COVID-19 IP waiver: a bad proposal

The World Trade Organization’s COVID-19 vaccine waiver proposal would negatively impact investment into future treatments, says Alexander Haertel of the European and Dispute Resolution Committees at the Licensing Executives Society International.

During the COVID-19 pandemic, calls to waive IP rights related to the disease have grown louder—for the development of vaccines and for the treatment of patients. There has been a push by India and South Africa urging the World Trade Organization (WTO) to issue a waiver as authorised under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) governing IP rights, to effect “prevention, containment and treatment” of COVID-19.

This waiving of IP rights, including but not limited to patent rights, has been broadly discussed in many governmental bodies eager to do everything they can to accelerate vaccine distribution. To take effect, such a proposal would have to be approved by member countries.

If such a waiver were approved by the WTO the member states would be exempt from granting new patents, copyrights, industrial designs and the like for technology relating to COVID-19. The member states would also be exempt from enforcing those rights that already exist. How this waiver would be carried out in practice is difficult to assess as it would be up to each of the 164 member states of the WTO to implement it under their national laws.

Many countries are withholding their consent, including the EU, the UK, and Japan. The motion is, however, supported by many different organisations. The supporters of the proposal argue that waiving patent and other IP rights would lead to an increase of vaccine supply and access. The big question is whether IP rights hinder vaccine production and distribution, and what other impacts might result from such a broad waiver.

IP is not a hindrance

The US government, which has backed the waiver proposal, is also a rights owner. The US government is the owner of patent US 10,960,070 which relates to how the spike protein is stabilised in the COVID-19 vaccine. This technology was initially developed by the US National Institutes of Health and is a key piece of technology that is used in the vaccines of companies such as Moderna and BioNTech/Pfizer. Supposedly at least BioNTech/Pfizer is a licensee to this patent of the US government.

Organisations such as the Licensing Executives Society (LES) US–Canada and others have addressed the US government and stated that IP is not a hindrance but rather a facilitator of vaccine development and deployment. In a letter, these organisations have emphasised that IP has facilitated the sharing of technical information with appropriate protections, enabled an unprecedented amount of innovation, and facilitated collaboration between unlikely innovators and partners.

“The big question is whether IP rights hinder vaccine production and distribution.”

Alexander Haertel, LESI

Companies and researchers have worked together to produce vaccines and needed respirators. They have cooperated to provide technology to facilitate contract tracing, improve testing, and create potential treatments for COVID-19.

Andrei Iancu, former director of the US Patent and Trademark Office, wrote in April 2021 that there is no evidence that patents slow broadening production or distribution of vaccines for the treatment of COVID-19.

He points out that “gutting patent rights is a dangerous prospect” as they are the incentive to put billions of dollars into research and development as well as clinical trials. Even with the incentive system of the revenue generated by the monetisation of patents, fewer than 12% of new molecular entities make it to the clinical stage that is needed for a market authorisation. Hence, it seems sensible to assume that a waiver would heavily impact investments to further develop these cutting-edge technologies.

Such a waiver could also make it more difficult for entities to work together and hinder future collaborations and licensing activity that would lead to new vaccines and therapies based on the discoveries made during COVID-19 response efforts.

Harmonisation needed

The development and production of a vaccine is a complex process which includes not only the use of the corresponding patents, but also know-how. The modern vaccines using mRNA and lipid nanoparticle encapsulation are new technologies for which no large-scale manufacturing facilities have existed prior to the pandemic.

It seems natural to assume that the building of additional factories and/or the conversion of existing production facilities just takes a bit longer time to gain more traction. The chief executive officer of the Serum Institute of India—which is one of the largest manufacturing facilities for vaccines on the world—stated that it is not IP or the lack of licensed manufacturing that is slowing manufacturing of vaccine, but rather the lack of global regulatory harmonisation.

Even if one assumed that patents pose a risk, there are other ways to license these patents if the patentee is not freely giving a licence. On the basis of article 31 of the TRIPS Agreement, many states have national law provisions which allow for compulsory licences that force a patentee to grant a licence.

In 2018 the European Patent Office did a survey of member states that outlines the requirements in each state. In very general terms the pre-requisite is that the company that seeks the compulsory licence must have applied for a voluntary licence with the patentee on reasonable commercial terms and conditions before asking for a compulsory licence. This requirement can usually be easily fulfilled—however, it requires seriousness and efforts on the side of the company seeking such a licence.

“Even if one assumed that patents pose a risk, there are other ways to license these patents if the patentee is not freely giving a licence.”

Public interest

The second requirement is the need of public interest to grant such a compulsory licence. This is usually the more difficult requirement as it needs a detailed reasoning and proof why a public interest exists. In Germany, the only compulsory licence that was upheld on appeal concerned the active ingredient raltegravir. The brand medicine Isentress, that includes this active ingredient, can be used for the treatment of HIV.

The Federal Court of Justice determined that there was a considerable risk of serious side-effects or therapy failure for the patients if they had to change the medicine, which would have been the case if an infringement action of the patentee had been successful (docket number X ZB 2/1).

In that case, all patients undergoing treatment with raltegravir would have had to change the treatment to different medicines with a considerable risk of side-effects. Hence, the public interest existed to grant a compulsory licence. Many national laws have similar interpretations of these requirements. However, there are not too many cases that are published.

Nevertheless, a mechanism already exists in national laws to grant a licence in case of public interest. This licence is not given free of charge but rather for the “usual” licence rate. The need for a waiver to limit the impact of IP on the treatment of COVID-19, therefore, seems unnecessary.

Governments should aim to use their national law in order to overcome any problems competitors may have. As a result of the current discussion of the TRIPS waiver, it should be noted that the provisions in article 31 of TRIPS and their corresponding national regulations can provide an adequate protection of the public health—if this is needed at all.

Alexander Haertel is the co-chair of the European and Dispute Resolution Committees at the Licensing Executives Society International and an international delegate of LES Germany. He is also a partner at Bardehle Pagenberg. He can be reached at: alexander.haertel@bardehle.de

Images, from top: Shutterstock / shutter_o, abu_zeina, JIRAWAT LOMAKUL

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