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INSIGHT: The PREP Act May Ward Off Coronavirus-Related Patent Infringement Claims

April 10, 2020, 8:01 AM

To help the fight Covid-19, manufacturers across the country are re-tooling production lines: fashion companies are making hospital gowns, automakers are producing ventilators, and facemasks are being 3D-printed.
Lurking in the background, however, are potential intellectual property disputes.

Patents cover many of the products being manufactured to help with the crisis, and their use. For example, there are reports from Italy of concerns over potential patent infringement claims relating to 3D-printed facemasks. One group of scientists and lawyers has even proposed a pledge to make Covid-19-related IP freely available. And others have suggested that the U.S. government should exercise its “march-in” or its Section 1498 “eminent domain” rights, or even purchase patents outright.

Should patent disputes arise in the U.S., companies responding to the pandemic may have an additional defensive tool at their disposal—the Public Readiness and Emergency Preparedness Act, or PREP Act.

PREP Act Immunity from Liability

The PREP Act was enacted in the mid-2000s primarily to protect manufacturers, distributors, and medical professionals from products-liability claims based on conduct during a public health emergency. To encourage responsiveness and facilitate innovation, the PREP Act provides immunity from most liability for claims of loss relating to the administration of medical countermeasures used to fight a public health emergency.

Under the PREP Act, for example, a car company that manufactures ventilators to assist the government in responding to an emergency-related shortage would be protected from later claims of liability in the unfortunate circumstance that one of the products malfunctioned and caused injury to a patient or health care provider.

The PREP Act allows the secretary of the Department of Health and Human Services to issue a declaration providing immunity from liability for virtually any loss relating to countermeasures adopted to combat national public health emergencies. Previously, the Secretary invoked the PREP Act in response to smallpox, anthrax, Zika, and Ebola, among others.

On March 17, the HHS secretary issued such a declaration, retroactive to Feb. 4: the Covid-19 declaration immunizes entities and individuals from liability with respect to their efforts to combat the current crisis, applying to the manufacture, testing, development, distribution, or administration of “covered countermeasures.”

Covered countermeasures include FDA-approved or authorized drugs, vaccines, diagnostics, or devices used to treat, prevent, or mitigate Covid-19 or the transmission of the SARS-CoV-2 virus. This immunity is limited to activities relating to federally administered programs or contracts, or activities authorized by federal, state, or local authorities that relate to the covered countermeasures.

Applying PREP Act to Patent Infringement Claims

The application of the PREP Act to patent infringement is a question of first impression. But because its terms broadly provide immunity against “all claims” for “any type of loss,” the PREP Act may extend beyond the product-liability realm to provide immunity against claims of patent infringement arising from products or treatments used in responding to the Covid-19 crisis.

Just like product-liability claims, patent infringement has long been recognized as a tort. And like product liability, an entity seeking to help in a public health crisis may find itself entangled in a patent dispute. As the PREP Act does not limit the type of loss that may be immunized against, a company that faces crisis related patent litigation should consider pointing to the act as an aspect of its defense.

Ultimately, key questions about whether an accused infringer can invoke the protections of the PREP Act will likely depend heavily on several specific facts in a particular case. Is the allegedly infringing entity a “covered person” under the act? Is the product at issue a “covered countermeasure?” Does the alleged infringement arise from circumstances sufficiently related the declaration? And, importantly, do the claimed infringement damages constitute a “loss” under the statute?

Consider the example of a company that 3D-prints face masks for a hospital facing a Covid-19 related shortage, and is later sued for infringement. As a manufacturer, that company should qualify as a “covered person” entitled to immunity and, provided the product receives any required FDA approval or authorization, the printed face masks should qualify as “covered countermeasures” used to “prevent” or “mitigate” the transmission of the virus, under the act.

Finally, the face mask supplier should argue that the patentee’s infringement claim seeks to recover the covered “loss” of its patent monopoly (regardless of whether reasonable royalty or lost profits damages are sought). So construed, because the PREP Act would provide immunity with respect to “all claims for loss” connected to covered countermeasures, the mask supplier would be immunized for claims of patent infringement based on masks used in the fight against Covid-19.

To be clear, this immunity is not absolute. The loss must be “caused by, arising out of, relating to, or resulting from the administration to or the use by an individual of a covered countermeasure”—so PREP Act immunity would not provide a license to broadly 3D-print and distribute face masks for uses unconnected to the crisis.

Interestingly, if immunity under the PREP Act were to apply to patent infringement, patent owners might still have an alternative avenue to seek recompense—by suing the federal government for patent-related royalties.

A patentee that is unable to recover for certain instances of patent infringement under the PREP Act could argue that government-imposed immunity was a taking of its property (patent rights) requiring compensation under the Fifth Amendment. Such a claim would require expense for the patentee, though, as they would need to bring a Tucker Act suit against the government in the Court of Federal Claims seeking compensation.

In the current emergency environment, it seems unlikely that a patentee would seek an injunction against any Covid-19-related infringement—such a lawsuit would risk widespread negative media attention and backlash.

It is conceivable, however, that at some point in the future—after the resolution of the pandemic—a patentee might seek compensation for infringement in connection with the Covid-19 health emergency. If such claims arise, alleged infringers should consider relying on the PREP Act to claim immunity.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Kevin Post is a partner in Ropes & Gray’s IP litigation practice in New York. He works extensively with high-technology and life science companies handling their complex patent disputes.

Matt Rizzolo is a partner in Ropes & Gray’s IP litigation practice in Washington, D.C. He represents companies from a wide variety of industries in forums throughout the U.S., both enforcing clients’ intellectual property rights and defending them from infringement claims.

Brian Lebow is an associate in Ropes & Gray’s IP litigation practice in Boston.

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