In a previous article , we discussed an overview of Latin American (LA) intellectual property issues. That article discussed industrial/technological areas that might be of interest for those looking to promote and protect LA Intellectual Property rights, with an emphasis on Patents. Brazil was noted as the LA country with the most activity in terms of PCT patent filings per capita (as of 2009). Here, we broaden the discussion to a look at Brazil’s history, culture, and more, along with the impact of those factors on Brazil’s IP regime.
Powerful, long, and mysterious, the Amazon River and the jungle it feeds are a metaphor for the country that engulfs them both. Nobody knows exactly where the river starts, but biologists scramble to classify species that continue to be found in the jungle, with hundreds more to be discovered. Brazil is a land of vastness that is currently undergoing revolutionary economic growth, with an 8.8 percent rate of growth in the second quarter of 2010.2
Brazil has an interesting history of invention. Probably the most flamboyant of Brazilian inventors was Alberto Santos-Dumont, who is famous for inventing the world’s first self-propelled “heavier than air” flying device3 along with many other flying artifacts and mechanisms used in airplanes. It is noteworthy that Santos Dumont made a point not to file patent protection for any of his devices. His mindset was to apply inventions for ‘the good of mankind’ rather than for personal profit.4 As we have seen, this may be a paradigmatic behavior for inventors in many LA countries. However, the paradigm more recently seems to be changing in Brazil.
In 1809, Brazil was the fourth country in the world to enact a patent law. At the time, Brazil was still part of the Portuguese Empire, under the rule of the Bourbon dynasty. Brazil was one of the founding members of the Paris convention (1883), during the imperial regime of Don Pedro II. In 1978, Brazil signed the Patent Cooperation Treaty (PCT) while under a prolonged military dictatorship, and became a founding member of the World Trade Organization (WTO) (1995) during the democratically-elected government of FH Cardoso. These notes of political history emphasize a constant endeavor for innovation in Brazil, despite the many political twists the country has experienced over time.
Patents in Brazil are awarded and supervised by the INPI (“National Institute of Industrial Property”). Brazil has a “first-to-file” patent system. Patent terms in Brazil are 20 years for invention patents and 15 years for utility model patents, calculated from the filing date. The average time to prosecute a patent is about five years. During prosecution or examination, a third party may submit documents and information for consideration by the Examiner. Also, for six months after the patent is granted, third parties may request “administrative nullity” of a patent. In Brazil, information presentations, game rules, teaching methods, surgical or medical techniques, computer programs, and business models are not patentable.
Compulsory licensing results when a licensee fails to use the patented subject matter, manufacture or completely manufacture a patented product or process, or when a national emergency arises, such as an impending public health crisis. ANVISA is the Brazilian National Sanitary Agency, which according to law has the authority to review and deny authorization to patent applications claiming pharmaceutical products or processes, which is a major cause for backlog in the Brazilian patent system.
In the pharmaceutical area, Brazil has disagreed on various issues with the U.S. and the multinational pharmaceutical industry. On the Brazilian side, there is a national public health policy geared to a not-for-profit operation and a large base of “generic drug” manufacturers, pushing “against” patents for “blockbuster” drugs typically granted or in-licensed to large innovator pharmaceutical entities. Agreements between the large pharmaceutical innovation companies and the generic drug manufacturers may be negotiated and result in compulsory licenses, but the Brazilian government and generic manufacturers often are not the adversaries of the large pharmaceutical innovation companies. The details of this controversy lie outside the scope of the present article, and deserve special treatment on their own.5 
According to statistical data collected by the Organization for Economic Co-operation and Development (OECD),6 Brazil and Mexico are the only Latin American countries that show up in the top 35 list for “national patent share” in the areas of information and communication technologies (ICT),7 biotechnology, and nanotechnology.8 In what follows, all the data collected from OECD relates to the inventor’s country of residence for PCT applications filed at the international phase. For example, Brazil has about 14 percent and Mexico has about 10 percent of their PCT patent filings covering ICT-related inventions, compared to a world average of around 36 percent. This ranks Brazil in 32nd for ITC-related patents in the world. In nanotechnology, Brazil comes in 29th, with around 11 percent of its PCT patents in this area, while Mexico has a higher ranking at 16th, with around 18 percent of its total patent filings in nanotechnology. The world average is about 22 percent. With regard to biotechnology, Brazil ranks 27th on the list with around 6 percent of its PCT filings in this area. Meanwhile, Mexico shows up at 32nd with around 4 percent, compared to a world average of around 9 percent.
The OECD report  offers other interesting data. For example, while in most industrialized nations the proportion of patent ownership by industry is greater than 50 percent,9 in Brazil this proportion is about 43 percent and in Mexico is less than 25 percent. By way of comparison, the same proportion in China increased from around 25 percent in 1995-97, to more than 50 percent in 2005. Again, Brazil and Mexico are the only LA countries that show up in the top 35 ranking for patent ownership.
The OECD report also notes the share of patents owned by universities, which can be an indicator of the degree of “intrinsic” R&D developed by a country. In this regard, Brazil and Mexico are tied at 5 percent, above the world average of 4 percent and close to the top of the chart (Singapore is first on the list, with around 10 percent of patents owned by universities). This speaks to the high degree of investment that both Brazil and Mexico have devoted to universities and centers for higher education, linking them with industrial development. For example, Brazil has a parallel system of publicly funded universities: a federal-sponsored system and a state-sponsored system. This, in addition to a large range of privately owned universities, most notably a chain of universities linked to the Catholic Church, has become an engine of economic growth. Far from interfering, these multiple centers for higher education often complement each other, offering young students a variety of disciplines for research and job opportunities in multiple locations.
Furthermore, a number of industries have grown alongside these universities and have absorbed a highly educated work force, benefitting from funding R&D programs in the universities. This has resulted in the creation of high-tech industrial corridors much like are seen in other parts of the world, for example: the Bay Area in California and the Research Triangle in North Carolina, to name a few.10 Such is the case of the greater São Paulo area in Brazil, stretching from the city of São Paulo to São José dos Campos and Campinas, to the east and north. This area encompasses at least five major research universities (Universidade Estadual Paulista (UNESP) Campinas, UNESP São Paulo, Universidade de São Paulo, Pontifícia Universidade Católica, and Universidade Federal de São Paulo). Research centers in aeronautics (Instituto Tecnológico de Aeronáutica) closely linked to EMBRAER, the Brazilian enterprise for aircraft manufacturing, in the automobile industry and in alternative energy sources, and the largest hospital in Latin America (Hospital das Clínicas, in the city of São Paulo), are all located around these university centers. In addition, the bulk of Brazilian industry is based or headquartered in the greater São Paulo area.
A noteworthy exception is PetroBras, the South American Oil-producing giant, headquartered in Rio de Janeiro. With about 50.1 percent government ownership, PetroBras is among the 20 largest oil producing companies in the world and is the largest company in LA based on revenue.11 PetroBras is a world-class leader in the development of advanced technologies, from deep-water and ultra-deep-water oil production to the development and commercialization of viable biofuels such as ethanol. PetroBras has led Brazil to be recognized as a world leader in the integration of biofuels with a country’s economy. By 2008, about 17.6 percent of the energy consumption in the transport sector was provided by sugarcane ethanol, while gasoline represented 23.3 percent and diesel 49.2 percent. PetroBras deserves a special note for its successful efforts in research and development, funding much of its research through university consortiums across Brazil.
Another point of interest reported by the OECD is the proportion of foreign ownership of Brazilian patents. While in developed nations this number typically represents less than 25 percent of the total patent filings per country, in Brazil this proportion rises slightly above 25 percent, and reaches about 30 percent in Mexico. While the majority of foreign ownership of Mexican patents is in the U.S. (about 70 percent of foreign owned patents in Mexico), Brazil has a more evenly divided distribution between the U.S. and the EU (around 45 percent each, the rest divided among other countries). Many international corporations, such as Siemens, FIAT, Volkswagen, and others have created design centers and R&D hubs in Brazil, profiting from a well-educated labor force at a relatively lower cost. In addition, the emergence of a powerful internal market has created the need for those design centers and R&D hubs to be local. To support this assertion, Figure 1 is attached, collected from ref. , which shows an impressive social movement in Brazil with a middle class sector growing while simultaneously shrinking the Brazilian poverty level in the last few years of this decade.12
In summary, the numbers reflect that, while Brazil still presents an IP picture resembling that of lesser developed nations, the patent statistics and other economic indicators are moving towards those of the most developed nations in the world. We see signs of development in the strong emphasis on education, a solidifying internal market, and the emergence of strong and healthy enterprises that have acquired world-class status in a relatively short span of time. All data seems to suggest that Brazil will continue to move up the charts in all IP indicators. Perhaps the time is ripe for surfing the wave and strengthening business contacts in the land of the Amazons.
To see table please click here.