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Innovation at stake

Brazil at the crossroads: Court ruling might jeopardize consumers’ access to innovation


Brazil’s bureaucracy is unfortunately not known for quickly processing requests, granting permits, or issuing opinions. One example of our sclerotic and slow public services is the Instituto Nacional da Propriedade Industrial (Inpi)...

A highly anticipated ruling of Brazil’s courts will decide whether future innovation will be available to its hundreds of millions of consumers or whether bad policies will deprive them of new products.

Many applicants for patents have to wait for over 10 years to get their request for a patent granted. Fortunately, Article 40 of the Intellectual Property Rights Law no 9.279/1996 recognizes that and hence automatically awards a patent a minimum exclusivity for ten years to compensate for administrative delays. The Brazilian Supreme Court will soon rule over this article. Depending on what its judges decide, Brazil’s consumers and patients should be potentially worried about the outcomes of the ruling. The AGU (Advocacia-Geral da União), an institution responsible for the legal representation, inspection, and control of the Institutions of the Republic, already sent a favorable analysis of article 40 and the importance of protecting IP rights.

The root cause of this problem is the massive delays Brazil’s public agencies cause to the approval of patents. These delays are not just bad news for the companies applying for patent protection but also for consumers, patients, and small businesses waiting for them to enter the market in Brazil. Imagine a farmer waiting for a new, less harmful, pesticide to protect his crops or new vaccines to protect his cattle or poultry whose patent is still pending in Brazil while farmers in Chile and Uruguay can already use them. If the current COVID pandemic has shown us all one thing, then it is essential to develop and deploy drugs and vaccines quickly. 

At present, there are over 70 drugs waiting for ten years and more to get patent approval in Brazil. The list includes lifesaving medicines, such as cancer pills and vaccines. Think of you being one of the patients waiting for these life-changing drugs. And that is only on medicines, In addition, other new developments in media, telecommunication, computer components, artificial intelligence, brands, and entertainment technologies will all be delayed in Brazil as well.

Now, suppose the judges scrap the compensation mechanism in Article 40, which gives companies at least ten years of patent protection in long approval delays. In that case, we run the risk of many innovative products just completely disappearing from Brazil. Innovation in Brazil would come to a standstill, and imports of new developments in the field of consumer electronics, chemicals, and medicines might get more challenging as companies tend to prefer to sell their products in markets where their intellectual property is protected. Shorter patent protection also means that companies have less time to make money with their products. Already expensive products such as smartphones will get even more costly. That is terrible news for consumers.

Historically, Brazil has a strong and pioneer role in protecting intellectual property rights, being the 4th country to have adopted a specific patent protection law back in 1809 and a patent article in its first and original constitution in 1824. Now, Brazil ranks only 62nd globally and hence merely in the center field of countries that incentivize and protect innovations through patents and other intellectual property rights. It ranks below nearly every European and OECD nation and way behind countries like Chile or Uruguay. We are even behind China and India when it comes to Intellectual Property rights and among the BRICS only outperform Russia. 

Modern trade agreements include provisions on intellectual property rights protections. The already highly debated MERCOSUR-EU trade agreement might not survive when Brazil goes ballistic against IP. The EU-counterparts already have enough reservations on environmental and agricultural issues. Loosening IP rules in Brazil might be the final nail in the coffin for the direly needed trade deal. The U.S. support for a Brazilian OECD membership might also erode if Article 40 falls.

Consumers tend to be the victims of slow bureaucracy and destructive policies in Brazil. The relatively poorer Brazilian consumers already pay 74% more for the same iPhone than U.S. consumers do. We need to embrace policies that bring these high prices down and not those that will make life even more expensive for Brazilians.