IP IN BRAZIL procedure, rules, laws, idioms, etc. Terefore,
before settling the agreement both parties should understand the other’s culture.
Legal barriers
Technology transfer in Brazil is still governed by Ordinance 435/58 of the Ministry of Finance. But it is an outdated rule and is based on protectionist measures against foreign commercial practices, focusing on the internalisation of the technologies and sometimes contradicting the parties’ wishes. Its application may directly conflict with Ordinance 837/12 of the Brazilian Health Ministry.
Te Brazilian Patent and Trademark Office (INPI) must record the following IP agreements: (i) trademark, patent and industrial design licences (IP licensing), and (ii) transfer of technology agreements (TTAs). Te INPI maintains an integrated system with the Brazilian Central Bank (BCB) and issues a certificate of recordal that may be presented to the bank/broker in order to apply the remittance of payment. Te BCB only accepts agreements recorded by the INPI.
Ordinance 436/58 governs the cap on the tax deduction on payments derived from IP agreements, which varies from 1 to 5% on the net or gross revenues depending on the technology and its industrial application. Te INPI applies the caps to regulate royalty payments derived from TTAs, mainly when the parties are related entities (such as a parent and subsidiary).
In these cases, however, the INPI unreasonably restricts royalty payments to match the caps related to tax deduction, namely from 1 to 5% on net or gross sales. If the parties are not related entities, the INPI does not connect tax deduction to the payment and it may allow the recordal with a provision of a 10 to 15% royalty rate.
Te INPI also applies a five-year time limit for the TTA application, although it can be renewed once for five more years but with no tax deduction for the second period. Agreements with non-competition/ confidentiality clauses exceeding ten years are not acceptable, as the INPI has determined that such provisions amount
to barriers to the transferee enjoying the acquired technology.
Furthermore, the INPI does not allow the recordal of technology licensing/know-how agreements, and enables the BCB to allow the payment. Te BCB does not allow the overseas remittance of royalties generated from this type of agreement.
On the one hand, there are tax incentives for developing technology, but for transferring/ acquiring a technology there is a heavy tax burden. Royalties generated from transfer of technology
www.lifesciencesipreview.com
Gabriel Di Blasi is a Brazilian patent attorney, lawyer and partner at Di Blasi, Parente & Associados, which specialises in IP issues. In addition, he has a technical background in industrial engineering and has expertise in patent prosecution and life science litigation. His core practice areas include domestic and international patents, designs, and regulatory and trade secrets matters.
Mellina Mamede is an attorney-at- law whose practice focuses on corporate agreements, with an emphasis on technology transfer, and consultation on IP, regulatory, corporate legal issues, and taxation on IP.
may also be subject to 35 to 40% taxes, which can be compensated or credited in foreign countries, as long as Brazil has ratified international treaties with them. Notwithstanding this, heavy taxation may discourage the parties from reaching an agreement.
Unprepared professionals
Te Brazilian public education system is something to be concerned about. Each year fewer students are interested in sciences and scientific studies. Overall, basic education is essential and academic performance is below average. Tis is due to low wages, poor qualification of professors, and the poor infrastructure of Brazilian schools. Professionals of Brazilian laboratories may not be qualified enough and may face difficulties in acquiring knowledge, which may lead to more time and costs during the application of technology transfer.
Te Brazilian government is now investing in education, primarily in sciences, promoting exchange experiences for students in all phases of secondary education. In addition, the Brazilian government has been assisting millions of students by supporting their studies in private universities and creating technical studies.
Private companies now are more engaged with public labs, and motivated to interact with either private or public entities to develop technology and acquire know-how. Besides, there are projects both in the public and private fields on the training
“THERE ARE TAX INCENTIVES FOR DEVELOPING
TECHNOLOGY, BUT FOR TRANSFERRING/ ACQUIRING A
TECHNOLOGY THERE IS A HEAVY TAX BURDEN.”
of technicians and their performance on the acquisition of technology.
Tere still are some cultural, legal and procedural barriers that must be overcome before the potential of Brazil’s life science sector can be realised. Although there has been a technological gap in the pharmaceutical industry, particularly related to patents, the government is committed to developing technology.
Gabriel Di Blasi is a partner at Di Blasi, Parente & Associados. He can be contacted at:
gabriel.diblasi@diblasi.com.br
Mellina Mamede is an attorney-at-law at Di Blasi, Parente & Associados. She can be contacted at:
mellina.mamede@
diblasi.com.br
Life Sciences Intellectual Property Review
Volume 2, Issue 1
35
VACLAV MACH /
SHUTTERSTOCK.COM
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