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Note from ABPI on the Substitute for PL 12/2021, approved by the Federal Senate on April 29, 2021, and which deals with compulsory license of patents.

In view of the approval of the Substitute for PL 12/2021, by the Federal Senate on April 29, 2021, according to the opinion of the rapporteur, Senator Nelsinho Trad, ABPI comes to provide the following clarifications.

First, ABPI congratulates the Federal Senate for not giving in to the temptation to unilaterally suspend obligations under the TRIPs Agreement. Such a unilateral suspension could not only result in international sanctions against Brazil, but it would also imply a message of disrepute to the World Trade Organization – WTO, which now discusses whether there is a need for modifications to the said treaty to face the Covid-19 pandemic.

However, ABPI understands that no modifications to the current wording of Article 71 of the Industrial Property Law are necessary to deal with the challenges imposed by the Covid-19 pandemic. According to the current wording of the aforementioned article, in cases of national emergency or public interest, declared in an act of the Federal Executive Branch, provided that the patent holder or its licensee does not meet this need, a compulsory, temporary license may be granted and non-exclusive, for the exploitation of the patent, without prejudice to the rights of the respective owner. According to Decree No. 3,201, of October 6, 1999, which regulates article 71 of the Industrial Property Law, the facts related to, among others, public health, nutrition, and the defense of the environment, are considered to be in the public interest. those of paramount importance for the technological or socioeconomic development of the country and they must be declared by an act of the Minister of State responsible for the matter.

Therefore, if it is demonstrated (i) the public interest by decree of the Minister of State responsible for the matter, (ii) the need to use the technology and (iii) the refusal or inability of the patent holder to meet the demand, it can already be decreed compulsory patent license under current legislation. It is important to add that, according to article 5, paragraph 1 of Decree No. 3,201, of October 6, 1999, there is an obligation for the holder to transmit the necessary and sufficient information for the effective reproduction of the protected object and the other technical aspects applicable to the case in kind. . In addition, the aforementioned decree already provides for the possibility of consulting with other government agencies for the implementation of the compulsory license.

Thus, ABPI understands that the current text of article 71 of the Industrial Property Law in conjunction with Decree No. 3,201, of October 6, 1999 already sufficiently regulates the compulsory license of patents, with no need to modify the current legislation. . In fact, such legislation was already used in 2007, in the case of the compulsory license of Efavirenz.

In fact, the Efavirenz case is a demonstration that compulsory licensing should always be the last resort, and that it is preferable for society that, in the first place, governments negotiate the purchase of medicines directly from the original manufacturers, because, if there is an agreement on price, this will always be the best option for the quick supply to the population of tested products with quality assurance.

The second option should be to encourage the negotiation of voluntary licenses between national laboratories (public or private), and the legitimate patent holders. Thus, there will be an efficient and rapid transfer of technology, with the availability of confidential information by the patent holder, and training of technicians from the national laboratory, enabling local manufacturing to start quickly, in most cases in a few months.

The compulsory license should always be the last option, because without the aid of the effective participation of the patent holder with the local company that will carry out the manufacture, it may take several years before the local manufacture of the object of the patent actually starts: in the case Efavirenz, this period reached almost 3 (three) years!

In addition, it is important to remember that the current text complies with Article 30 of the TRIPs Agreement, which establishes the following requirements for a compulsory patent license to be granted:

. Individual authorization;

. use may only be permitted if the proposed user has previously sought authorization from the holder, under reasonable commercial terms and conditions, and that efforts have not been successful within a reasonable time (this condition may be waived by a Member Country in case of national emergency or other circumstances of extreme urgency or in cases of non-commercial public use.);

. the scope and duration of such use will be restricted to the purpose for which it was authorized;

. such use will be non-exclusive;

. such use will not be transferable, except in conjunction with the company or part of the company that it enjoys;

. such use will be authorized predominantly to supply the domestic market of the Member State that authorized it;

. without prejudice to adequate protection of the legitimate interests of authorized persons, the authorization for such use may be terminated if and when the circumstances that gave rise to it cease to exist and if it is unlikely that they will exist again;

. the holder will be adequately remunerated in the circumstances of each use, taking into account the economic value of the authorization;

. the legal validity of any decision regarding the authorization of such use will be subject to a judicial appeal or another independent appeal with a clearly superior authority in that Member State;

. the legal validity of any decision regarding the authorization of such use will be subject to judicial appeal or to the competent higher administrative authority.

The approved substitute, however, does not comply with all the requirements listed in article 30 of TRIPs. The one, because it does not deal individually with which cases the compulsory patent license will be necessary, decreeing a generic compulsory license for the drug Redemsivir and for “vaccines against the SARS-CoV-2 virus and its variants, as well as its active ingredients and any inputs, inventions or utility models necessary for its production ”. The situations of different holders are not individualized, and it is certain that the wording proposed for article 71, paragraph 12 of the Industrial Property Law is unfortunate when it does not establish that it is a requirement for the granting of a compulsory license that there should be a prior negotiation with the holder.

Furthermore, the joint reading of the proposed wording for article 71, paragraph 12 of the Industrial Property Law with article 2, paragraph 3 of the substitute does not clarify whether the patents and patent applications of holders who have already been excluded from the compulsory licensing list had their vaccines acquired by the Brazilian government, opening the gap for the compulsory licensing of any vaccine whose acquisition contract does not provide for the transfer of technology and, even in cases where such transfer is foreseen, so that the compulsory licensing is still decreed due to the need for demand in the domestic market.

The decree of compulsory license of Redemsivir, in turn, in addition to not meeting the requirement of prior negotiation seems to violate the principle of isonomy, as this is not the only drug approved for Covid-19, having also been approved the monoclonal antibodies Casirivimab and Imdevimab. There is no explanation of the circumstances that lead to the decree of compulsory license only from Redemsivir, being certain that the opinion that sent the substitute was not supported by any manifestation of the Ministry of Health or CONITEC, the body responsible for the incorporation of technologies to SUS. Considering that Redemsivir, Casirivimab and Imdevimab are all medicines for hospital use in critically ill patients with specific clinical indications, it would be important to have an effective technical study of the need for compulsory licensing and at least an attempt to negotiate with the rights holders.

Furthermore, it is worrying that it is not clearly determined that the scope and duration of use authorized by the compulsory license will be restricted to the purpose for which the authorization was granted nor that it is determined that production will be primarily sent to SUS. Nor are technical criteria required by which technical institutes private entities may apply for a compulsory license, which is essential in view of the prohibition on sublicensing. It would be prudent to at least establish that only those who have the technical capacity to implement the object of the patent can apply for a compulsory license, and must submit documentation to do so.

Furthermore, it is not defined who are the “civil society organizations” that would be able to apply for compulsory licensing, and it is reckless to grant compulsory licensing in favor of those who do not have the minimum technical capacity to implement the object of the patent.

Equally worrying is the wording proposed for article 71, §11 of the Industrial Property Law, which does away with the business secret that protects confidential files submitted to regulatory agencies without indemnifying the holder. This implies expropriation without indemnity and violates constitutional guarantees for property rights and industrial property.

In addition, although the project determines in its article 1 that the compulsory license may be decreed to meet needs of national emergency or public interest, declared in law or act of the Federal Executive Power, or of a state of public calamity of national scope, decreed by the National Congress, there is a contradiction with article 2, through which Congress decrees public interest. In effect, according to the substitute himself, the National Congress can only issue a compulsory license in the event of a nationwide public calamity state, which is not enacted by the approved substitute.

In the case of Covid-19, there has already been an unrecovered public calamity decree that could have given rise to the compulsory license decree. There is no explanation in the project justifying the contradiction contained therein.

Finally, it appears that all modifications to article 71 of the Industrial Property Law are case by case, and it is certain that the best legislative technique would indicate, should new legislation be necessary, it would be better to promulgate a new standard dealing with specifying the Covid-19 pandemic if so deemed necessary, all so as not to disfigure a rule that deals with compulsory licensing of any type of patent.

In conclusion, ABPI respectfully recommends that the Federal Senate’s Bill 12/2021 be rejected by the Chamber of Deputies, since Brazilian legislation already has all the necessary devices to satisfy the public interest in the current pandemic situation.

São Paulo, May 4, 2021.

Brazilian Intellectual Property Association – ABPI