Home of the Free, Land of the Waive? Patent Waivers in the Time of COVID-19

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[co-author: Alexandra Nathe]

Over a year after the world shut down from the COVID-19 pandemic, many countries are beginning to see the light at the end of the tunnel that is a return to normalcy. Unfortunately, other countries are still deep in the throes of this devastating crisis. Recognizing this disconnect, representatives from South Africa and India proposed a potential solution to this issue—patent waivers—to the World Trade Organization (“WTO”) in October 2020. The United States’ recent showing of support for this proposal has renewed relevancy in this topic. This article first explains what a patent waiver is and the process to obtain one. It then concludes with a discussion of historical uses of patent waivers and the potential future impacts and implications should one be granted.

Patent Waivers Defined

When one is granted a patent, the patent holder receives a right to exclude others from making, using, offering for sale, selling, or exporting, the patented invention from the country for which the patent has been granted. If an unauthorized entity were to undertake any of those restricted actions with the patented invention, the patent holder could bring a claim of infringement against the unauthorized entity. A WTO-approved patent waiver would prevent patent owners from exercising their exclusionary right against entities in any countries that grant compulsory licenses to intellectual property (“IP”) related to COVID-19.

A compulsory license is an authorization that permits a third party to utilize protected IP without the IP holder’s consent in a way that would otherwise constitute infringement. While the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”) already provides for compulsory licensing, it is limited to patents for domestic use. The October 2020 proposal seeks to expand this scope to include more IP categories—copyrights, industrial designs, and trade secrets—for any use associated with the prevention, containment, or treatment of COVID-19.[1] Under this waiver, countries could manufacture, sell, administer, and export all related health products and technologies without fear of an infringement claim being brought against them by the IP owner.

Procedures to Obtain

Most proposals submitted to the WTO—including this one—follow the same general approval process. First, the proposal is submitted to the appropriate WTO secondary council, which then must submit a report to the General Council within 90 days recommending or rejecting further discussion. If the secondary council recommends the proposal, the General Council will discuss it with all member countries at the subsequent WTO meeting. The proposal will be approved if a full consensus is reached. Alternatively, if a full consensus cannot be reached, the proposal may still pass if three-quarters of the WTO member countries adopt it. In this scenario, the waiver would only apply to adopting countries while rejecting or dissenting countries would not be bound. Adopting countries would then implement the waiver under their own national laws, amending all current related statutes and legal codes.

Here, the secondary TRIPS council recommended the proposal, but as of the most recent General Council meeting at the time of this writing, consensus had not yet been reached. The waiver’s main proponents—South Africa and India—are currently revising the waiver with input from other supporting countries to put it in a better condition for approval at the next meeting.

Historical Examples

While this permissive of a waiver has never passed before, in 2001, the WTO added the Doha Declaration to the TRIPS Agreement. This additional section mandated that the TRIPS Agreement should not prevent WTO members from taking measures to protect public health, and, in times of national emergency or extreme urgency, some of the TRIPS requirements can be disregarded.[2]

The most well-known use of the Doha Declaration was in 2003 when developing countries issued compulsory licenses to manufacture, sell, and import inexpensive pharmaceuticals to aid in controlling HIV, AIDS, tuberculosis, and malaria without approval from the patent holder. In this scenario, both the importing and exporting countries were exempt from their normal obligations under TRIPS.[3]

Implications

As a waiver of this magnitude and kind is unprecedented, subsequent impacts are largely speculative. Critics of the proposal argue that one of the potential impacts is a removal of an incentive to innovate. Their main concern appears to be that companies will no longer risk investing time and significant resources if the reward for being first—i.e., obtaining a monopoly for the technology—is not guaranteed. Additionally, knowledge dissemination does not directly translate to increases in production. Raw materials and manufacturing resources are already strained and, unless the world is able to quickly scale up production capabilities, particularly in regions where storage is an issue, let alone capabilities in manufacturing, a mere patent waiver may not actually help control the pandemic in such regions.\

As the pandemic trudges on, any solution that may offer a bit of relief must be given adequate consideration. While it remains to be seen if a WTO-adopted patent waiver will be a viable option, one conclusion can be drawn from the fact that this controversial proposal has advanced as far as it has: the world has rarely been so willing to work together to meet a common goal.

Note:
Alexandra K. Nathe is a 2021 summer associate at Snell & Wilmer
[1]The Waiver Proposal as currently revised is available at https://www.wto.org/english/res_e/res_e.htm.
[2] Agreement on Trade-Related Aspects of Intellectual Property Rights, Part II, § 5, art. 31.
[3] For example, without the Doha Declaration, importing and exporting countries would have had to demonstrate prior attempted negotiations with patent holder for a voluntary license before being allowed to issue a compulsory license. .

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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