By Shane Tews

One year ago, the Joe Biden administration announced its support for a proposal at the World Trade Organization (WTO) that would waive Trade-Related Aspects of Intellectual Property (TRIPS) protections for COVID-19 vaccines and treatments. WTO member states recently agreed to a limited waiver that only covers vaccines and patents—not therapeutics or trade secrets. Both sides of the debate are relatively unhappy with this outcome. Does this mean it was a good compromise, or did the WTO fall short in its duties? How is the administration doing on other intellectual property (IP) issues?

On this episode, I welcomed AEI Adjunct
Fellow Michael
Rosen back to the podcast for a check-in on the TRIPS debate and a
more general update on the global IP policy landscape. Michael is the AEI tech
policy team’s specialist on IP issues; he writes often on IP-related incentives
for innovation, and on patent reform in Congress and at the US Patent and
Trademark Office. He is also a book review columnist for The Federalist and National
Review.

Below is an edited and abridged transcript of our talk. You
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Shane Tews: What was the final outcome from the 12th WTO Ministerial Conference as it relates to the TRIPS waiver?

Michael Rosen: When we last discussed the waiver in June 2021, the Biden administration had just announced that the US would favor the proposal put forward by India and South Africa at the WTO in October 2020. Under that proposal, there would be a waiver of TRIPS protections with respect to everything related to COVID-19: vaccines, treatments, diagnostics, and equipment.

The Donald Trump administration resisted that proposal, and
Europe followed the US. But in May 2021, the Biden administration stepped
forward and said it favored the proposal. It was only on June 17th, 2022 at the
WTO conference in Geneva that the various countries of the WTO compromised and
agreed to a limited TRIPS waiver. That means TRIPS protections have only been
waived for COVID-19 vaccines—not to treatments, therapeutics, diagnostics, or
trade secrets. Moreover, it’s in place only for five years, so it would have to
be renewed.

You previously
mentioned that India and South Africa (as well as Kenya) ended up with a
massive surplus of vaccines—so much so that they had to trash thousands because
they expired. That seems incongruous to this entire conversation; am I
interpreting things correctly?

You’re exactly right. It’s incongruous from the get-go—even
more so now. Last year, the objections we talked about and reiterated were that
we don’t have a problem with patents; we have a problem reaching remote
communities in the Global South and getting these vaccines into arms due to
numerous issues related to supply chain, deep freezing storage, and cold
storage transportation. That was what was holding up getting these doses in
arms in the developing world.

Now we have a different issue in addition to the
aforementioned one: We now have more supply than demand for these vaccines. The
pharmaceutical industry published their statistics: They’ve put out 13 billion
doses of the vaccines across all the major companies— AstraZeneca, Moderna,
Pfizer, and maybe Johnson & Johnson. Moreover, they plan to put out another
20 billion this year. We don’t have a supply problem at all. It’s not a matter
of needing to allow other countries to manufacture their own generic versions
of these drugs. The problem is getting shots in arms, overcoming vaccine
hesitancy and resistance, and transporting these doses to the remote corners of
the world. This latest decision by the WTO does none of those things.

Will China be
excluded from the waiver?

Initially, the compromise that had been floating around
would have excluded certain countries that already manufactured 10 percent or
more of the global supply of vaccine doses. Most prominently, that included
China, which makes and exports a tremendous amount of its Sinovac vaccine. There
was essentially no reason for China to need access to patents from other
companies or countries in order to start making generic versions of these
vaccines because they already produce so much on their own. However, it seems
that in the end—and we’re still studying this to be sure—the provision that
would’ve had the China exception was stricken from the final agreement. That
means that even China can now make generic versions of Comirnaty and all the
other Western COVID-19 vaccines out there.

There were some
recent changes involving standard essential patents (SEPs). What exactly is
going on, and are these changes emblematic of a larger problem?

Let’s start by defining what SEPs are, which is essentially what
they sound like. They are patents that various companies develop which then become
an irreplaceable and essential part of a certain technical standard (for
example, the 802.11g Wi-Fi standard that’s promulgated by the Institute of
Electrical and Electronics Engineers).

When an SEP goes into the standard, it means that when a
product conforms to a standard, it is also using that specific SEP. Part of the
issue is that there are negotiations over the terms of these patents. In order
to get recognized as a SEP, you need to make your patent available on what are
called “fair, reasonable, and non-discriminatory” (FRAND) terms. If a company
refuses to accept those terms and uses your patent without your permission,
then they’re infringing upon it. The question in that situation is whether an SEP
owner can get an injunctive relief against an infringer of an SEP.

Logically thinking, the answer to that question is yes. And
that was the stance the Trump administration took in 2019 when it issued its
guidance alongside the US Patent and Trademark Office and the National
Institute of Standards and Technologies. They said that appropriate remedies
for patent infringement— including injunctive relief—should be available to SEP
holders.

So what happened? In late 2021, the Biden administration put
out new guidance that withdrew the 2019 Trump administration statement. The
Biden administration essentially asserted that, generally speaking, when an SEP
holder has made a voluntary FRAND commitment, the various factors that go into
the injunction analysis militate against entering an injunction.

This created a whole firestorm among the patent community
and patent practitioners. By June 2022, the Biden administration backed away
from its new guidance, but had still withdrawn the 2019 Trump administration
guidelines. When you couple that with the flip-flop over the TRIPS waiver, it seems
sometimes that the Biden administration’s patent policy is just at sea. It’s rather
unclear what they’re doing.

What other issues in
the IP space should people be focusing on?

One issue that’s starting to come to the forefront involves
the International Trade Commission (ITC), a quasi-independent unit within
Department of Commerce designed to prevent the unfair importation of different
products into the US that harm the country and American public interest. One
main way it does this is by targeting products that infringe the patents of
what are meant to be domestic industries. (Domestic industries are American
companies or foreign companies that have a substantial presence in the US.) The
ITC recently came under fire for a practice that some entities have undertaken
where so-called “patent trolls” or “patent assertion entities” engage in
various ways of proving that they somehow have a domestic industry, but really they
are deploying smoke screens.

Congress reintroduced a bill that would clamp down on this
type of abuse (also known as “domestic industry by subpoena”). This abuse happens
when one of these patent trolls, which doesn’t manufacture anything, manages to
get some ruling or settlement on patent infringement with someone that actually
does make a product. They then obtain a license to that product and purport to
use the legitimate company as their domestic industry. This company then becomes
the grounds for why this patent assertion entity is able to get injective relief
at the ITC.

This relief is extremely powerful. It’s what’s called an “exclusion
order.” It means that whatever product the infringing company makes may not be
imported into the US. Customs agents appear at the ports, inspect the boats,
and destroy the infringing items as they come in. So it’s an extremely powerful
tool for these companies to wield.

Under this new bipartisan legislation, a few things would
change. Most importantly, it would require the legitimate company that the patent
troll is exploiting to sign onto the ITC complaint and become affirmatively
part of that complaint. It would also require the ITC to find that excluding
the infringing products would be in the public interest. They would have to
make an affirmative ruling that that is indeed the case, whereas now it’s
essentially the opposite. Thus, there are a few different ways in which this
legislation could be very beneficial.

The post An Update on US Intellectual Property Policy: Highlights from My Conversation with Michael Rosen appeared first on American Enterprise Institute – AEI.