Moving the goalposts: a covid-19 vaccine poses risk to patent-holders
Covid-19 has put the world on hold; most experts say the prospect of lifting lockdown measures relies heavily on finding an effective vaccine to stop the virus spreading. Several governments look set to introduce controversial compulsory licensing laws for any breakthrough vaccine to become publicly available, but lawyers in Latin America have voiced concerns about how this will impact IP rights in the region.
While some countries such as New Zealand and South Korea have had relative success in curbing infection rates, for much of the world the covid-19 outbreak shows no signs of easing up. The race for scientists to discover a vaccine is on; pharmaceutical companies are hunkering down in the hopes of being the first to find a breakthrough vaccine that could put an end to the crisis. However, question marks loom over how a potential immunisation could be made available to the public and how it could be distributed without infringing on intellectual property rights. It’s a puzzle that has left many IP practices in law firms scratching their heads.
Patents exist to protect an individual or a company’s right to a new discovery. However, when the health of a nation – or indeed the world – lies in the hands of that breakthrough, it may be a case of throwing out the rulebook altogether. In Latin America, policymakers are considering drastic legislative changes in the face of extraordinary circumstances to help speed up efforts to end the pandemic.
Moving up a gear
Countries across the region are taking steps to accelerate the discovery of a vaccine. In Brazil, patent applications for new technologies that could be used in the fight against covid-19 have been fast-tracked under new legislation. Brazil’s Patent and Trademark Office (INPI) passed the rule on 7 April and it will remain in place until June 2021. “The INPI has so far made a huge and successful effort,” says Gustavo de Freitas Morais, partner at Brazilian firm Dannemann Siemsen Advogados’ IP practice. The new measures have an additional benefit, as it also serves to reduce INPI’s application backlog, which has been one of the office’s long-term aims over the past decade.
Other IP offices across the region are also prioritising healthcare patents, with some using the opportunity to maximise efficiency. Peru has introduced a similar fast-track system to Brazil’s, whereby its patent office (PPO) is working proactively to push the most important applications to the top of the pile, even when the offices themselves are closed during lockdown and agents are working remotely. “The patent office is adopting the necessary measures, so that suspended time limits do not affect proceedings,” says Intellectual Property partner Alvaro Gutierrez at Estudio Echecopar member firm of Baker McKenzie International.
Meanwhile “work goes on almost as usual” at Argentina’s Patent and Trademark Office (PTO), which is flourishing in its smooth transition to total online working, says Raquel Flanzbaum, partner at IP boutique Berton Moreno + Ojam. Before lockdown was introduced, a build-up of in-person filings and office procedures was often the culprit of its administrative backlog, however many are now finding an all-online system has simplified matters and made the office more efficient.
The personal is political
While patent offices work around the clock to adapt to those fast-track changes, most eyes are on national governments across the region, though, as drastic revisions to IP legislation are expected to be announced. Scientists are edging closer to a breakthrough, and clarity will be needed on how any future vaccine might get used. Brazil’s Congress has been busy drafting a bill that, if passed, will grant compulsory licences for all patents related to covid-19 treatments or personal protective equipment, says Dannemann partner Rodrigo Oliveira.
Under compulsory licensing laws, a government has the power to revoke patent rights from innovators or companies if a discovery they made provides vital treatment or protection related to a national health emergency. Under these laws, another organisation can also reproduce and distribute the product without prior consent from the patent-holder. If the patent owner does not comply, they may face strict fines from the government.
Authorities have made similar strides in Chile, where there has been much speculation on whether policymakers will introduce compulsory licensing. On 17 March, the country’s House of Representatives unanimously voted in favour of a resolution to introduce such licensing (though it is yet to be approved by the Senate). Moreover, a bill reviewing current IP law has been stuck in Congress for three years now, says Alessandri partner Santiago Ortúzar. This has left many IP experts wondering if the current crisis will make the Senate fast-track this bill and approve these special licensing powers – essentially vetoing usual patent rules in the case of a health emergency. “We are not sure if the Senate will take the opportunity to include modifications to the bill in relation to compulsory licensing,” Ortúzar explains.
Compulsory licensing laws already exist in Argentina, Mexico, Costa Rica and Uruguay, among others, and allow governments to override patents for health products if those treatments are deemed vital for “public benefit” in a serious national health emergency. In Mexico's case, it would take extremely exceptional circumstances to trigger this law into action, though. Even after the outbreak of swine flu in 2008, the country avoided compulsory licensing as pharmaceutical companies were able to distribute treatments to the public without the need for government intervention.
The covid-19 pandemic, however, poses unprecedented hurdles in the country (and the world) on a much wider scale than swine flu ever did. As a result, concerns are growing that this time the Mexican government may have no choice but to resort to the controversial licensing. Further fuelling this anxiety is news that Mexico’s General Health Council (GHC) has “recently opened the door to the possibility that such licences might become applicable,” says Hogan Lovells (Mexico) partner Valentina Schmid.
A dangerous precedent?
Most medical experts say a return to normality will only come once an effective vaccine is produced. With mortality rates still high across the world and the threat of a global recession looming, pharmaceutical companies face great pressure to waive any patent rights in the interest of public health and the global economy. Given that compulsory licensing is threatening to move the goalposts on how IP rights are protected, some lawyers have been left feeling like they are heading into unchartered waters.
Alessandri’s Ortúzar explains that most Chilean government officials consider access to pharmaceutical products a health issue that trumps any argument for protecting IP rights. Yet, the possibility that compulsory licences could be granted under the current emergency threatens to set a dangerous precedent that could infringe the rights of patent-holders in the future.
“If, when the times comes, a [covid-19] vaccine is easily available to the population due to IP rights, then there will probably be a lot of pressure to facilitate and expand compulsory licences and, therefore, restrict IP rights,” adds Ortuzar. The worry is that, post covid-19, pharmaceutical companies that come up with new treatments could be forced to give up patents for any illnesses, big or small, if they are considered essential for the greater good of the population.
A blanket compulsory licensing bill could mean that in any future events, even if they do not match the extraordinary circumstances of covid-19, patent owners could be forced to waive their IP rights. Dannemann partner De Freitas Morais believes that this one-size-fits-all policy may be problematic: on top of harming intellectual property rights, a compulsory licensing bill could expose patent-holders to the risk of losing current IP protections indefinitely, unless the bill explicitly restricted this kind of licensing to the covid-19 pandemic only.
The license to cure
Compulsory licensing should only be used in a state of national emergency. In Mexico, lawyers are concerned about how open to interpretation the term “national emergency” is, if compulsory licensing does become law. “Any party, including competitors, could now, in theory, request a compulsory license for applicable patents before the Mexican Institute of Industrial Property (IMPI),” says Hogan Lovells associate Edgar Mata.
If local and foreign companies are prevented from retaining their patent licences, this could hinder the production and supply of essential goods to the population further than they already are in Mexico: the country’s IP sector suffered a blow in April when the US trade authority (USTR) included Mexico in a priority watch list for failing its standards for combatting piracy – a move some lawyers believe has deterred certain pharmaceutical groups from registering their products in Mexico. A compulsory licensing bill could place even more barriers for pharmaceutical groups trying to make a profit, which could further discourage these kinds of companies from registering in Mexico.
There are other grey areas still to be addressed over compulsory licensing. In Argentina, ambiguities lie in where this licensing leaves “secondary use” patents, where new products are developed using existing technologies. These patents were banned in the country in 2012, but since the development of a vaccine can sometimes rely on the use of previously discovered drugs, many companies are concerned about how a compulsory licensing bill might impact their use. “This is the real question our clients from the pharmaceutical industry abroad are concerned about,” says Berton Moreno + Ojam partner Raquel Flanzbaum.
A new can of worms
For now, compulsory licensing of pharmaceutical patents remains the focus for IP lawyers, but the patent debate is likely to have knock-on effects in other areas of law. One of those is data protection. “The access to sensitive health information, and the sharing of [it] in defiance of the data protection law is quickly becoming an important issue,” says Alessandri partner Ortúzar, who notes a rise in local governments requesting public medical information and statistics. Governments vying for confidential information to keep score on the pandemic is symptomatic of an even more worrisome trend of data privacy violations.
This could spell further danger in Chile, where concerns are already growing after the government set out plans for cards that use sensitive medical data to indicate whether an individual has recovered from covid-19 (the plans have since been postponed due to widespread concern over the potential discrimination the cards could pose). The use of recovery cards was entering treacherous waters as medical history is protected by Chile’s constitution and any violation could result in court sanctions. Any misstep in the use of data to patent or distribute a vaccine could invite a tsunami of data privacy issues, too.
Meanwhile, widespread lockdowns also mean that IP infringement cases are on hold, leaving individuals and companies unprotected by existing laws. “All courts are closed so pending lawsuits are on stand-by, which clearly affects IP owners of any industry,” says Hogan Lovells (Mexico) partner Bernardo Herrerías Franco.
For now, it is uncertain what a covid-19 vaccine might look like, and who might own the rights to it is even less known. In the face of uncertainty, regulators should take the right steps to reassure pharmaceutical companies about what exactly new regulations may entail. “Our clients would like to have more legal certainty over the protection and enforceability of their IP rights, including claiming damages and effectively stopping infringers,” says Herrerías.
The cost of production and testing needed before a vaccine is available should also be taken into account before landmark legislation changes are made. Before a vaccine is made available to the public, weeks, months or even years of trials and human testing may need to take place to ensure a vaccine is safe for public use. Mandatory licensing laws threaten to overlook the fees incurred to manufacture a breakthrough, which could discourage companies from using their resources in the event of another global crisis. “Our clients would ask that IP rights be respected and that the costs of obtaining pharmaceutical approved drugs always be considered,” says Alessandri partner Ortúzar who suggests that compulsory licensing should only be seen as “an extreme exception.”