IP & Antitrust: Brazil

1. Applicable rulesDoes competition law apply to the obtainment, grant, acquisition, exercise and transfer of intellectual property rights?

Brazil

Law No. 9,279, of 14 May 1996, is the legal provision related to intellectual property rights (IPR). The National Institute of Intellectual Property (INPI) is the competent entity responsible for implementing the rules regulating industrial property, notably for analysing patent applications.

The Administrative Council for Economic Defence (CADE or Brazilian Competition Authority) is responsible for the prevention and prosecution of violations against the economic order. CADE is not directly involved in the analysis of patent applications, but it may analyse potential abuses to the economic order, including if they are related to some extent to IPR.

In fact, out of a non-exhaustive list of potential conducts, Law No. 12,529, of 30 November 2011 (the Brazilian Competition Act), in its article 36, paragraph 3, lists four examples of situation that can be interpreted, along with the above-mentioned provisions, as anticompetitive violations:

• to prevent the access of competitors to sources of input, raw material, equipment or technology, and distribution channels;
• to regulate markets of goods or services by establishing agreements to limit or control the research and technological development, the production of goods or services, or to impair investments for the production of goods or services or their distribution;
• to hoard or prevent the exploitation of industrial or intellectual property rights or technology; and
• to misuse or exploit industrial, intellectual property, technology or trademark rights.

However, the Brazilian Competition Act sets forth that such practices will only consist of violations to the economic order if: their object leads to, or may lead to, the following effects: (i) limit, restrain or in any way harm free competition or free enterprise; (ii) dominate a relevant market of goods or services; (iii) increase profits arbitrarily; or (iv) exercise dominant position abusively.

In sum, CADE has no jurisdiction in the analysis of the validity of the rights granted by INPI. However, what CADE may investigate and condemn is the eventual abuse of the exercising rights to the detriment of competition.

CADE has already handed down several decisions discussing this issue (for instance, Administrative Proceeding No. 08012.005335/2002-67 (Editora Atenas Ltda./Ediouro Publicações S/A). Recently, in Administrative Proceeding No. 08012.002673/2007-51 (Anfape/Volkswagen/Fiat/Ford), CADE’s Tribunal confirmed that it has no powers to declare the nullity or loss of patents or registrations, but only the verification of any abuse of economic power resulting from a specific form of exercise of property rights.

For more information about the applicability of antitrust laws to obtaining IPR, see question 4. For more information about the applicability of antitrust laws to the granting, transferring or licensing of IPRs to competitors or other licensees, see question 5. For further discussion of the applicability of antitrust laws to the unilateral exercise of IPR, see question 7.

Answer contributed by José Alexandre Buaiz Neto, Giovana Porto and Thaiane Abreu

2. Competent authoritiesWhich authorities are responsible for the application of competition law to intellectual property rights? What enforcement powers do they have? Are there any special procedures for conduct that concerns intellectual property rights?

Brazil

CADE is the main enforcer of the Brazilian Competition Act in terms of investigation and punishment of conducts that could be considered as harmful to the competition. In Administrative Proceeding No. 08012.002673/2007-51 (Anfape/Volkswagen/Fiat/Ford), CADE stated that it cannot analyse possible detrimental effects to competition arising from the regular exercise of intellectual property, but that it can examine is the any abuse of economic power resulting from a specific form of exercise of property rights.

The framework used for the enforcement of article 36 of the Brazilian Competition Act is indicated in the same legal provision, from article 48 and following. The investigation of an abuse of IPR does not have any special procedure before CADE. 

If CADE considers the conduct as an anticompetitive violation, it may impose the fines indicated in article 37 of the Brazilian Competition Act (from 0.1 per cent to 20 per cent of the gross sales of the company, group or conglomerate).

In light of the Brazilian Constitution, however, the administrative decisions issued in Brazil can be analysed by the judiciary, in line with the principle of the non-obviation of judiciary jurisdiction. In fact, there are some decisions handed down by the judiciary that reviewed CADE’s administrative decisions (for instance, Proceeding No. 0076332-37.2014.4.01.3400 – this case subject to further appeal before the Federal Regional Tribunal of 1^st Region). This is a hot topic in Brazil in the current year: the Supreme Federal Court (STF) issued a decision indicating that the judiciary could not review CADE’s decisions, in light of the complexity of the matter (for more information, see RE 1083955 AgR/DF). This decision is subject to further appeal to STF’s plenary.

Answer contributed by José Alexandre Buaiz Neto, Giovana Porto and Thaiane Abreu

3. Market definitionHow are markets involving intellectual property rights defined?

Brazil

In terms of merger control, CADE’s approach to define a relevant market is established in the Guideline on the Assessment of Horizontal Mergers, published in 2016. The analysis of a relevant market includes the product and the geographic dimensions. The Guideline has also a specific topic related to technology markets, indicating that “patent law has permitted the creation of temporary monopolies as an incentive for the creation of new technologies”. CADE gives an example that mergers between technology companies may be analysed as a concentration of “research service providers” and that it could be a complex case with competitive concerns arising from future and potential rivalry. Therefore, CADE states that traditional tests for the definition of relevant markets may not be able to verify correctly the competition effects of a concentration in the technology sector.

It is also worth mentioning that CADE may leave the definition of relevant market open in cases that are evidently not harmful to competition, in view of their low concentration in the possible scenarios of geographic and product dimensions.

Regarding anticompetitive violations, CADE’s understanding is that the analysis of relevant market only works as “a mechanism to ascertain whether it is appropriate, practical and reasonable to isolate or fragment the boundaries of the economic activity in which the [competition] law will focus”. In Administrative Proceeding No. 08012.011508/2007-91 (Pró-Genéricos/Eli Lilly), a case involving sham litigation and IPR, CADE’s Tribunal did not analyse the relevant market, focusing its examination on the conduct itself and the resulting effects.

Answer contributed by José Alexandre Buaiz Neto, Giovana Porto and Thaiane Abreu

4. Acquisition and saleDoes competition law apply to the obtainment or grant and transfer or assignment of intellectual property rights?

Brazil

The obtainment or granting of IPRs is not subject to CADE’s competency and the entity responsible for these concessions is INPI, as mentioned in the question 1. CADE cannot interfere in any INPI’s procedure of obtainment or grant of IPRs. The transfer of IPR, however, can be the subject of CADE scrutiny if the economic groups involved in the transaction meet the turnover thresholds. 

The Brazilian Competition Act establishes, in its articles 88 and 90, the turnover thresholds of a mandatory notification (one economic group must have a turnover of 750 million reais and the other must achieve a turnover of 75 million reais, both in Brazil) and what are the types of transactions considered as a concentration act, respectively. However, the Brazilian Competition Act is not clear in defining whether an asset acquisition is required or not.

The Brazilian Competition Act, in its article 90, indicates that a pre-merger filing is required if the economic concentration refers to if: 

“I - two or more previously independent companies merge;

II - one or more companies acquire, directly or indirectly, by purchase or exchange of stocks, shares, bonds or securities convertible into stocks or assets, whether tangible or intangible, by contract or by any other means or way, the control or parts of one or more companies;

III - one or more companies incorporate one or more companies, or

IV - two (2) or more companies enter into an associative contract, consortium or joint venture”. 

In this way, the acquisition and sale of IPR is regulated by item II of article 90, considering it explicitly mentions the acquisition of intangible assets. In this way, CADE approved the Concentration Act No. 08700.004653/2018-10 (Mylan/Novartis), a transaction involving only IPRs of two medicines developed and previously detained by Novartis. CADE considered that the acquisition of these IPRs partially covered the activities carried out by Novartis. Another case approved by CADE (Concentration Act No. 08700.009226/2015-85; Henkel/P&G) was related to the transfer of trade and name rights regarding a hair care business previously detained by P&G to Henkel.

Answer contributed by José Alexandre Buaiz Neto, Giovana Porto and Thaiane Abreu

5. LicensingHow does competition law apply to technology transfer and licensing agreements?

Brazil

The analysis of technology transfer and licensing agreements can be subject of CADE’s scrutiny if the economic groups involved in the transaction meet the turnover thresholds and if the transaction could be considered as one of the hypothesis of economic concentration act, under article 90 of the Brazilian Competition Act.

CADE’s leading case of licensing agreements under the updated Brazilian Competition Act was the joint judgment of four transactions involving Monsanto and licensing agreements with licensee companies (Concentration Acts No. 08012.002870/2012-38 (Monsanto/Syngenta); No. 08012.006706/2012-08 (Monsanto/Nidera); No. 08700.003898/2012-34 (Monsanto/Coodetec); and No. 08700.003937/2012-01 (Monsanto/Nidera). CADE approved the transactions conditioned to modifications into the licensing agreements’ clauses, to remove the clauses that could give Monsanto the possibility to influence strategic decisions of the licensee companies. In this agreement, the influence would transcend the object of the contract, as it would reach not only seed production with Monsanto’s technology but also the total production of the licensee companies.

Concentration Act No. 08700.004957/2013-72 (Bayer/Monsanto) referred to a licensing agreement in which Monsanto would grant Bayer a licence for development, production and commercialisation of soybean seeds with a specific technology. CADE conditioned the approval of the transaction to amendments of some clauses of the agreement, which in CADE’s view could allow Monsanto to have undue control and influence over Bayer’s activities on the soy market. CADE’s Tribunal concluded that the royalties billing mechanism structured by Monsanto could grant the company access to Bayer’s sensitive commercial information. Therefore, to approve the transaction, CADE’s Tribunal determined the withdrawal of some clauses that could harm the possible or incoming competitors, reducing the options to agriculturists and the whole chain.

However, CADE’s Tribunal concluded that “the terms and conditions used by Google have clauses commonly seen in licensing and adhesion agreements, without evident anticompetitive characteristics. In such cases, CADE’s Tribunal indicated that the abuse of IPR causing damage to competition has to be demonstrated.

Answer contributed by José Alexandre Buaiz Neto, Giovana Porto and Thaiane Abreu

6. Market power and dominanceIn what circumstances is the possession of intellectual property rights deemed to confer substantial market power on the holder such that the rules on unilateral conduct will apply?

Brazil

In Brazil, holding IPRs does not presume a substantial market power. According to the Guideline on the Assessment of Horizontal Mergers of CADE, to characterise the existence of market power, it is necessary to carry out a complex analysis, which requires the existence of a dominant position, but also involves the investigation of other variables, such as entry barriers; counterfactual arguments; rivalry in the market; and economic efficiencies. In this way, CADE considers that a company has market power if it is able to systematically maintain its prices above the competitive market level, without jeopardising its market position and/or losing its customers.

Moreover, the existence of market power itself is not considered an infringement of the economic order. CADE recognises that the abuse of economic power is the behaviour of a company that uses its market power to undermine free competition through anticompetitive conduct. 

It is worth noting that the Brazilian Competition Act establishes, in its article 61, that CADE’s Tribunal can approve concentration acts conditioned to restrictions. In sequence to this provision, article 61, paragraph 2 provides a non-exhaustive list of restrictions that could be applied by CADE, one of them being a “compulsory licensing of intellectual property rights”.

Other explicit reference to IPRs licensing in the Brazilian Competition regulations will occur in the Antitrust Remedies Guideline. The “definitive transfer of intellectual property rights, including patents, trademarks and others” is mentioned as an example of structural remedy in the case of merger acts that result into competitive harm and can be approved only with restrictions. 

In fact, several merger cases judged by CADE had their approval conditioned to the disinvestment of IPR, such as Concentration Act No. 08700.008607/2014-66 (GlaxoSmithKline/Novartis), in which CADE determined the alienation of assets related to the medicine Niquitin, a type of nicotine replacement therapy.

Answer contributed by José Alexandre Buaiz Neto, Giovana Porto and Thaiane Abreu

7. Unilateral conductIn what circumstances may unilateral conduct involving the exercise of intellectual property rights be deemed to be anticompetitive (monopolisation, abuse of dominance, etc)?

Brazil

In Administrative Proceeding No. 08012.002673/2007-51 (Anfape/Volkswagen/Fiat/Ford), CADE’s Tribunal stated that an abuse of intellectual property could be characterised in cases of: (i) excessive price increases, (ii) deliberate shortage of products, (iii) non-availability of goods or services essential to the development of an activity in a derivative market, (iv) refusal to exclude any effective competition in the derivative market, (v) practice of evergreening, (vi) married sale of patented product with another unprotected product, and (vii) sham litigation.

In this case, specifically, Anfape (a national association of auto parts manufacturers) made a complaint to CADE claiming that Volkswagen, Fiat and Ford abused their intellectual property rights to prevent the manufacture and sale of auto parts by independent auto parts manufacturers. After a proceeding of more than a year, CADE’s Tribunal concluded that “the exercise of industrial property rights in the secondary market does not impede independent manufacturers.”

Moreover, there are several other cases ruled by CADE involving the discussion of IPRs, especially of sham litigation (Administrative Proceeding No. 08012.011508/2007-91 – Eli Lilly/Pró Genéricos; Administrative Proceeding No. 08012.007189/2008-08 – Dystar/Bann).

In the Eli Lilly case, the company obtained exclusive rights to trade a medicine used in cancer treatment, after filing lawsuits in the judiciary. CADE’s Tribunal concluded, however, that Eli Lilly omitted relevant information regarding the change of scope in the patent request (it was initially related exclusively to the active principle production process) and regarding information about the administrative process before INPI. CADE’s Tribunal handed down a decision indicating that Eli Lilly violated the competition law by trying to unfairly extend the effects of the right of exclusivity to other therapeutic purposes not covered by the court ruling, leaving its competitors out of the market. 

CADE conducts its investigation of unilateral conducts in a rule of reason basis, which means that the authority has the probative burden to demonstrate the possible anticompetitive effects in the investigated conduct.

Further, article 38, item IV, a, of the Brazilian Competition Act establishes that, in the face of a serious anticompetitive infraction or public interest, CADE can recommend to the respect public agency for a “compulsory licence over the intellectual property rights held by the wrongdoer be granted, when the violation is related to the use of that right”. 

Answer contributed by José Alexandre Buaiz Neto, Giovana Porto and Thaiane Abreu

8. Patent settlementsIn what circumstances may patent settlements be deemed to infringe competition law?

Brazil

The Brazilian Competition Act does not specifically address patent settlements. In this sense, patent settlements may breach the competition law in case they violate any of the practices that would consist of violations to the economic order if they have as their object, or may lead to, the following effects: (i) limit, restrain or in any way harm free competition or free enterprise; (ii) dominate a relevant market of goods or services; (iii) increase profits arbitrarily; or (iv) exercise dominant position abusively.

In addition, patent settlements may also breach competition rules if they fall within the scope of the following samples provided for in article 36, paragraph 3 of the Brazilian Competition Act, for example:

• prevent the access of competitors to sources of input, raw material, equipment or technology, and distribution channels;
• regulate markets of goods or services by establishing agreements to limit or control the research and technological development, the production of goods or services, or to impair investments for the production of goods or services or their distribution;
• hoard or prevent the exploitation of industrial or intellectual property rights or technology; and/or
• misuse or exploit industrial, intellectual property, technology or trademark rights.

With regard to CADE’s case law on patent settlements, CADE’s General Superintendency (SG) has already issued non-binding opinions touching base the matter. In this sense:

• Nova Atenas/Ponto da Arte/Ediouro (Administrative Proceeding No. 08012.005335/2002-67): both publishing companies Nova Atenas and Ponto da Arte filed complaints before CADE arguing, in summary, that Ediouro would have been practicing sham litigation, entering into non-competition agreements in courts and abusing its dominant position with regard to IPR. CADE’s SG recommend the condemnation of Ediouro, but the case was not reviewed by CADE’s Tribunal yet. According to the SG, among others, Ediouro entered into two non-competition agreements (the first with publishing companies Escala and Heavy Metal; and the second with SR3) to exclude competitors in the market for hobby magazines under payment of monetary amounts. In the first case, Ediouro argued that, even though its patent rights expired, they should remain as a corporate secret and could not be used by third parties. The SG stated that this was not in compliance with the Intellectual Property Act, which provides that patents are temporary, and mentioned two similar cases in US: Federal Trade Commission v Actavis, Inc and In The Matter of Bristol-Myers Squibb Company, Docket No. C-4076. With regard to the second case, SR3 filed a complaint arguing that Ediouro included a patent certificate in its magazines, even though the patent rights had expired. CADE’s SG then identified that Ediouro owned 73.7–100 per cent of the relevant market at the time of the alleged practice, which would also indicate barriers to entry in the market.
• Cristália/Abbvie/Abbott (Administrative Inquiry No. 08012.011615/2008-08): in summary, Cristália filed complaint against Abbvie and Abbott arguing sham litigation and abuse of IPR, among others. CADE’s SG recommended the shelving of the case in 2019, but made some mentions to patent settlements in the pharmaceutical market. According to CADE’s SG, the European Commission conducted a detailed analysis of the pharmaceutical sector in Europe (Pharmaceutical Sector Inquiry (EC 2009)) highlighting practices that are not anticompetitive per se, but that may lead to competition restrictions, including patent settlements. CADE’s SG also mentioned three cases in which pay-for-delay agreements, for example, were convicted by the European Commission (i) Lundbeck; (ii) Johnson&Johnson and Novartis and (iii) Servier. In addition, the Opinion issued by the SG mentions the recommendation from the OECD, in the 121st meeting of the Competition Committee Held on 18–19 June 2014, to balance the potential anticompetitive effects of practices involving patents in the pharmaceutical sector with the promotion of innovation.
• CADE’s SG also made the same mentions to patent settlements from the Cristália/Abbvie/Abbott case in the EMS/Germed v Genzyme (Administrative Proceeding No. 08012.007147/2009-40) with the recommendation to shelve the case in 2019.

Answer contributed by José Alexandre Buaiz Neto, Giovana Porto and Thaiane Abreu

9. Merger control (jurisdiction)In what circumstances will the transfer of intellectual property rights constitute a merger for the purposes of competition law?

Brazil

The transfer of intellectual property rights constitutes a merger subject to mandatory notification when it complies with the turnover thresholds under the Brazilian Competition Act: one economic group must have a turnover of 750 million reais and the other must achieve a turnover of 75 million reais, both in Brazil in the year preceding the relevant transaction.

In addition, the Brazilian Competition Act indicates in article 90 that mergers are required to be notified when: 

“I - two or more previously independent companies merge;

II - one or more companies acquire, directly or indirectly, by purchase or exchange of stocks, shares, bonds or securities convertible into stocks or assets, whether tangible or intangible, by contract or by any other means or way, the control or parts of one or more companies;

III - one or more companies incorporate one or more companies, or

IV - two (2) or more companies enter into an associative contract, consortium or joint venture”.

Considering that the transfer of intellectual property rights may sometimes not include acquisitions of companies, but activities with sharing of risks, among others, it is relevant to refer to CADE’s Resolution No. 17, which provides for the meaning of associative contracts. According to CADE’s Resolution No. 17, associative contracts are: (i) a contract with a duration of two years or more that establish a joint venture for the exploitation of economic activity, provided that, cumulatively: (a) the contract establishes the sharing of the risks and results of the economic activity that constitutes its object; and (b) the contracting parties are competitors in the relevant market object of the contract.

Answer contributed by José Alexandre Buaiz Neto, Giovana Porto and Thaiane Abreu

10. Merger control (substantive)In what circumstances will a merger involving intellectual property rights be deemed anticompetitive? Are there any special considerations for mergers involving intellectual property rights or innovation markets?

Brazil

Initially, it is worth mentioning that, when examining a transaction – involving intellectual property rights or not, CADE may (i) approve it as it is proposed orpresented by the parties; (ii) approve it upon compliance with certain conditions to be imposed to the relevant parties (which may be structural remedies, such as the sale of a plant; or behavioural remedies, such as the commitment not to impose exclusivity clauses); or (iii) block the transaction. 

In general, when reviewing a transaction CADE follows the stages indicated in the Guidelines for Analysis of the Economic Aspects of Horizontal Concentration. According to the Guidelines, the review of concentration acts should follow five stages, summarised below:

STAGE 1: Definition of the relevant market.

STAGE 2: Analysis of share of control of the market.

STAGE 3: Analysis of the probability of exercise of market power:

• Exercise of market power not probable: potential approval
• Exercise of market power probable: proceed to Stage 4

STAGE 4: Analysis of efficiencies.

STAGE 5: Analysis of the cost of the exercise of market power vis-à-vis the efficiencies:

• • Costs of the exercise of market power not superior to the efficiencies: potential approval
  • Costs of the exercise of market power superior to the efficiencies: potential restrictions/denial.

Besides the market shares, CADE also uses the Herfindahl-Hirschman Index (HHI) to measure the degree of concentration of the transaction. The HHI is equivalent to the sum of the square of the market shares of the market players. The ΔHHI is the difference between the HHI before the transaction and after the transaction. If the ΔHHI is above 200, the transaction may raise competition concerns and therefore it is not eligible for review under the fast-track procedure, according to CADE’s resolutions. In addition, CADE’s analysis in relation to markets in which the market share involved ranges from 30 per cent to 40 per cent tends to be more detailed, notably in markets with a low number of active players.

If CADE understands that a merger may harm competition, it is possible to provide CADE with alternative remedies to guarantee that the market would not be harmed by the proposed transaction. CADE may accept structural or behavioural remedies to address the situation. With regard to remedies involving intellectual property, CADE’s Guidelines for Remedies provides examples of structural remedies, as sales of assets (including IP rights) and definitive transfer of IP rights (including patents and brands, for example). Regarding behavioural remedies, the Brazilian Competition Act also provides the possibility of “compulsory licensing of intellectual property rights”.

As previously mentioned, CADE applied remedies in the scope of Concentration Act No. 08700.008607/2014-66 (GlaxoSmithKline/Novartis), for example, ordering the alienation of assets related to the medicine Niquitin, a type of nicotine replacement therapy.

Answer contributed by José Alexandre Buaiz Neto, Giovana Porto and Thaiane Abreu

11. StandardisationHow, in general, does competition law treat the development of standards in standard-development organisations (SDOs), and the exercise of intellectual property rights for technology that may be essential to a standard?

Brazil

The Brazilian Competition Act does not provide specifically for the development of standardisation. However, standardisation may breach the competition law in case it violates any of the practices that would consist of violations to the economic order if it has as its object, or may lead to, the following effects: (i) limit, restrain or in any way harm free competition or free enterprise; (ii) dominate a relevant market of goods or services; (iii) increase profits arbitrarily; or (iv) exercise dominant position abusively.

In addition, standardisation may also breach competition rules in case it falls within the scope of the following samples provided for in article 36, paragraph 3 of the Brazilian Competition Act, for example: 

• prevent the access of competitors to sources of input, raw material, equipment or technology, and distribution channels;
• regulate markets of goods or services by establishing agreements to limit or control the research and technological development, the production of goods or services, or to impair investments for the production of goods or services or their distribution;
• hoard or prevent the exploitation of industrial or intellectual property rights or technology; and/or
• misuse or exploit industrial, intellectual property, technology or trademark rights.

There is no public decision from CADE on the matter yet. In any case and, as mentioned in question 7, CADE’s Tribunal decided in the Anfape/Volkswagen/Fiat/Ford case that abuse in the exercise of intellectual property may take place in the case of:

• excessive price increases;
• deliberate shortage of products;
• non-availability of goods or services essential to the development of an activity in a derivative market;
• refusal to exclude any effective competition in the derivative market;
• practice of evergreening;
• married sale of patented product with another product unprotected; and
• sham litigation.

Answer contributed by José Alexandre Buaiz Neto, Giovana Porto and Thaiane Abreu

12. Standardisation and anticompetitive agreementsHow do competition law rules on agreements, concerted practices, etc, apply to the standardisation process?

Brazil

As mentioned above, the Brazilian Competition Act does not provide specifically for violations regarding standardisation and IP rights. In addition, there is no public decision from CADE on this regard. However, standardisation may breach the competition law in case it violates any of the practices provided for in the Brazilian Competition Act, including: (i) limit, restrain or in any way harm free competition or free enterprise;(ii) dominate a relevant market of goods or services; (iii) increase profits arbitrarily; or (iv) exercise dominant position abusively. 

In addition, standardisation may also breach competition rules in case it falls within the scope of the following samples provided for in article 36, paragraph 3 of the Brazilian Competition Act, for example:

• prevent the access of competitors to sources of input, raw material, equipment or technology, and distribution channels;
• regulate markets of goods or services by establishing agreements to limit or control the research and technological development, the production of goods or services, or to impair investments for the production of goods or services or their distribution;
• hoard or prevent the exploitation of industrial or intellectual property rights or technology; and/or
• misuse or exploit industrial, intellectual property, technology or trademark rights.

Answer contributed by José Alexandre Buaiz Neto, Giovana Porto and Thaiane Abreu

13. Standardisation and unilateral conductHow do competition rules on unilateral conduct apply to the exercise of intellectual property rights for technology that may be essential to a standard?

Brazil

Even though there is no public decision from CADE on this matter, it is expected that general competition rules be applicable to unilateral conducts regarding the exercise of intellectual property rights for technology that may be essential to a standard. That is, they may not violate any of the practices provided for in the Brazilian Competition Act, including: (i) limit, restrain or in any way harm free competition or free enterprise; (ii) dominate a relevant market of goods or services; (iii) increase profits arbitrarily; or (iv) exercise dominant position abusively. 

In addition, the practice may constitute an abuse in the exercise of intellectual property under the following circumstances provided in the Anfape case:

• excessive price increases;
• deliberate shortage of products;
• non-availability of goods or services essential to the development of an activity in a derivative market;
• refusal to exclude any effective competition in the derivative market;
• practice of evergreening;
• conditioned sale of patented product with another unprotected product; and
• sham litigation.

Answer contributed by José Alexandre Buaiz Neto, Giovana Porto and Thaiane Abreu

14. Recent cases and other developments

Brazil

CADE reviewed the following relevant cases in recent years involving IPR, among others:

• Microsoft/Google (Administrative Proceeding No. 08700.005694/2013-19): Microsoft made a formal complaint against Google arguing that Google was reducing incentives for companies to advertise in both Bing Ads and AdWords pages, with the inclusion of abusive clauses regarding Google’s licensing agreement software. CADE’s Tribunal decided to shelve the case in 2019, concluding that “the terms and conditions used by Google have clauses commonly seen in licensing and adhesion agreements, without evident anticompetitive characteristics”.
• Nova Atenas/Ponto da Arte/Ediouro (Administrative Proceeding No. 08012.005335/2002-67): even though the case has not a final ruling yet, it is worth mentioning that CADE’s SG looked at the European Commission and OECD statements regarding settlements in the pharmaceutical sector. In summary, CADE’s SG mentioned that Ediouro entered into two non-competition agreements (the first with publishing companies Escala and Heavy Metal; and the second with SR3) to exclude competitors in the market for hobby magazines under payment of monetary amounts. In the first case, Ediouro argued that, even though its patent rights expired, they should remain as a corporate secret and could not be used by third parties. The SG stated that this was not in compliance with the Intellectual Property Act, which provides that patents are temporary, and mentioned two similar cases in US: Federal Trade Commission v Actavis, Inc and In the Matter of Bristol-Myers Squibb Company, Docket No. C-4076. With regard to the second case, SR3 filed a complaint arguing that Ediouro included a patent certificate in its magazines, even though the patent rights were expired. CADE’s SG then identified that Ediouro owned 73.7-100 per cent of the relevant market at the time of the alleged practice, which would also indicate barriers to entry in the market.
• Anfape/Volskwagen/Fiat/Ford (Administrative Proceeding No. 08012.002673/2007-51): Anfape (a national association of auto parts manufactures) made a complaint to CADE claiming that Volkswagen, Fiat and Ford abused their intellectual property rights to prevent the activities of third parties in the aftermarket. CADE’s Tribunal decided in 2018 to shelve the case, in summary, because CADE would not have jurisdiction to declare the nullity or loss of patents or registrations, but only the verification of abuse of economic power resulting from a specific form of exercise of property rights.
• Pró-Genéricos/Eli Lilly (Administrative Proceeding No. 08012.011508/2007-91): a case involving sham litigation and IPRs, in which CADE made Eli Lilly in 2015 pay approximately 36 million reais due to the alleged practice of sham litigation regarding obtaining exclusivity in relation to specific medicine.
• Bayer/Monsanto (Concentration Act No. 08700.004957/2013-72): concerned a licensing agreement in which Monsanto would grant Bayer a licence for development, production and commercialisation of soybean seeds with a specific technology. CADE conditioned the approval of the transaction to the alterations of some clauses of the agreement, which could grant Monsanto the capacity of having undue control and influence over Bayer’s activities on the soy market. CADE’s Tribunal concluded that the royalties billing mechanism structured by Monsanto could grant the company access to Bayer’s sensitive commercial information. Therefore, to approve the transaction, CADE’s Tribunal determined the withdrawal of some clauses that could harm “the possible or incoming competitors, reducing the options to agriculturists and the whole chain”. The transaction was approved in 2014.
• Monsanto/Syngenta (Concentration Act No. 08012.002870/2012-38), Monsanto/Nidera (Concentration Acts Nos. 08012.006706/2012-08 and 08700.003937/2012-01) and Monsanto/Coodetec (Concentration Act No. 08700.003898/2012-34): CADE’s leading case of licensing agreements under the updated Brazilian Competition Act was the joint judgment of four transactions involving Monsanto and licensing agreements with licensee companies. CADE approved the transactions conditioned to modifications into the licensing agreements’ clauses to remove the clauses that could give Monsanto the possibility to influence strategic decisions of the licensee companies. In this agreement, the influence would transcend the object of the contract, as it would affect not only seed production with Monsanto’s technology but also the total production of the licensee companies. The cases were approved in 2013.

Answer contributed by José Alexandre Buaiz Neto, Giovana Porto and Thaiane Abreu