On August 11, 2021, the Brazilian Senate approved a Compulsory Licensing Bill (#12/2021). Bill #12/21 amends the Brazilian Patent Statute (Law #9,279/96) and authorizes the Federal Government to grant compulsory licenses for products or processes in the event of a declaration of national or international emergency of public interest or a declaration of state of nationwide public calamity.
On August 13, 2021, the Bill approved by the Senate was sent to the President for approval or veto. The President may either (i) enact the Bill into law without changes; (ii) partially enact the Bill and veto one or more other portions of the Bill; or (iii) veto the entire Bill. The deadline for the President to enact or veto the bill is September 2, 2021. If the Bill is vetoed, State Representatives and Senators can override the presidential veto with a majority vote.
The final version indicates that the Senate brought back into the Bill provisions specifically regarding the COVID-19 pandemic and the obligation of the patent holder to provide information to the public authorities regarding its patents and patent applications. Specifically, Paragraph 8 states that the authorities must be provided “necessary and sufficient information for the effective reproduction of the subject matter protected by the patent or patent application and the other technical aspects applicable to the specific case, as well as the results of tests and other data necessary for the granting of its registration by the competent authorities”.
Additionally, readers should also be aware of the provisions in Paragraphs 9 and 10 of the Bill, which were also brought back by the Senate. Specifically, Paragraph 9 provides that in situations where there is biological material related to the production of a patent or patent application’s object (e.g., product), the owner “has the obligation to supply such material to the licensee”. Further, Paragraph 10 establishes that if there is a refusal to provide the information or biological material, “article 24 and Title I, Chapter VI, of this Statute shall apply”.
Article 24 of the Brazilian Patent Statute states:
Article 24. The specification must describe the subject matter clearly and sufficiently so as to enable a person skilled in the art to carry it out and to indicate, when applicable, the best mode of execution.
Sole Paragraph. In the case of biological material essential for the practical execution of the subject matter of the application, which cannot be described in the form of this article and which has not been accessible to the public, the specification will be supplemented by a deposit of the material in an institution authorized by the BRPTO or indicated in an international agreement.
Title I, Chapter VI provides the General Provisions for the nullification of a patent. Articles 46 to 49 of this chapter do not provide any specific procedure or situation in which compulsory licensing applies. Specifically, Articles 46 to 49 recite:
Article 46. A patent is null when granted contrary to the provisions of this statute.
Article 47. Nullity may not be applicable to all of the claims, a condition for partial nullity being that the subsisting claims constitute subject matter that is patentable per se.
Article 48. Nullity of a patent will produce effects as from the filing date of the application.
Article 49. In the case of the provisions of article 6 not having been observed, the inventor may alternatively claim, in a court action, the adjudication of the patent.
In the previous versions of the Bill, there was an excerpt in Paragraph 8 that a nullity action could be invoked in situations where the patent holder did not provide the biological material requested by the public entity. However, in the final version of the Bill, the wording was modified to exclude this excerpt, because it was determined to potentially contradict the Brazilian Patent Statute. Thus, the reference to the nullification of a patent remains only indirectly in the Bill’s text in the provision of Paragraph 10, by quoting Title I, Chapter VI of the Patent Statute.
Below is a summary of the Bill:
- The Brazilian Executive Branch must publish, within 30 days after the declaration date of a state of emergency or public calamity, a list of patents or patent applications involving technologies which may be useful to manage the emergency or calamity. There is an exception for patents or patent applications that are subject to a technology transfer agreement or voluntary licensing agreement that are capable of ensuring that internal demand is satisfied;
- The Brazilian Executive Branch will perform, within 30 days (which is extendable for an equal period of time), an individualized evaluation of the listed technologies and will grant compulsory licenses only to those manufacturers having the requisite ability to meet production capacity;
- The patent or patent application holder must provide information regarding the reproduction of the protected subject matter and other applicable technical aspects, as well as tests results and other necessary data (this could include trade secret data);
- The Brazilian Congress may declare a nationwide public calamity that authorizes the Executive Branch to conduct a compulsory licensing procedure. In such instances, any compulsory license will be valid for a term that is limited to the period in which the nationwide public calamity lasts;
- The owner of a patent or patent application subject to a compulsory license will receive 1.5% of the net sales price of the product associated until the compensation due to the patent holder is effectively established. Compensation will only be payable on granted patents (and not pending applications);
- The Brazilian Patent and Trademark Office will prioritize the examination of patent applications that are subject to compulsory licensing;
- Products subject to the sanitary surveillance regime may only be marketed after authorization has been granted by Brazilian Food and Drug Administration, whether for an emergency basis or permanent basis;
- Regardless of the granting of a compulsory license grant, the government will prioritize the execution of technical cooperation agreements and contracts with the patent owner for the acquisition of the productive technology as well as any processes for transferring the technology; and
- For humanitarian reasons, compulsory licensing may be granted for patents on products intended to be exported to countries with little to no manufacturing capacity in the pharmaceutical sector.
The next few days will be critical in the development of the final text of the Bill. Ultimately, the final text of the Bill will depend on the President’s analysis.