Jason J Jardine
Knobbe Martens, San Diego
jason.jardine@knobbe.com

Justin E Culbertson
Knobbe Martens, Washington, DC
​​​​​​​justin.culbertson@knobbe.com

In late 2019 and early 2020, the world began to feel the effects of the coronavirus. Within a few short months, a worldwide pandemic was declared. Pharmaceutical and biotechnology companies (some newly infused with government funds) began to work in earnest to create diagnostics, treatments and vaccines. Some companies, such as Moderna, had been working on mRNA vaccines for ten years,^[1] but refocused their efforts to create an mRNA vaccine technology to create immunity against Covid-19.^[2]

For most diseases, the development of a vaccine and regulatory approval takes years, if not decades. In miraculous fashion, however, in late 2020 and early 2021 at least 15 Covid-19 vaccines were developed, with others in development. Among those, five vaccines developed in China and four developed in Russia have been approved and distribution to substantial portions of the world’s population has commenced.^[3]

In October 2020, India and South Africa submitted a petition to the World Trade Organization (WTO) requesting suspension of certain intellectual property provisions in the Agreement on Trade-Related Aspects of Intellectual Property Rights (the ‘TRIPS Agreement’). Among other things, the petition states:

‘[I]t is important for WTO Members to work together to ensure that intellectual property rights such as patents [...] and protection of undisclosed information do not create barriers […] to affordable medical products including vaccines and medicines or to scaling-up of research, development, manufacturing and supply of medical products essential to combat COVID-19.’^[4]

The petition predated the completion of most of the 15 vaccines mentioned above. Nevertheless, it raised concerns that IP, in particular patents, would create barriers to the rollout of vaccines and therefore reduce access to vaccines in poorer nations.

Now, more than six months after the October 2020 petition, the worldwide pandemic continues. Although regulatory hurdles, manufacturing constraints, disinformation and other impediments have prevented immediate universal access and adoption of vaccines, this article discusses some reasons for patent rights, and argues that patents have not been a barrier to access or adoption of vaccines so far.

IP rights and acquiring patent rights

IP rights generally refer to a basket of legal protections for ideas as property, as opposed to tangible or real property. The basic aim of IP law is balancing the interests of inventors protecting their ideas and the public accessing those inventions. Legal protections or rights are typically granted by a government to a creator for a certain period of time.^[5]

A patent is one type of IP right created in certain nations. A patent provides its owner with the legal right to exclude others from making, using, selling, offering for sale or importing the claimed invention for a number of years.^[6] In the United States, for example, a patent may be valid and enforceable for up to 20 years from the date of earliest non-provisional filing of the patent application.

To receive the legal rights of a patent, the inventor(s) must claim patent-eligible subject matter that is new, not obvious and has industrial utility. The inventor(s) must also disclose to the public a process that enables others to make and use the invention.

Some countries do not have a formal process for examining patent applications. Instead, if certain formal requirements are met, filed applications will be granted as a matter of course. However, most countries, including the US, China, Japan and European countries, conduct a formal examination procedure to ensure that the patent meets required statutory hurdles.

Although in the US regular examination usually begins around two years from patent filing, some petitions and programmes will expedite the examination. Once the patent examiner has determined that the application meets all statutory requirements, the application is allowed, an issue fee is paid and the patent proceeds to grant.

The owner of a valid patent may enforce legal rights against infringers within the country where the patent was granted; legal rights do not extend beyond the issuing country’s borders. Typically, enforcing a patent requires some form of a lawsuit in court.

Where are patent applications filed?

Patent filing, prosecution and maintenance is costly. A pharmaceutical company may spend up to $100,000 in filing and translation fees alone to seek protection for one invention. Consequently, an inventor or corporation considering filing patent applications in multiple countries will evaluate, among other things, whether a potential country has: (1) a patent system; (2) a legal system for enforcing a granted patent; (3) a market for making or selling the invention; and (4) a competitor in the market.

A country without a patent system will not have any patents. A country without a legal system capable of enforcement will have few, if any, patents. A country that is unlikely to be a market for the invention is not a good candidate for patent application filing. A country with a smaller population is not as likely to have a competitive market as countries with larger populations. Based at least in part on the considerations above, the inventor or corporation will file corresponding applications only in select countries.

Different technologies will also play a role in patent application filing. For example, for technologies that may develop faster than the time required to file and procure a patent (such as certain electrical or computer science applications), the relative value of patents is lower than for the pharmaceutical or biotech industries. The development of new drugs or treatments will often take many years and involve costly testing and regulatory approvals. Therefore, for such industries, the value of the patents in deterring competition from entering the market is greater.

Inventors and companies in countries where patent applications are not filed, or where patent applications are not granted, may make, use or sell inventions within those countries, even if the invention is patented elsewhere. Thus, publication of a patent or patent application in the US, for example, could provide any party with the right skills with the necessary instructions on how to make and use an invention. Based on that publication, the invention could then be made and used in all countries outside of the US where patent applications will not be filed or granted.

Given the costs and risks, why are patents filed?

As it is difficult for an inventor or company to bring an inventive idea to market, a patent application can provide a means to share the idea and attract investment or collaboration without fear of copying. In addition, having a patent application helps attract investment by showing both technical expertise and a commitment to bringing the idea to market. The patent application alone can provide a deterrent for a potential bad actor from entering the market using the inventor’s idea. A patent can be enforceable against potential infringers to preserve the owner’s market share. Moreover, either a patent application or a granted patent can generate revenue for the owner via a licence agreement if a competitor opts to use the technology.

What happens if patents are abused?

As mentioned above, the US government (and other national governments) have invested substantial capital into individual companies to ensure that diagnostics, vaccines and therapeutics are developed. Under the Bayh-Dole Act, because of the money invested, the government will have a ‘nonexclusive, non-transferable, irrevocable, paid-up license’ to promote the use of government-funded technology.^[7]  The law also authorises the US government to exercise so-called ‘march-in’ rights, which compel the owner of any invention obtained through federal funding to licence it to one or more third parties to the extent necessary, among other things, to address health or safety needs, ‘upon terms that are reasonable under the circumstances’.^[8]

In countries outside of the US, legal mechanisms have been created to deal with patent owners who are unwilling to practise or license their technology under commercially reasonable terms. For example, a compulsory licence is the grant of permission by a government to a manufacturer seeking to use another party’s IP without consent. Compulsory licences may be imposed on pharmaceutical manufacturers by some countries on the asserted grounds of public health and safety. Other grounds for potential support for assertion of compulsory licences might include national emergency, vital public health need, strong societal interest, abuse of economic power that might break antitrust laws, and in circumstances where multiple patents held by different owners cover a particular technology. For example, combination therapies, such as triple antiretroviral drugs, may be subject to more than one patent. In such cases, if one patent owner refuses to license, then the technology may not be marketed without a compulsory licence.

Have patents hindered access or adoption of vaccines targeting Covid-19?

In May 2021, the US government declared support for the October 2020 petition before the WTO to waive patent protections. Specifically, the government signalled support for companies in developing nations to manufacture and distribute vaccines without regard to patent rights. However, to date, no empirical evidence has shown patents for Covid-19 vaccines to have prevented the manufacture or distribution of vaccines to the world’s population.^[9]

Opponents of the October 2020 petition argue that the patent waiver would make it harder for biopharmaceutical companies to meet existing and future vaccine commitments and the patent waiver risks the proliferation of substandard or counterfeit vaccines.^[10] For example, the Pfizer vaccine requires 280 different components, produced by suppliers in 19 different countries.^[11] These patent holders argue that if the innovators who developed the vaccines are forced to surrender their patent rights, they will have to compete with other companies for already scarce resources, which will undermine the global response to the pandemic and compromise safety.

Proponents are worried that governments could choose to stop freely providing the vaccine. What happens in the US, for example, if Pfizer, Moderna or Johnson & Johnson increase the cost from the government-funded and purchased price ($10–$19.50 per dose) to the normal price of a vaccine ($50 to $175 per dose)?^[12] Many experts predict that Covid-19 booster shots will be a regular part of our lives for years. An increase in the price of coronavirus vaccines could have considerable impact on healthcare spending in the US. If Pfizer raised the price of its coronavirus vaccine from $19.50 per dose to $175 for example, a yearly booster for every American adult would cost $44.7bn and could increase annual US drug spending by nine per cent.^[13]

Although universal access to and adoption of vaccines to combat the Covid-19 pandemic has not yet been realised, patent applications or granted patents are not creating a barrier.^[14] Instead, the main obstacles have been raw materials, manufacturing plants and distribution systems.