In summary
Brazil has seen an increase in patent litigation, as the local economy grows and stabilises. With more companies eyeing Brazil as a strategic option for the enforcement of its intellectual property rights, it is important to be aware of the recent developments in the IP landscape of the biggest economy in Latin America. In this article, we discuss the new regulation on ‘skinny’ labelling, the growth of medtech disputes, the resurgence of the technology transfer programme and the Brazilian Patent and Trademark Office’s (BRPTO) new rules on administrative appeals.
Discussion points
- Court system and jurisdiction review: change to the bifurcated system
- Skinny label regulation as courts move to set liability for infringement
- Boom in medical devices market leads to patent infringement issues
- Resurgence of technology transfer agreements: threat or opportunity?
- Patent term compensation
- BRPTO’s new rule on administrative appeals
Referenced in this article
- Brazilian Food and Drug Agency, Board of Directors Rule No. 47/2009
- Food and Drug Law (Law No. 6,360 of 1976)
- Novartis Pharma v Medac Farma
- GlaxoSmithKline LLC v Teva Pharmaceuticals USA, Inc
- Celgene Corporation v Eurofarma Laboratórios S/A
- Constitutional Challenge No. 5,529
- Partnerships for Productive Development Framework (Ministry of Health Ordinance No. 4,472/2024)
- Brazilian Intellectual Property Law (Law No. 9,279/1996)
- BRPTO’s Rule No. 10/2024
Injunctions at a glance
Preliminary injunctions – Are they available? How can they be obtained? | Preliminary injunctions are available to patent owners, including ex parte. They are granted when the plaintiff proves a likelihood of succeeding on the merits and a risk of irreparable harm. However, if the balance of hardship favours the defendant (ie, alleged infringer), the court will deny the preliminary injunction. |
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Permanent injunctions – Are they available? How can they be obtained? | Permanent injunctions are available upon a finding of infringement. They are the primary remedy for patent infringement. |
Is payment of a security or deposit necessary to secure an injunction? | The court may order the plaintiff to post a bond as a condition to grant the preliminary injunction. |
What border measures are available to back up injunctions? | The court may notify Brazilian Customs to seize infringing imported goods. |
Court system and jurisdiction review: changes in the bifurcated system
Brazil adopts a bifurcated system for patent litigation. Infringement lawsuits fall under the jurisdiction of state courts, while federal courts have jurisdiction to hear invalidity challenges. This split derives from personal jurisdiction rules set forth in the Brazilian Constitution, establishing that federal courts have power over disputes involving federal agencies, including the Brazilian Patent and Trademark Office (BRPTO).
In 2024, the Superior Court of Justice (STJ), Brazil’s highest court with jurisdiction over non-constitutional matters, issued a ruling allowing invalidity defences in an industrial design infringement lawsuit. Although the case involves industrial design, the STJ’s opinion contains obiter dicta statements that apply to patent cases.
For infringement lawsuits, the venue is determined by the residence or principal place of business of the defendant, or by the place where the act of infringement (eg, sale, offer for sale or importation) took place. Invalidity lawsuits are usually filed in Rio de Janeiro or the federal district. Rio de Janeiro is where the BRPTO’s headquarters are located. Since BRPTO is a federal agency, lawsuits against it can be brought before the federal district courts as well.
Skinny label regulation as courts move to set liability for infringement
On 6 February 2024, an amendment to the Brazilian Food and Drug Agency (ANVISA) Board of Directors Rule No. 47/2009 entered into force, allowing generics and branded generics (also called ‘similar’ drugs) to remove patented uses from their labels (ie, ‘skinny’ labelling).
ANVISA’s President Director, Mr Barra Torres, has argued this measure will expand access to healthcare, as well as helping solidify the rights of patent owners.
However, ANVISA’s new rule is at odds with the federal legislation on this matter. According to article 3 of Law No. 6,360 of 1976, generic and branded generic drugs shall contain ‘the same . . . therapeutic indication and [be] equivalent to the drug already registered with the Food and Drug Agency’. Ongoing infringement lawsuits based on use patents may lead courts to address the legality of ANVISA’s rule soon.
In Celgene v Eurofarma, for instance, the court granted a preliminary injunction against a generic manufacturer that carved out its label to exclude the patented indication (even before the change in ANVISA’s rule). The decision ordered the alleged infringer to abstain from selling and offering for sale its product for the patented indication. As a result, Eurofarma could not offer its generic drug for sale in public tenders that did not specify for which indications the drug was being purchased. The same applied to private sales.
Medtech patent infringement
Brazil’s medical devices market is experiencing a surge. On average, more than US$6.7 billion worth of products are imported annually, with around 14,000 new products being introduced every year. One example is the increase in sales of equipment for endoscopic surgeries, given the rise in the number of bariatric procedures—over 70,000 per year.
A market growth often means more risks of intellectual property (IP) rights infringement. In Edwards Lifesciences v Doc Med, filed before the São Paulo State courts, the discussion surrounds violation of trade dress of a balloon-expandable transcatheter heart valve. In 3M v Pro-Tech, a patent infringement case involving maintenance-free respirators, the preliminary injunction was granted in December 2023.
On 28 August 2024, the São Paulo State Court of Appeals confirmed a trial judgment rendered in Ethicon et al v Scitech, which had granted a permanent injunction and damages in favour of the plaintiffs. The lawsuit was filed by Ethicon against local company Scitech, grounded on the infringement of a utility patent and an industrial design. Scitech has been ordered to cease all acts of commercialisation of the infringing product (powered surgical stapler) and to pay patent damages, as well as moral damages (a remedy somewhat similar to punitive damages).
Technology transfer agreements in pharma
The Brazilian government announced in 2023 its plan to resurrect the Partnerships for Productive Development (PDPs) programme after four years of inactivity.
PDPs are agreements between private companies (local or foreign), government-owned industries (such as publicly funded manufacturing plants) and the Ministry of Health. Their goal is the transfer of technology to produce drugs or medical devices relevant to the Brazilian public healthcare system (SUS). As a counterpart to this, the companies involved receive five to 10 years of exclusivity in the product’s supply to the government. Since its inception, over 400 million Brazilian reais have been spent on products via PDP.
In the past, the creation of PDPs for patent-protected products without the involvement or consent of patent owners caused a negative impact. In an infringement lawsuit, a trial court acknowledged that a PDP proposal involving an unauthorised private company violated patent rights, as it constituted an illegal offer for sale of the protected product, regardless of when the actual sale would occur. The programme also suffered a major setback after an audit by the government’s Accountability Office (GAO), which found a series of vulnerabilities, leading to the suspension and termination of dozens of partnerships. The GAO concluded the programme lacked objective criteria for defining the list of products of strategic relevance to SUS; objective parameters for carrying out analysis of PDP proposals and pre-defined criteria for grading proposals; clear deadlines for analysing monitoring reports and carrying out technical visits; transparency regarding the allocation of the unit price paid by the Ministry of Health (cost of the product versus cost of the technology); and objective criteria regarding the market share allocation whenever two or more PDPs were approved for the same product.
On 20 June 2024, the government published the new framework for PDPs (Ministry of Health Ordinance No. 4,472/2024) as part of the government’s policy to foster the National Strategy for the Development of the Economic-Industrial Health Complex (Decree No. 11,715/2023). The policy aims to increase access to drugs and medical devices in SUS and, on paper, addresses most of the existing concerns. Regarding IP rights, the new regulation mandates that the proposal must mention any relevant granted patent or pending patent application (Phase I) and state whether those are expected to be a hindrance within three years of its submission. If a proposal is approved and a patent is still in force at the end of the three-year phase (Phase II), the PDP will be stayed and re-evaluated. It may even be cancelled depending on when the patent-protected product would be clear for supply (Phase III).
Patent term compensation
Another topic that warrants attention is the discussion surrounding judicial patent term compensation. In 2021, the Brazilian Supreme Court handed down a landmark decision, ruling that a legal provision that previously guaranteed patent owners a minimum 10-year term of protection from grant was unconstitutional. The Supreme Court also decided that the ruling would apply retroactively to pharmaceutical patents. As a result, over 3,000 patents had their terms immediately shortened, while patents in other fields of technology (including animal health and agrochemical) got to keep their awarded 10-year term from grant.
The ruling rendered in Constitutional Challenge No. 5,529 raised several important questions that are still being answered to this date. Disputes keep on raging, for example, over whether the pharmaceutical patents that had their terms shortened can qualify for patent term compensation by other means. Battles are also being fought over whether those patents can be enforced for the period prior to the Supreme Court ruling in 2021.
Overall, over 50 cases have been filed seeking term compensation for specific assets, relying on the dicta of the Supreme Court majority opinion. Almost 40 of them invoked foreign frameworks by analogy. Nine others invoked provisions from Brazilian administrative and civil law to request specific term compensation.
These cases have given rise to four constitutional complaints before the Brazilian Supreme Court. So far there have been three unfavourable decisions on these complaints, affirming that the Supreme Court has ruled any type of patent extension unconstitutional, not just the automatic one provided in the Brazilian Intellectual Property Law. In the fourth case, however, Justice Ricardo Lewandowski – who has since retired and become the Minister of Justice – issued an opinion that the ruling rendered in Constitutional Challenge No. 5,529 is restricted to the automatic patent term extension and does not prevent individual compensations.
There is no final word on whether there should be any sort of term compensation in Brazil or not. The composition of the Supreme Court has been changing since the ruling of 2021. Soon, as the court responsible for deciding infra-constitutional issues, it will be asked to review appeals on specific cases, and things can change fast in Brazil. A few lower courts continue to grant preliminary injunctions in favour of patent owners to determine the immediate adjustment of the patent term as compensation for the administrative delay; however, most have been stayed by the court of appeals.
In parallel, Supreme Court Justice Luiz Fux rendered a decision in 2023 clarifying the scope of Constitutional Challenge No. 5,529 in relation to enforcement of pharmaceutical patents whose terms were reduced. The decision came in a constitutional complaint filed by local companies against a trial judgment of infringement in favour of Bayer, over a patent covering Xarelto. The trial court had concluded that Bayer’s patent, despite having its term reduced to 11 December 2020, was in force until the publication of the constitutional challenge ruling on 13 May 2021. Since there were infringements between December 2020 and May 2021, the court ordered the generic companies to pay damages and destroy the batches produced using active pharmaceutical ingredients imported on 30 March 2021.
The generic companies argued that the trial judgment violated the ruling in Constitutional Challenge No. 5,529 and Justice Luiz Fux agreed, ordering a retrial.
Brazilian Patent and Trademark Office’s updated guidelines on appeals
On 19 March 2024, the BRPTO published new rules on administrative appeals (Rule No. 10/2024), which impose some limitations on what the patent applicant can do at the appellate level. Formal issues (eg, lack of a power of attorney or other documents that should have been submitted at an earlier stage) cannot be corrected. Claim amendments that restrict the scope of protection will be allowed as long as they are not introducing any new argument into the proceeding, address the grounds of the decision of rejection and are based on the rejected set of claims.
Patent applicants can no longer present any new documents to support the application, unless they can prove they have not submitted said documents before due to an unforeseen event beyond their control. Examiners may, however, accept arguments that aim to clarify and prove a technical effect, since this is inherent to the matter initially disclosed in the application.
Following the publication of this new rule, a few patent applicants have filed lawsuits asking courts to order the BRPTO to abstain from applying this regulation to pending appeals. The first trial judgments were issued between June and August 2024, establishing that appeals must be analysed based on the rules in force at the time of filing, but noting that additional submissions filed during the proceeding, after Rule No. 10/2024 entered into force, are subject to this new rule.