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Law360 (May 13, 2021, 4:44 PM EDT )
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| William Bergmann |
The petition alleged that patents and other intellectual property rights posed a barrier to the provisioning of medical products to patients and asked that the enforcement of TRIPS agreement sections concerning copyright, industrial designs, patents and protection of undisclosed information, e.g., trade secrets and know-how, be waived with respect to COVID-19 treatments.
The effect of the waiver would be that nations that are members of the WTO would not have to enforce these rights with respect to COVID-19 treatments such as vaccines.
The petition further called for "the unhindered global sharing of technology and know-how" relating to COVID-19 treatments. On May 5, U.S. Trade Representative Katherine Tai announced that the Biden-Harris administration would support the waiver with respect to COVID-19 vaccines and would engage in text-based negotiations with the WTO to make that happen.[2]
Notably absent from the WTO petition, and Tai's announcement, are any details or proposed pathways with respect to how patent rights and know-how currently held by private pharmaceutical companies would be globally shared and why these companies would have any incentive to do so. Indeed, there are many hurdles that would need to be overcome to implement such as plan, including the agreement of all WTO members.
Those opposing the waiver, and there are many, argue that IP has not been a barrier, but a facilitator of critical, cutting-edge innovation to address the pandemic.[3] For example, Sen. Chris Coon, D-Del., remarked at Center for Strategic and International Studies conference in April:
If we were to simply open up to the world all of the IP at the core of these groundbreaking developments, I think we would then be at risk of losing the private sector investment in development that's critical to this moment of personalized medicine, of breakthrough vaccines and breakthrough medical diagnostics, and I think frankly the world would suffer as a result.[4]
Pharmaceutical companies point out that the reason they have been able to create vaccines so quickly is because they already had proprietary platforms that have been developed over more than a decade, at the cost of hundreds of millions of dollars of private investment.[5] The biggest hurdle to getting vaccines administered widely around the world is not IP protections, but limited infrastructure and supply chain bottlenecks.[6]
Although India is sometimes perceived as a relatively poor country, it has a well-developed generic pharmaceutical industry. The prospect of giving such a country technology that has been developed at private expense over several years raises many issues.
Although the waiver is supposed to be only for the duration of the COVID-19 pandemic, once the genie is out of the bottle there may be no way to put the genie back in.
There may be no practical way to prevent companies receiving such technology from using it to compete in the future against those companies that developed the vaccines with their own funding, particularly with respect to the knowledge of the underlying platforms that will be gained and that will have a much wider application than COVID-19 vaccines. [7]
The Patent Waiver: A Red Herring?
Although patent rights have been blamed for holding up widespread development and dissemination of COVID-19 vaccines, this appears to be a red herring.
First, the WTO rules themselves permit compulsory licensing of patents during emergency situations, so an additional waiver is not needed.[8]
Second, given that it takes a few years to obtain a patent in most jurisdictions, and the COVID-19 pandemic has not been around for that long, there are likely few issued patents specifically covering COVID-19 vaccines.[9]
Third, patents are public documents, and if all that were needed to produce vaccines were a waiver of patent rights, it would be relatively easy for developing countries to grant themselves a compulsory license and follow the instructions in the patents to produce vaccines.
It appears that the know-how needed to develop vaccines, and the accompanying infrastructure, are much bigger barriers to their production. As International Federation of Pharmaceutical Manufacturers & Associations chief Thomas Cueni remarked: "Taking away patents now or imposing a waiver wouldn't give you a single dose more. It wouldn't empower you to get the vaccine because you still wouldn't know how to roll them out on a large scale."[10]
To the extent that the U.S. government decided to waive patent rights and allow domestic production of vaccines covered by patents, it could invoke Title 28 of the U.S. Code, Section 1498, which permits a government contractor, acting with the authorization or consent of the U.S., to infringe upon patents on behalf of the U.S.
However, although such a contractor is immune from suit in district court, the U.S. may be sued in the U.S. Court of Federal Claims for any infringement caused by the contractor's production of vaccines.[11] Under Section 1498, the government is liable for "reasonable and entire" compensation, which is most frequently determined by calculating a reasonable royalty on infringing sales.[12]
Given that the government would have to pay any contractor it hires to make vaccines, as well as pay any damages resulting from infringement, plus deal with the considerable delay in ramping up any production, it appears to make more sense in this situation to simply negotiate with existing vaccine producers for the supply of additional vaccines.
Another aspect of COVID-19 vaccine production is that the precursors needed to produce vaccines are also in short supply. The government also has to consider the possibility that enabling additional manufacturers to make vaccines, by removing IP barriers, may only create a situation in which a greater number of manufacturers are chasing the same pool of raw materials and no additional vaccines are actually created.
Know-How
As mentioned above, the key IP barrier to any effort by developing countries to domestically produce a COVID-19 vaccine is more likely to be the know-how needed to successfully produce such a vaccine.
Although the Biden-Harris administration stated that it would support a waiver of IP protections, which presumably could include know-how, there was no discussion of any mechanism whereby the know-how possessed by private pharmaceutical companies could be lawfully obtained in order to be transferred.
Under the Fourth Amendment to the U.S. Constitution, the public is of course protected against unreasonable searches and seizures, so the government can't simply take it.
But what if the government is already in possession of the trade secret? In Ruckelshaus v. Monsanto Co., the U.S. Supreme Court held in 1984 that the government's unauthorized use or disclosure of a trade secret could constitute a taking under the Fifth Amendment, obligating the U.S. to pay just compensation to the holder of the trade secret.[13]
In Monsanto, the U.S. Environmental Protection Agency had disclosed some of Monsanto's proprietary data relating to a pesticide that it had submitted for registration under the Federal Insecticide, Fungicide, and Rodenticide Act, or FIFRA.[14]
Although the data was submitted to the government in confidence, the provisions of FIFRA were changed to allow the EPA to disclose the data to the public under certain conditions.[15] Monsanto alleged that this disclosure of its proprietary data constituted a taking under the Fifth Amendment, and the Supreme Court agreed.
Analogously, the government would be in possession of some know-how relating to the COVID-19 vaccines that was submitted to the U.S. Food and Drug Administration by pharmaceutical companies seeking approval of their vaccines or as a result of contracts entered into pursuant to Operation Warp Speed.
However, it is questionable whether this know-how, without more, is enough to realistically allow a developing country to ramp up production of something as complex as a COVID-19 vaccine. Further, any disclosure of know-how by the government would subject it to an obligation to reimburse the pharmaceutical companies for the taking.
Damages in such instances could potentially be mind-boggling, as they could include the loss of the background technology that is used for more than just COVID-19 vaccines, and this raises the specter that U.S. taxpayers would be the ones ultimately funding the development of this technology in other countries.
It is possible that governments in developed countries may have limited rights to know-how pursuant to government contracts with pharmaceutical companies that were entered into in order to speed up development and production of COVID-19 vaccines.
However, it is unlikely that these rights are of a sufficient scope to allow those governments to provide vaccine technology to a developing country for the manufacture of a COVID-19 vaccine.
Under the Bayh-Dole Act and U.S. government contracting law, the U.S. government could obtain rights in any inventions made pursuant to government contract and any data developed under the contract.[16]
However, any inventions or know-how developed at private expense during the preceding years would typically not be included within the government's rights. And most of the pharmaceutical companies have stated that significant amounts of the background technology used to develop COVID-19 vaccines was developed at private expense.
Further, the government often obtains nonexclusive licenses and government purpose rights that limit its use of inventions and data to those benefiting the U.S. government. Providing technology to developing countries, and private pharmaceutical companies within those countries, does not squarely fit into such a purpose. It has been reported that in at least the Pfizer Inc. contract entered into under Operation Warp Speed, the government obtained no invention or data rights.[17]
Given the many legal and technical hurdles associated with efforts to have COVID-19 vaccines produced in developing countries, and the potential harm to U.S. industry as a result, it is possible that the Biden-Harris administration's agreement to waive IP rights is more a gesture of goodwill than anything that will lead to substantive results.
It has been estimated that the current global capacity to produce COVID-19 vaccines will yield 10 billion doses by the end of 2021.[18] The U.S. government estimates that the current global population is 7.8 billion people.[19] In view of this, there is a significant chance that the current global supply will exceed the demand for doses long before any developing countries actually begin production.
William C. Bergmann is a partner at BakerHostetler. He previously worked as a trial and appellate attorney for 12 years at the U.S. Department of Justice.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/IP/C/W669.pdf&Open=True.
[2] https://twitter.com/AmbassadorTai/status/1390021205974003720/photo/1.
[3] Remarks by Sen. Chris Coon (D-Del.) at Center for Strategic and International Studies conference, reported at https://cnsnews.com/article/international/patrick-goodenough/gop-senators-warn-bidens-support-vaccine-patent-waiver.
[4] Id.
[5] Id., Remarks by Johnson & Johnson chief IP counsel Robert DeBerardine.
[6] Id.; https://medicalxpress.com/news/2021-05-wto-waiver-COVID-jab-ip.html.
[7] The Pfizer-BioNTech and Moderna vaccines use mRNA technology, for example, while the AstraZeneca and J&J vaccines are viral vector-based vaccines. https://www.mayoclinic.org/diseases-conditions/coronavirus/in-depth/different-types-of-COVID-19-vaccines/art-20506465.
[8] TRIPS, Uruguay Round Agreement, PartII — Standards concerning the availability, scope and use of Intellectual Property Rights, Article 31(b), available at https://www.wto.org/english/docs_e/legal_e/27-trips_04c_e.htm.
[9] Although there certainly would be many patents covering the background technology upon which the vaccines are based.
[10] Remarks by International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) chief Thomas Cueni, reported at https://medicalxpress.com/news/2021-03-waiver-war-wto-COVID-jab.html.
[11] Zoltek Corp. v. United States
, 672 F.3d 1309, 1317 (Fed. Cir. 2012) (en banc).[12] Decca, Ltd. v. United States
, 640 F.2d 1156, 1172 (Ct.Cl.1980), cert. denied, 454 U.S. 819 (1981)(stating that "the reasonable royalty method is the preferred method of ascertaining the value of patent rights taken by the government"). See Penda Corp. v. United States , 29 Fed.Cl. 533, 573 (1993)( court may award lost profits only after the strictest proof).[13] Ruckelshaus v. Monsanto Co.
, 467 U.S. 986 (1984). Under the Tucker Act, 28 U.S.C. § 1491(a)(1), the Court of Federal Claims has jurisdiction over claims "founded . . . upon the Constitution," including takings claims.[14] Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), 61 Stat. 163, as amended, 7 U.S.C. § 136 et seq.
[15] 467 U.S. at 995-97.
[16] 35 U.S.C. § 200–212; see, e.g., Federal Acquisition Regulation (FAR) 52.227-14.
[17] "As between Pfizer and the government, Pfizer also shall own any and all data generated by Pfizer within the scope of this Statement of Work ('Subject Data')." "For the avoidance of doubt, the parties do not anticipate Pfizer generating any Subject Data using government funding." Reported at https://www.npr.org/sections/health-shots/2020/11/24/938591815/pfizers-coronavirus-vaccine-supply-contract-excludes-many-taxpayer-protections.
[18] Global, regional, and national estimates of target population sizes for COVID-19 vaccination, The BMJ (published by the British Medical Association), Dec. 15, 2020, reproduced at https://www.bmj.com/content/371/bmj.m4704.
[19] https://www.census.gov/popclock/.
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