By Claudia Jurberg for Intellectual Property Watch

RIO DE JANEIRO - Doubt about the constitutionality of an aspect of the Brazilian Industrial Property Law has been raised by civil society institutions to Attorney General Antônio Fernando Barros e Silva e Souza.

Articles 230 and 231 of Brazil’s Law 9.279/96 created the mechanism known as the pipeline, which allowed patent claims to be accepted and approved for technological fields that had not been recognised previously, such as pharmaceutical and food products, based on the date of first foreign filing. The rule effectively created monopoly situations in some cases where items had already entered the public domain, sources said.

Some in civil society argue that this kind of patent violates the principle that asserts the supremacy of the public interest and the pursuit of national technological and economic development over intellectual property rights. The Brazilian attorney general may decide on the challenge in the coming days. If Barros accepts the question, he will send it to Superior Federal Court, the next level, which will judge it on merit.

By the end of 1990s, 1,182 pipeline patents had been requested in Brazil, about 45 percent from the United States followed by the United Kingdom with 13 percent, Germany 10 percent, Japan 9.6 percent and France 7.7 percent, according to Lia Hasenclever, an economist at the Federal University of Rio de Janeiro.

The pipeline mechanism exists in Brazil through its implementation of the 1994 World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which contains a clause requiring recognition of pharmaceutical and food patents. Article 27, paragraph 1, states that any invention, product or process in all technology sectors, is patentable if it is new.

Brazil could have used the period of transition for developing countries to adopt TRIPS by the year 2005, but under pressure it implemented the agreement in 1997.

In this case, the pipeline mechanism was adopted and the country allowed patent claims to be accepted and approved for previously unrecognised technological fields, such as pharmaceutical and food products. The applications for pipeline patents do not undergo any technical analysis by the Brazilian patent office, the National Institute of Industrial Property (INPI). INPI normally could have analysed novelty, inventiveness and industrial application.

According Mauro Maia, an attorney at INPI, the pipeline mechanism has provided unusually high profitability for pharmaceutical companies through high prices and royalties. “The situation is a scandal,” he said.

Has Investment Followed Pipeline?

By its early acceptance of TRIPS, Brazil agreed to recognise pharmaceutical and food patents before the required time of 2005. At the time, the government believed that multinationals would invest in research, as they promised. But the reality has been very different, according to some observers. Investments by multinationals have been disappointing and the pipeline patents are imposing a high cost on society, they said. Hasenclever said that pipeline mechanism is an “aberration” because it favours multinationals to the detriment of the national industry.

However, a spokesperson for the Merck, Sharp & Dohme pharmaceutical company contested the negative assessment and told Intellectual Property Watch that the company has invested approximately US$10 million per year in research in Brazil in recent years.

“This value represents one of the biggest in comparison with other pharmaceutical companies in Brazil and one in five from Merck in the world,” she said.

But NGOs insist that pipeline patents remain problematic. “The concession of pipeline patents also violates the acquired right of the collectivity by removing from the public domain knowledge belonging to everyone, which once again goes against society’s interest,” said Renata Reis, an attorney at the non-governmental Brazilian Interdisciplinary AIDS Organization.

The case of anti-retroviral drugs (ARVs) for patients with HIV/AIDS may offer a good example of the prejudice inherent in the mechanism of pipeline, critics said. Brazil has a highly touted national AIDS programme, providing a model for many other countries. Until 1990, there was a policy ensuring access to drugs and the country had national production of ARVs. After 1997, with the pipeline mechanism, this process was interrupted prematurely, said Hasenclever.

In Brazil, there are around 600,000 people infected with HIV/AIDS. More than 200,000 receive drugs without cost from the government. Attorney Maia explains the pipeline situation related to HIV/AIDS with an equation. The AIDS drugs cost the Health Ministry around US$750 million for 18 medicines to treat patients, and 80 percent of this budget goes toward only four medicines which are protected with pipeline patents.

A study by economists at the Federal University of Rio de Janeiro calculated the hypothetical financial loss caused by the adoption of the pipeline mechanism in the case of government purchases of five ARVs, during the period 2001-2007. The results showed that, due to the granting of unmerited patent protections for these medicines, the Brazilian state paid an additional $420 million when prices paid were compared to the World Health Organization’s minimum prices, and an extra $519 million when compared to the minimum prices of nongovernmental Médecins Sans Frontières.

Hasenclever calculated that the margin with 5 percent royalties on five ARVs during 2001-2007 would be $35.3 million.

Of the ARVs, Merck now produces only efavirenz and indinavir. Although these drugs are on the list of the Health Ministry, the company currently does not sell them to the government.

The efavirenz ARV, for which the Brazilian government recently issued a compulsory licence, is protected by a patent obtained under the pipeline mechanism (the first patent claim was filed in 1992). Now, generic efavirenz is imported from India.

When the patent claim was filed in Brazil, it no longer met the country’s novelty requirement, as the information on the invention had already been published five years earlier. Had the pipeline patent not been granted, this active ingredient could have been produced generically in Brazil, as it has been in India. Without the pipeline, patents would not protect these products, even though Brazil started granting patents in 1997.

Other medicines fundamental against the AIDS epidemic, such as lopinavir/ritonavir, abacavir, nelfinavir, amprenavir, also were protected by pipeline patents, removing them from the public domain without an evaluation of the national interest. A pipeline patent also was granted for cancer medicine imatinib (brand name Glivec), and for Hepatitis B.

The alleged harm inflicted upon public health by pipeline patents does not refer only to the increasing amount of costs, but also to other problems such as preventing local production of medicines, risks of supplies running out (such as the case of abacavir in 2007) and the poor quality of products offered by companies holding the patents.

On civil society’s charge to the Brazilian attorney general, Merck said it could not speculate on the outcome. But it did say the laboratory believes that the law of patents is an important tool to ensure the capacity for innovation and investment in research in a country.

Claudia Jurberg may be reached at info@ip-watch.ch.

Articles in Brazilian Law (unofficial translation):

* Art. 230, Law 9.279/96. An application for a patent, related to substances, materials or products obtained by chemical means or processes, and food products or chemical-pharmaceutical substances, materials, mixtures or products, and medications of any kind, as well as the respective processes for obtaining or modifying them, may be filed by a party who enjoys protection guaranteed by a treaty or convention in force in Brazil, in which case it is assured the date of the first patent application filed abroad, provided that its object has not been introduced on any market by direct initiative of the titleholder or by a third party with his consent, and that no serious and effective preparations to exploit the object of the application or of the patent have been made, in this country, by third parties. (1) The filing must occur within a period of 1 (one) year from the date of publication of this Law, and must indicate the date of the first filing abroad. (2) A patent application filed on the basis of this Article shall automatically be published, and any interested party may submit comments, within a period of 90 (ninety) days, as to whether it satisfies the provisions in the caput of this Article. (3) When Articles 10 and 18 of this Law have been observed, and once the provisions established in this Article have been satisfied and the granting of the patent in the country where the first application was filed has been proven, the patent shall be granted in Brazil, just as it was granted in its country of origin. (4) The patent granted on the basis of this Article is assured the period of protection remaining in the country where the first application was filed, calculated from the date of filing in Brazil and limited to the period established in Article 40, not applying the provisions of its Sole Paragraph. (5) An applicant who has filed a patent application that is still pending, related to substances, materials or products obtained by chemical means or processes, and alimentary or chemical-pharmaceutical substances, materials, mixtures, or products, and medications of any kind, as well as the respective processes for obtaining or modifying them, may submit a new application within the time limit and under the conditions established in this Article, attaching proof of having abandoned the pending application. (6) The provisions of this Law apply, where applicable, to the application filed and the patent granted on the basis of this Article

Art. 231, Law 9.279/96. An application for a patent related to the subject matter dealt within the preceding Article may be filed by a national or a person domiciled in this country, in which case it is assured the date of disclosure of the invention, provided that its object has not been introduced on any market by direct initiative of the titleholder or by a third party with his consent, and that no serious and effective preparations to exploit the object of the patent have been made, in this country, by third parties. (1) The filing must occur within a period of 1 (one) year from the date of publication of this Law. (2) The patent application filed on the basis of this Article shall be processed pursuant to this Law. (3) The patent granted on the basis of this Article is assured the remainder of the 20 (twenty) year protection period calculated from the disclosure date of the invention, beginning on the filing date in Brazil. (4) An applicant who has filed a patent application that is still pending, related to the subject matters dealt with in the preceding Article, may submit a new application, within the time limit and under the conditions established in this Article, attaching proof of having abandoned the pending application.