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ADI 5529 will affect granted patents, Supreme Court rules

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After a long trial of the Constitutional Challenge (ADI) 5529, which lasted for over a month, the Brazilian Supreme Court finally came to a conclusion regarding the sole paragraph of article 40 of the Brazilian IP Statute.

The rule determined that a patent’s term will not be less than 10 years for patents of invention and 7 years for utility model patents, counted from grant, except when BPO is prevented from proceeding with the examination as to the merit of the application, due to a proven pendente lite or for reasons of “force majeure”.

On May 6, 2021, nine of the 11 Supreme Court Justices agreed that the rule is unconstitutional. However, they all agreed to postpone a decision on the modulation of effects of the decision until May 12, 2021.

Brazilian Law provides for the Modulation of Effects, i.e., the Supreme Court may, by a two-thirds majority of its justices, restrict the effects of their decision or decide that such decision will only be effective as of a time mark set by the Court.

On the last (and final) day of judgment, eight of the 11 justices agreed that the rule is considered unconstitutional as of the publishment of the Supreme Court’s decision, with some exceptions. In summary:

(i) All pharmaceutical and medical device patents granted from April 8, 2021 on will have their terms of 20 years counted from the date of filing;

(ii) In all lawsuits filed before April 7, 2021 in which there is a discussion about the sole paragraph’s constitutionality, the rule will be considered unconstitutional;

(iii) Pharmaceutical and Medical Device Patents that, in the day of the publishment of the Supreme Court’s decision, are valid only due to the provision of the sole paragraph, will have their dates reduced in accordance to the 20-year from filing rule.

However, regardless of the term reduction, all “concrete effects” derived from patents that were effective only due to the sole paragraph will still be considered valid until the date of publishment of the decision. For instance, the effects of a licensing agreement signed when the patent was valid only due to the sole paragraph was effective until the date of grant. Also, a purchase of drugs that took place when the patent was valid only due to the sole paragraph is also valid, and the buyer cannot seek damages;

(iv) Other patents granted with the application of the sole paragraph, that are not pharmaceutical patents nor medical device patents, will not have their terms reduced and can still count with the term provided for in the sole paragraph; and,

(v) As the publication of minutes of the judgement session was published on May 13, 2021, the BPO, on granting a patent, will no longer be able to apply with the extension provided for in the sole paragraph of art. 40 of the LPI, so the protection will last for 20 years, in the case of invention, and 15 years, in the case of a utility model, counted from the date of filing.

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