The Big Secret Behind the Proposed TRIPS Waiver

By James Pooley
May 25, 2021

“Those who clamor for a waiver seem to ignore that robust, reliable trade secret laws enable such transactions. It may seem counterintuitive, but it’s well established that enforceable secrecy leads to more dissemination of technology, not less.”

“Be careful what you ask for because you just might get it.” — Anonymous

waiver - https://depositphotos.com/441471790/stock-photo-coronavirus-vaccine-bottle-corona-virus.htmlAll the fuss surrounding the proposal by India and South Africa to suspend the TRIPS Agreement to help them produce vaccines to fight COVID-19 has obscured some critical truths. In spite of the rallying cry “Patents versus People,” it’s not really about patents. And merely lifting TRIPS obligations will do nothing to address the current suffering of the world’s poorer populations. In fact, it would hamper efforts to secure global distribution of vaccines, as well as cause real harm in the long term.

The Biden Administration has embraced the proposal in principle and has received plaudits for what many see as a humanitarian and diplomatic breakthrough: choosing people over patents. So how could something that looks so right be so wrong?

First, we have to understand what the TRIPS Agreement is and isn’t. Stay with me here. I know that treaties can be boring, but this one is more important than you may realize.

Since their introduction in 15th century Venice, patents have been strictly territorial, a grant of rights that stops at the country’s border. Indeed, if you found some invention being used in another country, you could bring it back home and get a patent even though you weren’t an inventor at all. We didn’t care much about what was going on next door, just what would benefit the local economy.

Beginning in the late 19th century, as global commerce got seriously underway, a spate of treaties made it easier to claim inventions – and other intellectual property – in multiple countries. For patents, the high-water mark of this business-driven improvement came in 1978 with the Patent Cooperation Treaty (PCT), which bound all signatory countries to accept the priority date of an invention filed in another member country, so long as it was presented within 30 months. This is one of those international treaties that actually works in a practical way to speed the spread of innovation around the world.

But still, patents and other IP protections are decided under national laws, and variations from one country to the next in the scope of rights – especially in enforcement – continued to cause a lot of inefficiency for companies trying to build global markets. So back in the early 1990s, when we all thought tariffs were bad and globalization was good, when everyone seemed to believe that a rising tide of cross-border commerce would lift all national economies, the United States led an effort to establish the agreement that would come to be known as TRIPS, for Trade-Related Aspects of Intellectual Property Rights.

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Protection and Ownership

Here’s the thing to remember about TRIPS: it only creates obligations of governments to pass laws supporting intellectual property rights of various kinds: patents, copyrights, designs, trademarks, and trade secrets. It doesn’t affect the private ownership of those rights. That’s an important distinction, especially for trade secrets (or “undisclosed information” as it’s called in TRIPS), because unlike the other “registered” rights, it doesn’t depend on a government grant. It just requires a legal system that enforces confidentiality.

The provisions of TRIPS were not new for industrialized countries. But for the developing world the agreement represented a tradeoff: adopt our framework for protecting IP (including our own, like drug patents), and you’ll get the benefit of increased wealth and productivity that comes with joining the club we’re going to call the World Trade Organization.

What seemed to sell this deal was the expectation that “technology transfer” from industrial north to agricultural, extractive south would happen as a result. Remember that phrase “technology transfer,” because it’s at the hidden heart of the current waiver proposal. You see, published patents are available for anyone to read and learn from, and developing countries still have the option to compel licenses from patent owners if needed to address serious domestic needs, including pandemics. But patents are only a part of most stories of technology transfer, because in order to actually build the factory and produce the goods, you need to know more than what’s in the patents.

When I managed the PCT in Geneva, I heard a lot about this from developing country delegates to WIPO. They expressed great disappointment in how TRIPS seemed to be a “bait and switch” scam, in which the promised benefit never materialized. Patents are fine, but that doesn’t tell you how to adjust the dials on the machines to get the best outcomes. They thought they would be getting all that “know-how,” too.

For some traditional pharmaceuticals, this lack of know-how may not be a showstopper. The patent claims may describe a particular small molecule that provides a certain therapeutic effect. If you already know how to make pills, then manufacturing it can sometimes be relatively straightforward. Sometimes, but not always.

Moreover, biopharma generally, and mRNA vaccine technology in particular, are quite different from traditional drugs. Developing a process to reliably produce these medications at scale is astonishingly difficult and depends on years of experimentation involving cell growth times, temperatures, and other variables. That body of knowledge represents the trade secrets of the developers. It is enormously valuable, and not just for making COVID-19 vaccines. Creating other therapeutics based on the mRNA platform would be much easier and quicker with the benefit of knowing what tends to work and what doesn’t.

The Importance of the Entire Pharmaceutical Cookbook

So, this is why a temporary waiver of TRIPS—which would suspend national obligations to enforce IP rights—can’t possibly help countries like India get more vaccines to its citizens. The know-how required to manufacture at scale is owned by the companies like Pfizer and Moderna that are producing doses in record volumes. To effect the demanded “technology transfer,” governments would have to secure the agreement of those companies not just to hand over their entire “cookbook” but also to send qualified scientists and technicians to spend time at the foreign facilities, basically consulting on how to implement the secret processes to produce a safe vaccine. And even if that transfer happened tomorrow, getting to the point of actually manufacturing in volume would take more than a year.

Not only would the TRIPS waiver not produce the results the proponents want, it would likely reduce the current level of international distribution of vaccines, by interfering with access to the limited supplies of required ingredients. In fact, this supply chain disruption was recently cited by none other than the government of India in pushing back against popular demands for a compulsory license on Gilead’s Remdesivir and other COVID-19 treatments, noting that the “main constraint” was not intellectual property rights but preventing competition for scarce “raw materials and other essential inputs.”

TRIPS Ironies Abound

But there’s more. A waiver would result in even greater harm over the long haul. Drugs typically are not discovered by governments. Instead, we rely on the private sector to respond to new diseases. It seems deeply ironic that while our IP system succeeded in incentivizing the development of a new vaccine only months after the SARS CoV-2 virus appeared, we would now be considering suspending that system. Congratulations and thank you! Now, hand over your trade secrets!

Another irony relates to the fact that these companies have not been producing all the vaccine on their own. Instead, they planned ahead and established collaborative relationships with other manufacturers, leading to quick and effective voluntary technology transfers through licensing. Those who clamor for a waiver seem to ignore that robust, reliable trade secret laws enable such transactions. It may seem counterintuitive, but it’s well established that enforceable secrecy leads to more dissemination of technology, not less. Indeed, without it there would be hoarding of know-how, slowing production of vital medications and other innovations.

It takes more than $1 billion to engage in the risky business of producing a new drug. The willingness of shareholders to invest that kind of money requires a predictable IP system, one in which rights are not imperiled just because some people mistakenly believe those rights are in the way of achieving some laudable goal. Broadly removing IP protections is something governments can do, but they can only do it once, because the next time there may be no innovations available to claw back. Without reliable incentives, private industry simply won’t be able to prepare us for the next pandemic.

Trying to suspend IP rights clearly will not solve the problem and, indeed, risks making it worse. Instead, the international community – including the United States – should focus on diplomatic solutions to the immediate problem by lifting export controls by rich countries and forcing more equitable distribution of the available supplies of vaccines.

For decades, the United States has been vigorously promoting the value to society of a strong, globally harmonized IP system. The success of Operation Warp Speed has demonstrated the value of that system. This is no time to see what it might be like without one.

The Author

James Pooley

James Pooley is a former Deputy Director General of the World Intellectual Property Organization (WIPO). Jim has a private law practice in Silicon Valley where he specializes in trade secret litigation and counseling.

For more than 40 years, Jim represented clients in high-stakes trade secret and patent disputes. His broad litigation experience, combined with his service as an international diplomat and business executive, make him uniquely qualified to serve as advisor, co-counsel, expert or ADR neutral (he is a panel member of FedArb) in trade secret disputes, and to consult with companies about trade secret management. His most recent book, Secrets: Managing Information Assets in the Age of Cyberespionage, is available here.

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 as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 17 Comments comments. Join the discussion.

  1. Anon May 25, 2021 8:19 pm

    small correction: “Indeed, if you found some invention being used in another country, you could bring it back home and get a patent even though you weren’t an inventor at all.

    That changed awhile ago.

  2. George May 26, 2021 10:42 am

    Not losing any sleep over this. Besides just the executives of these companies are now all becoming billionaires just from COVID, so I’m definitely not worried about them. They will never be hurting or denied vaccines! They will be found on their new yachts (while their hard working researchers – and inventors – will be lucky to get a small raise or bonus)!

    Nothing ever really changes much! Inventors rarely if ever get rich! They’re not ALLOWED to! That would be some kind of ‘heresy’! Everyone knows that only the ‘already rich’ get to become even richer! It’s always been so (even in socialist and communist countries)! Nothing will change.

  3. xtian May 26, 2021 11:30 am

    @goerge – Green isn’t a flattering color on you.

    I know many rich inventors. They took the risk, formed a company, patented their inventions, and sold it to those big pharma guys. How evil?! I doubt that would happen if those inventors couldn’t protect their inventions via IP.

  4. Greg DeLassus May 26, 2021 1:25 pm

    I am surprised how few people are willing to consider the hypothesis that the proposed waiver might just be an empty gesture. A TRIPS waiver does not—by itself—actually affect any IP rights. Rather, the TRIPS waiver simply *permits* a nation to suspend IP rights *within its own borders*.

    Even if the TRIPS waiver happens, India cannot suspend any IP rights in the borders of the U.S. (or Germany, or the U.K., etc). Moreover, it appears that even the countries seeking a waiver do not *actually* plan to suspend IP rights inside their own borders. As the author notes, “the government of India… [has recently] push[ed] back against popular demands for a compulsory license on Gilead’s Remdesivir and other COVID-19 treatments… .”

    Ask yourself why that would be—why would the Indian government seek a TRIPS waiver, but simultaneously refuse to take measures that are *already permitted* under TRIPS to suspend IP rights? The obvious answer is that the whole effort is only for show.

    India & South Africa are currently suffering painful spikes in the epidemic. Citizens in those country are angry, and the government needs to be seen to be *doing something*. That is the reason for the proposed waiver. This way the governments of those countries can say to their citizens “see, we are fighting the international bureaucrats to be allowed to take the necessary actions.”

    If the waiver is granted, they can say “we fought the WTO and we won.” Meanwhile, the whole time while the waiver is being debated and negotiated, vaccine production continues to accelerate and new vaccines continue to get market authorization, such that by the time the waiver arrives, the vaccination situation will have approved on its own, and the governments will get to take credit for an accomplishment that would have happened anyway. Meanwhile, if the waiver fails, then any setbacks in the pandemic control efforts can be blamed on faceless WTO bureaucrats, rather than the Indian or South Africa civil servants and elected officials.

    In other words, this is just a mechanism for managing public opinion in the affected countries. There is no reason to expect that any actual IP rights will ever actually be suspended, even if the WTO waiver should come to pass. It is all just an empty gesture. The tell for this is the fact that even where India already has the power to act, it is refusing to do so.

    Pay more attention to what governments *do* than to what they *say*. India’s *actions* give away the game that this is all just for show.

  5. George May 26, 2021 2:50 pm

    @xtian

    “They took the risk, formed a company . . .” And then got lucky!

    How many new companies make it big, or become ‘unicorns’, xtian?! Maybe 0.1%? Would love it if it’s even 1%! So would investors! Let’s get some stats on that! Theranos didn’t do so well did it (except when it came to cheating its investors)? Bitcoin’s not looking so good anymore, either!

  6. Anon May 26, 2021 3:07 pm

    I here you xtian – George (if that is indeed his real name – oh wait, I do not care if that is his real name) really does sound like he has no filter on his posts – reacting purely on a stream of conscience, emotional level.

    Reminds me of 45.

  7. George May 26, 2021 4:08 pm

    “They took the risk”

    LOL! Most business people don’t take any big risks – ever (at least not if they’re good ones)! If necessary, they convince their investors to spread the risk, while investing very little of their own money into risky ventures. Also, if things go south, they usually come away unscathed and are able to start something all over again, because they’ve also come away with a very generous going away package from their prior failed venture (that’s in almost all business contracts).

    Elon Musk was one of the few that was ‘actually willing’ to bet it all TWO times, and almost lost it all too. I don’t think he’ll ever do that again though (especially not with his now $1750B). He even pulled back on his Bitcoin ‘gamble’ now! He’s not going to lose all his money on that one, either (but some people will)!

    NO, rich people (and people who ‘somehow’ get rich), don’t like losing money at all, and so DON’T ‘risk’ much of it! That’s also why rich people don’t play the lottery or engage in ordinary gambling either, like the rest of America’s ‘plebs’. They know there are much easier (and safer) ways to make money. Gambling isn’t one of them!

    So, spare me (and others) the ‘Profiles In Courage’ of rich people, xiatn. Most are NOT heroes of the American economy and they certainly aren’t the heroes of working people or the unemployed (neither of which they care much about).

    What the American ‘innovation economy’ needs much more of now, is investment from ‘ordinary Americans’, who can easily afford to risk up to $1000/yr on one or more new startups (so that their founders don’t have to WASTE THEIR TIME going ‘begging’ for $100K on Shark Tank – while usually not getting anything)!

    You certainly can’t start a new drug company with $100K, can you, xtian? No matter how brilliant you might be, you just can’t do that! On the other hand, 50 million people could each ‘donate’ $1 to do that, couldn’t they? In fact, they could do THAT 1000 times a year, couldn’t they? That would be 1000 new BIG startups every year, with maybe 10% succeeding (BECAUSE they would START OUT with $50M and the ‘top talent’ you could easily ttract with that kind of money)! So, ask, Janet Yellen to help make that happen, xtian! Then no inventor or entrepreneur would need to ‘beg’ wealthy people to finance their new startup (including, say, a new drug company startup)! The ‘little guys’ would agree to voluntarily spread the risk (and occasionally make out big time for taking that risk). If they have money for lottery tickets, they would have money for that! A lot better than gambling, anyway (which is all that the ‘average person’ is allowed to do with their spare money now). Let’s get rid of ‘qualified investors’ (i.e., rich ones)! Let ‘all the world’ provide VC (even people in other countries)! Now THAT’s an idea!

  8. George May 26, 2021 4:12 pm

    “reacting purely on a stream of conscience, emotional level.”

    Which is ESSENTIAL for ‘creativity’ and ‘invention’!!! But, then, those are things you would know nothing about, right – person with NO NAME?! LOL!

  9. George May 26, 2021 4:16 pm

    @Anon #6

    P.S. I thought you liked 45?! Maybe prefer Marjorie Taylor Greene for President now??? At least I’m not anything as bad as that (loyal Republican)!

  10. Anon May 26, 2021 4:53 pm

    George,

    Yet again, you miss and miss badly.

    Sure emotion is important. I never said anything to the contrary. But ONLY emotion does NOT get you to the aspirational position of your reply. ONLY emotion only gets you to the inane level of your actual replies, that cannot grasp how the legal aspects are at play.

    As to your view of my political leanings, you consistently get that wrong, and consistently attempt to paint positions that I have never taken. MTG? I have never indicated any leanings towards that politician.

    As to “no name,” I am on par with you and your “first name only” basis. Each serves the exact same capacity in the here and now. You seem unable to grasp that point (repeatedly). Must have been all that whupping your ass that you have been doing to yourself…

  11. xtian May 27, 2021 11:35 am

    I feel sorry for you George. So much of your life’s energy seems spent on envy towards others. Why can’t you be happy for and celebrate those that are successful/wealthy? I’ve been part of companies who pay stupid money to buy out smaller bio tech companies. Those that were bought out, left with big packages. This financial windfall and financial security allowed them to 1) start other companies or small businesses of their own, 2) work for risky start-up companies, and/or 3) do non-profit work they always wanted to do. Although I am jealous of their wealth, I am not envious of them. (Jealousy is wishing for something others have, etc. success, money. Envy is taking away the success of others have because you can’t it too).

  12. George May 28, 2021 3:57 pm

    @xtian

    “So much of your life’s energy seems spent on envy towards others.”

    LOL! I’m actually ‘pretty successful’, Xtian and so have no ‘money complaints’! I’ve had my own business for decades and never even had a ‘boss’ (besides my wife)! I also sleep like a baby at night! How about you?

    So, what’s to ‘envy’, especially since I don’t even care much about money in the first place and it’s definitely NOT my measure of ‘success’ in any case?! It’s what you leave behind (besides money) that really counts in life! I’d rather be a Jonas Salk, saving kids from dying, than a Jeff Bezos having fun on my new $500M yacht. I’d find a lot better things to do with that $500M!

    But, again, what does this have to do with Pooley’s article and the TRIPS waiver? Don’t worry, at least the executives of the drug companies will always do just fine, whatever is decided! Most become billionaires now! Are you worried they won’t be able to become 100-billionaires, like Musk and Bezos? I’m not. LOL!

  13. George May 28, 2021 4:08 pm

    @Anon #10

    “Must have been all that whupping your ass that you have been doing to yourself…”

    Yup – especially when preparing for, say, litigation?! Better give yourself a hard time before others do it! At least you’ll be prepared for it (and can respond accordingly)! LOL!

  14. George May 28, 2021 4:13 pm

    @Anon

    “As to “no name,” I am on par with you and your “first name only” basis. Each serves the exact same capacity in the here and now. You seem unable to grasp that point (repeatedly).”

    OK, let’s agree on a certain date in the future to reveal our true identities! I’me all for it! How about you? Then it becomes a non-issue, right? I’d love to find out who you are (and what you’ve done). Let me know when you’d like to do that.

  15. Anon May 28, 2021 7:39 pm

    OK, let’s agree on a certain date in the future to reveal our true identities! I’me all for it

    You absolutely miss the point of the here and now.

    Your ‘future’ actions do NOT change the current circumstances.

    I would love for you to understand your own inanities. And THAT can happen immediately (if you put that ‘fabulous mind’ to it).

    As to “(and can respond accordingly)! LOL!” – you have yet to respond ‘accordingly’ here. Why in the world would anyone take your own self-grandiose proclamations of how you might be in court, when you cannot even bother to get out of your way here?

    Granted, actions in court may well be entirely different. I really don’t have an issue IF you do behave differently in court than you do here on this blog (that would be entirely reasonable).

  16. Xtian June 1, 2021 10:28 am

    @george – if money is not the issue, then why bring up the salaries of the CEOs? You are correct, it has nothing to do with the Trips waiver. I was just responding to your post #2 where you brought up the fact that CEOs will make money from COVID vaccines.

    My point is, what does it matter if the CEOs makes money? The issue is whether the US should support a forced technology transfer to certain countries under the (false) guise that it would help the global COVID situation.

  17. Newbie June 2, 2021 4:34 pm

    As far as I can tell, the article does not propose a solution to this global crisis.
    There is clearly a bottleneck on vaccine production, specially for the poorest countries who may be fully vaccinated in 2023-2024.
    The argument of “suspending ip rights does not solve the problem since there is trade secret etc, so it is better to do nothing” is not an argument. We have a real problem now and, even if it takes years to transfer technology, that can still save millions of lives in this or in future pandemics.

    Can anyone help me understand what solutions there are then?

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