Trade barriers stop vaccine supply

This blog has previously commented on proposals to suspend patent laws, as a means of enabling developing countries to access vaccines for Covid 19. Certain countries have proposed, in the forum of the World Trade Organisation (WTO), to amend the TRIPS agreement to provide for a waiver of patent laws.

Other countries have objected to this proposal, and it seems that little or no progress is being made in the WTO discussions. See this commentary on the IPKat website, and this rather unconvincing reply.

The debate at the WTO has prompted its Secretariat to produce a note listing trade-related barriers to global vaccine supply. The list is extensive, and eye-opening. To take one small example, who knew that some countries require vials of 3.51 ml rather than 3.5 ml?

A selection of the barriers listed by the WTO follows:

1. Export and import controls (Controls), including the lack of expedited procedures for sending materials abroad to specialist laboratories for testing, or to fill-finish companies.
2. The more stringent Controls for donations of vaccines, compared with commercial supplies.
3. A general lack of predictability in the administration of Controls.
4. Where a batch of vaccine is delivered across multiple borders, each with their own Control requirements, this adds to the complexity of supply. There is a lack of coordination among border agencies.
5. The difficulty of producing appropriately-certified documentation for exports and imports, due to some embassies being closed as a result of Covid. Some countries still require paper documents with a consularised apostille, rather than rely on online documents. IP Draughts knows, from discussion with his notary colleague, how procedurally complex it can be in some countries to validate notarised documents.
6. The existence of applied tariffs for some inputs for vaccines, including in developing countries.
7. Complicated visa and health requirements in certain countries, making it difficult for specialists to visit developing countries to support vaccine distribution.
8. Requirements for local retesting of vaccine supplies, rather than relying on testing in the source country.
9. While vaccine shipments have been streamlined, and sometimes have been media events attended by politicians, the same is not true of ancillary immunization products (e.g. syringes, refrigerators) needed for administering vaccines.
10. Varying sterilisation requirements in different countries have resulted in suppliers having to set up separate production lines.

The WTO note identifies possible approaches to remove or reduce these and other barriers. It may be more productive for WTO members to focus on those topics, rather than grandstand about patent rights.

Background IP – a minefield?

This blog has previously discussed the subject of Background IP, which is often a defined term in research agreements. Sometimes, parties get stuck in negotiations over the extent to which Background IP is to be licensed under the agreement.

IP Draughts has two main concerns about this subject:

1. The parties are often vague about whether there is any background IP, and whether it is available for license. Clauses dealing with background IP become theoretical, a tick-box exercise, rather than an immediate commercial concern.
2. The chances of valuable foreground IP (as distinct from useful results) being generated under a research contract are sometimes low. The likelihood that it will be necessary to secure rights to background IP are even lower.

An important concern in many research contracts is who will own, who can use, and who will benefit financially from, any IP in the results of the research (commonly defined as foreground IP). The owner of the foreground IP will typically want to avoid a situation arising where they cannot commercialise the foreground IP because, in doing so, they will infringe another contracting party’s background IP. The other contract party may be willing to license its background IP if it is available (e.g. it has not been exclusively licensed elsewhere). Hence the clause dealing with background IP. For simplicity, this article will assume that there are only two parties to the contract; in practice, many research agreements have more than two parties.

A typical background IP clause may say that a defined category of background IP is non-exclusively licensed to the owner of the foreground IP, where the use of the foreground IP would otherwise infringe the background IP.

(There is another type of clause, which licenses background IP for the purposes of performing the research under the contract. IP Draughts thinks that type of clause is mostly a waste of ink, as the chances of a contracting party suing the other party for infringement of background IP in the performance of the agreed research seem vanishingly small. But that is not today’s subject.)

Coming back to the licence of background IP for commercialisation, which IP is typically covered by this licence? For this, we need to consider the definition of background IP. Unfortunately, the template agreements that parties use for research contracts have different, and inconsistent definitions.

The Brunswick collaboration agreement defines Background IP as:

• All Intellectual Property used in connection with the Project which has been generated prior to or outside the scope of the Project (“Background IP”) shall remain the property of the Party contributing the same.

The Lambert agreements define Background as follows:

• “Background”: information, data, techniques, Know-how, inventions, discoveries, software and materials (regardless of the form or medium in which they are disclosed or stored) which are provided by one Party (whether belonging to that Party or to a third party) to the other Party for use in the Project, and whether before or after the date of this Agreement, except any Result;

The European Commission’s Horizon 2020 Grant Agreement defines Background as follows:

• ‘Background’ means any tangible or intangible input — from data to know-how, information or rights — that exists before the GA is signed and that is needed to implement the action or to exploit its results.

Each of these definitions has a slightly different focus, in that some are concerned with information rather than the IP that protects the information. Leaving that aside, an important question of principle is whether the background IP licences should relate to one of more of the following:

1. IP in background information that was provided by one party to the other for use in the contract. (Let’s call the owner or provider of background information or background IP, the “Background Owner”.)
2. Background IP that the Background Owner has itself used in the performance of the contract research. Depending on the definition of Background, this might mean use of information, or infringement of IP.
3. Background IP that another party has used in the performance of the contract research.
4. Background IP that will be infringed when the results of the research are commercialised. In other words a commercial licence will be needed (to use the Framework wording above). This may be further broken down into (a) where the parties realise at the outset that such a licence will be needed, or (b) where they don’t realise, perhaps because no-one is thinking hard about these issues.

It is not clear to IP Draughts why a commercial licence to use Background IP should depend on whether that IP was “provided” in the course of the research, or on whether that IP was “used” in the course of the research. These points seem of marginal relevance, unless the intention is to limit the scope of the licence. From the perspective of the owner of the foreground IP, the background IP licence should be broad rather than narrow. But from the Background Owner’s perspective, granting a broad right when you don’t even know which IP is involved seems a risky strategy.

In most of the research contracts with which IP Draughts has been involved, the parties don’t consider carefully what background IP exists, whether it is available for licence, and what commercial terms, if any, should apply to that licence. Instead they come up with vague wording, such as the following which appears in the long-form Brunswick agreement:

If the Lead Exploitation Party requires the use of Background IP of any other Party (the “Other Party”) in order to exercise its rights in the Results then, provided the Other Party is free to license the Background IP in question, the Other Party will not unreasonably refuse to grant or delay granting a licence to the Lead Exploitation Party so that the Lead Exploitation Party may use such Background IP for the purpose of exercising its rights in the Results.

This wording doesn’t state whether the licence may be subject to commercial terms such as royalties.

By contrast, certain terms of research funding of the UK Department of Health and Social Care including the following provision:

The Contractor shall make available the Contractor Background IP that is necessary and/or useful for undertaking the Research…

Where such Contractor Background is unencumbered by third party rights, the Contractor shall licence or assign the Contractor Background IP to a nominee of the Authority’s choosing free of charge, in all other cases, such licence or assignment shall be made on fair and reasonable terms.

In this case, the definitions of Contractor Background IP, and Background IP, include the requirement that the IP in question is “used in the performance of the Research”. Although the first paragraph from the DHSC terms quoted above is slightly circular (see definition of Background IP), it too is definitionally focused on the stage of the research, rather than downstream commercialisation. The second paragraph – the scope of the licence – may be broader.

Other funding terms vary as to how they deal with background IP.

IP Draughts comes back to the question, when is background IP “used” in the performance of research. Logically, this seems to refer to use of information – e.g. a particular scientific technique – in respect of which a party owns a patent or other IP.

He finds the different drafting approaches to this issue mind-boggling. Provided, used and needed don’t mean the same thing, and information is not the same as intellectual property.

Is there a single, clear, fair, straightforward solution to this problem? Perhaps not, if the background IP clause is inserted without considering which IP it might “bite” on. Perhaps the vague approach of the Brunswick agreement is the least-worst option in the context of university research collaborations. For commercial services agreements in a B2B context, a customer might well prefer something stronger.

 

TRIPS waiver – academic arguments

IP Draughts has previously asked, on this blog, how the proposed TRIPS waiver would assist in the delivery of Covid 19 vaccines to developing countries.

Now there appears an answer, in the form of an academic open letter that has been signed by “over 100 international IP academics”. The letter can be found here.

Reading through this letter, IP Draughts continues to be puzzled. The letter makes plenty of interesting points, but fails, in his view, to “join the dots” and explain how the waiver, per se, will result in the delivery of vaccine to developing countries. Those points (some of which appear to IP Draughts to be bald assertions) include:

1. IP rights must serve the public interest.
2. IP rights and “monopolies over …information” are implicated in the lack of global capacity and their inequitable distribution.
3. A voluntary donation scheme has had very little success.
4. A voluntary technology access pool has had very little success.
5. Invitations to collaborate from companies such as Teva have not had a positive response from vaccine IP holding companies.
6. Distribution of existing vaccine stocks has been “profoundly unequal”.
7. Suspending rules under TRIPS is crucial to a radical increase in manufacturing capacity [why? how?]
8. The waiver would provide more companies with freedom to operate without fear of IP infringement.
9. Public funding of vaccines should be considered when deciding on the protection given to IP rights holders.
10. The IP system has failed to create market incentives for vaccine development, even with public funding.
11. Existing provisions in TRIPS are not sufficient.
12. Compulsory licences do not address the need for technology transfer and sharing of know-how to build local capacity. Building capacity would be good for this and future pandemics.
13. Governments should work with IP holders to make trade secrets available. There are precedents for this, eg in World War II production of penicillin.
14. A TRIPS waiver is a necessary ingredient in a multi-pronged approach. Other steps include global coordination of supply chains, streamlining regulatory approvals, sharing exclusive data, investment in technology transfer hubs.
15. A TRIPS waiver will facilitate the technical resilience of developing countries in present and future pandemic action and preparedness.

Readers may agree with several of the above points, as does IP Draughts, particularly points 1, 3, 4, 6, 9, 10, and 12. But where is the evidence that IP rights are the root cause of the problem – preventing vaccine manufacture and distribution to developing countries? Perhaps other issues are more important, such as those mentioned in point 14. The University of Kent web page that provides a link to the letter, above, states that the letter provides an “academic justification” for the waiver. In IP Draughts’ opinion, the thesis lacks rigour.

Podcast of this article here.

Can the UK lead on international IP policy?

The image above was created for a blog article some years ago, about sponsorship of law faculties.

IP Draughts is continuing to develop his funding proposal for a Research Centre for Intellectual Property, Innovation and International Trade, which he hopes to establish at University College London. He has had some great feedback and suggestions on the content from a variety of friends and colleagues.

He is reaching the stage where he would like to have preliminary discussions with potential funders. He has spoken to two UK government agencies. He would welcome suggestions from readers on suitable funders. They might be governmental or international agencies, philanthropic trusts, charities, large companies or law firms. Or, perhaps, a source that he hasn’t thought of. If you would like to receive a copy of the draft funding proposal, please let IP Draughts know.

One of the themes that has emerged from his discussions so far, is that the proposal seems to be broadly aligned with UK government policies in the field of innovation and knowledge exchange. IP Draughts is eagerly awaiting the publication of the government’s Innovation Strategy, which is apparently due to appear soon. In the meantime, he has seen the UK government’s Life Sciences Vision, which was published this week. It has some encouraging statements about the importance of the legal system and the need for strong IP laws, including the following statements (see pages 20 and 43):

The UK has a proud history as a centre for Life Science innovation, and a profound appreciation of the importance of the rule of law… Following publication of the Vision, Government and the Sector will explore the development of a pledge that reflects the UK’s intention to support the laws, practices and principles which underpin the operation of the Life Sciences sector.

And the document commits the UK to:

Maintain the UK’s strong Intellectual Property regime, recognising the important role this plays in securing the value of new technologies that are trialled and tested in the UK.

IP Draughts would broaden these statements. It is in the interests of developed economies generally, to have a strong legal framework for innovation. This includes but is not limited to life sciences. It includes IP and other areas of law and legal practice, particularly in the area of commercial transactions.

Whatever one’s views on Brexit, it seems to IP Draughts that there is an opportunity for the UK to use its greater freedom as an independent country to modernise the UK legal system for innovation, and to lead the way in encouraging modernisation internationally. IP Draughts hopes that he will be able to establish a Research Centre that will assist in this process.

Podcast of this article here.