The Curious Case of a Stillborn Patent: Patent Office Delays and the Need for a Rational Term-Adjustment System in Brazil

Introduction.  The ADI 5529

Are you a patent practitioner familiar with the Brazilian patent system?  Then you’re likely aware of a significant recent development.  In a landmark decision (Direct Plea for Unconstitutionality No. 5529 – ADI 5529), the Federal Supreme Court (“Supremo Tribunal Federal – STF”) declared unconstitutional the automatic extension of patent terms due to delays in Patent Office (PTO) examination. This provision was previously established in the sole paragraph of Article 40 of Brazil’s Industrial Property Statute[1] (Law no. 9,279/96 – Lei de Propriedade Industrial – LPI).

To those who may be unfamiliar with this discussion, the referred sole paragraph of article 40 of Brazil’s LPI allowed for an automatic adjustment for patents which the Brazilian Patent and Trademark Office (BRPTO) took more than 10 years to be granted. In this sense, if the BRPTO granted a patent within 10 years, the usual term of 20 years from filing would apply. Conversely, if the PTO took more than 10 years, the term would be automatically adjusted to 10 years from the date of granting.

Brazil’s Attorney General challenged the automatic extension of patent terms due to delayed examination in the Patent Office (PTO) by filing a Direct Plea for Unconstitutionality (ADI 5529). The Supreme Court (STF) agreed, finding the provision unconstitutional.  The Court’s reasoning hinged on Article 5, XXIX of Brazil’s Federal Constitution, which guarantees the temporary nature of patents. The automatic extension, according to the STF, created undue unpredictability regarding patent expiration dates, thereby hindering competition and innovation.

As a means of adjusting the effects of this decision, the Supreme Court additionally stipulated that the effects of this unconstitutionality declaration of the sole paragraph of article 40 should be applied as a rule from the date of publication of the opinion onwards (i.e., September 1^st 2021; prospective effects). However, a modulation of effects (retroactive application) applies, requiring immediate reduction of the patent term to 20 years from filing, regardless of delays, for (i) lawsuits filed before the preliminary injunction in ADI 5529 (April 7th, 2021) and (ii) patents related to pharmaceuticals, processes, medical devices, or materials.

Hence, the results of ADI 5529 removed the guardrails protecting the interests of patentees against delays in examination. This is particularly relevant, as Brazil has historically struggled with patent backlog and patent pendency issues[2], a trend that is now starting to be reversed[3].  To put it simply, from May 2021 onward, barring exceptions cited above, patentees must consider the “20-years from filing” term as the immovable, non-extendable, and non-adjustable, parameter for a Brazilian patent’s term.

The Background of the Case: Prosecution and PTO proceedings

Unsurprisingly, the story of this patent starts at prosecution. On November 17^th 2000, a patent application was filed for an “applicator for tampons” and was attributed the number PI 0005450-0 (“the ‘450 Patent”).

This patent endured a lengthy prosecution and was eventually rejected by the BRPTO on September 30^th 2008. From this rejection, an administrative appeal was filed to the Presidency of the BRPTO – the final administrative recourse available to overturn the rejection. On October 19^th 2010, the BRPTO issued its final rejection of the ‘450 Patent.

It is worth noting that the ‘450 Patent refers to a national phase application from a PCT filing. Hence, there are multiple corresponding applications in various jurisdictions, as seen below for illustrative purposes:

Faced with this rejection from the PTO, the patentee was left with a single pathway to attempt a reversal of the BRPTO’s decision: seeking a declaratory judgment from a Federal Court. That is what the Patentee did[4].

The Case of the Stillborn Patent

After 4 years of back-and-forth in litigation, on August 3^rd 2020, the 9^th Federal Trial Court of Rio de Janeiro issued a verdict reversing the BRPTO’s decision and affirming the merits of the ‘405 Patent.  Be that as it may, celebrations could not start quite so soon.

According to Brazilian Law (Code of Civil Procedure, article 496), verdicts against the Federal Government may only produce effects after confirmation by an Appellate Court. Hence, before the patent could be granted, a second hurdle had to be cleared: Attaining a confirmatory judgment from the Federal Court of Appeals for the 2^nd Circuit.

The long-awaited ruling was handed down on June 27^th 2022 when the 2^nd Circuit came to a decision affirming the Trial Court’s verdict. Unfortunately, the ordeal does not end there, as the BRPTO filed a motion for clarification against the 2^nd Circuit’s judgment. This motion reopened the discussions and prevented the judgment from becoming res judicata.

Finally, almost a full year following the original ruling by the 2^nd Circuit, on June 23^rd 2023, the motion for clarification was dismissed and the issue was declared res judicata shortly after.

Attentive readers may have noticed a troubling fact after all of these judicial proceedings: Upon the final ruling of the appellate court, the patent’s validity was affirmed 22 years, 7 months, and 6 days after the patent’s filing date. Thus, considering the ADI 5529 decision, this patent was allowed when its term had already expired.

What can we learn from this case?

The case under discussion provides an uncomfortable look into the need for an adjustment system for patent term in Brazil. Although the efficiency of PTO proceedings are consistently improving in Brazil – notably due to the BRPTO’s Backlog Combat Plan – there is still a need to compensate patentees when the delay in administrative proceedings curtail the term of enjoyment of a patent right.

While arguments in the ADI 5529 emphasized that the automatic extension provided by the LPI’s article 40, sole paragraph, was unconstitutional due to the lack of predictability of a patent’s term, such arguments would not apply to case-by-case adjustment of patent term due to the BRPTO’s inactivity. That is why many patent holders attempted to regain term for their patents through lawsuits for “Patent Term Adjustment” (PTA).

At the heart of the question lies a clear rationale: Delays and inactivity attributable to the PTO cause harm to a patentee’s right, as the legitimate expectation of enjoyment of a patent’s right is unjustifiably curtailed. It is to avoid such situations that article 62.2 of the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement) establishes that countries should ensure that administrative proceedings are speedy enough to not unreasonably hinder the enjoyment of an intellectual property right.

The Brazilian Judiciary has considered in specific situations the possibility of case-by-case through PTA lawsuits, even coming so far as “keeping alive”, through interim relief, patents that had formally expired[5]. Currently, this trend has been notably reversed in the Judiciary[6] and the main hope for adjustment of patent term stem from legislative bills underway in Congress[7].

Regardless of the fate of the PTA lawsuits ongoing in the Judiciary, cases like this one point to a statement of fact: Bona fide applicants are harmed by the PTO’s delay. These delays can be so substantial that even inventions deemed worthy of patents, like the ‘450 Patent, risk losing protection altogether.

For this reason, Brazilian magistrates, legislators, and stakeholders should give proper weight to the idea of case-by-case adjustment, as continued complacency only enables a perversion of the goals of the patent system – as seen in the above depicted case.

***

[1]     “Art. 40. An “invention” patent shall enjoy a term of 20 years and a “utility model” patent shall enjoy 15 years of term counted from the date of filing. Sole Paragraph. A patent’s term shall not be lower than 10 years for an “invention” patent and 7 years for a “utility model” patent, counted from the date of grant, except for the scenarios in which the BRPTO is rendered unable to proceed with examination of the merits of the application due to a proven judicial pendency or due to reasons of force majeure”.

[2]     Mark Schultz and Kevin Madigan, ‘The Long Wait for Innovation: The Global Patent Pendency Problem’ (Arlington: Center for the Protection of Intellectual Property, 2016), https://sls.gmu.edu/cpip/wp-content/uploads/sites/31/2016/10/Schultz-Madigan-The-Long-Wait-for-Innovation-The-Global-Patent-Pendency-Problem.pdf.

[3]     In this sense, The Interministerial Group on Intellectual Property (“GIPI’, in the Portuguese acronym) has recently announced an action plan for reducing the average time for grant of patents to 3 years. For more information on this, see: Viviane de Medeiros Trojan and Daniel Leopoldino Resende Duarte Gomes, ‘2023 – 2025 Action Plan for the Brazilian Intellectual Property National Strategy Announced by GIPI -’, 27 October 2023, https://www.kasznarleonardos.com/en/2023-2025-action-plan-for-the-brazilian-intellectual-property-national-strategy-announced-by-gipi/.

[4]     Lawsuit no. 0129480-37.2015.4.02.5101, 9th Federal Trial Court of Rio de Janeiro.

[5]     For more information on such interim relief awards, see: Jorge Enrique de Azevedo Tinoco and Viviane Trojan, ‘New Decision From The Brazilian Supreme Court In Favor Of Patent Term Adjustment (PTA) Cases’, Lexology, 24 November 2022, https://www.lexology.com/library/detail.aspx?g=f997d95b-55cb-4bd1-a302-73d064721683.

[6]    Gabriel Leonardos, Lucas Ribeiro Vieira Rezende, and Jorge Enrique de Azevedo Tinoco, ‘Anpassung der Wirksamkeitsdauer von Patenten in Brasilien: eine Stellungnahme der brasilianischen Justiz’, Mitteilungen der Deutsch-Brasilianischen Juristenvereinigung 41, no. 1 (October 2023): 11–34.

[7]     For more information on the ongoing PTA litigation in Brazil, see here.