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intellectual property

The power of the transnationals

An INPI study analyses sixty years of the history of patents in the chemical sector

laura beatrizWhile the total number of patent requests in Brazil has grown between 1993 and 1999 by the expressive annual rate of 18.1%, in the chemical sector the demand for the concession of legal privileges more than tripled during the period. One of the main reasons for this notable performance in this sector was caused by law 9.279/96 coming into practice, substituting law 5.772/71 (Industrial Property Code), which for more than twenty five years had frozen the chemical area, imposing upon it a rigorously restrictive policy.

But other reasons can also explain this performance, according to the economist from the Brazilian Industrial Property Office – INPI, Eduardo Assumpção, author of the study Chemical Patents in Brazil – An Troubled History . On the one hand, the greater internationalization of the Brazilian economy, with an increase in the flow of external investments, a part of which is intellectual capital itself that the patents lawfully incorporate. And the other, the advance of technology, resulting in the generation of new medicines that have arrived on the market over the last few years.

Disharmony
In this promising scenario, the foreign companies set the tone. Data published in the bookScience, Technology and Innovation Indicators in São Paulo – 2001, soon to be published through FAPESP, shows that the patents conceded in Brazil to non-residents – in general transnational companies – on average correspond to 85% of the total during the decade of the 90s. The remaining 15% go to Brazilian residents, which translates the innovation technology weakness in national capital companies. As the book defines, patents constitute the right to commercially explore an invention, with exclusiveness, for a determined length of time, with the compensation of disclosing knowledge and corresponding information.

The work of Assumpção (the complete edition is on the site: www.geocities.com/propindustrial) is centered on the observation of the behavior of companies and inventors, national and foreign, regarding the opening of fields of protection in the chemical area. According to him, the twenty highest patents requesters in the sector, all of them transnational companies, account for 784 requests in 1993 and 2,519 during 1999. On the hand, the Brazilian companies shrunk their participation during this period, going from 235 down to 184 requests of which only 57 transformed themselves into conceded chemical patents.

“Empirically, what I discovered by checking up on each one of the requests was a high degree of giving up in the middle of the process”, comments Assumpção, which provoked an enormous disharmony between the demands for patents and the effective concessions. This occurred both through the lack of technical competence in the request preparation and lack of content – novelty and inventive activity, basic requirements for patenting – and even by the lack of patience of those who made the request with the bureaucratic channels whose conclusion takes an average of eight years in the chemical sector.

This difference between demand and patenting, the study shows, is much greater on the part of individual inventors than companies. Among the latter, the rate of success is of one patent for every three requests (46 in 138), whilst that of the individual is of one out of every nine (11 in 97).

Reduced presence
Even the leading national institutions reduced their presence in the ranking, during the period analyzed. In 1993, they participated with around 23.8% of the Brazilian requests, a proportion that fell to 19.6% in 1999. It has to be said that the fall in the presentation of these requests was due to companies, since the level of inventions coming from individuals is extremely high: 41.3% in 1993 and 54.3% in1999.

In the opinion of Assumpção, these percentages – much higher than those of international standard – do not denote “an excess of creativity on the part of Brazilian inventors, but a weakness in the entrepreneurial demand of the sector”. For example, in the United States 95% of the chemical inventions were conceded to companies in 1998, leaving for the individual inventors a mere 5%.

The profile outlined by the study furthermore confirms that there are no private national companies that make it to the leaders ranking during both the years of the survey. This demonstrates “spasmodic” behavior: they are deposits that are concentrated in a determined point in time and do not denote continuous action.

Among the ten main companies or institutions requesting patents in 1993 and 1999, six of them were State companies. Only four of these institutions – among them the State University of Campinas and the University of São Paulo – were in the lists of the two years analyzed, indicating a systematic activity in patenting. Of the national companies that were outstanding in 1993, three of them are not truly active in the Chemical sector, but in connected areas such as mining and metallurgy, (Companhia Siderúrgica Nacional -CSN and the Vale do Rio Doce ) and paper and cellulose (Suzano).

An expected result
The area of medicines and cosmetics stood out among the ten highest areas in number of patent requests: there were 1,008, with an annual growth of around 35.1%, almost double the average rate of the other segments. An expected result, given the situation of exclusion that the pharmaceutical industry went through under the previous law and the importance that the companies give to patenting.

Among the foreign companies, L’Oréal presented an enormous portfolio: of the ninety inventions released by the company in 1999, 97% could be found in the class of Medicines and Cosmetics. On the other hand, the company of national capital Cosméticos Natura appeared on the ranking of Brazilian institutions for the first time in 1999 in 6th place, in front of Oxiteno and Ultragaz.

The second largest field of performance, Heterocyclic Compounds, also reflects the deregulation in the medicines sector, since the patents herein classified have their dynamics strictly associated to the active ingredients used in this area. Other fields that had a performance above average were Detergent Compositions and Pesticides and Herbicides, both with an annual growth rate of around 30%.

Two areas related to biotechnology – Micro Organisms or Enzymes and Peptides, Proteins – entered into the list of the main fields in 1999 with 36.9% and 44.8% of growth in the year, respectively.

Out of place presence
The presence of Brazil in the international field is “considerably out of place”, observes Assumpção. Only Petrobras registered systematic activity in patenting during the two year period 1997-1998. Of the twenty three Brazilian patents in the chemical area obtained in the United States during this period, eight of them belonged to the state company.

Making a summary of a group of fourteen economic areas that regularly request patents (excluding the most industrialized countries), of a size comparable or smaller than of Brazil, Assumpção observes that they, together, account for 12.6% of the total conceded patents in these countries during 1998. In the Chemical area, of all of the economies analyzed, only Hong Kong had a lower performance (twenty registered patents) than Brazil, but it must be remembered that the strength of this country is in its electronics industry. For its part, Finland totaled 136 concessions and Canada 1,007 only in the chemical sector.

The study clearly indicates that, under appropriate institutional conditions, subsidiaries of foreign companies can establish research bases in countries in which they invest, generating qualified employment and adding value to the products. This practice was observed in Israel and Belgium where branches of North American companies figure as the initiators in obtaining patents.

Assumpção suggests that this could be the path for Brazil, assuming the conditions are right – such as personnel, laboratories and adequate equipment – so that the companies here can develop front line research.

Inventions reflect the needs of the 19th century

The concession of temporary privileges (patents) looking to benefit inventors, “industry and the arts” goes back to a charter enacted by Don João VI in 1809, as Eduardo Assumpção reports in his study Chemical Patents in Brazil – A Troubled History .

Based on a meticulous piece of work carried out by Clóvis Costa Rodrigues and published in 1973, Assumpção makes a historic grouping of patents during the period 1830-1891, showing that there was in Brazil in the 19th century a system “surprisingly contemporary and adhering to the needs of an agricultural economy”, although a large part of it was based on pre-industrial and artisan chemistry. During this period, the country promulgated laws of industrial ownership and actively participated in international rights, turning itself into one of the original signing countries of the first treaty on industrial ownership, the Paris Union Convention in 1883.

The balance of the six decades covered in the study reveals the concession of 1,924 patents. The first, in 1831, registered the invention of equipment for the sugar industry: a still that, in one single operation, distilled and corrected the deposits. The list of patents granted during the period followed on with the authorization for the manufacturing a device for purifying carnauba wax  fabrics made of elastic gum extraction and purification of vegetable oils liquid rubber and porcelain manufacturing. These are some of the inventions that figured amongst the first products/processes to be patented in this sector.

During the first forty years the number of privileges granted was inexpressive: only one hundred and fifty five were registered. In the list of the patented inventions are the manufacture of porcelain, artificial marbles, safety matches and even a formula for preparing a liquid capable of getting rid of sauba ants.

However, from 1870 onwards the system of Brazilian patents “took an unprecedented leap” according to the study. The innovations went on to offer solutions linked to the technical problems confronted by the coffee sector, the axis around which the Brazilian economy began to gravitate around. The “coffee” theme was the objective of two hundred and nine patents conceded between 1930 and 1991, of which forty one refer to husking machines, thirty one to drying apparatus and twenty one to improved equipment, among others.

Parallel to this, the interest for obtaining privileges in the area of chemistry was increasing. By current criteria of the classification of inventions, three hundred and eighty one (one in every five) referred to this sector, in the period studied.

Demands
The chemistry patents conceded during the 19th century followed two main watersheds. On one side, inventions linked to the demands of the agrarian sector (including the activities of vegetable and animal extraction) fitting into the headings of “sugar industry” “oil, greases and waxes” and “biochemistry, wines, distilled alcoholic liquor”, among others. On the other side, following the start of urbanization and industrial processes, new necessities – such as public and residential lighting – resulted in the creation of products linked to categories such as “petroleum, gas and coke” and “cements, ceramics and their derivatives”, one of the most awarded segments in terms of privileges.

A notable piece of data indicated in the study unveils the importance that the grand inventors of the time gave to a peripheral country such as Brazil. Thomas Edison and Elaih Thomson – the creators of technologies linked to the electric lamp – worried themselves about petitioning for patents in the tropics, which indicated, in the opinion of Assumpção, “that the national market already looked attractive as a horizon for international investments in new technologies”.

From 1891 onwards, already in the Republican phase, the storing of documents, including models and prototypes, moved from the National Archive to the Commerce Directorate of the Secretary of Agriculture. Thus, the systematic registration of data was interrupted, whose integral conservation was taken up again in 1923 when tthe General Directorate of Industrial Property was established. This organ would later become the INPI.

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