The Road to Hell Is Paved with What Everybody Knows

By Kevin E. Noonan --

Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That's how it goes
Everybody knows

Everybody knows that the boat is leaking
Everybody knows that the captain lied
Everybody got this broken feeling
Like their father or their dog just died
Everybody talking to their pockets
Everybody wants a box of chocolates
And a long-stem rose
Everybody knows

"Everybody Knows," Leonard Cohen

And everybody knows that suspending patent rights is necessary to provide sufficient vaccine to stem the global pandemic caused by the SARS-CoV-2 virus known as COVID-19.  It is always a sign of intellectual weakness and pack animal thinking to believe something is true because "everybody knows"; recently American pathologists reaped the consequences of their "everybody knows" campaign against "gene patenting" in AMP v. Myriad Genetics (see "Schadenfreude Is Not Always An Unpleasant Feeling"), although evidence of this eventuality was available earlier (see "The ACLU, Working for the Man").  Sadly, the true roots of the issues arising over global vaccination have been known for almost a year (see "Latest COVID Conundrum: Accessibility of Vaccines (When They Are Available)"), and the wrong-headedness of proposals for a "patent waiver" have also been recognized (see "Suspending IP Protection: A Bad Idea (That Won't Achieve Its Desired Goals)").  And yet, of course, the Biden Administration, speaking though the U.S. Trade Representative Katherine Tai, issued a press release yesterday supporting the waiver (see "Biden Administration Supports Waiver of IP Protection for COVID-19 Vaccines").

There is no silver lining and no Pollyanna or Professor Pangloss available to contend that this is good policy, but it may be informative to consider the possible outcomes that could arise depending on how any such waiver or suspension is effectuated.

To the extent that the suspension or waiver of rights is limited to patents, the effects could amount to no more than virtue signaling, a political exercise meant to illustrate differences between the prior administration and this one, or to placate voices like Senator Bernie Sanders who maintain that pharmaceutical companies are rapacious predators who place profits over people (with a fervor and rhetoric the prior administration and its supporters reserved for liberals and the well-educated).

But as annoying as this might be, there is a greater danger in other forms of implementation.  The terms of the press release do not say that there should be a waiver of patent protection (which was the original impetus and justification for the waiver as proposed by India and South Africa last October when it was proposed; see "Communication IP/C/W/669, "WAIVER FROM CERTAIN PROVISIONS OF THE TRIPS AGREEMENT FOR THE PREVENTION, CONTAINMENT AND TREATMENT OF COVID-19, 2 October 2020").  The plain language of the press release, and the focus of the waiver that has evolved, is to include all intellectual property.  This would include trade secrets, and that raises a serious issue.  As explicated by Derek Lowe in his article "Myths of Vaccine Manufacturing," the rate-limiting step for COVID vaccine production (at least for the mRNA-based vaccines) involves proprietary machines and methods for making the vaccine that are, more than likely, not covered by patents and never will be.  The technological circumstances surrounding vaccine production involve trade secrets regarding formulation of vaccines that are what can be the bottleneck in the process.  But trade secrets are the type of property the rights to which cannot be suspended; disclosure destroys the secret and thus the property.  It is unlikely that companies will voluntarily give up their valuable trade secrets, and while there might perhaps be some stomach for forcing them to in some jurisdictions, it is unlikely that the U.S. will be one of them.

But this "moveable feast" of policy rationales illustrates the political fact that the aim and goal of this and other proposals by India, South Africa, and other countries is to escape the TRIPS requirement for recognizing and enforcing IP protections, imposed as part of the requirements for WTO membership.  When these facts are considered, the call by these governments (and others) should be understood for what it is:  an attempt to use the pandemic to achieve a goal of status quo ante (prior to the establishment of the GATT/TRIPS/WTO global trade and patent regime), which was imposed upon these and other countries a generation ago.  The COVID pandemic provides the humanitarian reason for a solution that isn't a solution but that resonates with uninformed (albeit generally well-meaning) politicians, humanitarians, and religious and non-governmental organizations.

It is undeniable that there are significant issues regarding availability of drugs in low- and middle-income countries that need to be addressed.  But there are ways to achieve the lofty goals that are at the root of calls for an IP waiver.  This includes cooperation between pharmaceutical companies, as Merck as done with Johnson & Johnson, that can increase the number of doses of the vaccine necessary for global vaccination.  Groups like Gavi, the WHO, and the Coalition for Epidemic Preparedness Innovations (CEPI), can be involved in a concerted effort obtain vaccine supplies for the rest of the world.  Western governments with "excess" vaccine reserves can use the auspices of these groups to send doses to low- and middle-income countries and economies (LMICS) and even some "wealthier" countries having the economic capacity to defray some or all of the costs.  Indeed, the Biden Administration announced it would make available "excess" vaccine doses to countries in need (amounting to 60 million doses).

The motivations for such efforts need not rely exclusively on altruism, either; as has become evident recently the virus has the capacity to mutate in ways that variants of unknown resistance to current vaccines can arise.  Vaccines, particularly the mRNA-base vaccines, may not be effective against these variants (see "Do mRNA-based COVID Vaccines Have an Achilles Heel?").  Thus, it is in everyone's interest to extend vaccination globally (regardless of how daunting that challenge may be) to reduce the probability of such variants arising.

The efforts being applied globally to develop vaccines, treatments, and better tests and technology in response to COVID-19 have been impressive.  We can hope that, ultimately, these efforts will prove to be successful.  Intellectual property protection has an important role to play in these efforts.  Past experience and recent developments suggest that protecting IP for vaccines, therapies, and technologies to fight COVID-19 will have a positive impact, and advance the cause of eradicating, or at least treating, and preventing this disease.  Support for the proposed IP waiver is a foolish and tragic mistake.

Comments

[James Scott Elmer]

Well said Kevin. Hard to believe there is so much resentment against a patent system that has allowed innovative companies to form and thrive to the point that they could make a vaccine to protect the world against a pandemic in record time. I hope that these recent efforts do not cause these same companies and brilliant minds to lose faith in the system.

[skeptical]

Small - but absolutely critical - distinction:

This is NOT about a 'patent' waiver.

The underlying goal here is NOT the patents, but rather the OTHER IP of Trade Secrets and implementing know how.

[Greg DeLassus]

"The terms of the press release do not say that there should be a waiver of patent protection (which was the original impetus and justification for the waiver as proposed by India and South Africa last October..."

This is not an accurate characterization of the Oct waiver proposal. The proposed text called for "[t]he obligations of Members to implement or apply Sections 1, 4, 5 and 7 of Part II of the TRIPS Agreement... to... be waived... ." Section 1 of TRIPS is copyrights; section 4 is industrial designs; section 5 is patents; and section 7 is trade secrets. The call, all along, in other words, has been for a relaxation regarding multiple forms of IP, not just patents.

[Greg DeLassus]

"To the extent that the suspension or waiver of rights is limited to patents, the effects could amount to no more than virtue signaling... But as annoying as this might be, there is a greater danger... [T]he focus of the waiver that has evolved, is to include all intellectual property."

I think that it is important to think carefully and clearly here. Waiver of *which* patents, and of *which* other IP. I doubt that Pfizer, Moderna, J&J, or any of the other vaccine makers really have many trade secrets inside the borders of India's sovereign jurisdiction, or South Africa's, or inside the borders of any other nation that is likely to act in reliance on a TRIPS waiver by suspending trade secret protection.

Meanwhile, a waiver of trade secret protection inside India's sovereign borders does not affect trade secrets held inside the sovereign borders of the U.S., or Switzerland, or Germany, etc. In order for those trade secrets to be at risk, there would need to be legislative changes in CH, DE, US, etc. Indeed, in the case of US trade secrets, not only would there need to be changes to US law (changes that *this* Congress would be vanishingly unlikely to enact), but also changes at the NY state level (for Pfizer), the IN state level (for Eli Lilly), the PA state level (for GSK), etc. None of this is ever going to happen, which means that the real world danger to the security of trade secrets held by the relevant market actors here is essentially the same as the danger posed to those trade secrets by a giant meteor loaded with laser gun-wielding monkey assassins.

It is really easy to overstate the significance of a TRIPS waiver here. To a first order approximation, I expect that the waiver will have no effect whatever on the ultimate course of vaccination or the ultimate bottom line of any of the relevant market actors. This is a PR move, not a substantive event in IP law.

[skeptical]

"Meanwhile, a waiver of trade secret protection inside India's sovereign borders does not affect trade secrets held inside the sovereign borders of the U.S., or Switzerland, or Germany, etc"

Yeah, no.

Think about it. Your remedy for a violation of Trade Secrets (think full sanctioned industrial espionage) in the face of a US committed waiver would be....

[Kevin Noonan]

Greg: you are correct, of course; what I meant to say was that the focus, rhetoric, and justification of the waiver proposal was initially patents, but the proposal encompassed all the types of IP you listed.

Thanks for the comment

[Kevin E Noonan]

On the other hand, Greg, if there is a waiver by the US of the TRIPS provisions that includes trade secrets, won't there be pressure for US companies to disclose trade secrets necessary to make vaccines? So the effect and scope of any waiver will likely be far broader than countries like India.

Where it will get interesting is if Germany continues to oppose the waiver, and BioNTech refuses to disclose. How do we get the necessary trade secrets disclosed?

[Greg DeLassus]

“[I]f Germany continues to oppose the waiver, and BioNTech refuses to disclose. How do we get the necessary trade secrets disclosed?”

How indeed? Like I said, there is no point getting too exercised about the waiver. It is a PR gesture, not a substantive legal change with any enforceable effect.

No trade secrets are going to be disclosed after the waiver unless the company in question: (1) wants to make the disclosure; or (2) gets sloppy about protecting the trade secrets. Of course, those are exactly the same circumstances in which trade secrets get disclosed before a TRIPS waiver. The waiver will not actually change anything.

[Greg DeLassus]

“[T]his ‘moveable feast’ of policy rationales illustrates the political fact that the aim and goal of this and other proposals by India, South Africa, and other countries is to escape the TRIPS requirement for recognizing and enforcing IP protections, imposed as part of the requirements for WTO membership.”

I think that this is correct. Many “developing world” countries signed up for WTO membership back in the more optimistic days of the Washington consensus, back when we thought that we had cracked the code to rapid economic growth & development. The idea back then was that with sufficient political will—aided by the right Chicago-trained experts—any nation could grow into the G20 league with a two decade lead time. Therefore, why not commit oneself to the gradual implementation of a set of G20-standard IP laws as the price of WTO admission. By the time those laws had to be implemented—it was thought—one would already be far enough along the development road that it would make sense to have such laws in place anyway.

Two decades later, however, we see that: (1) the Chicago boys overpromised and underdelivered; & (2) the sorts of IP laws that best serve a G20 economy are not the same sort that best serve a “bottom billion” economy. It is time that we acknowledge as much and renegotiate TRIPS accordingly. Nobody—neither the wealthier countries nor the poorer ones—really benefits from the global imposition of a one-size-fits-all view of IP laws.

[Kevin E Noonan]

Greg: I think that is what the waiver proposal - like the Doha Declaration before it - is trying to do. And like many international agreements it looks like there needs to be an accommodation to the realities - political and economic - of the "bottom billion." And also need to realize that there will be some in countries comprising the BB that benefit even though they shouldn't - just the entropy of any complex system.

Thanks for the comment

[skeptical]

I wonder — not entirely sarcastically — if Mr. DeLassus would find it any easier to swallow if the “movable feast” were clothed in the rhetoric of “Equity,” and stated to be a ‘reparation’ of sorts to brown people (and ‘poor’ people) of the world for the (limited effect) of Trade Secrets and know-how on the platform of the (Trumpian) single fastest ever vaccine development BY providing a full IP (and not merely patent) waiver.

Yes, an enforced full waiver would be a taking.

Yes, the current administration has the money supply printing presses running at full screaming level (so there is no qualms about printing as much “takings money” as necessary, is there?).

Yes, the global pandemic is “the worst thing ever” (since the Spanish Flu), and would be a “one time” event, certainly not changing “everything we know, and everything we do” in regards to biotech innovation.

Yes, there is a ‘moral imperative’ to do EVERYTHING (cue multiple stories of how even the Pope is speaking out).

I keep on seeing people SAYING “it’s not needed,” and “it’s not going to happen,” and both come across as rather empty platitudes to momentum of both World Opinion AND the Biden administration full embrace of “Equity.”

Yes, the elephant in the room is being greeted by ostriches putting their heads in the sand, as the camel’s nose is ALREADY in the tent.