Bloomberg Law
May 15, 2020, 8:01 AM

INSIGHT: Patents, IP Play Key Role in Race for Coronavirus Cure

Niky  Bagley
Niky Bagley
Cole Schotz

Now that the initial shock of the current crisis is starting to wear off, some wonder what role patents and other intellectual property rights may play in determining who has access to a cure and other life-saving treatment and equipment.

Who stands to financially gain from the race to find solutions, and how will intellectual property, technology, and treatment be shared among all countries—if at all—and should countries with treatment be allowed to exclude others from immediately receiving treatment?

Unfortunately, countries around the world do not yet appear to be fully working together in coming up with a solution to address the practicality of disseminating treatment and medical equipment to all or to ensure researchers and firms, regardless of where they are located, are fairly compensated while preventing intellectual property rights from being a hindrance to ending the crisis.

For the U.S. and other countries, mechanisms addressing the issue of patent infringement during a crisis are available—although none are perfect.

TRIPS and Pharmaceutical Patents

All 164 members of the World Trade Organization (WTO) are parties to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which requires members to implement similar minimal IP standards and protections.

The TRIPS Agreement provides flexibility to governments to suspend normal IP protections under certain circumstances. Article 27 authorizes governments to refuse to grant a patent in order to protect the health of their nation.

For “national emergencies,” “other circumstances of extreme urgency,” or “public non-commercial use,” under Article 31, governments can require compulsory, non-exclusive licensing of patents in order to provide needed products for their domestic markets. Through other agreements, including the Doha Declaration, member states have further expanded on these waiver provisions.

A compulsory license must be limited in duration and scope and provide the rights holder adequate remuneration. Member states are free to invoke these waiver provisions without authorization from the WTO.

To date, political pressure has largely prevented governments from invoking the exceptions to the TRIPS Agreement. The situation is, of course, different now. Whether the U.S. and other countries that have traditionally fought to protect strong intellectual property rights will invoke these waiver provisions if their domestic firms are unable to produce a vaccine or other treatment first remains to be seen.

Country Specific Measures

The U.S. Defense Production Act and 28 U.S.C. § 1498(A) (DPA)

The DPA authorizes the president to require businesses to prioritize and accept government contracts. The president may also allocate materials, services, and facilities to promote national defense.

Trump has invoked the DPA several times. He has required GM to manufacture ventilators. He has ordered the supply of materials needed in the production of ventilators to be directed to GE and others. Trump has also required 3M to increase its production of N-95 respirators to the U.S. market.

The DPA itself does not provide patent infringement immunity. The Act does, however, limit a patentee’s remedy to action against only the government—not federal contractors—for “recovery of his reasonable and entire compensation for such use and manufacture.”

However, 48 CFR § 27.201-1 authorizes the federal government to require companies to indemnify it for any alleged acts of patent infringement, which can run into the millions to defend.

The U.S. Bayh–Dole Act 35 U.S.C. § 200–212 and ‘March-In Rights’

The Bayh-Dole Act allows a non-profit or small business to acquire title to any patent that issues as a result of its federally funded research efforts. The funding federal agency retains a non-exclusive license to practice the invention throughout the world.

Under certain circumstances, including “to alleviate health or safety needs,” the federal agency retains “march-in rights” to grant licenses to third parties. To date, no federal agency has practiced this controversial right.

The U.S. Public Readiness and Emergency Preparedness Act (PREP Act)

Although not specifically directed at patent infringement, the PREP Act (42 U.S.C § 247d–6d) and Declaration provide immunity from suit and liability under Federal and State law for loss caused by engagement in activities aimed at reducing or combating Covid-19.

Covered activities include the design, development, and manufacture of products as well clinical testing and administration of treatment. The question remains as to whether liability from patent infringement suit is covered under the PREP Act.

Other Governments

Several countries around the world have enacted legislation empowering their government agencies to grant compulsory patent licenses. On March 18, Israel became the first country to grant a compulsory license to AbbVie Inc.’s patents for the importation and production of Kaletra, traditionally used to treat HIV.

Canada and Germany have passed legislation authorizing the use of compulsory licenses. The UK, France, Brazil, Ecuador, and Chile are among those with the option of invoking existing and proposed legislation to grant compulsory licenses.

Ireland has introduced legislation to limit patent rights for the public interest. Ireland is the world’s leading manufacturing hub for medical products, including ventilators produced by Medtronic.

As the pandemic continues, other countries are bound to invoke similar provisions.

Voluntary Licensing

Aware of the issue patents may pose to ending the crisis, companies and researches around the world have opted to suspend their patent rights and share their know-how. These include Medtronic, Innovative Genomics Institute, Howard Hughes Medical Institute, and University of California.

The World Health Organization (WHO), after being urged by Costa Rica, is leading the charge to create and maintain a global patent pool. Organizations such as the Medicines Patent Pool are creating their own patent pool. Others are signing on to an “Open COVID Pledge,” promising to make their intellectual property “available free of charge.”

Stepping back and looking at the big picture, it is readily apparent that a coordinated and comprehensive solution that works for holders of patent and intellectual property rights while ensuring that the virus is stopped everywhere and all people receive treatment is desperately needed.

Humanity will ultimately pass through this ordeal, but its inherent interdependence requires unity of thought and action.

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

Author Information

Niky Bagley is a member of the Intellectual Property team at Cole Schotz.