This chapter describes the issuance and litigation of Utility Models in Brazil. Although considered “Patents” in Brazil, utility models have a different treatment from Patents of Invention, having some specificities such as those related to the requirements for protection and the term of duration. This chapter will provide an overview of the Brazilian Patent System by outlining the scope of protection and requirements to obtain a utility model Patent in comparison with patents on invention, and by commenting on the enforcement of these rights in the judicial and administrative spheres.
14.1 The Brazilian Legal Framework on Utility Models
Regarding the international context, although Brazil is not a party to a few IP international treaties like the WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms Treaty (WPPT), it is a signatory to most of the main IP-related treaties including the Patent Cooperation Treaty (PCT),Footnote 1 the Berne Convention,Footnote 2 the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS),Footnote 3 and the Paris Convention,Footnote 4 among others.
Internally, the origins of the patent laws in Brazil can be traced to the year 1809 with an Order (Alvará) granting 14 years’ “exclusive privilege” to inventors.Footnote 5 The first Brazilian Constitution of 1824 also provided that inventors would have property rights in their productions or discoveries during a limited period of time.Footnote 6 When it comes to Utility Models, although there are documented sources indicating their official recognition in Brazil during the twentieth century,Footnote 7 art. 1 of Law 3.129/1882 already contained a definition that bears resemblance to what is recognized as a utility model today:
Art. 1[…] § 1 The following constitute an invention or discovery for the purposes of this law: 1- The invention of new industrial products; 2 -The invention of new means or the new application of known means to obtain an industrial product or result; 3- The improvement of an already privileged invention, if it makes the manufacture of the product or use of the privileged invention easier, or if it increases its usefulness.Footnote 8
Currently, the Brazilian legal framework on IP includes multiple federal laws related to copyright,Footnote 9 integrated circuit topographies,Footnote 10 plant varieties,Footnote 11 and, central for the purposes of this chapter, industrial property.Footnote 12 The Brazilian Law on Industrial Property (LPI) addresses issues related to patents (both patents of inventions and utility models),Footnote 13 industrial designs,Footnote 14 trademarks,Footnote 15 geographical indications,Footnote 16 unfair competition (which may also encompass issues related to slogans, and other advertising signs, consumer confusion, and trade secrets),Footnote 17 and crimes against industrial property.Footnote 18 It also provides some regulatory aspects on licensing, and the administrative procedure carried out by the Brazilian Industrial Property Office (INPI).
The interpretation and content of all federal laws mentioned above must be in accordance with the Brazilian Federal Constitution of 1988, which also expressly addresses Intellectual Property Rights, mainly in art. 5, XXVII, XXVIII and XXIX.Footnote 19 In Brazil, the right to property is a fundamental right (art. 5, XXII, CF88). However, this right is not an absolute one, since “property shall observe its social function” (art. 5, XXIII, CF88).Footnote 20 Several authors have argued that there is no legitimate property without it being tied to its social function,Footnote 21 agreeing with the idea that “[…] property endowed with a social function, which is not fulfilling it, will no longer be the object of legal protection.”Footnote 22
To exercise such a right according to its social function can be understood under a more objective lens, as it is seen in the case of rural property under art. 186 of the Brazilian Federal Constitution, as to which cumulative factors must be considered in order to assess whether the social function is met.Footnote 23 Nevertheless, the “social function” of property, and therefore intellectual property, is more than complying with a list of factors.Footnote 24 Regarding IP rights, limitations and exceptions (L&Es) can help to define the social function of property,Footnote 25 reaffirming that the property right is not absolute and must consider the social interest.Footnote 26 It becomes clear from the reading of the text of art. 5, XXIX of the Brazilian Federal Constitution that the granting of IP rights (including those related to utility models) is subject to consideration of the social interest and the technological and economic development of Brazil.Footnote 27
The next section will address how Patents of Invention and Utility Models are regulated under federal law, that is, the LPI, in Brazil.
14.2 Patents on Invention and Utility Models
Today, the LPI provides two types of patents: Patents on Invention and Utility Models. Patents on inventions are granted to those inventions “that meet the requirements of novelty, inventive step, and industrial application,” Footnote 28 whereas a utility model is an “object of practical use, or part thereof, susceptible to industrial application, which includes a new form or arrangement, involving an inventive act resulting in a functional improvement to the use or manufacture.”Footnote 29 Table 14.1 summarizes the principal requirements for patents on inventions and utility models in Brazil.
While the LPI formally treats “novelty” and “industrial application” in the same way,Footnote 30 the same cannot be said for the “inventive act/step.” Art. 13 of the LPI clarifies the scope of “inventive step” requirement for patents on invention: “An invention is endowed with an inventive step provided that, to a technician versed in the subject, it is not derived in an evident or obvious way from the state of the art.” Regarding utility models, art. 14 provides that a “utility model is endowed with an inventive act provided that, to a technician versed in the subject, it is not derived in a common or ordinary way from the state of the art.”
The Utility Model Patent Examination Guidelines provided by the Brazilian Patent Office (INPI) (2012, p. 5) establish that an inventive act is characterized by the presence of an unusual difference between an already existing object in the state of the art and the new invention. In other words, the difference must not be ordinary for a person skilled in the art. The inventive act presupposes a lower degree of inventiveness:
An inventive act is considered to exist when the modification introduced to an object results in a functional improvement in its use or manufacture, facilitating human activity, or improving its efficiency. The inventive act is of the same nature as the inventive activity, but with a lower degree of inventiveness.Footnote 31
According to Barbosa, identifying the inventive act in utility models is a more complex endeavor than that concerning the inventive step in patents on invention:Footnote 33
It is difficult, however, to discern the difference between the “evident or obvious consequence of the state of the art”, typical of Patent of Inventions, and the “ordinary result of the state of the art”, typical of models. Is the subjective parameter the relevant one? Would the person skilled in the art, necessary judge of the inventive step, be replaced by a layman in the case of the inventive act? What is the fine line between an invention that is evident or obvious and one that is common or vulgar? Because it is in this seamless limit that the Utility Model in its new version should exist.Footnote 34
Despite the differences between utility models and patents on invention under Brazilian Law, there is the possibility of the conversion (usually referred to as “change of nature”) of a Utility Model to a Patent on Invention and vice-versa.Footnote 35 Arts. 35, II and 36 illustrate scenarios in which such change of nature may occur:
Art. 35. Upon technical examination, a search report and an opinion will be prepared related to: […]
II - adjustment of the application to the nature of the protection claimed;
III - reformulation division of the application; or
IV - technical requirements.
Article 36. When the office action is for the non-patentability, or inadequacy of the application to the nature of protection claimed, or formulates any requirement, the applicant shall be notified to respond within 90 (ninety) days.
Paragraph 1. Upon failure to meet the requirement, the application shall be definitively dismissed.
Paragraph 2. In case the requirement is responded, even though not met, or its formulation is reconsidered and independently of arguments being filed regarding the patentability or suitability, the examination shall continue.
Finally, another difference between Patents on Inventions and Utility Models is their term or duration: “[a]n invention patent shall remain in force for a period of 20 (twenty) years, and a utility model patent for a period of 15 (fifteen) years from the date of filing.”Footnote 36
14.3 Administrative Procedure before the INPI
In Brazil, Patents, and therefore Utility Models, are granted by the Brazilian Patent Office (INPI). Created in 1970,Footnote 37 the INPI is the federal authority responsible for administering Industrial Property in Brazil, and for making enactments “on the advisability of signing, ratifying and denouncing conventions, treaties, covenants and agreements on industrial property.”Footnote 38 In addition to analyzing applications and granting patents, the INPI is also responsible for registering trademarks, industrial designs, software,Footnote 39 geographical indications, integrated circuit topography, and technology transfer agreements.Footnote 40
When it comes to utility model filings in Brazil, data from January and February 2022 show that 98% of the applicants are Brazilian residents, which is a very different scenario when we compare to Patents on Inventions during the same period (USA 31%, Brazil 17%, Germany 7%, China 7%, Japan 6%, Switzerland 5%, UK 4%, and France 4%).Footnote 41 With regard to the nature of the applicants, 64% of the utility model applicants for January/February 2022 were Individuals, 20% were small businesses, and individual entrepreneurs (MEI) and medium or large size companies represented 13% of the applicants.Footnote 42 In terms of overall applications, and comparing the applications filled for patents on invention and utility models it is clear that, in Brazil, patent on invention applications are substantially higher than those for utility models. These results are illustrated in Figure 14.1.
Patent on invention and utility model applications and decisions (2018–2021)
Reducing the time between filling a patent application and having it granted has been one of the priorities of the INPI, mainly for patents on invention, which may have contributed to the growth of Decisions on patents on invention between 2018 and 2020, as shown in Figure 14.1.Footnote 43 As of October–December 2022, the average time for a technical decision once the Request for Examination is filed is 2.6 years for utility models.Footnote 44 Compared to patents on invention, it is difficult to compare the pendency time of utility models and patents on invention because the pendency of patents on invention varies according to the nature of the invention. While the average time for a technical decision for inventions in the field of cosmetics is 2.1 years, the time for biopharmaceuticals is 5.4 years, once the Request for Examination is filed.Footnote 45
Today, the complete administrative procedure to obtain a patent for a utility model can be carried out online via the “e-INPI” and “e-Patentes” systems.Footnote 46 Briefly stated, the user must sign in to the system, gather all relevant documentation regarding the utility model, the inventor, the applicant, the invention, pay the necessary official taxes, fill out forms and file the application online.Footnote 47 The application must be filed according to art. 19 of the LPI and “shall contain: I. the request; II. the specifications; III. the claims; IV. drawings, if applicable; V. the abstract; and VI. proof of payment of the filing fee.”Footnote 48
Once it is filed, the user can keep track of the application online and must respond to any office actions and any further requests for additional information/documentation.Footnote 49 On the INPI side,
the Institute will carry out a preliminary formal examination of the application and, if there is full compliance with art. 19, the protocol will take place. In the event of formal failure to comply with art. 19, but the application provides data referring to the object, the applicant and the inventor, the INPI will formulate an office action to be fulfilled within 30 days, under penalty of having the application dismissed. Once the application is filed, it will be kept confidential for a period of 18 months from the filing date. It should be noted that the applicant must request the examination of the application within 36 months from the date of filing, under penalty of having the application dismissed, however, the INPI can only start the examination after 60 days from the publication of the Application.Footnote 50
According to art. 34 of the LPI, “[a]fter the examination has been requested, [a set of documents listed art. 34] must be submitted within a period of 60 (sixty) days, whenever requested, under penalty of having the application dismissed.” The technical examination will encompass the preparation of a search report and an opinion by the INPI regarding: “I. patentability of the application; II. appropriateness of the application given the nature claimed; III. reformulation or division of the application; or IV. technical requirements.”Footnote 51
In case INPI finds the “non-patentability of the application or the incompatibility of the application to the nature claimed, or makes some demand, the applicant shall be notified to submit comments within a period of 90 (ninety) days.”Footnote 52 In case the applicant does not respond to the request from the INPI, the application will be dismissed, and if there is any response, the examination will continue.Footnote 53 Finally, according to art. 37, “[o]nce the examination has been concluded, a decision shall be handed down, either approving or rejecting the patent application.”
It should be noted that additional costs to those paid at the time of the patent application filing may arise from, for example, compliance with Office Actions, the issuance of the Patent Certificate, and the payment of annuities.Footnote 54 In accordance with art 9 of Law n. 5648/70,Footnote 55 all the official information provided in the online system is also published in the INPI’s official gazette.Footnote 56
14.4 Enforcing Utility Models in Brazil
Enforcing exclusive rights in Utility Models is possible both in the administrative and judicial (civil and criminal) systems in Brazil, and the choice of one does not exclude the other.Footnote 57
14.4.1 Administrative Procedure
According to art. 51 of the LPI, and within six months of the date of the grant of a patent, it is possible to file an Administrative Nullity Proceeding (“ANP”) on grounds that the patent (either patent on invention or utility model) is not compliant with the requirements provided in the law and administrative regulations (e.g., legal and formal requirements, specifications, and claims).Footnote 58 The “procedure may be initiated ex officio or at the request of any person with legitimate interest.”Footnote 59 Once the ANP is initiated, the titleholder may submit comments after sixty days of its publication,Footnote 60 which will be followed by an Opinion of the INPI.Footnote 61 Then, both the applicant and the titleholder will have an additional sixty days to submit their final comments.Footnote 62 The final step of the administrative procedure is the analysis of the case by the president of INPI.Footnote 63 Figure 14.2 shows an overview of the number of ANPs filed per year between the years 2012 and 2022.
Total Administrative Nullity Proceedings (ANPs) (2012–2020).
Focusing on the acts of the utility model division, Figure 14.3 shows the INPI decisions nullifying the patent and those in which the patent was maintained (even with a restriction, which is called “partial nullity”). From the data below, it is clear that the majority of the decisions issued by the utility model Division on ANPs reject the ANP and uphold the utility model.
Decisions/status of ANPs filed at the utility model division (2012–2022).
According to data made available by the INPI for the period between 2012 and 2022, an average of 1–2 percent of the total decisions for approvalFootnote 64 (for patents on invention and utility models) are subject to an ANP.Footnote 65 When analyzed by market sector, the highest number of cases of ANPs appear in the “Division of Patents of Agriculture and Engineering Elements” (“Divisão de Patentes de Agricultura e Elementos de Engenharia”) with 2.35 percent of the decisions being followed by ANPs and the Division of Utility Models Patents (“Divisão de Patentes de Modelo de Utilidade”), with 2.97 percent.
The nullity of a patent can also be judicially requested while the patent is in force, and must be filed before the Federal Court with the participation of the INPI (even if it is not the plaintiff).Footnote 66 Once the Court decision is final, the INPI will make it public in its official gazette and the parties informed about it.Footnote 67
14.4.2 Judicial Procedure
To better understand the current number of legal actions involving patents on invention and utility models, both in the Criminal and Civil spheres, we used a private third-party software “webseek” owned by LDSoft.Footnote 68 This software uses the existing data in the INPI database with the possibility of applying different filters in the searches.
For this particular purpose, we searched for all the patents and applications with decisions tagged with codes 15.23 (“notice of legal action concerning the application”) and 22.15 (“notice of legal action concerning the patent”) for the last thirty years (between January 1, 1993, and January 1, 2023). The results are provided in Figure 14.4.
Notices of legal action for patents on invention and utility models (1993–2023).
While the above figures provide insight into the volume of legal proceedings involving patent on invention and utility models, it should be clarified that they may not reflect the exact and total number of cases discussing patents in Brazilian courts. These statistics likely only account for cases where details about the judicialization were formally documented in the administrative records of the INPI.
When it comes to criminal actions, the Brazilian legal framework is quite peculiar, since industrial property crimes are not listed in the Criminal Code anymore but are included in the LPI. Nevertheless, “[c]riminal action and the preliminary proceedings of search and seizure, in crimes against industrial property, shall be governed by the Criminal Procedure Code, with the modifications set forth in the Articles of this Chapter [of the LPI].”Footnote 69 Moreover, in Brazil, the procedure concerning crimes against patents usually starts with the filing of a criminal complaint by the offended, often the rightsholder, and not by initiative of the State, which can be represented by the Public Prosecutor’s Office.Footnote 70
Subject to fines, search and seizure,Footnote 71 destruction of the infringing products,Footnote 72 and even imprisonment (the penalty varies from one month to one year depending on the crime committed),Footnote 73 there are several acts like manufacturing, exporting, importing, or supplying patented products without authorization that are considered as crimes against patents in Brazil.Footnote 74 Imprisonment time can be extended when the infringer is or was a representative, agent, partner, employee, or licensee of the patentee.Footnote 75 Similarly, fines could be majored in certain cases.Footnote 76 Additionally, there are unfair competition crimes that are closely related to patents. We provide a summary of these crimes in Annex I.
In addition to criminal procedures, holders of patent on invention and utility model can also file civil infringement lawsuits. If successful, these suits can result in the payment of compensation, which is “determined by the benefits that the injured party would have gained had the violation not occurred.”Footnote 77 When it comes to the calculation of “lost profits,” the LPI provides multiple criteria, from which the most beneficial to the injured party can be applied, these being: (i) “the benefits that the injured party would have obtained if there were no infringement”;Footnote 78 (ii) “the benefits obtained by the infringing party”Footnote 79 and (iii) “the remuneration that the infringer would have paid to the rightsholder for a licensee that would allow it to lawfully use the asset.”Footnote 80
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