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Updated framework

Law introduces new incentives for innovation, but vetoes are criticized

028-031_Marco legal_240A law that passed, but was vetoed by President Dilma Rousseff, brings together a set of measures designed to encourage innovation and interaction between public and private research centers.  Law No. 13.243/2016 is not by itself the legal landmark in science, technology, and innovation that it is touted as being, but it does promote updates and refinements in the current Brazilian legal framework that surrounds those subjects.  One of the modified laws is the Innovation Act (No. 10.973).  In force since 2004, it already permits such strategies as the use of university laboratories and equipment by companies, in return for financial compensation.  The new rules, for which regulations have not yet been issued, permits such procedures as, for example, the sharing of the intellectual property of universities with manufacturers for use in innovation projects.  They also streamline the procedure to be followed in that kind of cooperation.

Another new feature affects careers at the federal universities.  New rules expand the possibilities that researchers who are working full-time solely on research will be able to perform paid work outside the universities after obtaining permission from their institutions.  A researcher who works on that basis will be able to dedicate 416 hours a year, i.e., eight hours a week, to research projects that involve cooperation with companies.  Previously, the limit was 120 hours a year.  “When a researcher serves as a consultant in the early phases of determining product viability, both industry and the university gain,” argues Naldo Dantas, institutional relations advisor at the Brazilian Association for Research and Development of Innovative Companies (Anpei), one of the organizations that represented the manufacturing sector in Congressional negotiations on the law.  Carlos Henrique de Brito Cruz, scientific director of FAPESP, points out that the biggest impact will probably be felt in the federal sphere.  This is because federal universities do not enjoy as much autonomy as there exists at the three São Paulo state universities: USP, Unicamp and Unesp.  “In the São Paulo institutions, the exclusive dedication regime is enforced by internal rules that resulted from decisions by the university board.  However, federal institutions must depend on a national law,” he explains.  “Researchers can use their eight hours per week for consulting and collaborating with companies, something that is common practice among leading universities elsewhere in the world.”

According to Sergio Gargioni, president of the Brazilian National Council of State Funding Agencies (CONFAP), the new law offers a re-interpretation of the Innovation Act.  “It is a sort of revision, since many points in the 2004 law needed to be updated,” he observes.  For example, governments (federal, state, and municipal) as well as their respective funding agencies, universities, and research institutions will be able to support the creation of environments that promote innovation, like technology parks and business incubators.  “That idea was not addressed in the earlier legislation and there were situations where Justice Ministry prosecutors questioned the legality of the transfer of public university funds for the construction of technology parks,” explains Guilherme Ary Plonski, coordinator of the Technology Policy and Management Center of the University of São Paulo (PGT-USP), who followed the progress of the bill in Congress.

According to Plonski, the recently-passed law is one of the pillars of what might be called the “legal framework of science,” that includes several other laws, such as the federal procurement regime and Constitutional Amendment No. 85, enacted in February 2015.  To Helena Nader, president of the Brazilian Society for the Advancement of Science (SBPC), the law de-bureaucratizes scientific legislation in Brazil and makes it more flexible by simplifying the relationship between public and private institutions.  “One article of the new law, for example, permits waiver of the competitive bidding requirement for purchases of equipment and other inputs for use in research,” she explains.

In 2011, when CONFAP and the National Council of State Secretaries for Science, Technology, and Innovation (Consecti) took the discussion to Brasília, the initial objective was to draft a national code for science, technology, and innovation.  But that approach was discouraged by the federal government on the grounds that it would be too complicated to combine in a single law subjects as varied and complex as clinical research and biodiversity, for example.  “And so the initial plan for the code was reformulated, “ recalls Plonski, who also serves on the board of the National Association of Entities Promoting Innovative Enterprises (Anprotec).

Another point in the new law provides that in order to support management of its innovation policy, a public research institution may have recourse to a Technology Innovation Center (NIT) that could even be given its own legal identity, as a private non-profit.  In the past, the NITs were university departments staffed by temporary grantees or government employees who had been detailed to work in those offices.  Now, the center can be shaped as a support foundation, an organization of civil society, or continue as a university department.  “The university manager has been given the flexibility to choose which model to adopt,” Plonski says.

Carlos Américo Pacheco, current director of the Brazilian Center for Research in Energy and Materials (CNPEM), who served as executive secretary of the Ministry of Science and Technology from 1999 to 2002, emphasizes that the new law is not self-applicable, i.e., it depends on enactment of implementing regulations and cannot be executed immediately.  He observes that much of what appears in the text is mere legal possibilities that will not necessarily be followed by all institutions.  “We can say that Brazil’s scientific policy menu has gotten longer.  That doesn’t mean that all of it will be implemented in practice,” notes Pacheco, for whom the law must be viewed in its broader context.  “In order for the new rules to be put into practice, the agents involved, including funding agencies, need to create specific conditions, such as issuing more formal requests for proposals of cooperation between universities and companies, and helping startups connect with big companies.”

Purchase of equipment and inputs for research was also addressed in the new law

Léo RamosPurchase of equipment and inputs for research was also addressed in the new lawLéo Ramos

Low Density
Paulo Feldmann, a professor at the USP School of Economics and Administration, does not believe the law has the right instruments to enable scientific and technological development focusing on innovation to achieve levels close to those of countries like the United States and South Korea.  “It does not, for example, address a very important question, which is whether we should do as South Korea does and permit companies to deduct their R&D expenses directly from the line item ‘income tax owed.’  Furthermore, there are countless challenges ahead, such as the low density of engineers and researchers, the extremely poor relationship between universities and companies, the absence of technology company incubators, and Brazil’s morbid aversion to risk, to cite just a few examples.  Legislation is important, but not enough,” he suggests.

Some points in the law, such as the one referring to the NITs, have become the target of criticism by unions and groups of researchers.  In November 2015, a group of government entities published a document entitled Carta de Campinas: Em defesa da ciência e tecnologica pública no Brasil (Letter from Campinas: In defense of public science and technology in Brazil) in which they stated that changes entailed by the bill, then still in the Senate, amount to a setback for Brazilian research.  Signed by groups of institutions, among them the Association of Unicamp Professors (Adunicamp) and the Association of Scientific Researchers of the state of São Paulo (APqC), the letter says the new law could “result in an increase in the flow of lifeblood from the public treasury to private companies.”

The document also criticizes the “high priests of the Brazilian researcher community, the entrepreneurial academicians” who, according to the letter, are acting in favor of a privatizing logic.  “In recent years, the lines of research are more closely tied to economic interests than to those of civil society,” says Joaquim Adelino de Azevedo Filho, president of the APqC.  “The new law will benefit only those projects from which companies can profit directly,” Azevedo Filho states.  “Furthermore, public competitions may be designed so as to serve solely private interests.”

“At the public hearings held since 2011, we have not discussed the career ladders for professors or talked about public competitions,” notes Gesil Amarante, a professor at the State University of Santa Cruz, in Bahia, and director of the National Forum of Managers in Innovation and Transfer of Technology (Fortec).  “We discussed the need for a healthy and transparent interaction among academia, the government, and companies in Brazil,” says Amarante, who coordinated the working group organized by Deputy Sibá Machado (Labor Party – Acre State) in the Federal Chamber, composed of representatives of government, companies, universities, and research institutions in order to improve the initial bill.

It had been expected that the bill would pass without vetoes, but that did not happen.  The ministries of Finance and Planning argued against some aspects of the law, pointing to them as “contrary to the public interest.”  “We did not expect that to happen.  If one of the strategies for Brazil to get out of the current crisis is to encourage production and innovation, the fact is that the vetoes may discourage companies from investing in research,” says Gargioni, from CONFAP.

One of the vetoes deleted the provision that called for waiver of the competitive bidding requirement by the public administration in order to contract with small businesses whose annual sales do not exceed R$90 million to provide services or furnish goods that were produced from the application of the knowledge thus gained.  According to Dantas, from Anpei, that decision reduced the purchasing power of state-owned corporations.  “Because of the veto, only big companies and institutes will benefit from orders placed by the State.  Meanwhile the startups, with smaller structures and less capital, will have trouble competing with bigger companies in a competitive bidding event.”

Members of the Alliance for Defense of the Legal Framework of Science, Technology, and Innovation, among them the SBPC, CONFAP, and the Brazilian Academy of Science (ABC), plan to send a report to Congress that evaluates the negative impact of the vetoes.  Helena Nader, of the SBPC, expects the vetoes to overridden.  “The law was supported and unanimously approved in both the Chamber and the Senate, by all the political parties.  That is why we will not accept those vetoes,” she says.