A step in the right direction

Martín Bensadon

Ignacio Sánchez Echagüe

The first Argentine Patent Law was enacted in 1864. More than 130 years later, Argentina approved the TRIPs Agreement in 1995 and passed a new Patent Law No 24,481 (the Patent Law) by the end of the same year.

Prior to the TRIPs Agreement and the Patent Law entering into force, there were not many patent cases at the courts, and more importantly, pharmaceutical products were not patentable. Nevertheless, the developments in the late 1990s could be taken as the big breakthrough in Argentine patent history.

The adoption of the TRIPs Agreement together with the enactment of the Patent Law brought many important changes in the patent system, which is now generally in line with international IP systems.

Patentable subject matter

The Patent Law follows the guidelines of the TRIPs Agreement and provides that, in principle, all inventions are patentable as long as they comply with the requirements of novelty, inventive step and industrial applicability. In case of any inconsistency between the Patent Law and the TRIPs Agreement the latter prevails, according to the Argentine Constitution.

The Patent Law in principle excludes from patentability scientific theories and mathematical methods, business methods, software, diagnostic and therapeutic methods applicable in the human body, and those related to animals, any kind of living matter or substance already existing in nature, and biological and genetic material already existing in nature.

The last two points may bring some confusion regarding the patentability of biotechnological inventions and microorganisms. However, these kind of patents are already being granted by the Argentine Patent and Trademark Office (Argentine PTO), especially bearing in mind that the TRIPs Agreement allows the member countries to exclude from patentability "plants and animals other than microorganisms". Thus, it is clear that member countries may not exclude microorganisms from patentability.

The Argentine PTO has recently issued a regulation relating to patent applications directed to second medical uses, according to which those patents would in principle not be granted.

The Patent Law expressly forbids patentability of methods of diagnosis or surgical or therapeutic treatment applicable in the human body. However, it does not contain any provision regarding second medical use claims, and therefore the general principle that any invention that complies with the requirements of novelty, inventive step and industrial applicability is patentable should be followed.

Consequently, it seems that the Argentine PTO has ruled beyond the boundaries established by the Patent Law, an issue that most likely will eventually be decided by the federal courts.

Argentina adopted internationally recognized standards regarding patentability requirements under the TRIPs Agreement in 1995. The basic patentability requirements are novelty, inventive step, and industrial applicability.

In addition, the Patent Law provides that the patent application has to adequately disclose the invention (written description and enablement) and must show the best mode to carry out the invention.

Patent term

Among the changes brought by the adoption of the TRIPs Agreement, one of the most relevant is the new term of validity for patents. The Patent Law, in line with the TRIPs Agreement, provides that patents are granted for a term of 20 years, counted from the filing date.

Argentine legislation does not provide for patent term extensions, and therefore it is not possible to extend the term of patents, for example due to government drugs approval delays or delays in prosecution of the patent application.

In light of the problems caused by pendency (see box), the Argentine PTO issued different regulations to try to accelerate the prosecution of patent applications.

1) Priority List

The first regulation was called the Priority List, and allowed applicants, under certain conditions, to change the order in which the substantive examination of their own applications should be performed.

Although this measure somewhat mitigated the enormous delay existing in some areas, it did not produce the expected substantial acceleration of prosecution for patent applications.

2) Waiver of international substantive examination

According to this regulation, it is possible to waive part of the substantive examination when a patent is granted in another country with substantive examination and similar patentability requirements. In these cases only Argentine prior art is studied.

The grant of a patent will still depend on the compliance with the remaining requirements established in the Patent Law and related regulations.

3) Changes in the abstract

This regulation allows the Argentine PTO to change the abstract when, in the opinion of the examiner, the abstract does not describe the object of the invention. The examiner may replace the abstract by the main claim (claim 1), or by the main claim and further secondary claims.

If the examiner considers that neither the abstract as filed by the applicant nor the main claim with or without further secondary claims fully describe the object of the invention, he or she may issue an Office Action requiring the applicant to file a new abstract.

The purpose of this regulation was to avoid unnecessary delays in requesting the applicant to change the abstract by allowing the Argentine PTO to do it. The regulation fulfils its purpose, however, at best it only avoids a one-month delay while pendency is still several years.

Enforcement

Patent enforcement is carried out by the federal courts, and the level of protection is fairly good in Argentina.

After the TRIPs Agreement entered into force several preliminary injunctions were granted, something that had not happened during the entire 130-year life of the old patent law.

After the reforms of the 1990s, the number of patent cases increased, and federal judges handled all the changes quite well, not only applying the Patent Law but also the TRIPs Agreement directly, enforcing its provisions and in general adequately protecting patentees' rights.

The patent owner and the licensee, the latter only if the patent owner fails to exercise the rights themselves, can sue in a civil and criminal case. The Justice Department's Attorney General's Office may also sue in criminal cases.

A party may be sued in the following cases:

• When the subject matter of the patent is a product, the patentee is entitled to prevent third parties from manufacturing, using, offering for sale, selling, or importing the product which is the subject matter of their patent, without their consent

• When the subject matter of the patent is a process, the patentee is entitled to prevent third parties from performing any act involving its use, without their consent, and from using offering for sale, selling or importing at least the product obtained directly by that process.

Patent applications in Argentina

Court cases

Federal jurisdiction is bestowed in patent cases. The courts that handle patent infringement suits are the federal courts of the jurisdiction where the infringement takes place. The patent owner has the choice of forum if the infringement occurs in several places, such as sales throughout the country. Nevertheless, the federal courts sitting in the city of Buenos Aires hear most of Argentina's patent cases.

The great majority of existing patent cases relate to appeals of Argentine PTO's decisions rejecting a patent application, preliminary injunctions and infringement cases. However, it is also possible to file other types of actions such as declaratory judgments and invalidity suits.

Alternative dispute resolution (ADR) is not a widely-used resolution system in patent matters, though mediation is a mandatory requirement before filing a lawsuit. Nevertheless, parties usually do not reach an agreement at the mediation stage due to its mandatory nature.

Foreign companies are treated in the same way as local companies. According to the Argentine Code of Civil Procedure, when the plaintiff is domiciled abroad and has no real estate in Argentina, the defendant may request the so-called excepción de arraigo, which consists of a bond that must be posted by the plaintiff to guarantee any damages or fees that the plaintiff should pay if they lose the lawsuit. Members of The Hague Convention of March 1 1954, relating to civil procedure are exempted from this requirement.

Trials are always decided by a judge. Theories of recovery include lost profits, profits obtained by the infringer, price erosion and reasonable royalty. Attorneys' fees are usually awarded to the winning party.

There are in principle no punitive or treble damages in Argentina.

There are always two instances in a patent case. The first instance starts with the filing of a complaint. On serving the suit, the defendant answers the complaint and the trial period starts. When the trial period finishes, both parties submit their final arguments and the judge issues a decision. The decision could be appealed to the Federal Court of Appeals, which issues a final decision. The final decision of the Federal Court of Appeals may be appealed to the Supreme Court only in cases of law that imply certain relevant issues of law.

The timing of court cases varies from case to case. It usually takes from three to five years for a decision of first instance to be issued, six months to a year at the appellate court and between one and two years if the case goes to the Supreme Court.

Changes in the Argentine Patent Law

In December 2003 the Argentine Congress passed a new law amending the Patent Law. The amendments include protection for products obtained by a patented process, new requirements to obtain preliminary injunctions, and the shifting of the burden of proof in infringement cases of process patents.

The amendment, which now includes protection for infringing products obtained by a patented process, is certainly correct. It literally transcribes Article 28.1(b) of the TRIPs Agreement. However this amendment does not stand for a real change in the legislation, because the doctrine of the Argentine Supreme Court obliges the courts to directly apply Article 28.1(b) of the TRIPs Agreement, which is very clear in this respect.

The situation prior to the enactment of the amendment was that the courts were directly applying the provisions of Article 50 of the TRIPs Agreement regarding preliminary injunctions. There were no additional requirements, nor any special procedure to obtain the injunctions, though sometimes local rules of civil procedure were applied without causing further complications.

The new law passed by the Argentine Congress includes requirements that are neither provided for by the TRIPs Agreement, nor are usually required by the courts, namely:

1) Likelihood of patent validity

The plaintiff has to show now a clear case of likelihood of validity of their patent if the validity of the patent is challenged by the defendant.

Until now the courts correctly considered in principle that a patent was valid and enforceable, and only considered validity issues in injunction proceedings when a defendant was able to clearly show that the patent was invalid.

2) Irreparable harm

The amendment to the Patent Law is superfluous on this point. Irreparable harm was and is still a necessary requirement for preliminary injunctions in patent cases to be granted. Prior to the amendment, the plaintiff also had to show irreparable harm.

3) Balance of hardship

According to the amendment the court should now determine whether "the damage that may be caused to the title holder exceeds the damage that the alleged infringer will suffer in case the measure was erroneously granted".

The consequence of this new requirement, not included in the TRIPs Agreement, may mean that in the future the granting of preliminary injunctions in patent matters may be more complicated. Defendants almost always complain about damage to local industry, imposition of a monopoly, and the like. Article 50 of the TRIPs Agreement seems to provide exactly the opposite: in case of doubt, the patent holder must be favoured, and the injunction granted.

Moreover, in patent cases it is very difficult to precisely determine the amount and even the existence of damages. It is usually a question of facts that requires a full trial to determine the existence and extent of damages to the patentees. Nevertheless, now the plaintiff should prove not only the existence of their damages and the extent of them, but also the existence of the damages to the defendant that the measure could cause them. Finally, after this is determined, the plaintiff has to compare both of them.

4) Likelihood of infringement

This is another superfluous provision of the amendment. The likelihood of infringement requirement has been applied before the enactment of the new law. Moreover, this requirement is set forth in Section 50.3 of the TRIPs Agreement.

5) Expert appointment

The amendment states that prior to the issuance of a preliminary injunction an expert has to be appointed to determine in 15 working days the validity and likelihood of infringement of the patent.

It is necessary to remember that validity and patent infringement issues are legal concepts that should be determined by the judge and not by an expert who only is knowledgeable in his or her own specialty.

The direct consequence of this amendment is that a probably unqualified expert will have to issue a validity opinion in 15 days after years of examination from the only qualified governmental agency, which is the patent office, and also an infringement opinion that should be issued by the judge.

6) Preliminary injunction granted inaudita altera parte
Another major change in preliminary injunctions is that these measures will be granted inaudita altera parte only "in exceptional cases such as when there is a demonstrable risk that the evidence may be destroyed".

Prior to the enactment of the new law, preliminary injunctions were granted by the courts always inaudita altera parte, and not only in exceptional cases, because that was the basic principle in Argentina regarding preliminary measures.

However, Section 50.2 of the TRIPs Agreement, which is directly enforceable according to the Argentine Supreme Court, provides that when there is a risk that a delay in granting the measure could cause irreparable harm to the right holder, the judge shall have the authority to issue the preliminary injunction inaudita altera parte. Therefore, it could be argued that when there is a case of irreparable harm, the measure may be granted inaudita altera parte according to the TRIPs Agreement.

The discussion of validity and likelihood of infringement with an expert and with defendant as a practical matter could transform a summary proceeding into a full lawsuit, thus contradicting Article 50 of the TRIPs Agreement that requires that the measures to be taken must be "prompt and effective".

Shifting of the burden of proof

The new law arguably improves the situation of patentees regarding the shifting of the burden of proof in infringement cases of process patent. Arguably, because the reversal of the burden of proof was already available to patentees on the basis of a general principle of procedural law, which had been expressly applied to a patent case in an injunction proceeding in re Eli Lilly.

The amendment provides that the burden of proof will in principle be reversed, unless the defendant proves that the product obtained by the patented process is not new. The law clarifies that novelty in this context means that the product is not new if a competitor had placed the product on the market before the time of the infringement, and that the competitor's product did not infringe the process patent at issue.

The amendment apparently does not improve the situation of patentees in connection with preliminary injunctions. On the contrary, the grant of a preliminary injunction may be more complicated as well as more time-consuming. In addition, the new law does not contain benefits in relation to the protection of products obtained by a patent protected process and with the reversal of the burden of proof for process patents.

Argentina went through a significant patent change in recent years. The adoption of the TRIPs Agreement together with the new Patent Law changed the entire patent framework, putting the Argentine patent system generally in line with other IP systems.

The legislation adopted international standards for the prosecution and enforcement of patents.

Unfortunately, the recently passed amendments were a backward step and there are still many aspects to improve in patent legislation, as well as in the functioning of the Argentine PTO.

A strong patent system is desirable to promote the progress of science and the development of technology. Argentina is moving in the right direction, but there is still a long way to go.

© 2004 Marval O'Farrell & Mairal. Martín Bensadon is a partner and Ignacio Sánchez Echagüe is an associate based in the firm's Buenos Aires office