Building a Predictable, Stable Patent System in Brazil

June 20, 2022

To recover from Covid and continue its path to high-income status, business as normal is not an option for Brazil’s economy. The pandemic has worsened structural economic problems faced by the country, underlining the limitations of relying on the export of commodities. To create jobs and more sustainable economic growth, Brazil must accelerate its progress up the economic value-chain towards higher-value, knowledge-based industries.

One essential policy supporting the development of innovation industries is a robust and predictable framework for the protection of intellectual property rights. If patents cannot be efficiently granted and enforced, few local entrepreneurs will be able to secure investment for their innovations and build viable businesses. Multinational knowledge-intensive companies, who bring with them skills, knowledge, and much needed capital, will look elsewhere to invest.

To its credit, the Brazilian government has long realised the need to boost Brazil’s innovation potential. It has taken several much-needed steps to improve the IP system, which had gained an unfortunate international reputation for inefficiency, particularly in the examination of patents.

In February 2019, reformist professional economist Claudio Vilar Furtado was appointed head of the Brazilian National Institute of Industrial Property (INPI), with a mandate to promote competition and improve the IP system.

Also that year a new Inter-ministerial Group on Intellectual Property was established to coordinate and oversee all issues relating to IP policy in Brazil: a recognition by the government that innovation is a major driver of competitiveness, investment and growth. Reform at INPI has made a dent in Brazil’s massive backlog of aged patent applications, which has unfortunately suffered from the longest delays among major economies.

Despite this reform, a May 2021 decision by the Supreme Court has caused alarm amongst both Brazilian and international innovative companies. Previously, Article 40 of the Brazilian Intellectual Property Law guaranteed at least ten years of patent term after grant. This guarantee was important in a patent system where inventors see more than half the 20-year patent term eaten by examination delays. However, of the Court found Article 40 to be unconstitutional. This decision has
raised fears that many inventions will no longer enjoy sufficient terms of protection in Brazil to make their investments worthwhile. The decision is especially discriminatory given that it will be applied retrospectively to only the life science sector.

If Brazil’s IP system is to maintain its upward trajectory and contribute to the country’s economic recovery after Covid, policymakers will need to respond to this court decision with new reforms to ensure patent life is meaningful and predictable. Fortunately, there are several options used by countries both regionally and internationally that provide a possible template.