Although he pronounced against the IP Waiver on 23 April, French President Emmanuel Macron declared having changed his mind on 6 May, following the US administration’s surprising decision on 5 May. These contradictory statements have rekindled the controversy over the IP waiver, which is a wrong path that distracts the debate from the real issue: how to make the compulsory licensing procedure effective?
IP is (too?) rarely emerging from the political discourse in France and Europe. However, since the announcement on 5 May by the Biden administration, which supports the proposal for the IP waiver linked to Covid-19, which emerged at the WTO under the leadership of India and South Africa, the subject of the patents come to the forefront of public debate, since the IP waiver concern mostly patents.
It should also be noted that Mrs Merkel has spoken out against the suspension of intellectual property, which is strange when you consider that a law passed in April 2020 by the German Parliament (Infektionsgesetz, summarised in English here) declares exactly the opposite: that patents linked to Covid-19 can be deprived of their effects at any time if necessary (which is contrary to Article 31 bis of the TRIPS Treaty, but then again, that’s not the case…)
A reminder to political leaders: what is a patent?
Often caricatured as instruments intended to fill the portfolios of the shareholders of “Big Pharma”, in particular, by keeping the secrets of their formulas, patents are in reality instruments for encouraging research, in particular for the amortization of R&D investments.
A patent is in fact a property title relating to an invention which is issued by an administration (i.e. the INPI) which grants, for a period of 20 years, an exclusive right to exploit the invention it discloses. In other words, contrary to what we often hear, a patent does not guarantee any secrecy, but allows research to be disseminated, as long as it is public.
Thus, expropriating patent owners would discourage investment in private research, which is far greater than investment in public research. Such a discouragement would appear, at the very least, in similar situations (e.g. pandemic with a variant requiring a new vaccine). Not to mention that in this case the patents, for the time being, do not concern vaccines as such, but manufacturing methods (such as messenger RNA) that were invented prior to the pandemic and that come solely from private investment (see a summary here). Finally, the patents are very often held by SMEs and not multinationals, as is the case with BioNTech or Moderna for example.
The IP waiver proposed at the WTO
Since autumn 2020, the WTO has been discussing a possible IP waiver in connection with the current pandemic. Of course, this waiver does not only concern patents, but all intellectual property, including apparently know-how, which is not only secret, but also very important for the exploitation of the lessons learned from patents. This know-how is essential for adapting production capacities, particularly for the messenger RNA technique.
It should also be emphasized that the IP waiver is intended solely to prevent States from being obliged to act at national level. In other words, the aim is to avoid each State having to implement the compulsory license procedure individually, which would risk driving the pharmaceutical industry out of their territories, in favor of a collective measure to suspend intellectual property.
This change of scale – from national to international – also serves as a pretext for moving from an compulsory license (limited by Article 31 bis of the TRIPS Treaty and subject to royalties proportional to the exploitation of the invention) to a pure and simple suspension (akin to expropriation which will at best be compensated by means of a patent indemnity).
In any case, there is currently no precedent for this, so each country would have to devise a specific procedure, which does not exist at present, whereby the State would have to identify the patents linked to COVID-19 and assess compensation for each of them.
The real problem: the lack of effectiveness of the compulsory licensing mechanism
In the end, it is hard to understand why political leaders are only for or against the IP waiver, while pretending to ignore the mechanism of the compulsory license, which exists in our positive law and could facilitate the manufacture of vaccines.
This lack of vision seems particularly damaging insofar as compulsory licensing would offer significant advantages: existing mechanisms and royalties proportional to the exploitation of the invention, so that a balance would be maintained between the reward that encourages research and the interest of public health.)
Moreover, it would be quite conceivable for WTO members to adopt collectively, at the international level, a declaration of intent by which they would undertake to implement the automatic licensing procedure, without any question of suspension (and therefore of expropriation).
It should be noted, however, that a bill tabled in the Senate on 8 April this year (see translation here), with a view to granting such a license, could (at last) make up for this unfortunate governmental deficiency.
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– “expropriating patent owners would discourage investment in private research”
Pfizer received $3.5 billion in revenue from the Biontech/Pfizer vaccine in the first quarter of this year, Moderna $1.7 billion. Isn’t that enough of an incentive?
– “the patents are very often held by SMEs and not multinationals, as is the case with BioNTech or Moderna for example”
And yet both Biontech and Moderna received substantial government funding. Should they be entitled to unlimited profits in the face of a pandemic?
– “compulsory licensing would offer significant advantages”
According to Politico, the main problem with compulsory licensing is the cross-border restrictions imposed by TRIPS. The patent waiver would circumvent those restrictions.
– “Isn’t that enough of an incentive?”
That depends on how much they spent in development. But in any case, this is more about the incentive for future developments. What will be the incentive to develop modified vaccines to cover new variants, or reduce side effects, if they will not be protected by a valid patent?
– “Both Biontech and Moderna received substantial government funding”
It is the task of those administering public money to make sure that appropriate reward is achieved for that funding. Just as with any other investor or sponsor.
– “Should they be entitled to unlimited profits in the face of a pandemic?”
Certainly not. The compulsory licensing mechanism proposed in the article should take care of that.
– “The patent waiver would circumvent those restrictions.”
If that is the case, still a WTO agreement for compulsory licensing would be better, imho. All cross-border restrictions can be erased if all parties agree.
In which way is the current German law not in line with the TRIPS agreement in your opinion?
Surely patents in of themselves disincentivize research and development? Do they not sort of tie down the invisible hand by preventing competition?
Surely a better system would be one where governments (or perhaps all states together via the WTO) repay important innovations and inventions with a royalty, in essence ‘buying’ the patent off the inventor and then entering the medicine into the public domain. This would incentivize innovation whilst also providing much wider access to the medicine.
It seems like the current state of patents create an instant monopoly, where the profit of the individual firm is maximized, and not the collective good.
Like everything else, a patent system needs a balance of interests if it is to function in a way that enhances the general welfare of society. On the one hand, each patent is a restraint on free trade. On the other hand, as Abraham Lincoln observed, a system of patents:
“….. secured to the inventor, for a limited time, the exclusive use of his invention; and thereby added the fuel of interest to the fire of genius, in the discovery and production of new and useful things.”
Adding fuel to the fire of genius within all fields of technology is what Planet Earth needs, now more than ever.
What a pity, that the wise balance of interests laid down in the UK Patents Act of 1949 is not to be found any more in the patent law of Europe. Compulsory Crown User provisions for the defence of the State, compulsory licences where appropriate, extensions of the standard patent term in individual deserving cases. It’s all there, but over-run by globalisation, deference to the supposedly all-knowing markets, and popular disillusionment with the wisdom of the experts.
Perhaps C19 will teach us that we should pay more attention to the experts (even perhaps those in economics). A patent waiver is a deliberate distraction from the hard problem of how to vaccinate everybody, all over the world. And anyway, it is going to get talked out, filibustered, and will never come to pass. Shame on those who are touting it in order themselves to make even higher profits out of the vaccine supply market.
There are solutions, things we can do quickly and effectively, as the experts are explaining to us. Trouble is, they are more expensive. Like with the 2008 finance crash, we need a Gordon Brown, to explain to the G7, or the G20, in terms they can all grasp, what needs to be done, to help all those poor people in India and in so doing, everybody else on Earth.
There are really some dreamers within the readers of this blog.
It is nothing new that patents for medicines have been regularly targeted as leading to a too high price for medicines, but wanting to kill the whole patent system is a bit far fetched.
The theory about patents is in exchange to a temporary monopoly, the applicant/owner discloses its invention. What is there bad with this?
No temporary monopoly would lead to everything being kept as secret as possible. Where is the gain?
We have seen where collective appropriation of all means of production has lead to. And today the one country which calls itself “democratic” is one of the most authoritarians on the world!