If the Devil of the WTO IP Waiver Is in the Details, What Are the Details? – JD Supra

Posted: May 11, 2021 at 11:10 pm

While the details of the WTO patent waiver have not been determined (or more properly negotiated), it is important to consider the structure of the international trade regime in which the waiver will operate and the consequences of any agreement defining exactly what will be waived.

The GATT/TRIPS agreement is a treaty, which (of course) is an agreement between countries, and disputes and accommodations are between their governments. The extent to which a private company's patent or other IP rights are protected under the terms of these agreements depends on actions of these governments in enforcing them on the company's behalf. Thus, for protections like patents, a government can agree to "turn a blind eye" to infringement by companies in other countries (or other governments) by refusing to press the rightsholder's case before the WTO, to pressure the governments unilaterally (as in the Watch List and Special Watch List of the U.S. Trade Representative's Special 301 Report), or otherwise support a private company's private actions using an infringing country's legal system. Such "passive" actions (i.e., refusing to enforce rights in violating or "scofflaw" countries) requires very little affirmative action by a government. These are the types of de facto waivers that can be effective, for example, for patented drugs that can be produced by conventional drug production technology wherein description of an active pharmaceutical ingredient molecule.

The details of COVID vaccine production have been set out in various new sources (see Neuberg et al., "Exploring the Supply Chain of the Pfizer/BioNTech and Moderna COVID-19 Vaccines"; Weiss et al., "A COVID-19 Vaccine Life Cycle: From DNA to Doses," USA Today, Feb. 7, 2021; King, "Why Manufacturing Covid Vaccine to at Scale Is Hard," Chemistry World, Mar. 23, 2021; Cott et al., "How Pfizer Makes Its Covid-19 Vaccine," New York Times, April 28, 2021). But these are certainly not disclosed in the detail necessary for commercial production, and the complexities of production are illustrated in graphics from the Times article, wherein the DNA is prepared in Chesterfield, MO and shipped to Andover, MA for mRNA production; then the mRNA shipped back to Chesterfield or Kalamazoo, MI for packaging into the vaccine nanoparticles; and then sent back to Andover for testing before release. While some of this complexity may be company-specific, it also represents the different technological requirements for preparing an effective vaccine. It is unlikely that most of the countries in favor of the waiver (except India and South Africa) have the technological infrastructure for producing the vaccine. And the company in India, the Serum Institute ("the largest vaccine maker in the world"), having the greatest likelihood of being able to reproduce the vaccine if the waiver is put in place recently was forced to "hand over its vaccines to the [Indian] government," according to an article in the New York Times (Schmall et al., "India and Its Vaccine Maker Stumble over Their Pandemic Promises," May 9, 2021).

It is evident that, in the almost total absence of patents involved in COVID vaccine preparation, the disclosure needed to reproduce these vaccines (no matter how difficult that may be in practice) are protected by trade secrets. If the WTO imposes this waiver, the question will be whether the U.S. will compel disclosure of trade secret owned by U.S. companies, or have disclosed them to the extent such secrets are part of regulatory filings. Either action would constitute a "taking" under the Fifth Amendment ("Nor shall private property be taken for public use, without just compensation"); see Epstein et al., "The Fifth Amendment Takings Clause," Interactive Constitution: Common Interpretation. Seemingly simple and straightforward, almost every word in the clause is open to interpretation, none perhaps as much as determining what "just compensation" entails. It is likely that, should the government act peremptorily with regard to takings of trade secrets justified by any WTO waiver clause, the effect on trade secrets will carry the greatest consequences and be the cause of most controversy. Indeed, the prospects arising therefrom are likely some of the biggest impediments towards effectuating any waiver in a manner that could have any chance of achieving the stated goal of facilitating COVID vaccine production.

This prospect also raises the issue of how any such waiver will be implemented in the U.S. Treaties are not necessarily "self-executing" and need to become enforceable through an Act of Congress. The distinguishing feature of such treaties are that "provisions in international agreements that would require the United States to exercise authority that the Constitution assigns to Congress exclusively must be deemed non-self-executing, and implementing legislation is required to give such provisions domestic legal effect." See Mulligan, "International Law and Agreements: Their Effect upon U.S. Law," Congressional Research Service 7-5700, Sep. 19, 2018. The necessity for Congress to act, although not having the heavy weight that entails approving treaties (i.e., a two-thirds majority vote in the Senate) nonetheless could be expected to face significant opposition should it be interpreted to permit the government to exercise a form of "eminent domain" over pharmaceutical companies' trade secrets. In this regard such an act could readily be characterized as "forced technology transfer" and even IP theft, should, for example, such trade secrets be capable of use to weaponize rather than immunize against viral infections.

The administration's public position raises the likelihood of an infringement on private property unprecedented in the U.S. It also has implications for other aspects of foreign policy; for example, at least some of the trade secrets belong to BioNTech, a German company. Germany has not agreed to the waiver, and should the U.S disclose BioNTech's trade secrets, no doubt Germany would have cause to seek redress against America. This is but one of the possible legal consequences that the recent capitulation to the purported global "kumbaya" of the WTO waiver is likely to create.

More complications will likely arise as the negotiations proceed. Provided the Administration is properly advised and the waiver properly limited (e.g., to patents) these and other deleterious consequences may be avoided. In view of the possibility of serious liability arising by improvident acquiescence to generally uninformed calls for a broad waiver, it might not be a bad idea for all those involved in innovation (universities, technology transfer offices, pharmaceutical companies, patent lawyers, and economists) counter these opinions with the facts and make their viewpoints known and voices heard.

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If the Devil of the WTO IP Waiver Is in the Details, What Are the Details? - JD Supra

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