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NOTES ON COMPULSORY LICENSING OF PATENTS IN BRAZIL
THE NORTOX VS. MONSANTO CASE
ASH, P. (1984) Notes on Compulsory Licensing of Patents in Brazil: The Nortox v. Monsanto Case. In: Patents in
Brazil. Daniel & Companhia.
The issue of compulsory licenses for the exploitation of patented . inventions is dealt with
by Chapter XII, Articles 33 to 38 of the existing Brazilian Cede of Industrial Property
(hereinafter Code). The present compulsory license provisions provide that compu lsory
license requests shall be processed as a single administrative instance. The Code does not
provide for an appeal to-the Minister of Industry and Commerce as had previously been
possible in accordance with Article 43, paragraph 4 of the 1969 Brazilian Code.
2.
The importance of the fact that it is no longer possible to lodge an appeal in the
administrative sphere has been demonstrated by a recent dispute between Monsanto
Company and Nortox Agro/Química S/A, involving a compulsory license request that up
to the present time remains "sub judice".
3.
Monsanto Company owns Brazilian Patent No. 7107076, which was granted on
March 25, 1980.
The patent contains 27 claims, the subject matter thereof being as
follows:
(a) Claims 1 to 21 directed to fitotoxic compositions;
(b) Claims 22 to 26 directed to the process for the production of n - fosfonomethyl.glicines;
(c) Claim 27 directed to a process for the control of plant growth.
4.
Monsanto had entered int. two voluntary non-exclusive license agreements with
Industrias Monsanto S/A, Monsanto's Brazilian subsidiary. The first covered Claims 1 to
21 and 27 and was recorded by the Brazilian PTO on June 22, 1982. The second covered
Claims 22 to 26 and was recorded by the PTO on July 21, 1982. The patented invention
was in partial use as a result of the marketing of a product known as ROUND UP.
HOW2ver, this use was not relevant to the subject matter of Claims 22 to 26.
5.
Nortox Agro/Química S/A filed a compulsory license request against Patent No.
7107076. Notice of this request was published by the Directorate of Contracts (hereinafter
DIRCO) in the Official Bulletin of September 6, 1983. On November 29, 1983, DIRCO
published a further notice in the Official Bulletin to the effect that Nortox was granted a
compulsory license for the exploitation of Monsanto's Patent No. 7107076. It later became
apparent that this allowance notice was published doe to the fact that Monsanto had nor
filed a response to the notification of the compulsory li cense request published on
September 6, 1983. The sequence of events is clarified by Article 34, paragraph 1 of the
Cede, which states that:
"The patentee shall be notified to file a response within 60 (sixty) days."
The importance of Article 34, paragraph 1 is made clear by Article 34, paragraph 2, which
provides that:
"In the absence of a response within the said period, it will be assumed that the patentee
has accepted the conditions offered."
6.
This brief publication granting the compulsory license to Nortox precipitated four separate
court actions, two of which were instituted by Nortox and the other two brought by
Monsanto.
The first has since been abandoned, and decisions have already been
published in relation to the second and third. However, the fourth court action is still awaiting
judgment. It is therefore possible, although not probable, that the grant of the compulsory
license to Nortox may be overturned.
The following is a synopsis of the four court actions, revealing the tactics that may be employed in a
compulsory license request dispute and, dependent upon the decision that is handed down in the
fourth case, the manner in which such a dispute may be avoided.
COURT ACTION No. 1
7.
Monsanto filed for a Writ of Mandamus in the 6th Federal Court on November 24, 1983, five
days before the November 29, 1983, DIRCO publication in which the compulsory license was
granted to Nortox.
The writ was directed against the administrative act of DIRCO in
publishing the September 6, 1983, notice of the compulsory license request. Monsanto alleged
that DIRCO was legally incompetent to make such a publication and that the publication itself
was "inadequate" (this point is further discussed in paragraphs 13 and 14).
8.
It may perhaps be assumed that, when DIRCO published notice on November 29, 1983, of
the allowance of the proposed compulsory license, it was unaware of the court action instituted by
Monsanto on November 24, 1983. The fact is that, nevertheless, on December 6, 1983, DIRCO
published a notice annulling the two prior publications (that is, the publications of September 6, and
November 29, 1983). No reason was given for the "about-face" that was made by the December 6,
1983, publication.
9.
The effect of the December 6, 1983, publication was the reopening of the 60- (sixty-) day
period of notice provided for by Article 34, paragraph 1 of the Code. In view of the renewed
opportunity to respond to the compulsory license request, Monsanto allowed their petition for a
Writ of Mandamus to lapse, the necessity for an injunction having been preempted.
COURT ACTION No. '2
10.
In response to the December 6, 1983, publication in the Official Bulletin, Nortox filed for a
Writ of Mandamus, requesting the suspending of the effects of the administrative decision, whereby
the two publications prior to the December 6 publication (the September 6 and November 29, 1983,
publications) were declared invalid.
11.
In response to this request, a preliminary injunction was granted on December 23, 1983,
suspending the effects of the December 6, 1983, publication for the period of 90 (ninety) days.
COURT ACTION No. 3
12. On January 9, 1984, Nortox, having obtained the preliminary injunction, then filed for a Writ
of Mandamus against the act of DIRCO, which annulled the September 6 and November 29, 1983,
publications. Nortox also requested the £full restitution of its rights as a compulsory licensee of
Patent No. 7107076.
13.
In its judgment, the court held that DIRCO had acted correctly in annulling the publications
of September 6 and November 29, 1983, by the later December 6, 1983, publication. It held that the
initial publication of September 6, 1983, bad been lacking in several essential prerequisites specifically it had omitted to make proper reference to the particulars of the patent concerned,
which had been referred to simply by its patent number. The publication had omitted to cite the title
of the invention, the name of the licensee, and/or the name of the attorneys of the patentee and
licensee.
14.
The court also found that the September 6, 1983, publication had been made in a section of
the Official Bulletin relating to contracts and technology transfer (thereby subject to the control of
DIRCO), when it had been customary to publish notice of compulsory license requests in the
section of the” Official Bulletin relating to patents (thereby subject to the control of DIRPA - the
Directorate of Patents of the Brazilian PTO). The court held in conclusion that the publication of
notice of a compulsory license request should be sufficient to attract the attention of all interested
parties. The court did not allow itself to be drawn into making a decision upon which should be the
appropriate organ of the Brazilian PTO to make such publications in the future.
15.
This judgment was handed down-on April 25, 1984. On April 29, 1984, DIRCO published a
notice in the Official Bulletin granting a compulsory license to Nortox for the exploitation of Patent
No. 7107076, on the condition that remuneration for the compulsory license was to be paid by
Nortox to Monsanto at a rate of 049„ calculated in accordance with the provisions of item 2.2.1 of
Normative Act No. 15, of September 11, 1975, which states:
"The amount of remuneration shall be stipulated on the basis of a percentage or on a fixed amount,
per unit of the product and, in either case, must be calculated on or correlative to the net price of
the sale or, whenever applicable, must also be correlative to the profit earned from the (sole of the)
product to which the license refers."
COURT ACTION No. '4
16.
Following the April 29, 1984, publication of the grant of the compulsory license to Nortox,
Monsanto attempted to make a partial renunciation of their rights in respect of Patent No. 7107076.
A notice to this effect was published by DIRPA in the Official Bulletin of June 19, 1984. However,
this publication was annulled by a DIRPA publication of August 7, 1984, and, on August 14; 1984,
the renunciation petition was formally rejected by a further publication in the Official Bulletin. In
this context, Monsanto filed for a Writ of Mandamus in an attempt to annul - the grant of the nonexclusive compulsory license to Nortox. The case revolves around the following important issues:
(a) Is partial renunciation of a Brazilian patent possible?
(b) Does toe grant of two separate voluntary licenses relevant to a single patent imply au affirmative
answer to question (a) above?
(c) Does effective working of a patent necessitate the working of all claims of a patent (or is
effective exploitation a criterion only imposed upon those claims of a patent which will assist
the technical and economic development of the country)?
(d) May a compulsory license be granted upon all the claims of a patent, notwithstanding
the fact that effective working of some of the claims has been established?
17.
It is suggested that the roles that apply to the effective working of a patented invention may
be extrapolated and applied by analogy to compulsory licenses. It has been the Brazilian practice,
and indeed the principle of the unity of invention would appear to dictate, that effective use of a
patented invention must incorporate the working of all the independent claims of a patent. It is
submitted that the indivisible nature of a patent is also of tantamount importance in relation to
compulsory licenses. For this reason, the correct response to the above questions would appear to
be as follows:
(a) -No; (b)-No; (c) -Yes, (subordinate question: -NO); (d) -Yes.
18.
It is clearly not possible to predict the final outcome of the Nortox vs. Monsanto case with
complete certainty. 'However, doe to its unique characteristics, it has brought to light some
interesting and rare aspects involving compulsory licensing of patents in Brazil, which we
thought should be brought to your attention.
November 1984