Established in 2004 and revamped in 2016, the Innovation Law (Law 13,243) aims primarily to create a secure environment for collaboration among companies, research institutions, and the government. More than just a set of rules, the legislation represents a strategy to ensure that Brazil can turn knowledge into economic development and more effective public policies.
According to the legal consultant of the Agribusiness Research Development Foundation (Fundepag), founding partner of Silva Ribeiro Advogados Associados, Ph.D. and Master by PUC/SP and Civil Procedure professor at PUC-SP/COGEAE, Leonardo Ribeiro, the law allows, in a solid and secure way, a partnership between various actors, such as public bodies, public research institutions, private companies, and third sector organizations, so that all can seek innovative solutions.
According to the lawyer, one of the merits of the law is to break with the still common idea that contracts with the government are always unbalanced and bureaucratic. “There is a certain fear among private institutions to ally with the government. The logic that is held, and which is mistaken, is that these partnerships bring abusive clauses. The Innovation Law does not start from this premise, on the contrary, it creates legal instruments that enable a more balanced, more horizontal relationship.”
Yes, the State Attorney of São Paulo, coordinator of the Thematic Center of Intellectual Property and Innovation of PGE/SP, master in Economic Law, Doctor (Ph.D) in Administrative Law, Rafael Carvalho de Fassio, emphasizes that innovating is more than a competitive advantage: it is a necessity. “Innovation is not something we do because it’s cool. Innovating is a survival strategy. For the company, it is what allows it to stay in the market; for the State, it is a tool for growth and development”.
Fassio recalls that legislation emerged in light of the perception that traditional administrative law did not offer adequate mechanisms for innovation-focused partnerships. “Almost nothing in the law was impossible to do before. What it did was facilitate, simplify, and provide legal security, as a response to the inefficiency of traditional State channels,” he observes. For him, the main premise of the legislation is precisely partnership. “No one grows alone. The private sector needs the intellectual capital of public institutions, and the State needs the investment and agility of companies. The innovation law seeks to facilitate this encounter”.
In practice, for a company interested in innovating, the first step is to identify what problem they want to solve, whether it be a product, a service, or a process. From there, the legislation allows for partnerships with public or private research institutions. “The important thing is that all these actors are available, and the law provides the mechanisms for these partnerships to occur safely,” says Leonardo Ribeiro.
These collaborations can generate solutions that, in addition to meeting market demands, become shared intellectual property, contributing to generating revenue, strengthening the scientific ecosystem, and benefiting society.
Controls and legal safety
Although it brings more flexibility, the Innovation Law also provides mechanisms for control and monitoring. “It proposes legal instruments for shelf partnerships. There is legal control, execution control, during the partnership’s validity, and, in case of public resource use, accountability”, explains Ribeiro.
According to the prosecutor, control is a delicate issue, especially in public administration. “The public manager, out of fear of accountability, often avoids innovative paths and reproduces known practices. The law helps reduce this fear by offering legal safety for bolder actions”.
The challenge, according to experts, is cultural. “It is necessary to have intellectual humility. The company needs to recognize the value of the knowledge in the public sector, and the state needs to understand the importance of private investment in research. The Innovation Law serves to enable these exchanges fairly, efficiently, and safely”, points out Fassio.
Artificial intelligence and innovation: an inevitable convergence
The recent popularization of artificial intelligence (AI), especially with tools like ChatGPT, has brought the debate about innovation closer to audiences who were not previously included in this context. For experts, this movement can be decisive in broadening the understanding of the importance of the Innovation Law.
“Artificial intelligence has become much closer to us. When ChatGPT was socialized. Everyone started discussing what the impact of this technology would be on health, employment, law, journalism. This debate has moved from academia to everyday life. This helps bridge the gap for those not traditionally involved in innovation to understand how these advances directly impact our lives,” explains Fassio.
According to the prosecutor, realizing that technologies such as AI are already transforming how people work and make decisions, companies and institutions are increasingly seeking the legal instruments that enable innovative projects, and this is where the Innovation Law plays a fundamental role.
Leonardo Ribeiro, who also researches the topic at an academic level, shares the same view. “Artificial intelligence is innovation in our veins. It came to revolutionize our relationship with the world, with our jobs, and with everything we do,” he asserts. Although, according to the lawyer, we are still dealing with what is called “weak artificial intelligence,” that is, systems specialized in specific tasks, without autonomy or consciousness, the transformative potential is already evident. “When we advance to strong artificial intelligence, then it will be a revolution. Today, tasks that would take days for a human to complete are resolved in seconds. But it is necessary to know how to use this tool well because it truly changes everything.”
In the view of experts, artificial intelligence is not only an ally of innovation but will also be increasingly central in research, development, and public policy formulation processes. “It will be a very important partner for those who want to innovate, both in the public and private sectors,” predicts Ribeiro.
Intellectual property, legal security, and balance among partners
One of the most sensitive topics when it comes to innovation is the management of intellectual property. According to Rafael Fassio, it is precisely at this point that the Innovation Law promotes significant advances, offering clear rules to protect creations and ensure a fair distribution of rights among those involved.
“When we talk about intellectual property, we are talking about protecting a creation that is often the result of collaboration between two or more parties, whether public, private, or both institutions. The Innovation Law allows establishing proportional criteria based on what each party has contributed, be it financial capital, technical knowledge, or infrastructure,” explains the attorney.
In addition, he emphasizes that negotiations need to include confidentiality clauses right from the start. “It is important for the parties to sign a confidentiality agreement at the beginning of the negotiations. This protects both the public and private sectors and allows for a more open conversation, safeguarding any industrial or strategic secrets that may be involved in the process”.
Leonardo Ribeiro stresses that this type of protection is not only legitimate but necessary, even for the public sector. “There was an old prejudice that the State could not work with confidential information because everything it does should be public. But this is a misconception. When the public sector gets involved in innovation, it is natural that it needs to protect strategic data until the project is mature”.
Another paradigm that the law helps to break is about the idea that the state should always hold the majority or entirety of the rights to the outcomes of a partnership. The logic now is of horizontal negotiation, in which there is no automatic prevalence of the State over the private partner, and each receives according to their effort.
According to experts, the legislation even allows for the entirety of the intellectual property to remain with the private partner when it makes sense. “The law recognizes that each project has its particularities. It authorizes the division to be adjusted to the reality of the partnership, without general impositions,” explains Fassio.
Transparency is also an important pillar for the success of these collaborations. “After the creation is finalized and brought to the market, it is essential to maintain constant exchange of information between the partners. After all, intellectual property turns into royalties and everyone needs to know what is being done with the product or technology developed. Without this, relationships can deteriorate and even result in complex legal disputes,” highlights the prosecutor.
Likewise, Ribeiro adds that the Innovation Law ensures that the public researcher can also receive the fruits of their labor. It clearly establishes the possibility of remuneration, division of royalties and commercial exploitation, both for the public entity and the private one.
The cultural change that the law stimulates, valuing mutual trust, legal certainty, and recognition of proportional effort, is, for experts, a decisive step towards a more fertile environment for innovation in Brazil.
Lack of knowledge and bureaucracy still hinder the implementation of the Innovation Law
Besides legal and institutional obstacles, two central hurdles still compromise the full effectiveness of the Innovation Law in Brazil: the lack of knowledge among the involved parties and the excessive bureaucracy that pervades the public sector.
“There is a lack of knowledge on the part of the public, universities, and research institutions. Often, when we present the law in lectures, people are surprised; ‘can we really do all this?'”, Fassio says. According to him, this unfamiliarity reveals a deep gap in the communication of the legislation and its practical appropriation by public agents.
Bureaucracy, in turn, also poses as a recurring barrier. The so-called ‘pen jam,’ the decision paralysis caused by public managers’ fear of innovating without clear legal support, leads many administrations to continue operating with the same old tools, even when they prove to be obsolete. ‘The manager prefers to use what he knows, what he has been doing for 20 years, rather than running the risk of being accountable for something new,’ Fassio explains.
To try to overcome this scenario, initiatives like the Science, Technology, and Innovation Legal Framework Toolkit, developed by the State of São Paulo’s Attorney General’s Office, have been offering practical solutions. With the aim of simplifying, the project gathers model documents and provides step-by-step guidance for the safe application of the legal instruments provided in the legal framework, functioning as a kind of ‘legal tutorial’ for public managers.
“We started with 10 documents in 2021, now we already have 12 and will expand to 15. It is a project that has become a national reference and has been used by other states and institutions,” highlights the attorney. The initiative is also being internationalized with bilingual versions (Portuguese-English and Portuguese-Spanish), with the support of the Inter-American Development Bank and Brazil Lab.
Still, there are structural barriers that hinder the standardization of procedures. As lawyer Leonardo Ribeiro points out, there is a significant disparity between the instruments used in different government spheres. While the Toolkit is widely used in São Paulo, at the federal level, different, more complex models that do not directly interact with the state ones still prevail.
This normative divergence ends up creating legal uncertainty for public and private entities that wish to establish partnerships in science, technology, and innovation. “The more pre-approved models we have, the better. This provides security for both the spending authority and the entrepreneur looking to invest,” reinforces Ribeiro.
Support foundations as a strategic link
Present in various innovation projects, support foundations like Fundepag play a strategic role by operationalizing actions, hiring personnel, and managing resources more agilely than direct administration.
“Institutions with support foundations are precisely those that apply the law the most. This is an empirical fact, not an opinion,” emphasizes Fassio. The action of foundations allows, in part, to circumvent the slowness of traditional administrative processes, especially in areas such as supplies and financial project management.
Nevertheless, both representatives from the public sector and the private sector need to adjust their expectations. “The entrepreneur needs to understand that when contracting with the State, it is not possible to impose the rules of the private sector. There is a specific set of rules that ensure equality and control,” Ribeiro points out. He believes that the search for a middle ground, with greater understanding and flexibility from both parties, is necessary to unlock partnerships.
Although progress is real, there is a long way to go. Standardizing legal understandings, greater dissemination of models like the Toolkit, and strengthening support foundations are key elements to make Brazil a more innovation-friendly environment. “Innovation is fast. And the public power, oftentimes, does not have the structure to keep up with this speed. Therefore, the more ready and secure legal instruments we have, the better for all sides,” concludes Leonardo Ribeiro.
