This article is written by Swapna Gokhale, pursuing a Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho.

Introduction

Recently we all have heard about the news of the proposal put forth by India and Africa before the World Trade Organization i.e. WTO to suspend IP rights in Covid-19 Vaccine. Not only for vaccines, but for treatment, diagnostics, and medical technologies also waiver is proposed until the majority of the world has developed immunity. As we are aware that every creator of Intellectual property has a monopoly over it. He gets a bundle of rights by registering the creation in his name.  Therefore, registration of any of the IP like logo, design, literary work, inventions etc. officially prohibits the world to use that IP without permission of the IP owner.  The document of proposed waiver calls for a waiver for all WTO members of certain provisions of the TRIPS Agreement in relation to the “prevention, containment or treatment” of COVID-19. While proposing the waiver of IP, it is the argument of the proposing country that the current global intellectual property system is a barrier to the timely access of the COVID-19 vaccines, and other medical products, especially for less developed countries or to scaling up the manufacturing and supply of life saving vaccines and other essential medical products. However, naturally, there is opposition to this proposal by some rich and developed countries in the context that such a move will be a hindrance to innovations and research. 

Well, what exactly does this suspension of IP rights mean? Have you ever seen any such thing where the IP owner waives his right on the IP? Or do you think that it would actually serve the intended purpose of scaling up the production of vaccines and reducing the cost of the drugs, as has been quoted by the proposing countries? Would such a waiver be detrimental to the rights and interest of the owner? For how much time such a waiver can be granted? All these questions we will address here.  

IP rights and pharmaceutical industry

IP rights occur in various forms. If you want to own the rights in a brand then you can get it from Trademark registration. Likewise, your rights in literary work can be protected by copyright law. Patent is granted on some inventions having practical utility in the industries of various fields. e.g.  IT, pharma, Scientific research organizations etc. The protection granted to the owner under relevant IP law not only gives him exclusive right to use but also gives the enforcement rights against its unauthorized use by an infringer. The recent debate on waiver of IP is for the enforcement of all the IP rights which includes Patent as well as copyright for the software used in research and development and other related rights associated with the Vaccine and other medical products for which the developers of the vaccine are entitled to. But for the medical process and the final product developer is entitled to Patent rights protection. 

Indian Patent regime is very strict especially for medicines and it provides tough standards to secure a patent. Novelty, inventiveness, and increased efficacy are the main criteria for entitlement of Patent. IPR is a prerequisite for pharma companies for identification, planning, commercialization, and protection of an invention. Manufacturing new drugs by a tedious R & D process and successfully bringing them into the market is a risky, lengthy and expensive process. It requires a lot of investment, infrastructure, and manpower. Before the amendment of the Indian Patent act 1970, only process patents were allowed and not final product patents. But by amendment of Patent Act 1970 in 2002, Patent was allowed to be granted on pharmaceutical products as well. Patent period was also increased from 7 years to 20 years.   

To know more about Trademark licensing Agreement please visit 

Suspension of IP rights

When IP rights are granted, it gives protection against illegitimate enforcement of the same by a person other than the owner. Suspension of IP rights means the postponement or debarment of the enforcement of IP rights which is granted to its owner. 

By using the flexibility provided under the TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement, the proposing countries are seeking waiver or suspension of IP rights especially in the anticovid vaccine for a temporary period. TRIPS agreement is an international legal agreement between the countries who are members of WTO i.e. World Trade Organization, which recognizes the significance of links between IP and trade and the need for a balanced IP system. India is one of the signatory members of the TRIPS agreement. Our entire IP regime is based on all the obligatory provisions under the TRIPS Agreement. Thus, the proposed suspension of IP rights would be suspension of some provisions of the TRIPS agreement. And the same needs to be allowed by the WTO.  The proposed suspension can be granted to the member countries under certain specific conditions and in some exceptional circumstances. The current pandemic is one of such exceptional conditions.       

Grounds of the proposal of suspension of IP rights

Last year in January 2020 the first COvid-19 patient was found in India. After that due to its fast-spreading a complete lockdown was declared from March 2020. Initially, there was no treatment or medicines available to treat the Covid affected patients. There were no tools to find out the reason for spreading, nor any effective medicines were in place. Naturally, the pharmaceutical industry all over the world started to find out the solution to this new dangerous guest. But the question of availability, cost, equitable distribution of the vaccine were required to be resolved on priority. Considering this, the Indian government along with Africa in October 2020 approached WTO to suspend the IP rights on pharmaceuticals especially on Covid Vaccine for a temporary period of time.

• Equitable distribution with affordable cost

Indian Pharmaceutical Industry is recognized as the world’s third largest Pharmaceutical Industry. As we know, many vital vaccines that are important for the survival of people are too costly. Even if vaccines are prepared, there needs to be an equitable distribution of it with affordable prices to everyone including developing countries, low-income countries, etc. In addition, there are so many new diseases evolving rapidly these days because of multiple reasons like changing lifestyles, etc. This situation got worse when the current Covid situation arose last year due to which lakhs of people got affected and many of them succumbed to death due to non-availability of effective medicine/vaccine etc. Because vaccines are the most effective way to fight this disease, within a few months from the beginning of this pandemic, many companies came forward to prepare vaccines for Covid-19. Out of which only some of them got the necessary permissions to manufacture vaccines. However, the vaccination of millions of people all over the world is not a kid’s stuff. There was a need for an effective mechanism to produce vaccines in large scale quantities, followed by their equitable distribution. But again, there was a challenge to control the cost. As per the current IP law, the developer or manufacturer of the product has the right to decide its price considering the cost that was incurred by him to produce that invention. Thus, there was a strong risk of an affordable price for the vaccine that is going to be prepared by the pharmaceutical companies.

• Large scale production of vaccine

The major difficulty to achieve the intended target of the large-scale production and equitable distribution of vaccines is the intellectual property (IP) rights that their developers enjoy. Further, looking at the efforts that are being put in by these companies which include their human intellect, huge investments, funds, multilevel process, infrastructure the possibility of the unaffordable cost of these vaccines was anticipated. Thus, this gives rise to many questions like affordability and accessibility of the vaccine all over the world especially, for low-income countries. Also, the said demand is not only huge but also time bound and was not only for vaccines but also for other medical products, tools, drugs, therapies, etc. 

Currently, the production of vaccines or medicine like Remedesivir is considerably short for the huge demand of the same from all over the world. Thus, it is a requirement of an hour to scale up the production of effective Vaccine against the Covid-19. By suspending IP rights though will not give a sudden rise in vaccines, but it will enable the capable manufacturers of pharmaceuticals to start production of vaccines and drugs without threat of the infringement claim by the patent owner. Thus, to achieve the target of maximum vaccination can be accomplished at the earliest.

By anticipating these problems, the proposal of suspension of IP rights during this pandemic was put before the WTO noting the exceptional circumstances that exist all over the world.

• Exceptional circumstances and for a limited period

On the background of the biggest health crisis where everyone’s lives are at stake, which is something unusual and a national emergency situation, requires swift action to control the spread. And there is no better solution than temporary suspension of IP rights on anti-covid medicines. This never-before situation was getting worse with each passing day. This war-like situation has been addressed by India genuinely and decided to take immediate steps to reduce technical problems in accessing the vaccines, drugs, medicines, medical tools etc. within a short span of time. IP rights might be a hurdle in large-scale production and distribution of vaccines. Further, the said proposal is only for a limited period of time. Once the majority of the population gets immunized by vaccination, the manufacturer’s IP rights can be restored. Thus, there would be no permanent hindrance to the new innovations.

• Reduction of access gap

A stronger health system in the country can lead to better economic growth. And the said economic growth of the country is directly proportional to the intellectual assets of every nation. As we know vaccines are not any such thing that can be produced in bulk at a time by pressing just one button. It involves so many things like human effort, technical knowledge, pharmaceutical expertise, infrastructure, economic investments together with a lot of permissions, procedures, rules, etc. Further low-income countries may not have all these facilities or technical know-how to produce any new product or they may be unable to buy these medicines for the price set by the developer. Thus, all this access gap can be reduced, if the monopoly of the developer of the vaccine can be suspended for some period of time.  This will also reduce the dependency on the production of the vaccine and medicine from wealthy countries. 

The result will be in three folds. Due to suspension, other equipped manufacturers can start manufacturing the same vaccine and can also export the same. Secondly, the purpose of development of these vaccines, drugs within a short span of time can be achieved, which is the requirement of today’s date. The third and most important intent is that suspending the IP rights would naturally increase competition leading to lowering the price so as to make it available at affordable rates to all, especially to all those low-income countries. 

Ultimately the current epidemic is not restricted to one country. It has an impact all over the world. Thus, keeping in mind the welfare of all the countries, this proposal has been put forward by the proposing countries in October 2020.  

Though the decision from the WTO is awaited. Naturally the same needs to be taken by keeping in mind various pros and cons which would rise after such suspension along with contentions of opposing countries. 

Opposition to the suspension proposal

• Effect of waiver

If the waiver/suspension of IP rights is granted by the WTO then no country can apply or enforce the IP rights granted on Covid Vaccine, treatment, drug, etc for a temporary period. This will give the right to the member country of WTO to treat their population especially for this Covid-19 without there being threat of claim of illegality by developers, under WTO law. 

• Grounds of opposition

Though more than 100 countries supported this proposal, there are many other countries, mainly developed and wealthy countries who are opposing this proposal. 

They claim that research and innovations boost due to the protection of IP. Suspension of IP rights may reduce or discourage the new inventions. Moreover, a group of 18 Republican lawmakers have written a separate letter to US president Biden against this proposal expressing their fear of losing vital research and development capabilities needed to prepare for future health needs.  

Further it is the contention of opponents that this move will reduce the competition in manufacturing necessary drugs for fighting Covid and it will not sweep in the manufacturing of the Covid-19 Vaccines as intended in the waiver proposal.  

Opponents’ contention is on two points. First is that the terms of the TRIPS agreement are sufficiently flexible enough to achieve the intended purposes of the proposing countries. And secondly, provision of a compulsory license can be enforced as given under the TRIPS agreement which can be used instead of a complete waiver of IP rights. 

Provision under TRIPS Agreement

• Article 31 of the TRIPS agreement (click here) has provided the flexibility to the member countries to use the subject matter of a patent without the authorization of the right holder, including use by the government or third parties authorized by the government. These provisions contain provisions by which the requirement of proof of efforts made for securing authorization of the right holder before such use is not necessary in situations of national emergency or other circumstances of extreme urgency. According to the patent law, no other person can use/exploit the subject matter of the patent without obtaining authority from the developer/ manufacturer. Especially in the case of pharmaceuticals, such restrictions become more vital because it has a direct connection with the public health of the population. However, in case of certain specific conditions as mentioned in this TRIPS agreement use of subject matter of a Patent by a third person without authorization of the Patent holder or developer/ manufacturer is allowed. While giving such flexibility TRIPS has also imposed certain conditions before availing this flexibility by the member countries. 

Looking at the current situation of Covid, this provision will enable all the equipped pharma companies to produce vaccines, medicines, treatments and other medical tools without a bar of IP rights. This would naturally scale up the production of much-needed Covid Vaccine which is the basic objective behind the proposal of suspension of IP rights.

• Further, Article 8 of the TRIPS agreement gave freedom to its members in a way to formulate their laws in a suitable manner consistent with the provisions of this TRIPS agreement, by which public health and public interest will be protected.

Compulsory License

Under Indian Patent Law there are provisions for Compulsory Licensing (click here). In a view of section 84 of the Patent Act 1970 whenever any invention is connected to the requirement of the public or the same is not available in the market at a reasonable price and it was being imported to India or the said right not exercised in India then any person interested may make an application to the Controller of Patent for grant of compulsory license on patent on that medicine at any time after the expiration of three years from the date of the grant of a patent. When such application is received Controller shall consider the same in the light of the existence of above-mentioned facts and shall pass an appropriate order keeping in mind the ability of the applicant to work the invention to the public advantage, his financial capacity etc. In the said compulsory licensing, there is a provision of appropriate remuneration to patentees also stipulated. 

This right to reproduce a patentee’s product by obtaining compulsory authorization, without first obtaining the consent of the patentee, is mainly incorporated with the object to ensure the non-abuse of Patent rights granted to a company for inventions or sometimes the patent rights granted are not being exercised by the patentee due to any of the reasons. Especially when the subject patent is essential for the public such compulsory licensing can be granted to safeguard the public interest. 

This method may be helpful to increase the accessibility of patented subjects and by natural corollary price range can also drop. Thus, compulsory licensing of pharmaceutical patents sometimes becomes necessary to save the lives of the people by ensuring the accessibility of drugs at affordable prices.  Though IP profitability of the patentee dilutes in this method, his incentives for innovation do not completely vanish. It can be secured by providing remuneration in the form of royalty.

Thus, in short, to break up monopolies and cartels, which are some of the abuses of patent rights, compulsory licenses can be used.

India’s first compulsory license has been granted by the Indian Patent Office to Hyderabad-based drug-maker Natco. A landmark decision, under the amended Indian Patents Act (2005), allows Natco to make and sell in India, a similar version of Bayer’s Nexavar, an advanced kidney cancer drug. Canada was the very first country to issue a Compulsory license in 2007 for drugs for treatment of AIDS to fulfil the need of Rwanda.

• Will compulsory license in the pharmaceutical industry be an effective alternative especially in the current Covid situation?

Though the compulsory licensing system allows the third person to use the Patent subject of the patentee, the same is time-consuming and not comprehensive. The negotiation process, terms, and conditions between the parties, remuneration terms, quality control, permissions, limited production rights, territorial rights to sell the product etc. all these procedures are very much cumbersome and thus not useful for current scenarios. After its incorporation, till date the usage of this tool is very minimal by the countries. Due to its level of complexity, this double-edged sword is not fit for the intended purposes. 

• Significant cons of compulsory license

1. The rights of the patentee get diluted.
2. The possibility of reduction of Foreign Direct investment in the pharma sector because of the threat of losing intended profit due to the threat of compulsory license. 
3. There may be the possibility that the reluctance of pharmaceutical firms to introduce products in the countries lacking patent protection due to dilution of IPR may adversely affect the access or availability of essential medicines.
4. This may affect the development of the research capability of manufacturers. 
5. The difficulty of licensee’s adequacy of the technological know-how to manufacture the licensed drug.

Thus, compulsory licensing is not an effective alternative to achieve the intended goal of scaling up the production of drugs or vaccines which is a requirement of hours.  

There are some examples where the tool of compulsory license failed in terms of quality or lack of technological knowledge. In 2007, Brazil decided to issue a compulsory license of a patented AIDS drug i.e. Efavirenz, to Farmanguinhos, which is the government-owned pharma company in Brazil. But the licensee was unable to manufacture the licensed drug due to a lack of technological know-how to do so. Thus, this important aspect can-not be overlooked while granting a compulsory license.

How suspension of IP rights in Covid Vaccine would benefit India in the current situation?

By the relevant IP laws, the pharmaceutical companies possess IP protection for their R & D for drugs, vaccines and other medical needs. But by selling these products at a higher price including cost for their investment, knowledge, etc., they recoup their expenses incurred for that invention. This would be so unfair, when there is the involvement of public money into the research and development of such life saving vaccines. As mentioned above the option of compulsory licensing as an alternative to the present proposal is less attractive because of its other complexities. Thus, in this situation it requires a more effective way to fight against this global crisis and unprecedented tragedy without getting stuck into the multilevel process of licensing etc. And one of the possible ways out is a suspension of IP rights in accordance with flexibility granted under TRIPS. 

By suspending the IP rights in pharmaceuticals, the monopoly of the IP owner can be broken temporarily, especially for the reason of the current major health crisis. This will enable the vaccine production, and other medicines against the Covid in large quantities which is not possible if a patent is there or in case of compulsory licensing wherein only a limited quantity of licensed product can be produced. Secondly, due to IP rights being lifted there would be strong competition amongst the manufacturers to produce Covid Vaccine and other medical products and tools with such a reduced cost to catch the market. 

Now the question is how manufacturers can recoup their expenses incurred if IP rights are suspended? In case of government funded projects like in case of CoVaxin which is a combined project of Bharat Biotech and ICMR, which suggest though not mandates, a stipulation that ownership of intellectual assets shall vest to the sponsor. Thus, in such a Public Private Partnership project the government would necessarily have ownership rights on it which would enable it to share the IP to the developing world. 

As far as the pharma projects which are not collaborated with the government /ministry are concerned such projects can be given tax benefits or subsidies by the government to ensure its availability in the market. 

Nevertheless, only blanket waiver of IP rights is not sufficient to meet the need of an emergency. After implementation of the suspension rule, how the manufacturer is going to share the technical knowledge, process etc. How undisclosed information of the manufacturer will be shared in the public domain? How will the quality of the drug be controlled? All these questions are not yet cleared.  There is a requirement to make the domestic IP laws of the countries more comprehensive to address all these points.  The intended object can be achieved through the suitable amendment or modification in relevant IP laws to reduce the chance of dispute and loopholes and as well as to avoid injustice to manufacturer or company or consumer.   

Section 157 of Indian Patent Act 1970

Even though there’s no negative clear provision beneath Indian Patent Act 1970 for suspension of scientific discipline rights, if we have a tendency to see S. 157A (b) (iii) of the act, it states that, Central government can take any action including revocation of Patent in the interest of security of India by notification in official gazette to that effect.           

In the explanation part it gives the explanation of the word “Security of India” wherein it states that:

“For the purposes of this section, the expression “security of India” includes any action necessary for the security of India which  is taken in time of war or other emergencies in international relations.”

Since the threat to lifetime of folks or property may also be termed associate emergency, and an emergency has not been explained within the act as confined to solely War or action of the country, by virtue of this section Indian government has power, even today, to suspend or revoke the patent of producing corporations, considering this health emergency.

Generic drugs

As far as generic drugs are concerned, it’s a drug created to be identical to existing brands in dosage form, safety, strength, route of administration, and quality. But those can be manufactured if the patent on that drug is already expired or the same is unenforceable or invalid and also they can be approved by rigorous review by FDA. Once generic medicine comes into the market the monopoly of the drugs is removed and consequently, it increases the competition and significant drop in drug cost. However these medications cannot be proprietary as a result of these area unit copies of already existing proprietary medication. so this can not be associated with the possibility for increasing production of medicine during this pandemic state of affairs. 

Conclusion

Waiver of the Intellectual Property Rights as planned by proposing countries just for the good thing about people at large. This situation of Covid that has no more practical remedy than immunizing agent, needs production-friendly rules and regulation in situ therefore to bring home the object of equitable distribution of the effective opposing covid medical product to any or all over the planet. However waiving rights for the undisclosed information about the medical products may open a door to undesirable consequences, for instance, potential abuse, fraud and the availability of unsafe treatments and vaccines. While allowing the member countries of WTO to escape WTO obligations, the same is not going to affect the domestic IP laws of the country.

To get rid of the present situation, there need to be systematic joint efforts by all the world by keeping the unpleasant consequences or abuse of patent law due to IP suspension, at arm’s length. The below mentioned measures may be useful in the current situation:   

1. The outcome of all covid related pharmaceutical projects funded by govt. to be made available on the public domain.
2. To all those covid related pharmaceutical projects not funded by govt. to be allowed tax relaxation or provision of subsidies.  
3. Enforcement of S. 157(b)(iii) of Indian Patent Act 1970 to achieve waiver status.

Human life is priceless. While the entire world is undergoing this critical situation of Covid-19, this is not the time to fight against each other on IP rights. To come out of this restrictive situation of Covid and to move ahead with healthier life at the earliest, we all are expected to support India’s proposal of IP suspension. After all, Health is Wealth! isn’t it? 

References

• https://thewire.in/health/covid-19-vaccine-patents-india-south-africa
• https://www.ijddr.in/drug-development/patenting-of-pharmaceuticals-an-indian-perspective.php?aid=4994
• https://www.orfonline.org/research/the-case-for-waiving-intellectual-property-protection-for-covid-19-vaccines/
• https://www.cato.org/free-trade-bulletin/unnecessary-proposal-wto-waiver-intellectual-property-rights-covid-19-vaccines#does-novel-virus-present-novel-issues
• https://spicyip.com/2021/03/intellectual-property-rights-in-covaxin-part-1-waiver-of-iprs.html
• https://spicyip.com/2020/07/covid-19-india-should-invoke-section-157a.html
• https://openscholarship.wustl.edu/cgi/viewcontent.cgi?article=1500&context =la w _g l obalstudies
• https://www.nishithdesai.com/fileadmin/user_upload/pdfs/Patents_and_the_Indian_Pharmaceutical_Industry.pdf
• https://theconversation.com/intellectual-property-and-covid-19-medicines-why-a-wto-waiver-may-not-be-enough-155920

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