Law, Business & Policy Thursday, May 12 Washington, DC Scan to - - PowerPoint PPT Presentation

BRAZILIAN HIGH-TECH LITIGATION:

Law, Business & Policy

Thursday, May 12 – Washington, DC

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Litigation in Brazil Against the Government

• n Behalf of Foreign Companies

Otto Licks, Partner at Licks Attorneys

Thursday, May 12 – Washington, DC

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• Patent system started in 1809, but the BRPTO was created only in 1970.
• PCT in force since 1980. Brazil is ISA and IPEA under PCT.
• TRIPs in force since 1995.
• TRIPS compliant Statute passed in 1996.
• 90 patent examiners circa 1980.
• First time the BRPTO hired more examiners was in 1998 (large gap)
• Now: 328 examiners; 322 at the BRPTO (6 are working in other government

entities); 237 are at the Office of Patents (DIRPA), while 85 have been assigned to

• ther activities unrelated to patent examination; 191 actually examine patents.
• 34,000 patent filings per year
• Less than 10,000 patent decisions per year

Overview of the BRPTO

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1995 – 14,000 patent filings per year 2015 - 35,000 patent filings per year

5,000 10,000 15,000 20,000 25,000 30,000 35,000

* Figures may change slightly due to the 30-month PCT filing period

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Patent filings go up, staff goes down… 191 patent examiners working in 2015

50 100 150 200 250 300 350 400 450 500 20,000 22,000 24,000 26,000 28,000 30,000 32,000 34,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Patent Filings Total Examiners

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The ever increasing Backlog: A snowball in Rio de Janeiro

10,000 20,000 30,000 40,000 50,000 60,000 70,000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Request for examination Office Actions Abandonment Patent backlog Linear (Patent backlog)

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The BRPTO’s Backlog per Technical Division - average time (years)

8 9 10 11 12 13 14 15 Telecom (DITEL) Food, Plant and Correlates (DIALP) Molecular Biology and Correlates (DIMOL) Physics and Electricity (DIFEL) Biochemistry and Correlates (DIBIO) Software and Electronics (DICEL) Pharmacy Division 1 (DIFAR-1) Pharmacy Division 2 (DIFAR-2) Agrochemical and Correlates (DIPAQ) Textile (DITEX) Polymers and Corretates (DIPOL) Human Needs (DINEC) Packaging Technologies (DITEM) Oil and Chemistry (DIPEQ) Civil Engineering (DICIV) Medical Devices (DIPEM) Inorganic Chemisty (DINOR) Mechanics (DIMEC) Utilidty Models (DIMUT) Metallurgy and Materials (DIMAT) Agriculture (DIPAE)

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Number of examinations per patent examiner (per month)

0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 2010 2011 2012 2013 2014 2015

Productivity

Average considering all examiners Average considering examiners actually examining Linear (Average considering all examiners)

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Number of grants/denials per examiner

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Comparing productivity JPO/USPTO/EPO/BRPTO

239 77 51 19.2 50 100 150 200 250 JPO USPTO EPO BRPTO

Average # of applications examined per examiner in 2012

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Comparison of the total # of examiners with the patent filings in a given year

Brazil 2010 2011 2012 2013 2014 2015 Patent filings 28,099 31,881 33,569 34,050 33,182 33.043 Patent examiners* 270 237 228 237 226 191 Ratio 8.7 11.2 12.3 12.0 12.2 14.4 Japan - JPO 2010 2011 2012 2013 2014 2015 Patent filings 353,277 350,594 350,908 336,058 325,989 318,721 Patent examiners 1,703 1,711 1,713 1,701

• Ratio

17.3 17.1 17.1 16.5

• Korea - KIPO

2010 2011 2012 2013 2014 2015 Patent filings 170,101 178,924 188,915 204,589 210,292 213,694 Patent examiners 712 711 726 732 724 741 Ratio 19.9 21.0 21.7 23.3 24.2 24.0 United States - USPTO 2010 2011 2012 2013 2014 2015 Patent filings 520,277 535,188 576,763 609,052 618,330 617,216 Patent examiners 6,420 6,652 7,808 8,013 9,302 9,161 Ratio 6.7 6.7 6.2 6.3 5.5 5.6 Europe - EPO 2010 2011 2012 2013 2014 2015 Patent filings 235,731 244,995 258,500 265,918 274,174 278,867 Patent examiners 3,967 3,961 3,994 4,112 4,221

• Ratio

4.9 5.1 5.4 5.4 5.4

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Patent filings per examiner BRPTO vs. JPO

8.7 11.2 12.3 12.0 17.3 17.1 17.1 16.5 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 2010 2011 2012 2013

Ratio BRPTO Ratio JPO

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• The BRPTO provides for early harvest and fast-track examination.
• Usually a fee is required.
• In addition, applicant must fulfill requirements established in the rules.
• If approved, application that benefit from a fast-track procedure will be decided in

about 11 months.

• 1. Early harvest:

1. Preliminary opinion – (Rule #123/2013)

• 2. Fast-track:

1. Green patents – (Rule #131/2015) 2. Priority BR – (Rule #153/2015) 3. PPH (Rule #154/2015) 4. Pharma fast-track (Rule #80/2013) 5. Small entities fast-track (Rule #160/2016) 6. Other cases of Fast-track (Rule #151/2015)

Fast-track From 14 years to 11 months

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Fast-track From 14 years to 11 months

Early harvest 1 Preliminary opinion (Rule #123/2013) Fast-track 2 Priority BR (Rule #153/2015) Fast-track 3 PPH (Rule #154/2015) Fast-track 4 Pharma (Rule #80/2013) Fast-track 5 Small entities (Rule #160/2016) Fast-track 5 Other cases of Fast- track (Rule #151/2015) Applications claiming Brazilian priority (first filed in Brazil) Applications first filed in Brazil, which were also filed abroad, such as a national phase of a PCT first filed in Brazil. First step towards a full PPH. Highly restricted. Might be challenged in courts to include non- US priorities and all fields of technologies. Fast-track examination

• f applications related

to the diagnosis, prevention or treatment of HIV-AIDS, cancer or neglected diseases; Fast-track examination

• f applications filed by

small entities.

• Applicant older than

60 years old;

• Applicant suffers

from functional or mental disabilities or

• ther severe

diseases;

• To obtain funds or

credits from Brazilian fostering or credit agencies;

• Applications dealing

with subject matter declared relevant for national emergency

• r public interest;
• A third party’s

application claiming the same subject matter of your patent

• r application;
• Third parties are

using or working the subject-matter of a pending patent application.

• Search report plus a

written opinion.

• Not a full

examination.

• Produces a report

similar to PCT’s WOISA.

• Started January,

2016.

• Closed in February

2016 when the Office accepted the 100th application.

• US or BR priority.
• Only in the field of oil

and gas.

• Application filed in

Brazil from January 1st, 2013.

• Application not under

examination.

• Started March, 2013
• Applicable to

products and processes, as well as devices and materials

• Possibility of

prioritized examination of patent applications covering products, process and medical devices considered strategic to SUS (art. 3 of the Rule). Only the Ministry of Health can ask for a patent application to be prioritized under art. 3 of the Rule.

• Started February,

2016

• During the pilot

phase, which will last a year, the BRPTO will accept up to 300 patents.

• Small entities, as

defined by law, generate annual gross revenues of up to 3.6 million.

• Foreign companies

cannot qualify as small entities. 890 (USD 250) 1,775 (USD 500) 1,775 (USD 500) No fee No fee No fee

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• Green patents

1. The third phase of the pilot program ended last April 16, 2016. 238 requests have been filed; 99 application grants; 95 application denials. 2. In average, applications take more than 1 year to be decided counting from the filing of the request for priority examination.

• Priority BR

1. On February 23, 2016, the Priority BR pilot program received its 100th request for priority examination; 2. Representatives of the BRPTO have announced that the second phase of the pilot program will be launched in the second semester of 2016. 3. 113 requests were filed. 42% of the requests were granted; 20% were denied; 38% are pending. 4. 59 companies are participating.

Recent/noteworthy developments in fast-track programs

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• PPH

1. 9 requests have been filed to date; 7 companies are participating. 2. First examinations and decisions are taking less than 80 days counting from the filing of the priority examination request.

• Pharma fast-track

1. As of February 23, 2016, 25 requests for pharma-fast-track were filed.

• Small entities fast-track

1. 38 requests for priority examination have been filed. 2. 28 companies are participating in the pilot phase of the program.

Recent/noteworthy developments in fast-track programs (cont’d)

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• The lack of appropriate actions by the Public Administration to solve the backlog

problem led some companies to challenge the BRPTO before federal courts.

• Several companies obtained temporary restraining orders forcing the BRPTO to

examine the patent in reasonable time – less than 60 days.

• Applicants request Federal Courts to issue an order imposing a ‘judicially induced

fast-track’ examination of a pending application.

• The grounds for the lawsuit is the statutory 60-day term provided by the

Administrative Procedure Law for the administration to conclude the analysis of an administrative proceeding.

• Cases where the BRPTO is applying strict patentability standards for some arts such

as pharma, biotech, and telecom also trigger potential challenges prior to a final decision.

Judicially induced fast-track: The basics

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• Typically, courts will appoint a patent master to issue a technical opinion

addressing the invention’s patentability.

• Judges comply with the conclusions and arguments made by the patent master.
• Courts enjoy a high degree of independence, turning the Judiciary into the best

chance a company may have to win a case against the Public Administration in Brazil, where the appointment of judges is an exception limited to higher courts and to a fraction of appellate judges.

• Judicial deferenceto the Executive Branch is low and Brazil has little space for

administrative discretion.

Judicially induced fast-track: The basics (cont’d)

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Judicially induced fast-track: a look into existing decisions

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Patent Prosecution Highway (PPH) Pilot Program Res.154/2015 (RPI 2348 of Jan 05, 2016, effective Jan, 11)

• Only applications of the same family, with the earliest application (filing or priority)

filed in the United States or Brazil, that were given a positive ruling on a patent claim(s) from either the BRPTO or the USPTO are eligible to participate in the USPTO- BRPTO PPH pilot program.

• The BRPTO only accepts applications containing claims directed to oil, gas or

petrochemical inventions. IPC classes: B01, B63, C09K 8, C10, E02, E21, F15, F16, F17 and G01.

• Only for Brazilian applications filed after January 1, 2013 that were published by the
• BPRTO. The corresponding request for examination must be previously submitted to

the BRPTO.

• The Brazilian application may not be the object of a Judicial Action.
• Patentability decision remains within the sole discretion of each Office and the

applicable national statute.

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Applications participating in PPH

# BR Application (corresponding US patent/application) Applicant US Patent Issued? Days from PPH request to BRPTO acceptance Days from PPH request to BRPTO first

• ffice action

Days from BRPTO acceptance to BRPTO first

• ffice action

1 BR 112014022151-0 (US 9,169,697) Baker Hughes Incorporated

Yes

50 71 21 2 BR 102014017479-6 (US 9,193,932) Afton Chemical Corporation

Yes

30 57 27 3 BR 102013032934-7 (US 13/725,482) Afton Chemical Corporation

No

30 57 27 4 BR 112015022246-3 (US 9,121,969) ION Geophysical Corporation

Yes Request denied Request denied Request denied

5 BR 102013000290-9 (US 9,238,778) Suncoke Technology and Development LLC

Yes

29 56 27

BR patent issued

6 BR 112015008014-6 (US 9,249,637) National Oilwell Varco, L.P.

Yes

41 55 14 7 BR 112015006941-0 (US 9,074,421) National Oilwell Varco, L.P.

Yes

35 49 14

Information updated as of May 10, 2016

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BR-Priority Pilot Program

• Accelerated examination program directed to applications first filed in Brazil or

claiming BR priority.

• Started January 2016 and closed after one month, when the BRPTO accepted the

100th application.

• Number of Participating Applicants: 59*
• Top Applicants*:

Applicant # of Requests Faculdades Católicas Mantenedora da PUC-RJ 15 Natura Cosméticos S.A. 11 TQTVD Software LTDA 7 Ouro Fino Participações e Empreendimentos S/A 6 Ouro Fino Saúde Animal Participações S.A. 6

(*) Source: Diego Musskopf – Manager of Cooperative Examination Group DIRPA/BRPTO - ABPI seminar of 04/12/2016

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• 1. The BRPTO’s patent backlog has two main underlying causes: (i) poor productivity;

(ii) 40% of patent examiners are deviated to activities unrelated to patent examination.

• 2. Patent applicants should expect to wait for an average 14 from filing to a final

decision (grant/denial).

• 3. Most of the BRPTO’s fast-track programs are limited in scope (e.g., only O&G

applications benefit from the PPH pilot program). This explains why demand for them is not always high.

• 4. Companies that do not benefit from fast-track programs, but that nonetheless are

interested in having their patent applications examined within a reasonable period

• f time, have to look elsewhere.
• 5. “Judicially Induced Fast-Track” is a new option for companies wishing to have their

patent applications examined within less than 60 days.

Conclusions

Thank you!

Otto Licks

• tto.licks@lickslegal.com

T +55-21-3550-3702 M +55-21-99792-5232