By James Love
On March 15, 2022, STAT published text of a proposed compromise at the World Trade Organization (WTO) to temporarily relax global standards for intellectual property for COVID-19. The original proposal tabled by India and South Africa in 2020 as IP/C/W/669 would have waived 40 articles of the WTO Trade Related Agreement on Intellectual Property Rights, known as the TRIPS.
The proposed compromise would allow for “the use of patented subject matter required for the production and supply of COVID-19 vaccines without the consent of the right holder to the extent necessary to address the COVID-19 pandemic, in accordance with the provisions of Article 31 of the Agreement, as clarified and waived.” In short, the compromise only waives a single 20-word paragraph in one article: the one dealing with exports under a non-voluntary authorization.
In general, there are no legal benefits to the proposal. Countries can already export a non-predominant share of vaccine production under the TRIPS agreement, with mechanisms that are broader regarding both exports and imports, available regardless of the technology, and permanent.
This note focuses on the practical risks the proposed agreement presents as a precedent.
In this compromise, there is a deliberate effort to create some ambiguity over what is “waived” and what is “clarified,” particularly for persons without technical expertise in the WTO’s TRIPS rules. I would put the provisions impacted by the text into two categories:
- Provisions that restate existing TRIPS rules as they relate to Articles 31 (“Other Use Without Authorization of the Right Holder”) and 39 (which concerns “Protection of Undisclosed Information”).
- Article 31.f of the TRIPS. The text waives this provision on exports under a non-voluntary authorization, subject to limitations on geography (eligible countries are defined as developing countries minus China), disease (COVID-19), technology (vaccines only), time (temporary, with the time period to be determined later), and conditions, including new obligations to list patents, notify the WTO and provide details of the use of the waiver, and obligations to prevent re-exportation of products, even when the exports would be lawful in the importing country.
The risks the proposal presents are twofold, (1) the normalization of several TRIPS+ conditions on non-voluntary authorizations that collectively are restrictive, burdensome, and protectionist, and (2) the risk that the “clarifications” of existing flexibilities in the TRIPS are a special case, only for emergencies, COVID-19, vaccines, or this temporary mechanism.
Bad precedents from proposed limitations and conditions on non-voluntary authorizations
Requirement to list the specific patents. The new obligations for listing of patents were not included in the original TRIPS for good reason. The United States, the United Kingdom, and many other countries do not have this obligation in their government/Crown use statutes, and in the case of complex biomedical inventions, where patent landscapes are often subject to non-disclosure agreements, changing over time, and controversial as to their scope, relevance, and validity, it is a consequential and objectionable requirement. More on this topic here.
Notifications to the WTO. The requirement for detailed notifications to the WTO forces health authorities to engage Ministers of Trade and Foreign Affairs. This requirement can be a deal breaker in the many countries where different philosophies and missions clash, and where raising the authorization to a trade issue might increase the fear that non-voluntary authorizations have a global political cost.
Anti-diversion obligations. The anti-diversion obligations undermine legitimate parallel trade, when the products are otherwise legal in the importing country. Such obligations are unnecessary when a government is keen to acquire vaccines that are both affordable and scarce, and when the vaccine manufacturer has the ability to enforce intellectual property rights, if any, in importing countries. Article 6 of the TRIPS states that “the exhaustion of intellectual property rights” is left to “each Member free to establish its own regime for such exhaustion without challenge,” a topic that was front and center of the 1998 to 2001 litigation between drug companies and South Africa. The proposed compromise text, which only applies to developing countries, would be applied even when the compulsory license was used on a single input of vaccine. Vaccines are particularly vulnerable to infringement claims from third parties, such as the patent on use of biodegradable lipids that Alynlam claims is infringed by Moderna for its mRNA vaccine, and this would also be an issue if a compulsory license was granted for the patents on the CPG 1018 adjuvant that is used in the Baylor vaccines. If this becomes a precedent extended to treatments for cancer or other cases, it would more broadly undermine Article 6 of the TRIPS.
Geographic restrictions on both imports and exports. There are no restrictions on which countries can export under a compulsory license in the TRIPS agreement. The only restrictions on which countries can import in the TRIPS agreement are found in the amendment Article 31bis, which gives WTO members the option to “opt out” of the special 31bis mechanism as importers, either for emergencies or more generally. The proposed compromise is more restrictive than the TRIPS in that the only countries that can import or export are developing countries, less China. Any restrictions on exports during a pandemic are problematic, particularly when the biggest problem is the exact opposite, the blocking of exports of COVID-19 countermeasures. The geographic restrictions on imports in 31bis have been criticized as protectionist, because they prevent manufacturers from benefiting from economies of scale, which could mean they would have to charge higher prices or forego production altogether. It is unlikely that the current compromise proposal will even be utilized, if adopted, but the text is not unimportant if it further normalizes restrictions on the exports under a compulsory license to higher income countries, even when a product is not infringing in either country.
The notion that certain TRIPS flexibilities are exceptional to the COVID-19 crisis
There are several provisions in the proposed compromise which only restrain existing flexibilities in the TRIPS. For example, the proposal states that:
- Governments can forgo prior negotiations with patent holders,
- A country “may issue a single authorization to use the subject matter of multiple patents” for a vaccine,
- Actions can be taken through legislative acts, executive orders, emergency decrees, and judicial or administrative orders,
- Remuneration “can take account of the humanitarian and not-for-profit purpose of specific vaccine distribution program” and “existing good practices in instances of national emergencies, pandemics, or similar circumstances,” and
- Nothing in Article 39.3 of the Agreement shall prevent a Member from taking measures necessary to enable the effectiveness of any authorization issued as per this Decision.
All of these clarifications of existing flexibilities in the TRIPS may provide the illusion of comfort for the COVID-19 pandemic, but they also run the risk of being later held out as an exception, not so much in a legal sense, but in a consequential political sense. One previous example of this occurring is from the first paragraph of the 2001 Doha Declaration on TRIPS and Public Health, which states, “We recognize the gravity of the public health problems afflicting many developing and least-developed countries, especially those resulting from HIV/AIDS, tuberculosis, malaria and other epidemics.” This clause is frequently used to claim that the access-expanding paragraphs 4 through 7 of the same declaration only applied to “HIV/AIDS, tuberculosis, malaria and other epidemics,” including the paragraph 5 “clarifications” of flexibilities in compulsory licensing and parallel trade.
It is possible that there will be no actual COVID-19 vaccine cases where the proposed compromise will be useful at all, given its temporary nature, the existing flexibilities in the TRIPS, and the superior alternatives already available for exporting under a compulsory license. That said, the proposal introduces precedents that will be used to justify further narrowing of TRIPS flexibilities, and risks that the most neutral clarifications of existing flexibility will be spun by drug companies and their advocates in producing countries as special, rather than general, and not be used outside of an emergency or COVID-19, or for anything other than vaccine.