IP Considerations During a Public Health Crisis

Updated on August 25, 2021
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By David G. Oberdick

The swift development, production, deployment and — most importantly — efficacy of the COVID-19 vaccines showcased the best in public-private collaboration. Recent headlines regarding the vaccines and their intellectual property (IP) and, in particular, patent rights, however, show how the two domains do not always agree.

In May, President Biden caused a short-lived uproar when he backed a global effort to waive intellectual property protections for COVID-19 vaccines, a scenario which would allow other countries to manufacture their own versions of the groundbreaking immunizations. The incident was also a reminder that the private companies and organizations who own IP in the health care industry may face different rules and ethical questions in certain situations, particularly during a crisis.

IP & Health Care

Organizations secure their IP for many reasons, including to build value through tangible assets, guard against infringement by market rivals, and create licensing and sales opportunities. In health care, particularly, IP policies and protections promote innovation and growth, leading the way to developments that can make an impact on one of the world’s most important sectors. 

However, organizations face more nuanced policies concerning their health care IP and may be compelled to share it, such as when private entities receive funding or draw on research from government agencies to develop a new asset (i.e., new drugs, equipment or processes). For example, amid the development of two of the most prominent COVID-19 vaccines, the U.S. government provided a $2.5 billion grant to pharmaceutical firm Moderna, and BioNTech, which partnered with Pfizer, received nearly $450 million from Germany. 

Stances on IP rights in these and related situations differ domestically and internationally, and current events can even play a role in the approach, but we can look to some existing laws and statutes to provide guidance.

  • Bayh-Dole Act: This law allows businesses and nonprofits to retain ownership of inventions made under federally funded research and contract programs and gives the government license to practice the subject invention. The organizations must also file for patent protection to ensure commercialization upon licensing.
  • TRIPS and Compulsory Licensing: Sometimes, a government may allow another party to produce a patented asset without the consent of the patent owner (although the owner can be compensated in these instances). This is known as compulsory licensing and is part of the World Trade Organization’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, of which the US is a member. 

Compulsory licensing occurs when a country that has issued an IP right, such as a patent, authorizes someone to operate under that patent without the permission of the owner. For example, the government of Canada could issue a compulsory license for a drug developed in the U.S. and patented in Canada. Under the original TRIPS Agreement, a country’s compulsory license only applies to patents and activity in that country. In 2001, a group of countries adopted the supplemental “Doha Declaration” that permits countries to grant compulsory licenses to export pharmaceutical products to meet public health needs (e.g., Canada could authorize companies to manufacture drugs in Canada for export to South Africa without the permission of the Canadian patent holder). Over the years, a handful of countries have issued compulsory patent licenses using TRIPS flexibilities to increase local supplies of drugs for HIV/AIDS, cancer, and heart disease.

There is no list of specifically identified reasons compulsory licensing may be used, but major emergencies, such as a pandemic, reach a scale where this may be encouraged by governments. Beginning in March 2020, a number of countries including Chile, Ecuador, Canada, Germany, and Israel enacted, or seriously considered, compulsory licensing and access measures to address the emerging COVID-19 pandemic. Indonesia and Brazil have more recently taken such measures.

  • Defense Production Act: While not directly related to IP and used rarely, this law gives presidents emergency authority to control domestic goods and production. We saw this act used during the height of the pandemic, when the government required some companies to focus on producing vital medical supplies and equipment.

The Pros and Cons of Sharing IP During Crises

As we’ve seen for more than a year now, a public health crisis creates a unique situation for businesses that may be able to provide assistance. There is a small needle to thread — a business wants to enjoy the benefits of IP protection, but it does not want to look heartless or unwilling to help. This is where the economic argument meets the moral argument.

A legal advisor with deep experience in IP can help guide businesses through these complex scenarios and, ideally, reach a solution that benefits all parties. 

For example, the Bayh-Dole Act and TRIPS apply to issued or registered intellectual property, such as patents or copyrights. To the extent that a company can keep technology a trade secret, compulsory licensing would not appear to be available. Where compulsory licensing does apply, the patent owner still has rights over the patent, including a right to be paid compensation for copies of the products made under the compulsory license. Further, the person or company applying for a license, normally (outside of a national emergency), must have tried, within a reasonable period, to negotiate a voluntary license with the patent holder on reasonable commercial terms. Only if that fails can a compulsory license be issued, and even when a compulsory license has been issued, the patent owner must receive payment. The TRIPS Agreement says that “the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization.”  Legal counsel should be involved in any such negotiation of a voluntary — not only as to compensation, but also the time frame and scope of the license.

Protecting IP and patent rights, even in the best of times, can be convoluted. The pandemic may appear to add more complications, but general IP law concepts and statutes still hold true. Understanding them — and having the right advisor on hand — will help all businesses in the health care sector.

David G. Oberdick is a partner with the Pittsburgh law firm Meyer, Unkovic & Scott. He is a member of the firm’s Intellectual Property, Corporate & Business Law, Business Litigation and MUSolutions Groups. He can be reached at [email protected] or 412-456-2881.

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