Brazil: Brazil Federal Court Of Appeals For The Second Circuit Rules That Mailbox Patents Can Only Be Granted With The Validity Date Of 20 Years From Filing

The Brazil Federal Court of Appeals for the Second Circuit held a hearing for the 1st Specialized Panel to rule on the Repetitive Demands Resolution Incident regarding the validity date for mailbox patents.

Mailbox patents are pharmaceutical and agrochemical patents that were filed under a special regime in Brazil between its adherence to the TRIPs Agreement (Trade-Related Aspects of Intellectual Property Rights) in 1994 and the issuing of the Brazilian IP Statute. The reason for this special regime was that, prior to the TRIPs Agreement, pharmaceutical and agrochemical inventions were not allowed to be patented in Brazil – which would need to change in consideration of the TRIPs.

Article 70.8(b) of the Agreement established that from January 1, 1995 all of the signatory members would need to apply the same criteria of patentability to pharmaceutical and agrochemical patent applications that was required to other applications. In this sense, it was established a procedure in which the Brazilian Patent and Trademark Office ("BPTO") would receive such patent applications, especially in order for Applicants to save their priority dates, but they would only be analyzed under the law of the new IP Statute, which was still unpublished. However it is worth mentioning, despite this special regime, these patents that became known as "mailbox" patents were not extraordinary patents (different from BTO's understandings), as established by TRIPs.

The new IP Statute was issued on May 14, 1996 and came into force on May 14, 1997. Articles 229 and 229-B, respectively, established that (i) pharmaceutical and agrochemical patents filed between January 1, 1995 and May 14, 1997 would be examined under the same patentability standards established in said law, with the validity date limited to the main section of article 40 of the IP Statute and (ii) that these patent applications would need to be decided by December 31, 2004.

Article 40 of the IP Statute established that the validity of patents will be of 20 years from the filing date, but its sole paragraph states that the validity term cannot be inferior to 10 years from the granting date. Basically, this means that:

  • Patents granted by the BPTO in less than 10 years will be valid for 20 years from filing date; and
  • Patents granted by the BPTO in more than 10 years will be valid for 10 years from granting date.

The rationale for this rule is quite simple: to protect patent owners from long administrative procedures – still a true reality in Brazil, by guaranteeing a minimal validity date in order to ensure that patent owners would have at least 10 years in which they could enforce their patents, including being able to effectively stop third parties from using the respective inventions – something that is not possible to do while the invention is still a patent application.

In relation to mailbox patents, the rule was that their validity date would be limited to 20 years from filing, as long as granted by December 31, 2004, which would certainly guarantee that the validity term would never be inferior to 10 years from the granting date.

Therefore, if the BPTO had respected such limitation date, there would have been no controversy regarding mailbox patent validity dates. But, of course, the BPTO did not comply with the rule established by article 229-B, and granted mailbox patents after the limitation date.

The BPTO at first interpreted the IP Statute in a combination of articles 229 and 229-B, and granted mailbox patent applications that were examined in more than 10 years with a validity date of 10 years from the granting date.

However, in 2013, the BPTO adopted the new interpretation of solely considering article 229, which would limit the validity date of mailbox patent applications to the main section of article 40, despite the fact that the BPTO did not comply with article 229-B. Aiming to enforce this new interpretation, the BPTO filed several lawsuits claiming that the validity term of the mailbox patent applications that were granted from 10 years from the granting would need to be reduced, considering 20 years from filing.

Naturally, patent owners disputed such interpretation, which led to a large controversy in court, in which trial and appellate judges adopted different interpretations of the law. Therefore, several decisions were issued in favor of the BPTO and several others issued in favor of the patent owners. Considering the large number of cases regarding the same dispute and the number of controversial decisions, in 2017 one of the patent owners filed a Repetitive Demands Resolution Incident ("IRDR"), which is intent on determining the correct interpretation that the courts would need to adopt.

The IRDR was distributed by random draw to Appellate Judge Ivan Athié, from the 1st Specialized Panel of the Federal Court of Appeals from the Second Circuit, who adopted the same interpretation than the BPTO's. The panel ruled on the IRDR on June 27 and also established that the correct interpretation would be that mailbox patents would only be valid for 20 years from filing. The decision was unanimous.

This decision can still be appealed to the Superior Court of Justice, and filing said appeal will stay the effects of the panel's decision, which, in turn, would mean that the patents that would have their terms reduced by this decision will still be in force pending a final Superior Court decision. Therefore, there is still a chance that this decision will be reverted and that the interpretation of the IP Statute will be the one that mailbox patents can be granted from 10 years from the granting date.

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Founded in 2001, Tauil & Chequer Advogados is a full service law firm with approximately 90 lawyers and offices in Rio de Janeiro, São Paulo and Vitória. T&C represents local and international businesses on their domestic and cross-border activities and offers clients the full range of legal services including: corporate and M&A; debt and equity capital markets; banking and finance; employment and benefits; environmental; intellectual property; litigation and dispute resolution; restructuring, bankruptcy and insolvency; tax; and real estate. The firm has a particularly strong and longstanding presence in the energy, oil and gas and infrastructure industries as well as with pension and investment funds. In December 2009, T&C entered into an agreement to operate in association with Mayer Brown LLP and become "Tauil & Chequer Advogados in association with Mayer Brown LLP."

© Copyright 2019. Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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