Deep Dive Episode 206 – Intellectual Property in a Pandemic: The Proposed COVID-19 WTO Waiver
In October 2020, India and South Africa filed a request at the World Trade Organization (WTO) to create an exemption from an international treaty known as TRIPS (Trade-Related aspects of Intellectual Property Rights) for technologies, drugs, and vaccines used to respond to the COVID-19 pandemic. If the WTO adopts the waiver, countries could refuse to issue and protect IP rights for those technologies.
Some argue that the waiver is a necessary measure that would give a boost to the global fight against COVID-19, but others contend it would do little to help defeat the current pandemic and could hinder future innovation. An expert panel joined us to discuss the proposed waiver and weigh the arguments on each side of the debate.
In October, members of RTP’s Intellectual Property Working Group published a white paper on the same topic, which you can read here.
Although this transcript is largely accurate, in some cases it could be incomplete or inaccurate due to inaudible passages or transcription errors.
[Music and Narration]
Introduction: Welcome to the Regulatory Transparency Project’s Fourth Branch podcast series. All expressions of opinion are those of the speaker.
Host: On January 11th, The Federalist Society’s Regulatory Transparency Project hosted a virtual event titled “Intellectual Property in a Pandemic: The Proposed COVID-19 WTO Waiver.” The following is a recording from that event. We hope you enjoy.
Nate Kaczmarek: Hello, and welcome to this Regulatory Transparency Project webinar. This afternoon, our topic is the proposed WTO COVID-19 IP waiver. We are very pleased to have with us some excellent experts for an insightful and thorough discussion. My name is Nate Kaczmarek. I am Vice President and Director of RTP. As always, please note that all expressions of opinion on the webinar are those of our guests.
Today, we are happy to have a great moderator in Professor, Saurabh Vishnubhakat. Saurabh is a professor at the Texas A&M University School of Law. He also holds a joint appointment as professor in the Texas A&M University Dwight Look College of Engineering and is a fellow of the Duke Law Center for Innovation Policy. His expertise is in intellectual property, administrative law, and federal litigation. He is frequently cited and is very well published. Saurabh is also a friend to RTP, and we’re delighted that he could guide today’s conversation.
If you’d like to learn more about all of our guests today, you can visit our website, RegProject.org, where we have everyone’s complete bios. In a moment, I will turn the program over. Once our panel has had time to debate and discuss our theme, we’ll go to audience Q&A, so please think of the questions you’d like to ask. Audience questions can be submitted via the Zoom raise hand function. If you raise your hand, we’ll do our best to call on everyone in order.
With that, thank you everyone for being with us today. Saurabh, the floor is yours.
Prof. Saurabh Vishnubhakat: Thank you very much, Nate. Welcome everyone. I’m very pleased to introduce our distinguished panelists. Their sterling reputations do proceed them, so in the interests of time, I’ll keep things brief.
The Honorable Andrei Iancu is a partner at the law firm of Irell & Manella. From 2018 to 2021, he was the Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.
The Honorable David Kappos is a partner at the law firm of Cravath Swaine & Moore. From 2009 to 2013, he too was Under Secretary of Commerce for IP and Director of the USPTO.
And Professor Arti Rai is the Elvin R. Latty Professor of Law at the Duke University School of Law. She previously served as administrator for policy and external affairs at the USPTO from 2009 to 2010 and more recently served as Senior Advisor in the Office of General Counsel at the Department of Commerce during 2021.
Welcome, everybody. Let’s begin at the beginning. As we know, vaccines and therapeutics have now become available to respond to the COVID-19 pandemic, but how widely available and to whom is an issue of considerable global controversy. In October of 2020, India and South Africa sought an exemption in the World Trade Organization from the TRIPS Agreement with respect to vaccines, therapeutics, and other technologies related to the pandemic response. And the result of such a waiver would be that countries could refuse to issue intellectual property rights for those technologies, and where such rights have already been issued, countries could decline to enforce those rights.
Several months later, in May of 2021, the Biden administration announced its support for a TRIPS waiver in some form and pledged to “actively participate in text-based negotiations at the WTO to make that happen.” Now, this has resulted, as you might imagine, in domestic political debate in the United States as well as extensive international debate among least-developed countries, low- and middle-income countries, and higher-income countries about the necessity and wisdom of the proposed waiver.
Let’s start by considering the waiver request on its own terms, whether the waiver would actually help address the problems that it’s intended to address, and what costs the waiver might impose, and what other problems, if any, it might create. So my first question — and this is for you, Mr. Iancu, and then I’ll ask for reactions from others. In your view, how much of an obstacle are patent rights or IP rights more generally actually posing to more robust production and distribution of vaccines, especially in least developed countries and low- and middle-income countries where this seems to be a focus?
Hon. Andrei Iancu: Thanks, Saurabh, and thanks to The Federalist Society for having this program, really an honor to be with all of you. The short answer to the specific question is not at all. I don’t think intellectual property rights pose an obstacle at all. I don’t think there’s any evidence that they do. And quite to the contrary, I believe that all the evidence shows that intellectual property rights actually help facilitate, number one, getting the new technologies and the innovations developed, created in the first place, and then, second, distributed around the world.
But let me back up for just a minute and say that there is indeed a very significant access problem to COVID-19 technologies, to vaccines, and frankly to lots of other medical technologies around the world. There is an inequity in distribution. We see it most prominently in front page news vis-à-vis the vaccines in today’s world. Here in the United States, for example, and other developed nations, there’s an overabundance of vaccines. There are more now here than we can convince people to take, as an example. There’s lots of other countries around the world where the penetration rate of the vaccine, the uptake, has been far, far less. There are some countries where the percentage of people vaccinated is in the single digits.
There’s no question that there is an issue here. The only question is, what is the cause of it, and what are the solutions? The world leaders, as you’ve identified, have fixated on intellectual property as being the major cause. And unfortunately, that is driving attention away from the real causes and, therefore, the real solutions to this precise problem.
But patents and other IP clearly is not what stands in the way here of access. Patents, in particular, create the incentive and reward environment, the protection environment, in which investors and inventers can deploy lots of capital and time to develop the technologies in the first place. You remove that, you risk getting less innovation in the first place.
Second, patents and other intellectual property enable companies to collaborate with each other so that the technologies can be moved from their labs into the market with companies being secure that the rule of law will protect their inventions and intellectual capital once it has been deployed to the marketplace. And we have seen the evidence of this.
Not only have we developed multiple vaccines in less than a year and brought it to market, so the intellectual property system has worked from that perspective, but also, collaboration among industry members is at an unprecedented rate. There are hundreds of collaboration agreements around the world when it comes to COVID-19 vaccines and the like; big companies with small companies, like Pfizer and BioNTech, big companies with other big companies, like Johnson & Johnson and Merck collaborating, or AstraZeneca and the Serum Institute of India.
None of those would be possible without these companies feeling secure that their crown jewels will be protected by the rule of the law. If you remove that, you remove their willingness, at least to some extent, to collaborate with each other. So all the evidence points toward the fact that IP, the reliance on the rule of law, enables this collaboration and distribution.
Then, if we put that aside, the next question is what are the real problems that the world leadership should be focused on, and how do we get to the real solutions, because it’s not IP.
Prof. Saurabh Vishnubhakat: Before I ask a follow-up question or two, let me invite Mr. Kappos or Professor Rai to respond or react if you would like.
Prof. Arti Rai: Sure. I’m happy to jump in and say a few words. I agree with the Honorable Director Iancu that IP and specifically patents are not the core issue here. In some respects, I think that some of the advocacy groups are fighting the last war with respect to HIV/AIDS, and that was a different set of questions than is at issue here.
That said, I do think that there is an intellectual capital question that does come into play. It’s not necessarily intellectual property, but it is intellectual capital in the form of know-how, and who has the know-how to manufacture vaccines and who does not. I think that may be what Director Iancu might have been alluding to in terms of other issues.
And that does potentially get us into some very tricky questions with respect to trade secrecy. And I don’t think that those tricky questions are as — don’t grab the sort of media attention that patents do, again, in part because of the history with respect to HIV/AIDS. And, in point of fact, I think that legal mechanisms, top-down legal mechanisms, are much more difficult to implement with respect to know-how transfer. I can talk more about that as we progress through the webinar.
It may be—and this is an interesting question—that patents can serve as a vehicle for transfer of that know-how voluntarily via contracts, or they may not, depending upon how willing the parties are to engage. Director Iancu has pointed to a number of collaborations that have already gone forward with some transfer of know-how, no doubt as a consequence of patent protection underlying that transfer. There are entities that are claiming they want to collaborate with Pfizer and Moderna in some lower middle-income countries that have not secured such collaborations as of this date. And one of the questions is what’s going on there, and I think we should talk about that as we progress.
David Kappos: Yeah. Hey, Saurabh, Dave here. First of all, nice to see you. Nice to see you, Andrei and Arti. I’ll call everyone by their first names since none of us is in the government anymore. I would just add that I think this really is all about trade secrets, and it is all about a bald effort orchestrated by those who would love to be able to get access to others’ trade secrets for free. The MRNA platform is the result of some great investment originally by the U.S. government in funding several companies trying to crack that platform, if you will. And Moderna was the first to do it. They’ve created an important platform for the creation of many great therapies, and potentially some dangerous things too if in the hands of the wrong parties.
Yet, companies in places — the countries that you I think already mentioned, Saurabh, would be tops on the list, that have fought so hard on the basis of needing a waiver for COVID, when both of the other two speakers have already correctly said that’s got nothing to do with the problem, it’s those nation states and companies that have a lot to profit from getting free access to an American-created MRNA platform that are so much behind, trying to get the U.S. government to back them up, enforcing the disclosure of trade secrets for their own commercial gain. And it’s those — we should just be honest. It’s those companies as well as countries, our economic competitors all over the world who have not yet figured out the MRNA platform, who stand to gain.
So the thing that in my mind is so sick about all of this and is so unfortunate and—I’ll be, again, honest—irresponsible about the U.S. government backing this waiver is, number one, the U.S. government is now complicit, aiding and abetting in distracting attention from the real issues and letting humans die so that it can pursue some other objective. I don’t get how there’s anything more important than preventing humans from dying from COVID. But I believe the U.S. government is complicit in and aiding and abetting in that activity by supporting a waiver, knowing full well, as it does, that it’s going to have nothing to do with solving the COVID problem.
And then, secondly, I think it’s irresponsible and extremely unfortunate that the U.S. government is complicit in attempting to purloin from U.S. innovators who benefited from public resources contributed by U.S. taxpayers, like all of us here on the screen right now, and giving that technology away to our economic competitors. I can’t think of anything more dumb to do, quite frankly. And I think there should be an accounting for it.
Prof. Saurabh Vishnubhakat: Let me ask a follow up question drawing from something you said early on, Dave, that this is in significant part upstream. It’s publicly supported, publicly funded. We, of course, have, not just within the trade secret regime but in the patent regime as well, a legal framework in the United States, as you all know, for allocating the rights and ensuring broad uptake of rights that are publicly funded or publicly supported at the outset and then later become the subject of patentable innovation. And I’m speaking, of course, of the Bayh-Dole Act.
Now, the role that public funding and public support play in the innovation, the upfront development of a vaccine or a therapeutic or something like this, and the role that patent protection or public support might play in the downstream commercialization and distribution are frequently conflated in public debate. But they are two related but distinct issues.
I was wondering if any of you all have some thoughts on what the public-private partnership, and not only the very successful private-private partnerships that Andrei mentioned, what role that complication might play in how we think about the approach that either the U.S. government should take or the WTO should take in considering how these forms of knowledge should be transferred.
Prof. Arti Rai: I’m happy to jump in a little bit on that. And thank you, Dave, for giving us the liberty to speak on a first name basis. That’s wonderful. I think that the public-private piece of this is really interesting, and it’s important for understanding also why public-private attempts have thus far failed to deliver as comprehensively as they could have. I speak specifically of the COVAX effort that a number of us are familiar with and have friends who have participated in, which is an effort to use public purchasing dollars to donate and secure allocations for low-income and lower middle-income countries.
One of the challenges as we know which happened with COVAX is that COVAX was not able to secure the contractual commitments it needed because developed countries went outside COVAX. And that’s totally understandable for countries to want to secure their own populations first before they work with the WHO affiliated organization. That said, that meant that COVAX didn’t have the resources or the doses to give to the low- and lower middle-income countries, even though it was specifically set up for that sort of purpose.
That raises the question, then, of whether some of those funding agreements that were engaged in by developed countries, such as Operation Warp Speed, which was $18 billion to a bunch of different pharmaceutical companies—and that’s not including the advanced purchase agreements with Pfizer, which is many more billions—whether that sort of public funding could have come with some sort of nudge towards transfer of knowledge.
Now, I get Dave’s point about not wanting necessarily to give away U.S. funded trade secrets to the world. But to the extent that we consider the global public health issue a national security issue, to the extent we might consider it not only a national security issue but also a global social welfare issue, an international diplomacy issue, the nudge apparently was not there in the contract.
Some of us wrote back before we joined the administration that it would have been good to have some of those nudges in the contracts, but the nudges were not there. Interestingly, the European Union spoke specifically of having nudges in their advance purchase agreements, and they didn’t have those nudges either. So it seems to me that that was a place where the whole public-private partnership principle could have worked better for purposes of facilitating knowledge transfer going forward.
Hon. Andrei Iancu: Let me add a couple of things, Saurabh, here. A key point in my mind for folks to appreciate is that, as a general principle on all these issues, intellectual property protections should be viewed as part of the solution and not part of the problem. And that applies to this particular question as well as to some other things that have already been said in this meeting.
On the public-private partnership, what’s really important is to understand that for the world of innovation [inaudible 00:22:17], you need all [inaudible 00:22:20] firing, all this on all cylinders. So you need the public enterprises to work well and participate, governments, or things like COVAX and so on. You also need academia to generate and produce technology and innovation in the labs and whatnot. But really importantly, you also need the private enterprise. None of these can work on their own.
What is really important for this particular debate is to understand that you absolutely, categorically need the private enterprise. You cannot have a worldwide response to a pandemic like this at the speed and quality that we have seen in the past two years without the private sector. Therefore, you need intellectual property in order to enable the private sector. To have the level of investment necessary to have the private sector participate as it does and as it did, as it usually does in the biopharma space, where it takes billions of dollars to bring just one drug to market, you need intellectual property protection for those investments to be made in the first place.
When people say companies should forgo their IP because the government has participated to some extent in that innovation and that IP, that is a fallacy for multiple reasons. But first and foremost, if you forgo IP, you will forgo the private component of that public-private enterprise. And all you’re basically left with is the public component, which cannot operate very well on its own, as we’ve known — as we’ve seen in many examples around the world.
The second point that this relates to is to something that Arti said earlier on, which I agree with, that this is — a lot of this is about know-how, who has the know-how, how do you transfer that know-how, and so on. And there is no question that some know-how trade secret protection is a different type of IP as compared to patents. Trade secret protection is just another type of IP. The proposed waiver — the WTO proposes to waive trade secret protection as well.
But again, here, IP is part of the solution and not part of the problem. Let me be specific about that. Who has the know-how? Well, for sure, the developed nations have more of the know-how than the undeveloped nations and, in some respects, a lot more; in the MRNA example, completely. But their long-term solution is not a complete waiver of trade secrets because that won’t solve anything. The long-term solution here is capacity building in the developing world. The developed countries have a responsibility when it comes to medical technology to make sure that the developing world in the next pandemic is better prepared to innovate and develop medicines on their own.
And how do you get to that? It’s not by waiving IP, because if you waive IP, the private sector will have no incentive to invest, and they’ll be afraid to invest and put their know-how in the developing countries if it won’t be protected. Retaining strong IP rights, including in the developing world, together with other incentives and projects, will help get the private sector to make more investments in the developing world so that the developing world is better prepared when the next pandemic comes around. And again, for that, IP is part of the solution, not part of the problem.
David Kappos: Saurabh, I would just add a couple things. First of all, the trade secret discussion is a classic rope-a-dope because it’s not about trying to get the trade secrets disclosed to create more coronavirus vaccines. As has already been said, the world is now awash in those and will be even more awash in them as we proceed through 2022. The rope-a-dope is to get access to the technology for other vaccines and treatments for the future, so again, just to be honest about what we’re talking about here.
Coming back to the public-private partnership point, that’s really important. Having spent most of my career working in a corporate setting, I’ve engaged and participated in lots of public-private partnerships. I’m a big believer in them. They work really well, can work really well.
The public-private partnership we need in this case has nothing to do with trade secrets or patents. The public-private partnership we need is moving refrigeration equipment to developing countries. It’s providing the transportation infrastructure so that the vaccines can make it to the towns and cities and villages and what have you in least developed countries. It’s making sure that enough vials are getting to the right places and enough syringes. It’s about public-private partnerships so there’s enough medical professionals, enough information being distributed and shared with people in order to get them interested and motivated to take the vaccine.
So there’s tremendous opportunity for public-private partnership here, but again, let’s be honest. It’s got nothing to do with disclosing trade secrets or getting free licenses under patents. It’s all about just the plain old gorp, if you will, the simple logistics of moving vaccines to people and getting them in people’s arms.
Prof. Arti Rai: I’ll just jump in here. And I say I won’t disagree. I don’t disagree at all about the fact that just physical stuff is absolutely necessary here, and there’s a dearth of the physical infrastructure that is necessary to do the vaccination we need and at the speed we need it.
It is the case that at this point in time, we probably are beginning to ramp up to sufficient supply of the MRNA platform vaccines, which by the way, we should all be clear, are in many respects the gold standard because they seem to be the most protective against a lot of these monster variants that are arising. So two years into the pandemic, or almost two years into the pandemic, we have begun to ramp up to the stage where we are beginning to have supply.
That probably is not the way we want to run the next pandemic. We want to run the next pandemic is a way—and this goes to something Andrei was saying—that allows developing countries also to ramp pretty quickly so that they don’t wait for two years. Now, whether that requires giving away trade secrets, I don’t think it does. I don’t think that’s a good idea. And for all the reasons people have said, IP is important. I don’t think we should give away trade secrets. I do think there are ways that have been — mechanisms that have been demonstrated in other contexts of tiered pricing, of ensuring that knowledge flows occur only to trusted parties.
It’s not an all or nothing game where you absolutely have to keep everything in one silo in one company, or you have everything go open source. That’s a false dichotomy, and I think that the sophisticated questions are questions of how we’re going to problem solve without going to either of those false dichotomies. And COVAX was an attempt to do that, a very, I think, tremendously perceptive attempt of the part of Bill Gates and others. For a variety of reasons, it didn’t succeed, but let’s hope the next time around there will be a better COVAX that will have more local manufacturing capacity at its disposal.
Hon. Andrei Iancu: Can I add something, Saurabh? I want to follow up on what Arti said because it’s very important that world leaders begin to focus on this. The next pandemic or the next health crisis is always around the corner. And we always seem to be taken by surprise, but we shouldn’t, because it always keeps coming. There is some new disease that affects lots and lots of people all the time, and we always seem to be surprised. We really shouldn’t. World governments, especially developed nations—United States is prime example—need to work to prepare the world and ourselves for that. So what needs to happen?
And I touched upon, a little while ago, on capacity building. We need to work now. The world governments, make it G7, G20, in some format, the world governments need to come together and have a plan. There is, for example, the World Bank for the financial aspects of this to handle various financial crises around the world. There could be a World Bank type of a thing for healthcare.
But a plan needs to be made now so that we can help, because it takes time, so that we can help the various regions around the world develop their own capabilities to weather the next health crisis and not beg entities like COVAX or somebody else for the transfer of actual produced medicines. We need to work now to enable countries around the world to develop their own workforce so that they can build these things, either innovate on their own, but if not innovate their own, at least produce on their own at the highest standards, as we do in the developed nations, the medicines that will address the crisis of the future.
And to do that, you need — obviously, government has the convening power and so on, so they need to be involved. But you absolutely, categorically need the private sector to work together towards that end. And importantly, none of that will happen at all if you’re proposing to waive IP. It’s the exact opposite that you need to do. You need to convince private industry that IP is strong, not only in the United States, but in the developing world where you want to put these future manufacturing sites so that these private companies will feel secure that if they disclose their know-how to the local entities, it won’t be stolen or misused.
Governments in the developed countries working together with governments in the developing world, working together with private industry should work now to address this issue in the future. The concern I have is that the current push to waive IP rights goes exactly in the wrong direction and is going to do more harm. As Dave said earlier, it’s going to help kill more people, to be blunt, than save people. And to me, that is the tragedy of the current proposal.
David Kappos: Saurabh, just as one fact check, if people care about facts anymore, I haven’t heard any mention from the Biden administration that the reason it’s going along — or frankly from those who have proposed the IP waiver, that the reason for the IP waiver is to help prepare for the next pandemic. The logic I’ve always heard up until now has been that the whole reason is so that we can overcome the current pandemic.
And I think to say anything different, I would expect no one would because it leads right back into Andrei’s point, that look, if what you’re really talking about is the next pandemic, the inventions to solve that pandemic haven’t been created yet. And we’re never going to get them unless we have a strong IP system. So I think we should keep the focus of the current desire and push for intellectual property waivers, at least so far as I know it, fact-wise, on the current pandemic.
Prof. Saurabh Vishnubhakat: Yeah. So that’s a great segway to my next question, which is that there is this — frequently in IP policy, the question we face is do we try to get everything out of the system that we have today, or should we leave at least some incentive in place because the things we do today will have an effect on the future, the next pandemic, capacity building for the future and so on. But it’s not clear from the debate that we’ve seen either in the domestic sphere or in the international community that, even today, the waiver as currently framed would actually lead to the knowledge transfer necessary for broader vaccine deployment. That’s contested as well.
And one of the counterpoints that we might consider is that there might be a role instead for existing flexibilities under the TRIPS Agreement such as compulsory licensing. That, of course, is a contentious issue that has incentive implications for the future as well. Those existing flexibilities, TRIPS flexibilities, other mechanisms might be enough or not enough. And therefore, there might be a need today for the vaccine waiver, the TRIPS waiver, or not.
So, Arti, let me put the question to you first. What’s your view on the sort of marginal benefit that the waiver may or may not offer vis-à-vis the existing flexibilities that the TRIPS Agreement already provides for?
Prof. Arti Rai: I think that the marginal benefit is very small, if potentially nonexistent. That said, there is a mechanism, I think, that the compulsory licensing piece of the puzzle and/or the waiver could tap into with respect to know-how. And this is where I think things get deeply wheezy but also deeply interesting for purposes of thinking about how one could get payment for know-how.
Some of the activist community has been suggesting that with a waiver, or perhaps with compulsory licensing, one could have certain regulatory agencies that as a consequence of the marketing authorization mechanism do have trade secret protected information in the regulatory dossiers that have been submitted to them. Maybe those agencies in certain countries, at least, either with the waiver or with compulsory licensing, would be willing to make that information available, sort of as so-called CMC information for those who spend their time thinking about regulatory and market authorization.
I think that that is not a good thing. I don’t think that CMC information should certainly not be made freely available by regulatory agencies. But there is an interesting question as to whether there can be some payment for that type of information with perhaps the participation of the firms that have submitted that information. Could we set up a marketplace, a carefully regulated marketplace, that would charge for that sort of information so that potentially in the future—in particular because I think in this case, in the context of this pandemic, we probably have the supply we’re likely to need—we could have more global manufacturing? So that would be the idea, essentially what my colleague Jerry Reichman would call liability role, so payment for information bought, a marketplace where that does occur.
David Kappos: Arti, could I ask a question? Would the marketplace allow for free-market negotiation and transfer, or is this something the government controls? Did that part get worked out?
Prof. Arti Rai: No, no, no. This is all very hypothetical. No, no one’s worked this out at all. That would be — that’s part of the challenge, how do you get agreement on the terms of the price, because that’s where the stickiness will come in. No doubt, those who have the information will say it’s worth a lot more than those who want to get the information, and so forth. And also, in some cases, there may be some opportunity for tiered pricing. And that creates its own complications if you’re talking about transferring information and limiting to just the poorest of the poor so that it doesn’t leak over to the richer countries.
All that is really complex and really difficult. I do think in general my view is that the more we can let the private sector take the lead on that with just nudging on the part of the public sector, nudging ideally with some money thrown in, which always helps, that would be my view. But that’s the vision that one could imagine.
David Kappos: Yeah, that seems constructive to me. You know, I’ve heard the same concept advanced vis-à-vis data, writ large as a non-rivalrous resource. It’s just information, right? And if the government can play some role but kind of a nudging role in maybe applying some capital, which as you say is always helpful, that seems constructive to me.
The one other comment, you guys, that’s coming to mind is from doing deals that involve trade secrets, know-how, I find it very difficult to get those deals done. We get them done, but they do fail more often than deals that have patent and copyright components in them because of the trust gap and the fact that the seller or the licenser will always be concerned. Once I disclose the technology, then the licensee is going to have less of an incentive to actually take a license. So it’s just a very tricky area to get into, not impossible in my experience, anyway, but tricky to license know-how.
Prof. Arti Rai: Yeah, I agree. I’m sorry, just one thing. I agree. And my colleague Ashish Arora here at Duke has suggested that actually you need the patent vehicle as the underlying backstop because if the person steals or misappropriates your trade secret during the negotiation, you can at least sue them for patent infringement. And I think that’s a plausible argument, that that’s the way to have trade secret know-how transfer happen most efficiently.
Prof. Saurabh Vishnubhakat: Yeah. So with respect particularly to CMC data, I think that’s a really interesting point, Arti, though. So CMC, for those who don’t know, chemistry, manufacturing, and controls data, seems to be particularly to manufacturing. And to the extent materials are thrown into the mix, so much the better because there’s something tangible to which you can tether the pure informational transfer. But the manufacturing and controls information seems to go directly to the capacity building point, Andrei, that you were making earlier. So what are your thoughts on how this waiver might apply in the current situation sort of bracketing for a moment the incentive attracts on the future?
Hon. Andrei Iancu: Yeah. Again, for all the reasons I’ve mentioned, I think the current proposal would harm all of these efforts and not help them. And the existing flexibilities that you’ve referenced a bit earlier, those are very good examples. The current TRIPS Agreement, which the proposal wants to waive, has built in flexibilities. For example, countries can, on their own, if they deem it necessary, they can issue compulsory licenses, as you have mentioned, to force some of the exact issues that the waiver would achieve.
But here’s an even more important flexibility. The TRIPS Agreement doesn’t apply at all currently and through 2033 to the least developed countries. The United Nations maintains a list of LDCs, least developed countries, to which TRIPS already doesn’t apply. It’s been waived from the get-go. Some of those countries actually have medicine and vaccine manufacturing capabilities. An example of this is Bangladesh. It has a good vaccine manufacturing capability. TRIPS doesn’t apply at all currently. Why, then, isn’t Bangladesh making vaccines? If people think that the waiver of TRIPS at large solves the issue, well, we have an example in point right here.
In addition to that, every other country that is subject to TRIPS, India, South Africa, who are the main proponents of the country, can itself on its own waive TRIPS if it believes it is necessary and would achieve its purpose. So before governments, like the United States government, says, “Yes, we should waive TRIPS,” I believe governments have a responsibility to prove to us that, A, it’s necessary, and B, it will achieve its intended purpose. And for that latter point, if they think it will achieve its intended purpose, they need to tell us how come nobody has exercised the compulsory license flexibility. And the least developing countries, including Bangladesh, have not achieved a single vaccine yet even though TRIPS doesn’t apply to them at all.
To me, this discussion needs to be an evidence-based, fact-based analysis. And I haven’t seen any of the governments make the evidence clear that, A, it’s needed and, B, that it’s going to work for its intended purposes. They have a responsibility to do so, at the minimum make sure that whatever they do here does not do any harm.
Prof. Saurabh Vishnubhakat: Please, go ahead, Arti.
Prof. Arti Rai: Following up a little bit on what Andrei said, I do think that, unfortunately, this waiver discussion has become a distraction. I think it was intended, perhaps, by the activists to be a tactical move to kind of bring everyone to the table, shock them to the table if you will, but it hasn’t worked that way. And I don’t think that the United States decision to engage in text-based negotiation has necessarily worked that way. And so, at this stage, I think it has become a distraction, and I do hope that we move towards thinking about mechanisms for relatively voluntary know-how transfer that is compensated.
Prof. Saurabh Vishnubhakat: The final question I want to put to the group, and I’ll begin with you, Dave, and of course leave some time for questions. Whether the waiver proposal ultimately succeeds or ultimately fails, it’s not going to be limited just to the context of COVID vaccines. The precedents we set today are going to ripple across intellectual property policy. And so, I’m curious, as a former high-ranking government official yourself—and, of course, all of us have worked in government—what does the political economy of this debate look like? What effect do you think it’ll have domestically, internationally on how we conduct intellectual property policymaking going forward?
David Kappos: Yeah. Thanks, Saurabh. A couple comments on that, it’s like the bell that can’t be unrung. Up until now, the thought of the U.S. taking leadership for, much less agreeing, even grudgingly, to waive TRIPS requirements and to throw the intellectual property system away for any short-term gain would have been unthinkable. The U.S. was depended upon to be the world’s leader in being honest and in thinking long-term. It comes back to the point you raised before, Saurabh, that the intellectual property system and investments in innovation are long-term investments. If all you care about is “give me mine now” and don’t think about the future, well then, sure, it’s a convenient approach to take for now.
I think the decision is not only very unfortunate for the reasons we’ve discussed already, but it’s unfortunate domestically by setting a terrible precedent that can’t be taken back. You can be assured that for all of eternity going forward, every time there’s some public health crisis of some important nature, or perceived important nature, or arguably important nature, the first thing or one of the first things you’re going to hear is, “Well, of course, we should waive intellectual property. And the U.S. has done it before, so the U.S. should be jumping on that bandwagon.” So I think it’s very bad domestically for that reason.
It also sends a very bad message to innovators large and small in the U.S. about how they’re going to be treated as a result of their work and thanks, if you will, for their investment of time, energy, and literally billions of dollars in developing new innovations, whether they be for pandemics or climate change or name some other thing that’s really, really important. There are plenty of those out there.
And that even doesn’t get to the international stage. For me, it was literally like the next morning after the waiver from the U.S. that I was on a call like this with colleagues, in that particular case in China, where I was getting the U.S. government lines played back to me about why it’s heretical, it’s hypocritical for the U.S. to be lecturing other countries about the importance of intellectual property. I mean, it literally didn’t even take a day. It was early the next morning for me and that evening in China.
And my experience in the government and even since is that our economic competitors are very, very fast and alert to play these concessions back to us. It’s basically an equation of saying, “If your country is so glib about giving away intellectual property, why should we respect it here? Why should we treat it any differently?”
And given that the U.S. has — this is a larger issue of course than this particular pandemic. But given that the U.S. has a positive balance of trade in precious few areas of human endeavor, intellectual property being one of the few, it again seems to me to be rather sad commentary on our ability to capture and maintain logic, and look out for our country’s own best interests and that of our 330 million or so citizens, to say, “We’re going to throw away one of our few areas of positive trade and just give that away for free for really any reason,” given that we determined in this call, there’s no good reason to do it.
So that’s probably enough, Saurabh, but I can’t see any good at all that comes from this in terms of what you call the political economy, either domestically or internationally.
Prof. Saurabh Vishnubhakat: Andrei, Arti, your thoughts?
Hon. Andrei Iancu: Yeah. I couldn’t agree more. Only to say that I’m willing to take the proposal at its face value and accept that it’s well intentioned. I’m willing to accept that the countries that are proposing it, the activists that are fighting for it are well intentioned and that they, in fact, want to waive intellectual property rights to save people’s lives and to get more vaccines into people’s arms and more medicines distributed to as many people around the world as possible. I’m willing to accept that, although, frankly, we can have a debate about that too.
But accepting it, show us the evidence that what you’re proposing here will actually help to achieve those goals for this crisis as well as for the very next crisis and the one after that decades down the road. Show us that it’s going to help, and then show us that, in fact, it’s not going to hurt.
And let me speak to the American administration in particular because we are here in the United States, and at least all of us here on this panel are former U.S. government officials. The U.S. administration has a responsibility to human lives around the world to show the evidence that if they implement what they are proposing to implement will not harm people, that the disruption, the historic disruption, that they want to put in place in the intellectual property system that has not been tried once in American history for the past 200-some years, that this disruption they want to put in place now for the first time in American history will actually achieve the intended purpose and will not actually harm people.
We need that evidence before taking such a huge leap. And I haven’t yet seen that, even accepting people’s statements and intentions at their face value.
Prof. Saurabh Vishnubhakat: Arti?
Prof. Arti Rai: So let me perhaps just turn down the temperature a little bit by saying, yes, I think that, on balance, the commitment to engage in text-based negotiations, limited as far as I know to vaccines and not to other interventions like pills or monoclonal antibodies, is a distraction as I’ve said. I’m not sure it’ll have the — given that it’s just a commitment to engage in text-based negotiations, and thus far not much has emerged from that, I’m not sure it’ll have the enormous precedential effects that Dave and Andrei think it will. But I think, on balance, it was definitely a distraction.
I do think that one of the — on the positive side, I think we’re seeing, particularly not in the vaccine space but particularly in some of the antiviral pill space, some of the voluntary tiered pricing activity by firms like Merck with respect to their antiviral pill that is the end statement I would hope we would all want to achieve, that tiered pricing is a win-win for everyone.
Let me say I don’t think that’s because of any of this. I think it’s probably despite the distraction of the waiver. But nonetheless, I think that there is some hope on the horizon. It’s not all doom and gloom.
Prof. Saurabh Vishnubhakat: I see a question in the chat from Thomas Dillon. Would you like to frame your question directly, or shall I read it for you? Thomas Dillon? All right. I’m happy to go through it. Without know-how, the mere waiver of patents is not going to enable a vaccine manufacturer. Has the pro-waiver party explained the process of compulsion which will result in the disclosure of such know-how? Will it be criminal enforcement?
So I know in the context of patents, compulsory licenses, simply a matter of declining to grant judgment in an infringement suit because the knowledge by virtue of the patent has already been disclosed to the public, though the question of compulsory licensing of a trade secret, which is actually secretly held, is more complicated. Any of the panelists want to take a swing at how this might work, please?
David Kappos: Yeah. I’ll start with that briefly, Saurabh, since I do that stuff pretty frequently in deals. To do tech transfer, you generally have to put people on airplanes and send them. You can’t just send documents. Phone calls and Zooms actually are of marginal benefit. You’ve got many time zones and culture gaps and language gaps and you’re explaining and trying to show extremely difficult processes.
What we’re really talking about here is — I don’t know whether you call it extraordinary rendition or kidnapping or whatever, but you literally are going to have to start going to Cambridge, Massachusetts, and places like that, and breaking into people’s homes, and taking them out of their homes and putting them on airplanes to the — I think we’re talking about less developed, lesser developed countries, and forcing them to show others and disclose their trade secrets. It just seems hopelessly un-American to me in addition to hopelessly impractical.
Prof. Arti Rai: So I do think that this is — I generally, perhaps without as much fervor as Dave, generally agree that compulsory disclosure of very sticky information is difficult. The only caveat I would add is that there is more codified information in the CMCs. Whether that would enable sufficient knowledge flow, disclosure of that would enable sufficient knowledge flow to help, not a completely resourceless firm but a firm like the Serum Institute of India or a firm like Gennova, also in India, which is apparently collaborating with an MRNA firm in the state of Washington right now to develop a more temperature amenable MRNA vaccine that doesn’t have to be put into cold storage. There is some codification and knowledge that has taken place through the CMC. It’s an empirical question whether that codification would be sufficient for a very sophisticated lower-middle income player.
Hon. Andrei Iancu: Can I just add very quickly, I have not seen any explanation, just to be direct to the question. Nobody has made a specific proposal of how the know-how would be transferred under this proposal. Having said that, remember that this would be an international waiver that is agreed to in the multilateral forum at the WTO, the World Trade Organization.
Countries then need to ratify that international agreement. For example, in the United States, you would need an act of Congress, both chambers, as usual, passing the new legislation, the president signing it. And by the way, a lot of — and that would be at the federal level. A lot of trade secret protections in the United States are at the state level. So I don’t know. You’d have to deal with state laws as well. So I actually, from a practical point of view, don’t much see a path forward in the United States.
But what’s important is that this is an international treaty. Other countries have easier implementation mechanisms. Other countries have dictatorial regimes or less democratic regimes, and they can just dictate, “Okay, beginning tomorrow, this is waived.”
Remember, hundreds of collaboration agreements have already gone into place. A lot of companies in foreign nations already have access to this know-how through these collaboration agreements, or at least various pieces of the know-how. Those countries, if the waiver is implemented at the WTO, could tomorrow or the day after ratify locally in their countries, and then locally, through mechanisms that are not germane to the United States but in those countries, could very well work. They could force the local companies that have this know-how to just appropriate it.
And this highlights the unfairness of this whole things because companies with the know-how have already collaborated to an unprecedented extent relying on the rule of law and the TRIPS Agreement — provided by the TRIPS Agreement, in nations around the world. And this would be an after-the-fact appropriation.
Prof. Saurabh Vishnubhakat: I see that we’re at time, but I do see one question in the chat from Adam Mossoff and it’s, I think, a point of useful factual clarification, so I’ll ask the audience’s indulgence to entertain just this one question for the panelists before we adjourn.
The panelists mentioned that millions in public funding was used to create the MRNA vaccine. Was public money provided for the original research, or was it provided at the start of the pandemic for the development, late-stage testing as required by the FDA, and creating distribution capacity? The news reports I’ve read—this is Professor Mossoff—have detailed that the MRNA platform was mostly, if not entirely, funded through private funding by VC investors and others. Is this not true? If public funding was provided for the creation of the technology itself, do we know the relative amount compared to the private funding amounts?
Prof. Arti Rai: I can speak a little bit to that. So, yeah, for the original upstream research that Moderna did and that BioNTech did—so this is technology that came out of two relatively small startups—there was a lot of VC money, indeed.
There was, I understand, however, also some public money, which is part of the reason there’s now a dispute between Moderna and the U.S. government over who should be listed on some of the relevant patents. And so whether we can get a full accounting, I don’t think that information is out there. I would love to have a full accounting, although, at the end of the day, I’m not sure that it matters as much as the fact that the public and private pieces all work together well. But that is what I know with respect to Moderna, at least.
Hon. Andrei Iancu: Okay. Can I just add something very quickly, or are we out of time, Saurabh?
Prof. Saurabh Vishnubhakat: I think we have just a moment. Go ahead, please.
Hon. Andrei Iancu: So very quickly, I also don’t understand the point of this debate. Some argue a lot of American taxpayer funds have gone into these vaccines at whatever level, and therefore we should agree to the TRIPS Agreement. I don’t get it. It seems to me to be the exact opposite. If American taxpayers have funded these vaccines—and there’s debate about that as the question and also Arti indicates—but if, in fact, American taxpayers have funded this, at least some portions of the vaccine, why are we willing to give that American-based technology away for free to the whole world without any controls and potentially to some of our enemies as well?
Prof. Saurabh Vishnubhakat: Okay. Well, that’s our panel discussion. I’ll turn it back over to Nate. My thanks to the panelists and to the Regulatory Transparency Project for this wonderful discussion. It was really a pleasure.
Nate Kaczmarek: Yeah. My regret is that we didn’t book 90 minutes. We’ll have to have everyone back again to continue to monitor this topic and to debate it further. Certainly, we’re thankful to our experts for their time and expertise today. We welcome feedback via email at [email protected]. Thank you all. Have a great day.
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This has been a FedSoc audio production.
Irell & Manella LLP
Cravath Swaine & Moore LLP
Elvin R. Latty Professor of Law
Duke University School of Law
Professor of Law and Director, Intellectual Property and Information Law Program
Benjamin N. Cardozo School of Law, Yeshiva University