hermeneutic limits and possibilities of the equality principle in the
Transcrição
hermeneutic limits and possibilities of the equality principle in the
PONTIFICAL CATHOLIC UNIVERSITY OF RIO GRANDE DO SUL – PUCRS LAW SCHOOL POSTGRADUATE LAW PROGRAM DOCTORATE IN LAW MILTON LUCÍDIO LEÃO BARCELLOS HERMENEUTIC LIMITS AND POSSIBILITIES OF THE EQUALITY PRINCIPLE IN THE BRAZILIAN PATENT LAW Porto Alegre 2010 2 MILTON LUCÍDIO LEÃO BARCELLOS HERMENEUTIC LIMITS AND POSSIBILITIES OF THE EQUALITY PRINCIPLE IN THE BRAZILIAN PATENT LAW Doctoral thesis submitted to the Postgraduate Program in Law Degree from the Law School of the Pontifical Catholic University of Rio Grande do Sul as partial requirement for obtaining the Doctoral degree in Law in the area of concentration and Efficiency and Effectiveness of the Constitution and the Fundamental Rights in Public Law and Private Law. Advisor: Prof. Dr. Ricardo Aronne (PUCRS) Co-Advisor: Prof. Michael Meurer (Boston University) Porto Alegre 2010 3 CATALOGING IN PUBLICATION (CIP) INTERNATIONAL DATA B424I Barcellos, Milton Leão Hermeneutic limits and possibilities of the equality principle in the Brazilian patent law/ Milton Lucídio Leão Barcellos – Porto Alegre 2010. 184f. Thesis (Doctorate) – Law School, PUCRS Advisor: Prof. Dr. Ricardo Aronne 1. Law. 2. Patents. 3. Fundamental Rights. 4. Equality Principle. 5. Competition. I. Aronne, Ricardo II. Title CDDir 342.27 Librarian in Charge: Salete Maria Sartori, CRB 10/1363 4 MILTON LUCÍDIO LEÃO BARCELLOS HERMENEUTIC LIMITS AND POSSIBILITIES OF THE EQUALITY PRINCIPLE IN THE BRAZILIAN PATENT LAW Doctoral thesis submitted to the Postgraduate Program in Law Degree from the Law School of the Pontifical Catholic University of Rio Grande do Sul as partial requirement for obtaining the Doctoral degree in Law in the area of concentration and Efficiency and Effectiveness of the Constitution and the Fundamental Rights in Public Law and Private Law. Approved on August 27th, 2010. EXAMINING COMMITTEE ____________________________________________________ President: Prof. Dr. Ricardo Aronne – PUCRS ____________________________________________________ Prof. Dr. Clarice Beatriz da Costa Sohngen – PUCRS/FADIR ____________________________________________________ Prof. Dr. Ângela Kretschmann – UNISINOS ____________________________________________________ Prof. Dr. João Marcelo de Lima Assafim – UCANRJ/UFRJ ____________________________________________________ Prof. Dr. Luiz Gonzaga da Silva Adolfo – UNILASALLE/ULBRA Porto Alegre 2010 5 To God, always Him, foremost. To my enlightened parents who raised and educated six children with unmatched love and dedication, electing family as root and reason of a decent life. To my grandparents Lucídio Scherer, Amyta Bier, André Leão and Hilda Ferreira. 6 ACKNOWLEDGEMENTS Thanks to God, once more, for teaching me the two most important ―laws‖: Love one another as He loved us and do to your neighbor as you want your neighbor to do to you. My parents Milton Leão Barcellos and Norma Scherer Barcellos, for motivating me, for believing and dedicating themselves to their children. My five siblings André, Cláudia, César, Carla and Amita, in particular to my three ―Charlie‘s angels‖, for taking care of me and for teaching me so much, even without perceiving it. My aunt Tetê, for the affection of a mother, which she has always dedicated to all of us. My Gift Camila Bono for the light and love that irradiate from her. My advisor Ricardo Aronne for his juridical genius and creativity, as well as his patience, incentive, ethics and companionship which were paramount for the thesis to have beginning, middle and end. My co-advisor Michael Meurer for showing me the deficiencies of the patent system in American reality. My friend and colleague Patrícia Agra Araújo for the support and substantial assistance at Boston University and in the thesis completion. My friend and partner Gustavo Bahuschewskj Correa, since the achievement of the course would be impossible without his support. My friend and colleague Helenara Braga Avancini for the many talks, always enriching ones. My friend and colleague Lívia Haygert Pithan for the constant motivation to teach. OJF. My friend and colleague Daniele Maia Teixeira Coelho for the vital moments of My Master‘s Degree Advisor Juarez Freitas from whom I have learned so much and will keep learning about hermeneutics. The Coordinator of PUCRS Postgraduate in Law Program Ingo Wolfgang Sarlet, for his long-suffering, teachings and for understanding the mishaps of this eternal student. My professors and colleagues from PUCRS, Alexandre Curvelo, Betina Krause Suecker, Carlos Alberto Molinaro, Cezar Saldanha, Daniel Machado da Rocha, 7 Daniele Lutzky, Eugênio Facchini Neto, Jorge Luis Nicolas Audy, Karine Demoliner, Lisianne Sabedra, Luis Paulo Germano, Luis Renato Ferreira da Silva, Marli Elizabeth Ritter dos Santos, Paulo Antônio Caliendo, Paulo Vinícius Sporleder de Souza, Phililip Franca, Rafael Dresch, Regina Linden Ruaro, Renato J. Ritter Júnior, Ricardo Aronne, Ricardo Lupion Garcia, Roque Bregalda, Simone Tassinari Cardoso, Thadeu Weber, Vilmar Fontes, a special appreciation for the fellowship, learning and aid to follow the inquiring and investigative line. The Professors and Colleagues from Boston University, where I was extraordinarily welcome as a Visiting Scholar during my doctoral internship, Michael Meurer, Keith Hylton, Ben Depoorter, Lisa Geller, Kevin Outterson, Carolina Rossini, John Wilbanks, Caroline Cavareli Rudaz, Xie Zhiyoung Yu, Satomi Tanaka, Catherine Bubenzer-Paim, Andreas Bubenzer-Paim, Cyro Goldstein Troper, Luis Eduardo Pulido, Manuela Matilde Consito, Mei Kaneda, Molly Ann Torsen, Navrose Palekar, Rodrigo Bermeo, Volodymyr Yakubovskyy, Wesley Khristopher for helping me cope with the first adaptation in Boston and for contributing to my research. Professor Greg Vetter from Houston University Law School for his teachings and for presenting me with an essential book for my research. The authorities and colleagues who effectively contributed much to the field research conducted in Brazil and in the USA Patrícia Agra Araújo, Paulo Furquim, Pamela Harbour, Armando Irizarry e Tara Isa Koslov. All my colleagues and former students from the Law Specialization Course of PUCRS Intellectual Property, as well as to my colleagues and former students from the courses and lectures in the area of intellectual property lectured at PUCRS,UNISINOS, UFRGS, UNILASALLE, UNIRITTER, FSG, UPF, UNISC, AMF,UCAM/RJ, UNIVATES, UCS, ULBRA, ABAPI, ASPI, NEDE/AJURIS, ESAOAB/RS, IARGS, my thanks for the contributions and provocative questions which have enriched me and worked as a springboard to my academic advance. My Colleagues from the OAB/RS Special Committee on Intellectual Property for the ever-provocative discussions and fellowship for the sake of spreading knowledge about this important branch of law. All my colleagues from Leão Intellectual Property for the effort to make up for my necessary absence to complete this course and research. Caren Andrea Klinger, Patrícia Souza de Oliveira, Raquel da Silva Pereira and Victor de Mello Rodrigues whom, out of love and dedication and great help in their performance at PUCRS Postgraduate in Law office, greatly contributed for the entire course to always keep its quality and success that are its benchmark. Charlotte Gliksman (Assistant to the Associate Dean) and Peter O'Meara (International Scholar Advisor) for their assistance and special affection at Boston University. CAPES and PUCRS for granting scholarships that made the academic improvement possible for this research completion. 8 Boston University Law School for receiving and approving the research project developed by a Visiting Scholar. 9 Keep yourself simple, good, pure, serious, free from affectation, a friend of justice, fearing the gods, gentle, passionate, vigorous in all your attitudes. Fight to live as philosophy wishes you lived. Revere the gods and help men. Life is short. Marco Aurélio 10 ABSTRACT This thesis intents to demonstrate that the equality principle should be recognized as an essential principle in the patent system in order to allow this system to sustain its functions according to the social interest together with the economic and technological development of the country. The equality principle based on a different treatment of different technologies according and limited to the effective differences acts as an optimization of the whole patent system, according to its functional essence and also to guarantee the free competition at the same time. The proposed study shows that the hermeneutics starting from the recognition of the equality principle can really help with an effective optimization of the patent system to fulfill its functional essence based on constitutional purposes. However, the hermeneutic effort based on the equality as a starting point has limitations which depend on integrating modifications of the law. Keywords: Patents. Fundamental Rights. Equality Principle. Free competition. Legal Hermeneutics. 11 LIST OF ABBREVIATIONS AND ACRONYMS ACED - Administrative Council for Economic Defense AL – Antitrust Law BAIP – Brazilian Association of Intellectual Property BAS - Brazilian Antitrust System CAFC – Court of Appeals for the Federal Circuit CC – Civil Code DOJ – Department of Justice DAU - Direct Action of Unconstitutionality EPC – European Patent Convention EPO – European Patent Office FTC – Federal Trade Commission IPL – Industrial Property Law MFEMS - Ministry of Finance Economic Monitoring Secretariat MJELS - Ministry of Justice Economic Law Secretariat PC – Paris Convention PCT – Patent Cooperation Treaty TRIPS – Trade Related Aspects of Intellectual Property Rights USPTO – United States Patent and Trademark Office WIPO – World Intellectual Property Organization 12 SUMMARY 1. INTRODUCTION ………………………..……………………………………....…13 2. THE MARKET AND THE PATENT SYSTEM ……………………………...…. 20 3. EQUALITY AND WELFARE STATE ………..……………………………...…. 87 4. PROBLEMATIZING EQUALITY IN THE PATENT SYSTEM ……..………... 95 5. LIMITS OF THE CONSTITUTIONAL HERMENEUTICS AND THE SYSTEM OBSTACLES …………………………………………………...……….………. 129 6. EQUALITY AND FREE COMPETITION AS ORIENTING AND LIMITING HERMENEUTIC REFERENCES OF THE PATENT LAW …….…………... 139 7. POSSIBLE SOLUTIONS FOR THE ADEQUACY OF THE PATENT SYSTEM …………………………….……………………………………………….………. 150 8. CONCLUSIONS ………………………………………..…………..…………… 157 REFERENCES ………………………………………………..………..……….. 163 APPENDIX A: Field Research ACED ………………………..……….…..… 176 APPENDIX B: Field Research FTC and DOJ……………………………......184 13 1 INTRODUCTION The basis of the development of this thesis starts from the analysis of the equality principle as one of the constitutional foundations to be revealed in search for adequacy of the patent system to the reality of the technological development of society, with special attention to examining the principle of free competition as the hermeneutic guidance to determine the limitations on the exercise of the patent law, aiming to point out the clashes and possible solutions for a Brazilian patent system in line with the Magna Carta of 1988. In effect, this study has struggle points that in general, require the topical understanding of the equality principles and free competition, so that the impact of these two principles on the patent system is examined under the focus of the needed acknowledgement of the factor of discrímen taking the technological diversity as its base. The structure of the patent system is observed as a whole, which assumes that every intellectual creation that meets the requirements of novelty, inventive activity, industrial application and descriptive sufficiency, the way they are currently interpreted, although not expressly prohibited by provision of law, is eligible as subjective right for obtaining a patent, granting equal rights to the holder. Before this equal treatment, there is a direct reflection on the possibility of misuse of patent rights based on the current structure of the patent system, whose prevention and repression by the legal system face difficulties due to the nature and complexity of such rights. Examining such issues under the guise of equality principle, we have the patent system assuming in the case of innovative technology (in any given area) the legal possibility of obtaining a patent fulfilling ―canned‖ requirements applicable to any technological area. 14 That is, the treatment given by the patent system is formal and materially the same for any kind of technology, even if there is a real ―black hole‖ of differences among the technologies being examined. It is necessary to face the equality principle, as well as analyze the patent system from the perspective of the principle of equality of material goods, transferring its application to an unequal treatment of unequal technologies. Going beyond the raised questions by the application of the equality principle in its material aspect in patent law (keeping the current discrepancies away as much as possible) moving on to the moment of the exercise of the patent law in the market, there is no way to analyze the intersection between patent law and antitrust law without a clear initial individualization and contextualization of both related, through which the understanding of factual situations that increasingly pervade the antitrust agencies and the Judiciary becomes more didactic. In effect, industrial property together with trademark, industrial designs, geographical indications and repression to unfair competition, as established by the Industrial Property Law (Law No. 9.279/96, article 2)¹ has its north bounded by the constitutional provision for immediate effectiveness prescribing the limits of the infraconstitutional legislation connected to the fulfillment of social interest as well as the tec _______________________________ ¹ Law 9.279/96, Art. 2 The protection of the rights regarding the industrial property, considering its social interest and the technological and economic development of the Country, is performed by means of: I –granting of patents of invention and utility model; II- granting of industrial design registration; III – granting of trademark registration; IV – repression of false geographical indications; and V – repression of unfair competition. 15 technological and economic development of the Country (CF, art. 5, item XXIX)² In this sense, we should remember that patent law has been gaining prominence in developing countries, considering the increasing value of the ―intellectual capital‖ instead of physical assets, as well as the essential relation of such rights with the evolution of markets.³ Going further, the need for the existence of a patent system is linked to the existence of competition, which is the assistance itself of the social interest to stimulate a healthy competition that is a fundamental cornerstone of the patent system. More importantly, this study takes into account that in a State of Law, the intellectual property stands out and should be guided, if possible, by its clearly functionalizing aspect, with the guideposts expressed by the harmonic preponderance __________________________ 2 Federal Constitution of 1988: Article 5 All citizens are equal before the law, with no distinction whatsoever, guaranteeing Brazilians and foreigners residing in the Country the inviolable right to life, freedom, equality, safety and property, as follows: XXIX – the law shall ensure the authors of industrial inventions a temporary privilege for the use and protection of industrial creations, ownership of trademarks, names of companies and other distinctive signs, bearing in mind the social interest and the technological and economic development of the Country. 3 th The 964 issue of the magazine ―Exame‖ of March 24 ,2010, p. 96-98 published an article on Nathan Myhrvold (Bill Gates‘ former right-hand man at Microsoft), founder of Intellectual Ventures, a company whose mission is stated on their website, i.e., ―energize and streamline an invention economy that will drive innovation around the world‖. An interesting factor is that it already has a portfolio of 30,000 patents but it does not produce a single product out of it, i.e., the goal is to form an intellectual capital for trading, which demonstrates a clash with the traditional way of viewing the patent system in the competitive universe. The report itself demonstrates the pros and cons of a business system focused only on the trade (in large scale) of patent rights without effectively developing products/services related to them: If on one hand it helps to financially reward the small inventors owners of patents that are used by large companies, on the other hand it might ―stifle innovations‖. Intellectual Ventures has no previous risk of patent infringement (for it does not launch products/services in the market), it only works on the accumulation and negotiation of patent rights. It has over five billion dollars for investments. These current events indicate something very important related to this thesis: treating the patent system as it used to be treated in its most harmonized constitution from the late nineteenth century consists in making a big mistake, i.e., the base of the current system and the interpretation of the system when operating in a competitive environment. 16 preponderance of utilitarian theories and social planning theories 4, finding its purpose at the constitutional order established. On the other hand, the dynamics of the market competition has made compulsory a greater regulation of the State in private relation and, in the context of industrial property rights and in view of the restriction of the object under analysis in this essay, an increasing need for interpretation of the limits of antitrust and patent law that apparently (and only apparently) conflict in contemporary society. It is noteworthy that, in the survey it was identified that an essential principle to the solution of the questions of the basis of the patent system has been ignored, i.e., the equality principle provided by the Art. 5, heading and item I of the Magna Carta of 1988. Within the context of the exercise of rights over patents, in which hermeneutics has much to contribute, this thesis examines the contemporary issues such as an excess of owners, broad interpretation of claims, descriptive insufficiency, license exchange among dominant competitors in the market and the legal uncertainty beyond the natural one of the patent system essence itself. Still, the aim is to demonstrate that the Federal Trade Commission – FTC and the Department of Justice – DOJ 5 conclusions, that the right over a patent should be seen __________________________ 4 Such theories, together with the labor theory and the personality theory are analyzed by William Fisher in his study ―Theories of Intellectual Property‖, Harvard, 2001, and are also taken into the Brazilian reality in analysis in my dissertation titled ―The legal basis of industrial property and its interpretations‖, defended on April 07th ,2006, PUCRS, which concludes that our current Brazilian industrial property legal system must follow a hermeneutic guidance designed by the harmonic preponderance of the utilitarian theories and the social planning theories in relation to the lower incidence of the labor theories and personality theories. 5 Just like the ELS (Economic Law Secretariat) and the ACED in Brazil, the FTC and the DOJ are North American antitrust agencies. Unlike the domestic agencies, which have complementary and different skills, (the ELS is in charge of instruction, and the ACED is in charge of the antitrust trial cases), the FTC and the DOJ have concurrent jurisdiction, being for most sectors, either agencies responsible for their trial. 17 seen as the right over any other form of property, are mistaken, although wellintentioned6. In view of these considerations, and therefore trying to equate this reality, we seek to interpret the real meaning and value of the constitutional principles regarding the patent rights (especially including the equality principle) also regarding the antitrust law, adapting them to the political guidelines set by the original legislature representative, as well as guiding its implementation and effectiveness, in accordance with consecrated axiological vectors, in order to establish clear hermeneutical assumptions to be relevant as studying the intersection of these principles regarding the patent law. One of the unintended effects from the lack of the equality principle application on the basis of the patent system is the perverse effect generated in the competitive environment, which will be subjected to specific analysis. In the structural development of this thesis, essential to the market and patent system initial approach; tracing out the assumptions on the behavior of the market and on how the patent system is developed, it is clear that the international harmonization has brought many benefits, but at the same time, it has brought impositions that imprison the formatting and often detune the constitutional premises. Later on, we pass to the analysis of the equality embedded in a Welfare State, considered in its material sense, verifying that the fundamental right and guarantee have passed and still pass through an integrating recognition in the society, in search for inequality corrections. __________________________ 6 The ownership of a patent was recognized as an absolute right, i.e., the holder of a patent was legitimated to use it as he wished, even against explicit competing principles. The equating of a patent right to any other property right was nothing more than an evolution over the old concept of patent ―untouchability‖. That is, there is no special treatment to the patent (see Antitrust Enforcement and Intellectual Property Rights: Promoting Innovation and Competition, issued by the DOJ and FTC in April 2007, p. 21). However, such assertiveness, eventually forms a wrong premise, since the patent rights, though similar to other property rights, own a diverse essence and functions which go beyond the social function, turning to the aforementioned finalistic clause item XXIX art. 5 of the Magna Carta of 1988. 18 The next chapter finds that the use of factor discrímen within the industrial property, intuitively, is not new, for it already exists discrímen based on several kinds of industrial property rights; but the application related to the incidence of the equality principle based on new technologies (and technological differences) for which the patent system has not been developed is original and necessary. Next, it deals with the limits of Constitutional Hermeneutics and how far the legal system allows a systematic interpretation of the law7 to serve as a basis for solving the apparent conflicts in the system guided by the equality principle, free competition and by the harmonic preponderance of the utilitarian theories and the social planning theories which reflect a functional feature linked to the patent system. Further analysis shows that the non-application of the equality principle on the patent system basis generates results that, on one hand, require a hermeneutic effort and, on the other hand, are not amenable to solutions through hermeneutics, requiring legislative changes for its compliance in accordance with the principle of free competition and with the very finalistic conditional clause art. 5, XXIX of the Magna Carta of 1988. After demonstrating the problematic intersection of the equality principle with the principle of free competition and with the assistance for the harmonic preponderance of the utilitarian theories and the social planning theories expressed in the art. 5, XXIX of the Federal Constitution of 1988 as guiding and limiting the patent law, possible solutions to help with a desirable readjustment of the patent system are taken towards new technologies that have emerged and are still to emerge. __________________________ 7 Terms proposed by Juarez Freitas in his Systematic Interpretation of Law 4 ed. revised and amplified São Paulo: Malheiros 2004. 19 The findings lead to an overview of the key elements guiding the work, summarizing and pointing to each of the repercussions that the hermeneutic limits and possibilities generate, when they rest on the application of the equality principle in the Brazilian patent system, without ignoring the international character and limitations that guide it. A patent system guided by the equality principle, with differential treatment to different technologies, leads to an essential systematic and integrating rethinking that results in the strengthening of the very existence of the patent system, functional and harmonic with the Federal Constitution. 20 2 THE MARKET AND THE PATENT SYSTEM The intellectual property is overlaid with a legal protection as long as it belongs, far beyond the contemporary social speech, to its immanent economic content. Actually, paradoxically, this value transcends such immanence, being reached by the market, which virtualizes and rebuilds it. It is therefore important to approach the patent system from this intersection of legal and economic issues, so that the text does not get lost in dogmatic abstractions. Some arguments brought by Ana Frazão are relevant to the goals led by this thesis, especially the ideological demystification statements that have assumed a ―scientific-truth-character‖ and, among these ideological statements dressed like ―scientific truths‖ are the examples given by the author of smithian invisible hand, the dogma that the economic growth is more important than wealth distribution, the absolute value of the efficiency and the idea that the economic indicators reflect effectively the economic progress, regardless of people‘s quality of life8. Such ideological statements, which should long not be considered as ―scientific truths‖, wind up reverberating in the object of study of this essay in several situations of analysis of the application of the equality principle, as well as the intersection __________________________ 8 LOPES, Ana Frazão de Azevedo, Company & Property – Social Function and Abuse of Economic Power. São Paulo: Quarter Latin, 2006 p. 217. 21 intersection of the Patent Law with the Antitrust Law as, for instance, at the time of the application of criteria of reasonableness considering a particular use (abuse) of a patent when striking at the Antitrust Law, resting on aspects of economic repercussion, as well as, the application of rule of reason in American reality in the analysis of cases involving antitrust law in which the per se rule is not applied. It is possible to identify several practices in the Patent Law that might be, in fact, considered illegal (per se rules), but at the same time there are increasingly common practices, in which there is doubt regarding its legality or still, they are considered legal through limited analysis of its consequences. The Antitrust Law is a regulating law in the market, so the competitive relationships occur in the space called market, and the patent law exists as a confluent-like-stimulus to the achievement and search of the competitive space in the market. Most existing doubts in the application of the harmonic and reciprocal limitations between the Patent and Antitrust Law are due to hermeneutic misconceptions on the foundations of such laws9, as well as limited access to empirical data, which must go through the correct orientation of the patent system in contrast with the principles of free competition and equality. __________________________ 9 Several analyses start from questionable assumptions about the elementary question: Why is there a patent law and an antitrust law? For instance, one cannot agree with the statements contained in the 2002 OECD project on Genetic Inventions, Intellectual Property Rights and Licensing Practices, by stating on page 22, that ―The essential principle of all forms of IPR is to recognize and reward the work of inventors, designers and authors because society deems that it benefits from the promotion of the useful and cultural arts‖. This simplistic view spread to every corner ends up literally reducing the broadest (and several) principles of each one of the intellectual property rights species, since the industrial property rights only exist, are protected and able to full exercise while in tune with the Country‘s economic and technological development and its social interest. Therefore, we must look more thoroughly into such rights to understand their dimension, as well as its connection as an instrument for the implementation of human rights. 22 The patent system, as a legal creation towards the compliance with specific functions, besides being externally modulated by the Antitrust Law and fundamental rights, might be internally modified, restricted, expanded or even replaced by another system that complies with what has been established in the item XXIX of the art. 5 of the Federal Constitution of 198810, and it is essential to bear in mind that the history of Brazilian Constitutions demonstrates that alternative solutions to the temporary granting of privileges are possible11. This constitutional relevance and provision do not come dissociated from a binding context imposed by the art. 170 of the Federal Constitution12 that, as a matter of fact, precedes and guides the Industrial Property Law itself due to the systematic integration of the law and the finalistic clause itself contained in the item XX __________________________ 10 A simple reading is enough to conclude that the Political Letter of 1988 does not protect a system of patents, yet it seeks to guarantee ―the authors of industrial creations a temporary privilege for their utilization‖, connected to the fulfillment of established functions at the end of the item. The election of a patent system as a form of exteriorization of the constitutional designs stems from an infraconstitutional legislative option and, obviously, due to an international standardization. In the same sense, there is an understanding in the U.S. as described by Rochelle Cooper Dreyfuss in Patent and Human Rights: Where is the Paradox? (available at http://ssrn.com/abstract=929498), which states that, There is no fundamental right to a particular form of protection—to a patent on a specific product (no matter how ingenious) or to a patent that covers specific uses (no matter how valuable). The legislature is free to use the tools of the patent system (such as term, subject matter, scope, compulsory licenses, right to relief) to allocate excess benefits (those not required to spur optimum production) in any way it sees fit. Human rights concerns should certainly inform that decision, but the legislature could also choose to divert the benefits of inventions to fulfill other social objectives. 11 It is important to emphasize that the fact that the Brazilian Federal Constitutions prior to 1988, traditionally provided the granting of patents when it was interesting to the ―vulgarization‖ of that particular technology, and a right to exclude third parties for the inventor was no longer due yet a fair reward. 12 Federal Constitution of 1988: Art. 170. The economic order, founded on the value of the human labor as well as on the free enterprise, aims to ensure everyone a life with dignity according to the social justice order, as follows: I-national sovereignty; II-private property; III-property social function; IV-free competition; V-consumer protection; VI- environmental protection, including differential treatment, depending on the environmental impact of products and services and its processes of elaboration and provision; VII- social and regional inequalities reduction; VIII- pursuit of full employment; IXpreferential treatment to small companies, constituted under Brazilian laws, having their headquarters and administration in the Country. Sole paragraph. It is assured to everyone the free exercise of any economic activity, regardless of any governmental authorization, except in cases provided by law. 23 XXIX of the art. 5 of the Magna Carta of 1988, interpreted as follows: The free enterprise and free competition principles do not exist per se, they are not sufficient unto themselves. They are instrumental in promoting the human dignity. The Brazilian Constitution, in its entirety, proposes to carry out broader objectives than, simply, the free market. […] That‘s why incur serious mistake, rude misunderstanding, those who argue that the legal texts must, under penalty of unconstitutionality, fit in absolute terms the typical rules of ―free market‖. Obviously, we are not stating that Brazil‘s Constitution, postulates a market model unrelated to the free enterprise and free competition; quite the contrary. 13 In the words of Luciano Sotero Santiago14, ―[…], it can be stated as follows: for the invisible hand of the market to work, the help of the visible hand of the State is needed.‖ We glimpse the inevitable need for the regulation of the State in the market. It is necessary a more detailed analysis of the existence of the patent law as a consistent solution to the market failure in the absence of stimulus for innovation and improvement of means of production and products, since the patent law exists as a way to correct such failure, aiming at meeting the social interest and the technological and economic development of the country. In this sense, Denis Borges Barbosa 15, dealing with the limits of the patent rights, argues that ―What characterizes a patent as a form of social use of property is the fact that it is a limited right by its function: it only exists while socially useful‖. __________________________ 13 GRAU, Eros Roberto; FORGIONI, Paula A. CADE V. BACEN: Conflicts of Jurisdiction between Autarchy and the role of the Attorney General‘s Office in Antitrust law – 10 years fighting the abuse of economic power. Belo Horizonte: Del Rey, 2005. 14 SANTIAGO, Luciano Sotero. Antitrust law and regulation. Doctrine and Jurisprudence. Salvador: Juspodium, 2008, p.376. 15 BARBOSA, Denis Borges. An Introduction to Intellectual Property. 2. ed. Rio de Janeiro: Lumin Juris, 2003, p. 472. 24 Following the same train of thought, Barbosa 16 delimitates the interpretation of constitutional objectives in the granting of patents by examining the abuse through teleological diversion. Abuse, besides an excess of power, is also a diversion of purpose. The purposes of a patent have, in our right, a constitutional design. As we have seen before, the patent is intended to immediately reward the creator, and has as a mediate purpose, the social interest and the technological and economic development of the Country. Each one of these purposes involves an analysis of a compatible use of the right, and the indication of the use contrary or beyond the same right. The first facet of the abuse of patent rights is the nature of the creator‘s reward. The letter does not determine the monetary reward of the inventor, as formerly in the Soviet Union, but assures him a unique opportunity of using his technology for economic production, i.e., a restriction on competition. Thus, the patent regime is an exception to the principle of market freedom, determined by the art. 173, § 4 of the Constitution, rooted in the art. 1 item IV and 170, IV. Every exception to a fundamental principle of the Constitution matters in a considerate and restricted application. Thus, the resulting restriction of the patent is subject to parameters of a use that does not exceed what is strictly necessary for an immediate purpose, namely, the effective stimulus, however moderate and reasonable to the inventor. Everything that restricts competition beyond what is strictly necessary exceeds the immediate end of the patent – it is abuse. On the other hand, in the same constitutional plan, there would be an abuse of patent and purpose diversion, i.e., against or away from the social interest and the economic and social development of Brazil. In effect, we must look more closely into the historical developments that the patent system has been through while inserted into a competitive environment. Taking a look at the effective beginning of an incentive system for innovation, Nuno Pires de Carvalho17 states that Egypt was, it can be said out of a certain historic liberty, the place where for the first time the State promoted in a continuous and orderly way the technological development, later the same author emphasizes that in ancient Egypt a patent system may not have existed to generate technical creation, s __________________________ 16 BARBOSA, Denis Borges. An introduction to…., p. 508. CARVALHO, Nuno Pires de. The Structure of the Patent System and Trademarks – Past, present and future. Rio de Janeiro: Lumen Juris, 2009 p. 130-131. 17 25 since the idea of individual knowledge ownership had not come forth yet, but there were systems to promote inventions. Brazil has just turned 200 years old since its first Patent Act18, where the Magna Carta of 1988 has upheld the protection of industrial inventions, provided that they observe the hermeneutic guidance related to linking the triad: the social interest and the economic and technological development of Brazil. However, according to Gama Cerqueira 19, Brazil was the fourth country in the world to establish the protection of the inventor‘s rights, the first was England through its Statute of Monopolies (1623); in the second place, more than a century later, the United States with its Constitution in 1787, which gave powers to the Congress to legislate on the protection of inventions (the first U.S. Law on patents came to be enacted in 1970); in the third place, the French legislation on privileges of invention of 1971; and in the fourth place Brazil was present, still a Colony, with the Charter of the Prince Regent of 1809. As Gama Cerqueira20 points out, the first Brazilian law relating to inventions enacted after our independence only took place in 1830, which would put Brazil in the thirteenth place to adopt legal protection for inventions. __________________________ 18 The Charter of the Prince Regent D. João VI of 1809 had the privileges introduced in Brazil as follows: ―The purpose of this Charter is to promote the happiness of my vassals, being established with this plan the liberal principles for the prosperity of the State of Brazil, particularly needed to promote agriculture, encourage trade, advance navigation and cause the population to grow, making more extensive and analogous the magnitude of this State, and it is still very convenient that the inventors and producers of some new machine and artistic invention enjoy some privilege, besides the right they may have to the cash value, that their service establishes on behalf of industry and arts. I command that all persons who are in such case present their new invention to the Royal Trade Council, which recognizing the veracity of its foundation, may grant them the exclusive privilege of 14 years, compelling them to publish it at the end of this period for the entire nation to be able to enjoy the fruit of this invention. I command, likewise, that those which are currently granted be revised, making them public as determined above and revoking those which, by false allegations or even with no well-founded reasons, receive similar granting. 19 CERQUEIRA, João da Gama. Industrial Property Treaty. São Paulo: Revista dos Tribunais (Journal of the Courts) 1982, p.6. 20 CERQUEIRA, João da Gama. Op. Cit. P. 7. 26 The temporality (while limiting the public interest and while necessary to generate incentive) of the protection granted to inventions and the public interest in the system of ―privileges‖ have existed since the beginning of today‘s so-called patent system in Brazil, given that their functional aspect has evolved over the decades, without losing this very character of temporality and the public interest involved in the system. The valorizing option chosen by the Country in its migration into a Welfare State regarding patents was a balance among seemingly conflicting goals, determining that the hermeneutic guidance to be followed is the preponderance of utilitarian theories and social planning theories in relation to the lower incidence of labor theories and personality theories.21 Such constitutional finding on the patent rights concludes that much more than a personal absolute static right, it is a right in constant change, and it is social and relative whenever confronted with other rights that direct and limit it, since the right of patent holders exists and is bound to comply with purposes constitutionally established. In the Brazilian constitution regarding the protection of inventions, following the route traced by the art. 179, item 26, of the Constitution of the Empire of Brazil of 1824, in the Brazilian Federal Constitution of 1891, in its art. 72, §§ 25 and 27, it had already been mentioned the protection of inventions, as follows: Article 72, § 25 – The industrial inventions will belong to their authors, who will be ensured a temporary privilege by law, or a reasonable premium will be granted by the Congress, whenever convenient popularize the invention. __________________________ 21 BARCELLOS, Milton Lucídio Leão. Industrial Property & Constitution: Preponderant Theories and their interpretation in the Brazilian reality: Livraria do Advogado (Lawyer‘s library), 2007. 27 Currently, the patent system should meet clear premises of functionality, existing as necessary, sufficient and in the limits to meet the social interest and the economic and technological development of the Country. When these premises of functionality fail to be met, the system should be reconfigured and reinterpreted, observing the limits of hermeneutics in contrast with potential needs for legislative changes. Such constitutional premises of the patent system should be observed by the relevant ordinary legislation (in particular the current Law 9,279/96), pointing out that history has shown that the current patent system was created and internationally harmonized for the traditional technologies existing in the late nineteenth and early twentieth century, within the specific commercial and industrial concerns of the time. Even before the Federal Constitution of 1988 the goals of the patent system were clear as an effective instrument to ensure the national development 22. The current Brazilian (and international) patent system establishes requirements for patentability as well as periods of the same protection to different technologies, but it already provided in its history and national and international tradition, a positive discrimination establishing a differential requirement of patentability23 and granting a lower temporal protection 24 for the so-called utility models. __________________________ 22 Arthur Carlos Bandeira, in the inaugural speech of the Third National Seminar on Industrial Property of the BAIP 1983, which celebrated the centenary of the Paris Convention for the Protection of Industrial Property, about dealing with the industrial property stated that ―[…] its main function is to ensure the development of our own society together with its weaknesses, talents and peculiarities. The system subsistence thus depends on a careful balance of its benefits and responsibilities. A fair and efficient mechanism of the expiry of patents and trademarks, the expansion of areas where no patent is granted, and basically, the effective administration of the agency responsible for granting privileges and records are the guarantees that this balance is maintained‖. (Annals from the Third National Seminar on Industrial Property of the BAIP, Porto Alegre, August, 29th and 30th , 1983, p.23) 23 Instead of ―inventive activity‖ provided as one of the requirements for patentability of inventions, for the utility models (which would be ―inventions or improvements with minor inventiveness‖) the requirement of patentability is the ―inventive step‖. 24 Likewise, regarding the delay of exclusivity, the legal term of utility model patent is 15 years instead of 20 years provided for inventions. 28 That is, a differential treatment granted to differential technologies based on the degree of technology inventiveness already exists in the history of the patent system. In a comparison between the history of Brazilian patent system and the U.S. patent system, we see that in different historical moments, positions in defense of a national development are similar, but in relation to dealing with technologies, there is no positive discrimination in the U.S. in the adoption of patents of utility models. At this point, a historical retrospection of the U.S. law is worth. In the history of patent law in the United States, according to the U.S. Patent Act of 1790, relative novelty25, importation patents26, the absence of non-obviousness requirement, were some of the features that made the U.S. patent system meet the constitutional clause focused on promoting the progress of science and useful arts. In a thorough research on the history of the patent system since 1787 until 1836, identifying the origin of the constitutional clause relating to intellectual property, Walterscheid28, considering various alternative and cumulative hypotheses on the origin, debate and inclusion of this constitutional clause; scrutinizes the significance to that time of the words and terms that compose it: __________________________ 25 If the invention or discovery was only new in the United States; the requirement of relative novelty was already fulfilled. Such provision of relative novelty followed original British standards which also dealt with relative novelty, so that everything made outside of England would not go against the relative novelty requirement. 26 Given the interpretation of the novelty requirement as being relative, it was possible and common the so-called ―importation patents‖, which entrepreneurs and American ―discoverers‖ traveling, mainly to Europe, copied inventions from there, requiring their internal protection inside the United States, since they were about a ―discovery‖ that met the relative novelty requirement, not known or used in the United States so far. 27 The accuracy was low as to the real contribution of the invention or discovery in relation to the existing state-of-the-art, since the granting of patent by the government met the ―sufficient importance and usefulness‖ requirement instead of the non-obviousness requirement, which would eventually bring about very similar patents that did not actually contribute to the technological progress. 28 WALTERSCHEID, Edward C. To Promote the Progress of Useful Arts – American Patent Law and Administration, 1787 – 1836. Littleton, Colorado: Rothman & Co., 1998, p. 50-51. 29 The use of the term ―science‖ is straightforwardly by the fact that in the latter part of the eighteenth century it was synonymous with ―knowledge‖ and ―learning‖. […] The origin of the words ―useful arts‖ meant basically helpful or valuable trades. Thus to promote the progress of useful arts presupposed an intent to 29 advance or forward the course or procession of such trades . That is, the system was designed to develop knowledge/learning and the useful trade or value, without having any theoretical basis aimed at the acknowledgement of natural law grounded on labor theories and personality theories, but aimed at specific internal economic development goals. Since its first Patent Act, the United States were already concerned about the obligation of the inventor not only to reveal his invention or discovery, but also to restrict the granting of patent to the requirement that the description should be sufficiently clear and detailed so that someone ―skilled in the area‖ 30 might be able to make, construct or use the invention, to the end, that the public may have the full benefit from the technology after the expiration of the patent term, according to Section 2 of the Patent Act of 179031. Given the obvious problems of the first Patent Act of the United States, as early as 1973 the new Patent Act came into effect, leaving the patent system less buro ___________________________ 29 Translation into Portuguese: O uso do termo ―ciência‖ sofreu evolução tendo em vista o fato de que na parte final do século dezoito era sinônimo de ―conhecimento‖ e ―aprendizado‖. [...]. A origem das palavras ―arte útil‖ significava basicamente útil ou valioso para o comércio. Assim, promover o progresso das artes úteis pressupunha uma intenção em avançar ou ir adiante ao curso ou processo de dito comércio. 30 There are various definitions or synonyms for the commonly used definition of ―skilled in the art‖, which the technology directly related to that invention can be summed up in that person trained in the specific invention. 31 Section 2 of the Patent Act of 1790: ―[...] which specification shall be so particular, and said models so exact, as not only to distinguish the invention or discovery from other things before known and used, but also to enable a workman or other person skilled in the art or manufacture, whereof it is a branch, or wherewith it may be nearest connected, to make, construct, or use the same, to the end that the public may have the full benefit thereof, after the expiration of the patent term [...]‖. 30 bureaucratic and less rigorous, but, at the same time, it generated a larger number of lawsuits, as emphasized by Matsuura 32. Under the 1793 act, any disputes associated with the substance of patents would be resolved in federal courts. That shift was altered with the next substantial revision of U.S. patent law, in 1836, when the process was revised to return to a more rigorous substantive review of applications. One important consequence of a patent process that is more a registration system than an examination and review system is that it tends to shift power from the patent examiner to the courts.33 Another criticism on the fact that the absence of request for substantive examination under the term of the Patent Act of 1973 was detrimental to the patent and legal system as a whole, was emphasized by Walterscheid 34, stating that instead of taking off from the President‘s hands the task of granting patents by simply turning the system without substantive examination, it would be better to avoid costly legal disputes by creating patent examiners positions that would have the function and responsibility to perform substantive examinations of each patent application. The substantive examination by a qualified examiner35 was instituted only in the Patent Act of 1836. Walterscheid mentions the elaborated chart on the annual evolution of the number of patents granted in the U.S. from 1791 to 1840 showing, among other factors, that the system alteration without substantive examination into a system with subs ___________________________ 32 MATSUURA, Jeffrey H. Jefferson v. The Patent Trolls – A Populist Vision of Intellectual Property Rights. United States: University of Virginia Press, 2008, p. 92. 33 Translation into Portuguese: Sob o Ato de 1793, quaisquer disputas associadas a questões de patentes deveriam ser resolvidas nas cortes federais. Esta mudança foi alterada com a próxima revisão substancial da Lei de Patentes dos EUA em 1836, quando o processo foi revisado para voltar a ter uma revisão mais rigorosa de mérito dos pedidos de patentes. Uma conseqüência importante de um processo de patente mais caracterizado como um sistema de registro ao invés de um sistema de exame e revisão é que tende a mudar o poder do examinador de patentes para os tribunais. 34 WALTERSCHEID, Edward C. Op. Cit., p. 212-213. 35 That would solve the problem of the State Secretariat lack of time to look into many substantive examinations. 31 substantive examination since 1836 36 did not result in considerable alterations in the number of patents granted in the U.S. 37. In fact the basis of the modern American patent system is deeply linked to the Patent Act of 1836, recognizing the need for a substantive examination prior to the granting of patents, thus avoiding fiercer legal disputes as they are today. It is noteworthy that the patent granting system with a prior examination of the patentability now has to deal with a huge growing volume of patent applications, which meant that the USPTO had, in 2007, 8,913 employees in all sectors, and out of this total number, the astonishing number of 5,477 patent examiners, i.e., in 2007, 61.45% of all the United States Patent and Trademarks – USPTO employees were Patent Examiners, according to data from USPTO itself 38. Despite such data, there is constant criticism on the USPTO regarding the granting of ―weak‖ patents, i.e., with poor quality of examination and invalid. ___________________________ 36 See the long Section 7 of the Patent Act which states that ―[...] the Commissioner shall make, or cause to be made, an examination of the alleged new invention or discovery; and if, on any such examination, it shall not appear to the Commissioner that the same had been invented or discovered by any other person in this country prior to the alleged invention or discovery thereof by the applicant, or that it had been patented or described in any printed publication in this or any foreign country, or had been in public use or on sale with the applicant's consent or allowance prior to the application, if the Commissioner shall deem it to be sufficiently useful and important, it shall be his duty to issue a patent therefore […]‖. 37 WALTERSCHEID, Edward C. Op. cit. p. 245-247. For instance, in 1831 573 patents were granted in contrast with 752 and 702 patents granted in 1835 and 1836, respectively. The incredible growing number of patents granted in the U.S. compared to data of 170 years later, since only in 2006 the USPTO granted 154,760 patents, and in the same year nothing less than 390,815 patents were applied at the USPTO. In a direct comparison, it should be noted that in Japan, in 2006, 217,364 patents were granted by the JPO, and in the same year 514,047 patents were applied. Data from the World Patent Report: The Statistical Review (2008). Available at http://www.wipo.int/ipstats/en/statistics/patents/wipo_pub_931.html#tables. Accessed on: March 14, 2009. 38 UPSTO’s own data. Available at: www.uspto.gov Accessed on: March 15, 2009. 32 After 1836 there were prompt evolutions in the U.S. patent system, such as in 1839 with the introduction of the grace period and in 1842 with the introduction of design patents (protection only of the visual aspect of the industrial design). In 1850 there was an emphasis by the Supreme Court of the United States that in addition to the novelty and utility requirements (new and useful) the invention also had to be non-obvious39. In 1870 there was the unification of the legislation in a single Patent Act, especially the introduction into law (already recognized by jurisprudence) that in the description of the patent application ―the best form of patent implementation known by the applicant on the application date‖ (best mode requirement) 40 should be indicated. In the same year, in December, Judge Clifford from the Supreme Court of the United States, in the trial of Seymour v. Osborbe‘s case states that: Letters patent are not to be regarded as monopolies, created by the executive authority at the expense and to the prejudice of all the community except the persons therein named as patentees, but as public franchises granted to the inventors of new and useful improvements for the purpose of securing to them, as such inventors, for the limited term therein mentioned, the exclusive right and liberty to make and use and vend to others to be used their own inventions, as tending to promote the progress of science and useful arts, and as matter of compensation to the inventors for their labor, toil, and expense in making the inventions, and reducing the same to pr ___________________________ 39 See the case of the Supreme Court of the U.S.: Hotchkiss v. Greenwood 52 U.S. (11 How.) 248. In this case, the novelty and utility of the invention were based upon the mere exchange of material used in the product, so that the patent was annulled by the Supreme Court for being obvious for ―a skilled in the art mechanic‖. 40 See section 26 of the Patent Act of 1870: That before any inventor or discoverer shall receive a patent for his invention or discovery, he shall make application therefore, in writing, to the commissioner, and shall file in the patent office a written description of the same, and of the manner and process of making, constructing, compounding, and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art or science to which it appertains, or with which it is most nearly connected, to make, construct, compound, and use the same; and in case of a machine, he shall explain the principle thereof, and the best mode in which he has contemplated applying that principle so as to distinguish it from other inventions; and he shall particularly point out and distinctly claim the part, improvement, or combination which he claims as his invention or discovery; and said specification and claim shall be signed by the inventor and attested by two witnesses. 41 Supreme Court of the United States of America. Seymour v. Osborbe. December of 1870, 78 U.S. 516, 20 L.Ed. 33, 11 Wall. 516. 33 practice for the public benefit, as contemplated by the Constitution and 42 sanctioned by the laws of Congress. In 1887 the United States joined the Paris Convention for the Protection of Industrial Property, being bound to recognize and process, without invalidating, a patent application made by a member of the Paris Union, ensuring priority to the date of the patent deposit in the country of origin within the period specified in the Paris Convention. A historical time in the U.S. legislation was the year of 1980 when the Sherman Act came into effect establishing standards of antitrust law in its eight sections, such issues will be addressed in the chapter on the evolution of the U.S. antitrust law. But it was only in the twentieth century that in the United States a greater recognition of the intersection of the patent law with antitrust law began, when the interpretation of the Sherman Act began to clearly see the patent law as a contributory factor to the undue extension of economic monopolies. According to Ladas43: In general the twentieth century has seen a dynamic interrelationship between the patent system and the application of antitrust laws. Although the first antitrust law, the Sherman Act, was enacted in 1890, the courts did not start to give it teeth until Theodore Roosevelt‘s administration (19011909). It was not until the 1930's that the patent system started to come under attack, being viewed as assisting in the maintenance of monopolies that were seen as being at least a contributing factor to the economic misery of the thirties. This skepticism about the patent system survived World War II __________________________ 42 Translation into Portuguese: Cartas-Patente não devem ser consideradas como monopólios, criadas pela autoridade executiva à custa e prejuízos de toda a comunidade com exceção das pessoas nomeadas como titulares das patentes, mas sim como franquias públicas concedidas aos inventores para melhoramentos novos e úteis com o objetivo de assegurar a estes, como inventores, por um prazo limitado estabelecido, o direito exclusivo e a liberdade de fazer, usar e vender para terceiros as suas próprias invenções, tendo em vista a tendência em promover o progresso da ciência e das artes úteis, e como compensação aos inventores pelo seu trabalho, suor e despesas em realizar as invenções e colocá-las em prática para o benefício público, como contemplado na Constituição e sancionado pelas Leis do Congresso. 43 LADAS & PARRY. A brief history of the Patent Law of the United States. Available at http://www.ladas.com/Patents/USPatentHistory.html . Accessed on: April 27, 2009. 34 and blossomed again in the depressed economic conditions of the 1970's, a 44 period of strong anti-trust enforcement. In a roundabout way, since late eighteenth century there was wariness about the patent system, for in Matsuura‘s description45, Thomas Jefferson was already concerned about the potential harmful effects of the temporary legal monopoly: Jefferson shared the growing public concern with regard to monopolies, noting in a 1788 letter to James Madison that ‗monopolies are sacrifices of the many to the few‘. Yet, he also recognized, in a 1790 letter to Benjamin Vaughan, that patents had ‗given a spring of invention beyond my conception‘. While he acknowledged that many of the patents were ‗trifling‘, he noted that ‗there are some of great consequence‘. Thus, although Jefferson was concerned about the use of monopolies to encourage invention, he recognized that patents did provide incentives for inventive 46 work. The changes began to be more common in the U.S. Patent Act since 1952, a year characterized by profound changes, such as imposing a limit of two years for the inventor to alter it, increasing the spectrum of the protection of his patent claims after it had been granted; the legal possibility for a patent to remain valid after a patent annulment procedure, partially derived from some of the patent claims, was introduced in 1952 (before that, if part of the patent was invalid, nothing would remain _________________________ 44 Translation into Portuguese: No geral, o século vinte tem representado um inter-relacionamento dinâmico entre o sistema de patentes e a aplicação das leis antitrustes. Apesar da primeira lei antitruste, o Ato Sherman, ter se estabelecido em 1890, as cortes ainda não tinham dado força até a Administração de Theodore Roosevelt (1901-1909). Mas não foi antes do ano de 1930 que o sistema de patentes começou a ser atacado, sendo visto como uma ajuda a manutenção de monopólios que eram vistos pelo menos como um fator de contribuição para a miséria econômica dos anos trinta. Esse ceticismo sobre o sistema de patentes sobreviveu até a Segunda Guerra Mundial e reapareceu na depressão econômica dos anos de 1970, um período de forte aplicação de regulação antitruste. 45 MATSUURA, Jeffrey H. Jefferson v. Op. Cit., p. 97. 46 Translation into Portuguese: Jefferson compartilhou a crescente preocupação pública com relação aosmonopólios, destacando em uma carta datada de 1788 a James Madison que ‗monopólios são sacrifícios de muitos para poucos‘. Ainda, ele também reconheceu, em uma carta de 1790 a Benjamin Vaughan, que patentes têm ‗conferido um impulso de invenção além da minha concepção‘. Enquanto ele se dava conta de que muitas das patentes eram ‗insignificantes‘, ele notou que ‗havia algumas grandes conseqüências‘. Assim, apesar de Jefferson preocupar-se sobre o uso dos monopólios para encorajar a invenção, ele reconheceu que patentes geravam incentivo para o trabalho inventivo. 35 valid; among other changes in the patent system that are summarized by Ladas & Perry47. A noteworthy fact is that the U.S. patent system has gone through some procedural changes in enforcement, scope and interpretation of what would be considered patentable and, based upon applicable theories on the comparative analysis of the state of the art and the violation existence (e.g. theory of equivalents), what would be considered as partial violation and dependency violation. Within this postmodern harvest, the U.S. patent law has promoted some ―answers‖ that, nowadays are being considered not as suitable as initially were considered to be. In 1999, William Fisher 48 noticed such problems that today, partly justify the Patent Reform Act49 pending in the United States Congress and some trends __________________________ 47 LADAS & PARRY. Op. Cit., bring a history of the major legislative changes in 1954 (amendments in the plant patent act), 1955 (presumption of patent validity is applied independently in each patent claim, 1966 (Supreme Court in the Graham v. John case establishes the appropriate test for deciding whether one or more patent claims are obvious or not) 1971 (Supreme Court expanded the effect of the final decision on patent invalidity from inter partes to erga omnes, as decided in Blonder-Tongue v. University of Illinois), 1978 (Patent Cooperation Treaty comes into effect in the U.S.) 1980 (Patent Maintenance Fees come into effect after its granting by the USPTO, creating the possibility of patent review, stressing that ―anything made under the sun is susceptible to patentability, 1982 (CAFC was created, the arbitration to discuss the existence of the patent infringement or validity came into effect, the U.S. were successful because they managed to include in their agenda the topic on Intellectual Property at the GATT round (known as Uruguay Round).1988 (the U.S. implement the patent term extension in case of any FDA delay on the approval of the drug corresponding to the patent granted, the legal definition that the patent is not without effect by the alleged misuse of it by reason of refusing the licensing of it or by agreements with competitors, unless the patent holder has market power in a particular relevant area). 48 FISHER, William W. The Growth of Intellectual Property: A History of the Ownership of Ideas in the United States. 1999. Available at: http://cyber.law.harvard.edu/property99/history.html .Accessed on: March, 12, 2009. 49 The Patent Reform Act started with a proposal for changes in the patent system in 2005, the Patent Reform Act proposes several substantive changes regarding the process of obtaining a patent and the patent rights in the U.S.. After some adjustments in its proceeding, now represented by the proposal of the Patent Act of 2009, some of the proposals get aligned with most of the worldwide patent system, being among them: The system alteration from First to Invent to First to file; the possibility of interested parties presenting allowances against the granting of patents during the administrative proceeding and before the trial by the USPTO Patent Examiner and in order to assist him in his analysis, changes issues related to the actual damages for patent infringement, among other issues proposed in the document of 2009. A noteworthy fact is that these proposals have been widely debated since 2005 but, if on one hand it is noted that as a whole the Patent Reform Act will weaken the rights of patent holders and turn the administrative process of obtaining a patent more bureaucratic, on the other hand besides outlining itself with the massive majority of countries, it creates a more equitable administrative proceeding (with a higher probability of success) and a more balanced power of enforcement. 36 trends of the Supreme Court of the United States about turning more rigorous the validity of injunctions in lawsuits of patent holders: This proliferation of the kinds of potentially patentable inventions has been paralleled by expansion of the set of entitlements encompassed by a patent. The doctrine that best exemplifies that expansion is the concept of "equivalents." Ordinarily, the rights of a patent owner are defined, not by the scope of his invention, but by the language of his "claims"; a rival's product will infringe the patent if and only if it falls within the bounds of a valid claim. In the nineteenth century, rivals would sometimes take advantage of this principle. By constructing products that differed in minor respects from patentees' claims, they sought to avoid liability. Toward the end of the century, the courts developed the equitable doctrine of "equivalents" to prevent such evasive maneuvers. Since that time, four developments have transformed the doctrine into a powerful weapon in the hands of patentees. First, the courts have abandoned the notion that an "equivalents" inquiry is only appropriate when there is evidence that the defendant has deliberately copied the plaintiff's invention or engaged in some other kind of fraud; now the doctrine is available in every case. Second, the formulas used by the courts to define the ambit of the doctrine have become more favorable to patentees; now plaintiffs need only show that defendants' products are not "substantially" different from the patent's claims. Third, the increasingly common use of juries in patent cases has resulted in increasingly generous (to patentees) interpretation of the doctrine. Finally, courts have held that the doctrine of equivalents may be invoked by patentees even when the defendant's product or activity only became possible as a result of new technology -- in other words, even if the defendant's product or activity could not have been foreseen at the time the patent was granted. What about the manner in which the Patent Office and courts have interpreted and applied the standard requirements for patentability -- novelty, nonobviousness, utility, etc.? Here the dramatic shift in favor of patentees has been more recent. Roughly speaking, the nineteenth century was characterized by ever more generous interpretation of the statutory criteria. Partly as a result, patents became important to many companies and industries. Between the First and Second World Wars, however, the tide turned. Angered by anticompetitive uses of patents by large companies, both the Patent Office and the courts became substantially less willing to grant or uphold questionable patents. Beginning in the 1950s, the Patent Office became more generous, but the federal courts varied widely in their willingness to go along. The creation in 1982 of the Court of Appeals for the Federal Circuit eliminated these variations. Equally importantly, the new court (as its advocates had foreseen) has been much more favorable to patentees -- sharply lowering the bar of "nonobviousness" and encouraging 37 more generous damage awards. 50 Calling attention to the fact that the U.S. patent system has undergone changes in its history always seeking to comply with the constitutional clause that asserts as a guidance to be followed the ―promotion of science and useful arts, ensuring the authors and inventors, for a limited period of time, the exclusive right to their respective writings and discoveries‖ 51. In fact, these changes stem from the criticism involving old treatments for new technologies and demonstrations of current faults in the patent system as it is handled __________________________ 50 Translation into Portuguese: Essa proliferação dos tipos de invenções potencialmente patenteáveis tem sido paralelamente acompanhada pela expansão dos direitos sobre uma patente. A doutrina que melhor exemplifica essa expansão é o conceito dos ―equivalentes‖. Normalmente, os direitos de um titular de patente são definidos não pelo escopo da invenção, mas pela linguagem das ―reivindicações‖; um produto rival irá infringir a patente se, e apenas se, enquadrar-se dentro das fronteiras de uma reivindicação válida. No século XIX rivais tiravam vantagem algumas vezes desse princípio. Através da construção de produtos que diferiam em pequenos aspectos em relação às reivindicações das patentes protegidas, eles procuravam evitar violação. Mais adiante no final do século, as cortes desenvolveram a doutrina dos ―equivalentes‖ para prevenir tais manobras evasivas. Desde aquele tempo, quatro desenvolvimentos transformaram a doutrina em uma poderosa arma nas mãos dos titulares de patentes. Primeiro, as cortes abandonaram a noção de que uma análise de ―equivalentes‖ somente é apropriada quando há evidência de que o réu tenha deliberadamente copiado a invenção do autor ou realizado algum outro tipo de fraude; agora a doutrina é disponível em qualquer tipo de caso. Segundo, a fórmula utilizada pelas cortes para definir o âmbito da doutrina passou a ser mais favorável aos titulares de patentes; agora os autores precisam apenas mostrar que os produtos dos réus não são ―substancialmente‖ diferentes das reivindicações da patente. Terceiro, o aumento do uso de júris em casos de patentes resultou em um aumento generoso (para os titulares de patentes) da interpretação da doutrina dos equivalentes. Finalmente, cortes têm afirmado que a doutrina dos equivalentes pode ser invocada pelos titulares de patentes mesmo que o produto do réu ou sua atividade não podiam ser constatados na época em que a patente foi concedida. E o que dizer da forma como o Escritório Oficial de Patentes e as cortes têm interpretado e aplicado os requisitos de patenteabilidade – novidade, não obviedade, utilidade, etc.? Aqui está uma mudança dramática em favor dos titulares de patentes que é mais recente. Falando de forma grossa, o século XIX foi caracterizado por uma ainda mais generosa interpretação dos critérios estatutários. Como um resultado parcial, patentes se tornaram importantes para muitas empresas e indústrias. Entre a primeira e segunda Guerra Mundial, no entanto, a maré virou. Descontentes com os usos anticompetitivos feitos por patentes de grandes empresas, tanto o Escritório de Patentes quanto as cortes tornaram-se substancialmente com menor disposição para conceder ou sustentar patentes questionáveis. Começando nos anos 50, o Escritório de Patentes se tornou mais generoso, mas as cortes federais variavam muito na sua vontade em seguir o mesmo caminho. A criação, em 1982 da Corte de Apelações do Circuito Federal eliminou essas variações. Igualmente importante, a nova corte (como os seus advogados a anunciavam) começou a ser muito mais favorável aos titulares de patentes – reduzindo o rigorismo no exame da ―não obviedade‖ e encorajando a concessão de indenizações ainda maiores por danos. 51 Section 8 of the United States Constitution: […] To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries. 38 handled by the U.S.52, as well as the previously mentioned Patent Reform Act under discussion since 2005 in the U.S. that proposes significant changes in the U.S. patent system. Before the Courts, the system has been modified following a wave of overvaluation and excessive credibility conferred on patents granted by the USPTO. In the previous cases prior to the Mercantile Exchange v. eBay case, for instance, the granting of injunctions depended only on the evidence that the plaintiff was the patent holder (owned the Patent Letter granted by the USPTO) and the evidence that the defendant was violating one or more patent claims. There are therefore several recent decisions granting injunctions 53 and others not granting them54, taking the socalled e-Bay case as a watershed55. That is, in the U.S. today the granting of preliminary or permanent injunction has become more difficult, because the requirements are higher than those applied by the CAFC from the early 80‘s until the trial of the U.S. Supreme Court in the e-Bay case above-mentioned. __________________________ 52 See Jaffe & Lerner (2004) and Bessen & Meurer (2008). See, for example, some recent cases of granting of injunctions: Global Traffic Technologies Llc V. Tomar Electronics, Inc. (2009); Acumed Llc v. Stryker Corporation, Stryker Sales Corporation, Stryker Orthopaedics, and Howmedica Osteonics Corporation; 3M v. Avery Dennison (2006); TiVo Inc. v. Echostar Communications Corp. (2006); Rosco, Inc. v. Mirror Lite Co.(2006). 54 See also some illustrative cases of refusal of injunctions: Z4 Techs., Inc. v. Microsoft corp. (2006); Paice LLC v. Toyota Motor Corp. (2006). 55 Mercantile Exchange v. e-Bay. The so-called e-Bay case does not involve an application for preliminary injunction, but permanent injunction. However, it is a high relevant case in the American Jurisprudence because it brings questions about the analysis of four relevant factors to the granting of injunctions. In this particular case, we must look briefly into its history, starting with the refusal of injunction by the District Court, considering that: a) there was no irreparable harm because Mercantile Exchange had no intention of licensing (even for e-Bay), it did not put products on the market directly with this patent and had not applied for an injunction; b) the financial compensation would be the appropriate remedy in view of the Mercantile Exchange licensing the patent; c) the balance of the damages for each party was more favorable to e-Bay (which would have major and unwarranted damages with the eventual granting of injunction); d) the public interest did not favor either party because it was about business method patent and for the fact that the plaintiff Mercantile Exchange did not use the patent in the market but only sought for the license and abstention from using it against third-parties. Subsequently, the Court of Appeals for the Federal Circuit CAFC reversed a decision applying the general rule that the Courts should grant permanent injunctions in cases of clear infringement of patent, unless there are special circumstances, such as public health protection. The case went to the U.S. Supreme Court that determined that the lawsuit should be brought back to its origin so that the rule of the four requirements might be applied (irreparable damage, inadequacy of other legal remedies, balance of the damage to be incurred by the plaintiff or by the defendant with the granting or non-granting of injunction, as well as the public interest involved). 53 39 The law is constantly changing in all societies, so stifling definitions and laws generates inconsistent legal stagnation with the social evolution. In the area of patents and antitrust law it is the same way, since some non-patentable technologies decades ago, are currently patentable and may no longer be in the future, as well as some behaviors in the competitive market allowed in the past, are no longer allowed today. What matters is to know which ―conducting wire‖ should be observed in this constant evolution in the ways of thinking, acting and reacting. In U.S. law there is no doubt that this ―conducting wire‖ is reinforced by utilitarian theories, these attitudes are aimed at highest possible efficiency, accepting ―side effects‖, provided the ―balance‖ is a positive one. In this system, unlike the European system, there is no differentiation between patent of utility model and patent of invention; however, the requirement for obtaining a patent of invention is less rigorous than for obtaining a patent of utility model56. In the U.S. context, to which extent can the hermeneutic work go and from where is the legislative change required to adapt the system to the present reality? The Patent Reform Act is a proof that many changes are necessary, as well as some of them, regarding the differential treatment to different technologies based on the equality principle, are not yet cogitated. Surely, the patent system in a competitive environment other than the Brazilian one should have its specific adaptations, for, according to Luciano Benetti Tim67 __________________________ 56 In the U.S. the Brazilian requirement of ―inventive step‖ for granting a patent is known as ―nonobviousness‖ requirement. 57 For example, Adam Jaffe and Josh Lerner (Innovation and its Discontents, 2004) have stressed the term equality problem of patent protection for all technological areas, but wind up defending that the establishment of different protection terms will create another difficult problem to solve concerning the specific legislative pressures to each technological field. They conclude that it would be practically impossible to establish different terms in a fair way, avoiding sectorial influences and pressures. 40 Timm58 the Brazilian market is clearly, not identical to the American or European market. In particular, an analysis of the Brazilian competitive environment is important to demonstrate similarities and differences facing the American system. It is important to look into the Brazilian competition law through an initial trigger exposed by Paula Forgioni 59 who establishes some differences between the antitrust rules and those on repression of unfair competition: It is in the legal interest directly protected by two legal acts that we find the difference between antitrust rules and the repressive ones on unfair competition. In these, the well-protected asset immediately refers to the competitor, while the antitrust law refers to competition, to the market. In the first one, it concerns the competitor‘s good faith interacting with other economic agents, while in the second ones it concerns the market structure guidance and maintenance. Furthermore, one should bear in mind, as Malchups teaches, that the damage caused to a competitor or to competitors is quite different from the damage caused to competition itself. Hermeneutical care should be taken when interpreting the statement above, for one should understand as ―legal interest directly protected‖ not the objectives and fundamentals of Law 9,729/96 (which are linked to the constitutional premises outlined earlier), but in order to meet these objectives directed toward collectivity there is the need to individually regulate rights in the competitive field, as pointed out by Ricardo Aronne60. __________________________ 58 TIMM, Luciano Bennetti. International agreement on technology transfer in Brazil. In: TIMM, Luciano Benetti; PARANAGUÁ, Pedro (Org.) Intellectual Property, antitrust and development. Rio de Janeiro: FGV, 2009, p.95. 59 FORGIONI, Paula A. Fundamentals of Antitrust Law. 3. ed. São Paulo: Revista dos Tribunais (Journal of the Courts), 2008, p.287. 60 ARONNE, Ricardo: Reason & Chaos in Legal Discourse on Civil and Constitutional Law. Porto Alegre: Livraria do Advogado Editora (Lawyer‘s library Press), 2010, p.107. 41 The economy itself in the Welfare State, in addition to the vaunted discourse of efficiency, must soak itself in the fundamental rights to make sense and result in an inclusive market which contributes towards the reduction of inequalities. It won‘t ever mean to denature or monetize them with its false utilitarian determinism. On the contrary. One should have an insight into its meaning, since it is something that grounds itself and is autobiographically fundamentalist. For the economy, when enclosed in its own system, the last foundation (grund) would look like abyss (abgrund) of a non-foundation. Simply for its inability to substantiate. In the Social and Democratic State of Law, the humanistic existentialism will not be a choice of efficiency. That is, in the Brazilian competitive legal system one should be alert to the unintended effects that generate eminently utilitarian options in the humanistic existentialism inherent in the established values by the Political Letter of 1988. Such understanding makes it clear that the old conceptions of Stuart Mill 61 on liberty has long changed their bases, from which it is inferred that liberty without regulation does not generate the desired development in the meaning craved by the Democratic State of Law, with a clear need for both corrective and preventive regulation. Moreover, it is worth mentioning that the preventive analysis of anticompetitive conduct is relatively recent, introduced with the creation of the ACED by the DecreeLaw 7666/45, and other substantial innovations brought by this legal provision of short __________________________ 61 In his ―On Liberty‖ (1859, p. 132-133), John Stuart states that: ―But it is now recognized, though not till after a long struggle, that both the cheapness and the good quality of commodities are most effectually provided for by leaving the producers and sellers perfectly free, under the sole check of equal freedom to the buyers for supplying themselves elsewhere. This is the so-called doctrine of Free Trade, which rests on grounds different from, though equally solid with, the principle of individual liberty asserted in this Essay‖. 42 short duration62. In this sense, highlighting the current natural objectives of the Brazilian competitive system, Valéria Guimarães de Lima e Silva 63 points out: By the current constitution the State has the responsibility to manage the market, constitutionally raised to the condition of national heritage (art. 219), that indicates that not only the consumers or the economic agents are holders of the legal interest protected by the competition law, but rather the whole collectivity, as attested in the sole paragraph article 1 of the Brazilian antitrust law. […] Once the market sets up the national heritage, the infringement of economic order does not necessarily need to be characterized by the conduct of an agent against another agent, but the achievement of a practice directed against the market itself. Going beyond the current constitutional/infra-constitutional aspect of the systemic valorizing sense of the competitive umbrella, an extremely relevant factor to the Competition Law (and to the present study as well) is the definition of ―relevant market‖ for the application or non-application of certain legal provisions provided by Law 8,884/94. In the up-to-date and precise view of Paula Forgioni 64, which demonstrates the complexity and the differences of international positions, one can define the identification of the relevant market as follows: ___________________________ 62 According to Valéria Guimarães de Lima e Silva. Antitrust Law. International Aspects (Juruá: 2007, p.289 et seq.), the short duration of the Decree-Law 7666/45 and, even after, with the subsequent laws, there was no significant development and there were no cases in the Brazilian antitrust law from 1963 to 1990, at ACED only 337 proceedings were initiated, of which only 117 resulted in administrative processes, and, in terms of conviction, only 16, of which all were suspended by the Judicial Power. That is, the effective use of the Brazilian antitrust system now has as landmarks the Federal Constitution of 1988 and the Law 8,884/94 itself (which solved previous conflicts between the Laws 4,137/62 and 8,884/94). 63 SILVA, Valéria Guimarães de Lima e. Antitrust Law. International Aspects. Curitiba: Juruá, 2007, p. 305-306. 64 FORGIONI, Paula A. Op. Cit., p.261. 43 It seems that the trend is the adoption of a more restricted market to eventually mitigate the market share of the agents that generate its contestability. Surely, the relevant market is built in each concrete case. As we have seen above, we ought not to have the illusion that, in real situations, there is a relevant market ready to be discovered by the interpreter; on the contrary, it is about a logical operation in which a unique procedure should be adopted, which allows us to identify the competitive relations that the economic agent participates in. In short, we observe that every antitrust authority often develops their own study method, establishing the relevant market boundaries. In the United States, it revolves around the agent‘s power when it comes to the acknowledgement of his capacity to keep the new price for a reasonable period of time, deep down, the agent‘s market power is being measured, how much it resists the market forces (=competition). Europeans, in turn, are based on a technique that takes into account the possible substitutes for the cogitated asset, what separates the delimitation of the relevant market power, converging at the competitive relationship in an absolute instrumental way. The difference between the procedures, as we have seen, is subtle, but it has practical importance. So much that several authors in the United States have spoken out against this classical form of the relevant market fixation, for the distortion it may present. Such definition problem of the relevant market is taken to the solution of concrete application provided by the articles 20 and 21 of Law 8,884/9465, making this delimitation particularly in the area of patents be carefully analyzed in each concrete case, for the right to exclude others from a technology in particular often goes beyond the patentee‘s market segment. __________________________ 65 Some behaviors, for instance, suppressed by Law 8.884/94: Art. 20 are cited. It is taken as infraction of the economic order, regardless of fault, the acts under any circumstance, which have the purpose or might produce the following effect, although they are not achieved: I- restrict, distort, or by any means damage the free competition or the free enterprise; II- dominate the relevant market of goods and services; III- arbitrarily increase profits; IV- abuse a dominant position. Art. 21. The following behaviors, among others, as long as they represent hypothesis provided by the art. 20 and its items, characterize infraction of the economic order; XVI- take possession of or prevent the exploitation of industrial property rights either intellectual or technological. XXIV- impose excessive prices, or increase the price of goods or services without a cause. Sole paragraph. In the characterization of the imposition of excessive prices or the unreasonable increase of prices, among other relevant economic and marketable circumstances, it shall be considered: I- the price of the product or service; either by its increase, not justified by the cost of the respective inputs, or by the introduction of quality improvement. II- the price of the product previously manufactured, when it comes to the substitute resulting from non-substantial alterations. III- the price of similar products and services, or any improvement in competitive markets. IV- the existence of agreements or arrangements in any way, which might cause an increase in the price of goods or services or even their costs. 44 In a recent case tried by the U.S. Supreme Court the American antitrust system objectives were reaffirmed, especially regarding the relevant market, being primordial to quote the decision in Verizon v. Trinko case66. […] Finally, we do not believe that traditional antitrust principles justify adding the present case to the few existing exceptions from the proposition that there is no duty to aid competitors. Antitrust analysis must always be attuned to the particular structure and circumstances of the industry at issue. Part of that attention to economic context is an awareness of the significance of regulation. […] One factor of particular importance is the existence of a regulatory structure designed to deter and remedy anti-competitive harm. Where such a structure exists, the additional benefit to competition provided by antitrust enforcement will tend to be small, and it will be less plausible that the antitrust laws contemplate such additional scrutiny. […] Section 2 of the Sherman Act, by contrast, seeks merely to prevent unlawful monopolization. It would be a serious mistake to conflate the two goals. The Sherman Act is indeed the ―Magna Carta of free enterprise,‖ United States v. Topco Associates, Inc., 405 U. S. 596, 610 (1972), but it does not give judges carte blanche to insist that a monopolist alter its way of doing business whenever some other approach might yield greater competition. We conclude that respondent‘s complaint fails to state a claim under the Sherman Act.67 __________________________ 66 The Supreme Court of the United States. VERIZON COMMUNICATIONS INC. v. LAW OFFICES OF CURTIS V. TRINKO, LLP, 540 U.S. 398 (2004). 67 Translation into Portuguese: […] Finalmente, nós não acreditamos que os princípios tradicionais do antitruste justificam adicionar o presente caso às poucas exceções no sentido de que não há dever em ajudar concorrentes. Análise antitruste deve sempre estar conectada à estrutura particular e circunstâncias da indústria específica sob análise. Parte dessa atenção ao contexto econômico é um prêmio para o significado da regulação. [...] Um fator de importância particular é a existência de uma estrutura regulatória desenhada para impedir e remediar danos anticompetitivos. Quando esse tipo de estrutura existe, o benefício adicional à concorrência proporcionado pela efetiva implementação do antitruste tende a ser pequeno, e será menos plausível que as leis antitrustes contemplem esse tipo de verificação adicional. [...] Seção 2 do Sherman Act, ao contrário, procura evitar simplesmente um monopólio ilegal. Seria um grave erro agrupar os dois objetivos. O Sherman Act é realmente a ―Carta Magna da livre iniciativa‖ United States v. Topco Associates, Inc., 405 U. S. 596, 610 (1972), mas não confere aos juízes uma carta branca para insistir que um monopolista altere o seu jeito de fazer negócios sempre que modelos diversos possam gerar maior concorrência. Nós concluímos que os argumentos do contestante não estabelecem uma reivindicação embasada no Sherman Act. 45 In a recent event held at the Itamaraty Palace in Rio de Janeiro 68, experts in the Brazilian Antitrust System – BAS, the National Institute of Industrial Property – NIIP, the World Intellectual Property Organization – WIPO, the Judicial Power, international organizations and academic sector, addressed the intriguing intersection between intellectual property and antitrust law. In the above-mentioned event, in the panel related to Intellectual Property, competition, innovation and technological information, it was defended by Professor Mário Possas from the Federal University of Rio de Janeiro (UFRJ), that both the competition policy and intellectual property have important common goals, which are to develop a competitive and innovative environment. Elena Kamilarova highlighted in the event the abusive use of patent law in the pharmaceutical sector, with respect to agreements and abusive lawsuits (sham litigation). The expert lecturer‘s findings are compiled in an article of huge empirical fire that demonstrates a high number of cases that use the patent system in a competitive way, damaging innovation in Europe 69. Since the research developed by Kamilarova and her two colleagues is based upon extensive number of cases identified and analyzed in the pharmaceutical area takentaken ___________________________ 68 International Seminar on the intellectual property and competition policy, held between 7 and 8 of June 2010, at the Itamaraty Palace in Rio de Janeiro. Available at http://www.cade.gov.br/seminariopi2010/Programa.pdf . Accessed on: July 12, 2010. 69 KAMILAROVA, Helena; DOMANICO, Fabio; RIEDL, Alexander. Preliminary results of Commission pharmaceutical sector inquiry raise competition concerns. Competition Policy Newsletter, N. 1, 2009, p. 29-31. Available at: http://ec.europa.eu/competition/publications/cpn/2009_1_8.pdf. Accessed on: March 22, 2010. 46 that would be suffering problems in its operation, while focused on innovation70, it is important to quote some of these figures that demonstrate the great care to be taken regarding the examination of the abusive use of patent law, violating its own essence and, consequently, causing anticompetitive effects: Patent clusters A strategy commonly applied by originator companies is to extend the breadth and duration of patent protection by filing numerous patents for the same molecule, forming so-called ―patent clusters‖. In some cases, individual blockbuster medicines are protected by up to 1 300 patents and pending patent applications in the EU, leading to uncertainty for generic companies seeking to enter the market without infringing an originator company‘s patents or patent applications. In the period 2000 to 2007, originator companies also engaged in nearly 700 cases of patent litigation with generic companies in relation to the sample of products investigated. Generic companies won 62% of all cases where a final judgment was taken but it took on average 2.8 years for a final judgment to be reached by court.71 Patent opposition procedures The preliminary findings confirm that the opposition rate (i.e. the number of oppositions filed per 100 granted patents) before the European Patent Office (EPO) is consistently higher in the closest available proxy for the pharmaceutical sector than it is in organic chemistry and in all sectors (overall EPO average). Based on the sample investigated, generic companies almost exclusively opposed secondary patents. They prevailed in approximately 75% of final decisions rendered by the EPO (including the Boards of Appeal) during 2000 to 2007, either by achieving the revocation of the patent or by having its scope restricted. Even though generic companies are very successful in opposing originator companies‘ secondary patents, approximately 80% of the final decisions took more than two years to obtain. The duration of opposition procedures (including appeal procedures) conside __________________________ 70 The initial part of the article makes the purpose of the research and its reasons very clear: Given the importance of a wellfunctioning pharmaceutical sector, the Commission launched a sector inquiry into pharmaceuticals on 15 January 2008. The inquiry was initiated in response to signs that competition in the pharmaceutical market in the European Union may not be working well. This was indicated by a decline in innovation measured by the decreasing number of novel medicines reaching the market each year and by instances of delayed market entry of generic medicines. The inquiry sought to examine whether certain practices of pharmaceutical companies may be among the reasons for the generic delay and the decline in innovation. 71 Translation into Portuguese: Agrupamento de patentes: Uma estratégia comumente utilizada por empresas que desenvolvem tecnologias é a de estender a abrangência e a duração da proteção patentária através de numerosos pedidos de patentes para a mesma molécula, formando os chamados ―agrupamentos de patentes‖. Em alguns casos, remédios individuais campeões de vendas são protegidos por até 1300 patentes concedidas e em trâmite na União Européia, levando a uma incerteza para empresas de genéricos que pretendem entrar no mercado sem infringir patentes concedidas ou em andamento de empresas titulares das mesmas. No período de 2000 a 2007, empresas inovadoras se envolveram também em aproximadamente 700 casos judiciais de patentes com empresas de genéricos em relação à amostra de produtos investigados. Empresas de genéricos ganharam 62% de todos os casos nos quais houve um julgamento final proferido, mas tomou aproximadamente 2.8 anos até que um julgamento final fosse proferido por um Tribunal. 47 considerably limits the generic companies‘ ability to clarify the patent 72 situation of potential generic products in a timely manner. Patent settlements The sector inquiry also found that, between 2000 and 2008, more than 200 patent settlement agreements were concluded between originator and generic companies in the EU, with nearly half (48%) restricting the ability of the generic company to market its medicine. 45 settlements contained — in addition to the restriction — a value transfer from the originator company to the generic company, with direct payments to generic companies alone amounting to more than €200 million.73 Patent strategies As regards competition between originator companies, the preliminary findings of the sector inquiry show that originator companies engaged in socalled ―defensive patent strategies‖. Originator companies used patents falling into this category primarily to block the development of new medicines by their competitors and not to bring a new/improved medicine to the market. The sector inquiry also found at least 1 100 instances across the EU of overlaps between an originator company‘s patents relating to a medicine in the sample under investigation and the R&D programme and/or patents held by another originator company for its medicines. These overlaps create significant potential for originator companies to find their research activities blocked, with detrimental effects on the innovation process.74 Patent-related exchanges, disputes, litigation and oppositions In many cases originator companies tried to settle potential disputes, for instance through licensing. However, in approximately 20% of the cases where __________________________ 72 Translation into Portuguese: Medidas de oposições às patentes: Os resultados iniciais confirmam que a taxa de oposições (o número de oposições protocoladas por cada 100 patentes concedidas) perante o Escritório Europeu de Patentes (EPO) é consistentemente maior do que a média mais próxima disponível para o setor farmacêutico do que para a área de química orgânica e também em todos os setores (média geral do EPO). Com base nos exemplos investigados, empresas de genéricos quase que exclusivamente se opõe apenas a patentes secundárias. Elas tiveram êxito em 75% das decisões finais tomadas pelo EPO (incluindo a Câmara de Recursos) durante 2000 e 2007, sejaatravés da revogação da patente ou através da restrição do seu escopo. Mesmo as empresas de genéricos sendo bem sucedidas nas oposições às patentes secundárias de empresas inovadoras, aproximadamente 80% das decisões finais levaram mais de dois anos para ser obtida. A duração dos procedimentos de oposição (incluindo procedimentos de apelação) limita consideravelmente as habilidades das empresas de genéricos em tornar clara a situação da patente para a produção de genéricos tempestivamente. 73 Translation into Portuguese: Acordos de Patentes: A pesquisa setorial também revelou que entre 2000 e 2008 ocorreram mais de 200 acordos de patentes entre empresas inovadoras e empresas de genéricos na União Européia, com aproximadamente metade (48%) restringindo a possibilidade das empresas de genéricos comercializarem seus medicamentos. 45 acordos envolviam – somando-se a restrição – uma transferência de valores das empresas inovadoras para as empresas de genéricos, com pagamentos diretos a empresas de genéricos chegando ao montante de EUR 200 milhões. 74 Translation into Portuguese: Estratégias de Patentes: no que tange à concorrência entre empresas inovadoras, os resultados preliminares do setor investigado No que tange à concorrência entre empresas titulares, os resultados preliminares da pesquisa do setor demonstram que empresas titulares são engajadas nas assim chamadas ―estratégias defensivas de patentes‖. Empresas titulares usam patentes dessa categoria primeiramente para bloquear o desenvolvimento de novos remédios pelos seus concorrentes e não para trazer um novo ou aperfeiçoado remédio para o mercado. A pesquisa setorial também revelou pelo menos 1100 instâncias através da União Européia de sobreposições entre titulares originais de patentes relacionadas a remédios na amostra sob pesquisa e o programa de P&D e/ou patentes de titularidade de outros titulares originais para os seus remédios. Essas sobreposições criam um potencial significativo para empresas titulares terem as suas atividades de pesquisa bloqueadas, com efeitos negativos para o processo de inovação. 48 where a license was requested the patent holder refused to grant it. Between 2000 and 2007 originator companies engaged in litigation against other originator companies in 66 cases concerning 18 different medicines in the sample under investigation. In 64% of the cases, litigation was concluded by means of a settlement agreement. The patent holders lost the majority (77%) of cases where final judgments were given (13). The preliminary findings also showed that, between 2000 and 2007, originator companies mainly challenged each other‘s secondary patents. The applicant originator companies were very successful when challenging the patents of other originator companies. During that period, they prevailed in approximately 89% of final decisions rendered by the EPO (including the Boards of Appeal).75 In effect, the research above points to some of the diverse forms to use the patent system with anticompetitive purposes that go beyond the limits of the patent law itself (diverted or abusive use of the system), which, when achieved produce harmful effects against the very essence that should move the pro-competitive patent system. Bringing these questions into the field of Brazilian antitrust law, as informed in the event on Intellectual Property and competition policy; today such abusive cases identified and under the ELS analysis are 12 cases, which is very little not because of the existence of factual situations worthy of the BAS analysis, but because of the lack of identification of such situations by unfamiliarity with possible illegal activity within the Brazilian legal system. In this sense, the incisive way Carla Eugênia Caldas Barros 76 addresses one kind of abusive and diverted use of patent law draws our attention: __________________________ 75 Translation into Portuguese: Trocas, disputas, litígio e oposições relacionadas às patentes: Em muitos casos,empresas titulares tentam entrar em acordo em disputas potenciais, por exemplo, através de licenciamento. No entanto, em aproximadamente 20% dos casos em que uma licença é solicitada, o titular da patente se recusa a concedê-la. Entre 2000 e 2007 empresas titulares entraram em litígio com outras empresas titulares em 66 casos referentes a 18 remédios diferentes na amostra sob investigação. Em 64% dos casos o litígio foi resolvido através de acordo judicial. Os titulares de patentes perderam a maioria dos casos (77%) nos quais houve uma decisão final sem acordo (13). Os resultados preliminares demonstram também que, entre 2000 e 2007, empresas titulares desafiam-se umas às outras principalmente quanto às patentes secundárias. As empresas titulares requerentes foram muito bem sucedidas ingressando contra patentes de outras empresas titulares. Durante esse período, elas prevaleceram em aproximadamente 89% das decisões finais exaradas pelo EPO (incluindo a Câmara Recursal). 49 The legal provisions of dependent patents point out the analytical notion of property, without the notion of social exploitation. The country needs to increasingly develop; however, it has ordinary legislation contrary to the Constitution and quite restrictive regarding the granting of exploitation by the holder of the dependent patent. It all works as a vicious circle; the dominant does not authorize the exploitation of the dependent one, since he does not release his basic patent. The holder of the dependent patent can get the title of patent owner; however, the prevention of initial exploitation defiles the process, should the dependent patent object be perfected by others. One should not forget that this legislation only meets the interests of large corporations, which use research and hire patents among themselves, forming cartels and abusing the economic power. The obligation to license a patent in certain situations of abuse of patent law, other than the cases of dependent patents, is provided in the Industrial Property Law, in the Antitrust Law77 and directly related to forms of control of unfair competition in license agreements at TRIPS. So, being an instrument for the promotion of the social interest, economic and technological development, which implies the promotion of a healthy competition and not a limiting one above what is necessary for its own promotion in broad sense, the patent system should have limiting mechanisms and its use goes beyond the goals set by the original representative when it limits, for instance, the exercise of free competition. __________________________ 76 BARROS, Carla Eugênia Caldas. Improvement and dependence on patents. Rio de Janeiro: Lumen Juris, 2004, p. 48. 77 Both previously cited regarding the compulsory licensing as a means of abuse correction, as well as the communication between the IPL and the AL emphasized along this essay as necessary and uniquely relevant for the free competition and for the real foundations of the existence of a patent system to be preserved and always monitored. 78 Despite its restrictive sense, TRIPS clearly provides and reproaches the abusive use of the intellectual property system by establishing the harmfulness of practices that restrict competition, as stipulated in the article 40 of TRIPS: 1. Members agree that some licensing practices or conditions pertaining to intellectual property rights which restrain competition may have adverse effects on trade and may impede the transfer and dissemination of technology.2. Nothing in this Agreement shall prevent Members from specifying in their legislation licensing practices or conditions that may in particular cases constitute an abuse of intellectual property rights having an adverse effect on competition in the relevant market. As provided above, a Member may adopt, consistently with other provisions of this Agreement, appropriate measures to prevent or control such practices, which may include for example exclusive grantback conditions, conditions preventing challenges to validity and coercive package licensing, in light of the relevant laws and regulations of that Member. 50 In this sense, Denis Borges Barbosa79 teaches: According to the content of the international text in analysis, the national law may, without offending the TRIPS, prohibit any provisions inserted into license agreements or likewise that provide licensing practices or conditions that may, in particular cases, constitute an abuse of intellectual property rights, which may have side effects on competition in the relevant market. […] The TRIPS list is merely illustrative, in light of many other clauses and practices found in the practice of the BPTO Brazilian Patent and Trademark Office (INPI) and documented in the Supreme Court ruling published at RJT 106/1057-1066. Still trying to demonstrate the relevant authors‘ thinking about the function of the social contract, some thoughts of Cláudia Lima Marques 80 are brought up: The law develops thus, a contract theory with ―social function‖ just like those described by Wiehweg, i.e., the law leaves the positivist (and deductive) view of science, recognizes the social influence (custom, morality, harmony, tradition) and takes over ideological prepositions by concentrating its efforts in solving problems. It‘s an increasingly typical thinking style, which is oriented towards the problem; creating more open and more functional legal forms, concepts and principles defined without much logical rigor, as we shall see at the CC, since they only have significance in light of the problem to be solved, they are legal formulas in the search for conflict solution, formulas that never lose their attempting characteristic. This seems to be the current phase of law, once the skepticism on the decline of the systematic thinking and the infallible decoding are overcome; we work out the positive function of the topical thinking and the reetization of law. Specifically, contractual practices; denying or restricting the licensing of technology absorption, undergo competitive issues that go beyond the individualistic right of the patent holder(s), and through the instrumental function of the contract, we should under __________________________ 79 BARBOSA, Denis Borges. An Introduction to…, p.1101-1102. MARQUES, Cláudia Lima. Consumer Code: The new regime of contractual relationships. 4 ed. São Paulo: Revista dos Tribunais (Journal of the Courts), 2002, p.178-179. 80 51 should understand the characterization of the right to contract as an instrumental right, as asserts Judith Martins Costa81: In relation to the free enterprise economy, the freedom of contract is instrumental, i.e., to ensure the exercise of economic activity, the necessary means to that exercise are provided. Just like all other means, the freedom of contract does not exist ―per se‖ but it is meant for something, i.e., it is permanently polarized and conformed to ―what it is meant to‖. These means are not only meant to concretize the free enterprise economy, but equally, the structuring principles of the art. 1, the guidelines or ―objective rules‖ outlined in the art. 3 and in the art. 170, as well as the freedom, guarantees and rights of the art. 5 and 7 of the Constitution. Going further, another important contribution to the definition of what is understood by the contract instrumental nature and its limitations in the area of patents as a competitive instrument, which is complemented by the principles of good faith and economic balance, is given by Teresa Negreiros 82: Our premise is that the function of the social contract, when conceived as a principle, before any other direction and extent one can assign to it, simply means that the contract should not be conceived as a legal relationship that only interests the contracting parties, impervious to the social conditions that surround it and are affected by it. In this sense, crowning the contract instrumental nature, which goes beyond the individual, is the position of Ruy Rosado de Aguiar Júnior83: There was a complete change in the interpretive axis of the contract. Instead of considering the parties‘ intention and the satisfaction of their interests, the contract should be seen as an instrument of social interaction and preservation of the community interests, where it finds its raison d‘être and where __________________________ 81 MARTINS-COSTA, Judith. Reflections on the principle of the social function of contracts. Revista Direito GV, v. 1, n. 1, p.45 May, 2005. 82 NEGREIROS, Teresa. Contract Theory – New Paradigms. Rio de Janeiro: Renovar, 2002, p. 206. 83 AGUIAR, JR., Ruy Rosado de. New Civil Code Project: obligations and contracts. Revista dos Tribunais (Journal of the Courts), São Paulo, n. 775, p. 19-20, May 2000. 52 where it draws its strength from - since the contract requires a state order to grant its efficacy. In Patent Law, which encompasses its functional law nature, the dialog with Contract Law in its current equally functional dimension is important to identify the diversions or abuse not dimensioned by the legal system, and, therefore, Judith Martins-Costa‘s84 statements should be noted, in line with the constitutional principles, and the provision that the ―freedom of contract shall be carried out by reasons and limits of the social function of the contract‖85 bringing two different hermeneutical aspects of functionality that the freedom of contract is directly linked to: Once this perspective is situated we can conclude that the private autonomy (source of freedom of contract), with a new meaning, away from the atomistic and voluntaristic perspective, based upon the postulate (concomitantly factual and normative) of sociality, is to say that every individual is social and that the conclusion of individualization can only be achieved socially. […] We may agree, however, that this role of ―provision of negative external limit‖ sums up the principle of the contract social function, the art. 421 would be virtually useless, since cases already decided upon by jurisprudence demonstrate that either the hypotheses are already caught by the rule of the art. 187 of the Civil Code (consecrating unlawful means), or it is not about incidence of the social function principle but hypotheses of interpretation favorable to the adherent, integration according to the good faith, or even cases that have been regulated by special laws as the Consumer Code or the Land Statute. All of it leads to the conviction of the need to find its own and specific voice to the art. 421. This own voice is, I think, in the second level of semantic comprehension of the expression contained in the art. 421. That is, according to Judith Martins-Costa‘s86 vision, the limitation of freedom of contract by the social function does not express the real reason for which the art. 421 of the Civil Code of 2002 is innovated, so that the ―social function not only works as an external limit, but is also an ―integrative element of the private autonomy function field in the freedom of contract domain‖. __________________________ 84 85 MARTINS-COSTA, Judith. Op. Cit., p. 49-50 Art. 421 of the Civil Code of 2002 53 It is clear that the function issued by the art. 421 of the CC is not simply to establish that the freedom of contract is limited by the social function, but more importantly, this freedom should arise and persist during the business relationship even after its completion due to the social function, having inter-subjective and transsubjective efficacies, which are the most challenging ones in one of their facets related to the efficacy against non-determined third parties or a certain collectivity, as for instance, the contracts that are impacted by the Competition Law. In her conclusions on the impact of the social function on freedom of contract, Judith Martins-Costa87 states that: Here is a real qualitative leap that I find in the art. 421: the understanding that the liberty of each one is exercised in an orderly way to the common good as expressed in the social contract, assuming the internally conformed right to freedom (of contract) in fields of particular relevance to the common good. In view of this functional contractual reality, Pierre Régibeau and Katharine Rockett88 stress the possibility of even ―forcing‖ the patent holder to sign a compulsory agreement, which is also provided in our Industrial Property Law 9,279/96, the authors assert that: As we have just seen, compulsory licensing is most likely to be called for in two types of situations: when the patent holder has significant market power in both the upstream and downstream market and when another firm develops an infringing innovation. However these two cases call for different principles when it comes to setting the terms of the licensing contract. In the infringing innovation case, the object of compulsory licensing is to ensure that a socially useful innovation actually gets introduced, not to increase competition downstream. This objective can be achieved by choosing the royalty according to Baumol and Willig ‗s ECPR formula. This formula sets the ‗access charge‘ paid by the licensee is equal to the marginal __________________________ 86 MARTINS-COSTA, Judith. Op. Cit., p. 50. Idem, p. 57-58. 88 RÉGIBEAU, Pierre; ROCKETT, Katharine. The Relationship between Intellectual Property Law and Competition Law: An economic approach. Essex and CEPR University, June 2004, p. 47. 87 54 marginal cost of granting access (likely to be close to zero in the case of IPR) plus an amount reflecting the profits lost by the licensor because of increased competition downstream. In other words, the license contract would be such that the original patent holder is made (at least) as well off as if it refused to grant a license. License terms that are less favorable to the licensor would amount to an ex post revision of the scope of the property right initially granted. As we have discussed above, such revisions are undesirable as they undermine the implicit ‗contract between society and innovators.89 The concern about the perversion or abuse of patent law not only in the contractual context90, but also facing individual behaviors, is a topic much studied internationally, it is also relevant to bring some notions of comparative law, in particular the way it is dealt with in the United States of America. The largest economy in the world has a long tradition in cases involving competition law (or antitrust as it is called there) with the famous Sherman Act of 1980 __________________________ 89 Translation into Portuguese: Tradução livre: Como vimos recentemente, licença compulsória é mais comumente utilizada em dois tipos de situações: quando o titular da patente possui poder de Mercado significante em ambos os mercados primário e secundário e quando outra empresa desenvolve uma inovação infratora. No entanto, nesses dois casos são aplicados princípios diferentes quando chega o momento de definir os termos do contrato de licença. No caso de infração à inovação, o objetivo da licença compulsória é de garantir que uma inovação socialmente útil seja efetivamente introduzida no mercado e não que haja aumento de competitividade no mercado secundário. O objetivo pode ser atingido escolhendo-se o royalty de acordo com a fórmula ECPR de Baumol e Willig. Essa fórmula estabelece que a ‗cobrança de acesso‘ paga pelo licenciado é igual ao custo marginal de concessão de acesso (tendente a ser próximo de zero nos casos de direitos de propriedade intelectual) adicionado um valor referente ao lucro perdido pelo licenciante em decorrência do aumento da concorrência no mercado secundário. Em outras palavras, o contrato de licença será feito de tal forma que a empresa titular da patente se mantém (pelo menos) tão bem quanto estaria se recusasse a concessão da licença. Termos de licenças que são menos favoráveis ao licenciante irão gerar uma revisão posterior do escopo do direito de propriedade inicialmente concedido. Como discutimos acima, esse tipo de revisões são indesejadas, pois prejudicam o implícito ‗contrato entre a sociedade e os inovadores‘. 90 In the contractual context of patents, not only voluntary contracts and their abuses are included, but also the unwarranted negativeness of hiring and the compulsory hiring called compulsory license. This is why, it is important to understand the Brazilian contractual system while instrumental. 55 198091as a watershed between the old and modern treatment of antitrust cases in the U.S., and it has been complemented later by the Clayton Antitrust Act of 191492. The Sherman Act has only two relevant sections93 in which the behaviors that, regardless of their effects on the market, are considered anticompetitive and forbidden (per se rules) and those that require further analysis to characterize an effective antitrust law violation (application of rule of reason) may be framed. The U.S. doctrines differ when it comes to the goals of the Antitrust Law. According to John Kirkwood and Robert Lande 94 the fundamental goal of the Antitrust Law is to protect the consumers from anticompetitive actions that might cause them any harm in short, medium and long term, with no ground to keep the doctrinal chain that defends as its main goal the promotion of an economic efficiency or an increased competition. However, in Richard Posner‘s95 view the main goal of the antitrust law is to promote the so-called ―economic welfare‖ or a so-called ―allocative efficiency of the market‖ and not the protection of consumers (which would be an ―outcome‖ or a purpose accessory of the economic or allocative efficiency of the market). __________________________ 91 The Sherman Act is a national and international reference in analysis of antitrust cases, considering that the simplicity of its applicable provisions towards unilateral, bilateral/multilateral, horizontal and vertical behaviors, remains up-to-date, enabling the adequacy and interpretations of Courts over decades. 92 Because of the Sherman Act generosity and the need for more specific provisions, the Clayton Act came to solve the unfilled gaps, specifying particular prohibited behaviors, three levels for effective compliance, exceptions and specific remedies against harmful attitudes towards competition. 93 Section 1: Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. Section 2: Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony […]. 94 KIRKWOOD, John; LANDE, Robert. The fundamental Goal of Antitrust: Protecting Consumers, Not Increasing Efficiency. Notre Dame, Indiana. Notre Dame Law Review, Vol. 84, 2008. 95 POSNER, Richard. Antitrust Law. 2. Edição. Chicago: The University of Chicago Press, 2001. 56 In effect, the Chicago School and Posner‘s position is until now much criticized as an imperfect or incomplete answer, for despite the merits of this economic analysis of law, since there is no doubt that the economic indicators greatly contribute to Law, the economic simplification does not offer a complete answer. Paula Forgioni96 states: Thus, the search for security and legal predictability turns out to be a dangerous incentive for the antitrust student to fall into a trap of economic analysis of law, which shows, just like the Siren‘s song; formulas able to solve concrete cases that might present themselves. All this argument is, however, thrown to the ground when we think just like Sullivan, that antitrust does not mean only allocative efficiency. Law is a complex phenomenon that cannot be enclosed within the economy limits. It is understood that the fundamental objectives of the U.S. antitrust law, in the words of Keith Hylton97, permeate a dialog and combination between the objectives of maximizing competition (in which most of the time the consumers‘ interests are protected) and the consumer protection. In effect, prior to the quotation above, Robert Land together with Neil state that98: Consumer choice only is effective when two fundamental conditions are present. There must be a range of consumer options made possible through competition, and consumers must be able to choose effectively among these options. The antitrust laws are intended to ensure that the marketplace remains competitive, unimpaired by practices such as price fixing or anticompetitive mergers. The consumer protection laws are then intended to ___________________________ 96 FORGIONI, Paula A. Op. Cit., p. 179. In a lecture attended by this doctoral student in the subject of Antitrust Law from the Law School of Boston University during the Visiting Scholar program in 2009 as part of the studies for the completion and improvement of this thesis, it was stated by Prof. Keith Hylton that the objectives of the antitrust law permeate a composition between the maximization of competition and the maximization of social interests seen as fulfilling the consumer interests. This is because there are situations in which the monopolistic activity serves the consumer interests. 99 LANDE, Robert H.; AVERITT, Neil W.. Consumer Sovereignty: A Unified Theory of Antitrust and Consumer Protection Law. Chicago: ABA, Antitrust Law Journal, Vol. 65, p. 713, 1997. 97 57 ensure that consumers can choose effectively from among those options, with their critical faculties unimpaired by such violations as deception or the withholding of material information. Protection at both levels is needed to ensure that a market economy can continue to operate effectively.99 It is interesting to note that the definition and cooperation between the Antitrust Law and the consumer protection in the United States is far from being static, as Pamela Jones Harbour100 states: As a result of this diversity in antitrust and consumer protection enforcement, we have multiple levels of government adopting both complementary and conflicting statutes. Moreover, these statutes may be enforced by variously motivated actors and agencies, applying rules of 101 law that may change over time, even without legislative intervention. Even being aware that there is a combination of factors to define the U.S. antitrust system, the influence of law economic theory is steeped in such a way that the utilitarian view with an economic bias (even the one focused on the implementation of social welfare) winds up determining the direction of the antitrust system. Such statement does not express the rejection of the U.S. antitrust system, but rather a feeling that it is incomplete when analyzed under the principles of Competition Law, constitutionally considered in Brazilian reality. ___________________________ 99 Translation into Portuguese: A escolha do consumidor somente é efetiva quando duas condições fundamentais estão presentes. Tem que haver uma gama de opções possíveis ao consumidor através da concorrência, e consumidores devem ter a possibilidade efetiva de escolher entre uma dessas opções. As leis antitruste são voltadas para que se assegure a continuidade de um mercado competitivo, isento de práticas como fixação de preços ou fusões anticompetitivas. As leis de proteção ao consumidor têm por objetivo assegurar que os consumidores possam escolher efetivamente dentro dessas opções com as suas faculdades críticas intocadas por estas violações ou por possuir informações materiais. Proteção em ambos os níveis é necessária para assegurar que a economia de mercado possa continuar operando de forma efetiva. 100 HARBOUR, Pamela Jones. Cooperative Federalism in the Enforcement of Antitrust and Consumer Protection Laws. Federal Trade Commission 90th Anniversary Symposium. September 23, 2004, p. 5. Available at: http://www.ftc.gov/speeches/harbour/040923coopfed.pdf . Accessed on: June 23, 2009. 101 Translation into Portuguese: Como resultado dessa diversidade entre a efetivação do antitruste e proteção ao consumidor, nós temos níveis múltiplos de governos adotando tanto dispositivos complementares quanto dispositivos que conflitam. Além disso, estes dispositivos podem ser efetivados por diversas pessoas e agências motivadas, aplicando regras de lei que podem mudar com o tempo, mesmo sem intervenção legislativa. 58 The ultimate goals for the continuity of this thesis intensively reverberate in this chapter that deals with the constructive dialog that the Patent Law has with the Competition Law, and it is exciting to see the innumerable intersection hypotheses that both areas of Law provide in the legal reality. This way, methodologically, the analysis of the intersection between patent law and Brazilian and American antitrust law will be conducted, identifying individual behaviors of companies under the legal control, as well as the behaviors through agreements with other companies, stimulating our romantic rethinking: And therefore as a stranger give it welcome. There are more things in heaven and earth, Horatio, Than are dreamt of in your philosophy. But come- Here, as before, never, so help you mercy, how strange or odd 102 soe‘er I bear myself[…] The Brazilian reality of intersection between Antitrust Law and Patent Law is recent and has no tradition and relevant legal precedent as we can find in the vast American precedents and literature. It is a relationship which uncovers itself and, many times, is covered by a fog that prevents its identification. Of course, the Brazilian antitrust law does not ignore the existence and possibilities of interaction with the patent law, but due to the lack or insufficiency of knowledge __________________________ 102 SHAKESPEARE, Willlian. Hamlet the Play, act I, scene V. July 26, 1602. Stationer‘s Register. 59 knowledge of the latter, combined with our recent culture applier of an effective regulating antitrust law, the interaction of these two areas is still a matter of scarce literature and court decisions. If the patent system provides a negative right to prevent third parties from using a particular technology for a certain period of time it is, prior to being legal, intuitive to say that the exercise of that right can generate a need for dialog with the Competition Law. Going further, it is the care of the social interest itself in encouraging a healthy competition as one of the fundamental cornerstones of the patent system, so that if there was no competition the existence of the patent system would be unnecessary. Now, it has already been said that the patent law, besides being eminently functional, exists and is defensible as long as it meets the harmonic preponderance of the utilitarian theories and social planning theories 103 established in the item XXIX of the art. 5 of the Magna Carta of 1988. This relationship between patent law and antitrust law is intimate, provided in the Antitrust Law and Industrial Property Law that allow the restriction of patent rights when they are used beyond their constitutionally delineated purposes. In the Industrial Property Act the compulsory licensing system is present, which was implemented in the Paris Convention – PC at the Hague Revision of 1925, replacing the original provision called ―compulsory labor‖, where the inventor had to work his work inventions in all countries from where he received the granting of the patent. This substitution, in the words of Di Biasi, Garcia and Mendes104, was the result of the search for a more flexible provision that would meet the aspirations of the national economy, but that might not let the patent owner uninterested. __________________________ 103 BARCELLOS, Milton Lucídio Leão. Op.Cit. 60 The use of compulsory licensing institute, within its diverse modalities, is provided in the articles 68 and 74 of Law no. 9,279/96, and Denis Borges Barbosa 105, based on the present legal system, divides the compulsory license into diverse modalities including a license due to abuse of rights, a license due to abuse of economic power, a license of dependence, a license due to public interest and the legal license that the employee, co-patentee, grants ex legis to his employer, according to the art. 91 § 2 of the IPL/96. It is clear that each of the compulsory license modalities deserves a deep and detailed analysis, which is not the goal of this study, being only worth to highlight the existence of diverse modalities of implementation of compulsory license in restriction to the particular exercise over a patent right ownership, seeking the balance of interests as fairly as possible. For this study, the most important modalities of compulsory license are the first three above-mentioned. Regarding the abuse of rights, provided in the art. 68 with greater detail of requirements and possibilities in its following paragraphs, what is mentioned by Marcus Elidius Michelli de Almeida106 should be noted: When, for instance, the patent is no longer used, or even if it is acquired so that no one can make use of it, an abusive act might be occurring. Best explained, the unfair competition can be practiced both in the face of an act of forgery and by the holder of an industrial property who make use of it (or fails to use it) in an abusive way. __________________________ 104 DI BLASI, Clésio Gabriel; GARCIA, Mario Augusto Soerensen; MENDES, Paulo Parente Marques, The Industrial Property. Rio de Janeiro: Forense, 1997, p. 42. 105 BARBOSA, Denis Borges. An introduction to…, p. 501. 106 ALMEIDA, Marcus Elidius Michelli de. Abuse of Law and Unfair Competition. São Paulo: Quartier Latin, 2004, p. 193-195. 61 As seen in a separate chapter (1.1), the abusiveness of the right can be either due to an action or an omission. Thus, should the holder of a patent right fail to use it just to keep another product in the market, although of poor quality makes him a higher profit, he will be abusing of his own right. […] A patent is a privilege granted by the State, it is not like buying a house and owning it. Obtaining a patent and not making use of it, or even charging high amounts for licensing it, would only serve to stifle competition. […] Also on this point, it is noteworthy that the non-use of a patent, which involves cost reduction to other employers, since it deals with a good that integrates the final production of another good, will certainly affect the business of the latter. It means that the patent holder forces the continuity of a more costly activity carried out by a third party (whether or not his competitor), causing him damage, just by not offering a good, of which he has a privilege. The situation is about unfair competition not stricto sensu but indirectly, lato sensu. It is interesting to note that it is also possible to characterize the compulsory license modality due to abuse of economic power as one of the modalities of compulsory license due to abuse of rights. Carla Eugênia Caldas Barros108, analyzing the compulsory license as a result of the refusal to voluntarily license, states: An example is the case of the patent holder who refuses to hold a voluntary license, thus impairing the development of the economic activity of the country. The exploitation proposal exists, the licensee is likely to negotiate prices and other terms and the holder, in advance and point-blank, denies the licensing. This might mean abuse of economic right, legitimating the compulsory license granting. __________________________ 107 In this conception, every abuse of economic power by using a patent as an instrument of such abuse is anti-judicial and, somehow an abuse of rights. However, not every abuse of rights is an abuse of economic power. For instance, a patent holder who unreasonably refuses to license it and refuses to produce a product that incorporates the patented technology within the statutory period, may be committing an abuse of rights without committing an abuse of economic power. The economic power is a factual finding, either you have it or you do not have it. About possessing, the right will only intervene if its use is made in an abusive form. The art. 187 of the Civil Code of 2002 defines the abuse of rights as unlawful, declaring that: the holder of a right commits an awful act if by exercising it, he clearly exceeds the limits imposed by its economic and social purpose, and by good faith and morality. It remains as a general typification, but oriented, so that the abuse of rights may be recognized as unlawful. In this sense see Paula Forgioni, op. cit. 108 BARROS, Carla Eugênia Caldas. Intellectual Property Law Handbook. Aracaju: Evocati, 2007, p. 276. 62 The compulsory license comes just to reaffirm this functional essence of patent law aimed at fulfilling the purpose of a harmonic preponderance of the utilitarian theories and social planning theories, it is not a patentee‘s absolute right, but a right-duty of, for instance, exploiting direct or indirectly the subject of the patent, under penalty of compulsory license and, should it not be enough, acknowledging the patent expiry with the consequent extinction of it before the expiration of its term. So the compulsory license is one of the international accepted instruments for the correction of the discrepancies between the goal of the patent system and its use in the competitive market. Such corrective instrument111, due to some market instrumental problems as well as instrumental problems of lack of clear definition of empirical data, ends up not being used in the competitive environment, despite its strength and international provision. ___________________________ 109 Law 9,279/96: Art. 68. The holder shall be subject to having the patent compulsorily licensed should he exercise its rights abusively, or exercise abuse of economic power, proven under law, by administrative or judicial decision. §1 Grounds of compulsory license: I- the non-exploitation of the patent object in Brazilian territory for lack of manufacturing or incomplete manufacturing of the product, or even the lack of full use of the patented process, except in cases of economic inviability when the importation shall be admitted; or IItrade that does not meet market needs. §5 The compulsory license which § 1 deals with will only be required after 3 (three) years from the granting of the patent. Art. 80. The patent will expire ex officio or upon request of any person having legitimate interest if, 2 (two) years from the granting of the first compulsory license, this term has not been sufficient to prevent or remedy the abuse or disuse, except for justifiable reasons. 110 As mentioned previously, the compulsory licensing system (since when it was known as ―compulsory labor‖ in other patterns) has provision in the Paris Convention since 1925 and is inserted at TRIPS art. 31 (another use without the holder‘s authorization). 111 As well as the patent system works to some extent, as a correction of discrepancies presented in the competitive system for the pursuit of constitutional goals. What will be dealt with later on is that the equality principle as the basis of the patent system, works on two biases, for instance, the first is the one in which the one who develops technology cannot be treated as the one who does not develop it, the second is embodied in the fact that different technologies should be treated differently according to their differences. 112 Note that here it is not about the compulsory license due to public interest according to the Law 9,279/96, widely spread by the media about the case of drugs for treating AIDS, but it is about other species of compulsory license applied by the Competition Law. 63 In one of the few decisions involving the compulsory licensing of patents in the competitive environment, there are still instrumental restrictions in the implementation of such measure (which should really be seen as exceptional, but never as an instrument ―not to be used‖) 113. In this sense, below is part of the decision of the ACED of 1999: […] 16. The public agency empowered to investigate and prosecute abuses of economic power is the ACED (CADE), under Law no. 8,884/94. Since the abuse of economic power is proven resulting from the patent, and if the severity of the violation requires it, the penalty provided in the art. 24, item IV, subheading ‗a‘ should be imposed by the ACED through a recommendation to the BPTO (INPI) for the compulsory license to be granted. […] 17. On the other hand, according to the art. 68 of Law 9,279/96, the BPTO (INPI) has the power-duty to impose a penalty provided in the art. 68, because the legal provision expresses the holder‘s will – in this case, the collectivity – and it is towards the satisfaction of this will – public interest – what the Agency activity should be addressed to. […] This procedural difficulty, besides the procedural matter of competence, is much due to the peculiarities of the patent system, including the difficulty of defining the patent limits (or group of patents), which also influences the definition of relevant market being analyzed for setting up the typicity of the provision in the art. 24 of Law 8,884/94. Taking as an example what happens in the U.S. system, there are behaviors involving patents which are considered illegal regardless of an analysis of relevant market, economic power and/or reasonableness that can be categorized as abusive behavior (abuse of rights). Taking as an example, such behaviors observed in contracts of patent licensing/exploitation can be: license connected with other patents unrelated to the __________________________ 113 In consultation with ACED answered in 1999 (Consultation no. 31/99, of 03/31/99, Inquirer: Ministry of Health. DOU of May 11, 1999, 1. Session), one of the procedural issues remains clear that make the use of compulsory license complex in competitive environment: ACED recommends, but the one that applies the compulsory licensing is the BPTO (INPI). 64 object of the contract itself, charge of royalties besides the patent term, among others. On the other hand, in analysis made by the BAIP regarding the contracts of licensing/transfer of technology involving patents, it is clear the understanding of the association that the rule of reason is the one to be applied in all situations in which there is evidence of the use of contractual clauses involving anticompetitive patent rights (emphasizing that the presumption is always that the contracts of licensing/transfer of technology are, in principle, pro-competitive. In this sense, here are the conclusions of the BAIP114: 54. In view of the competitive aspects of technology transfer contracts/rights licensing, as well as the prevalence of the rule of reason in the analysis of corporate conduct, it becomes necessary the analysis of specific conduct and the trade-off between the anticompetitive effects and the possible benefits or identified efficiencies, including the structuring of the market, the market power of the contracting parties and the benchmarking of the degree of competition in the relevant market. 55. More importantly it is to note that these practices have pro-competitive impact so that a given clause can be crucial to improve the quality of goods and services, promote efficiency and the technological or economic development and increase business productivity/market competitiveness. 56. For these reasons, the analysis of technology transfer contracts and rights licensing should occur judicious, thorough and extensively; in order to reach the ―market innovation‖, encouraging the dissemination of the knowledge. Objectively, Nuno Pires de Carvalho115 demonstrates the competitive fields in which patent rights put their holders into: ___________________________ 114 BAIP. Guidelines on Examination of Technology Transfer Contracts and Rights Licensing of the Industrial Property from an Antitrust Law Perspective. Resolution BAIP no. 68. Available at: http://www.abpi.org.br/bibliotecas.asp?idiomas=Português&secao=Resoluções%20da%20ABPI&codi go=3&resolucao=1 . Accessed on: Mar. 02, 2009. 115 CARVALHO, Nuno Pires de. Interview published at ACED informs, n. Feb. 23, 2010. Available at: http://www.cade.gov.br/news/n023/entrevista.htm . Accessed on: Mar. 22, 2010. 65 […] The patent has the effect of reducing transactions costs (in comparison to these two rival systems) through a better quantification and qualification of rights. By describing the invention and by delimiting in time the period of protection, the patent puts the protected invention in competition with: (a) other competing patented inventions; (b) competing technology that is in public domain; (c) prospection of emerging competing inventions; and (d) the threat of the violation of rights. These four possibilities (many times existing at the same time) press the patent holder and hinder the transformation of a property right into a monopoly situation. We should not forget that one of the key principles of the patent system is the principle of alternativity of inventions, through which a patent is only granted for inventions likely to be alternated with other technical creations. This principle was formulated by th the Supreme Court of the United States in mid 19 century and continues in full force. So even when the patent is granted for an invention that has no competitor in the market, the competing technology may emerge at any moment – by the holder overpricing, so as to attract the gain interest from his competitors. Soon they will have developed techniques that will enable them to gain market share. The only exception, the only case in which the patent could become synonymous with absolute barrier for competitors‘ entrance, it is the case of technical standards. When such are imposed by governmental authorities, or when, even voluntarily, they take up a share from the relevant market, the patent on the standard technique could indeed mean a monopoly. This is why the compulsory licensing regime is almost automatically applied to patents that turn out to be technical standards. Therefore, there is no conflict, there is no paradox. The patent generates competition or is synonymous with competition. The countries where the patent system is most used (either on the acquisition of rights or on the enforcement of such rights) are the ones where the respective industry is more aggressive and competitive. […] Despite the brilliance and up-to-datedness of the statements in the interview, we disagree over the statement from the passage that even when the patent is granted for an invention that has no competitor in the market, the competing technology may emerge at any moment – by the holder overpricing, so as to attract the gain interest from his competitors. Soon they will have developed techniques that will enable them to gain market share. Taking as an example, the jet turbine116, in its inventive concept applied to the solution of a technical problem, which was susceptible to patentability, is still unique, despite having generated subsequent undeniable technical advances susceptible to __________________________ 116 It is noteworthy that various types of jet turbines are included in the concept of jet engine, however, they are all based on the jet propulsion consistent solution through a high-speed expelled jet. 66 dependent patents. The exaggeration in pricing may be a factor, but not the only one. So, there comes the question: is there any competing technique as efficient as the ones applied to the jet turbines for years in the commercial aviation? No, there isn‘t. There is only technical improvement resulting from the original technical solution. This way, alternative techniques emerged in the market can (and it often occurs) be in a situation of dependency on the prior technique, which can generate a clear barrier to enter the market, whose identification is not always easy. Another routine example is that of the ballpoint pen (technical solution based on applying a metering ball flow of ink in a writing instrument) that was created by Laszlo Birô in the 30s, and in 1944 Birô sold his patent in the United States to Eversharp-Faber and in Europe to Marchel Bich. If such invention had occurred nowadays and a specific market was created (ballpoint pen market 117), there would certainly be clear barriers to enter the market, being noteworthy to analyze whether or not such barriers would be used in violation of competition law (since the ballpoint pen technology, even though it has competitors in the market, creates its own market of massive prevalence, lacking to date, technology with the same benefits similar in terms of competition materially considering). Today the technology is in public domain, but if it were still in effect it would certainly create barriers to entry that would have to be analyzed within a carefully defined relevant market. __________________________ 117 Using a specific vision of the relevant market, for the given example, the large market of pens, or even larger market of manual writing instruments are not considered. About the definition of relevant market, it is noteworthy to reproduce the teachings of Paula Forgioni (Op. Cit., p. 231), in the sense that ―The relevant market is the one where the competitive relations are dealt with, or the one where the economic agent whose behavior is under analysis acts upon. Without its boundaries, it is impossible to determine the incidence of any of the hypotheses contained in the items of the art. 20 of Law 8,884/94‖. We go through the geographic relevant market delimitation and through the material relevant market. Paula Forgioni cites several examples of definition of material (or product) relevant market, importantly to emphasize that, on one hand there are decisions that define a single market for all razors that require water for their use, including the disposable ones, the ones with two blades and the ones with a blade system, on the other hand the pasteurized type C milk constitutes a relevant market distinct from that of long-life milk. 67 Another statement extracted from the excerpt from the interview of Nuno Pires de Carvalho endowed with relativism is that The patent has the effect of reducing transaction costs (in comparison with the two rival systems) through a better quantification and qualification of the rights. As for this statement, there are technological areas in which the transaction cost reduction provided by the patent system is totally questionable, as for instance, patents involving computer programs118. What the best interpretation119 demonstrates is that the existing relation between Competition Law and Patent Law is contributory or complementary not contradictory, since there is no conflict between the two legal systems when their limitations and goals are understood. To encourage a better social-economic-technological performance of the free competition there is a system of temporary ―privileges‖ (patents) connected to its functionality. When there is a diverted or abusive use of such system there are some applicable legal mechanisms in both Law 9,279/96 and Law 8,884/94 to keep the functional balance of the system as a whole in respect to the valorizing functional guidance provided in the Magna Carta of 1988. The patent system has limitations, mainly based on its historical stagnation which ignores the technological specificities and uses the same patentability requirements, delimiting rights both materially and temporally, even when the technological essence that generates the subjective right towards the patent is quite diverse. It is also relevant, within the ―legal transplant‖ limitations, to analyze how the relationship between patent law and competition law is seen in a comparative law analysis, based on research done in the U.S. system. _________________________ 118 119 Among others, see the aforementioned Bessen & Meurer (2008) and Jaffe & Lerner (2004) FREITAS, Juarez. The systematic interpretation of the law. 4. ed. São Paulo: Malheiros, 2004 68 The relationships between patent law and antitrust law in the USA have the particular characteristic of a higher volume and greater tradition of situations of intersection in the area of contracts, mergers, acquisitions and other marketing transactions involving patents by limiting either present or future actions of competitors in vertical or horizontal relations, as well as the existence of undue individual behaviors. Currently, due to the increased number of patents from different holders and due to the increasing complexity and interactivity of the technologies developed, situations involving the relation between patents and competition law are becoming more frequent and more complex, since today we are experiencing the tragedy of the anticommons. For us to understand the meaning of the anticommons in the area of patents, it is essential to understand the origin of such term and how it was applied. According to Michael Heller120, and his classic example of the reasons that made market stall owners, at the time of the fall of communism in several Eastern European cities, not migrate to stores and expand their businesses, leaving unoccupied and underutilized spaces, was the excessive bureaucracy and the amount of permissions that the stall owners had to obtain to occupy premises and expand their businesses, so they would rather remain in their small stalls. Making an analogy to the patent system, it is clear that the failure of the existing market consisted in the fact that the investments in technology would get pulverized should there not be the creation of a ―maneuver‖ to correct such failure and prevent that the technology be easily disseminated before the investor/creator had time to recover his expenses and might benefit from his creation. The answer to that, balancing the public and private interests, was the creation of a system of temporary ―rewards‖, which currently work through a national and international patent system. __________________________ 120 HELLER, Michael A. The Tragedy of the Anticommons: Property in the Transition from Marx to Markets. Harvard: Harvard Law Review, v. 111, 1997, p. 621-668. 69 Thus, the current solution found to solve this market failure and encourage the dissemination of new technologies (seeking to make effective the material sense of the principle of free competition), generating development, is the patent system, i.e., the granting of a temporary easement conferring the right to exclude others from practicing that technology for a specific period of time. In short, to solve the problem of commons (several people having the same benefit of using technologies created so that no one can exclude the others from using them), the anticommons were created (the right to exclude others from using a technology protected by the patent). However, recent history has also shown that the excess of patent owners can generate the opposite effect to the one intended by the creation of the patent system, i.e., many owners create transactions difficulty and limit investment in technologies that have many patents, keeping the interest away from joining and competing in technology markets, i.e., the tragedy of the anticommons. Michael Heller121, in his latest work on ―gridlock‖ economy that‘s hidden in relation to the patent system, demonstrates that the tragedy of the anticommons (which would be the problem of excessive owners in the area of patents) generates serious and large proportion effects: Unfortunately, privatization can overshoot. Sometimes we create too many separate owners of a single resource. Each one can block the others‘ use. If cooperation fails nobody can use the resource. Everybody loses. […] Now imagine twenty or two hundred owners. If anyone blocks the others, the resource is wasted. That‘s gridlock writ large – a hidden tragedy of the anticommons. I say ―hidden‖ because underuse is often hard to spot. For example, who can tell when dozens of patent owners are blocking a promising line of drug research? Innovators don‘t advertise the projects they a __________________________ 121 HELLER, Michael. The gridlock economy: How too much ownership wrecks markets, stops innovation, and costs lives. New York: Basic Books, 2008, p. 2. 70 abandon. Lifesaving cures may be lost, invisibly, in a tragedy of anticommons. Gridlock is a paradox. Private ownership usually increases wealth, but too much ownership has the opposite effect: it wrecks markets, stops innovation, and costs lives. Savvy companies such as IBM, Celera, and Bristol-Myers Squibb already understand some of the hidden costs of gridlock. Rather than waste time and money trying to assemble fragmented ownership rights that might profit them and benefit us all, many of the world‘s most powerful business simply abandon corporate assets. They redirect investment toward less challenging areas, and innovation quietly slips away. But this debacle has a flip side. Assembling fragmented property is one of the great entrepreneurial and political opportunities of our era. We can reclaim the wealth lost in a tragedy of the anticommons. After you learn to spot gridlock, you will become convinced, as I am, that the daunting costs it imposes can be reduced or even reversed – not just in the business world but in our political, social, and everyday lives. You will want those who made the mess to clean it up. You may even find ways to profit from assembling ownership. But it takes tools to unlock a grid.122 In a broader sense, pointing out all the problems currently criticized in the patent system, Michael Gollin143 brings eight major criticisms on intellectual property: __________________________ 122 Translation into Portuguese: Infelizmente, privatização pode ultrapassar seus benefícios. Algumas vezes nós criamos proprietários separados em demasia para uma única fonte. Cada um pode bloquear o uso dos outros. Se cooperação falhar ninguém poderá usar a fonte. Todo mundo perde. […]. Agora imagine vinte ou duzentos donos. Se qualquer um bloquear os outros, a fonte será desperdiçada. Isso é um cadeado (impasse) largamente citado – uma tragédia do anticommons escondida. Eu digo ―escondida‖ porque a falta de uso é normalmente difícil de ser identificada. Por exemplo, quem pode dizer que dúzias de proprietários de patentes estão bloqueando uma linha promissora de pesquisa de drogas? Inovadores não anunciam os projetos que eles abandonam. Curas que salvam vidas podem ser perdidas, invisivelmente, em uma tragédia do anticommons. Cadeado (impasse) é um paradoxo. Propriedade privada normalmente aumenta o bem-estar, mas muita propriedade possui o efeito inverso: complica os mercados, interrompe a inovação, e custam vidas. Empresas experientes como IBM, Celera e Bristol-Myers Squibb já entenderam alguns dos custos escondidos do cadeado (impasse). Ao invés de gastar tempo e dinheiro tentando compor direitos de propriedades fragmentadas que poderiam gerar lucro e beneficiar todos nós, muitos dos negócios mais poderosos mundialmente simplesmente abandonam propriedades corporativas. Eles redirecionam seus investimentos em áreas menos desafiadoras e a inovação silenciosamente escapa. Mas esse desastre possui outro lado. Compor propriedade fragmentada é uma das maiores oportunidades empresariais e políticas da nossa era. Nós podemos reivindicar o bem estar perdido em uma tragédia do anticommons. Após você aprender a identificar o cadeado, você ficará convencido, como eu sou, de que os custos impostos podem ser reduzidos ou até mesmo revertidos – não apenas no mundo dos negócios, mas em nossas vidas políticas e sociais. Você irá querer que aqueles que fizeram a bagunça a limpem. Você até mesmo pode achar formas de lucrar com a composição de propriedades. Mas são necessárias ferramentas para destravar um cadeado. 123 GOLLIN, Michael A. Driving innovation: Intellectual property strategies for a dynamic world. New York: Cambrige University Press, 2008, p. 40. 71 Critics seek to restrict or even eliminate some types of intellectual property protection, using eight different arguments based on concerns about negative consequences. These arguments may be summarized as theories based on restricted access to technology, increased cost, monopolization, inappropriate investment incentives, competition, expense, institutional 124 requirements, and ethics. As if it were not enough, in the area of patents, as described by Michael Meurer and James Bessen125, there is still the problem of lack of clear definition of the limits of each patent, so that there are chances of uncertainty regarding the existence or not of infringement of a particular technology, be it partial or by equivalence. Such problems of excess of owners added to the difficulties of establishing the state of the art as well as the definition of clear existence or inexistence of violation in the area of patents generate a discouraging effect to the entrance or development of certain market already populated by countries/creators. But what would be the relationship of this anticommons problematicness with competition issues? There are many answers, starting from turning into another barrier to enter the market, hindering competition and eventually facilitating the ―legal‖ domain of markets. In the words of Michael Carrier 126, except for the so-called per se rules127, all the antitrust procedures involve an analysis of the pro-competitive and anticompetitive effects that the conduct or activity generates in the market, we should __________________________ 124 Translation into Portuguese: Críticos procuram restringir ou até mesmo eliminar alguns tipos de proteções de propriedade intelectual, usando oito argumentos diferentes baseados em preocupações com o acesso restrito à tecnologia, aumento de custos, monopolização, incentivos inapropriados para investimentos, concorrência, despesas, requisitos institucionais e ética. 125 MEURER, Michael; BESSEN, James. Op. Cit, p. 47. 126 CARRIER, Michael A. Resolving the patent-antitrust paradox through tripartite innovation. Nashville, TN: Vanderbilt Law Review, May, 2003, p. 1049-1110. 127 When a particular activity or behavior is directly regarded as having an anticompetitive effect by itself, regardless of the analysis of the context in which such behavior is inserted into. 72 be careful with the natural effect of which the right to exclude others embedded in the patent system generating an allowable price increase or an output decrease. This way, we must look into individual behaviors and those considered plural behaviors involving the interconnection of antitrust law and patent law in the market. An example would be the refusal to license a patent. In an old way of seeing the property right as a whole, the analysis of refusal to license a patent would be a banal analysis, in which the preponderant observation would be that exploiting or not his property right would be part of the owner‘s rights. When it comes to analyzing the property right as a functional right, not absolute and that generates rights and obligations to its holder, and when the patent right is equated, for legal purposes, with a property right, the mission to verify whether a particular refusal to license a patent is legitimate or whether it is inserted into the so-called doctrine Patent Misuse becomes more challenging. The DOJ and FTC guide of 2007 128 includes five issues related to the refusal to license a patent that are interesting to be analyzed separately, since the DOJ and FTC findings are based on opinions of several panelists who participated in the guide formation through hearings on their experiences and opinions 129. The five issues concerning the unilateral refusal to license a patent are under analysis. Should patents be seen as a special property right and receive special treatment from the antitrust legislation? According to the DOJ and FTC Guide of 2007, the conclusion was that the antitrust legislation should be applied in patent rights __________________________ 128 US Department of Justice and US Federal Trade Commission. Antitrust enforcement and Intellectual Property Rights: Promoting Innovation and Competition. April 2007. 129 It is interesting to note that the above-mentioned DOJ and FTC Guide is based on experiences and knowledge of different specialists, such as Steve Anderman, Ashish Arora, Roxane Busey, Carl Cargill, Rebecca Dick, Ian Forrester, Jeffery Fromm, Jonathan Gleklen, Peter Grindley, Benjamin Klein, Josh Lerner, Howard Morse, Carl Shapiro, Christopher Sprigman, James Venit, among other renowned panelists that integrated several pieces of research and consultation done by the DOJ and FTC in 2002. 73 rights as well as it is applied in any other property rights, not granting any special treatment due to the patent intangible essence130. Should the market power be presumed when there is patent law? The FTC and DOJ‘s reply is that the patent itself does not create market power, citing precedent of the DOJ and FTC and the Supreme Court of the United States themselves. This fact stems from the observation that even if there is a patent over a particular technology, it won‘t be a stumbling block for there to be other substitute/parallel technologies in the market that might stop the patent holder from exercising market power. Is there a remedy for an unconditional and unilateral refusal to license a patent, considering a violation of the antitrust rules? According to the DOJ and FTC, if a unilateral refusal to license a patent is considered a violation of the antitrust rules, a proper remedy would be the compulsory licensing. The DOJ and FTC go further by pointing out that some of the lecturers who participated in public hearings prior to the preparation of the 2007 Guide stressed that the Courts and Agencies are not adequately equipped to determine appropriate terms and conditions, since the compulsory licensing as a solution would be complicated. But this problem would be easily solved if there was already a voluntary licensing of technology in the relevant market under analysis for comparison purposes 132. __________________________ 130 It is important to note that part of the old doctrine regarded the patent rights (and industrial property rights as a whole) as being untouchable and immune rights towards external ―provocations‖, consisting in a kind of hermetically sealed right with its own rules unattainable by other branches of Law. However, at the same time that such equating of patent rights with the rights over any other physical property showed an evolution against the hermetic absolutism of patent rights, we can see that such equating bears problems related to the intangible essence of the patent Law in relation to the tangible essence of the tangible property rights. For a clear understanding of the differences between these concepts, see Besse & Meurer (2008), in particular the treatment given to the lack of clarity of the boundaries of the patent. 131 This aspect is important to demystify once and for all the wrong meaning in which the word monopoly is used to describe the right over a patent. Of course, the fact of holding one or more patents has no direct relationship with the existence of market power; therefore, such statement should be made cautiously, since often the market power is obtained through one or more patents. Therefore, it is critical the examination of each slice of the market separately, identifying the major players and the origins of their market shares. 74 What would be the effect in terms of incentives to innovate if the refusal to license was suppressed? In this analysis the lecturers using sources for the findings of the DOJ and FTC were divided among those who defend that innovation is reduced by the threat of a compulsory license with royalties far below those already charged by the monopoly (and that might not be enough to pay for investment in search and development), and among those who claim they are not convinced that the accountability for the antitrust rules would have a negative effect on innovation 133. What are the competitive effects on the refusal to license patents? At this point, the competitive aspect in the negotiating strategy of the company was equally reflected in refusing to license a patent. That‘s because many refusals to license are only apparent and are part of the ―game‖ of trading, besides the fact that the value of the patent license for a few licensees is higher than the value applied to a larger number of licensees, since the secondary market would be willing to invest more and pay a higher value for the license should there be little commercial pulverization. That is, the patent holder would have difficulty in obtaining the maximum financial return on the patent, in case he should not commit himself to limiting and/ or refusing licenses of his patent to the licensees. ___________________________ 132 The limitations of the FTC and DOJ to conduct further analysis regarding the legitimacy and impact on the market and on the consumer that the refusal to license generates in short, medium and long term is the Achilles heel of the intersection of patent law with competition law, because the damage to the consumer and to the market might not be apparent or predictable should there not be a minimal structure available to identify them and establish conditions in a compulsory license that meets the limits of the U.S. rules of reason. This aspect will be discussed more deeply, since it is the crux for the solution of numerous problems that depend on qualified investigation and technical study to measure the possible effects on the market with eventual unilateral refusal to license the patent(s). 133 As noted above, only technical information clarity submitted to the analysis in each case will be able to make viable the prevision of the effects that the market and consumer would be subject to with the rebound behavior of the patent holder(s). 75 The findings of the DOJ and FTC mean that the conditions or reasons for the refusal to license cannot be immune to an analysis of the Antitrust Law, yet this particular intersection does not represent a significant portion to be analyzed134. There are several effects of a unilateral and unjustifiable refusal to license a patent. One of them is the positive stimulus in the market itself to generate better and parallel technologies, keeping the harmonic objective of the patent system and competitive system immaculate. However, there are situations where the unilateral refusal to license a patent by him who holds the dominant position generates anticompetitive effects, for instance, should the market not be able to be totally assisted and should the non-assistance of the market as a whole be an obvious strategy of the patent holder for the current or future price rise based on scarcity. Now, stipulating the value of the product is the patentee‘s right, but he is obligated to, once exploiting the patent, serve the whole market within a reasonable term, and once he has no intention or is not able to do it, he should allow the voluntary licensing of the patent to companies that are able to exploit it in non-served markets. A recent and much debated case due to its decision effects is the case of Image Technical Services Inc. vs. Eastman Kodak Co. 135, where the unilateral refusal to license patents concerning parts of products produces anticompetitive effects. Paul Kirsch136 analyzing the Kodak case137 in contrast with the CSU case138, stressed that __________________________ 134 At this point, it is worth noting the position of the Specialized U.S. Court of Appeals for the Federal Circuit, which, though pointing to the lack of immunity in patent law, demonstrates that the possibilities of defense against the abuse of one or more patents by its holder are limited by the situations where the violator of the patent can prove: ―(1) that the asserted patent was obtained through knowing and willful fraud within the meaning of Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172, 177 (1965), or (2) that the infringement suit was a mere sham to cover what is actually no more than an attempt to interfere directly with the business relationships of a competitor, Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 144 (1961)‖, as it can be seen in the grounds of the decision of April 1999 regarding the case of Glass Equipment Inc. vs. Besten Inc. and Simonton Windows Company (96-1467, - 1481). 135 125 F. 3d 1195 – United States Court of Appeals for the Ninth Circuit confirmed the application of the Sherman Act, recognizing as abusive the conduct of Kodak not licensing its patents. 136 KIRSCH, Paul F. Refusals to License IP – The Perspective of the Private Plaintiff. May 1st, 2002, Available at: www.ftc.gov/opp/intellect/020501kirsch.pdf . Accessed on Feb. 5th, 2009. 137 125 F. 3d 1195 – United States Court of Appeals for the Ninth Circuit. 138 203 F. 3d 1322 – Federal Circuit, 2000. 76 stressed that the decision in Kodak case based on detailed analysis of the relevant market is better than the decision in CSU case, since what was decided in Kodak case does not immunize patents of competitive violation when by refusing to license patents, the company acts in an anticompetitive manner. There is no doubt that the refusal to license patent can be considered illegal when it comes to Antitrust Law, but such situations should be examined case-bycase, importantly to exemplify some circumstances in which the refusal to license a patent represents an unwarranted abuse to be repressed and rebalanced by not only the antitrust law principles, but also by those pertaining the constitutional guidance made for the patent system: Refusal to license one or more patents when there is already agreement on licensing to third parties, and even so, the market is still not being fully satisfied. Refusal to license from the ―mother‖ patent holder (cases of improvement/dependence among patents) when the company that wants to put a product on the market has developed new technology consisting in relevant technological improvement in relation to the ―mother‖ patent. This refusal to license may be expressed or tacit, i.e., after negotiation attempts, there is a lack of response or a response with an absurd proposal dissociated from the factual reality of the relevant market of trading technologies. Individual behaviors anchored in patent rights that defile the antitrust rules that pass through the improper exclusion of competitors from the market through specific practices139, product innovations140, and prohibition on reverse engineering 141. They also pass through litigation practices and patent processing that present themselves ___________________________ 139 An example of these exclusion practices analyzed under section 2 of the Sherman Act is the United States of America v. Microsoft Co. case (US Court of Appeals – District of Columbia – 253 F. 3d 34 – 2001). 140 It is also an example the Microsoft Co. case (US Court of Appeals – District of Columbia – 253 F. 3d 34 -2001) and the California Computer Products v. IBM Co case (US Court of Appeals – Ninth Circuit – 613 F. 2d 727 – 1979), while in the latter the exclusion of non-natural competitors in the market was not proven (which would be the Plaintiff‘s obligation), the plaintiff fails to prove conspiracy or illegal monopolization. 77 in form of Sham litigation142, obtaining patents through fraud 143 and accumulation of patents144. There are also the behaviors expressed through horizontal agreements (cartels, price fixing agreements145, patent litigation agreement146, cross agreements _________________________________________________________________________________ 141 See Bowers v. Baystate Technologies Inc. (US Court of Appeals for the Federal Circuit – 320 F 3d 1317 – 2003), dealing with the interesting and widespread case of possibility of use of reverse engineering for the development of new products, since there is no violation of intellectual property rights. 142 Several kinds of Sham litigation are known, and in the patent field they present themselves through lawsuits based on patents which the holder himself is aware they are invalid, pressure on the competitive market assigning a greater right to the patent than that which was actually granted, the widespread agreements between pharmaceutical patent-holding companies in nullity lawsuits brought by generic drug companies, among other anticompetitive practices that, through abusive or diverted use of the patent system, generate anticompetitive effects. 143 Making use of illegal procedures before the USPTO generates addicted patents which can be annulled if fraud is proven in obtaining them. In Nobelphama AB v. Implant Innovations Inc. (US Court of Appeals for the Federal Circuit – 141 F. 3d 1059 – 1998) it was proven by the jury that there was fraud in obtaining the US 4,330,891 patent, stressing that such patent did not show the best form to implement the invention (best mode) and such fact was deliberately ignored, and the patent by fraud was granted. 144 According to the decision in SCM Corp. v. Xerox Corp. (US Court of Appeal for the Second Circuit – 645 F. 2d 1195 – 1981) the accumulation of patents made by Xerox, making its product virtually unique, did not violate the antitrust rules, with no evidence of anticompetitive practices by Xerox by the simple accumulation and exploitation of patents. 145 See the traditional case of the 1940‘s tried by the Supreme Court of the United States involving the United States v. Line Material Co. (Supreme Court – 333 US 287 – 1948), in which three different approaches are given, recognizing or not the abusive price fixing among patent holders in patent license agreements also providing the price fixing. 146 Once again, the best examples derive from undue agreements legally signed in the US and Europe involving litigation among companies producers of protected drugs and generic drug companies. See Louisiana Wholesale Drug Co. v. Hoechst Marion Roussel Inc and Andrx Pharmaceuticals Inc (United States Court of Appeals for the Sixth Circuit – 332 F. 3d 896 – 2003) among other relevant decisions. 78 and cross licensing involving several patents147, among other practices) and vertical agreements (exclusivity clauses, territorial restraints, restrictions on area of use and restrictions on resale) involving patents, all subject to antitrust analysis, regardless of being based on patent individual rights, in view of the real possibility of abuse or diverted use of these rights. Luciano Benetti Timm148 emphasizes some specific clauses inserted in technology transfer agreements which are considered anticompetitive and which harm the market: The main problematic clauses in relation to their anticompetitive effects are: grant back clauses, prohibitions of using technology after the post expiry, clauses prohibiting the administrative and judicial inquiry concerning the validity of the intellectual property right (no challenge), tying arrangements, prohibition or restriction on competition (non-competition clauses), price fixing, volume restrictions, Field of use restrictions, package license, noncompetition clauses, export restrictions, cross licensing and pooling patents). It is noted that many individual, horizontal and vertical behaviors represent a diverted use of the patent system, generating the so-called doctrine Patent Misuse, as mentioned by Gary Myers149 commenting on the leading case of the Supreme Court of Morton Salt Co. v. Suppiger (314 US 488, 62 S. Ct. 402, 86 L. Ed. 363 – 1942): ___________________________ 147 It is noted that many times the agreements involving several patents are pro-competitive (in the US there is the presumption that they are pro-competitive), and some restrictions imposed on agreements can promote an integrative efficiency coming from, for instance, economy of scale, research and development capabilities integration, production and marketing in circumstances that generate benefits to the market and to the consumer in short, medium and long term. The possibility of agreement involving patents is essential to minimize the effects of the tragedy of the anticommons, allowing the circulation and use of property productively. 148 TIMM Luciano Benetti. Op. Cit., p. 104. 149 MYERS, Gary. The intersection of antitrust and intellectual property – cases and materials. St. Paul: Thomson West, 2007, p. 66. 79 The Supreme Court held that, as a Court of equity, it would not aid Morton in protecting its patent when Morton was using that patent in a manner contrary to the public policy. Id. At 490-92, 62 S.Ct. at 404-05. The Court stated: The grant to the inventor of the special privilege of a patent monopoly carries out a public policy adopted by the Constitution and laws of the United States, ‗to promote the progress of science and useful arts, by securing for limited times to… inventors the exclusive right…‘ to their ‗new and useful‘ inventions. United States Constitution, Art. I, para. 8, cl. 8, 35 USC para. 31. But the public policy which includes inventions within the granted monopoly excludes from it all that is not embraced in the invention. It equally forbids the use of the patent to secure an exclusive right or limited monopoly not granted by the Patent Office and which it is contrary to public policy to grant. Id. 492, 62 S.Ct at 405. Thus, the Supreme Court endorsed ‗misuse of patent‘ as an equitable defense to a suit for infringement of that patent. 150 The General Court of the European Union has recently confirmed 151 a long and detailed decision of the European Commission 152 on punishing AstraZeneca pharmaceutical company for abusing its own patent right (improper arguments that originated the Patent Supplementary Protection Certificate granted irregularly) and for abusively striving to delay the legal trading authorization of the generic drug under the name of Losec of AstraZeneca (the active principle generic name is Omeprazole): Broadly speaking, this decision deals with two alleged abuses in connection with Astra‘s strategy in relation to its applications for so-called supplementary protection certificates (hereinafter .SPC.) extending the protection for the active substance omeprazole in its anti-ulcer medicine Losec __________________________ 150 Translation into Portuguese: A Suprema Corte decidiu que, como uma Corte de equidade, não irá apoiar Morton na proteção de sua patente quando Morton estiver usando esta patente em uma forma contrária à política pública. Id. At 490-92, 62 S.Ct. at 404-05. A Corte sustentou que: A concessão ao inventor de um privilégio especial de um monopólio de patente traz consigo uma política pública adotada pela Constituição e leis dos Estados Unidos, ‗para promover o progresso da ciência e das artes úteis, através da garantia por um prazo limitado [...] aos inventores direitos exclusivos [...]‘ para as suas ‗novas e úteis‘ invenções. Constituição dos Estados Unidos, Art. I, parágrafo 8, cl. 8, 35 USC parag. 31. Mas a política pública que inclui invenções com a concessão de monopólios ao mesmo tempo exclui de proteção tudo que não for abrangido pela invenção. Igualmente proíbe o uso da patente para garantir um direito exclusivo ou monopólio limitado não concedido pelo Escritório de Patentes o qual seja contrário à política pública conceder. Id. 492, 62 S.Ct at 405. Assim, a Suprema Corte endossou o ‗uso desviado de patente‘ como uma defesa condizente para uma ação de violação dessa patente. 151 Only reduced the total compensation amount from EUR 60,000,000 to EUR 52,250,000. 152 Decision related to the case: COMP/A 37.507/F3 – AstraZeneca. Full decision available at: http://ec.europa.eu/competition/antitrust/cases/dec_docs/37507/37507_193_6.pdf . Accessed on: Oct. 7th, 2010. 80 Losec; and Astra strategy in relation to a switch (mainly in 1998) from capsule to tablet formulations of Losec. […] It should be mentioned at the outset that the said two alleged abuses respectively concern behavior in relation to two distinct regulatory systems: a) the patent system whereby extra protection is granted under Community patent law in the form of SPCs for pharmaceutical products and b) the procedures and conditions under Community and national pharmaceutical law relating to the authorization to market pharmaceutical products. However, both abuses have the same objective of preventing or delaying market entry of generic omeprazole based products. […] HAS ADOPTED THIS DECISION: Article 1 1. AstraZeneca AB and AstraZeneca Plc have infringed Article 82 of the Treaty and Article 54 of the EEA Agreement by the pattern of misleading representations before patent offices in Belgium, Denmark, Germany, the Netherlands, Norway and the United Kingdom and before national courts in Germany and Norway. 2. AstraZeneca AB and AstraZeneca Plc have infringed Article 82 of the Treaty and Article 54 of the EEA Agreement by their requests for the surrender of the market authorizations for Losec capsules in Denmark, Norway and Sweden combined with their withdrawal from the market of Losec capsules and launch of Losec MUPS tablets in those three countries. Article 2 For the infringements referred to in Article 1, the following fines are imposed: (a) a fine of EUR 46,000,000 on AstraZeneca AB and AstraZeneca Plc, jointly and severally liable, (b) a fine of EUR 14,000,000 on AstraZeneca AB. Article 3 This decision is addressed to AstraZeneca AB (S-151 85 Södertälje, Sweden) and AstraZeneca Plc (15 Stanhope Gate, London W1K 1LN, the United Kingdom). This decision shall be enforceable pursuant to Article 256 of the Treaty.153 This paradigmatic decision of the European Court shows the extreme difficulty in identifying, in apparently lawful procedures, strategies that just abuse the system in or ________________________________ 153 Translation into Portuguese: Em termos gerais, esta decisão trata com dois alegados abusos conectados à estratégia da empresa Astra em relação aos seus pedidos de Certificados de Proteção Suplementar (chamados SPC) estendendo a proteção do princípio ativo omeprazole no seu medicamento anti-úlcera Losec; e também a estratégia da empresa Astra em relação à troca (principalmente em 1998) de cápsulas para formulações em tabletes do Losec. […]. Deve-se mencionar que os ditos dois abusos respectivamente trazem atenção para dois diferentes sistemas regulatórios: a) o sistema de patentes no qual proteção extra é concedida através da Lei de Patente Comunitária na forma de SPCs para produtos farmacêuticos e b) os procedimentos e condições, de acordo com a legislação farmacêutica Comunitária e nacional relacionada à autorização para comercializar produtos farmacêuticos. No entanto, ambos os abusos possuem o mesmo objetivo de impedir ou atrasar a entrada no mercado dos produtos genéricos com base no omeprazole. […]. Adotou a seguinte decisão: Artigo 1 1. AstraZeneca AB e AstraZeneca Plc infringiram o Artigo 82 do Tratado e o Artigo 54 do Acordo EEA através de atos de artifícios perante os Escritórios de Patentes da Bélgica, Dinamarca, Alemanha, Holanda, Noruega e Reino Unido e perante Cortes Nacionais na Alemanha e Noruega. 2. AstraZeneca AB e AstraZeneca Plc infringiram o Artigo 82 do Tratado e Artigo 54 do Acordo EEA através dos seus pedidos formulados para a obtenção de das autorizações de comercialização do Losec em cápsulas na Dinamarca, Noruega e Suécia combinado com a sua saída do mercado do Losec em cápsulas e lançamento do Losec MUPs em tabletes nesses três países. Artigo 2 Pelas infrações especificadas no artigo 1, as seguintes multas são impostas: (a) Uma multa de EUR 46,000,000 na AstraZeneca AB e na AstraZeneca Plc, juntamente e severamente responsáveis, (b) Uma multa de EUR 14,000,000 na AstraZeneca AB. Artigo 3 Esta decisão é aplicada contra AstraZeneca AB (S-151 85 Södertälje, Suécia) e AstraZeneca Plc (15 Stanhope Gate, Londres W1K 1LN, Reino Unido). This decision will be required according to the article 256 of the Treaty 81 order to obtain practical effective gains in the market (involving the aforementioned Sham Litigation) It should be noted that a major problem in judging anticompetitive conduct expressed through the abusive use of the patent system is precisely the difficulty in identifying such conduct and, at the same time, predict its effects in short, medium and long term, demanding an enormous investigative effort from the antitrust authorities as well as an effort to deepen the available empirical data. Trying to clarify and prove the difficulty encountered by the authorities and parties involved in identifying abusive anticompetitive behaviors in cases involving patent rights, research was conducted based on interviews with officials from FTC and DOJ, as well as the ACED and ELS. The professionalism and organization of the US Department of Justice and the Federal Trade Commission should be highlighted concerning the capability of organization and compilation of information through a practical and specific ―guide‖ on the intersection of intellectual property rights with the antitrust law. Far beyond a simple ―guide‖, actually the work developed by members of the DOJ and FTC jointly brings in-depth analyses of specific cases, and it is preceded by public hearings with the participation of society as a whole and, in particular, the experts in public and private academic field. In the Brazilian reality, despite the existence of those judged by the ACED involving this intersection, there is not a specific ―guide‖ to deal with such cases, as it occurs with the DOJ and FTC. But there are some more restricted works under develop ___________________________ 154 U.S. Department of Justice and the Federal Trade Commission. Antitrust Enforcement and Intellectual Property Rights: Promoting innovation and competition. Available at: www.ftc.gov/reports/index.shtm . Accessed on: 02/09/2009 82 development as for instance, the BAIP Resolution no. 68 of 10/21/2004, under the name of Guidelines on Examination of Technology Transfer Agreements and Licensing of Intellectual Property Rights under the perspective of Antitrust Law 155. However, analyzing the work referred by the DOJ and FTC, and some of the works developed in Brazil as well as some decisions of the Federal Circuit and the Supreme Court of the United States itself, we come across issues that are left unanswered, which generated the need for an elaboration of a questionnaire and interviews with some FTC, DOJ, ACED and ELS officials, seeking not only a comparison between the two perceptions, but more than that, seeking to fill some gaps that are important to the study developed. Regarding the FTC, the answers obtained had Armando Irizarry156, Tara Isa Koslov157 and Pamela Jones Harbour158 as reference sources. Those interviewed in several occasions made reference to the April 2007 DOJ/FTC ―guide‖ on their answers, but they pointed out some factors and cases worthy to be stressed. The function of the FTC is to protect the consumer and to stimulate competition, i.e., there is a harmonic duality of goals. To the FTC, the conduct is important when analyzing issues related to antitrust. This fact shows the depth of research that should be done for the typification of anticompetitive conduct. The forms of investigation used by the FTC are, basically the press (including the very public statements of the company‘s CEOs), complaints from other companies __________________________ 155 Available at: http://www.abpi.org.br/bibliotecas.asp?idiomas=Portugu%C3%AAs&secao=Resolu%C3%A7%C3% th B5es%20da%20A BPI&codigo=3&resolucao=1 . Accessed on: Feb. 9 , 2009. 156 Counsel for Intellectual Property – FTC – Bureau of Competition – Office of Policy and Coordination. 157 Attorney Advisor of Commissioner Pamela Jones Harbour – FTC. 83 companies, FTC easy access to the public (they receive everyone/every complaint, and have a complaint hotline). The FTC understands that the goals of the patent system and antitrust system are focused on the bottom line benefits generated to the consumers, and the natural monopolies are not affected by the antitrust rules; In the interviews it became clear that the FTC has human resources structural problems to analyze more complex cases with advanced technologies and uncertain impacts on the market. This fact confirms the inadequacy of the current patent system when applied to the protection of essentially diverse technologies from those which this system has been designed for, as it is defended in this work. To support the personal opinions explained in the interviews, a few cases considered in the ―guide‖ have been quoted, such as Verizon 159, Kodak160, CSU161 (see FTC guide p. 21). Field research was also conducted together with representatives of the Brazilian antitrust authorities, interesting results were obtained that confirm the hypothesis of the importance of clearly recognizing the equality principle towards the recognition of a differential treatment of different technologies, meant for the patent system, causing effects on the competitive environment. Paulo Furquim de Azevedo, ACED Councilor at the time of field research 162, in his answers to the questionnaire concerning the research, states: ___________________________ 158 Commissioner. Verizon Communications Inc. v. Law Offices of Curtis V. Trinko LLP, 540 US 398, 407 of 2004. In this trial, it is clear the position that the exercise of monopoly power naturally and legally obtained in the market, with monopoly pricing, cannot be affected by the US antitrust legislation. 160 Above-mentioned – 125 F. 3d 1195 – US Court of Appeal for the Ninth Circuit. 161 Above-mentioned – 203 F. 3d 1322 – Federal Circuit, 2000. 162 Full questions and answers to the survey available at Appendix A. 159 84 I do not know if I have understood the question. It does not seem to me that the patent rights are areas in which the existence or not of market power or abuse of power is, comparing to all other sectors, difficult to gauge. Undoubtedly this is a hard task, but it is also hard to the market production of media content, software, specialized services, etc. A very important item in this area is the sham litigation. Since it is not clear whether or not the property right has been infringed, companies can make use of the intellectual property protection system to impose costs on competitors, even if they have not, in fact, infringed such rights. Therefore, the difficulty in assessing whether or not there has been violation of IPR is a source of competition concern. In my view, there is no, at first, incompatibility between the intellectual property right protection and its full exercise as well as the antitrust policy. In fact, it has been soberly proven during this thesis that the inaccuracy of the patent rights limits due to several factors (among them, the use of writing techniques that extend the protection without a descriptive sufficient support and the nonrestrictive interpretation of patents), works as an instrument of abuse of patent rights, as well as little expertise in the issue. Another analogous factor on the inaccuracy of the patent rights limits is the complexity of conduct that involves diverted acts of the legality provided for the lawful competitive use of the patent system. In the final revision stage of this thesis, after the event held at Itamaraty Palace in Rio de Janeiro, a technical cooperation agreement was signed among BPTO, ELS and ACED163, which shows the first step towards ___________________________ 163 The Brazilian Patent and Trademark Office – BPTO, the Union, through the Economic Law Secretariat – ELS and the Administrative Council for Economic Defense- ACED celebrate among themselves the Technical cooperation agreement. 85 towards the development in the identification and analysis of anticompetitive practices perpetrated by abuses in the area of intellectual property: The following constitutes object of this technical agreement among the Participants, when requested, and according to its convenience and opportunity: I) Provide advice, regarding definition of routines, guidelines and procedure rules on concentration acts or anticompetitive practices that involve intellectual property; II) Studies on the relationship and interfaces between intellectual property and antitrust; III) Participating and holding events and seminars, including aiming to train servers; IV) Providing studies and analyses of proceedings in a compiled collection; V) Exchange of information and expertise among their technical bodies, and VI) Based on analyses and studies, preparation of normative proposals, which will lead, under this agreement, the integrated measures to case resolution. Sole Paragraph: Once an investigation has begun, the ELS may report to the BPTO requesting the sharing of technical information on eventual property rights securitized by the investigated economic agent(s), by (an) other economic agent(s) acting in the relevant market under examination. Second Paragraph: When the BPTO, exercising its duties, verifies the evidence of restrictive practices on the free competition and the intellectual property, shall report to ELS, giving account of the facts, and if need be, shall manifest itself in advance about its jurisdiction area for the purposes of the art. 30 et seq. of Law no. 8,884/94. Third Paragraph: Once the administrative process for the confirmation of the existence of violation to the economic order is established, the ELS, once the defense (s) from the Representative (s) is received, will send copies of the proceedings, defense representation (s) by letter to the BPTO, so that the Office, if need be, gives its opinion on the subjects of its specialization, which should be submitted before the procedure instruction finishes within the ELS. Fourth Paragraph: Once the BPTO is aware of practices that may constitute the noncompliance of the ACED decision, it will inform the President of the Council. Fifth Paragraph: The decisions of the ACED Board that may have effects on intellectual property rights should be forwarded to the BPTO, together with the Reports produced, for the knowledge of this Agency and for the appropriate measures to be taken. It is shown in this way, an acknowledgement of the complex relationship between the market and the patent system, demanding special study and clear understanding of the reciprocal and harmonic limitations imposed by the patent system 86 system and the antitrust law, on behalf of the compliance of the art. 5, XXIX of the Magna Carta of 1988. In the area of copyright there is also the problematic intersection with the antitrust law, Helenara Braga Avancini 164 states in her conclusions: Actually, the economic order principles are only meaningful when analyzed in light of the fundamental rights, in particular, by the principle of copyright functionalization, which is not new to the Academy and judges. The challenge is to turn this evidence into effectiveness, since the use of the Antitrust Law and the use of the consumer law, in order to limit the excessive ownership, eventually exercises the functionalization of the Copyright, implementing the fundamental rights. Added to these factors is the importance of the recognition and respect of the equality principle on the basis of the patent system, in order to adequately protect the patentable intellectual creations according to their different technological essence and their subsequent impact on the competitive context. __________________________ 164 AVANCINI, Helenara Braga. The copyright in a perspective of fundamental rights. The limitation of excessive ownership through the antitrust law and the consumer. Doctoral Thesis presented at the Pontifical Catholic University of Rio Grande do Sul – PUCRS, Porto Alegre, 2009. 87 3 EQUALITY AND WELFARE STATE The French novelist Honoré de Balzac used to say, in the nineteenth century, that Equality may be a right, but there is no power on earth that can make it a fact. There is no doubt that the notion of equality has been longer approached than the notion of competition and patents, and it is clear that the principle of equality of material goods exploited by Aristotle over two thousand years ago clearly shows, to the present day, that treating unequal people equally does not match the ideal pursuit of justice165. The equality principle in our legal planning is defined, essentially, in the art. 5, item and paragraph I, ensuring, in short, that all men and women are equal and should be treated materially speaking (not only formally) equally 166. It is noted that the manifestation of the equality principle not only derives from the art. 5., item and paragraph I of the Magna Carta of 1988, but also from the very essence of the art. 1., paragraph III and article 3. and its paragraphs of the same Carta167. The analysis of the equality principle in the legal planning is of paramount importance, for the understanding of how such principle should work as a ―corrective‖ to the existing discrepancies in the formally equal treatment that the patent system con ___________________________ 165 ARISTOTLE. Nichomachean Ethics. São Paulo: Martin Claret, 2003. Federal Constitution of 1988: Art. 5 All are equal before the law, without distinction whatsoever, guaranteeing Brazilians and foreigners residing in the Country the inviolable right to life, liberty, equality, safety and property, as follows: I- men and women have equal rights and obligations under this Constitution; 167 Federal Constitution of 1988: Art. 1 The Federative Republic of Brazil, made up of the indissoluble union of the States and Municipalities and the Federal District, constitutes a Democratic State and has as its foundations: III – the dignity of the human person; Art. 3 The fundamental objectives of the Federative Republic of Brazil are: I – build a free, fair and helpful society; II – guarantee the national development; III – eradicate poverty and marginalization, and reduce the social and regional inequalities; IV – promote everyone‘s welfare, without racial, sex, color, age prejudice or any other form of discrimination. 166 88 confers on technologies168 susceptible to patentability at the present time. According to Jorg Neuner169, the equal treatment can be essentially justified and due to three reasons: protection of the individual, protection of the group involved and the community interest. When the author emphasizes the protection of the individual, he relates it to its objective of consideration for the dignity of the human person, limiting the holder of a private right to the development of another. In the words of Patrícia Uliano Zoch de Moura 170, ―By understanding that the human beings, although equal as species, look unequal when it comes to social issues, it is worth trying to equate them‖. Somehow, it involves the principle of equality of material goods, consisting in recognizing the inequalities and, facing them, establishing proportionally unequal treatments. Examining the principle of equality of material goods as one of the components of expression of dignity, we must look into the broader question involving dignity, pointed out by Ricardo Aronne 171, stating that ―Any notion of dignity, in view of a material level and not merely formal, should be perceived concrete (topical) and intersubjectively, as translated by Ingo Sarlet, in the most significant work devoted to the topic, in the legal literature‖. __________________________ 168 The term technology has different meanings depending on the context in which it is used. It is adopted the concept of technology expressed at Wikipedia Encyclopedia: Technology, in general, is the meeting between science and engineering. It is a term that includes in it from simple tools and processes, such as a wooden spoon and fermenting grapes, to the most complex processes ever created by the human being, such as the International Space Station and the desalination of seawater. Available at: http://pt.wikipedia.org/wiki/Tecnologia . Accessed on: Sep. 10th, 2008. 169 NEUNER, Jorg. The equal treatment principle in German private law. Fundamental Rights & Justice, n. 2, p. 85, Jan/Mar. 2008. 170 MOURA, Patrícia Uliano Effting Zoch de. The purpose of the equality principle – The social leveling – Interpretation of acts of being equal. Porto Alegre: Sergio Antonio Fabris Editor, 2005, p.38. 171 ARONNE, Ricardo. Op. Cit., p. 69. 89 That is, escaping from the purely formal concept of equality, we must necessarily and topically examine this principle so that we can figure out its materially accepted definition. In the words of Bolzan de Morais, stressing the broad and open hermeneutical sense of the Constitution that permeates the principle of equality of material goods, ―The role of the Constitution is not finished yet, even if it undergoes a profound reformulation stemmed from a new reality that imposes itself and is ordained, taking into consideration its open and universalized nature‖. The practical problem of the application of the principle of equality of material goods is not in the premise of defining what justice is, but it is in how to achieve it in the individualized reality (topical), being noteworthy the relevance indicated by Barzotto173 of the analysis of realism174, pragmatism175, ethical character176, casuistry177, and traditionalism178 used by the Roman jurists on this author‘s endeavor to demonstrate the elective affinities between the Aristotelian prudence and the Roman jurisprudentia. In an analysis of Comparative Law regarding the possible limits of a universality of human rights, Angela Kretschmann179, drawing a comparison among ___________________________ 172 MORAIS, José Luis Bolzan de. Human rights ―global (universal)‖. Of everyone, everywhere. Yearbook of the Postgraduate Program in Law – Master‘s and PhD – Center for Legal Studies – Unisinos, São Leopoldo, 2001, p.69. 173 BARZOTTO, Luis Fernando. Prudence and jurisprudence. Yearbook of the Postgraduate Program in Law – Master‘s and PhD – Center for Legal Studies – Unisinos, São Leopoldo, 1999, p. 163-192. 174 While Aristotle focuses on getting to know the practical truth through prudence, which is contingent, but no less objective, Romans seek solutions outside of abstractions, based upon patient examination of reality. 175 Despite the Roman jurisprudentia not aiming at producing a theory of justice, it performs it in concrete cases, as well as the Aristotelian prudence seeks to know the concrete man‘s good and the concrete polis, imposing itself as a purpose to all. 176 As well as prudence describes a premise of a prudent man in the sense of moral excellence, the Roman jurisprudentia seeks to find a more adequate solution, from a moral standpoint, for the practical case. 177 As well as prudence comes from experience for Aristotle, denying the existence of prudence among youth, for the Roman jurisprudentia without long contact with the realities of life, there is no way to find the rights present in the cases. 178 Attention should be given to the elderly, because their opinions are worthy of it. The Roman jurisprudentia asserts that experience comes from soundness of decisions and it could only be inquired by extremely grounded reasons. 179 KRETSCHEMANN, Ângela. Universality of Human Rights and Dialog in the Complexity of a Multi-civilizational World. 90 Western cultures and human developments, Hindu, Muslim and Chinese, clearly demonstrates that the respect for the contextualized considered individual is essential to trace possible parameters of universalization of human rights. In work dedicated exclusively to the analysis of the equality principle, Celso Antônio Bandeira de Mello180, proposes the node question that, in its positive form of the need for establishing discriminations, is interesting to the development of this thesis: ―When is the law forbidden from establishing discriminations? That is: what limits oppose this normal function, inherent to the legal function of discriminating?‖ Going beyond the Aristotelian important findings of unequal treatment to the unequal and equal treatment to the equal, Celso Antônio Bandeira de Mello 181, stating that ―to the legal rule itself it is forbidden to grant several disciplines to equivalent situations‖, concludes that there is an offense to the constitutional precept of equality when: II- The norm adopts as a discriminating criterion for the differentiation of regimes, the non-resident element in the facts, and unequalized situations or people. This is what happens when you want to take the factor ―time‖ – which does not rest on the object – as a differential criterion. III- The norm assigns different legal treatments in attention to adopted factor that, still, does not have a relation of pertinence logic to the disparity of regimes granted. IV- The norm assumes relation of pertinence logic existing in the abstract, but what has been established leads to opposing effects or anyhow discordant with the interests constitutionally esteemed. We conclude that the mentioned author clearly defends that ―there is no way to unequalize people and situations when unequal factors182 are not found in them‖, basing not only on the person for the unequal treatment, but also on the factors and situation that unequalize them. __________________________ 180 MELLO, Celso Antônio Bandeira de. Legal Content of the Equality Principle. 3. Ed. São Paulo: Malheiros Editores, 2009, p. 13. 181 MELLO, Celso Antônio Bandeira de. Op. Cit., p. 11 and 47. 182 Idem, p. 35. 91 That is, the need to equalize or discriminate does not stem from the analysis of equalities and inequalities among human beings as individuals, but from the equalities and inequalities taking into account equal or unequal facts, situations or people. Treating equal and unequal people equally or unequally requires a deeper analysis rather than the simple interpersonal comparison, because if it is not like that, the very equalization and discrimination will harm the equality principle. Looking for contributory answers in the Comparative Law, it can be seen that the Standford University Encyclopedia of Philosophy183, establishes that the equality principle is a complex and highly contested concept, where it divides equality into 4 possible principles (Formal Equality184, Proportional Equality185, Moral Equality186 and Presumption of Equality187). __________________________ 183 Available at: http://plato.stanford.edu/entries/equality/ . Accessed on: Apr. 23rd , 2010. When two persons have equal status in at least one normatively relevant respect, they must be treated equally with regard to this respect. This is the generally accepted formal equality principle that Aristotle formulated in reference to Plato: "treat like cases as like" (Aristotle, Nicomachean Ethics, V.3. 1131a10-b15; Politics, III.9.1280 a8-15, III. 12. 1282b18-23). 185 When factors speak for unequal treatment or distribution, because the persons are unequal in relevant respects, the treatment or distribution proportional to these factors is just. Unequal claims to treatment or distribution must be considered proportionally: that is the prerequisite for persons being considered equally. 186 Since "treatment as an equal" is a shared moral standard in contemporary theory, present-day philosophical debates are concerned with the kind of equal treatment normatively required when we mutually consider ourselves persons with equal dignity. The principle of moral equality is too abstract and needs to be made concrete if we are to arrive at a clear moral standard. Nevertheless, no conception of just equality can be deduced from the notion of moral equality. Rather, we find competing philosophical conceptions of equal treatment serving as interpretations of moral equality. These need to be assessed according to their degree of fidelity to the deeper ideal of moral equality (Kymlicka 1990, p. 44). With this we finally switch the object of equality from treatment to the fair distribution of goods and ills or bads. 187 The presumption of equality provides an elegant procedure for constructing a theory of distributive justice. The following questions would have to be answered in order to arrive at a substantial and full principle of justice: What goods and burdens are to be justly distributed (or should be distributed)? Which social goods comprise the object of distributive justice? What are the spheres (of justice) into which these resources have to be grouped? Who are the recipients of distribution? Who has a prima facie claim to a fair share? What are the commonly cited yet in reality unjustified exceptions to equal distribution? Which inequalities are justified? Which approach, conception or theory of egalitarian distributive justice is therefore the best? 184 92 Historically, when the ideal of equality ―was born‖ in the United States Declaration of Independence the contrast between this ideal and the reality back then was enormous 188. One of the symbols defending the equality principle as a way to abolish the racial discrimination in the US was the US Supreme Court Judge Thurgood Marshall, who believed and defended that equality, would be best achieved through an integrated movement of society. In Catherine Bernard‘s189 view, in an article showing four different perspectives of the equality principle, understanding the equality principle in European jurisprudence shows that there are justifiable grounds on views of a utopian equality (political slogan of little practical effectiveness), an equality aiming for a social informative objective, whose implementation would work as an advisor to a nondiscrimination, without having a major legislative force, and eventually an equality seen as a general principle of Law limiting legislative activities. The Declaration of the Right of Man and of the Citizen of 1789 190 is an international historical paradigmatic benchmark at the beginning of understanding the material sense of the equality principle. Vanessa Batista Oliveira Lima191 points out that ―The thesis of legal equality proposed since the French Revolution, has undergone profound changes, from formal __________________________ 188 For instance, in regard to the voting right at the time, only males had suffrage in the new independent states. This fact shows the acceptance of a higher ideal against a normal cultural practice, creating a healthy shock between being and having to be as it was considered at the time. 189 BERNARD, Catherine. The principle of equality in the community context: P, Grant, Kalanke and Marschall: Four uneasy bedfellows? The Cambridge Law Journal (1998), 57:2:352-373 Cambridge: University Press. 190 Art. 1. Men are born and are free and equal in rights. Social distinctions can only be founded on the common good. 191 LIMA, Vanessa Batista Oliveira. Affirmative Actions as instruments for the implementation of the equality principle and the principle of the dignity of the human person. P. 09. Available at: http://www.fa7.edu.br/recursos/imagens/File/direito/ic/v_encontro/acoesafirmativascomoinstrumen rd tos.pdf Accessed on Apr. 23 , 2010. 93 formal equality to a real one, from abstract to concrete, but always standing as a cornerstone of the Western legal systems‖. The same author adds: ―Paraphrasing CANOTILHO, strength (sic) is to recognize that the equality principle does not prohibit, but rather assumes, that the law should establish distinctions of situations, since there is objective and factual basis for such discrimination‖192. On several occasions the Supreme Court has spoken on the equality principle application, recognizing the necessary application of the principle in its material or substantial dimension. At the trial of the DAU 2649/DF, regarding the constitutionality of Law 8899/94, it became explicit through the Reporter Cármem Lúcia‘s vote that The Law 8,899/94 is part of public policies to insert the handicapped into society and it aims at equal opportunities and at the humanization of social relations, pursuant to the foundations of the Republic of citizenship and dignity of the human person, which is concretized by the definition of the means in order for them to be achieved. Analyzing the equality principle within a competitive environment of equal opportunities to competitors in a competitive market, makes clear the notion that the development of the equality principle starts parallel to the development of the free competition. The purely formal notions of equality and that the market was selfregulated without the need for minimal state regulation were giving way to increasingly developed notions of a necessary material or substantial equality, as well as a constant state regulation to ensure compliance of equality principle and free competition. For there to be a totally free market (with no regulation) it would be forcible to assume a situation of absolute material or substantial equality. As such assumption does __________________________ 192 LIMA, Vanessa Batista Oliveira. Op. Cit., p. 10. 94 does not exist, the search for further corrections on behalf of a material equality contributes to a greater possibility of keeping the State away from the regulation on a postmodern treatment of the principle of free competition. As pointed out by Paula Forgioni 193, in this correlation of meeting the principles of equality and free competition, we should be attentive to the current capitalist model, because: As we shall see in the third part of this line of development of the competition disciplinary rules that we are tracing, the biggest current danger is for us to consider, only, this restrict function of the antitrust regulation, as if we were in the initial period of the economic liberalism, disregarding its development process, which runs parallel to the one of the functions exercised by the modern capitalist State. There is no doubt that the effective application of the equality notion in its material sense reaffirms the recognition of the free competition applied to an increasingly less regulated market by the State. It cannot be seen today because the scope of an equality of material goods through an effective unequal treatment to the unequal according to their inequalities represents an arduous task, almost utopian, in a Democratic State of Law permeated by secular inequalities to be gradually and constantly adjusted. So, we must pay attention to the fact that the patent system has a direct linkage with an efficient and properly understood system of free competition, in the same way as it has a valorizing linkage with an axiological focused basis on a material or substantial equality that ends up not being observed in some situations that are based on the application of a merely formal equality when it comes to the absence of an unequal treatment to unequal technologies according to their inequalities. __________________________ 193 FORGIONI, Paula A. Op. Cit., p. 69. 95 4 PROBLEMATIZING EQUALITY IN THE PATENT SYSTEM Achieving equality in the patent system is an arduous task when this thesis argues that, the equal treatment of the patent system granted to different technologies undermines the equality principle. Within this context the analysis goes through the seemingly simple matter on where the patent system meets and on where it does not meet the principle of equality of material goods, and it is clear the fulfillment of this principle, for instance, regarding everyone‘s access to the patent system194. Interesting to note an empirical observation that the infra-constitutional legislation embodied in the Law 9,279/96 already presupposes and indicates some situations of unequal treatment based on the existing differences among technologies195. To generate the subjective right to the patent, all technologies submitted to a patent application must meet requirements of a formal or material order. Among the req ___________________________ 194 It should be noted that even at this point we could infer certain material inequality, since access to the patent system and its concrete benefits depends on numerous factors that pass, essentially, through the cost of using the system nationally and internationally. 195 The Brazilian patent system works with two different types of patents: invention and utility model. Leaving aside the discussion on the terminological/conceptual utility model being effectively a patent (in its international sense as treated by the PC, PCT and TRIPS), it is about an unequal treatment to different technologies, since it establishes different patentability requirements, as well as it grants different protection terms. Besides this question, we have yet another example in the area of biotechnology that, in certain cases, requires the deposit of biological material for the effective analysis of the descriptive sufficiency and the understanding of the invention, treating unequally (regarding the necessary requirements for obtaining a patent) unequal technologies. 96 requirements of formal order are those referred to in the article 19 of Law 9,279/96 196 and among the requirements of material order are those established in the arts. 8, 9 and 24 of the same Law197. There are situations of unequal treatment of technologies legally subject to obtaining a patent, and as to formal requirements, for example, technologies that do not imply the need for a representation through drawings, are obviously exempt from such presentation. Of course the unequal treatment as to formal requirements is not the goal of this work, but it only serves to demonstrate that, even formally, the differences are already legally identified. The key to this study is the analysis of unequal treatment as to the verification of its material requirements, i.e., for example, as already emphasized, the Law 9,279/96 establishes an inventive activity to a minor degree (inventive step) and a temporal right term to exclude third parties from the exploitation of the object of the minor patent (15 years instead of 20 years). That is, the Law 9,279/96 recognizes and applies the equality principle in its material dimension treating explicitly differently different technologies. The problematicness comes in when an internationally harmonized system over a century ago was not designed and harmonized to handle non-existing technologies back then198. ___________________________________________ 196 Art. 19. The patent application, as established by the BPTO, shall contain: I- requirement; IIdescriptive report; III- claims; IV- drawings, if need be; V- summary; and VI- proof of the payment of the fee related to the filing. 197 Art. 8. The invention that meets the requirements of novelty, inventive activity and industrial application is patentable. Art. 9. It is patentable as a utility model the object of practical use, or part thereof, susceptible to industrial application, which presents new form or disposition, involving inventive step, that results in functional improvement in its use or in its manufacturing. Art. 24. The report should clearly and sufficiently describe the object, so that it can be achieved by a skilled technician and it may indicate, whenever appropriate, the best execution form. 198 Citing just a few examples, biotechnology, integrated circuits, computers, software, among others that did not exist in the nineteenth century. 97 In effect, at the time, the only necessary unequal treatment in view of the existing technologies was related to the utility model, whose relationship of minor inventive activity x proportionally minor protection was the adequate and sufficiently found solution. Therefore, our pre-understanding of the patent system ends up linking our understanding of the current patent system, being necessary to be aware of the pre-understanding as an integrating element of the understanding199. Meurer and Bessen200 point out that the benefits of the private property are directly related to procurement rules and to the clear determination of the limits or extent of such rights, concluding that: The benefits of private property derive from the promise of efficient, nonarbitrary enforcement. The details of the rules of acquisition and the determinants of the scope of the rights affect this efficiency. Poorly designed rules of acquisition, ownership, and scope can cause property to fail. 201 If the property right has flaws in its procurement rules or difficult delimitation of its limits, when properties in large scale and from several ownerships came to be, such problems, which were previously ignored, became relevant. This is what is happening in the area of patents, it is much simpler identify and delimit the rights over a patent in the electrical or mechanical field than do the same involving computer programs (seen as methods or steps for solving a technical problem not based on the protection of the program or source code itself). The patent ____________________________________________ 199 See GADAMER, Hans-Georg. Truth and Method. Translated by Paulo Meurer, new revision by Ênio Paulo Giachini Sá Cavalcante Schuback. 5 ed. Rio de Janeiro: Vozes, 2003. 200 MEURER, Michael J. ; BESSEN, James. Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovation at Risk. Princeton: Princeton University Press, 2008, p. 45. 201 Translation into Portuguese: Os benefícios da Propriedade privada derivam de uma promessa de eficiência, de uma execução não arbitrária. Os detalhes das regras de aquisição e os fatores determinantes do escopo dos direitos afetam essa eficiência. Regras de aquisição, de propriedade e de abrangência mal desenhadas podem gerar o fracasso da propriedade. 98 system was not created to protect this kind of technology and its simple adaptation ends up treating equally diametrically different technologies. Notwithstanding the provisions of the TRIPS Agreement to bar discrimination against protection granted by patents based on the technological diversity 202, the developed countries already establish discrimination, as, for instance, in the pharmaceutical area, allowing additional validity period of patents based on the approval delay of the product related to that patent by the agencies of public health. It is, without a shadow of a doubt, a differential treatment based on the peculiarities of market entry of products related to these technologies. In this sense, we must quote observations made in the Reference Book on TRIPS and Development203, specifically regarding the interpretation of the article 27.1 of the TRIPS Agreement as to the possibility of discrimination and its interpretation in the face of the TRIPS provisions: Neither the Paris Convention nor national laws contained a provision comparable to Article 27.1. Hence, discrimination now banned was permissible, such as establishing different terms of patent rights according to the field of technology, as provided for under some domestic patent law. The principle that patents shall be available, and patent rights enjoyable without discrimination as to the place of invention had generally been accepted under the European Patent Convention. However, in some countries, differential treatment was granted to patents depending on the country of invention. That was the case, for instance, under the Canadian regulation on compulsory licenses introduced in 1988 and in force until Bill C-91 was passed in February 1993. The United States – the single country to maintain a ‗first-to-invention‘ rule concerning entitlement to a patent - imposed a discriminatory burden on foreign inventors under §104 of the U.S. Patents Act. Evidence of inventive acts was restricted to the territory of the U.S., and foreign applicants were not permitted to prove a date of invention which antedated their U.S. filing date. This territorial limitation was later extended to Canada and Mexico under the North American Free Trade Area Treaty. Similarly, national laws could treat patents differently depending on the local or imported origin of the product. Thus, Section 337 of the U.S. Tariff Act accorded to imported products challenged as infringing U.S. patents treatment less favorable than the treatment accorded to similarly challenged products of __________________________ 202 TRIPS – Article 27.1: […] patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced. 203 Resource Book on TRIPs and Development, Part II: Substantive Obligations. 2.5 Patents. ICTSDUNCTAD. Capacity Building Project on IPRs and Sustainable Development, p. 29-35. Available at: http://www.iprsonline.org/unctadictsd/docs/RB2.5_Patents_2.5.2.pdf . Accessed on Jan. th 10 , 2010. 99 U.S. origin. This Section was found inconsistent with the GATT in United States -- Section 337 of the Tariff Act of 1930. It has been a common feature in patent laws (of developed and developing countries) to provide for compulsory licenses in cases of "non-working" (in conformity with Article 5.A (4) of the Paris Convention), and to interpret that ―working‖ was only satisfied by local production (not by importation). Some commentators have interpreted Article 27.1 as a ban to such differentiation but, as discussed below, such interpretation is controversial. 204 […] The non-discrimination rule contained in Article 27.1 is intended to protect right-holders against arbitrary policies that undermine their rights, when such policies are adopted on grounds of the field of technology, the place of invention or the origin (locally manufactured or imported) of the products. The need to differentiate the rights according to the types of inventions concerned has been extensively debated. Many have wondered why patent rights of equal effect and duration should be granted to inventors who have made different contributions, some of them significant and others less so. Debates have largely focused on the duration of patent rights, since the rate of obsolescence of technology and the periods necessary to recover R&D investments significantly vary across sectors. In fact, patent laws in many countries currently allow for a differentiation based on the field of technology, as illustrated by the extension of protection conferred to pharmaceutical patents in the U.S. and Europe in order to compensate for the period required to obtain the marketing approval of a new ____________________________ 204 Translation into Portuguese: Nem a Convenção de Paris ou as leis nacionais continham previsão comparável ao Artigo 27.1. Então, discriminação agora banida era permissível, tais como o estabelecimento de prazos diferentes de patentes de acordo com a área tecnológica, como era feito em algumas leis de patentes domésticas. O princípio de que patentes devem ser acessíveis e que os direitos de patentes aproveitados sem discriminação quanto ao local da invenção foi em geral aceito através da Convenção Européia de Patentes. No entanto, em alguns países, tratamento diferenciado foi concedido para patentes dependendo do país da invenção. Esse foi o caso, por exemplo, da regulação Canadense de licenças compulsórias introduzida em 1988 e em vigor até a Proposta C-91 passar em fevereiro de 1993. Os Estados Unidos – o único país a manter a regra do ‗primeiro a inventar‘ relacionada à titularidade de uma patente – impôs um limite discriminatório através do parágrafo 104 do U.S. Patents Act. Evidência de atos inventivos era restrita ao território dos EUA, e para requerentes estrangeiros não era lícito provar a sua data de invenção que era anterior à data do pedido protocolado nos EUA. Essa limitação territorial foi posteriormente estendida ao Canadá e ao México em decorrência de acordos do Tratado de Livre Comércio das Américas do Norte. Similarmente, leis nacionais podiam tratar patentes de forma diferente dependendo do local ou origem de importação do produto. Assim, a Seção 337 do U.S. Tariff Act concede para produtos importados que violem patentes estadunidenses tratamento menos favorável do que o tratamento dado a produtos similares violadores produzidos originariamente nos EUA. Esta Seção foi reconhecida como inconsistente com o GATT nos Estados Unidos – Seção 337 do Tariff Act de 1930. Tem sido uma questão comum nas leis de patentes (de países desenvolvidos e em desenvolvimento) prever licenças compulsórias em casos de ―não exploração‖ (de acordo com artigo 5.A (4) da Convenção de Paris), e a interpretar que esta ―exploração‖ apenas é satisfeita através de produção local (não por importação). Alguns críticos interpretaram o artigo 27.1 como um banimento para esse tipo de diferenciação, mas, conforme discutido abaixo, essa interpretação é controvertida. 100 new drug. 205 The problem of the non-application of the equality principle on the basis of the patent system, abstracting away the provisions and possible interpretations of the TRIPS Agreement, generates repercussions that the hermeneutic effort cannot solve for the effective optimization of the patent system as a functional-oriented gear towards meeting the harmonic preponderance of the utilitarian theories and social planning theories. Nuno Pires de Carvalho206 points out that the attempt to impose an international termination of technological discrimination (it was argued at the time that a country was not able to arbitrarily define, according to its interests, what would be susceptible to patentability or not): The game rules introduced in 1883 remaining unchanged in essence no longer worked, therefore. It was necessary to introduce new rules that would reduce the free riding of the new major players. […] This draft treaty, which proposed a language that is now included in the article 27.1 of the TRIPS Agreement, was discussed at the WIPO from 1986 to 1990. The Diplomatic Conference to adopt this Treaty started in Hague, in June 1991, and never ended. The main opponents to the idea of ending technological discrimination in the field of patents were the developing countries. The idea was to use the principle of the national treatment of the Paris Convention in its favor. Since Brazil and other countries felt they had no expertise in the development of inventions in certain sectors, or they felt they had no comparative advantage, they would rather deny protection to their own nationals, so that they could deny protection to foreigners. This reasoning was mainly applied in the pharmaceutical and chemical fields. There was nothing else for the main players but to change the game rules. And they did it by simply introducing a new trump. Formerly, the major argument for promoting the international protection of inventions through patents ___________________________ 205 Translation into Portuguese: A regra da não discriminação contida no artigo 27.1 é voltada para proteger os titulares de direitos contra políticas arbitrárias que minem seus direitos, quando esses tipos de políticas são adotadas em termos de áreas tecnológicas, o local de invenção ou de origem (produzido localmente ou importado) dos produtos. A preocupação sobre a necessidade de diferenciar direitos de acordo com os tipos de invenções foi debatida exaustivamente. Muitos consideraram por que direitos de patentes de efeitos e duração iguais devem ser concedidos para invenções que tenham feito contribuições diferentes, algumas delas significantes e outras nem tanto. Os debates foram focados largamente sobre a duração dos direitos sobre patentes, tendo em vista a taxa de obsolência da tecnologia e os períodos necessários para recuperar investimentos em P&D variam significativamente de setor para setor. De fato, leis de patentes em muitos países freqüentemente permitem uma diferenciação com base na área tecnológica, como ilustrado através da extensão de proteção conferida a patentes farmacêuticas nos EUA e Europa no sentido de compensar o período necessário para obter a aprovação de comercialização de uma nova droga. 206 CARVALHO, Nuno Pires de. The Structure of the Systems…, p. 404-405. 101 patents was the promise of technology transfer. It was in this frame of mind, moreover, that Brazil had requested from the General Assembly of the United Nations to examine true impact of patent protection, as I described above. But as this argument seemed not to have convinced the free riders, the United States and the European Communities changed the trump card: the international protection of the intellectual property was not only worth to encourage technology transfer, but also and above all, to ensure free trade. In a particular work on the implementation of the TRIPS Agreement, analyzing the article 27, reaffirming that TRIPS has not innovated in relation to the article 2 of the PC, the same interpretation prevails over what it was at that time and what it is today, Denis Borges Barbosa207 notes: This time, it is not introduced, with the TRIPS, concerning the nondiscrimination standard, any new requirement; any new face to the nondiscrimination rule of the Paris Convention. Furthermore, since it is consecrated by an a-hundred-ten-year-tradition of peaceful application, the practice followed since 1884 in the application of the Paris Convention is applied to the understanding of the Article 27 of the TRIPS, in accordance with the Article 30.2b of the Vienna Convention. In short: what has never been considered discriminatory under the Paris Convention, shall not be so under the TRIPS. The fact is that the patent system should work as a doer of the social interest and the technological development of the Country to the same extent as it is necessary to fulfill this function. When it goes beyond or falls short of these goals we come across diversion that must be corrected. One of the diversions of foundation is exactly the disregard of the equality principle when there is the equal treatment to diametrically diverse technologies, leading to an inadequate protection to the constitutionally provided one. That is, techno end __________________________ 207 BARBOSA, Denis Borges. Intellectual Property – The implementation of the TRIPS Agreement. 2 ed. Rio de Janeiro: Lumen Juris, 2005, p. 142-143. 102 technologies that end up retaining a temporarily or qualitatively greater protection than what its very essence requires, inserted into a system that is extremely legally unsafe by nature. Now, the patent rights, among property rights, are the most unstable and the ones that present the greatest legal uncertainty to their holder and to those who one way or another are involved or connected to the exploitation of such rights. It all begins with the difficulty of definition of state of the art for determining novelty and inventive activity. Like everything else that has become accessible to the public, by written or oral description, prior to the date of patent application, worldwide, regardless of the language used or the ―publishing‖ means, it should be considered as relevant material for the analysis of the novelty and inventive activity requirements, it remains clear that it is impossible to exhaust the analysis in 100% safe way before filing the patent application and often throughout the patent life 208. As the detailed analysis of the legal uncertainty inherent in the patent system is not object of this study (but it serves as a factor to identify the need for a correct understanding of the equality principle as the basis of the system), here are some brief considerations on this inescapable legal uncertainty. - Period of 18 months of patent application secrecy: before starting research, before entering a patent application, during the process of patent application and prior to effectively using the technology object of the patent application, good practice recommends that a search be conducted on the state of the art to identify relevant anteriority that might limit or interfere the rights of the holder of the patent application or __________________________ 208 Law 9,279/96: Art. 11. The invention and utility model are considered new when not included in the state of the art. § 1 The state of the art comprises everything made accessible to the public prior to the date of filing the patent application, by written or oral description, by use or otherwise, in Brazil or overseas, except as provided in the arts. 12, 16 and 17. 103 or the granted patent. However, as there is a statutory period of secrecy of 18 months from filing the patent application on (during which you cannot know the content of the patent application); any search for anteriority, no matter how extensively and carefully conducted, will not identify any eventual relevant anteriority existing in the past 18 months209. This fact by itself, already makes the system insecure and risky. - State of the art consists of everything that was accessible to the public in Brazil and overseas: Not only the patent documents that are considered as state of the art. Any lecture, scientific article, text, description or any disclosure of analogous knowledge, in any language and in any country, can be considered as relevant state of the art to stop the acquisition of a patent or even to cancel the granting of a patent. It is humanly impossible to exhaust the search for state of the art before, during and after filing a patent request. Another factor that shows a total legal uncertainty in the patent system. - The patent nullity can be argued throughout its term: After the lengthy process of patent application, involving opportunities of third parties intervention, the search conducted by the applicant and by the examiner of the BPTO, if not located prior deterrent anteriority in the researched state of the art and provided that it fulfills legal requirements, the patent is at last granted and, subsequently, the Letter Patent is issued. However, unlike the limitation periods provided in the Civil Code, since it is an atypical property right, of outstanding character and strongly driven by the public interest, the term to file a patent nullity action lasts throughout its validity. Therefore, it starts on the date of its granting and only ends on the last day of its validity. And else, the effects of the declaration of nullity retroactive to the date of the filing of the patent __________________________ 209 Besides being provided the secrecy in the Law 9,279/96, such secrecy is an internationally accepted and virtually uniform rule. This is provided in the article 30 of our IPL: Art. 30. The patent application will be kept secret during 18 (eighteen) months from the date of the filing or the date of the earliest priority, after which it shall be published, except as provided in the art. 75. 104 patent, as if it had never generated any legal effects 210. And it could not be different211. - During the processing, the patent application might go through changes: On the holder‘s initiative or on the requirements of the BPTO patent examiner, the patent application may be modified during the process. However, there is no provision of a republication of the application, prior to its granting, unfolding the changes made and giving opportunity to the manifestation. The dissonances of this absence of republication together with the arrangements provided in the Administrative Procedure Act (Law 9784/99), as well as the limits of the possible changes are not object of this work, since what is relevant it is to note the possibility of change added to this lack of republication of the altered application as another factor contributing to the legal uncertainty in the current patent system212. - Interpretation of the limits of protection granted to patents: even if there is the express legal provision providing limits of protection granted by the patent 213, the legal provision itself forwards the protection to interpretation. And as the act of interpreting, however methodological it might be, is not an exact science, here is another element of legal uncertainty in the patent system. It is concluded that, an uncertain system by nature that, besides this legal uncertainty, does not properly use a factor of discrímen based on the technological differences __________________________ 210 Law 9,279/96: Art. 48. The nullity of the patent shall take effect from the date of the filing. […]. Art. 56. The nullity action may be brought upon at any time during the validity of the patent, by the BPTO or by any other person with legitimate interest. 211 Understanding the rationality of the patent system as a connected functional exception, if any of the requirements for patentability have not been fully met, it is important to recognize the fundamental constitutive addiction of a right that could not have belonged to the holder of an annulled patent. Accurate analysis of the patentability requirements and retroactivity of the effects of nullity till the date of the patent filing are demandable due to the very essence of the patent system. Legal certainty shall be established once there is the expiration of the term of the patent validity, lest, during this period, anyone should argue the nullity of this limited and temporary ownership. 212 Law 9,279/96: Art. 32. To better clarify or define a patent application, the applicant may make changes until the request for examination, provided that they are limited to the issue initially exposed in the application. […]. Art. 35. Because of the technical examination, the search report and relative feedback will be elaborated a: I – patentability of the application; II – adaptation of the application to the claimed nature; III – reformulation of the application or division; or IV – technical requirements. 105 differences of each technological creation eligible to obtain a patent, generates a further factor of unnecessary legal uncertainty in the system. This fact is clearly seen in the area of technology involving computer programs, as highlighted by Michael Meurer and James Bessen 214: We believe that, on average, software patents suffer notice problems more acutely than patents drawn from most other areas of technology. There also seem to be large numbers of obvious software patents, which aggravate these notice problems. Taken together these factors probably explain why software patents impose higher litigation costs than other types of patents. 215 These authors cite several legal cases in the USA in which the legal uncertainty resulting from patents involving software is clear, especially the difficulty in determining the clear limits of the technology in this area 216. According to statistics from the World Intellectual Property Organization – WIPO the number of patents in effect (already granted and within their validity) has been gradually increasing, as described below217: _________________________________________________________________________________ 213 Law 9,279/96: Art. 41. The protection extension granted by a patent shall be determined by the content of the claims, interpreted based on the descriptive reports and by the drawings. 214 MEURER, Michael J. e BESSEN, James. Op. Cit., p. 194. 215 Translation into Portuguese: Nós acreditamos que, na média, patentes de programas de computador sofrem de problemas de informação consistente mais agudamente do que patentes da maior parte de outras áreas tecnológicas. Também parece existir um grande número de patentes de programas de computador óbvias, o que agrava esses problemas de informações consistentes. Tomados em conjunto esses fatores provavelmente explicam por que patentes de programas de computador geram maiores custos de litígio do que outros tipos de patentes. 216 One of the examples cited is the E-Data case, in which the interpretation of the claims in a wider way based on the technique of using vague terms such as ―material object‖, generates a greater legal uncertainty and a greater loss for the patent system as a whole. There is no doubt that the interpretation of a patent should be in a restrictive not ampliative way. See Interactive Gift Express, Inc v. Compuserve Inc., 256 F.3d 1323 (dispute involving patent US 4,528,653) and in the same sense of problematic interpretation of the patent limits: Wang Lab.,Inc. v. America Online, Inc. 197 F.3d 1377 (dispute concerning the US patent 4,751,669) and also Pinpoint Inc. v. Amazon.com Inc., 369 F.Supp. 2d 995 (dispute concerning the patent US 5,758,257). 217 World Intellectual Property Indicators. Produced by World Intellectual Property Organization. 2009 Issue, p. 41. 106 In 2007, the total number of patents in force across the world is estimated to be around 6.3 million. The United States of America (1.8 million) and Japan (1.2 million) are the countries in which most patents are in force. Compared to the United States of America (US) or Japan, the number of patents in force in China is low. However, in recent years there has been a significant increase in the number of patents in force in China, reflecting the increase in the number of patents issued by the patent office of China (see A.23 and A.24). Residents of Japan (around 1.7 million) and the US (around 1.2 million) owned the majority of patents that were in force in 2007. Between 2005 and 2007, the number of patents in force owned by residents of China, the Republic of Korea and Israel increased by 69.4%, 32.0% and 16.1%, respectively, while the number of patents owned by residents of Ukraine and Germany decreased by 16.1% and 14.1%, respectively. Some countries, such as China and Mexico, rank higher in terms of patents in force by patent office than by country of origin, reflecting the presence of a large number of foreign applicants in their respective domestic markets (see A.4). For the patents in force by patent office indicator, the European Patent Office is not reported because EPO issued patents are converted into a bundle of national patents, which are validated and maintained at national patent offices.218 Such data demonstrate the growing number of patents in force, as well as the _________________________ 218 Translation into Portuguese: Em 2007, o número total de patentes em vigor mundialmente era estimado em aproximadamente 6.3 milhões. Os Estados Unidos da América (1.8 milhões) e Japão (1.2 milhões) são os países nos quais a maioria das patentes está em vigor. Comparado com os Estados Unidos da América (US) ou Japão, o número de patentes em vigor na China é baixo. No entanto, nos anos recentes têm ocorrido um aumento significante de patentes em vigor na China, refletindo o aumento do número de patentes concedidas pelo Escritório de Patentes da China (ver A.23 e A.24). Residentes do Japão (aproximadamente 1.7 milhões) e dos EUA (aproximadamente 1.2 milhões) são titulares da maioria das patentes que estavam em vigor em 2007. Entre 2005 e 2007, o número de patentes em vigor de titularidade de residentes da China, República da Coréia e Israel aumentou em 69.4%, 32% e 16.1%, respectivamente, enquanto o número de patentes de titularidade de residentes da Ucrânia e Alemanha diminuiu 16.1% e 14.1%, respectivamente. Alguns países, como China e México, estão mais bem classificados em termos de patentes em vigor por Escritório de Patentes do que por país de origem, refletindo a presença de um grande número de requerentes estrangeiros nos seus respectivos mercados domésticos (ver A.4). Para as patentes em vigor por indicativos de Escritórios de Patentes, o Escritório Europeu de Patentes não é computado porque EPO concede patentes que são convertidas em uma série de patentes nacionais, as quais são validadas e mantidas nos Escritórios Nacionais de Patentes. 107 growing number of future patents that will take their place in the competitive environment, all of them having equal rights, even dealing with completely different technologies. In the US there were 1,800,000.00 patents in force, whereas in Brazil there were 31,000 in 2006, which produce legal effects in the market. It is important to note that the legal uncertainty inherent in the patent system, when applied in the area of computer programs, takes greater dimensions because the use of more comprehensive terms for the protection of the developed technique solution generates a far greater impact on the analysis of the patent limits as to its enforcement. Much of this problem can be attributed to the use of principles, rules and protection criteria not designed specifically in compliance with the technology peculiarities involving computer programs. According to Beresford 219 , the first patent filed in the area of patents involving computer programs is from 1962 and aimed at protecting an improvement in the computer memory management. The national and international discussions about whether or not having the possibilities of patent protection involving software has lasted until today, despite already having a greater uniformity in the sense that if the technical solution is implemented by a computer program, but it fulfills the requirements of patentability, there is no way to deny the patent granting, since the source code or the computer program itself would not be being protected 220. ___________________________ 219 BERESFORD, K. Patenting Software under the European Patent Convention. London: Sweet & Maxwell, 2000, p. 4. 220 Law 9,279/96: Art. 10. It is not considered invention nor utility model: […] V- computer programs per se; 108 The European Patent Convention (EPC) has the same view of not considering a computer program as an invention 221. In this sense, in manifestation almost two decades ago, the memorable and cherished encourager and defender of intellectual property, Fr Bruno Jorge Hammes222, shows that the protection of technology patents involving computer programs was possible, but treated as complementary to Copyright protection: Tendencies and perspectives. It can be said that the copyright protection of computer programs has been seen as the most appropriate way; for twenty years it has met its purpose and presumably will do so for a long time. It has been generally accepted and practiced. Even when the peculiarities of the program imply that the Copyright is not suitable, the tendency is complementarily rely on other legal institutions, such as invention patent, unfair competition, contractual form. […] There are situations in which the patent law can be complementarily arrogated. It occurs in technical inventions related to programs, in which the program is part of a technical complex. André Bertrand223 also reflects the existing concern at the time about failures of adaptation of Copyright protection to computer programs, considering that: A useful weapon directed against exact copies made by ―pirates‖, but which is an insufficient resource when it comes to affecting a third party, a competitor, for instance, who will have taken possession of some software internal logic without copying the instructions, so that he might benefit from that inside of his own company, thus saving money at the creator‘s expense. __________________________ 221 Article 52 of the European Patent Convention of 1970: (1) European patents shall be granted for any inventions, in all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application. (2) The following in particular shall not be regarded as inventions within the meaning of paragraph 1: (c) schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers; 222 HAMMES, Bruno Jorge. ―Software‖ and its legal protection. Legal Studies, São Leopoldo, v. 24, n. 63, p. 73, Jan/Apr 1992. 223 BERTRAND, André. The legal protection of computer programs. Porto Alegre: Livraria do Advogado Editora (Lawyer‘s Library Press), 1996, p. 29. 109 So, basically, what occurs at the national and international level is the separation (within the same technology) from what is protected by Copyright (source code, visual screens, descriptions, that is, the program itself) and from what is protected by the patent system (processes or systems that involve a computer program as a means for performing the process or system, i.e., the program itself is not protected). However, the discussions on how to protect, through the intellectual property system, technologies included in a computer program and those implemented by it, are historically relevant, since there was a major debate about the possibility of protection exclusively by the Copyright or by the creation of a mixed system of protection because of the sui generis nature of the computer programs224. Alexandre Dias Pereira225 concludes, after historical and conceptual analysis of the express intellectual creation or the one which contains a computer program, that: Well, will it make sense to assign private rights over the ―thinking‖ operations of computers? What is the foundation to exclusively reserve the possibility of a computer to be controlled and operated in a particular way? Will it not be translated into an obstacle to the evolution of the ―cyberbrains‖? Now, in our view, the answer is right here. Computers are machines and machines are objects of rights, not subjects. It seems untenable assigning private rights over the intellectual operation of the human spirit; we do not believe so for the machines. The machine, as a thing, can be object of rights, regarding its physical appearance, as well as to its intellectual composition. In other words, the machines ―intelligence‖, contrary to human beings, can be taken away. The patent rights will be, precisely, the legal form suitable for this possession. The legal nature and the necessary form of writing a patent involving computer programs differ from other traditional forms of intellectual creations protected by copyright and by patents. Echoing the criticism of undue adequacy of computer programs ____________________________ 224 See, among others, PEREIRA, Alexandre Dias. Software Patents. In: Portuguese Association of Intellectual Property Law, Coimbra, V. I, 2001, p. 385-429. 225 PEREIRA, Alexandre Dias. Op. Cit., p. 421. 110 programs to current forms of protection of intellectual creations, in particular with regard to patentability, Luiz Antônio Xavier dos Santos 226 points out several relevant technical issues: For an invention to be patentable it should meet the following requirements: novelty, inventive activity and industrial application (IPL art. 8). In fact, the patentability requirements in the Brazilian legislation follow similar patentability concept defined by the art. 52(1) of the European Patent Convention (EPC), as previously mentioned. The concept of industrial application – concept not used in the US legislation – means that the invention should be used or produced in any kind of industry (IPL art. 15). The invention should contain technical specifications and should be related to a product or manufacturing process (IPL art. 42 and Normative Act item 15.1.3.2 – NA 127/97). Maria Dal Poz and Sandra Brisolla (2004) report that the ―vast majority of countries now recognize as patentable an object that represents a ―technical contribution‖, i.e., an industrial application. This characterization is considered too much restrictive by the USA, which defend the use of the concept of ‗utility requirement‘ or ‗practical application‘‖ [31]. Therefore, the concept of utility is one of the reasons why an invention related to the software is prone to patentability in the United States. Another important factor for us to analyze is the invention description. The art. 24 of Law 9,279/96 establishes that the report should describe clearly and sufficiently the object, in order to enable its implementation by a skilled technician and indicate, whenever appropriate, the best form of implementation. It is known that computer programs are not fully described (the source codes, for example, are not fully disclosed). In fact, the BPTO Resolution no. 58/98 that established rules and procedures relating to registration of computer programs, provides in the art. 4(2) that the technical documentation is made up of the full or partial listing of the source program. Another important question: would the computer program be an ―object‖ which enables its implementation by a skilled technician, as provided in the art. 24 of the IPL? It is known that when the programs are deposited they are truly ―black boxes‖ and are not fully disclosed. The depositor almost never reveals the program source code, since he prefers to keep it as an industrial secret to prevent copying and piracy. The programs are not objects and are usually described in flowcharts, mathematical formulas and graphic interfaces. How can a computer program, which is not an object, be reproduced and performed by a skilled technician and be patentable by the art. 24 of the IPL? In the United States, contrary to Brazil, the object described in the descriptive report does not need to be fully revealed. It only needs to be sufficiently described and understood in the technology sector to which the patent protection is intended. Dal Poz and Brisolla (2004) also report that the permission for the patenting can be obtained: ―i) from a description based on subjective inquiry, which conceals many characteristics of the object to be patented or, patented __________________________ 226 SANTOS, Luiz Antônio Xavier dos. The legal protection of software with emphasis on patent – The conflicts, interests and alternatives. Elaborated on Feb/2007 and inserted into Jus Navigandi n. st 1644 of Jan 1 , 2008, p. 2. Available at http://jus2.uol.com.br/doutrina/texto.asp?id=10312&p=2 Accessed rd on: Feb 23 , 2009. 111 ii) in the case of objective explicitness on it, forcing the disclosure […]. Laws in the USA and in some developed countries, follow the first provision, while developing countries pursue the maintenance of the current standard of objective description‖ [32]. Therefore, the description of the application based on the subjective inquiry is another reason why an invention related to the software is prone to patentability in the United States. A computer program, besides not being considered an invention (art. 10, V of Law no. 9,279/96), is a purely abstract conception (not patentable by the art. 10, II of the Law) and also a mathematical method (algorithm) (not patentable by the art. 10, I of the Law) and, if related to a computer, it will not ―turn‖ into a product or process with ―technical characteristics‖ that can be manufactured in the industry (not susceptible to industrial application and not patentable by the art. 8 of the Law). Engr. Abrantes reports that ―patent protection has been significantly expanded at the international level‖ and at the endnote of the article he explains that ―in the United States the decision of the Supreme Court Diamond v. Diehr 1981 starts a series of decisions increasingly expanding the possibility of software patents‖[33]. It is a real fact that the 1981 Diamond v. Diehr case starts a series of decisions increasingly expanding the possibility of software patents, but only in the United States, Japan and EPO. As for the argument that the patent protection ―has been significantly expanded at the international level‖ does not correspond to the reality. The European Parliament recently rejected, in 2005, the software patenting, and the vast majority of developed and developing countries also oppose the patenting. Further, incisively contrary to the protection of any intellectual creation that might be related to computer program, Luiz Antônio Xavier dos Santos 227 points out: The regime of protection for computer programs as invention patent is not liable to privilege, according to the art. 10, item V of Law no. 9,279/96. The program when related to a computer, does not technically alter the functioning of the computer. According to Professor Pedro Resende, only by designing the chip, during the computer project stage, it is possible to alter the functioning of the computer. He exemplifies ―the same way as a disc does not alter the functioning of a turntable‖. A computer program is a purely abstract conception, a mathematical method and is not liable to industrial application. It is not patentable also by the art. 10, items I and II, and by the art. 8 of the IPL. Most of the Patent Offices in the world do not consider the patentable computer program as an invention. The USPTO, JPO and EPO Offices, together, make up the Trilateral Patent Office. Not coincidentally, the three Offices grant software-related patents. __________________________ 227 SANTOS, Luiz Antônio Xavier dos. Op. Cit., p.3. 112 The USPTO and JPO do not follow the TRIPS Agreement, since they do not apply the ―industrial application‖ requirement. They advocate harmonizing the patent system, but the patentability requirements provided at TRIPS are not met and harmonized in their Patent Offices. After the start of the software-related patenting, the United States and Japan also considered the patentable computer programs as business models. In the Brazilian legislation, the business models are abstract conceptions, financial and commercial methods, etc. and are not liable to industrial application as well (they are not patentable by the art. 10, items II and III of the IPL). The logic of the patent system is to privilege the true inventor who invents something creative and something that has an application in the industry. The invention, after a given period, is put in public domain so that the whole society might enjoy its benefits. The increase of the scope of an invention leads to the increase of the private monopoly, and consequently, the reduction of the public benefit, affecting Brazil and the developing countries to have public access to new knowledge and preventing researchers and inventors from developing their own inventions. The software patenting goes against the principles of the patent system that does not accept the patenting of an invention that is vulgar, abstract and has no industrial application. We might partly disagree with this position, because in fact, an intellectual creation related to a computer program (and not the computer program itself) is likely to meet the requirements of patentability and therefore, eligible to obtain a patent. There are several recognized examples and even cited by the author above, since they result in effective technical solution of a technical problem and meet the requirements of patentability (PI9504218 – memory allocation in a printing system; PI9503180 – control of car gears; PI9404321 – image processing MPEG; PI9307625 – television program selection system; PI9306983 – telecommunications system; PI9302550 – encryption system; PI9300395 – graphics window control; PI9203427 – multimedia system task control; PI9107319 electronic mail; PI9105295 – character recoPI 113 recognition; PI8404687 – elevator control; PI8402214 – data printing)228. In this sense the very Patent Office Board BPTO in its Examination Manual of 1991 explains: An invention cannot be excluded from legal protection, provided that the conventional requirements of patentability are met, merely by the fact that for its implementation they use computer programs. Thus, the computer program itself is excluded from patent protection; nevertheless, if the program controls the operation of a computer, even conventional, the unit resulting from the computer and the program combined can be a patentable invention as a method or device. The problems in protecting technologies implemented by software as patents are related to the adequacy of a system that was not initially developed to such technologies. Dan Burck and Mark Lemley229 believe that the best solution for the problematic adaptation of new technologies to the old patent system lies in the correct interpretation of the courts in cases involving patents: Both innovation and patent Law unquestionably work differently in different industries. The law can either take account of those differences or seek to ignore them. Ignoring them would require major changes in existing law, and would leave the law ill-equipped to deal with the fundamentally different ways in which innovation works in different industries. Indeed, given the crisis of confidence the system currently faces, it is not much an exaggeration to say that the patent system must bend or break: a patent system that is not flexible enough to account for these industry differences is unlikely to survive. […] __________________________ 228 Available at www.inpi.gov.br. Accessed on April 22nd , 2009. BURK, Dan L.; LEMLEY, Mark A. The patent crisis and how the Courts can solve it. Chicago: The University of Chicago Press, 2009, p. 167 e 169. 229 114 Courts are better suited than Congress to take account of these changes, but to do so they will have to remain open to considering evidence of those changes. Put another way, legal rules will have to evolve in the common law tradition.230 Notice that, as previously described in the work of Michael Meurer and James Bessen231, there is a legal uncertainty in the delimitation of the limits of patents involving software besides the usual uncertainty related to the possibilities of interpretation of a patent in more traditional technologies; causing a well-defined problem when it comes to dealing equally with diametrically different technologies. Treating as property right (which traditionally has its limits well defined) technologies involving software that are defined through writing and several linguistic possibilities aimed at the future protection of the patent, ends up generating an inadequacy, whose base is on the non-proportional treatment to the inequalities of these technologies in relation to others. Analyzing empirically all lawsuits involving patents in the area of software, biotechnology and business methods in the USA (2002 data), Bessen and Meurer 232 have shown that the percentage of lawsuits in the area of patents involving software is absurdly higher than other technological areas, and in these lawsuits that argue about patents involving software, arguments involving the writing and interpretation of patents are extremely common. __________________________ 230 Translation into Portuguese: Tanto inovação quanto o Direito de Patentes inquestionavelmente funcionam diferentemente em diferentes indústrias. A lei pode ou levar em conta essas diferenças ou procurar ignorá-las. Ignorando-as então irá demandar maiores mudanças na lei existente, e iria deixar a lei mal equipada para lidar com as formas fundamentalmente diferentes nas quais a inovação funciona em diferentes indústrias. De fato, tendo em vista a crise de confiança que o sistema enfrenta correntemente, não é exagero dizer que o sistema de patentes deve se dobrar ou quebrar: um sistema de patentes que não é suficientemente flexível para lidar com essas diferenças de indústrias possui uma improvável chance de sobrevivência. [...]. Tribunais são mais bem preparados do que o Congresso para lidar com essas mudanças, mas para isso eles terão que permanecer abertos para considerar as evidências dessas mudanças. Colocando de outra forma, regras legais terão que ser envolvidas dentro da tradição da common law. 231 Op. cit., p. 198-253. 232 MEURER, Michael J. ; BESSEN, James. Op. Cit., p. 191. 115 Not surprisingly, the highest probability of litigation in the USA is related to business method patents, which are legal in the US system, but not susceptible of protection in the vast majority of other legal systems (e.g. Brazil and Europe do not allow the patenting of business methods). That shows, once again, the more abstract the possibility of writing a patent application, the greater the possibilities of legal indefiniteness of protection and the greater the chances of validity discussion, scope and interpretation. Since in the Brazilian legal system, the business methods are not considered inventions by express legal provision 233, the issue addressed herein focuses on patents involving software. Therefore, the current legal system related to the protection of technologies involving computer programs presents two main problems: the first related to the adequacy itself of the patent system which was not created for the protection of this kind of technology (equal treatment to diverse technologies) and the second regarding the interpretation of this kind of legal protection as to its limits (often ampliative interpretation for the future, blocking and/or putting up barriers of hard definition for the entry and establishment in the competitive market). And, in a perspective of competition, highlighting how the protection systems and the use of technology should be evaluated, by examining the social value of the patent, Denis Borges Barbosa234, states that: Reichmann says that whether the minimal protection or the proper protection or the reasonable protection do not meet more effectively the competition interests should be examined. The value of the patent or the value of the software should be evaluated not in terms of meeting the final utilities, but rather, in terms of the capacity the intellectual property has of increasing competitiveness. __________________________ 233 Law 9,279/96: Art. 10. It is not considered inventions or utility model: III – schemes, plans, principles or commercial, accounting, financial, educational, advertising, lottery and supervision methods. 234 BARBOSA, Denis Borges. An introduction to… p. 637. 116 rather, in terms of the capacity the intellectual property has to increase competitiveness. The value of the patent, in this universe we are in, is not the care for the sick in Africa. The value of the patent, or the comparative value of the several systems of intellectual property, is the capacity the patent has to provide a greater competition in the market. Within the assumptions that the hand of the market caresses and fondles everything and from it come all the benefits of mankind, the patent, the copyright, the MP3, all this new, and ever new systems of protection and the use of technology should be evaluated in their capacity to increase competition. Therefore, there are currently two well defined problems in the protection of technical solutions involving computer programs: One of them related to protective base that disregards the principle of equality of material goods and the other one disregards these very peculiarities when interpreting the patent protection involving software in the market (indefiniteness of the limits of protection). Regarding second use patents, the first problem described as to the disregard of the principle of equality of material goods based on factor related to the peculiarities of each technology is also identified. As mentioned above, an immediate effect of the mentioned problems on the application of the patent law is that it might turn into an inhibitor of competition in the formation of barriers to entry or even unduly increase of the cost of rivals. Another problematic issue in the current patent system is the treatment given to the patents for second medical use235 (or even first 236 or third237 medical use). ________________________ 235 A new medical use for a particular product/compound that is already used as medicine for another purpose. 236 A new use, as medicine, of a product/compound that is already known, but was never used in the medical field. 117 The definition of patent for second medical use, given by the BPTO in its public discussion on patentability of such technologies, is that ―The invention of second medical use is based on the account of a new therapeutic activity of a chemical compound already known, aiming at producing a product with different purpose from the one already applied to the state of the art‖238. That is, the inventions of second medical use would be those that developed a new purpose for a chemical compound already known, being, in theory, patentable should it meet the requirements of novelty, inventive step and descriptive sufficiency239, since the requirement of industrial application, if understood in its broadest sense, is easily met in this technological area. There are several arguments against the granting of patents for second medical use, and one of the major ones concerns the lack of novelty, industrial application and inventive step or the existence of inventive step in a minor degree (since the compound or the active principle already existed, so the research and application to treat a diverse pathology would be more associated with the finding than ___________________________ 237 A new medical use for a particular product/compound that was already used as medicine for a specific purpose, as well as, subsequently, for another purpose and, eventually, is researched and developed for a third medical purpose for that product/compound. 238 Available at <http://www.inpi.gov.br/menu-esquerdo/patente/discussoes-tecnicas/diretrizes-paraoexame-de-pedidos-de-patentes-na-area-de-segundo-uso-medico/>. Accessed on Dec. 20th , 2009. 239 According to these interim guidelines still under discussion at the BPTO, the definitions of novelty, inventive step, industrial application and descriptive sufficiency are as follows: 3. NOVELTY: The second use to be considered new should be substantially different from the use already revealed in the state of the art. The patent application of second medical use should reveal the application of a pharmaceutical product already known to treat pathology/ clinical status different from the one for which this product was already applied in the first use. 4. INVENTIVE STEP: The second use invention is endowed with inventive step whenever, for a skilled technician, it does not occur in an apparent and obvious manner of the state of the art. However, in this particular area, some aspects should be carefully observed for measuring this requirement: a) the mechanism of action; b) relation therapeutic activity-chemical structure; c) etiology of target diseases. 5. DESCRIPTIVE SUFFICIENCY: Clinical approach? Description of the stages of clinical trials? Experimental tests in vivo associated with tests in vitro? 118 than the invention as to the inventive step requirement). To solve this problem of meeting or not the requirements of patentability (novelty, inventive step, industrial application and descriptive sufficiency), the advanced public discussion itself established by the BPTO starts to outline specific considerations lest second use patents be granted without technical criterion and without the accurate examination of their patentability requirements. Moreover, analyzing European, Japanese and Chinese cases of granting of second use patents, within the scope of technical discussions debated at BPTO, Flávia Riso Rocha240, notes that: - When the claim is related to a class of compounds: analyze carefully whether there is ground for such comprehensive claim. - New use should be substantially different from the known use; it‘s not only about a new form of expression, or more generic or more specific expression of the known use. - New use cannot be inferred directly by the mechanism of action or by the pharmacological action of known use. The use invention of a known compound is considered inventive if the new use cannot be derived or expected from its structure, composition, molecular weight, known physicochemical properties and use already revealed for such product, but it uses a newly discovered property of the product and leads to an unexpected or advantageous technical effect. On the other hand, which is also cited by the same author in the abovementioned work, Argentina and India are examples of countries that do not grant second use patents, and the arguments for not granting such patents are: Indian Office Indian Patent Act (2005) __________________________ 240 Available at: <http://www.inpi.gov.br/menu-esquerdo/patente/discussoes-tecnicas/diretrizes-paraoexame-de-pedidos-de-patentes-na-area-de-segundo-uso-medico/>. Accessed on Dec. 20th, 2009. 241 Op. Cit. 119 Section 3(d) of the Patent Act (1970): the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.242 Argentine Office Second use patents are not liable to protection: - Claims like: ―use of compound X (known) to treat disease Y‖: is equivalent to a therapeutic method. - Claims like: ―use of substance X (known) to produce a drug to treat disease Y‖: lacks novelty, since the compound is already known for medical use, as well as the drug manufacturing process. - Claims like: ―process to manufacture a drug for the treatment of an illness and characterized by containing the compound X (known)‖: lacks novelty, as above-mentioned. The novelty of the manufacturing process is not derived from the new therapeutic use, since the composition is already known. That is, we go back to the interpretation fundamentals for the definition of whether or not second use patents are likely to meet the patentability requirements. Once these requirements are met, we should take heed of the fact that the protection granted by the second or third use patent is as comprehensive as the one granted to any other patent, i.e., even if the so-called ―inventive potential‖ related to second use patents is smaller than the one related to other intellectual creations eligible for protection by patents of invention, the ―privilege‖ is granted without any difference, which demonstrates, in practice, an equal treatment to diverse ―inventive potentials‖, going against the equality principle materially considered. It is seen that the analysis of the fact that the second use patents meet the harmonic preponderance of the utilitarian theories and the social planning theories, despite _________________________ 242 Translation into Portuguese: Patent Act Indiano (2005). Seção 3(d) do Patent Act (1970): a simples descoberta de uma nova forma de uma substância conhecida a qual não resulte em reforço da conhecida eficácia desta substância ou a mera descoberta de qualquer nova propriedade ou novo uso para uma substância conhecida ou o mero uso de um processo conhecido, máquina ou aparelho a não ser que este processo conhecido resulte em um novo produto ou empregue pelo menos um novo reagente. 120 despite having a direct relationship, is different from the analysis of meeting the principle of equality of material goods considered under the premise of technological diversity. It is important to highlight some considerations brought by Charlene Maria Coradini de Ávila Plaza243: When we face the practical scope of the use claims it is important to reflect on three unique questions. The first one is the legal possibility of formulating a claim that would result in a patent directed to the use or not for the product or previous process, so as not to confuse the public and the competitor by the new title. The second question concerns the effectiveness of this patent, because logically, granting this privilege we have to have an exact notion of how the position of the contestants who have the previous privilege or benefit from the technology in public domain would be, and eventually, reconcile the social interests with the second use patent claim in practice. In Brazil, we must call attention to the huge debate raging between ANVISA (National Health Surveillance Agency) and the BPTO concerning the possibilities or non-possibilities of granting second use patents 244. In this sense, Eduardo Ribas De Biase Guimarães245 says: The granting of patents involving second medical use – also known as ―Swiss formula‖ – is not the only type of controversial claim in the field of intellectual property of drugs. It will be highlighted here because it was an object of official resolution of ANVISA Collegiate Board – which did not occur to any other type of claim – which generated broad debate. It is worth mentioning the arguments of industrial property agents, class organizations and ANVISA members over the issue. __________________________________________ 243 PLAZA, Charlene Maria Coradini de Ávila. Patent protection and innovation in pharmaceutical industries: evergreening mechanisms and fair followers alternatives. Annals of the XVII CONPEDI (National Council for Research and Post-Graduation in Law) National Congress, held in Brasília th st nd – DF on November 20 , 21 , 22 2008. 244 BPTO considers as susceptible to patentability, provided that the legal requirements are met and ANVISA considers as non-susceptible to patentability. When it comes to the richness of the debate and the international controversy itself on the topic, it is noted that the legal role of ANVISA in this discussion is totally inappropriate, since it is not up to it to legally analyze patentability requirements. 245 GUIMARÃES, Eduardo Ribas De Biase. Right to Health and Drugs Intellectual Property in Brazil. National Health Surveillance Agency prior consent. Dissertation submitted as partial requirement for obtaining the Master‘s Degree in Collective Health, Postgraduate Course in Collective Health – a major in Humanities and Health Science of the Institute of Social Medicine from Rio de Janeiro State University. Rio de Janeiro, 2008, p. 51-53. 121 Second medical use patents refer to a patent medicine whose active principle – namely, the substance in the composition that is responsible for its therapeutic effect – is an old molecule that shows an unexpected new therapeutic use. According to Correa (2006, 2007), even though they are allowed in some countries, their patentability is not expressly required by the TRIPS – which only forces the granting of patents on products and processes. As a common practice in the pharmaceutical field, the author points out that these applications are inconsistent with the novelty requirements – since the compound to prepare the drug as well as the drug itself would already be known – and with the industrial application – since the novelty would be, in these cases, an identified effect on the human body, and not the product itself or its manufacturing method. He finally points out that the second medical use patent is substantially equivalent to a therapeutic treatment method; something that is not subject to private ownership in most countries. Other critical insights highlight the fact that new uses are simple discoveries related to a product already known, i.e., they would be a mere disclosure of an already existing feature in the product in question. The patenting of discoveries is universally forbidden in the intellectual property system. However, some experts say that the applications that involve the ―Swiss formula‖ are not random discoveries, but rather the result of research, analysis and investments, and therefore, they represent patentable inventive steps. There is no international consensus on the issue. As TRIPS does not require the granting of these patents, the national industrial property offices have been adopting different approaches. The Andean Community60, for instance, in official resolution, opted to reject the second use patent. 61 The United States and Europe, in turn, considered it patentable. It is important to remember that the legal controversy over the issue has a long history. Ferrier (1994), analyzing these legal impasses in Europe, especially in the history of the French patent system, says that the second pharmaceutical application was not considered patentable for a long time. In 1960, when the decree no. 60,507 introduced for the first time the drugs patent protection in France under a specific title (brevet spécial de médicament), it was clear that only the first application could be protected, and all subsequent applications were thus not patentable. This same principle, of the limitation of the first application, was also restored by the February 2nd 1968 French law, when the drugs first entered the general patent act framework. Talking of the main opinions of judges and lawyers about the issue, the author highlights that there was no consensus on the possibility of such claim meeting the novelty and inventive step requirements. In the Brazilian scenario, it is noted the fact that the patenting of new applications of an object already known has been traditionally accepted. At the same time, there are opinions of experts indicating that the use patent would not be possible in the current Brazilian legal conjuncture. Added to this situation of uncertainty, the current Industrial Property Law does not contain a specific provision that expressly forbids a second application in the pharmaceutical field (Barbosa, 2004). The BPTO, within this controversial context, decided to accept this type of claim, as shown in the excerpts below taken from the guidelines for the examinations of patent applications in biotechnology and pharmaceutical fields: There are two basic types of claims: those related to objects (compounds, products, appliances, devices, etc.) and those related to activities (processes, uses, applications, methods, etc.). ´[…] 2.39 Second use inventions 122 2.39.1 These inventions can be of two types: (i) a new use, as a drug, of an already known product used outside the medical field (first medical use); (ii) a new medical use of a product already known as a drug (second medical use) […] 2.39.2.4 Claims such as: i) Use of product X characterized by the preparation of a drug to treat disease Y. j) Use of product X characterized by the preparation of a drug to treat disease Y, treatment that consists in such and such. They are known as ―Swiss formula‖, and are almost exclusively used in second medical use inventions. They are patentable, observing the considerations contained in the items 2.23 above. If there was differential treatment to deal with technical solutions involving second medical use (among other technologies) the controversy over the analysis of patentability requirements as well as the adequacy of the current protection to these solutions would be solved. When the second use patents are analyzed from the perspective of the Decree no. 1355, 12/30/1994 (TRIPS Agreement), it can be seen that the provisions of the article 27.1246 of the above-mentioned Agreement cover the protection for second use patents, provided that the elastic patentability requirements established by the TRIPS247 are met. This is because at TRIPS, all technologies that meet such requirements and that are not expressly excepted by other provisions of this Agreement, are subject to patent ___________________________ 246 Article 27. Patentable Subject Matter: 1. Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. Subject to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article, patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced. 247 It is important to note that besides the hermeneutic open space of the concepts of inventive step and industrial application, TRIPS makes an explicit reference in footnote, that For the purposes of this Article, the terms ―inventive step‖ and ―subject to industrial application‖ can be characterized by a Member as synonymous with the terms ―non-obvious‖ and ―usable‖. Such caveats harmonize TRIPS with the U.S. treatment of the patentability requirements and with those countries that follow the designations of these patentability requirements even more elastically. The problem established at TRIPS (which concerns the present thesis) is that ALL technical solutions that comply with the article 27.1 (except for the exceptions contained in this very Agreement) are subject to patent protection and these patents have a less than 20-year term (article 33 of the same Agreement). That is, within TRIPS, considering the applicable provisions to the area of patents, there is no way to establish technological factors both based on the type of protection and based on the validity extension of that protection. 123 patent protections with equal rights and obligations 248. In this sense, Maria Thereza Wolff and Paulo de Bessa Antunes249 state that: The importance of research on other uses of known molecules grows enormously today, since it has become prohibitively costly the search for new molecules for invention of drugs, from their initial research to the sale in the drugstore shelves. Thus, the new therapeutic effects have been given vital importance in technological research and the patent protection is absolutely necessary as an incentive for clinical trials and the Research and Development (R&D). It is important to note that in the development of a new molecule there are several lines of research, a primary one and the others secondary. The granting of patents for second medical use has the great merit of serving as stimulus so that the secondary lines are developed and, often, the secondary lines become the primary. We are talking about new inventions and not random ―discoveries‖, since with the invention of known drugs for the treatment of other diseases there are entirely different circumstances that will have to be tested. The new use results from research, analyses and investments and not from a mere chance, as those who oppose the second use patenting want it to be. Actually, there can be no justification to discriminate the first and the other uses since all represent patentable inventive step, the chemical may be the same though. The research is protected and paid for as an inventive work, not obvious or with an evident industrial utility. It seems that one of the TRIPS Agreement problems is precisely the lack of flexibility in enabling a temporal modulation or protective extension of the technical solutions that are essentially diverse from those traditionally and originally provided as susceptible to protection by the patent system. ___________________________ 248 Taking as an example, the Argentine PTO interpretation to refuse to grant second use patents is formally in accordance with TRIPS, for either it recognizes the lack of novelty or recognizes it as a therapeutic method, not violating the provisions of this Agreement (at least formally considered). Now, the biggest problem with such interpretations that generate either the possibility of granting patents for second use or its mere non-granting is exactly in the extremism of such options, disregarding immediate solutions based on the application of the equality principle. Technical solutions focused on the second use clearly have a lower level of inventive potential in relation to the technical solutions of development of an entirely new compound to cure AIDS, for instance. Using this same compound, adapted for the treatment of cancer clearly spared the compound identification inventive step. By simply saying that the protection will be proportional to the one that was created as plus to the compound initially developed and by saying that there will be dependence among the patents does not establish a sufficient factor for the fulfillment of the equality principle materially considered. 249 WOLFF, Maria Thereza; ANTUNES; Paulo de Bressa. Patents for second medical use. BAIP Journal, N. 74, p. 53, Jan/Feb. 2005. 124 It is worth observing that the terminology used or the framework used in the treatment of intellectual creations applied in the industry that have a load of inventiveness and an expression form of technical solution for a differential technical problem, is not uniform. That is because while utility models are not considered patents250 worldwide, in Brazil, through the Law 9,279/96, they are clearly arranged as a kind of patent251, generating, since then, some confusion concerning the terminology applied to it. It is a fact that the technical solutions that have ―lower level of inventive step‖ and are applied in the day-to-day industry, also known as improvements, are usually called ―small patents‖ or ―minor patents‖ internationally. Besides Brazil, many countries provide protection for these intellectual creations as lower level of inventive potential technical solutions, granting a shorter period of legal protection than the one granted to patents of invention. While patents of invention, by express provision of the TRIPS Agreement cannot have a less than 20-year term from the date of the filing of the patent application or the date of the first claimed priority, usually, the utility model (or utility model patents as referred by the Law 9,279/96), when accepted in national legal systems, have a term equal to or less than 10 years252. __________________________ 250 A clear example of this is the Paris Convention itself that, in its article 1, item (2) does not consider the utility models as a kind of subspecies of patents: The protection of industrial property is aimed at patents of inventions, utility models, industrial models or designs, service trademarks, business name and the indications of source or the descriptions of origin, as well as the repression of unfair competition. 251 Law 9,279/96: Art. 8 The invention that meets the novelty requirement, inventive step and industrial application is patentable. Art. 9 It is patentable as utility model the object of practical use, or part of it, susceptible to industrial application, that presents a new form or arrangement, involving inventive step that results in functional improvement in its use or in its manufacture. 252 Except for Brazil, Honduras, Japan, South Korea and Malaysia, which have legal provision of protection for utility models for 15 years, the vast majority of other countries that grant protection for utility models (e.g., Germany, Argentina, Austria, Belgium, Bolivia, Chile, China, Colombia, Denmark, Ecuador, Finland, France, Italy, Mexico, Peru, Russia, South Africa, Spain, Turkey, Venezuela, UAE, among others) have protection terms equal to or less than 10 years only. 125 That is, in many countries this kind of higher industrial protection is provided (called Gebrauchsmuster in Germany) and, when it is not provided with another term, it can ―fit‖ into the requirements for patentability of inventions that end up being more elastic253. It is interesting to note the proximity of the concepts of invention and utility model, and it is worth quoting the teachings of João da Gama Cerqueira 254 analyzing such institutes still under the aegis of the old Industrial Property Code: 25. In principle, not only the creation of an entirely new product, previously unknown or nonexistent is considered an invention, which is in fact very rare, but also products created by the modification of analogous products or similar ones, which have their own characteristics. It cannot be concluded, however, that mere changes in the shape, size or proportions of objects or products always constitute inventions. In general, such changes do not constitute an invention. If it were otherwise, anyone could become an inventor and obtain a patent, by simply increasing or decreasing the size of an object, by changing its proportion or modifying its shape or ornamentation. In Germany, for instance, it was recognized that such modification in the dimensions and proportions of a gas burner, based on experimental observations, allowing it to get lighting power significantly higher with the same consumption of gas, was enough to characterize an invention. […] 284. The object of the right over a utility model and, therefore, over the respective patent, it is the model itself characterized by its shape and structure, by the arrangement of its elements or by its devices. Unlike the inventions, the object of the right, in this case, does not consist in the idea or conception of the model, in the inventive idea (n. 218 above), but, as we have said, it consists in the model itself, concretely considered and limited by the novelty of its form. As we have seen at no. 89 of the volume 1, the protection of utility models does not extend beyond the particular form that characterizes them, while the object of the invention patent does not consist in the form that the invention is carried out, but in the idea of invention, in which the form appears only as a means of application of the forces of nature. __________________________ 253 It is the example of the USA, since the patentability requirements there are more elastic (nonobvious and useful instead of inventive step and industrial application) many utility models, so named in other countries, are eligible for protection as ―Utility Patents‖ in the USA. It is noted that in the USA the term ―Utility Patent‖ is used to define the form of protection for inventions and to differentiate from the term ―Design Patent‖, because there is no protection in the USA in the form of ―Utility Model‖. It is interesting to note that in Brazil the industrial designs are not considered patents and in the USA they are (Design Patent), and there they are submitted to substantive examination before the granting of the Design Patent, which does not occur here in Brazil regarding the records of Industrial Designs. With these observations, we conclude that it is important to note that under the designation and requirements of Utility Patents in the USA, the protection of the so-called Utility Models in other countries is often possible there. 254 CERQUEIRA, João da Gama. Op. Cit., p. 56 and p. 379. 126 Also dealing with utility models, already considered in the current reality, Denis Borges Barbosa255 teaches that: Under Brazilian law, as well as under Argentine, German, Greek, Italian, French and Japanese law, for instance, together with the invention patents a special kind of protection for the so-called utility models subsists. Restricted, as a rule, to improvements or enhancements of tools, equipment or parts, such small patents protect the creativity of the worker, the production line engineer, the small inventor and the artisan. In theory, it is the tutelage of the improvements resulting in greater efficiency and convenience in any physical apparatus. According to the Law 9,279/96, utility model is ―the object of practical use, or part of it, susceptible to industrial application, that presents a new form or arrangement, involving inventive step, that results in the functional improvement in its use or in its manufacturing‖. As basic criterion, the national laws require meeting lower requirements for granting the patent, and they provide shorter terms, or more restrictive protection conditions. In France, for instance, the report of the state of the art for granting certificates of utility is exempted – lower cost to the inventor. In Brazil, most of the national authors‘ patents are classified as utility model (or UM). The notion of invention clearly houses the utility models. Later in the same work, when dealing with the relations of utility model with the TRIPS, Denis Borges Barbosa256 states that: There is no reason for the incentive system to invention of countries like Brazil to restrict itself to the great and noble invention patents. It seems reasonable that, as part of a temporary program, an official system for rewarding simple innovations, improvements in the concrete productive process be founded, without questioning the inventive activity, or even the objective novelty. Alternatively, the program could provide advisory support or be in charge of the promotion of encouraging activities under each company domestic policy responsibility. Particularly notable the trend of the current intellectual property law of reducing the requirements regarding the originality and creativity, the protection of new technologies turns out to be more a guarantee of the investment than the creativity itself. Thanks to this trend – and without the slightest consideration for the most restrictive levels of inventiveness of the developing countries – the rules of TRIPS do not oblige countries to establish __________________________ 255 256 BARBOSA, Denis Borges. An introduction to…, p. 567. Op. Cit., p. 571-572. 127 establish any system of protection for minor inventions and improvements, leaving that decision to the national criterion. Since the 1925 Hague Revision of the Paris Convention it is already provided, internationally, the utility model protection257. To conclude, it is worth quoting Barbosa‘s258 considerations regarding the problematic definition of the inventive step requirement as an ―inventive activity in lower potential‖ for granting patents of utility model (or utility models only): As already seen, the ―inventive step‖ is an essential element of the utility model. It is hard, however, to discern the difference between ―evident or obvious consequence of the state of the art‖ typical of invention patents, and the ―common or vulgar consequence of the state of the art‖, typical of the models. Is the subjective parameter relevant? Would the skilled technician, the judge required in the inventive step, be replaced by a layman in the inventive act case? What‘s the fine line between an invention that is clear or obvious and the one that is common or vulgar? So, it is in this seamless limit that the Utility Model shall exist in its new version. As we read on the European Community Directive proposal on MU, the inventive step should be the requirement that, relative to the state of the art, the invention is not very obvious for an expert in the field. This formulation establishes that the protection for utility model requires inventive data, and not only novelty. However, the gradation proposed at the EC that corresponds to the word «very» would indicate that such piece of inventive data is not inferior to the one required for the patent. A formulation like this exists under certain national laws on utility models. It is about a technical or practical benefit for the utilization or manufacturing of the product or process in question, or another benefit to the user, as for instance, an educational benefit or a value in terms of entertainment. __________________________ 257 The original text of the PC of 1883 (Decree no. 9233 of June 28, 1884) in its article 2 did not mention utility models, they were only treated in the article 1, paragraph 2 of the 1925 Hague Revision (Decree no. 19056 of December 31, 1929), according to the original texts as follows: PC of 1883, article 2: Nationals of any country of the Union shall, as regards the protection of industrial property, enjoy in all the other countries of the Union the advantages that their respective laws now grant, or may hereafter grant, to nationals; all without prejudice to the rights specially provided for by this Convention. Consequently, they shall have the same protection as the latter, and the same legal remedy against any infringement of their rights, provided that the conditions and formalities imposed upon nationals are complied with. PC of 1925 (Hague Revision), article 1, paragraph 2: The protection of industrial property has as its object patents, utility models, industrial designs, trademarks, service marks, trade names, indications of source or appellations of origin, and the repression of unfair competition. 128 What matters to analyze is precisely the provision of a differential protection based on a lower inventive potential expressed in specific intellectual creations, i.e., the existence of a factor of discrímen based on the inventive potential. As the inventive potential is considered lower in the utility models, the solution was to give a protection time lapse equally lower, in order to enable different protection for different technical solutions. This is an example of the application of the equality principle in its material dimension historically inherent in the industrial property, i.e., there is a factor of discrímen which considers the degree of inventiveness or even a mixture of the degree of inventiveness with the technological area so that, because of this, it grants a shorter term of protection in relation to the one provided for other intellectual creations that are expressed as higher inventive potential solutions for technical problems. __________________________ 258 Op. Cit., p. 569-570. 129 5 LIMITS OF THE CONSTITUTIONAL HERMENEUTICS AND THE SYSTEM OBSTACLES Within the integrative perspective, in which the hermeneutics tries to understand the best solution for every factual situation, the constitutional and infraconstitutional mechanisms outline parameters for an integrating systematic interpretation, eliminating the ever apparent conflicts. Hermeneutics provides suitable answers within a limit of a minimum of legal predictability, and it is not up to it to create rules and principles, but rather understand them and topically apply them, especially highlighting the teachings of Vicente de Paulo Barreto259: The process of constitutional hermeneutics, assumes, therefore, the consideration of values and social and political conditions, which dictate its roots in a moral understanding of the political body. It is not confused with a semantic game or with the understanding of the application of the law as the mere subsumption of the positive norm valued to the social facts. For this reason, the contemporary constitutional hermeneutics cannot be restricted to the interpretive processes typical of the understanding of the law, as a dogmatic system to be read semantically. The hermeneutic process implies more than a simple, seductive observation and acceptance of the existence of rules. The contemporary constitutional hermeneutics, specifically to serve the function of interpreting specific guidelines, which are legitimated by the democratic state of law, takes place in the argumentative process, where the values that precede the very construction of the constitutional order are present. The contemporary constitutional hermeneutics lives a similar situation to the one found in the advent of the protestant interpretation of the body of tradition: and it is not currently about the creation of new mechanic methods, which replace the old ones, but about a new conception of the object under analysis, the legal phenomenon in question, through its hermeneutic reading. Only thus, can the legal interpretation integrate into the broader framework of the contemporary hermeneutics, as it is found formulated and accepted in the humanities and social science field. ________________________ 259 BARRETTO, Vicente de Paulo. From interpretation to constitutional hermeneutics. In: CAMARGO, Maria Lacombe (Org.). 1988-1998: a decade of Constitution. Rio de Janeiro: Renovar, 1999, p. 18. 130 Always seeking to examine hermeneutics within a realistic view of the being, which is undoubtedly made up of its pre-understanding, it is important to emphasize the words of Gadamer260: The overcoming of all prejudice, this global demand of Aufklärung, shall prove itself as prejudice whose revision will give way to a more suitable understanding of the finitude, which not only controls our human character but also our historic consciousness. Is it true that finding oneself immersed in tradition means at first hand be subjected to prejudices and be limited in their own freedom? Is it not right, rather, that all human existence, even the freest one, is limited and constrained in many ways? And if it is right, then the idea of an absolute reason does not represent any possibility for a historic humanity. For us, reason only exists as real and historical, that simply means: reason is not the owner of itself, because it always refers to the side on which it plays its role. That is, there is a historicity of the pre-understanding and the understanding, but it is the pre-understanding that constitutes us, since truth goes beyond the method. One of the pre-understandings that is part of the patent system is the one related to the assumption that the patent system itself, considered in its essence, has more benefits than costs. Such pre-understanding is only partially true, as demonstrated by several authors cited here regarding the problems raised by the patent system in certain technological areas. In order to undo some pre-understandings, the most important understanding is to temporarily situate the patent system and understand that it has not gone through substantial adaptations in its evolutionary history, since it has been about a century of a certain international stability when it comes to the requirements for obtaining a patent, despite a current increasingly technological evolution, as highlighted by Marcos Wachowicz261: __________________________ 260 GADAMER, Hans-Georg. Op. Cit., p. 367. WACHOWICZ, Marcos. Reflection on the technological revolution and the intellectual property tutelage. In: ADOLFO, Luiz Gonzaga Silva; MORAES, Rodrigo (Coord.). Rio de Janeiro: Lumen Juris, 2008, p. 303. 261 131 The process of social assimilation of new technologies and the legal planning of social changes produce a kind of misalignment between the technological evolution and the adaptation of Law to new social situations. This is an extremely significant and relevant issue given the recent Technological Information Revolution, in which the socio-technological evolution has acquired an exponential rhythm, of which Law resents a kind of slowness for necessary changes in the legal planning. However, the adjustments and adaptations of the legal planning in the face of the socio-economic evolution are essential and unavoidable, even if they occur later. Obviously, before the TRIPS Agreement there was more national liberty to establish a patentable issue or a non-patentable issue, to define what was considered to be invention or not, among other liberties that existed in a system that only provided minimal standards recommended for technology protection without imposing sanctions or international repercussions. That non-authoritative secular system composed by rules providing more traditional technologies262 turned into a mandatory observance system, more uniform, disregarding the evolutionary stage of each country 263 and without the proper adequacy to the peculiarities of different new technologies created 264. These aspects are not exempt from a constitutional filtration concerned about an integrated and harmonic system that eliminate, within the possibilities of the world of _________________________ 262 1883 Paris Convention (currently in force the 1967 Stockholm Revision) without imposing any kind of imposing norm regarding the non-positive discrimination. 263 No matter how much it is alleged in the demonstration of reasons at TRIPS to have an attitude Recognizing also the special need of least-developed countries Members in respect of maximum flexibility in the domestic implementation of laws and regulations in order to enable them to create a sound and viable technological base, the fact is that TRIPS, while agreement in the international field as it is, privileged the bargaining power and the specific interests of countries most able to impose their will. This noteworthy fact does not create the possibility of noncompliance of this Agreement, but it demonstrates a need for harmonization and some reading of it in line with the 1988 Brazilian Federal Constitution. 264 As already pointed out above, TRIPS provides in Article 27.1 a non-discrimination clause based on the technology differences, as follows: Article 27. Patentable Subject Matter. 1. Subject to the provisions of paragraphs 2 and 3, patents shall be available for any inventions, whether products or processes, in all fields of technology, provided that they are new, involve an inventive step and are capable of industrial application. Without any damage to paragraph 4 of Article 65, paragraph 8 of Article 70 and paragraph 3 of this Article, patents shall be available and patent rights enjoyable without discrimination as to the place of invention, the field of technology and whether products are imported or locally produced. 132 of facts, most of the system disintegrating clashes, since the relations established between Constitutional Law and Private Law constitute a necessary linkage. In a preliminary analysis between the Constitutional Law and the Private Law, Paulo Bonavides265 clearly shows his constitutionalist vein concerned about the integration and harmony of the legal system: Both all other branches of Public Law and the Private Law find themselves in a position of inferiority and submission – never of equality and coordination – in the face of Constitutional Law. This is the one that, in a privileged way, heads the legal planning, outlining the basic rules of the normative system. Such statements demonstrate that every infraconstitutional legislation should be interpreted in accordance and compliance with the constitutional axiological harmony, since TRIPS, PC and IPL, although their particular rules have a higher or lower extent over private and public interests, should be interpreted in accordance and compliance with the Brazilian Federal Constitution. In this integrating movement that seeks to keep away the existing clashes in the system, Ângela Kretschmann266 highlights: What should be understood, in the midst of so much controversy, is that the protection system can serve and, should aim at precisely reconciling the conflicting interests, provided that appropriate rules are focused on protection, without exaggerating the power granted to the author or holder. Actually, a suitable system can serve conflicting interests, all is needed is establish benefits in a balanced form. In order to get it done, it is necessary to respect the rules on competition, seek to balance the interests between domestic and foreign market, considering that the economic globalization has imposed limits to the government social and political action itself, within the ambit of Intellectual Property. __________________________ 265 BONAVIDES, Paulo. Constitutional Law Course. 11. Ed. São Paulo: Malheiros, 2001, p. 33. KRETSCHMANN, Ângela. Intellectual Property Rights and Human Dignity – Re(visting) the Copyright in the Digital Age. Florianópolis: Conceito Editorial, 2008, p. 223. 266 133 Identifying the harmonic organization of the legal system, within a hermeneutic analysis involving equality and property rights, important lessons are highlighted by Ricardo Aronne267: While the guarantee of private property is a special principle which concretizes the general principle of liberty, the social function of private property is to densify the equality principle. Equality and liberty have a sense remelted from the one that emerged from the liberal constitutions. They concretize the principle of human dignity as a fundamental principle that connects directly to the Social and Democratic State of Law. […] In each normative interpretation, the whole system is being interpreted, implying a process of concrete re-legitimation of law, whenever it occurs. It occurs, because every time the Law is put into effect it holds a different meaning. When this new meaning is not revealed, it implies a denial of jurisdiction, since it would be unnatural and insecure for a law along the years, to remain untouchably the same. Property is not far from other institutions at this point, without damage of the several economic myths whenever it might want to do otherwise. The meaning that the economic system might want as to the ownership entitlements goes through the mediation of the legal system in order to acquire a meaning, or at least cogency. Juarez Freitas268 brings fundamental contributions to understanding the limits and possibilities of an integrating topic-systematic interpretation of the system: For these reasons, we urge not to treat the interpreter like a passive reagent to the established system, observing to prepare him for the arduous, painful and not always well-made exercise of continuous vigilance on the proportionality of his axiological considerations. The interpreter systematizes – although does not create the Law (in terms of legislative production) – by simply not surrendering to the supposed absolutism of the normative prescriptions. By doing so, he draws limits to the legislator‘s own mission, who cannot, in respect to the constituent power, engender antinomies that pose special risks to the survival of the founding elements of the Positive Law. Such sensible and rational attitude – in the communicative sense of the term, explained in the previous chapter – does not get confused at all with the pure discretionarity advocated by many, even less with the discretion that is anchored in fallacious arguments. The interpretation makes choices, yes, chooses solutions, but it never does it indiscriminately, although there is __________________________ 267 268 ARONNE, Ricardo. Op. Cit., p. 106-107. FREITAS, Juarez. Op. Cit., p. 76-77. 134 not ―the‖ right interpretation, it remains bound to the indeclinable duty of finding systematically better solutions, at least as serene pretense. It is in this pretentious way – in a good sense – that a hermeneutic harmony is sought after, based on the application of the equality principle as the patent system harmonic base while a constitutionally assured consideration of a factor of discrímen grounded on the natural differences of each technology submitted to protection by the patent system. As pointed out by Gonzaga Adolfo 269, the challenges of a constantly changing society are many, but all of them are subject to adaptation on behalf of a more just and fraternal society: Of course, the reality surrounding the topic under discussion, particularly as related to the fantastic technologies that daily emerge and get improved, is so complex and overwhelming that it is feared, as it is being written, being already overcome by it. That is, a topic, just like most others, that is ―open‖ and around which constructions that will timely be made will dictate the direction that will be taken in a society that, while incessantly seeks knowledge and information, might see in authors and intellectual creations the exact dimension of a world where they, given the freedom of expression, can be the cause and consequence of a new reality of balance, freedom and social justice that are sought to erect. In this regard, the constitutional hermeneutic helps the interpreter topically analyze each technological area within their specificities and, after these specificities are considered, by knowing the intellectual creation for which the protection or the exercise of rights resulting from this protection in the patent system is sought after, the analysis of the limitations imposed by the free competition principle and by a finalistic delimitation of the patent system itself towards an observance of a harmonic preponderance of the utilitarian theories and the social planning theories is made possible. __________________________ 269 ADOLFO, Luiz Gonzaga Silva. Private works, collective benefits: the public dimension of the copyright in the information society. Doctoral Thesis at the University of Vale do Rio dos Sinos – UNISINOS, São Leopoldo, 2006, p. 349. 135 However, there are limits to the hermeneutic performance that require an own legislative movement so that there might be adequacy to the current reality. As previously mentioned, the patent system was not created internationally harmonized to cover innovative technologies like those that are housed by the system today, such as patents involving computer programs, second medical use, biotechnology, among others. That is, the system established treats equally diametrically different technologies, requiring the same patentability requirements and granting the same term of protection, creating a harmful effect under the axiological perspective of the patent system in its harmonic functional character, being noteworthy to mention the already cited author Celso Antônio Bandeira de Mello270 regarding the importance of differentiation inherent to the equality principle: Now, the isonomy principle states that equal situations be treated equally and unequal situations be treated unequally. Hence there is no way to unequalize people and situations when unequal factors are not found in them. And finally, as repeatedly commented, it is important moreover that the regime differentiation be correlated with the difference that has been taken into account. If the protection granted starts to be considered exacerbated over time and starts to represent a clash with the technological essence of the object of the mentioned protection, the use of hermeneutics as a corrective instrument of the clashes faces legal structural obstacles to an integrating correction. _________________________ 270 MELLO, Celso Antônio Bandeira de. Op. Cit., p. 35. 136 Taking as an example, if the average life of a technology involving computer program is 10 years, the 20-year protection for patents, legally provided and that enables the existence of dependable technologies subject to dependence license271, becomes exacerbated, but without being able to be solved through hermeneutics for the reestablishment of the excessive protection. The base of such problem is the disregard of the equality principle establishing the temporal term of protection. Another example is directly related to the level of protection of a patent. If this level of protection is high (ampliative interpretation of the protection granted to a patent272), there will be more difficulties for competition to be established at ideal levels, once the possibility of third parties patent infringement as well as the creation of parallel invention is high, there will be a real discouragement to competition in that specific technological area. Once again analyzing the issue from an economic point of view, Posner and Landes273 highlight: The greater patent protection is, the smaller the benefit to competitors from the information contained in the patent Grant because the less they can do with it. They will face greater difficulty and higher costs in inventing around the patent, a high probability of losing a patent infringement suit, and greater sanctions if they lose. Their marginal cost curve will be steeper or, equivalently, the elasticity of supply lower, making the residual demand curve less elastic and thus enabling the patentee to charge a higher price and _________________________ 271 Problem already identified, among other authors, by Carla Eugênia Caldas Barros in the work cited Improvement and dependence on patents. Rio de Janeiro: Lumen Juris, 2004. 272 Such ampliative interpretation can be derived, for instance, from an ampliative application of the doctrine of equivalents or from the consideration and definition of substantial violation of patent claims. One way or another, there is a need for a balance between adequate protection and no restriction of free competition as well as what is strictly necessary for the functionalization of the patent system. 273 POSNER, Richard A.; LANDES, William M. The economic structure of intellectual property Law. Cambridge/MA: The Belknap Press of Harvard University Press, 2003, p. 299. 137 and capture a greater share of the post-invention market.274 Therefore, the system imposes real limitations for constitutional hermeneutics to be able to sufficiently assist the solution, for instance, of the so-called gridlocks highlighted by Michael Heller275. Within a systematic view, it is clear that hermeneutics has an important place in the correction of the clashes in the patent system, especially when it helps with the topical consideration on the seemingly conflicting rights whenever there is nonexcluding room for interpretation. The non-excluding room refers to the possibility of hermeneutic effort effectively being likely to solve the apparent conflict. For example, when the compulsory licensing defined by abuse of rights is legally provided, but procedural steps are established that, many times, prevent it from being implemented, it faces an excluding room for the possibility that the hermeneutic effort might be useful. Therefore, it becomes an obstacle of the system to hermeneutics. In this sense, even if the anticompetitive practice is identified, the disproportional remedy can be as harmful as the inertia, as notes Ricardo Sichel276: The neuralgic point is investigate the misuse of patent rights, when applied to market relations. Precisely the existence of conduct that causes marmarket __________________________ 274 Translation into Portuguese: Quanto maior a proteção da patente, menor é o benefício aos concorrentes através da informação contida na patente concedida porque menos eles podem fazer com a mesma. Eles irão enfrentar grande dificuldade e maiores custos em inventar paralelamente à patente, uma maior probabilidade de perder um caso judicial de violação de patente e ainda maiores penalidades se eles perderem. A sua curva de custo marginal será espaçada ou, equivalentemente, menor será a elasticidade de suprimento, fazendo com que haja uma curva de demanda residual menos elástica e, assim, possibilitando ao titular da patente cobrar preços mais altos e obter uma maior fatia do mercado pós-invenção. 275 HELLER, Michael. The gridlock economy: How too much ownership wrecks markets, stops innovation, and costs lives. New York/USA: Basic Books Publisher, 2008. 276 SICHEL, Ricardo. The European patent law and other studies on intellectual property. Rio de Janeiro: Lumen Juris, p. 110-111. 138 market distortion, without the consequent gain of efficiency, is what must be opposed. I observe, therefore, that the privilege granted to a patent, as an occasioning element of technological development should win the State shelter. Nevertheless, the use of a legally obtained right to obtain ill-gotten gains, causing market shortage, deserves from the Public Power, the appropriate response in order to repress abuses. This point is especially relevant, when it is observed that the Federal Constitution guarantees the temporary property right of a patent. This right is, therefore, conditioned to the public interest and the technological development of Brazil. For the hermeneutic effort to be productive there might not be express legal limitations concerning the minimum protective time lapse and diverse types of technologies necessarily getting equal treatment, since in these cases the system obstacles create chains that negatively affect the subsequent analysis of the exercise of the right over a particular technology in the competitive market, distorting, the true meaning of the patent system as functionally a worker of the principle of free competition. 139 6 EQUALITY AND FREE COMPETITION AS ORIENTING AND LIMITING HERMENEUTIC REFERENCES OF THE PATENT LAW If the patent system exists as functionally useful and with clear objectives 277, its harmony with the equality principle materially considered and with the free competition is essential, lest it should suffer from a ―defunctionalization‖ that impairs its essence and objectives. Now, the German Constitutional Court itself establishes the functional character added to the harmony of the constitutional totality, as highlighted by Denis Barbosa, Karin Grau-Kuntz and Ana Beatriz278 commenting on the judgment in the ―Patentanmeldung‖279 case: The constitutional interpretation of the intellectual property should be made: a) taking into account the purpose and function of the property (functional interpretation) b) taking into account the whole structure of the Constitution. Once recognized the nature of the property right and the protection of the art. 14 of the Fundamental Law the same interpretative systematics used for property over material goods is applied, i.e., ponderation between the effects of the protected individual interest and the collective interests. As well as competition is dynamic and generates new challenges, getting adapted over time, the same way it is for the intellectual creations in constant evolution, also generating new challenges in constant evolution over the years. ___________________________ 277 It is reiterated at this point, the arguments already posted about the essence and purpose of the patent system. 278 GRAU-KUNTZ, Karin; BARBOSA, Denis Borges. The intellectual property in the Constitution of the Constitutional Courts. Rio de Janeiro: Lumen Juris, 2009, p. 58. 279 BverfG, 36, 281, of 01.15.1974. 140 Such market and creativity dynamics require real hermeneutic challenges lest the harmony with the essence and objectives of a protection system of intellectual creations should end up staying in evolutionary dissonance. Thus, the baptizing elements that are intended to orient the hermeneutic movement in order to ensure this harmony between essence/objectives with the effective desired results should be identified. Roberto Jaguaribe and Otávio Brandelli 280 share concerns related to the effective development of the country through intellectual property, citing some relevant important aspects on an ―evolution‖ of the patent system: An adequate intellectual property protection system can be a valuable instrument for development. But it must be properly inserted into the national innovation system and compatible with the other instruments. The great surge of globalization over the last thirty years has expanded the international operation of large companies and has diversified production, which creates a demand for increasing homogenization of rules. There thus seems to be no room (and, most probably, interest) for going back to the period of full flexibility preceding the TRIPS Agreement. Nevertheless, it is crucial to avoid an inertial expansion of the system, mainly raised by the strength of the rental sector lobbies that most benefit from the system. It is also important to prevent the classical limits from exceeding the scope of the intellectual property rights. These limits concern in particular to preserve the distinction between discovery and invention and they also concern the obstruction of exclusive appropriation of knowledge. In this sense, always catching a glimpse of development, there is no doubt that competition is essential for the development of society. In the words of João Marcelo de Lima Assafim281, dealing with the panorama of the antitrust rules: _________________________ 280 JAGUARIBE, Roberto and BRANDELLI, Otávio. Intellectual property: room for developing countries. In VILLARES, Fábio (Org.). Intellectual property: tensions between the capital and the society. São Paulo: Paz e Terra, 2007, p. 303. 281 ASSAFIM, João Marcelo de Lima. Technology transfer in Brazil – Contractual and competitive aspects of Industrial Property. Rio de Janeiro: Lumen Juris, 2005, p. 271. 141 Besides the benefits that competition bestows on consumers, the competitiveness among companies creates a suitable environment for the country‘s economy to play an increasingly relevant role in the context of global economy. From the economic point of view, the patent system has many flaws due to, among other factors, fixed cost differences related to intellectual creations in different technological areas, as highlighted by Posner and Landes 282: Whether a given degree of patent protection is socially desirable depends on the patentee‘s fixed costs, the inherent difficulty of inventing around the patent (that is, holding constant the degree of patent protection), and the extra profits that the patentee can expect to receive from greater protection. The greater the fixed costs of research and development and the easier it is to invent around the patent, the greater will be the degree of patent protection required to create adequate incentives to invest in developing the invention in first place. The patent system makes no effort, however, to match the degree of patent protection to those variables. A patentee‘s monopoly markup, which of course is influenced by the degree of patent protection, beers no direct relation to the fixed costs that he actually incurred 283 in creating the patented invention. In a specific economic aspect, it is identified that the patent system fails to establish a proportionally related modulation to the fixed costs involved in the creation of patentable creations. Ideally, if the equality principle is analyzed as the basis for determining the spectrum of protection of a patent, even from the standpoint of economic justification of the system, there would be a more appropriate modulation, since the consideration ________________________ 282 POSNER, Richard A.; LANDES, William M. Op. Cit., p. 300. Translation into Portuguese: Mesmo um grau de proteção por patentes sendo socialmente desejável isso depende dos custos fixos do titular da patente (o que significa manter um grau constante de proteção da patente), e dos lucros extras que o titular da patente pode esperar receber através de uma maior proteção. Quanto maiores os custos fixos de pesquisa e desenvolvimento e quanto mais fácil for inventar ao redor da patente, maior será o grau de proteção patentária necessário para criar os incentivos adequados para o investimento em desenvolver a invenção. Apesar disso, o sistema de patente não faz nenhum esforço para alcançar o grau de proteção de acordo com essas variáveis. A base do monopólio do titular da patente, o qual evidentemente é influenciado 283 142 of the equality principle in accordance with each type of technology to be protected helps suit a closer proportion to the ideal between the developed technology and the granted protection. Therefore, the very flaws existing in the patent system should serve as an indicator so that one can better know the system as an intrinsically limited system to the protection of technological innovations increasingly diverse, peculiar and challenging. And the huge work of hermeneutics is, facing such challenging problems, help and establish an understanding as objective and detached from preconceptions 284 as possible, as highlighted by Mario Bunge 285 analyzing the epistemology in its dimension of objectivity vs. subjectivity: In effect, it is a declared purpose of the scientific research to produce representations of the world that are objective (impersonal and publicly susceptible to test). That is why the scientist submits them to continuous verifications and tries to improve them. That is why any subjective elements (whenever identified) suffer elimination. And because there is a need to keep distinction between objectivity and subjectivity is that the semanticist should strive to clarify distinction. As politicians, carry luggage of training, knowledge, experience, that is introjected into the being and that influences the decision power (in which emphasis must be given to the tendency of present and future absolutization of how the patent system is seen), it is also important to remember the reflections of David Schnaid 286 that: The contamination of the interpreter‘s understanding by his formed ideology is inevitable, formed from experiments and experiences, distorted by _________________________________________________________________________________ pelo grau de proteção da patente, não possui qualquer relação direta com os custos fixos que ele despende em efetivamente criar uma invenção patenteável. 284 Here, the term pre-understanding is used in its negative sense, that is, in the sense of addiction that we all carry on the established system. 285 BUNGE, Mario. Basic Philosophy Treaty – Volume 2. Semantics II: Interpretation and Truth. Translated by Leônidas Hegenberg and Octanny S. da Mota. São Paulo, 1976, p. 211. 288 SCHNAID, David. Philosophy of law and interpretation. São Paulo: Revista dos Tribunais, 2004, p.235. 143 by pre(previous) concepts and proto-ideas, determined by his existential history (ek-sistere). This experience or legal experience may imply the presence of irrational elements and contingents in the decision-making process, which do not appear in the doctrinal thinking. Our attitudes are influenced by the beliefs we hold, which, in turn, were formed without the evidence of their veracity, but rather pre-conceptually, and by impulses of fear, hope and desires‖. While participating in a particular analysis of law, rules of conduct and behavior, above all, a pre-analysis based on the individual history is carried out. The human being is naturally subject to beliefs and prejudice that influence rationality to deal with life concrete situations, so that the understanding of pre-understandings serves as benchmark so that the principle of participation, within the asymmetry of individual formations, can help find decisions as universalized as possible in each specific technological area. The equality principle, located at the very founding base of the patent system, works as a basilar hermeneutic guidance, distinctive and inseparable from any technology susceptible to patent protection. It means that, even before a functional consideration of the patent system, there should be respect for difference, because the material equality implies the recognition of this difference. Aware of this need to recognize equality as an orienting element of hermeneutics applied in patent law, based on the differential treatment to different technologies, the patentability requirements are put at stake, which, in spite of being universalized and constitutional, were not historically developed in respect for the equality substantially considered. The requirement of novelty is based on preventing identical intellectual creation from being subject to patent protection for different holders, by establishing as the basis for meeting the requirement of novelty, the first to file a patent application that does not have a full public disclosure of its content prior to the date of the patent application 144 the patent application. The motivation is related to the balancing to meet the principle of free competition (in order to stimulate innovation and, consequently, stimulate the innovative competition) through a restriction of temporary protection that reaches only what is strictly necessary to meet the social interest and, the economic and technological development of the country. In a similar sense is the requirement of inventive step, going beyond the requirement of novelty, which implies that, the creator should have contributed in a relevant manner, in technical terms, in relation to everything that was accessible to the public on the date of the patent application or that, once having the protocol date prior to the application, has been subsequently published to that one. Once again the motivation is related to the balancing described above, so that it represents an effective technical contribution to the state of the art and not only a few nonsubstantial differences, and just because they are not part of the constitutional objective, do not enjoy the possibility of protection by the patent system. From the standpoint of an instrumental view of only granting patents to intellectual creations that describe and enable, technical and theoretically, to reproduce the invention, the requirement of descriptive sufficiency 287 also has a direct relation with free competition and with the functional designs of the patent system __________________________________________ 287 This requirement, together with the requirement of inventive step, are the most relevant from the practical and theoretical point of view of the patent system, since the requirement of descriptive sufficiency aims that a patent application be practically a ―comprehensive manual‖ of how that technology will be put into practice. The intentional or unintentional deception of full revelation of this ―comprehensive manual‖ leads to addiction that, should it not depend only on small and simple contextual explanation or definition of words, is insurmountable. This is because often the omission of the so-called ―ace in the hole‖ in a patent application is a strategy intentionally adopted by the applicant to avoid, even when the competitor has access to the patent document, having real difficulties (or even the impossibility) in learning (theoretically or practically) and reproduc ing the teachings contained in the application in agreement with the effects described therein. It is an extremely important requirement guided by the free competition and by the need for a constitutional functional performance of the patent. Another crafty possibility of use of the patent system in violation of the requirement of descriptive sufficiency is the patent application protocol requesting protection for a particular technical effect without actually having a minimum of scientific basis to support this technical effect, i.e., running ahead in the innovative race ―revealing‖ the theoretical proof of the technical effect described during the patent application and benefitting from the date of the filing corresponding to the moment when the technical effect, described since the very beginning, had not theoretically been mastered yet. It is noted that the individual inventor and companies in good faith should be aware of this requirement, since the sufficient description of the patent application should be seen as a key element together with the novelty and inventive step (or inventive act in the case of utility models). 145 system, as follows: There has recently been a decision of the U.S. Court of Appeals for the Federal Circuit288 (CAFC) reaffirming the importance of the ―written description‖ requirement being sufficient when considered both the original drafting of the claims regarding the drafting of amendments, as well as separating the requirements into two different parts (the description of the invention itself and the description of how to use the invention) establishing greater rigor regarding the effective identification if the inventor, on the date of the patent application protocol, has literally been able to establish a line between what has been described and what has been claimed in the patent application. The U.S. Court of Appeals for the Federal Circuit itself had already determined five years ago that 289: The 'written description' requirement implements the principle that a patent must describe the technology that is sought to be patented; the requirement serves both to satisfy the inventor's obligation to disclose the technologic knowledge upon which the patent is based, and to demonstrate that the patentee was in possession of the invention that is claimed.290 Now, the requirements listed above are nothing more than part of the ―deal‖ done so that the patent system meets its functional objectives and, instead of restricting, generates greater competition with better use to the society. The fact is that the constitutional functional objectives of the patent system cannot be achieved in an ideal way if the equality principle in its basis is not observed (as the equality of material goods and not merely formal), since the treatment onlyemm __________________________ 288 Ariad Pharmaceuticals, Inc. v. Eli Lilly & Co. (US Court of Appeals for the Federal Circuit, 2010) (en banc). 289 Capon v. Eshhar, 418 F.3d 1349, 1357, 76 USPQ2d 1078, 1084 (US Court of Appeals for the Federal Circuit, 2005). 290 Translation into Portuguese: O requisito do ‗relatório descritivo‘ implementa o princípio de que a patente deve descrever a tecnologia que busca ser patenteada; o requisito serve tanto para satisfazer a obrigação do inventor em revelar a tecnologia conhecida sob a qual a patente se baseia, e para demonstrar que o requerente dominava a invenção que é reivindicada. 146 only formally equal (the same application requirements, term of protection and interpretation) of different technologies generates a not desired difficult and of complex correction defunctionalization of the patent system by the competitive market. The patent system is already complex and insecure by nature, so by constituting and interpreting it ignoring the equality principle materially considered based on the differences of each technology submitted to protection corresponds to a hermeneutic attitude that adds even more complexity, insecurity and functional diversion to the system, creating significant impact on the free competition itself. It is worth remembering, the teachings of Habermas 291, concerning a not merely formal posture of the Law: The law achievement project, which refers to the operating conditions of our society, therefore of a society that emerged in certain historical circumstances, cannot be merely formal. Nevertheless, differing from the liberal paradigm and the social State, this paradigm of law no longer anticipates a specific vision of society, not even a particular vision of good life nor a particular political option. Since it is formal in the sense that it only formulates the necessary conditions under which the subjects of the law can, as citizens, understand each other to figure out their problems and solve them. In this search for the achievement of law in the area of patents, the differences of objectives between market efficiency and efficiency in the continuous search for justice should be noted. In this sense, Rawls calls attention to the differences between the ideal legislative process and the ideal market process, noting that both are designed to achieve different goals, since the ideal market process aims at efficiency whereas the ideal legislative process aims at justice. Moreover, the ideal market is a perfect process 147 process regarding its purpose, whereas the ideal legislative one is an imperfect procedure. Thus, as Rawls292 teaches the economic theory does not fit in the legal procedure, since the application of economic theory to the constitutional process presents clear limitations, but at the same time it also provides data to, analyzed in a broader context, help grant effectiveness to fundamental rights. It was already pointed out by Maria Vitoria Stout 293 that, within a restrictive view of the non-discrimination clause based on different technologies; even the provisions that provide a longer validity term for pharmaceutical patents because of the delay of the regulatory agencies to authorize the entry of corresponding goods into the market were considered a kind of ―compensatory‖ discrimination: The amended template sets up an interesting dichotomy between pharmaceutical and nonpharmaceutical patents in the area of patent term extensions. The template now provides that while a party must adjust the term of a nonpharmaceutical patent to compensate for unreasonable delays that occur in granting the patent, a party has discretion to adjust the term of a pharmaceutical product patent to compensate for unreasonable delays in granting the patent. Whether this revision now discriminates against holders of pharmaceutical patents in allowing a country to choose not to grant automatic patent term extensions for unreasonable delays is an interesting question outside the scope of this Article. […] CAFTA Articles 15.9(6)(b) and 15.10(2), giving pharmaceutical patent holders the unique ability to extend the term of their patents for delays in the regulatory approval process and to halt any attempt to manufacture their patented product under compulsory license, do not just dance around the line set by TRIPS on impermissible discrimination. CAFTA boldly goes where no United States free trade agreement has gone before it,86 and where no United States free trade agreement will (likely) go after it.87 Because these provisions touch on the ability to fight devastating health epidemics on a global scale, the TRIPS dispute settlement system is an apt forum to challenge them, and Article 27.1 offers the strongest argument to invalidate ___________________________ 291 HABERMAS, Jurgen. Law and Democracy: Between Facticity and Validity. V. II [s.I.]: Tempo Universitário, 1992 (original 1959b), p. 190. 292 RAWLS, John. A theory of justice. São Paulo: Martins Fontes, 2002, p. 400. 293 STOUT, Maria Vitoria. Crossing the TRIPS nondiscrimination line: How CAFTA Pharmaceutical patent provisions violate TRIPS article 27.1. Boston University Journal of Science and Technology Law, v. 14, 25 April 2008, p. 199-200. 148 them. 294 It is in this context that the principle of equality and free competition should be seen as the early and harmonic basis of the patent system, since it is impossible to think of a fair patent system without taking into account the equality principle as a hermeneutic guiding focus. On the other hand, this equality considered as a generator of specific factors of discrímen, besides guiding, it restricts the patent rights to the technological essence contained in the intellectual creation subject to patent protection, allowing a better adequacy in the competitive environment. Out of respect for the equality principle, technologies involving computer programs, second medical use, biotechnology, nanotechnology, among other challenging ones that already exist and are still to be created cannot be treated equally both among themselves and in relation to traditional technologies that form the basis that has justified the existence of the patent system and its ―canned‖ requirements. Hermeneutics has much to contribute both considering the equality principle applicable on the basis of the patent system, recognizing the technological differences and, from them, understanding the system within its functional orientation (social interest, economic and technological development) and considering this system. __________________________ 294 Translation into Portuguese: O texto emendado estabelece uma dicotomia interessante entre patentes farmacêuticas e não farmacêuticas no que tange à extensão do prazo de validade de patentes. O texto agora provê que enquanto um interessado deve ajustar o prazo de uma patente não farmacêutica para compensar atrasos não razoáveis que ocorrem no processo de concessão de patente, outro interessado tem discricionariedade para ajustar o prazo de uma patente de produto farmacêutico para compensar pelos atrasos não razoáveis na concessão de patentes. Se esta revisão agora discrimina contra os titulares de patentes farmacêuticas ao permitir um país de escolher não conceder prazos adicionais automáticos de patentes por atrasos não razoáveis é uma interessante questão fora do escopo deste artigo.[...] Artigos 15.9(6)(b) e 15.10(2) do CAFTA, concedendo aos titulares de patentes farmacêuticas a habilidade única de estender o prazo de suas patentes por atrasos no processo de aprovação regulatória e evitar qualquer tentativa de produção dos seus produtos patenteados através de licenças compulsórias, não apenas dançam ao redor da linha estabelecida por TRIPS sobre discriminação não permitida. CAFTA vai onde nenhum acordo de livre comércio dos Estados Unidos jamais foi antes e onde nenhum acordo de livre comércio dos Estados Unidos irá (provavelmente) depois disso. Porque essas previsões tocam na habilidade de lutar contra epidemias devastadoras em uma escala global, o sistema de disputas do TRIPS é um fórum apto a desafiá-los e o Artigo 27.1 oferece o argumento mais forte para invalidá-los. 149 system always limited by a necessary role in an environment where the principle of free competition is the rule. 150 7 POSSIBLE SOLUTIONS FOR THE ADEQUACY OF THE PATENT SYSTEM This chapter begins with the conclusions of Dan Burk and Mark Lemley 292 in which several researchers have already figured out possible solutions to the current patent system issue in different industries, but the challenges will continue to come up and the patent system should keep getting adapted to the new and challenging technologies: Some exciting recent work has already been done in filling out the frame work we have established. Chris Cotropia has identified a new policy lever in the doctrine of equivalents, for example. Richard Gruner has suggested that obviousness could serve as a policy lever in industries such as software and business methods, in which a large majority of patents seems to consist of taking existing ideas and applying them in a new context. And others have suggested that the forseeability doctrine should be applied in different ways in the biotechnology industry. Deciding which policy levers should and should not be used will require further work by a lot of people. Second, courts and scholars will have to pay attention to the characteristics of the particular industries for which courts are setting rules. We don‘t claim any monopoly on knowledge about the proper patent law rules for any given industry, and others can and have disagreed with the suggestions we have made in this book. This disagreement is healthy; devoting serious scholarly attention to the needs of particular industries will help better tailor the law to those industries. Further, the scientific characteristics of industries and particular technologies within each industry change over time, and the law needs to adapt to those changes. The nature of the software industry as we have describe it today looks very different than it did in the 1970s, and the legal rules that made sense then seem rather archaic today. Some have argued that biotechnology is undergoing similar evolution, reducing the anticommons risks at the research stage but heightening concerns at the downstream products stage. And surely it is true, as we suggested in chapter 11, that the biotechnology industry itself is not monolithic; the rules appropriate for DNA patents may not be the same ones that fit monoclonal antibody patents. Courts are better suited than Congress to take account of these changes, but to do so they will have to remain open to considering evidence of those changes. Put another way, legal rules will have to evolve in the common law tradition. Finally, the industries themselves will come and go over time. If we had written this book 120 years ago, we would likely have focused significant attention on the railroad industry, which faced significant patent issues that previous industries had not had to deal with. Ninety years ago we would have discussed the problematic issues that arose in the nascent airline industry. Both industries still exist today, but their characteristics have changed. As they have become more mature, the role of patents in both industries has declined, to the point that it no longer make sense to tailor pate ____________________________________ 295 BURK, Dan L.; LEMLEY, Mark A. Op. Cit., p. 169-170. 151 patent rules to those industries. By contrast, software and biotechnology – two of the most important industries in the modern economy and ones that occupy a significant part of this book – were not even on the radar screen of the patent system forty years ago. New industries – nanotechnology, perhaps, or synthetic biology – will doubtless challenge the courts years to come.296 The difference between the theoretical basis of what has been defended by Dan Burk and Mark and what is understood as the application of the equality principle, is that those who support the possibility of protective adaptation in each type of industry, and such considerations should be taken under an eminently economic _________________________ 296 Translation into Portuguese: Alguns trabalhos recentes e excitantes já foram feitos em preencher a moldura que nós estabelecemos. Chris Cotropia identificou um novo parâmetro político na doutrina dos equivalentes, por exemplo. Richard Gruner sugeriu que a obviedade poderia servir como parâmetro político em indústrias como as de softwares e métodos de negócio, nas quais a grande maioria das patentes parece consistir em adotar idéias existentes e aplicá-las em um contexto diverso. Outros têm sugerido que a doutrina da previsibilidade deveria ser aplicada de forma diferente na indústria biotecnológica. Decidir quais parâmetros políticos serão ou não usados irá demandar muito trabalho adicional de muitas pessoas. Em segundo lugar, cortes e estudiosos deverão estar atentos para as características das indústrias em particular para as quais as cortes estão determinando regras. Nós não reivindicamos qualquer monopólio sobre o conhecimento a respeito de regras apropriadas no direito de patentes para qualquer indústria específica, e outros podem e já discordaram das sugestões feitas por nós neste livro. Essa discordância é salutar; dedicar séria atenção de estudiosos para as necessidades de indústrias em particular irá ajudar a melhor definir o direito para essas indústrias. Além disso, as características científicas das indústrias e tecnologias específicas com cada indústria mudando de tempos em tempos, o direito precisa se adaptar a essas mudanças. A natureza da indústria de software que descrevemos dos dias de hoje é muito diferente daquela dos anos 1970, assim como as regras legais que faziam sentido naquela época parecem arcaicas nos dias de hoje. Alguns argumentaram que a biotecnologia está seguindo em uma evolução similar, reduzindo os riscos de anticommons na fase de pesquisa, mas aumentando as preocupações no mercado secundário na fase dos produtos. E certamente é verdade, como sugerimos no capítulo 11 que a indústria da biotecnologia em si mesma não é monopolista; as regras apropriadas para patentes de DNA podem não ser as mesmas para enquadrar patentes de anticorpos monoclonais. Cortes estão mais bem equipadas que o Congresso para dar conta dessas mudanças, mas para fazerem isso terão que permanecer abertas para analisar as evidências dessas mudanças. Colocado de outra forma, regras legais terão que ser realizadas em uma tradição da common law. Finalmente, as próprias indústrias irão ir e vir com o passar do tempo. Se tivéssemos escrito este livro há 120 anos, nós provavelmente teríamos focado atenção significativa na indústria ferroviária, a qual enfrentou questões significativas na área de patentes que indústrias anteriores não tiveram que lidar. Noventa anos atrás nós teríamos discutido os aspectos problemáticos que foram levantados na indústria aeronáutica nascente. Ambas as indústrias continuam existindo hoje em dia, mas as suas características mudaram. Como ficaram mais maduras, o papel das patentes em ambas as indústrias foi reduzido, ao ponto que não há mais sentido em ajustar as regras de patentes para estas indústrias. Em contraste, software e biotecnologia – duas das mais importantes indústrias da economia moderna e as quais ocuparam parte significante desse livro – nem mesmo eram localizadas na tela do radar do sistema de patentes há quarenta anos. Novas indústrias – nanotecnologia, talvez, ou biologia sintética – irão sem dúvida alguma desafiar as cortes nos próximos anos. 152 economic point of view of the effects caused in the market, so that in accordance with the versatility of industries, solutions should occur in a common law system through the courts and not through the legislative changes. Such statements differentiate themselves from the possible solutions within an effective application of the equality principle, as a principle of fundamental rights, on the basis of the patent system even before the consideration of the effects that the technological differentiation (factor of discrímen) will cause in the market. Let us make it clear that, although the modulation of the factor of discrímen proposed is assisted by the effect it causes in the competitive field, the need for recognition of the differences is inherent in the current patent system, as well as the patentability requirements regarding novelty, inventive step (inventive act in the case of utility models), descriptive sufficiency and industrial application. Within this possible modulation of the equality principle materially considered, assisted by the principles of free competition and by the functionality or conditionality to the social interest, economic and technological development of the country, is that the adaptations of the patent system become constitutionally legitimate. Emphasis should be given to the recent publication of Marshall Phelps and David Kline297 in the sense that the intellectual property rights should go through constant adaptation to effectively serve their essential purposes: Today‘s renaissance boom in information age technology has once again strained our patent system. The PTO simply hasn‘t had the resources to respond to the three-fold increase in patent applications over the past 20 years. And as a result, patent quality has suffered in some areas and litigation rates have risen. Hence, the need once again for reforms to help patent system meet the challenges of today‘s new technologies and new industries. Patent quality must improve. We must make it easier for small businesses and independent inventors to obtain patents for their discoveries. We must take ____________________________________________ 297 PHELPS, Marshall; KLINE, David. Burning the Ships – Intellectual property and the transformation of Microsoft. Hoboken/New Jersey: John Wiley & Sons, 2009, p. 161-162. 153 take reasonable steps to reduce the flood of litigation. And we need to harmonize our patent system with those of other countries. This last item is perhaps the most important measure we could take in the short term, for it is incredibly inefficient and expensive for applicants to conduct prior art searches and obtain patents in each and every country separately. But there are voices today – in some cases, very loud voices – for whom reform is not enough. They argued that intellectual property is outmoded, a tool used by monopolists to crush innovative young firms, and a barrier to open innovation, knowledge sharing and economic growth. They cloak their arguments in the rhetoric of ―the common good‖. But some of their misguided proposals – such as they call to eliminate patent rights for software or to abrogate IP rights in order to achieve greater interoperability – would, if adopted, cut the heart out of the knowledge economy and lead to devastating losses in jobs and living standards for millions worldwide.298 Despite understood, but refuting the DOJ and FTC statement in their aforementioned 2007 Guideline that the intellectual property rights should be seen as any other property right for purposes of anticompetitive behavior analysis; we can just check the endless number of possible differences generated in the market because of clear clashes between the intellectual property rights and the traditional tangible property rights, being once again important to quote the words of Phelps and Kine299: A house, after all, is worth what it‘s worth no matter who lives in it – and its worth can be more or less determined through comparables. The worth of a patent, on the other hand, depends upon who wants to use it, for what commercial _________________________ 298 Translation into Portuguese: O boom renascentista na era da informação tecnológica mais uma vez restringiu o nosso sistema de patentes. O PTO simplesmente não tem tido recursos para atender à triplicação no número de pedidos de patente nos últimos 20 anos. E como resultado, a qualidade das patentes tem sofrido em algumas áreas e o percentual de litígios tem aumentado. Assim, a necessidade mais uma vez de reformas para ajudar o sistema de patentes a atingir os desafios das novas tecnologias e novas indústrias. A qualidade das patentes deve ser melhorada. Nós precisamos tornar mais fácil para que pequenas empresas e inventores independentes obtenham patentes para as suas descobertas. Temos que tomar passos razoáveis para reduzir o fluxo de processos judiciais. E nós precisamos harmonizar o nosso sistema de patentes com aqueles de outros países. Este último item é talvez a medida mais importante que nós podemos tomar em um curto prazo, por isso é incrivelmente ineficiente e caro para os requerentes conduzir buscas prévias no estado da técnica e obter patentes em cada um dos países separadamente. Mas existem vozes hoje – em alguns casos, vozes muito altas – para as quais reforma não é suficiente. Elas argumentam que a propriedade intelectual está desadaptada, uma ferramenta usada por monopolistas para esmagar jovens empresas inovadoras, e uma barreira para a inovação aberta, compartilhamento de conhecimento e de crescimento econômico. Eles focalizam os seus argumentos na retórica do ―bem comum‖. Mas algumas de suas propostas desviadas – como as que denominam de eliminação dos direitos de patentes para programas de computador ou para a ab-rogação de direito de propriedade intelectual no sentido de adquirir maior interoperabilidade – iriam, se adotadas, arrancar fora o coração da economia do conhecimento e levar a perdas devastadoras de empregos e padrões de vida para milhões ao redor do mundo. 299 Op. Cit., p. 168. 154 commercial or other purpose, in what market (or litigation setting), and under 300 what set of economic and legal constraints. Further, in their conclusions, these authors recognize 301: IP‘s role will continue to evolve – indeed, must evolve – to meet the demands of new technologies and changing economic realities, continuing recalibrating IP‘s careful balance between private incentive and public interest. That is the only way intellectual property can continue, as it has for past 200-plus years, to serve as a spur to innovation and economic progress that benefits the whole of society.302 One of the possible solutions to the problems faced in the patent system is the restrictive interpretation of the claims that delimit the scope of the patent protection. Such restrictive interpretation should observe the factor of discrímen of each specific technology to, including the technology developed (descriptive report and drawings, if necessary) and the required protection (claims), perform an appropriate restrictive interpretation, avoiding the generalization of interpretive concept. Taking as an example, in view of the subjectivity of the language used in the patent writing involving computer programs, the restrictive interpretation should be even more careful than the restrictive interpretation performed in an industry of the traditional mechanical area, whose linearity of vocabulary and limitations of semantic understanding of words requires less hermeneutic effort. ________________________ 300 Translation into Portuguese: Afinal, uma casa vale o que vale independentemente de quem vive nela – e o seu valor pode ser mais ou menos determinado através de comparações. O valor de uma patente, por outro lado, depende de quem quer usá-la, para qual finalidade (comercial ou outra), em que tipo de mercado (ou definição de litígio), e sob que tipo de restrições jurídicas ou econômicas. 301 Op. Cit., p. 177. 302 Translation into Portuguese: O papel da Propriedade Intelectual continuará a envolver – de fato, precisa envolver – o atendimento das demandas das novas tecnologias e a mudança das realidades econômicas, continuamente recalibrando cuidadosamente o balanço da propriedade intelectual entre o incentivo privado e o interesse público. Esse é o único modo que a Propriedade intelectual poderá continuar estimulando a inovação e progresso econômico que beneficia toda a sociedade. 155 As already mentioned and proven empirically, the problem of delimitation of protection is stronger in the area of patents involving software, so the restrictive interpretation should be aware of this peculiarity to avoid this mistaken expansion of the scope of protection in a particular patent. Through a restrictive interpretation besides the one provided for more traditional technologies and through a rigorous analysis based on the descriptive sufficiency and on the inventive step, most of the problems that cause the lack of definition of the boundaries of patents involving software will be solved. However, regarding the patents of second medical use, hermeneutics faces obstacles that require a legislative reformulation also having the equality principle as a hermeneutic guide on the basis of the patent system to understand that, as they are patent that involve minor inventive activity (and for this reason are clearly unequal) it should be attributed shorter period of protection for them taking as an example what happens to the utility model patents. For this purpose, a legislative change preceded by greater empirical research is necessary to determine, within the ambit of this particular technology, which term corresponds to an effective application of the equality principle, while maintaining the functional balance that keeps stimulating research and development of new inventions in this particular technological area. As for the problematic excess of owners (tragedy of the anticommons) and the reflections it may cause in the market, also the equality principle must be seen as a base guiding element, since the problems due to excess of owners bring out legal issues formerly submerged by the absence of what can be named as specific ―traffic‖ of patents in each technological area. 156 In those cases where a particular technological area is with heavy traffic of patents and there is expressed, clear and defined difficulty in obtaining licenses for the lawful technology exploitation, once again the factor of discrímen is essential to, within a specific marketing context, house a higher or lower intensity of interpretation of the requirements for the compulsory use of technologies. For this purpose, the investments in specific empirical research are essential, a joint work between the Brazilian System for Protection of Competition and the PTO with investment in continuous training of workers focused precisely on the identification of specific characteristics of each market associated with the specific use of particular technologies as an instrument of domination besides and in disrespect to the specific factor of discrímen itself of that technological area, causing a defunctionalization that should be properly fixed in specific cases. These solutions are quite far from the generalization of a procedure that negatively impacts the patent system, since it is known that the essence of this system of patents is pro-competitive, for the proposed solutions only seek the underlying adjustments so that the exceptional defunctionalizations can be fixed without absolute bonds that ignore the equality principle materially considered and, in doing so, avoid problems difficult to solve in the competitive environment. 157 8 CONCLUSIONS It has been observed that one of the major problems still existing in the patent system is the hyper-potentiation when confronted with other constitutional principles, since the research began analyzing essentially the patent law in contrast with the free competition, showing that the patent law as a legal creation aimed at a specific purpose should be considered as such and should always be linked to its exceptional essence. It has also been observed that, in the same chapter on the market and the patent system, history shows that this has been evolving and getting adapted in a more elastic way to the international harmonization of minimum standards for the patent protection originated from the Paris Convention, also considering a system developed with the pre-understandings and the evolutionary possibilities back then. Analyzing equality in a Welfare State, it has been shown that since Aristotle it has been no longer about equality in its formal dimension only, so the fundamental right to equality implies its necessary substantial or material consideration to enable an equal treatment according to the inequalities. Consequently, it has been found that the application of the equality principle comes across problems when it faces the patent system, mainly due to ―canned‖ patentability requirements and the lack of the possibility of positive discrimination as to the gaping technological differences existing in the intellectual creations susceptible of patent protection. Despite these problems pointed out, it has been observed that, even if only instinctively and in a specific traditional discriminatory way, the application of the equality principle on the basis of the patent system already exists. This occurs when when 158 considering the utility model patents as a factor of discrímen based on the diversity of inventive potential and technological essence, causing a factor of discrímen which provides a less rigorous requirement of inventive activity (inventive step) and a shorter temporal protection (15 years instead of 20 years) than the one provided for all other patents. It has also been found that the modulation of the patent protection term, as well as the interpretation form of the patentability requirements, causes direct effects on the exercise of patent rights in the competitive market, as an excess of protection can guarantee the patent holder an improper competitive advantage, thus excluding or damaging the competitive dynamics. Subsequently, it has been shown how far hermeneutics solves the clashes and how far the hermeneutic effort faces obstacles expressed by legal limitations imposed by the very canning of the patent system. It has been observed, for example, that hermeneutics solves, through restrictive interpretation, some problems related to the limits of the right over a particular patent outlined in the patent document, thus avoiding the functional distortion of the patent system in this aspect. Emphasis has been given to the fact that the restrictive interpretation itself should precisely be aware of the factor of technological discrímen to enable the fulfillment of the functional axiological vector of the patent system. On the other hand, it has been observed, for example, that hermeneutics cannot fully solve that which regards to the determination of the uniform temporal protection term for all intellectual creations that meet the ―canned‖ requirements of novelty, inventive step, industrial application and descriptive sufficiency. When it comes to these considerations, the study has focused on the application of the equality principle and the principle of free competition as guiding references 159 and limiting references of the patent system, intending thereby, to demonstrate that the recognition of the material equality on the basis of the patent system and, consequently, the application of the factor of discrímen according to the technological diversity, besides being constitutionally provided (although not applied) fixes the clashes and causes pro-competitive effects assisting the principle of free competition. When it comes to the possible solutions for the problems shown, there have been evidences that, from the observance of the equality principle, the possible solutions can be directed through hermeneutics and, when the latter finds itself limited by the patent system, the possible solutions can be directed through integrating legislative change. Hermeneutics serves as an important instrument to, analyzing patents involving computer programs or complex technologies currently or in the future, assist in the restrictive interpretation of the right existing in the Letter Patent, focusing on the unequal treatment to unequal technologies from the perspective of those inequalities. An essential factor for the constitutional understanding of patents involving complex technologies is the restrictive interpretation based on the equality principle, resulting in a particular factor of discrímen to each specific technology. It is important to say that, due to the current techniques of patent writing, which at times provide protection today for patents that will come to exist and which the inventor himself has not yet mastered on the date of the patent application, greater attention is necessary to avoid that the protective craving results in protection beyond the one that is effectively adequate and observant of the patentability requirements in line with the technology under examination. Moreover, as demonstrated, an increasing number of empirical studies have been identified, showing that the patent system has been failing in the performance of its functionality or that such performance is disproportionate in certain technological areas. Such studies indicate and support the conclusion that a necessary adequacy of the patent system to the equality principle in its material dimension 160 dimension and constitutionally expressed is needed, based on the respect for technological diversity. Despite the importance of hermeneutics solution, getting rid of the shackles of the pre-understandings impregnated in the patent system since the beginning of its international harmonization, it has limitations imposed by the patent system itself. Such limitations occur, for instance, when some technology requires a time cycle less than twenty years to meet its constitutional objectives. The old discussion on the possibility of granting validity term of different patents to different technologies is strengthened by the application of the equality principle as a guiding element of such a possible factor of discrímen. This claim of validity term, apparently utopian, is the one that would suit the application of the equality principle on the basis of the patent system when hermeneutics is not sufficient to keep the apparent clashes away. It is because an elastic protection term for a problematic technology creates greater possibilities of patent exploitation in a dysfunctional sense, i.e., does not meet the social interest and the economic and technological development of the country, causing intervention beyond the necessary one in order to meet the principle of free competition. A clear example in which hermeneutics is limited (as there are few problems of interpretation of the limits of law), so that a legislative change in the patent protection term is necessary, is the second medical use patents. It is about clearly defined patents, usually with lower investments, whose inventive activity occurs at lower potential in relation to the necessary one for the development of the molecule or of the development of the first use, and which, paradoxically, have the same validity term. Going beyond the argument, that is limited in itself, that the protection is smaller because it is restricted to the claimed use, in fact there is clear and equal temporal treatment where there should be an unequal temporal treatment due to the e 161 explicit inequality among the inventive activities. It is understood that second use patents, applying the factor of discrímen, should have a temporal term less than twenty years, since the ideal term, despite possible analogy with the temporal term granted to utility model patents, would still depend on further empirical research for its mensuration to be as close as possible to the ideal one. Thus, the necessary alteration in the article 40 of Law 9,279/96 would be necessary for the inclusion of another temporal discrímen. This temporal differentiation, reducing the term in accordance with the equality principle, generates direct beneficial effects in the competitive environment because it will remove one of the major explicit barriers of market entry by the lower temporal resolution of the protection granted, taking into account the free competition. Obviously, the equality principle materially considered does not solve all problems through hermeneutics and through the adequacy of protection to technological diversity, still leaving unanswered questions which shall be answered by further studies. But a position in which the equality principle can also contribute as a determining factor for the application of the factor of discrímen is in the case of the exercise of patent rights on the market, since the differential treatment of different technologies assists in the identification, prevention and repression of anticompetitive conducts, favoring a constitutionally healthy competition in a market populated by an excess of holders as well as barriers to entry caused precisely by the exercise of an abusive or maladjusted patent right, and many times difficult to identify. For this purpose, once abuse is identified in the competitive environment (which is facilitated by the application of the equality principle on the basis of the patent system), the use of compulsory license for abuse of rights, for abuse of economic 162 economic power and for patent improvement (dependence) should be more frequent and procedurally more accessible, favoring the functionality of the patent system on behalf of free competition. It is clear that, although such factors contribute to the understanding of how mistaken is the understanding that the rights over patents, when their competitive effect in contrast with an antitrust examination is analyzed, should not be considered different from any other property rights. That is, the inappropriate premise permeates all further analysis of hermeneutic addictions that would not occur if such premise were not adopted. 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Research Methodology: Sending the pre-elaborated questionnaire for councilors, and other officials and lawyers involved in cases analyzed by the Brazilian Competition Defense System. Objectives: Obtain answers that will help to define the actual US Competition System when it faces patent related issues, in order to establish a comparative analysis between the FTC/DOJ Authorities (US) practices and the SDE/CADE Authorities (BR) practices, since the same research has been conducted in the Brazilian Competition System. Those answers will also be useful to identify the struggle points of both systems and will help to map possible solutions in order to confirm or not the hypothesis developed in the ongoing Doctoral Thesis. Presentation of answers in the thesis: Despite the intention of giving special thanks in the thesis, should it be requested by the interviewee, it shall be ensured him full anonymity. Only the names of the interviewees who authorize the revelation shall be published. Questionnaire 1) Within the legally established functions, in your view, what are the main functions performed by the ACED lately? The ACED performs three main functions: preventive control (market structure), repressive control (conduct) and competition advocacy. All of them are relevant and, each in its own way, have limits, which are detailed in subsequent questions. 177 2) In your view, how has the ACED positioned itself in the formulation and conduct of the competition defense public policy when involved in the abuse of property rights (either related to tangible property or intangible property)? First, it is necessary to conceptualize what ‗abuse of property rights‘ means. The characterization of an antitrust illicitness requires the observation of two conditions: that the act causes damage to competition and that from this act do not derive benefits that outweigh the costs come from the competition discouragement. Therefore, exercising legitimate property rights, for instance by setting prices that generate extraordinary profits, does not constitute illicitness by itself. In order for this to occur, it is necessary to characterize the damage to competition, which may occur through the direct elimination of competition, via concerted conduct, or via unilateral exclusionary conduct. 3) In your view, what are the limitations or problems the ACED faces in carrying out these functions? The ACED faces relevant limitations in the exercise of all its three main functions: In a brief summary, the control of structures is constrained by the subsequent notification system, which reduces the capacity of enforcement of structural measures, since, in general, the merger is a fait accompli at the time of notification. In regard to conduct control, the major limitations arise from the increasing judicialization of conduct of proceedings in the administrative sphere, which is, in case of conviction, succeeded by judicial review. It leads to an immense distance between the commission of an offense and its effective punishment, resulting in subpunishment. In the case of competition advocacy, the opinions of the Brazilian Antitrust System BAS (the main actor for this role is the Economic Monitoring Secretariat EMS not the ACED) are often ignored at no cost to its recipient. 4) In your view, what could be implemented to improve the performance of these functions at the ACED (both prevention and repression)? Control of structures: prior notification Conduct control: simplification of procedures and reduction of instruction time. Competition advocacy: partnerships with other agencies, with the aim of spreading the culture of competition and a greater effect of vocalization on behalf of competition. 5) Did you ever judge cases where patent law was directly or indirectly involved? For instance: Cases involving clauses in agreements that the term goes beyond the expiring term of patents (or effects of the agreements in this way, although indirectly); cases involving market power based, among other factors, on cross-licensing, mergers involving patent pools on market dominant technologies; agreements involving monopolists/oligopolists in lawsuits involving patents; unilateral and exclusive ―grant-black‖ clauses (improvements 178 (improvements on technologies developed by the licensee that, through this clause, belong to the licensor or ensure the licensor the exclusive exploitation); the application of compulsory license, either by refusing to license or supply, or by any other reason, among other situations. If so, do you think the understanding and focus given by the BAS and/ or by the judiciary were correct or not? Why? Do you believe that some element has been missing in the analysis (either by the BAS or by the judiciary)? Yes. I was reporter in the Gemplus and Axalto case (which resulted in Gelmato), smart cards manufacturers holders of roughly 50% of patents. The concern was that the control of intellectual property rights might have detrimental effect on the smart cards manufacturing market, more competitive than the innovation manufacturing market. The case was concluded through a (TDC) agreement, in which the applicants agreed to license their patents on non-discriminatory basis for a period of 5 years. This period was not extended in order not to create adverse incentives for future innovation. As the case was concluded with agreement, the judiciary was not called upon. 6) In your opinion, should the patent rights be treated as any other form of possible exercise of market power or should they be treated in a special way? How? There are, of course, peculiarities in the patent rights, but not to the point of requiring the constitution of a single category in antitrust analysis. I understand that the main element – which enables a grouping with other kinds of rights – is the fact that an eventual market power comes from a public policy, part of a technological or industrial policy, and, therefore, it is legitimated by the same society that supports the existence of an antitrust policy. 7) In your opinion, should each specific technological market have a differential treatment? Can this differential treatment also be stipulated by virtue of the necessary technological percentage and by virtue of the one who dominates it (instead of solely relying on market power directly exercised by the owner (s) of the patent (s)), instead of considering the company market share? At first, all markets should have a differential treatment, that is to say that none should have it. A market analysis is always made case-by-case, and conclusions are case-specific. There are possible analogies (e.g. technological innovation markets) which allow the appropriation of knowledge and experience obtained from other markets, but this analogy should be sufficiently substantiated in each case. 8) In your view, is it possible that contracts with clauses involving patent rights could be ―hiding‖ violations of the competition Law because it is about areas of difficult benchmarking of the existence or not of market power or abuse of market power? Besides the deeper and empirical analysis of each relevant market, what else could be done by the Brazilian antitrust system so that such tem 179 clauses were more easily identified or repressed? I do not know if I understand the question. I do not believe that patent rights are areas where the existence or not of market power or abuse of market power is, compared to all other sectors, hard to benchmark. Undoubtedly it is a hard task, but it is also hard to the manufacturing market of media content, software, specialized services etc. A relevant item in this area is the sham litigation. Since it is unclear whether the property rights have been infringed or not, companies can use the intellectual property protection system to impose costs on competitors, even though they have not, in fact, infringed them. Therefore, the difficulty in evaluating whether or not there has been violation of IPR is a source of competition problems. 9) From your experience and knowledge in the area, which other contributions could you provide to this field research? For instance, if the BAS had more experts in each technological area to identify potential present or future effects caused by all kinds of patent exploitation in the relevant market, it would be better able to anticipate future damage that the past, present and future acts under the BAS analysis might potentially cause on the competitive system and, consequently, on the considerate fulfillment of constitutional clauses that constitute the principles of free competition, social interest, social function of property and consumer protection. In my view, there is no, at first, incompatibility between the protection of property rights and its full exercise and the antitrust policy. This proposition is, partly, developed in the ADMINISTRATIVE PROCEDURE no. 08012.000912/2000-73, which I quote the following extract: Although [the ELS] has undertaken statistic analysis to identify the observance of the first necessary condition [high prices], the subsequent analysis of the ELS summarily discard the harmfulness of the conduct, even in those cases where the disproportionate price increase was identified. I argue, as follows, that, in fact, there is no occurrence of illegal antitrust by abusive pricing in the proceedings, considering the plexus of necessary facts to infer the damage to competition caused by the company action. This path of analysis, simple and straightforward, makes the procedure unnecessary. 180 The central question in this case and in other administrative procedures because of the “PCI (Parliamentary Commission of Inquiry) of Drugs” is to characterize which set of facts, once observed, can be concluded from the occurrence of an antitrust illicitness of abusive prices, according to Law 8,884/94. Obviously, the disproportionate price increase and the existence of a dominant position are part of this set of facts, but are certainly insufficient to infer illicitness. Excessively low prices, in very restrictive conditions, can represent predatory pricing illicitness, as it is already known in the antitrust literature303. It remains to be seen what set of facts is sufficient to represent an infringement through excessively high prices. First of all, it should be recognized that, under competitive conditions and under the absence of market failures, the pricing that makes a company targeted at making the maximum profit, is socially desirable. The maximum profit of a company is obtained through the optimal choice of technology (combination of inputs) and through the choice of the quantity produced which makes the marginal cost and the marginal revenue equivalent. In other words, with the aim of making the maximum profit for itself, the company uses the inputs as efficiently as possible and expands its production until it depletes the profit possibilities. If there is competition, its marginal revenue coincides with the market price, in such a way that this company production reaches the highest level of social welfare, i.e., the point where the marginal cost equals the market price. If the company has market power, it has such relevance in the market that a variation in its production is able to affect prices. As a result, there are incentives for such firm to produce less than what is socially desirable, getting higher prices than those that would be observed under competitive conditions. The company‟s price of choice could, therefore, be considered „excessive‟, in the sense that there would be, in a static analysis, gains derived from an embarrassment to the firm‟s pricing strategy. However, the market power held by a company is often legitimate; many times protected by the public policy, i.e., by society‟s choice. This is the case of dominant pospositions __________________________ 303 In this regard, see MOTTA, Mássimo. Competition Policy: Theory and Practice. New York: Cambridge University Press, p. 412-422. 181 positions acquired in the market, through greater efficiency, better product quality and innovation. It is also often directly protected by patents, which grant the innovator the status of holder of exclusive production rights or the use of a particular product. The profit realization arising from positions achieved by the legitimate exercise of market rules is the basis of the incentive so that firms compete on cost reduction, quality growth and innovation. Preventing, through antitrust policy, the realization of gains – e.g. condemned, by itself, to the practice of high prices, would be contradicting the foundation of the same policy. This proposition is convergent with the one constant in the main textbooks of the Industrial Organization, as cited below. Surely the government cannot condemn a firm for increasing demand for its product by providing information, by reducing its own costs investing in R&D and in physical capital, or by accumulating experience. The problem is that most of the decisions that make the firm healthy also improve its position in the market in relation to potential and actual newcomers. (Tirole, 1988:323) For no other reason, the legislator was careful to add the paragraph 3 of the art. 20 of Law 8,884/94, which states that “gaining market share as a result of a natural process based on economic agent greater efficiency in relation to their competitors does not characterize the illicitness provided in the item II”(regarding market domination). The same legislator, however, includes, among other competitive conducts, in the Art. 21, item XXIV, of the same law, the practice of “imposing excessive prices, or increasing without good cause the price of goods or services.” From the previous argumentation, it is concluded that „excessive prices‟, providing they are the result of profit realization of dominant position legitimately achieved, do not characterize an infringement of antitrust. The application of the item XXIV of the Art. 21 of Law 8,884/94 should be restricted to the use of illegitimate market power (e.g. result of concerted conduct of prices) or to the pricing that directly causes damage to competition. In the first case the „excessive price‟ is a symptom of some anticompetitive llegitimately, 182 conduct that allows, illegitimately, price rise, and not directly the conduct that must be repressed. It should, therefore, be observed if there are in the case under study elements that show the existence of a practice that, by inhibiting competition, enables the realization of higher prices. This is certainly not the case of legitimate exercise of intellectual property rights or the dominant position gained within market rules. It is in this very sense that Prof. Rubens Nunes stated about, in a simple and lucid article on the topic, as cited below: Excessive prices are those that result from violations of the economic order, as the cartelization, either by obtaining monopoly by spurious means, such as the influence with the legislator, or by the regulating agency in regulated sectors. In the first case, the violation characterized in the article 21, XXIV would always be followed by conducts that would give material conditions for the imposition of “excessive prices”. The second case is outside the scope of antitrust.304 „Excessive price‟ can also be part of a strategy to exclude competitors in vertically related stages, in a continuous variation of a strategy of sale refusal, also described as illicitness in the item XIII of the Art. 21 of Law 8,884/94. The relationship between the two conducts is in the fact of a sale refusal to be conceptually equivalent to an indefinite price and, therefore, impossible to be paid. In this sense, „excessive price‟, as a violation of antitrust, would not be the one derived from the pricing of maximum static profit – in which the marginal cost equals the marginal revenue -, but the one that is essentially a strategic action aimed at reducing competition in a manner similar to the sale refusal strategy. In this case, „excessive price‟, just like „sale refusal‟ and „predatory pricing‟, would result in the reduction of the current profit in exchange for private benefit derived from the reduction of competition in the future. In the case under discussion, the factual elements are not present to infer the damage to competition resulting from price rise. There is no evidence of pricing strategy to exclude mpetitors or of illegal conduct that could stain the price rise with illegitimacy, and occurring no infringement to competition. ___________________________________________ 304 NUNES, Rubens. Arbitrary Profit and Excessive Price. ACED –Informs, no. 041, Mar. 2007. 183 strategy to exclude competitors or of illegal conduct that could stain the price rise with illegitimacy, and there is no occurrence of infringement to competition. 184 APPENDIX B: Field Research - FTC e DOJ Questionnaire PUCRS BOSTON UNIVERSITY SCHOOL OF LAW SCHOOL OF LAW POSTGRADUATE PROGRAM VISITING SCHOLAR PROGRAM IN LAW DOCTORATE IN LAW ___________________________________________________________________________ RESEARCH Doctoral Thesis in course - THE INTERPRETATION OF THE PATENT LAW LIMITS BASED ON THE DYNAMICS OF THE MARKET COMPETITION Doctoral Student/Researcher: Prof. Milton Lucídio Leão Barcellos FTC Commissioners’ Research: This research aims to analyze how the FTC Commissioners understand and act in the United States Competition System when faced with competition behaviors involving Patent issues. Research Methodology: Interviews with the FTC Commissioners in order to answer the eight questions, regarding their high experience and overview of the intersection of Competition Law and Patent Law faced by DOJ and FTC. Goals: Obtain answers that will help to define the actual US Competition System when it faces patent related issues, in order to establish a comparative analysis between the FTC/DOJ Authorities (US) practices and the SDE/CADE Authorities (BR) practices, since the same research has been conducted in the Brazilian Competition System. Those answers will also be useful to identify the struggle points of both systems and will help to map possible solutions in order to confirm or not the hypothesis developed in the ongoing Doctoral Thesis. Presentation of the answers and results in the Thesis: Although the intention of this researcher is to individually identify the source of the answers with a special thankful note to the Honorable Commissioners that took their precious time to help with 185 with this research, if any Commissioner requests not to be identified or connected to its answers this researcher will fully respect that, and the name of the specific Commissioner will not be mentioned in any part of the research results, information or final Thesis, related in all the citations just as a ―DOJ/FTC source interviewed‖. Questions: 1) Based on your experience and understanding, which are the main functions and duties of the FTC nowadays? 2) Based on your experience and understanding, which are the limitations and/or problems that the FTC is facing to develop those main functions and duties? 3) Based on your experience and understanding, what could be changed or implemented in order to improve the development of those main functions and duties? If applicable, please answer based on both areas: Prevention and repression of anticompetitive behaviors. 4) Did you ever judge antitrust/competition cases involving directly or indirectly patent rights? Such as cases involving patent licensing agreements that the terms goes beyond the expiring term of the patents; market power or attempt to reach market power involving cross-licensing patents; horizontal and/or vertical agreements involving patent pools, patent misuse, exclusion of competitors or other anticompetitive conducts using the patents as one of the basis for this conducts; Anticompetitive patent settlements; Unilateral and exclusive grant-back clauses; refusal to deal and compulsory license based on the refusal to licensing and to supplying the needs of the market; and other possible situations that you may have faced while analyzing antitrust cases involving patent rights. Which were the main difficulties founded in this kind of cases in order to establish a per se rule or a rule of reason analysis? 5) Based on your recent experience and understanding, and also based on the fact that the US Antitrust Guidelines General Principles was established almost 14 years ago, do you think that the Patent Rights should be treated as any other form of property and also generally do not create market power in the antitrust context? Or should it be treated from a different perspective? If it should be treated from a different perspective, could you explain briefly how? 6) Based on your experience and understanding, should each specific technological market have a specific and/or different treatment by the Antitrust Authorities? If so, could this specific and/or different treatment be established also based on the percentage of technology needed in the very specific product/service instead of based only on the market power of the owner(s) of the patent(s)? 7) Based on your recent experience and understanding is it possible that contracts with clauses involving patent rights could be ―hiding‖ violations of the competition Law that do not come to the attention of the Competition/Antitrust Authorities since it would be difficult to identify the existence of market power or even the abuse of this market power behind those clauses? Besides the deeper and empirical analysis of each relevant market, what else could be done by the DOJ/FTC in order to improve the analysis of cases dealing with the 186 the intersection of the Patent Law and Competition Law and also to help that such clauses could be better identified and repressed? 8) Based on your experience and understanding, which other contributions could you give to this research? Thank you very much for your time and cooperation. Your distinct participation will really help improve and qualify my Thesis.