Biodiversity Law Reform Spurs Innovation, But Patent Backlog Remains

SÃO PAULO, BRAZIL – Experts have touted Brazil for taking a major step toward fostering biotechnology innovation in 2015 by reforming its biodiversity laws, but incentives for conducting new biological product research in the country continue to be hampered by 14-year patent application backlogs.

The South American nation of roughly 200 million people is among the most biodiverse countries in the world, providing an abundance of genetics to conduct drug discovery research. From 2001 to 2015, however, the legal framework in place for using biodiversity in research was filled with bureaucracy, which imposed burdens on the private sector and government.

Under the previous framework, researchers were required to obtain authorization from the federal government to access genetic heritage and traditional knowledge (skills and practices passed on from previous generations) in Brazil, which often took years to receive. The process involved the submission of documents and reports, and resulted in high costs to companies. Those who conducted such research without the green light from the Genetic Heritage Management Council would be subject to "biopiracy" violations.

"In the old workflow, we had so many steps before starting this research," Anita Pissolito, a partner at the Brazilian law firm Nascimento Mourão Advogados, said at the BIO Latin America Conference Oct. 28. And all those steps made innovation difficult. … Innovation done outside the country would happen first."

Companies now have more flexibility in negotiating benefit sharing. The law established the National Benefit Sharing Fund, to which the company will share a portion of its net annual sales of the product ranging between 0.1 and 1%.

The new law – enacted in November 2015 – allows Brazilian national companies to start their research right away. These companies are only required to register their research in an online database to inform the government of the kind of research being done and the kind of genetic resources being used. Foreign companies can apply for access to genetic resources, although they are required to collaborate with a Brazilian R&D institution.

Any companies that utilized genetic heritage or traditional knowledge between June 30, 2000 and Nov. 17, 2015 are allowed one year from the implementation of the database to comply with the new law and register their products.

Companies are also given the responsibility of negotiating benefit sharing. The law established the National Benefit Sharing Fund, to which the company will share a portion of its net annual sales of the product ranging between 0.1 and 1%. The purpose of benefit sharing is to compensate communities from which the genetic resources and traditional knowledge were derived. The new law gives companies more freedom to negotiate, while the previous framework imposed several restrictions on negotiating. Firms must present a benefits sharing agreement within a year after notifying the government that the product is ready for commercialization.

"This means a new legal framework to foster innovation in Brazil biodiversity," Pissolito said, which aims to improve legal certainty, lower transaction costs and ensure the fair, equitable sharing of benefits.

Poor Intellectual Property Protection Remains A Barrier

Rafael Marques, head of the Genetic Heritage Management Council in Brazil's Ministry of Environment, said at the conference that it can take 14 years to obtain patent approval, noting there are "management issues" within the Brazilian government on the subject.

"So how are we going to attract investment, especially in R&D, if we have a backlog in intellectual property that dates from the year 2000?" Pedro Luis Fernandes, vice president of Corporate Affairs & Sustainability for Latin America at Novozymes AS, asked rhetorically.

"We may be very quick in expediting things in terms of research. But if you have an onset about your intellectual property, nobody will invest," Fernandes added.

In theory, Brazil's intellectual property system should operate at a level similar to that in other developed countries, as it is a member of the World Trade Organization. WTO establishes minimum levels of protection that each government must provide.

Bernardo Gradin, CEO of the Brazilian biotech company and ethanol producer GranBio, also pointed to the difficulties of obtaining patents in Brazil. He noted his firm has 15 patents filed in Brazil and 320 filed in the US. "Bureaucracy is very high and difficult to go along with," Gradin said, adding that Brazil needs to establish an "innovation culture."