17 September 2021

New Compulsory Licensing Rules For Patents In Brazil

The Covid-19 pandemic triggered the review of the provisions of the Brazilian Patent Statue (9.279/1996) on compulsory licensing of patents in cases of national emergency or public interest.
Brazil Intellectual Property
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The Covid-19 pandemic triggered the review of the provisions of the Brazilian Patent Statue (9.279/1996) on compulsory licensing of patents in cases of national emergency or public interest. After a few months of debate, on 6 May 2021, the Brazilian Senate approved bill 12/2021, which creates a two-step compulsory licensing process and amends the provisions of the Brazilian Patent Statue. On 6 July 2021, the House of Representatives approved the bill with some amendments (see here).

The Bill then returned to the Brazilian Senate where the House of Representatives´ amendments were discussed. On 02 September 2021, the bill was sanctioned with vetoes by Brazilian President Jair Bolsonaro who signed law 14.200/2021. Even though the National Congress has until 3 October 2021 to review the President´s vetoes, the new rules shall apply to all future cases involving a national or international emergency, public interest, or a national public calamity situation.

In general terms, it is worth mentioning that the grant of compulsory licenses in exceptional situations is already permitted by the current Brazilian legislation with support by the federal constitution and international treaties to which Brazil is a signatory. However, the main change brought by law 14.200/2021 is the set-up of a two-step compulsory licensing process:

i. First stage: the Brazilian Executive Branch must publish, within 30 days of the state of emergency declaration date, a list of patents or patent applications related to essential products and processes that would help to counter such situation. In the case of the covid-19 pandemic, the government would be beholden to draft such list including Brazilian patents and/or patent applications put forward as potentially useful for treatment and prevention of covid-19.

Patents and patent applications subject to a technology transfer agreement or a voluntary license to produce the protected product and/or process capable of ensuring that domestic demand is met will not be included in this list. In such cases, it will be analyzed if the number of supplies, the price and deadline are compatible with the needs of the state of emergency, public interest or public calamity situation. Consequently, patents or patent applications would be excluded from the list if: (i) the concerned subject matter is being duly and directly explored in the country; (ii) the patent or patent application is already subject to a voluntary license; or (iii) there are transparent agreements for the sale of the product covered by the patent or patent application.

ii. Second stage: after the publication of said list, the Executive Branch will have a 30-day term, renewable for the same period, to analyze the inventions and utility models covered by the patents and patent applications listed. Compulsory licenses would then be granted, ex officio, for a specific period and on a non-exclusive basis, but only for the cases useful to face the specific situation that underlies it and for which technical and economic capacity to produce the object of the patent or patent application has been proved. Compulsory licenses may also be granted to meet the needs of countries with insufficient or no manufacturing capacity in the pharmaceutical sector.

Patent owners would receive a remuneration corresponding to 1.5% of the net sale price of the product covered by the patent, but only if the patent application is granted. Moreover, the payment of said royalties, corresponding to the entire period of the license, must be made only after the grant of the patent.

In relation to President Bolsonaro´s main vetoes, it should be highlighted that, contrary to what bill 12/2021 previously established, the owner of the patent or patent application subject to a compulsory license will not be obliged to provide the necessary and sufficient information (e.g.: know-how, technical aspects, biological material, test results and other data) for the effective reproduction of the object protected by the patent or patent application. According to a statement from the President´s office, the provision on knowledge transfer was vetoed as it was seen as being too difficult to implement and would therefore discourage investments in R&D in the country.

Furthermore, the President vetoed the possibility that a decision to grant a compulsory license could be taken by the enactment of a law, independently of the Executive Federal Branch´s decision in this regard. President Bolsonaro opted to keep a final decision on compulsory licensing under the responsibility of the Executive Branch instead of the Legislative Branch. In line with this veto, the President also vetoed the legal provision of bill 12/2021 recognizing by law the state of emergency in public health of national importance arising from the covid-19 pandemic.

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.

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