Sistema Único de Saúde, or SUS) mitigated, to a degree, the devastating effects of the heath crisis and the public laboratories Instituto Butantan (in São Paulo) and Fiocruz (in Rio de Janeiro) are playing an essential role, along with foreign partners, in providing vaccines to the population.

The national health surveillance agency (Agência Nacional de Vigilância Sanitária, or ANVISA) has also made noteworthy contributions. The agency is attempting to expedite its examination procedures for granting approval for the use of the available vaccines. We envisage (and hope) that the know-how acquired in this extraordinary process can bring permanent effects, once the agency, which is currently being criticised by healthcare sector practitioners due to the delay in analysing pharma and chemical related patents, by law, gives its prior approval during the prosecution of these patent applications.

Moreover, we can expect the judicialisation of some discussions regarding access to the vaccines and health treatment (through collective actions) and/or requests for compulsory licensing of COVID-related technologies and drugs. For instance, some patents covering COVID drugs can be considered second medical use patents and, therefore, subject to judicial challenge as the matter is a subject of great controversy in the country.

Current Judicial Landscape

High-speed virtualisation of the courts: digital justice is the new norm

Another remarkable effect of COVID-19 has been the quick and successful virtualisation of both federal and state courts.

All Brazilian courts (including the higher instances) have maintained their regular activities throughout the entire year, with all judicial acts being carried out through virtual means. Judges and law clerks have worked remotely most of the time, but their activities were not suspended. After short periods of suspension of judicial deadlines at the beginning of the pandemic, terms are now running normally.

All trial sessions and hearings are conducted online, and it can be said that activities are being performed smoothly. In fact, a significant impact on productivity has been observed as the number of decisions has risen markedly in the past few months.

According to the National Council of Justice (Conselho Nacional de Justiça, or CNJ), from the beginning of the pandemic to 17 December 2020, BRL580 million (approximately USD109.6 million) in funds have been allocated by the courts to combat COVID-19 and the total number of acts related to pending lawsuits reached 695.5 million. There were 21.5 million rulings and appellate judgments, 32.5 million decisions and 55.9 million orders. The numbers are superlative.

Revision of INPI acts granting or refusing patent applications

According to the data that can be gathered based on INPI’s sub judice publications in the Official Gazette, the number of patent-related acts from INPI challenged before the courts has been stable in the last three years (81 cases in 2018, 79 cases in 2019 and 73 cases in 2020). Some of the recent lawsuits were related not only to patent invalidity claims but also writs of mandamus filed against the agency to expedite the examination of a patent application, including in view of the often-uneasy relationship between ANVISA and INPI.

Considering INPI’s recent initiatives to reduce its backlog and therefore the increase in examination of patent applications, it is expected that more invalidity enforcement claims will be brought before the judiciary in the coming years.

The Supreme Court’s 2021 agenda on IP-related legal issues

The Brazilian Supreme Court is expected to examine two important aspects of IP Law in 2021:

  • one concerning the patent term of validity allowed by Article 40, sole paragraph of Law 9.279/1996 (Brazilian IP Statute); and
  • the other regarding the constitutionality of “pipeline patents”.

Article 40, sole paragraph of the Brazilian IP Statute: patent terms

On 13 May 2016, the Brazilian Prosecutor General of the Republic (PGR) proposed a Direct Action of Unconstitutionality (ADI 5529) to obtain a declaration of unconstitutionality regarding the sole paragraph of Article 40 of the Brazilian IP Statute. This provision sets forth that, if INPI takes more than ten years to grant a patent, that patentee is assured a patent term of validity of ten years counted from the granting decision. In practical terms, and again due to INPI’s backlog, a great number of patents last for about 25/30 years.

The local and foreign pharmaceutical industry have taken divergent positions over this dispute and the result of the judgment is certainly hard to foresee. Should the provision be considered unconstitutional, it is quite possible that the court will determine the modulation of the effects of the decision, especially considering its substantial economic impacts.

In fact, recently, due to the discussion before the Supreme Court and pressure derived from a recent audit by the Federal Court of Accounts (Tribunal de Contas da União, or TCU) that also suggested the exclusion of the above provision, a government task force co-ordinated by the Secretary of State to study and eventually propose a bill to change IP law in this respect was created. In addition, there are Bills currently pending before the National Congress referring to amendments to Article 40. Nonetheless, no concrete legislative measure has yet been adopted.

Pipeline patent constitutionality

The Supreme Court is also expected to judge, at the same date, the unconstitutionality (ADI 4234) of the Brazilian IP Statute provisions that deal with so-called pipeline patents (also known as revalidation patents). This mechanism is aimed at granting patents to products/processes that were not patentable before the current IP Statute, which become enforceable in 1996. This is a long-waited verdict for the Brazilian IP community even though the issued pipeline patents are already in the public domain.

Trends to Monitor

5G standard-essential patent (SEP) disputes

The tremendous promise of 5G technology is widely acknowledged; it has the potential to transform a range of industries and to contribute to economic growth. The public auction of the rights to implement fifth-generation wireless networks in Brazil is expected to occur in the first half of 2021 but the political battle around it has already made the headlines.

It goes without saying that we may see a new round of SEP disputes concerning 5G technologies. After all, Brazil remains an attractive option for SEP litigation given the importance of the Brazilian market to many industries, as well as the fact that Brazilian courts have so far favoured ex parte preliminary injunctions for SEPs (see Vringo v ZTE). Smartphones need to use cellular SEPs and, as such, patent owners could show infringement based on compliance with technical standards.

On the other hand, Brazil may also serve as a favourable forum for prospective licensees aiming at, for instance, obtaining invalidation of certain 5G-related patents and – concurrently – a stay of the infringement claim, as well as trying to challenge the premises of FRAND licensing models – an issue yet to be more comprehensively addressed by national courts.

Software patents

Following a public consultation held in August 2020, INPI published Ordinance 411/2020, which sets forth the new Examination Guidelines for computer-implemented inventions.

In brief, Ordinance 411/2020 confirms INPI’s understanding that it may issue software patents provided the invention solves a technical problem and reaches technical results that do not derive directly and exclusively from the source code, and updates the INPI rules and examples to better encompass technologies whose importance has been increasing exponentially, such as those linked to the internet of things and/or artificial intelligence.

It is expected that these changes will boost interest in seeking patents in this realm. Consequently, as individuals and companies are constantly looking to turn their innovations into patents, and those patents into cash, the attempt to enforce software-related patents before the courts shall also be greater. A tendency, thus, to be closely monitored.

Patent law aspects to be better addressed

Among several issues that may gain momentum in the months ahead are those concerning grace periods and filing amendments to patent claims.

Brazilian law establishes that novelty is not affected in the case of disclosure of an invention for which protection is sought, provided certain criteria are met (Article 12). There has been a wide debate on whether disclosure by another Patent Office (such as a published patent application), and to the benefit of a foreign corporation, would entitle a claimant to a grace period to preserve novelty. While deciding on this, Brazilian courts would also have the opportunity to debate the powers of INPI in setting rules that restrict patent applicants’ rights under the Brazilian IP Statute.

As to claims amendment, which is regulated by Article 32 of the Brazilian IP Statute, according to INPI, any amendments to patent claims must be filed before the request for examination of the patent application and be supported by initial disclosure (see Resolution 093/2013 of INPI). After the request for examination of the patent application, amendment (voluntary or not) to the claims broadening the scope of the claimed subject matter will not be accepted and these amendments will be refused.

IP specialists have long disputed the adequacy of the mentioned Resolution in view of Article 32, and litigation concerning claim amendments for patent applications whose examination was requested before or after Resolution 093/2013 is mostly handled by federal courts at the moment.

Procedural aspects of patent litigation

In Brazil, patent validity claims are always tried by federal courts, whereas infringement lawsuits are filed before state courts. This bifurcated system imposes several challenges on patent litigation in Brazil.

Patent invalidity as a defence in infringement claims

A first challenge worth noting concerns the possibility of arguing patent invalidity as a defence in infringement claims before state courts. According to the Brazilian IP Statute, patent invalidity may be raised as a defence at any time (Article 56(1)). Due to a Superior Court of Justice precedent issued in 2012 (REsp 1.132.449/PR), defendants, for the past decade, have had difficulties in having invalidity arguments heard before state courts within the scope of a patent infringement claim.

Recently, however, the Superior Court of Justice, in a unanimous decision, affirmed the possibility of a declaration of patent invalidity in an infringement claim by state courts (REsp 1.843.507/SP) – the effects of this declaration will be restricted to the parties involved in the lawsuit. The decision was grounded on the fact that the possibility of disputing the validity of a given patent was introduced by the current IP Statute to guarantee a proper defence against infringement, which cannot be seen in relation to disputes involving trade marks as highlighted in REsp 1.527.232/SP (Repetitive Thesis 950).

It is important to bear in mind that the court rulings in Brazil are not mandatorily binding in most cases. Thus, how much deference courts will pay to the particularities of each case, in order to allow an invalidity argument to proceed as a defence in an infringement claim, is still to be seen (precedents are otherwise still observed).

Staying an infringement suit while patent validity is being challenged

Another challenge relates to the possibility of staying an infringement lawsuit while discussion over patent validity is still ongoing. A stay of infringement whilst invalidity is being discussed may not be a satisfactory solution, as it can impose an undue burden on a patent owner that, in most cases, will have waited a long time to have the patent granted. Besides, it is easy to see that this mechanism could be abused. On the other hand, allowing the infringement claim to proceed in such circumstances may, for example, cause inefficiencies and unduly jeopardise a company’s business.

Following a decision issued by the Superior Court of Justice stressing the judge’s discretion in this matter and determining the stay of an infringement claim in view of validity discussions, the number of judges granting stays has increased, which has led litigators to be more creative in showing reasons for such cases to proceed in parallel.

Battle of injunctions

Lastly, the so-called bifurcated system has produced a battle of injunctions – ie, when a federal judge grants a preliminary injunction to stay the effects of a granted patent citing an ongoing infringement lawsuit where injunctive relief was issued in favour of the patent holder. This new trend, very much produced because of issues previously mentioned in this article, shall also be taken into account when preparing an enforcement case or defending one as the interaction between federal and state court judges improves.

In this sense, attorneys expect to see an increase in patents suits and the related development of IP law in Brazil as more complex matters are examined, and judges gain greater experience and become more specialised in this field.

Gusmão & Labrunie

Av. Brigadeiro Faria Lima, 1485
11th floor, Pinheiros
São Paulo, 01452-002
Brazil

+55 11 2149 4500

glpi@glpi.com.br www.glpi.com.br
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Law and Practice

Authors



Kasznar Leonardos Intellectual Property provides tailored solutions to the most complex IP issues, both nationally and internationally, with a deep understanding of different cultures and business industries. Specialised in the management of intellectual assets, the team has 25 partners and more than 240 employees, with correspondents in every state of Brazil and a broad international network. It acts as legal adviser on contractual matters, as industrial property agent with the Brazilian Patent and Trade Mark Office, and its lawyers, arbitrators and mediators act in litigation and extrajudicial dispute resolution. The firm's main areas of practice are patent and trade mark prosecution, industrial designs, regulatory law, life sciences, digital law, marketing and entertainment law, sports law, biodiversity, copyright, unfair competition, technology transfer, geographical indication, trade secrets, franchising and licensing, fashion law, licence compliance and anti-piracy.

Trends and Development

Authors



Gusmão & Labrunie is one of Brazil’s leading intellectual property firms and has been helping clients – including Unilever, BASF, Roche, Libbs, Ford, GE, and Transocean – achieve their ambitions in securing and enforcing vital patent assets for over 30 years. Its team of attorneys and patent specialists has unrivalled technical expertise and experience, and provides strategic guidance and services regarding patent counselling and prosecution, as well as crafting patent strategies to be used in various court proceedings. The firm has been involved in cutting-edge cases that have shaped the Brazilian intellectual property landscape as well as contributed to the development of legal strategies later implemented in other countries by clients. In this sense, it is worth mentioning, for instance, that Gusmão & Labrunie was a pioneer in enforcing intellectual property rights with regard to TV formats as well as in litigating second medical use claims and injunctions related to 3G SEPs.

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