Brazil: Getting To Work

Last Updated: 14 November 2015
Article by Fabio Albergaria Dias

Patent owners are theoretically required to work their inventions in Brazil, or run the risk of a compulsory licence being granted to a competitor, but the situation is complicated, as Fabio Albergaria Dias of Luiz Leonardos & Advogados explains.

"Am I obliged to work my invention locally?" Regularly, in Brazil, foreign companies are faced with this apparently simple question.

According to the previous Brazilian Industrial Property Code of 1971, if the product protected by a patent was not exploited in the country within a period of four years from its date of grant, or if such exploitation was interrupted for a period of more than two consecutive years, the patent would be forfeited.

The current Industrial Property Law, dated May 14, 1996, abolished such a rule. It is important to remark that now there is a provision under article 68(1)(I) of the IP law stating that if the product is not locally exploited within a three-year period from its grant, it becomes vulnerable to compulsory licences, except in specific cases when local manufacture is not economically viable. In these cases, importation is allowed.

According to Brazil's IP law, a compulsory licence may be requested only by a party with a legitimate interest, as well as the technical and economic capability to effectively exploit the product protected by the patent. The compulsory licence will be non-exclusive, and sub-licensing is not permitted.

Some may argue that the above provision should be analysed in conjunction with the caput of article 68 of Brazil's IP law, concluding that the local working requirement depends on the patentee having first exercised its rights in an abusive manner or abused its economic power.

Another question that arises from such discussion is whether the local assembly of a product would comply with the requirement of local manufacturing. In this situation, the mere assembly of the product would correspond to the importation of the parts constituting it, and would be admitted only if local manufacturing proves to be unfeasible.

The requirement of local working is considered to be of paramount importance to the development of the country, creating industries and providing local jobs, by means of the transfer of technology and innovation. The government grants a monopoly to the patentee for a period of 20 years from the filing date of the patent application or ten years from the date of the patent's grant. In response, the patentee works the patented product locally.

The effect of TRIPS

On the other hand, Brazil has been a member of the TRIPS Agreement since 1994. Article 27.1 of the agreement states that patent rights shall be enjoyed regardless of whether products are imported or locally produced. In fact, TRIPS was the basis for the creation of Brazil's IP law, which will celebrate its 20th anniversary in 2016. This is why the law is not deemed to be TRIPS-compliant.

Nevertheless, article 2.2 of TRIPS states that nothing shall detract from existing obligations that members may have to each other under the Paris Convention. Article 5A(2) of Paris Convention, in turn, corroborates that each member country has the right to take measures providing for the grant of compulsory licences to prevent abuses resulting from the exercise of exclusive rights, such as failure to work the invention. The Paris Convention entered into force in Brazil back in 1884.

TRIPS itself also corroborates such an assertion, since the interpretation of articles 30 and 31 allows members to provide limited exceptions to the exclusive rights of the patent, including the use of the patented subject matter by the government or third parties authorised by the government. It concludes that the local working requirement is within the scope of the agreement.

Historically, the local working requirement of Brazil's IP law was challenged at the WTO in the dispute of US v Brazil back in 2000. The Brazilian government attempted to grant compulsory licences based on the lack of local manufacturing of patented medicines owned by US pharmaceutical companies, in an attempt to threaten these companies to reduce the prices of the medicines used in Brazil's public health programme to combat AIDS. However, during the discussion, in 2001, the US and Brazil reached an agreement, with the US withdrawing its complaint, but the enforceability of the local working requirement was not discussed.

Generally, companies attempt to overcome such a requirement by voluntarily licensing the patented invention or seeking to license it. One of the most common types of offer for license is 'nominal' working, which comprises the placing of advertisements, usually in the Federal Official Journal, offering a licence on certain terms.

However, there is no evidence to suggest such an approach would be effective to prove that the invention was worked or there had at least been an attempt to work it, in order to avoid the grant of a compulsory licence to an interested third party. Unlike in other countries, there are no provisions in Brazil's IP law on the filing of statements disclosing the status of working.

In theory, however, the law still has a provision in article 69 listing quite general situations in which a compulsory licence should not be granted. These include, for example, if the patentee justifies its failure to use the invention with legitimate reasons, which is consistent with the provision of article 5A(4) of the Paris Convention, or if the patentee proves that serious and effective preparation for exploitation has been made.

If all mechanisms to avoid the compulsory licence prove to be ineffective, the patentee must be aware that such a licence is still subject to royalty payments.

It should also be emphasised that during almost 20 years of the current IP law's existence, only two requests for a compulsory licence have been filed and there are no records of a compulsory licence having been granted by the Brazilian Patent and Trademark Office (INPI) due to lack of local working.

In fact, only one compulsory licence has been granted in Brazil, on the grounds of public interest, in a case involving two Merck & Co owned patents encompassing the retroviral efavirenz. In this case, the compulsory licence was regulated by Decree No. 6108, dated May 4, 2007, and not by the INPI in accordance with the provisions of Decree No 3201 of October 6, 1999, which regulates compulsory licences granted on the grounds of public interest or national emergency.

In view of the above, the current understanding is that in principle the right of the patent owner shall not prevail over the public interest.

Originally published by World Intellectual Property Review Annual 2015.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.