Patent Rights and Wrongs in the COVID-19 Pandemic: EU and U.S. Approaches to Compulsory Licensing

“There are ways to ensure access to life-saving medicines, including a future COVID-19 vaccine. However, the European Union and the United States, which constitute the largest economies in the world, have diverging views on compulsory licensing.”

compulsory licensing COVID-19 - https://depositphotos.com/358544690/stock-illustration-pandemic-flu-coronavirus-covid-outbreak.htmlAs governments around the globe fight the COVID-19 outbreak, pharmaceutical companies race to develop a vaccine and potentially secure a patent for it. To speed the process, much of that effort builds on known drugs for other diseases. The World Economic Forum reports that 70 potential vaccines are currently in development around the world. According to a BBC report, research is in progress on more than 150 additional drugs globally, with many pre-existing drugs being trialed for potential usefulness in combating COVID-19. Those which can are giving it their best shot—for people as well as profit.

In the wake of this COVID-19 vaccine and patent sprint, questions arise concerning affordable and universal access: will governments, especially poorer ones, be able to secure affordable access to a vaccine if and when one becomes available? Can a patent owner actually be forced to license a COVID-19 vaccine for the benefit of the greater good? The answers are likely yes to both, depending where you are.

Governments can secure access for their populations to a vaccine, at least in theory, because the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) provides a mechanism for governments to authorize themselves, or third parties, to make use of a patent without the permission of the patent owner through compulsory licensing. All the Member States of the World Trade Organization, which are most countries in the world, including the United States, are parties to TRIPS. This article focuses on compulsory licensing, the circumstances under which it can be invoked, and the important diverging views between the European Union and the United States that could chart critically different paths for those infected with the disease.

How to Secure Public Access to a Patented Vaccine

The rights associated with a patent vary somewhat from country to country, but most often, a patent provides the patent owner with the exclusive right to make, use, sell, license and distribute an invention for a specified period of time. Accordingly, pharmaceutical companies racing to develop a COVID-19 vaccine will patent it in order to protect and enhance their ability to profit from their invention and offset the steep costs associated with developing it.

The TRIPS Agreement, which came into effect on January 1, 1995 is to date the most comprehensive, multilateral agreement on intellectual property, including patents. TRIPS is an international minimum standards agreement, meaning that Member countries (including the United States) may provide more (but not less) protection of intellectual property if they so choose. Member countries are left free to determine the appropriate method of implementing the provisions of TRIPS within their own respective legal systems and practices.

Thus, it is a balancing act. TRIPS allows for exceptions to the exclusive rights conferred by a patent, such as the right to license, sell and distribute a patented vaccine; however, the exceptions must not unreasonably affect the exploitation of the patent or prejudice the patent owner. TRIPS also explicitly permits the use of compulsory licensing.

The patent law objectives of TRIPS are to promote technology, invention and innovation, and the dissemination of such, to the advantage of patent owners as well as users by means conducive to social and economic welfare. Thus, in the pharmaceutical context, TRIPS aspires to protect the interests of patent owners without leaving marginalized countries, with limited resources to develop or acquire medicines themselves, out to dry (or die).

Significantly, the compulsory licensing provision of TRIPS is optional. Some countries have opted separately to allow for compulsory licensing, while others have not. Most European countries provide for compulsory licensing of some sort, as do India and Canada to name a few. These countries permit compulsory licensing to encourage public access to inventions and vaccines, and naturally this is promising in the fight against COVID-19.

However, Member countries are not obligated to implement the compulsory licensing provision of TRIPS. As for the many Member countries that have opted to allow for compulsory licensing, a patented vaccine may be produced without the consent of the patent owner in a national emergency or other extreme urgency, such as the COVID-19 pandemic. As detailed above, most European countries allow for compulsory licensing, and EU Member States, provided certain conditions are fulfilled, must allow for compulsory licensing of medicines to least-developed and developing countries pursuant to EU Regulation (EC) No 816/2006.

Compulsory Licensing in a Pandemic

As hopeful as this sounds, compulsory licensing has its limitations. Use of the patent must be limited to the purpose for which it is granted. A government must try to obtain consent of the patent owner unless there is a national emergency or other circumstance of extreme urgency, such as an epidemic, in which case seeking consent is not required. Further, if the purpose of the license is to stem a national emergency, the compulsory license must cease when the emergency is under control. The patent owner retains the right to be paid, and the amount to be paid is decided according to the circumstances of each case. Determining the fair and reasonable patent royalty the patent owner is to be paid is likely to be the subject of litigation and delay.

The right of least-developed and developing countries to gain access to lifesaving medicines and vaccines through the application of compulsory licensing was reinforced by the Doha Declaration (2001), which may be applied by all World Trade Organization (WTO) Members. The United States has been a Member of the WTO since January 1, 1995. The Doha Declaration, inter alia, states: “Each Member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted.”  It further states that Members maintain “the right to determine what constitutes a national emergency or other circumstances of extreme urgency” (emphasis added), and that a public health crisis (such as COVID-19) can be an emergency under this provision.

The European Union, in stark contrast to the United States, has implemented legislation to address public health problems of least-developed and developing countries through compulsory licensing of pharmaceutical products. EU law provides that every EU Member State shall grant a compulsory license for the manufacturing and distribution of medicine to least-developed and developing countries, so long as the conditions in TRIPS (Article 31) on compulsory licensing are fulfilled. This may drive greater international investment in EU vaccine development, and speed the process of getting a COVID-19 vaccine to where it is needed most in the European Union and internationally. While across the pond, U.S. regulatory hurdles as well as litigation may further obstruct EU-developed vaccines from timely reaching the United States.

Compulsory Licensing Under U.S. Law

The closest the United States comes to compulsory licensing of medicines and vaccines is a government agency’s right to compel licensing of a federally-funded patent. These are called “march-in rights,” which give the U.S. government the right to override the patent owner and grant licenses to applicants, provided the development of the patent was funded by federal funds, and the patent owner has:

  • not taken effective steps to achieve practical application of the invention;
  • not reasonably satisfied health and safety needs;
  • not reasonably met requirements for public use specified by federal regulation; or
  • granted an exclusive right to use the patented invention to somebody without obtaining a required promise, or where the licensee in that case breaches a required promise, that the invention will be manufactured substantially in the United States.

Although limited to federally-funded inventions, the U.S. march-in rights are powerful, at least in theory. However, in practice, they have never been invoked, despite efforts by applicants. Strong protections are afforded to patents under U.S. law. This rewards innovation and incentivizes innovators, such as the institutional researchers, Big Pharma, and other patent owners intensely seeking to be first to market with an effective vaccine against COVID-19.

The Race to Save Lives

There are ways to ensure access to life-saving medicines, including a future COVID-19 vaccine. However, the European Union and the United States, which constitute the largest economies in the world, have diverging views on compulsory licensing. In the United States, there is no general right to force licensing and distribution of a vaccine, whereas in the European Union, a compulsory license can—and likely will—be granted to secure access to medicines at times of national emergency and for use in least-developed and developing countries. There is no over-arching legislative body to quickly bridge the divide. Markets will be limited—and black markets may thrive. The future of a speedy COVID-19 vaccine accessible to the American public may in fact lie abroad.

Accordingly, the circumscribed right to compulsory licensing under U.S. law, in combination with the lack of universal health care in the United States, could result in limited access to a COVID-19 vaccine, and further, the consumer price for the eventual vaccine could be very high. In poorer countries, litigation is likely where governments seek to provide access to the vaccine by compulsory licensing. Pharmaceutical companies in turn will seek compensation, which will drive litigation and further delays. As an example, several pharmaceutical companies filed suit against African governments where their national legislation capped the price of life-saving medicines during the AIDS epidemic in order to help save lives. A similar situation could arise with COVID-19.

As the world continues to cope with the COVID-19 pandemic and its death toll rises, governments around the globe work to protect their citizens in developing life-saving vaccines and treatments. It is a race to save lives, as well as to secure the bottom line. But how countries gain access to newly-developed COVID-19 treatments, which are sure to come, is a complex matter with no simple answer and could, in fact, put profit before the very people who can least afford the wait.

Pandemic Flu Coronavirus Covid Outbreak Concept Hand Holding Blood Tube — Stock Vector

Image Source: Deposit Photos
Author: Rewat
Image: 358544690 

The Author

Nafsika Karavida

Nafsika Karavida is an Associate with Reavis Page Jump LLP. She advises clients in employment, intellectual property, corporate and transactional, and cross-border commercial law. Her areas of practice include representing clients in pre-trial negotiations and mediations, formation and dissolution of various forms of partnerships and corporations, as well as intellectual property disputes. Ms. Karavida also counsels clients on issues relating to public access of records produced by federal, state and local governments, representing public and private companies, non-profit organizations and individuals.

For more information or to contact Nafsika, please visit her Firm Profile Page.

Nafsika Karavida

Dara Onofrio is Patent Counsel with Reavis Page Jump LLP. Her practice focuses on intellectual property matters with special emphasis on patent prosecution and licensing in numerous fields of science and technology.

For more information or to contact Dara, please visit her Firm Profile Page.

Nafsika Karavida

Deena Merlen is a Partner with Reavis Page Jump LLP. She serves clients at both our New York and Stamford offices and heads the Connecticut practice. Her practice areas include intellectual property, employment and labor law, media and entertainment, general business law, commercial transactions and dispute resolution.

For more information or to contact Deena, please visit her Firm Profile Page.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 6 Comments comments. Join the discussion.

  1. MaxDrei May 20, 2020 5:24 am

    I recall something about US Government action when there was a scare about the disease anthrax. Didn’t it achieve its public health aims very simply and straightforwardly, by saying to the one and only supplier of anthrax vaccine (a European company, wasn’t it Bayer?) “I’m going to make you an offer you can’t refuse”?

    in that case though, the anthrax scare went away (as if by magic, I suppose).

  2. Junebug May 20, 2020 3:59 pm

    “I have not seen in my experience situations in which we were involved in the development of a vaccine, particularly for low- and middle-income countries that really needed it, where the pharmaceutical companies priced it out of their reach,” Dr. Fauci said.

    Why are we rushing to condemn vaccine manufacturers already?

  3. Anon May 20, 2020 7:00 pm

    Junebug,

    I read your quote differently.

    Dr. Fauci appears to be being gracious to the Pharma companies, indicating that the Pharma companies have NOT priced items out of reach for the low and middle-income countries that need it.

    In my best Paul Harvey tones, the rest of the story is that this “magnanimous virtue” is merely because typically the US consumer is saddled with a forced altruism from the geographic pricing schemes employed by those Pharma companies.

  4. truthoverlies May 21, 2020 1:04 am

    It’s critical to understand that there are not just a couple of pharma drugs that are effective in the treatment against Covid-19 but also a natural very safe cheap remedy that’s BOTH a preventative and therapeutic against Covid-19, the proper use of vitamin C — see orthomolecular d ot o r g (click on ‘Library’ and then ‘News Releases’ and read the editions from about February of 2020 on forward)

    A lot of this is based on Nobel laureate Linus Pauling’s pioneering work. HOWEVER….. everyone should keep the following in mind, especially now with the corona scamdemic going on: there are many bogus voices around who strive to distract the public from (1) the value of vitamin C therapy and (2) the fact that Pauling’s VALID work with vitamin C supplementation has been “falsified” by data distortions and lies, and he as a person (a double Nobel laureate) has been slandered as some deluded idiot by the criminal medical establishment and its countless quackwatch shills, lackeys, ignoramuses, and trolls for decades and it continues today — search for the scholarly report “2 Big Lies: No Vitamin Benefits & Supplements Are Very Dangerous” by Rolf Hefti (a published author of the Orthomolecular Medicine News organization). The same corrupt criminal people (and their uninformed followers) are behind the organized suppression, lies, and half-truths spread about the value of vitamin C therapy against covid-19 — see orthomolecular d ot o r g

    But you can’t discredit the facts with lies. That only exposes and discredits the liars (see citations above).

    The fact that we are dealing with a VERY CRIMINAL OFFICIAL POWER STRUCTURE (the Deep State, governments, WHO, official corporate medicine, the mainstream media, paid off scientists, etc) that constantly hoodwinks the unsuspecting public with MANY BIG LIES can easily be recognized by anyone with two working brain cells when reading this one sentence by a former US government official, Paul Craig Roberts, Ph.D., in his article ‘The Cost of Big Pharma’s Covid-19 Vaccine Will Be Paid in Lives and in Billions of Dollars’:

    “A corrupt establishment and media that can sell us 9/11, Saddam Hussein’s weapons of mass destruction, Iranian nukes, Assad’s use of chemical weapons, a Russian invasion of Ukraine, Russiagate and a large number of other lies can also sell us on locking up a successful treatment in the closet while we await a vaccine.”

    or from another article of his:

    “In “freedom and democracy” America there is only official truth, and it is a lie. […]. […] when I told the truth that Russiagate was a hoax, which it has proved to be, an anonymous website, possibly a CIA or NATO operation called “PropOrNot,” included this website among its fake list of 200 “Russian agents/dupes.” The Washington Post, a believed long-time CIA asset, hyped the PropOrNot revelation as if it were the truth. With “Russiagate” in full hype, the purpose was to scare readers away from those of us who were exposing the hoax. […]. The way those with agendas control the explanations is by shouting down those who provide objective accounts. Social media is part of the censorship. Explanations out of step with official ones are labeled “abusive,” and in “violation of community standards.” In other words, truth is unacceptble. […]. Everyone who uses social media is by their use supporting censorship. Facebook imposes fascist censorship in order to protect official explanations. The presstitutes and universities do the same. In America truth has lost its value. […]. Even a public health threat like coronavirus is politicized. […]. If you are Big Pharma, NIH, CDC, or the research professionals dependent on grants from these sources, you want a vaccine, not a cure. This means a long wait, assuming an effective and safe vaccine is possible. […]. The hydroxychloroquine (HCQ), zinc, and intravenous vitamin C treatments, which have proved to be effective, are badmouthed by Big Pharma and its minions. In other words, the profit agenda over-rides health care and the saving of lives. […]. It is all about money. There are no profits for Big Pharma or a chance for patents for Dr. Fauci unless inexpensive HCQ, zinc, and Vitamin C can be sidelined.”

    But having true knowledge like that is not enough in itself, YOUR BEHAVIOR must reflect the implications of that knowledge…. ESPECIALLY NOW IN THE FACE OF THIS MASSIVE EVIL SCAM. As the American social critic Paul Rosenberg pointed out in his article ‘Nothing Changes As Long As You Obey’:

    “I hear the same complaints about politicians that you do. And while I understand them, the fact is that complaining accomplishes almost nothing. And there is a very simple reason why complaining has no real effect: BECAUSE THE COMPLAINERS KEEP RIGHT ON OBEYING. As long as you obey, the things you complain about will keep on happening.”

    And there are the profound words of Martin Luther King, Jr.:

    And Edmund Burke said:

    “The only thing necessary for the triumph of evil is that good people do nothing.”

  5. MaxDrei May 21, 2020 5:46 am

    Here a Link to a piece that discusses the age-old “Crown Use” provisions of UK patent law, under which the government can procure the use of any patented invention without infringing, but must in the end pay reasonable compensation.

    For a hundred years or so, these Crown user provisions have been routinely used in defence equipment procurement, when the safety of the realm is at stake. But as IAM explains, they are “good to go” also when that safety is prejudiced by a pandemic. The government and the patent owner afterwards negotiate compensation, to be determined by the court if no agreement can be reached.

    https://www.iam-media.com/coronavirus/how-uk-crown-use-provisions-apply-suppliers-of-emergency-covid-19-treatments

    Why don’t other countries protect themselves in this way? I don’t know.

  6. Nafsika Karavida July 7, 2020 5:55 am

    The New York Times yesterday published an article on the potential steep costs of a Covid-19 vaccine in the US and the possibility of applying the “march-in rights.” The article can be retrieved here: https://www.nytimes.com/2020/07/06/opinion/coronavirus-vaccine-cost.html?action=click&module=Opinion&pgtype=Homepage
    We foresaw all of that in our article published on IP Watchdog almost two months ago but the New York Times article is more focused on the overall political, financial and public health landscape in the US that may stand in the way of general access to a vaccine.

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