Compulsory licences in times of crisis

Laurence Bibow

Compulsory licences in times of crisis

The context of the Covid-19 pandemic has unexpectedly put compulsory licences under the spotlight. As the Covid-19 outbreak swelled in the last year, the question of the access of suitable medicines to all, and especially in low-income countries, has been raised. Protests have been made against a potential hindrance of patent rights to Covid-19 treatment, some including requests that the process for obtaining a compulsory licence for such patents be eased. Forcing owners of patents to licence them may seem a solution for ensuring appropriate worldwide supply of Covid-19 related products and in particular vaccines. Some may also see a solution to accelerate the production of the vaccines and other medical treatments. In this context, a proposal has been submitted to the WTO by South Africa and India calling for a waiver of certain provisions of the TRIPS Agreement in relation to the prevention, containment or treatment of COVID-19, including patent provisions.

What is compulsory licensing?

Compulsory licensing is a legal tool that allows a government to authorize a designated third-party to work the invention protected by a patent without express authorisation from the patent holder, under conditions, including compensation and aiming at protecting the legitimate interests of the patent owner. Compulsory licensing may seem contradictory with the very principle of patent protection which provides an exclusive right to the patent owner, therefore compulsory licensing follows strict safeguard conditions.

Compulsory licensing although it may be applied to patents in any field, is more frequently seen in the pharmaceutical industry. A report from WIPO on compulsory licensing shows that in the past, pharmaceutical compulsory licences have resulted in substantially reduced prices and better spread of medical treatment. The mechanism is however rarely used, considering the total number of patent grants in the world.

Nevertheless, according to the World Intellectual Organisation (WIPO), 156 countries make provision for compulsory licensing under their respective legal frameworks. The objective and goals of compulsory licensing include:

  • Safeguard public interest
  • Prevent abuses of the patent rights, such as non-working or insufficient working
  • Ensure national security
  • Respond to national emergencies

The legal background for compulsory licence can be found in two international treaties, but compulsory licences are then granted under national law.

The Paris Convention for the Protection of Industrial Property for patent and utility models (Article 5A of the Paris Convention) provides a right for a state to grant compulsory licenses to prevent the abuses related to patents, for example, failure to work. It takes into account the time necessary for the patent holder to organize the exploitation of the invention by himself or licensees.

Article 31 of the Agreement on Trade-Related Aspects of the Intellectual Property Rights (TRIPS), 1995 provides strict conditions for allowing compulsory licensing and government use. The TRIPS Agreement provides flexibility to allow Members to take measures to protect public health and promote access to medicines for all. For example, each state can determine the grounds upon which compulsory licenses can be granted and which circumstances constitute a national emergency or extreme urgency. Article 31bis details special compulsory licences permitting patented pharmaceutical products to be exported to countries lacking production capacity in the pharmaceutical sector.

Unintended consequences of Covid-19

Regarding Covid-19, compulsory licensing could a priori concern any type of products, such as medicines and the vaccines itself, medical devices such as ventilators, facemasks and other protective equipment, or contact tracing software… as well as methods, such as for producing any of these products, essential to treat or protect from Covid-19. As the outbreak of Covid-19 accelerated, some countries have updated or clarified their legislation in order to expedite or simplify the process to ensure access to Covid-19 related patents and the products or methods they protect. New, sometimes temporary, regulations have been enacted. For example, in Chile, in March 2020 the parliament unanimously adopted a resolution declaring that the Covid-19 pandemic justifies the use of compulsory licensing “to facilitate access and availability of medicines and technologies for the prevention, treatment and cure of coronavirus covid-19”.

In France, for example, the provisions from 1968 relating to “licence d’office” set-out various licensing conditions depending on the circumstances around the patent at issue, such as public health, public interest, or national defense. Within the parameters of the 1968 provision, any public health compulsory licence was limited to granted patents for medical devices or methods entailed a cumbersome and lengthy legal process which was never used. New provisions in France were adapted in 2020 under the Covid-19 emergency laws. The conditions of the new provisions are broader and allow the Prime Minister to order the seizure of all necessary persons, services, and goods – including patents in the circumstances of declaration of a state of health emergency. Safeguards include that the measures should be appropriate and strictly proportionate to the health risks involved and terminated without delay when no longer necessary.

Hence, even if various patents could be useful in some way in relation to Covid-19, the strict conditions for allowing a compulsory licence effectively narrow down the patents that are potential candidates under the provisions. As of March 2021, only one case worldwide has been noted of a government-use licence for a potential treatment: in March 2020, Israel issued a compulsory licence approving the use of generic versions of the HIV medicine called Kaletra of the US company AbbVie before the expiry of the patent and obtained from countries where the patent had expired, e.g. India, for the purpose of testing the drug as a treatment for Covid-19. More recently in March 2021, Canada based Biolyse Pharma, sought a licence from Johnson & Johnson to manufacture a generic version of their Covid-19 vaccine for export to low-income countries. Their request for a licence was refused. On the basis of their objective to manufacture the vaccine for low-income countries, Biolyse Pharma requested a compulsory license.

Compulsory licensing is still not widely used

For many, a patent is generally seen as a fair reward for R&D efforts. If compulsory licences were to be generally available this would likely impact effect on R&D investment. Accordingly, allowing compulsory licensing may be seen as contrary to efforts to encourage long-term innovation. In any case, enforcement of Covid-19 patents would results in bad press for the patentee. Indeed, in order to allow for tests for Covid-19 treatments to be conducted, Gilead decided to withdraw its antiviral drug designation in the US for Remdesivir and AbbVie announced that it would not seek to enforce its patent rights covering the HIV drug Kaletra. Moderna announced in October 2020 that it would not enforce their Covid-19 related patents during the pandemic and was willing to license their patents once the pandemic is over. The company has provided access a selection of representative US patents granted between 2018 and 2020 relevant to their vaccine against COVID-19.

Another example is the alliance of the British–Swedish pharmaceutical company AstraZeneca with Oxford university. Oxford University was granted a patent on the technology. Public funding was given to support the development of AstraZeneca’s vaccines in exchange for agreement to deliver vaccines in several countries including US, EU, China, Japan, UK, and Brazil. Today, AstraZeneca has an exclusive worldwide license, and indicates commitment to providing the vaccine on a low or no profit basis during the pandemic. In addition, Astrazeneca has promised that any post pandemic royalties will go to a research centre. In India, an agreement has been made with the Serum Institute of India to provide the vaccines in India and possibly to other low- and medium-income countries.

Are there any Covid-19 patents?

A compulsory licensing scheme necessarily implies at least that there is a patent to license… There are currently over 250 Covid-19 vaccines in development, some of which are already authorised for use in vaccination campaign around the globe according to WHO, including those from Pfizer/BioNTech , AstraZeneca/Oxford, Moderna, Spoutnik V, Sinopharm, Sinovac, Johnson & Johnson, Bharat Biotech, CanSino. It is worth noting that a vaccine product may be based on many patents, some of which may have developed prior to the current pandemic. For example, the Pfizer-BioNTech and Moderna messenger RNA vaccines are partly based on a technology developed by the University of Pennsylvania which was patented in 2005 and both companies have a licence to use the technology.

Covid-19 is caused by the SARS-CoV-2 coronavirus which was first discovered in December 2019. It was only after the publication of the genetic sequence of the SARS-CoV-2 in January 2020 that pharmaceutical companies could start working on a vaccine.

Search keywordNumber of patentsFiling years
SARS-CoV-2 + Vaccine6002020-21
SARS-CoV + Vaccine43002003-21

A search of patent databases shows that approximately 3500 “SARS-CoV-2” related patent applications worldwide that were all filed between 2019 and 2021 after the discovery of the virus have been published to date (Aug. 2021). Most of these applications originate from China (≈1900 applications); the second country most represented is the US (≈490 applications). They concern various technical fields, including protective equipment, detection methods, antiviral drugs, vaccines, and other therapy related inventions. When the search is limited to include the term “vaccine” the search returns about 600 SARS-CoV-2 vaccine patent applications, which have been published to date.

As a patent application is normally published 18 months after its filing, these numbers will not include recently filed applications. There are nevertheless exceptions as early publication is possible on request by the applicant. For example, the US Patent Office (USTPO) is encouraging applicants to request early publication of any Covid-19 related patent applications so as to spread knowledge faster. In any case, as of today, the number of patent applications filed during 2020 is largely underestimated and the public does not know the full extent of covid-19 related patent applications.

Searching more generally with the term “SARS-CoV” gives a total of a little more than 11000 patents applications worldwide starting from 2003 when the SARS coronavirus was first discovered. There were around 400 applications filed per year before the Covid-19 pandemic. The patent offices which have received most applications are those in China (≈3000 applications) and the US (≈2000 applications), but also Europe (≈1000 applications) and Japan (≈650 applications). Interestingly, 234 of these SARS-CoV patent applications are mentioned as involved in licenses. A peak of about 4150 applications were filed solely in the 2020-2021 period of which close to 1000 patents already granted. If adding the term “vaccine” to the search query, one finds that there are close to 4300 SARS-CoV vaccine patent applications published as of Aug. 2021

Other solutions

The Covid-19 pandemic ignited the creation of both private and collaborative initiatives to counterbalance potential risks arising from patents while avoiding the necessity to resort to compulsory licensing. Voluntary sharing and pooling initiatives of IP rights have been implemented. Open Covid Pledge was created at the outset of the pandemic with the objective of making intellectual property relevant to Covid-19 freely available. In May 2020, the WHO announced the establishment of the Covid-19 Technology Access Pool (C-TAP) for sharing intellectual property, data, knowledge, know-how, and technology to accelerate Covid-19 related R&D and enable production of health tools needed in the response to the Covid-19 outbreak in various regions of the world. The Covid-19 Vaccine Global Access (COVAX) initiative is co-led by CEPI (Coalition for Epidemic Preparedness Innovations), GAVI (the Vaccine Alliance), and the WHO with the stated mission of ensuring equitable access to Covid-19 vaccines for all populations. Before the Covid-19 outbreak, the WIPO report concluded that the overall impact of issued compulsory licenses seemed positive: “The existence of such provisions, or announcement of intention to invoke such provisions, promotes willingness on the side of the patentees to conclude licensing agreements”. Today, it is questionable whether a mere legal solution like a compulsory licensing program would really improve the worldwide distribution of Covid-19 related technologies. The obstacle to a wide distribution of the Covid-19 vaccines today seems to be chiefly related to the technology for developing, manufacturing, and delivering safe and effective products, in addition to the legal aspects restraining the supply. As stated in the WIPO report:

“The effectiveness of the compulsory licensing provision to meet the intended policy objectives depends on various factors which may lie within and outside the realm of the patent system”.

For further information, please contact Laurence Bibow.

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