426. Brazil would like to thank the co-sponsors for including in the agenda the important topic of "promoting public health through competition law and policy" under the item IP and the Public Interest.
427. The promotion of competition and the protection of IPRs are essential cornerstones for the development of a modern economy, and the challenge Members face, irrespective of their level of development, is to find the right balance between both policies.
428. In a well-functioning market economy, IPRs may provide incentives for competition, based on the promise to grant exclusive rights to products or services that eventually bring a benefit to society and, as a result, more competition in the medium-long term. For this incentive mechanism to function, however, it is essential that existing IPRs not be employed abusively, harming competition and innovation in the short term at the expense of IP users.
429. In this sense, competition laws play a key role in ensuring that the exercise of exclusive intellectual property rights do not give rise to anti-competitive practices, whether through the abuse of the IP holders´ dominant position in the market or unlawful agreements among right holders themselves.
430. On patents and health, we believe innovation, bolstered by the patent system, has produced a number of important technologies that have improved health outcomes worldwide. Innovation is also vital to achieving the 2030 Agenda´s goal of improving the health and well-being of all people at all ages, which appears in a number of SDG targets.
431. While important progress has been made, significant gaps persist in health, innovation and access. To mention one example, according to WHO and the World Bank, 400 million people worldwide lack healthcare, including access to medicines, vaccines and medical devices. Three quarters of them live in middle-income countries. Furthermore, an estimated 1.7 billion people in 185 countries still need treatment and care for neglected tropical diseases.
432. The WTO, WIPO and WHO report on IP and Public Health highlights that: "Several potentially anti-competitive strategies in relation to IP rights involving medical technology have been observed and documented. These strategies mostly are designed to extend patent protection for originator drugs and to prevent market entry by generic competitors after patent expiry."
433. The UNDP report, entitled "Using Competition Law to Promote Access to Health Technologies", also provides a thorough analysis of different strategies companies use to try to curb competition. The same document underlines the importance of competition law as one of the important tools to promote innovation and access to health technologies.
434. In our view, the use of competition law to curb abusive conduct is in line with both the letter and the spirit of Article 7 of TRIPS, which states that: "The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations".
435. Article 8.1 of the TRIPS Agreement also recognizes that the principles of IP protection are based on underlying public policy objectives.
436. Various other provisions of TRIPS are relevant to competition law including Article 6, Article 31(k) and Article 40. These provisions leave broad discretion to Members in how they apply competition law in respect of the acquisition and exercise of IP rights.
437. We would like to highlight that Brazil´s approach to IP and Competition aims to be cautious, balanced and pragmatic.
438. The Administrative Council for Economic Defense (CADE) is the Brazilian Antitrust Authority responsible for applying Law 12.529/2011 (Antitrust Law). The institutional dialogue between CADE and our IP office (INPI) has been intensified through a recent agreement for the exchange of knowledge, information and technical cooperation. The objective of this increasing collaboration is to ensure IP and antitrust laws are equally respected and assessments are made on a case-by-case basis.
439. Based on this cooperation, CADE found Eli Lilly of Brazil and Eli Lilly and Company guilty of sham litigation in order to obtain exclusive marketing rights (EMR) for a medical drug used in cancer treatment in 2015.
440. In our view, such intra-agency dialogue and cooperation ensures stability, reliability and legal certainty, essential elements of a conducive business environment and for attracting investment and innovation.
441. Pursuing a better alignment between IP, trade and health policies is an ongoing, never-ending process. That´s why, we, Members, have to continue working together to develop a balanced and effective international patent system that encourages and rewards innovation and, at the same time, is supportive of public policy objectives.
442. That is why we believe the item "IP and Public Interest" is of utmost importance and should be further explored in the TRIPS Council agenda in future sessions.
443. In the Eli Lilly Case, the Brazilian Association of Generic Medication Industries filed a complaint against Eli Lilly of Brazil and Eli Lilly and Company, alleging that the defendants had practiced sham litigation by unlawfully enforcing patents in the medical drug market. The plaintiff claimed that the defendants were creating artificial barriers to competition by filing suits against public institutions, such as the INPI, in order to obtain unlawful exclusivity over a medical drug used in cancer treatment. CADE's ruling identified an abuse of IP rights in Eli Lilly's conduct. According to CADE, the claims filed by the defendants fulfilled the three requirements for establishing sham litigation, as developed by case law: (1) implausibility of the claims, (2) provision of erroneous information and (3) unreasonableness of the means used. The agency highlighted the importance of careful scrutiny in sham litigation cases involving IP rights due to the high potential of such cases to cause very harmful effects on competition. CADE addressed the complex interface of antitrust and IP law, noting that even patents lawfully granted by the designated government agencies did not preclude the possibility that these IP rights could be abused in enforcement proceedings.
444. CADE found the defendants guilty of sham litigation for the following reasons: (i) the suits filed by Eli Lilly were manifestly unreasonable in the sense that they were not credible and had no chance of succeeding, since the patentability of the pharmaceutical product whose IP was being enforced had never been analysed by INPI; (ii) the defendants omitted relevant information, such as the suspension of the patent review and the modification of the patent scope, from their submissions filed in the judicial suits; and (iii) the means used to enforce the IP rights were deemed unreasonable since the same claim had been filed in several different courts . The defendants had obtained an unlawful monopoly, harming competition, by filing various judicial claims to avoid the practical effects of the refusal to grant the requested patent in order to obtain EMR.
445. This ruling exemplifies an instance where CADE applied antitrust rules in a case involving the abuse of IP rights. The defendants' conduct in the Eli Lilly case had clearly been abusive and the resulting unlawful monopoly had caused serious harm to competition.
