The COVID-19 pandemic raised the question of whether the U.S. patent system should accomplish more than purely incentivize innovation. As Prof. Mariam Marcowitz-Bitton suggests, there is a “need to calibrate patent law to incentivize effective and welfare-enhancing innovation, while ensuring maximal access to inventive efforts once they are created.”[1]
U.S. patent system in the COVID-19 pandemic
The U.S. patent system is intended to “promote the Progress of Science and useful Arts.”[2] In order to do so, it offers a bargain: in return for “the creation and disclosure of new, useful, and nonobvious advances in technology,” a patent owner gets the federally protected, right to exclude others from the practice its invention for a period of years.[3] A profitable invention will encourage competitors to develop alternatives, which leads to more competitive pricing and improved products.[4] The patent system values innovation and disclosure;[5] however, altruism, apart from any byproduct of capitalism, is noticeably absent from the patent bargain.
The height of the COVID-19 pandemic in the U.S. revealed the current state of the patent system: it successfully incentivizes innovation but not public interest goals.
It is remarkable that pharmaceutical companies were able to develop and manufacture vaccines that successfully combated COVID-19 in such a short time. Patents were, inevitably, a factor in this success. Research and development (R&D) is expensive, particularly in the pharmaceutical industry where the risk of failure is high. Therefore, companies rely on profits from their successful inventions to recuperate their losses,[6] making the exclusive right to practice a successful invention an essential part of the pharmaceutical business model. The longer a company has exclusive rights, the longer it can sell its products at high costs with limited competition.
If the number of patent applications is any measure, the U.S. patent system succeeded in encouraging useful scientific progress during the pandemic—almost one thousand patent applications were filed with the U.S. Patent Office (USPTO) revolving around COVID-19 solutions in just two years.[7] Furthermore, companies such as Moderna, BioNTech, Pfizer, and Novavax received patents around their COVID-19 technology.[8]
Despite the apparent incentivized innovation, the U.S. government was confronted with a conflict. Companies were granted exclusive rights in their COVID-19 technology, giving them the ability to price their products and technology without market regulation. At the same time, there was a global public health crisis that required affordable access to that technology.
Lack of global accessibility
In addition to encouraging innovation, a patent system should ensure that innovative technology is accessible and contributes to the public interest. Over the past few years, the world saw how the U.S. patent system and international patent regimes do not ensure accessibility. Patents may have even delayed global access to vaccines in the pandemic.[9]
For instance, pharmaceutical companies became a driving force in vaccine nationalism. Instead of providing for the global populations, companies with exclusive rights to their patented technologies priced their vaccines in view of profit maximization.[10] Vaccine developers generally focused on providing vaccines for their own countries, and wealthy countries rushed to secure vaccine doses for their own populations.[11]
Because of companies’ right to exclude others from use of their patented technology, developing nations were priced out of buying the emerging vaccines and deprived of access to the relevant technology.[12],[13] Without patent limitations, every country would have had the potential to make its own vaccines and to provide a steady and affordable supply of vaccines to their populations,[14] rather than having to rely on the charity of countries buying the bulk of available vaccines.[15]
A solution adopted by WTO
To address the uneven global distribution of COVID-19 vaccines World Trade Organization (WTO) members presented the MC12 TRIPS waiver decision (“the WTO agreement”) in June 2022.[16] The WTO agreement permits developing countries to use patented COVID-19 vaccine technology to manufacture vaccines without the consent of patent owners for the next five years.[17] The agreement thereby temporarily waives patent protection for COVID-19-related patents in developing countries.
Although this agreement may benefit some COVID-19 relief efforts, the WTO acted too little and too late. First, producing the COVID-19 vaccine requires not only the patented technology, but also either additional research by the patent users or undisclosed trade secret knowledge.[18] Without mandatory sharing of trade secrets, the patents may ultimately be of little use to developing countries hoping to take advantage of the WTO agreement. Second, the agreement came too late, as COVID-19 supplies are more readily available and the demand for them more manageable.[19]
Also, the agreement threatens medical innovation and has potential to disrupt the U.S.’s competitive market.[20] Trends in R&D investment support this conclusion: strong patent protection and weak antitrust enforcement generally results in a period of more R&D investment than in times with weaker patent protection.[21] Thus, as patent protection becomes less reliable, acquiring the necessary capital for R&D may become more difficult, limiting medical innovation.[22]
Nevertheless, the WTO agreement may make future global collaboration in light of a pandemic more readily accessible. It took WTO members two years to accept the agreement.[23] In the next pandemic, the agreement may serve as a template so that intellectual property sharing occurs before the height of the disease and there is potential for more impactful agreements in the future.
The Moderna patent pledge
Another response to the pandemic was companies’ agreements not to sue for infringement during the health crisis, exemplified by Moderna’s patent pledge.
In October 2020, Moderna pledged that “while the pandemic continues, Moderna will not enforce our COVID-19 related patents against those making vaccines intended to combat the pandemic.”[24] While intellectual property is crucial for the company’s ability to conduct R&D, it wanted to “remove any perceived impediments” created by their intellectual property rights.[25] Moderna’s pledge had a broader scope than the WTO agreement. Companies globally could use the patented technology throughout the height of the pandemic, providing the opportunity for more wide-spread access to vaccines.
As Moderna affirmed in a March 2022 update, the pledge still stands for developing countries.[26] However, in August 2022, Moderna filed suit in the U.S. against Pfizer and BioNTech for patent infringement by their COVID-19 vaccine.[27] Moderna asserts that it terminated its original 2020 pledge when it released the March 2022 update,[28] but the March 2022 update did not expressly revoke the patent pledge.[29]
Moderna’s decision to sue Pfizer and BioNTech reveals the disadvantage of patent pledges. The lawsuit portrays Moderna as unwilling to uphold its pledge. If found unenforceable in court, Moderna’s pledge would be unreliable, causing future pledges to carry the same unreliability. Regardless of the lawsuit’s outcome, patent pledges are voluntary, and any sense of corporate responsibility that may drive a company to make a pledge is bound to be fleeting. Such uncertainty limits the utility of patent pledges, because they are only as generous as the companies pledging.
On the other hand, the lawsuit also indicates that the patent pledge may have had a tangible impact on pandemic relief efforts. Moderna alleges that Pfizer and BioNTech used Moderna’s patented technology in the production of their vaccine. Moderna’s intellectual property sharing, therefore, may have had a significant impact on the availability of the vaccine in the U.S. and abroad; despite the later uncertainty around the pledge, Moderna allowed access to its essential technology in the height of the pandemic.
Additional solutions
The WTO agreement and patent pledges are two examples of efforts to calibrate patent law in response to the COVID-19 pandemic. Other examples of responses to the pandemic include compulsory licensing, in which a patent owner is required to license the right to manufacture its invention;[30] government incentives, such as the USPTO’s Patents for Humanity award;[31] and the COVID-19 Technology Access Pool, which facilitates the sharing of knowledge and data, such as gene sequencing research and clinical trial results.[32] None, however, solved the need to incentivize effective and welfare-enhancing innovation, while ensuring maximal access to inventive efforts, because it is difficult to manipulate patent regimes timely and effectively in response to a crisis.
Intellectual property is engrained in companies’ business models—it is how they survive and profit. The U.S. patent regime would benefit from a large recalibration to the modern world, where pandemics and global crises are growing more common and technology more complex.
Profs. Miriam Marcowitz-Bitton and Yotam Kaplan offer an example solution to create affordable access and equitable distribution of patented technology.[33] Their idea is to replace the “one-size-fits-all” patent system, which provides twenty years of patent protection for all patents, with a system that extends patent protection only until the patent owner has recouped its investments and made a (non-excessive) profit.[34] This would involve a shorter patent term for money-making patents so that the public will have access to cheaper products sooner and, at the same time, patent owners will still have incentive to innovate because the potential for profit is still present.[35]
Such a drastic idea is unlikely to impact the current U.S. patent system. Nonetheless, the patent system would allow for much more accessible technology if patent rights were restricted in some way—not so much that the decrease in economic value would radically minimize innovation, but enough to make essential technology more quickly accessible.[36]
[1] Miriam Marcowitz-Bitton & Yotam Kaplan, Recalibrating Patent Protection for COVID-19 Vaccines: A Path
to Affordable Access and Equitable Distribution, 12 U.C. Irvine L. Rev. 423, 426 (2022) (emphasis added).
[2] U.S. Const. art. I, §8.
[3] Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 151 (1989).
[4] Andrew Beckerman-Rodau, Patent Law: Balancing Profit Maximization and Public Access to Technology, 4 Sci. & Tech. L. Rev., 25 (2019).
[5] John Butcher, The importance of patents in biotechnology, UK Human Rights Blog (Feb. 21, 2020), https://ukhumanrightsblog.com/2020/02/21/the-importance-of-patents-in-biotechnology-john-butcher/.
[6] Id.
[7] Kunmeng Liu et al., What, Where, When and How of COVID-19 Patents Landscape: A Bibliometrics Review, 9 Frontiers in Med., 4 (2022), https://www.frontiersin.org/articles/10.3389/fmed.2022.925369/.
[8] VaxPaL: COVID-19 Vaccines Patent Database (last visited Nov. 13, 2022, 12:55 PM), https://www.vaxpal.org/.
[9] E. Richard Gold, What the COVID-19 pandemic revealed about intellectual property, 40 Nature Biotech. 1428, 1428 (Oct. 2022).
[10] Marcowitz-Bitton, supra note 1 at 426-28.
[11] Greg Myre, In The Battle Against COVID-19, A Risk Of 'Vaccine Nationalism', NPR (May 27, 2020), https://www.npr.org/2020/05/27/861886520/in-the-battle-against-covid-19-a-risk-of-vaccine-nationalism.
[12] Marcowitz-Bitton, supra note 1, at 426.
[13] Beckerman-Rodau, supra note 4, at 32-35.
[14] A patent waiver on COVID vaccines is right and fair, 593 Nature 478 (May 27, 2021) (corrected Feb. 10, 2022).
[15] Gold, supra note 9, at 1429.
[16] Cong. Rsch. Serv., R47231, World Trade Organization: “TRIPS Waiver” for COVID-19 Vaccines (Aug. 31, 2022).
[17] Id. at 1.
[18] Ian Lopez & Matthew Bultman, Covid Vaccine Waiver Deal Threatens Investment for Future Crises, Bloomberg L. (Jun. 21, 2022), https://news.bloomberglaw.com/health-law-and-business/covid-vaccine-waiver-deal-threatens-investment-for-future-crises.
[19] Zachary Brennan, Industry groups call to block WTO IP waiver expansion to Covid-19 therapeutics, Endpoints News (Sep. 30, 2022), https://endpts.com/industry-groups-call-to-block-wto-ip-waiver-expansion-to-covid-19-therapeutics/.
[20] Cong. Rsch. Serv., IN11901, Breakthrough on a Potential COVID-19 Intellectual Property Rights Waiver (Mar. 25, 2022).
[21] Marcowitz-Bitton, supra note 1, at 454 (citing Jonathan M. Barnett, The Great Patent Grab, in The Battle Over Patents: History and Politics of Innovation (Stephen H. Haber & Naomi R. Lamoreaux eds., 2021)).
[22] Lopez, supra note 18.
[23] Id.
[24] Moderna’s Updated Patent Pledge, Moderna (Mar. 7, 2022), https://investors.modernatx.com/Statements--Perspectives/Statements--Perspectives-Details/2022/Modernas-Updated-Patent-Pledge/default.aspx.
[25] Id.
[26] Id.
[27] Jorge L. Contreras, No Take-Backs: Moderna’s Attempt to Renege on its Vaccine Patent Pledge, Harvard Law Bill of Health (Aug. 29, 2022), https://blog.petrieflom.law.harvard.edu/2022/08/29/no-take-backs-modernas-attempt-to-renege-on-its-vaccine-patent-pledge/.
[28] Id.
[29] Moderna, supra note 24.
[30] Beckerman-Rodau, supra note 4, at 45-47.
[31] Patents for Humanity, U.S. Pat. & Trademark Off. (last visited Nov. 13, 2022, 12:55 PM), https://www.uspto.gov/ip-policy/patent-policy/patents-humanity.
[32] Marcowitz-Bitton, supra note 1, at 462.
[33] Id.
[34] Id. at 428-29.
[35] Id. at 446.
[36] Beckerman-Rodau, supra note 4, at 36.