The Patent Litigation Law Review: Brazil
The amendments to the Industrial Property Law2 (the IPR Law) and the incorporation of the Agreement on Trade-Related Aspects of Intellectual Property Rights into Brazilian law mark clear turning points for the reinforcement of patent protection in Brazil, which greatly improved the litigation environment in respect of preventing infringement of intellectual property (IP), particularly patent rights.
Among the main improvements of the IPR Law, the extension of patent protection to any and all fields of technology and the creation of specialised courts on industrial property rights have been regarded as the most significant ones. The previous IPR Law excluded from patentability inventions related to the pharmaceutical, biotechnology and fine chemical industries since there was a direct government policy to create a 'market reserve' for local companies to exploit, produce and commercialise foreign technology in technical areas regarded as crucial, without authorisation and the payment of royalties. The arguments for the market reserve were the need for IP protection to match the economic development policy adopted by the government at the time.
These facts gave rise to a disrespectful culture of intangibles and weakened the patent owners' rights, especially foreign ones. Enforcing patent rights before the courts was a challenge under the previous IPR Law: the judges were driven by limited understanding of IP rights and were greatly influenced by development policies. In addition, no specialised courts had yet been established, and intangibles lacked priority when compared with other matters addressed by the judges, such as family law.
The current IPR Law was, therefore, a landmark. It strengthened IP rights and levelled patent protection to international practices. Furthermore, patents have been expressly recognised as chattels or movable property,3 which makes patents adequate subject matters for property rights and for enforcement before the local courts to prevent others from using, exploiting and disposing inventions in the Brazilian territory.
An important development in patent litigation that arose from the IPR Law is the spread of specialised courts addressing IP rights. Article 241 of the IPR Law initially envisioned the creation of specialised courts to settle conflicts related to IP rights – a trend that became reality in 2001 when the federal courts of the Second Region (Rio de Janeiro and Espírito Santo) created a specialised structure that specifically addressed IP rights by establishing four federal trial courts.
This trend continued with the setting-up of two specialised appellate panels, all in the Second Region in the city of Rio de Janeiro, where the Brazilian National Institute of Intellectual Property (INPI) is headquartered, and the State Court of Rio de Janeiro set up seven chambers on business law matters, including IP rights. The State Court of São Paulo recently created two first instance courts that specialise in IP business law matters, including issues relating to IP rights, as well as two appellate chambers, which currently comprise 14 specialised judges. The State Court of Minas Gerais also inaugurated two specialised business law courts at first instance, and the State Court of Rio Grande do Sul currently has one specialised business law court.
The overall quality of the decisions regarding IP rights in general, especially patents, has increased substantially owing to the judges' experience with patents, unfair competition and related intangible rights. Moreover, the time frame for rendering a final decision on IP rights has decreased substantially.
i General rules and proper venue for patent litigation
The Brazilian litigation system was conceived by the Constitution, which outlines a structure of various courts horizontally organised under different subject matters that should be addressed. It also outlines vertical layers of jurisdiction extending to the Superior Court of Justice (STJ) and the Federal Supreme Court (STF) in certain cases, provided that the requirements have been adequately fulfilled.
The Civil Procedure Code4 and the Criminal Procedure Code5 set out the procedures for the suit, including judicable disputes, standing to sue and cause of action, and the tools that plaintiffs and defendants may use during litigation
Concerning patent litigation, the existing landscape branches out into two different jurisdictions or court spheres encompassing infringement rights and disputes related to decisions issued by the INPI on patent prosecution, including patent invalidity.
ii Federal Courts: matters regarding the INPI's decisions
According to the Constitution, the federal courts hold the jurisdiction to address disputes that state companies, entities and agencies of the federal government have claimed in the suit. Those courts are organised into five geographical regions, each served by an appellate court, as follows: the Regional Federal Court of the First Region, located in Brasilia; the Regional Federal Court of the Second Region, located in the city of Rio de Janeiro; the Regional Federal Court of the Third Region, located in the city of São Paulo; the Regional Federal Court of the Fourth Region, located in Porto Alegre; and the Regional Federal Court of the Fifth Region, located in Recife.
The location of the headquarters of the federal agency that participates in the claim determines which of the enlisted federal courts has jurisdiction. Since property rights are secured through examination of the patentability requirements by the INPI, the INPI's decisions during patent prosecution are questioned specifically at the Federal Courts of the Second Region. This is the prevailing rule.
The main judicable patent matters addressed by the federal courts are the invalidity of claims and the INPI's decision refusing the grant of a patent to a specific invention. Other matters commonly addressed by the federal courts on patents are adjudication of rights under Article 49 of the IPR Law when the INPI disregards inventors' names in a granted patent and writs of mandamus against the INPI to expedite the prosecution of patent applications.
iii State courts: patent infringement and losses and damages
Another set of courts available for patentees are the state courts, which hold jurisdiction for the aggrieved patentee to recognise infringements of its granted patent, re-establish status quo regarding the adequate patent rights prior to violation and recover damages for losses caused by acts that violate the patent and unfair competition.
State courts are established in each of the 26 states of Brazil and the Federal District in Brasilia. Each state court is independent and may establish the numbers of civil and criminal courts, the specialisation of the courts and the composition of the chambers at second upper instances.
There are rules under the Civil Procedure Code and the case law that determine the adequate venue for a court suit on patent infringement within one of the existing 26 state courts. The general prevailing rules on the proper venue are as follows:
- The prevailing jurisdiction is the state court where the infringer (defendant) is domiciled, as indicated in the by-laws or the acts of incorporation.
- The competence of the state court may be determined in accordance with where the infringement or the tort occurred. This choice involves combining the infringement with the losses and damages plea. The infringed patentee, for example, should take into consideration a place within the state within which a product or service infringing the patent was made available to the public for commercialisation or the place where the products were found; therefore, if the patent infringement took place anywhere within the state of Rio de Janeiro, the proper venue for litigation would be the Business Law Chamber of the State Court of Rio de Janeiro. This flexibility greatly assists the infringed parties in cases where the violation takes place by means of online platforms in the Brazilian territory.
- As an exception, the competence of the state court can be determined by the place where the infringed party (plaintiff) is domiciled. This situation applies solely in cases where the infringer does not have a clear domicile.
The state courts also hold the jurisdiction to address the procedures related to the criminal actions since patent infringement is regarded as both a civil tort and a criminal offence. The court procedure will be run in this regard by the Criminal Procedure Code and the rulings specified in Articles 201 to 207 of the IPR Law that deal with the needed search and seizure procedure of the object comprising the invention for a preliminary examination of the possible patent violation.
Types of patent
According to the IPR Law, patents can be granted to inventions and utility models. While inventions are technological creations that present a new and inventive solution for a technical problem, utility models are products of a practical use expressed in new shapes that lead to a functional improvement or means of manufacture. Industrial design and plant varieties, for example, are not patentable; protection of those IP rights takes place concomitantly by registration at the INPI and the National Plant Varieties Protection Service, respectively. Article 10 of the IPR Law further enlists subject matters that are not looked upon as inventions or utility models.
Since Brazil is a member of the Paris Convention, the local patent system is ruled by the 'first-to-file' regime, which grants the patent in the Brazilian territory of a technological development to the one who first files the invention for protection. To obtain patent protection, the invention or utility model must fulfil the patentability requirements set out by Articles 8, 9, 24 and 25 of the IPR Law.
Regarding the prosecution and examination of the patentability requirements of a patent application for a possible patent grant, the following steps must be undertaken:
- submission to a formal preliminary examination at which point the INPI's examiners will verify if the application complies with Article 19 and the applicable normative acts;
- secrecy of the patent application for 18 months, counted from the date of filing or the earliest priority, if any, after which it will be published;
- payment of official maintenance fees from the end of the second year of filing: if the first filing was made in Brazil, or the application in Brazil comes from the CUP agreement, the time is counted from the date of filing in Brazil; however, if the patent application comes from an international phase (Patent Cooperation Treaty (PCT)), the time is counted from the date of international filing. If the 24-month period expires prior to the Brazilian national phase filing, payment of the overdue maintenance fees must be made within three months of the Brazilian national phase filing;
- examination request by the applicant or by any interested party, which should be made within 36 months of the date of filing: when the primary jurisdiction of the filing is Brazil or if the request comes under the contribution and unit purchase (CUP) agreement, the 36 months are counted from the date of filing with the INPI; however, when the request comes from the international PCT phase, the 36 months are counted from the date of the international filing;
- examination of the patent application and rendering of a decision, either approving or rejecting it: during the examination period, the office actions referring to formal or technical adjustments are published in the INPI magazine, and if applicants do not carry out those actions, the patent application is definitively shelved, with no extension period being possible; and
- payment of the official fees with the issuance of the official patent letter.
Counted from the filing date, a patent for an invention will have a term of 20 years, and a utility model patent will have a term of 15 years. The additional periods of 10 years for patents for inventions and seven years for utility model patents were eliminated by a decision issued on 14 May 2021 by the STF that recognised the unconstitutionality of the Sole Paragraph of Article 40 of the IPR Law,6 which was expressly revoked by Federal Law No. 14,195 of 26 August 2021; therefore, those additional periods can no longer be applied to patents granted after 14 May 2021.
According to the amendment of the effects of the STF decision, patents relating to pharmaceuticals and healthcare that had been benefiting from the additional period will lose the benefit; in other words, if the patent should have had an additional period from the granting of at least 10 years for invention patents or at least seven years for utility models, those patents will no longer have any additional period – only the 20 years for invention patents or 15 years for utility model patents.
In addition, patents within the extra period became extinct as of 14 May 2021. Patents that are benefiting from the exceptional period of the Sole Paragraph of Article 40 of the IPR Law will continue to be valid and effective until the last day of the maximum 10-year exceptional period of patent protection.
Procedure in patent enforcement and invalidity actions
The existing split of the jurisdiction applicable to patent litigation in Brazil into invalidity disputes and patent infringement involves specific procedural rules and challenges that the related parties must face in the courts.
i General patent invalidity procedures
Patent invalidity claims should be understood under a broad concept encompassing judicable controversies related to decisions rendered by the INPI during the prosecution of a patent application that affect the grant of patent rights. Among the disputes are the nullity of patent rights issued in disagreement with the patentability requirements and the INPI's refusal to grant a patent to a specific invention.
Invalidity suits mainly hold as cause of action evidence that the granted patent adequately fulfilled the novelty, inventive step and industrial requirements for an invention. Further there should be evidence that the claims are supported by specifications and the ability to precisely define the invention subject to the protection. There is also a cause of action grounded on violation of the IPR Law and the applicable regulations. This will be addressed specifically in Section IV.ii.
In addition to identifying the cause of action, the plaintiff must evidence its legitimate right to propose the judicial nullity proceedings, as required by Article 56 of the IPR Law. Legitimate rights are understood as third-party connections with the concerned patent, such as licensees, distributors and others entitled to benefits from the invalidity action (e.g., benefits to society when proposed by a consumer's association or clear interference in the plaintiff's existing patent rights). The IPR Law also allows for the proposition of invalidity actions ex officio by the INPI as a remedy for the agency to revise its own decisions.
When proposed by a legitimate third party, the INPI will be summoned and participate as a co-defendant, but it will not, in principle, bear attorney's fees and compensation for losses and damage.
If a court action is initiated by a foreign company, the courts may demand the plaintiff to post bonds (fiduciary guarantee) in court at a rate of 20 per cent of the amount discussed in court, unless the foreign company (plaintiff) holds real estate in Brazil. The bonds are regarded as collateral to cover legal fees and the costs of the defendant or party against whom the action is initiated.
Urgent orders such as ex parte preliminary injunctions may be duly granted by the judges of the federal courts to suspend the effects of the judicable patent when there are elements that prove the probability of the alleged claim (fumus boni iuris) and the risk of loss or injury to the useful outcome of the lawsuit (periculum in mora). The objective of the injunction is to avoid irreparable damage or damages that would be difficult to recover.
An amendment has been adopted by the most recent version of the Civil Procedure Code. Under this law, injunctions may also be granted based on prima facie evidence. Unlike interlocutory relief, there are circumstances in which the facts and claims are so likely owing to the documents or judgments, or the rights in discussion are so clearly undisputed, that the judge is authorised to grant the relief independent of the presence of urgency or the risk of damage.
An injunction grounded on evidence is a novelty since it increases the protection of intangibles. It was somewhat common to see Brazilian judges refuse the grant of injunctions owing to the absence of fumus boni iuris or periculum in mora, which can now be minimised if the interested party correctly follows the requirements of the new procedure for this type of relief.
Both urgent measures and prima facie evidence are usually grounded by supporting technical opinions and documents that prove the inadequacy of the violation of the IPR Law and the illegality of the grant of patent rights. A knowledgeable attorney will turn to his or her technical assistance and expert review team for support on acquiring such documentation prior to filing the lawsuit, therefore increasing their chances of obtaining an injunction; however, if the party is not able to gather proof prior to the suit, they can always request the judge to grant early production of evidence and, on the grounds of that new evidence, obtain the relief.
During litigation procedures, the judges may select experts to assist them in understanding the technicalities and peculiarities of the patent subject matter and the technical reasons behind invalidation. Owing to the lack of technical background of the judges of the federal courts and the fact that only attorneys-at-law are allowed to participate in court procedures, the importance of the participation of technical experts and assistance has increased substantially during court procedures. The same rationale applies to patent infringement suits.
The burden of proof for evidencing that the patent claims do not comply with the patentability requirements lies entirely on the plaintiff, who should specify the technical arguments and present the documents, materials and the technical report to support its demands. The defendant has a guaranteed 60-day period to present its defence and technical arguments supporting the patent grant.
As a co-defendant, the INPI usually acts in the court suit to support its administrative decision that led to the patent grant, and it is its prerogative to be summoned to offer a response within a 30-day period after the holder of the invalid patent presents its defence.
Since there is no jury procedure for invalidity, the control of the court proceedings at first instance is led entirely by one judge, who will guarantee to the involved parties, following the procedure set out by the Civil Procedure Code, the opportunity to comment and oppose each other's arguments up to the judgment of the court of first instance. It is during this phase of the civil procedure that the parties have the chance to prove their case using adequate expert-produced evidence, if duly requested and deemed necessary by the judge.
The judge may, as a preventive or incidental measure, determine the suspension of the effects of the granted patent in dispute insofar as there is adequate compliance with the procedural requirements provided by the Civil Procedure Code. The effects of injunctions persist until the final decision is rendered, unless the judge expressly revokes it in the first instance judgment or if the justice revokes it by an interlocutory decision prior to the second instance decision.
The federal courts decide on the invalidity suit in respect of the nullity of the INPI's decision that offered a grant or refusal to a judicable party and may further decide that the invalidity should be partially applicable to specific claims under Article 47 of the IPR Law or convert the patent into a utility model. The conversion of a patentable invention into a utility model is a mechanism envisaged by the INPI's regulations and adopted by the agency during patent prosecution.
The final decision rendered on patent nullity will be published by the INPI through the Industrial Property Gazette so that the decision is known to third parties. An appeal may be filed to the Appellate Chamber.
As an example, an overall final decision at the first instance level is reasonably rendered within 36 months for patent matters, which may be extended based on the complexity of the case. A similar period is also found at the second instance (higher courts), unless the suit escalates to presentation before the Superior Court of Justice.
ii General patent litigation procedures
Concerning enforcement, the proper venue for patent infringement is one of the state courts, in accordance with the jurisdiction rules set out by the Civil Procedure Code; therefore, the state courts are competent for the patentee to obtain the cessation of the violation and compensation for any losses and damage. It is preferred for infringement suits to be held at state courts that specialise in business law and intellectual property rights.
An essential requirement for a patent infringement suit is the existence of a patent duly granted by the INPI since patent applications are regarded as 'expectations of rights' where the patent requirements are yet to be confirmed by the INPI; therefore, patent applications are not adequate subject matter to support litigation procedures against infringement. A patent grant, on the other hand, confers on its titleholder the right to exercise its exclusive rights.
The cessation of patent infringement may be requested in court after the granting of the patent, not during the stage of patent prosecution at the INPI unless the request is grounded on unfair competition practices and not directly on patent violation. In this regard, the INPI holds a priority programme under Resolution No. 151/2015 to speed up the prosecution of patent applications grounded on the applicant's evidence that an invention under a patent application is being infringed by third parties through use, manufacture, licence and commercialisation. A special procedure must be sought to speed up prosecution.
Compensation for the unauthorised use of the subject matter of the patent is secured to a patentee, including exploitation that occurred between the date of publication of the application and grant of the patent. If the infringer obtains, by any means, knowledge of the contents of a filed application prior to publication, the period of undue exploitation for the effect of compensation will be counted from the commencement date of the exploitation. The initial date for compensation may be the date that exploitation of the invention by the infringer started when the infringer obtained knowledge of the invention of the patent application prior to publication under the terms of Item I of Article 44 of the IPR Law.
The IPR Law and the Civil Procedure Code guarantee the grant of an injunctive order to suspend the violation of the patent rights and seize the violating goods to avoid irreparable damage or damages that would be difficult to recover. Injunctions may be granted before summoning the defendant.
However, as mentioned in Section III.i, urgent measures are granted when infringement is evidenced by means of technical reports, legal opinions, etc. Monetary caution or a fiduciary guarantee may be required to avoid irreparable or difficult-to-repair damage when granting an injunction to suspend the violation, prior to summons of the defendant or when the judge understands it to be necessary. A fiduciary guarantee is always required when the plaintiff is a foreign party.
The same enforcement suit may combine the injunctive relief request, recognition of patent violation and compensation for losses and damage.
Seizure of the products violating the patent may be obtained by a decision by the court on final merits. Customs actions may be obtained if it is evidenced that the product to be imported violates a patent granted in Brazil, although the Customs Code7 focuses seizures on falsified products or products that hold altered packaging.
Although the Constitution and the IPR Law separate the cause of action led at the federal courts from that of the state courts, the STJ has decided that the state courts may determine the nullity of a patent incidentally during the infringement dispute by determining that the infringed or the infringing patent does not comply with the patentability requirements.8 The effects of patent nullity in this case strictly apply to the applicable plaintiff and the defendant in the current dispute at the state courts; therefore, it does not hold erga omnes effects, and patent invalidity with effect to any and all third parties may be obtained only at the federal courts.
This exception is grounded in Item I of Article 56 of the IPR Law, which permits that patent nullity may be argued as a matter of defence in case of patent infringement. This ruling applies to civil tort and criminal offences, as provided in Article 205 of the IPR Law.
Patent litigation at the state courts, as is the case in the federal courts, is conducted by one judge, who organises the procedures, leads the summons of the parties and gathers information and documents, including those proposed by the parties, for the formation of its judgment on the case.
Owing to the stringent technical contents, patent infringement usually involves technical experts appointed by the judge and assistant experts proposed by each defendant and plaintiff. Official hearings may be requested by the parties, the experts or the judge, which take place after receiving the defendant's argument and before trial where the judge may attempt an amicable settlement by the parties. There is no jury procedure for patent infringement disputes.
There are mechanisms under the Civil Procedure Code that encourage the plaintiff and the defendant to reach a satisfactory solution by means of mediation or conciliation within the court procedure. There is also an instrument referred to as a 'procedural agreement', which is a mechanism that allows litigants to enter into an agreement in relation to the adoption of specific procedures that align more adequately with their interests and the nature of the court action.
In practice, for example in a patent infringement, the parties can mutually establish that the suit will be solved without the production of an expert opinion. They may also put aside other proceedings that delay the court procedure or may agree on different deadlines.
Appellate chambers usually comprise three judges, who will examine the facts and legal arguments filed by the court parties. A justice rapporteur is chosen to lead the procedures and render an initial decision that will be verified and confirmed by the remaining judges of the chamber.
After normal patent infringement procedures have been conducted, a final decision is usually rendered by the judge at first instance within 40 to 50 months of the filing of the initial petition. At second instance, the expected decision is rendered within 36 months of the appellate petition.
iii Statute of limitations
Owing to the fact that patent litigation in Brazil is divided into invalidity actions and patent enforcement, where the judicable controversy and the motion vary, the deadline to pursue court protection for a patentee's property rights and losses and damage differs and is governed by the IPR Law provisions and the Civil Code.
For matters relating to patent nullity proceedings, the court procedure may be proposed by the INPI ex officio and by a legitimate interested party during the validity period of the patent under Article 56 of the IPR Law. Concerning the nullity of the INPI's decision that refused the grant of the patent to a patent application, the applicant has a period of five years from the date that the decision was officially published to turn to the federal courts to revert the agency's decision on the grounds of illegality and violation of the IPR Law. This time frame is a general rule provided by Article 1 of Decree No. 20,910/1932, as well as by Article 2 of Decree-Law No. 4,597/1942, which governs procedures against decisions issued by the public administration in general when there is no specific law addressing the deadline.
Patent infringement suits may be initiated before the state courts within five years – a period within which the aggrieved party may obtain losses and damages as a remedy for patent violation under Article 205 of the IPR Law. There is, however, uncertainty regarding the initial date the statute of limitation commences in patent infringement.
For some scholars, the initial date is the date of the occurrence of the violating act, which refers to the date the product comprising the violated patent is offered for commercialisation; however, for other scholars, the commencement date is the day the patentee becomes aware of the infringement.
The state courts have issued decisions accepting the 'infringement act' and the 'patentee knowledge rule'; however, the prevailing court understanding on this matter, which is yet to be consistent, is the patentee's awareness of the violation owing to the fact that patent infringement may be a hidden violation when it involves a patent in the form of a process (not product) used internally by a specific company. Awareness is strongly accepted when a cease-and-desist letter is dispatched and received.
Although the laws of the land secure a longer period for pursing the cessation of infringement and compensation for losses and damage, moving fast in court is recommended for patentees to secure ex parte preliminary injunctions to prevent irreparable or difficult-to-repair damage. Urgency is of the essence.
The extension of the protection conferred by a patent is always defined by the scope of the claims interpreted in relation to the description and drawings; therefore, infringement refers to a third party's unauthorised use of a product that is the subject of a patent, or a process or product directly obtained by a patented process. This ranges from sales to the importation of a product.
Patent infringement examination in court takes into consideration direct infringement, the doctrine of equivalents and contributory infringement.
Independently of the civil action, the patentee may initiate criminal proceedings owing to patent violation, which are processed at the state courts. According to the IPR Law, a patent violation qualifies as a crime when the infringer:
- manufactures a product that is the subject matter of a patent of invention or a utility model patent, without the patentee's authorisation;
- uses means or processes that are the subject matter of a patent of invention without the patentee's authorisation;
- exports, sells, exhibits or offers for sale, maintains in stock, hides or receives with a view to use for economic purposes a product manufactured in violation of a patent of invention or a utility model patent or that is obtained by a patented means or process; or
- imports a product that is the subject matter of a patent of invention or a utility model patent or is obtained by a means or process patented in Brazil for the purposes mentioned in point (c) and that has not been placed on the external market directly by the patent owner or with his or her consent.
The penalty varies from three months to one year plus payment of fines, depending on the infringement involved. Furthermore, it may be increased by one-third to one-half when the party is or was a representative, proxy, agent, partner or employee of the patentee or of his or her licence.
An action against patent crime will be initiated by means of the owner filing a criminal complaint of private interest against the physical person defendant. A criminal complaint should always be preceded by a search and seizure order to obtain irrefutable evidence about the infringement, whereby the corpus delicti is placed before two court experts who examine the evidence and prepare an official report of their findings.
ii Invalidity and other defences
Among the defences against patent invalidity are those provided in Articles 25, 26 and 32 of the IPR Law. Accordingly, the applicant may produce alterations on the patent application within the examination request period, if these are limited to the subject matter initially disclosed in the application.
INPI Resolution No. 93/2013 clarifies how the Article should be used. The Resolution explains that the revealed matter corresponds to all matter contained in the patent application filed by the applicant at the time of filing, namely the description, claims, drawings (if any), summary or sequence listing (if any). There is a difference between matter revealed and matter claimed: the latter corresponds to the set of claims contained in the section of the application as filed. The revealed matter is broader than the claimed matter. In other words, not everything that appears in the specification is found in the list of claims presented by the applicant.
In the case of patent applications arising from the division of an application, pursuant to Article 26 of the IPR, in respect of a division being made after the date of request for examination of the original patent application, such applications will be subject to a time limitation outlined in Article 32 of the IPR; in other words, their claims may not undergo voluntary amendments.
However, voluntary amendments aimed at correcting or reducing the initially claimed scope of protection are not subject to the term established in Article 32 of the IPR. According to Item II of MEMO/INPI/DIRPA No. 072/08 of 25 April 2008, the provisions also apply to amendments in the contents of the claims resulting from the declaration of the applicant in response to office actions from technical exams.
Another relevant article that should be considered and may constitute a defence against patent invalidity are Articles 24 and 25 of the IPR Law. Those articles relate to the clarity and descriptive adequacy of a patent application. Clarity and descriptive adequacy can interfere with each other. According to the INPI's publication 'Examination Guidelines Patent Requests', the meaning of the terms of the claims must be clear to a person skilled in the art from the wording of the claim, based on the specification and drawings, if any. Given the differences in scope of protection achieved by various categories of claims, the examiner must ensure that the wording of the claim is clear for the category that it represents.
The condition that claims must be clear applies to individual claims as well as for the set of claims as a whole. Clarity of claims is of utmost importance as it defines the subject matter of protection; thus, the meaning of the terms used in the claims should be clear to a person skilled in the art from the wording of the claim, based on the descriptive report and drawings, if any. Given the differences in scope of protection achieved by various categories of claims, the examiner must ensure that the wording of the claim submitted by the applicant is clear for the category for which it is intended.
Besides arguing the nullity of the plaintiff's patent as a defence against infringement allegations, Article 43 of IPR Law stipulates some events that are not considered to be violations of patent rights:
- acts practised by unauthorised third parties in private and without commercial meaning, provided they prejudice the economic interest of the patentee;
- acts practised by unauthorised third parties for experimental purposes, related to studies or to scientific or technological research;
- preparation of a medicine according to a medical prescription for individual cases, executed by a qualified professional, as well as to a medicine thus prepared;
- products manufactured in accordance with a process or product patent that has been placed in the local market directly by the patentee or with his or her consent;
- third parties who use without economic ends, in the case of patents related to living matters, the patented product as the initial source of variation or propagation for obtaining other products;
- third parties who, in the case of patents related to living matters, use, place in circulation or commercialise a patented product that has been introduced lawfully into the market by the patentee or his or her licensee, provided that the patented product is not used for commercial multiplication or propagation of the living matter in question; and
- prior use of the patent for the purpose of seeking a marketing authorisation from the local government.
Final remedies for infringement
In addition to obtaining restrictions on the violation of the patent, the patentee may seek compensation, which will be set out in accordance with Articles 209 and 210 of the IPR Law under the following criteria, whichever is most favourable to the injured party:
- the benefits that would have been gained by the injured party had the violation not taken place;
- the benefits gained by infringer; or
- the remuneration that the infringer would have paid to the patent owner for a granted licence that would have legally permitted him or her to exploit the subject of the rights.
According to Item II of Article 42 of the IPR Law, the right to indemnification of a patent application related to biological material shall be recognised only when the biological material has become available to the public.
There are no statutory punitive damages for patent infringement; awarding those damages is under the discretion of the judge in an exemplary nature in view of the harmful effect of the violation on the patentee's activities. Punitive damages are a concept accepted and commonly used by judges in business law, especially when the involved matter links to commercial agreements, among other things.
Other types of patent proceedings
Other procedures that may be adopted by third parties to challenge existing patent rights include forfeiture prosecution, compulsory licence request and expropriation. Such challenges may take place through administrative procedures at the INPI.
i General comments on compulsory licencing in Brazil
According to the IPR Law, ensuring that a patented invention works in the Brazilian territory is regarded as an important requirement for the maintenance of the rights under the patent. A patent may be declared compulsorily licensed owing to non-working and when abuse or misuse is noticed in the following situations:
- the patentee exercises the patent rights in an abusive manner or by abuse of economic power that is proven under the terms of the law or by court proceedings;
- lack of manufacture or incomplete manufacture of the patented product in the Brazilian territory or lack of complete use of a patented process, except in the case of non-exploitation owing to economic restrictions and no viability to market in Brazil;
- when commercialisation does not meet the needs of the local market;
- in a situation of dependency of one patent in respect of another where the subject matter of the dependent patent constitutes a substantial technical advance in relation to the earlier patent, and the owner of the dependent patent does not come to an agreement with the owner of the earlier patent for the exploitation of the latter; and
- by an act of the federal executive authorities owing to a national emergency or public interest insofar as the patentee or his or her licensee does not satisfy the necessity.
Compulsory licences based on the lack of exploitation or incomplete manufacture and sale may only be requested three years after the grant of the patent from a party with legitimate interest.
The grant of compulsory licences follows specific requirement and limitations:
- compulsory licencing is always non-exclusive, which means that the patentee may also exploit the patent under the compulsory licencing period;
- compulsory licences are always without sub-licencing rights, since the licensee is the one admitted to exploit the patent;
- the patentee receives royalties from the licensee under the compulsory licence; and
- the licensee must initiate the exploitation of the invention under the patent within one year of the grant of the compulsory licence.
ii Forfeiture proceedings
According to Article 80 of the IPR Law, a patent may be declared forfeited ex officio or at the request of any party with a legitimate interest if two years after the grant of the first compulsory interest, the period has not been sufficient to prevent patent abuse and the disuse or lack of adequate use in the territory, except when the abuse or disuse is legitimately demonstrated.
Concerning appeals for the litigation procedure at the federal courts, after the rendering of the judgment at first instance, the parties may desire to appeal. The defendant (the holder of the invalid patent) has a 15-working-day period and the INPI a 30-day period to do so. The appellate chambers usually comprise a three-justice panel, and one justice is selected to be the rapporteur, who will deliver his or her position and the arguments yet to be discussed by the collegiate for a final decision. If the three-justice panel do not reach a unanimous decision, the appeal will proceed to a session with minimum quorum of five justices.
A special appeal to the STJ is exceptionally available when the issued decision is evidenced to violate federal law or the Constitution. Discussion of facts is not allowed at the STJ.
Regarding patent infringement, appeal is available to the parties soon after the final decision is rendered by the judge that led the concerned court suit. An appeal may be filed to the Appellate Chamber within 15 business day of the rendering of the decision
The year in review
The years 2020 and 2021 were marked by the covid-19 pandemic, which sent the world economy into disarray. There have been unprecedented, damaging effects on public health, social relations and the economy worldwide.
Brazil has faced the difficult dilemma of choosing between mitigating the effects of the pandemic on its citizens or avoiding further disruption of production lines and marketing channels, which could lead to the collapse of both supply and demand.
The authorities of some Brazilian states followed a physical distancing protocol to perform as a cordon sanitaire, with the aim of minimising the spread of the disease and further infection of its population, by implementing a series of measures to suspend activities and promote social isolation.
On 20 March 2020, the federal government decreed a state of public calamity and emergency, which corroborates the seriousness and exceptional nature of the effects of the pandemic. It has taken further necessary measures to avoid any possible risk of juridical insecurity and to eventually clarify all parts in considering legal disputes.
As the situation increased in severity and required swifter action by the federal and state authorities, on 10 June 2020 the Pandemic Law9 was passed, with an effective date retroactive to 20 March 2020. It provides for an emergency and transitional legal regime for private legal matters until 30 October 2021.
Under this scenario, the National Council of Justice (CNJ) published Resolution No. 329 of 30 July 2020 (Resolution 329/2020) to incorporate online platforms and other forms of communication in procedures during sessions and hearings with the judge. The objective was to secure transparency in the communication with the judge and permit the information to be accessed remotely.
The CNJ holds powers clearly defined by the Constitution that are linked to the administrative and financial control of the courts so that there is compliance with the duties of the judge.
According to Resolution 329/2020, by the end of 2020 most state courts and the federal courts were structured to work with videoconference through specific digital platforms in hearings and sessions. The virtualisation of the courts has allowed for the functioning of their activities to the public, without the judges and law clerks needing to be present at the courts. Further, since 2009 the local courts have been progressively digitally converting case files, thereby making it possible to fully access petitions and other filed documents through downloads.
These facts facilitated the rendering of court services to the public with minor interruption in 2020, and allowed hearings and sessions to maintain the right of the plaintiff to demand to speak out. Sessions are, therefore, running normally through specific platforms.
Another relevant landmark in patent litigation was the decision issued by the Supreme Federal Court in May 2021, which declared unconstitutional the Sole Paragraph of Article 40 of the IPR Law.10 It eliminated the 10-year minimum period of patent protection from the date of patent grant that was set out in that Paragraph. Patents granted from 14 May 2021 will follow a validity time frame established by Article 40 of the IPR Law, which is 20 years for patents of inventions and 15 years for utility model patents, counted from the filing date.
Following this decision, the judges of the Supreme Court established further boundaries on the effects of the decision, including the identification of situations in which the effects will be retroactive. Two of the technical areas directly affected by the retroactive effect (ex tunc) are the pharmaceuticals and healthcare. These boundaries were set by the modulation effects set out by the highest court.11
Another relevant development was the exclusion of the participation of the National Health Surveillance Agency (ANVISA) in the patent prosecution involving pharmaceutical inventions by means of Federal Law 14,195/2021, which revoked Article 229-C of the IPR Law. ANVISA's examination of the patentability requirements was regarded as unnecessary, slowed the speed of the prosecution and, in general terms, resulted in a perceived inefficiency. As of 27 August 2021, the powers to lead the technical examination of an invention and confirm the patentability requirements fall solely upon the INPI under the IPR Law.
Among the trends for the upcoming year on patent litigation is how the state courts will address the controversy linked to standard-essential patents (SEP) and the voluntary commitment by a patentee of a SEP to negotiate a fair, reasonable and non-discriminatory (FRAND) licence.
An increasing number of court actions involving the enforcement of SEPs have been filed before the state courts of Rio de Janeiro and involve the necessary demand of ex parte preliminary injunctions to compel unauthorised users to negotiate with the patentee a licence for the use of the SEP.
Considering that the patentee holds an obligation to grant a licence to any and all interested parties, pursuing injunctions in court before offering a licence to a specific third party violates the principle of good faith, which also rules the procedures of litigation. Further, the effects of patent rights are stringently reduced when the invention is regarded as an essential technology to a specific market or is regarded as a standard technology that facilitates the interoperability of products in the telecommunications industry in view of the obligation to dispose the technology without discrimination to interested third parties.
On the other hand, unauthorised use of a patented technology is, as a general principle, regarded as patent infringement; therefore, disputes on SEPs and FRAND licencing are important to look at and follow in the coming years.
On this matter, the Brazilian Competition Authority (CADE) examined an antitrust violation request and regarding Ericsson's (the titleholder of patents related to 3G technology) alleged abusive practice of industrial property and sham litigation against TCT.12 This was owing to the court disputes initiated by Ericsson being regarded as undue and aiming to press the company for the execution of a licencing agreement for the use of the 3G technology.
According to CADE's decision, Ericsson's practice to compel TCT to negotiate a 3G licencing agreement does not hold sufficient economic impact and, therefore, cannot be framed as violation of the antitrust laws. Furthermore, it was argued that Ericsson did not compete with TCT in the Brazilian market since it was no longer in the telecommunications market.
CADE, therefore, decided to shelve the administrative procedure owing to the lack of any evidence of violation of the economic order.13
1 José Carlos Vaz e Dias, Marina Castro and Thiago Lombardi are partners at Vaz e Dias Advogados & Associados.
2 Federal Law No. 9,279 of 14 May 1996.
3 Article 5 of the IPR Law.
4 Federal Law No. 13,105/2015.
5 Decree-Law No. 3,689/1941.
6 Court procedure, ADI No. 5529 STF.
7 Decree No. 6,759 of 5 February 2009.
8 Court Case No. REsp 1.820.963-SP.
9 Law 14.010/2020.
10 Supreme Federal Court, ADI No. 5529.
11 Jose Carlos Vaz e Dias, 'A New Dress Code for Patent validity in Brazil: The Practical Effects of the Supreme Court Decision', Patent Lawyer Magazine (May/June 2021): pp. 24–29.
12 Tct Mobile Telefones Ltda v. Telefonaktiebolaget LM Ericsson, CADE Preparatory Procedure No. 08700.008409/2014-00.
13 Technical Note No. 11/2015/CGAA1/SGA1/SG/CADE.