The ongoing coronavirus pandemic highlights a potential conflict between patenting innovations and protecting public health. In my first book, Intellectual Property and Health Technologies, I reviewed this tension in the context of drug development. On the one side, there is a struggle for companies to patent their innovations so that they can benefit from the market exclusivity allotted to them. On the other side, there is a struggle for countries that cannot afford to pay for patented products to get treatments to their people.
We are already seeing this dynamic unfold in the current pandemic. Several U.S. companies have already announced that their research into COVID-19 has resulted in the filling of patent applications covering methods of treating patients infected with the coronavirus. For instance, Texas-based Moleculin Biotech filed a patent application covering the use of inhibitor compound WP1122 to limit coronavirus replication in patients by depriving the host cells of energy.
Similarly, PA-based Premier Biomedical filed a patent application directed to a method of treating COVID-19 infection by using antibodies to target the replication pathways of COVID-19 and cause the disease antigens to bind together, thereby allowing the coronavirus to be removed from the blood.
While many companies will file patent applications to their coronavirus research, many countries will be looking for ways to circumvent patent rights in order to bring treatment options the public. We have already seen this with announcing that AbbVie’s HIV treatment Kaletra® has been approved for importation despite the fact that patent protection for Kaletra® doesn’t expire until 2024 in Israel. This is the first time that Israel has exercised its law to permit approval of a generic version of a patent-protected drug. As a side note, AbbVie has already confirmed its intention to suspend its patent rights to Kaletra® in response to the COVID-19 health crisis.
So what exactly is this law that allows a country to circumvent patent rights and allow an otherwise patented product to be imported for public health purposes? It is known as “compulsory licensing” and it stems from the TRIPS Agreement which is signed by each country that wants to me a member of the World Trade Organization, or WTO. Below is a brief over of compulsory licensing, how it has been used before, and what we can expect moving forward.
Brief History of Compulsory Licensing
One of the agreements that countries must ratify upon joining the WTO is the Agreement on Trade Related Aspects of Intellectual Property Rights, or TRIPS. The TRIPS Agreement was negotiated in 1994 to harmonize intellectual property laws across different countries and establish minimum standards for protecting and enforcing intellectual property rights for all WTO member countries. This is because, prior to the TRIPS Agreement, patent laws varied across countries. In most developed countries, for instance, patents were valid for 15-17 years from date of filing, compared to only 5-7 years in some developing countries. This shortened life span significantly reduced the ability of intellectual property owners to benefit from reduced generic competition.
While the TRIPS Agreement harmonized patent laws in all member states, the TRIPS Agreement also recognized the countervailing need for countries to protect public health. In Article 8 Section 1, the TRIPS Agreement states that “Members may …. adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistent with the provisions of this Agreement.” There are several provisions under TRIPS that allow governments to provide for limitations to intellectual property rights.
One such limitation is compulsory licensing. In Article 31, for instance, TRIPS allows governments to order domestic manufacturers to make a patented product without permission from the patent holder. This practice is known as compulsory licensing. Article 31 permits countries to engage in compulsory licensing if there is a “case of a national emergency or other circumstances of extreme urgency,” or in cases of “public non-commercial use.” Under these circumstances, the country is not required to negotiate with, or seek approval from, the patent holder of the drug, but is instead just permitted to manufacture patented products, such as essential medicines, for its domestic market.
In addition, the “scope and duration” of a compulsory license under Article 31 has to be “limited to the purpose for which it was authorized.” This means that a country that issues a compulsory license to treat COVID-19, for instance, will not be able to use the medicines to treat other conditions or for longer than is required. If we look at Israel, for example, a compulsory license to Kaletra® will only allow Israel to use that license to treat COVID-19 patients during the time of the pandemic, not HIV patients for an unlimited period of time. A compulsory license, therefore, is limited in scope and duration and not a way for countries to receive blanket approval to use the drug for any and all uses it desires.
A major limitation of Article 31 is that it requires that production of the patented product to be “predominantly for supply of domestic market.” This means that if a country wants to benefit from compulsory licensing, then it must also be able to manufacture the product. The problem here is two-fold. Many countries, including both developed and developing ones, do not have the ability to manufacture complex medicines. In reality, depending on the nature of the drug, very few places could just be able to pick up and start manufacturing a drug. In addition, time is a problem. Even if a country is equipped to manufacture a drug, it is unlikely it could do so quickly. Manufacturing even the simplest of compounds without previous experience and know how would likely involve some trial and error which would delay the drug in reaching the public.
To address the problem of being required to manufacture a drug in-house, an amendment was made to the TRIPS Agreement to allow countries with insufficient or no manufacturing capacities to take advantage of the compulsory licensing provision under Article 31. The amendment, known as Article 31bis, allows countries to issue compulsory licenses to its domestic generic pharmaceutical manufacturers, permitting the domestic manufacturers to export medications to other countries. This amendment expands access to generic drugs by eliminating the restriction in Article 31 that requires use of compulsory licenses on pharmaceutical patents for "predominantly for the supply of the domestic market."
Compulsory Licensing Case Studies
Compulsory licensing has been used in varying ways over the years but it started predominantly as a negotiating technique to lower drug costs. In 2001, the Brazilian government threatened to use compulsory licenses to negotiate lower prices of HIV drugs in an effort to curb the growing rate of HIV infections in Brazil. As a result, Brazil was able to reduce the prices for several HIV/AIDS drugs in 2001, including Stocrin® (efavirenz), Crixivan® (indinavir), and Viracept® (nelfinavir) by upwards of 65 percent. After using compulsory licensing as a negotiation technique, Brazil eventually went forward with manufacturing its own HIV drugs.
Following in Brazil’s footsteps, Thailand was also successful in issuing a compulsory license for the HIV drug, Kaletra® (lopinavir/ritonavir), despite already getting favorable drug pricing. Thailand also issued a compulsory license for Sanofi-Aventis’ heart disease drug, Plavix® (clopidogrel), which proved to be controversial because it represented the first time that a compulsory license was issued for a chronic disease, as opposed to an infectious disease. The Thai government justified the license under Article 31(b)’s “public non-commercial use” provision instead of the “national emergency” provision. Since the “public non-commercial use” provision is not defined in the TRIPS Agreement, Thailand’s action illustrates how broadly the “pubic non-commercial” provision can be read to include health conditions that are not infectious diseases.
After Thailand began issuing compulsory licenses for chronic diseases, India granted its first-ever compulsory license in March 2012 when it allowed Natco Pharma to manufacture a generic version of Bayer's drug Nexavar® (sorafenib), a drug used to treat kidney and liver cancer. The compulsory license resulted in a 97% reduction in the price of the drug. Following Nexavar®, India continued to issue compulsory licenses for other drugs used to treat chronic diseases, including compulsory licenses on three cancer drugs, including Roche's Herceptin® (trastuzumab), Bristol-Myers Squibb's Sprycel® (dasatinib) and Ixempra® (ixabepilone).
This is the first time that we are experiencing a global pandemic in recent years and the first time that are seeing how companies and countries react to compulsory licenses on a global scale. I fully expect more countries to follow in Israel’s footsteps and issue compulsory licenses. I also fully expect companies that conduct research into COVID-19 to file patent applications to those ideas.
These concepts do not have to be mutually exclusive and doing one does not have to be at the detriment of the other. Patent rights are not absolute. There are many restrictions to them, a 20-year term being one of them. Likewise, compulsory licenses are not absolute. They can only be issued in certain circumstances and can only be used for a specific purpose. In a time when restoring global public health is at an all-time high, patent rights and public health rights must work together to not only develop new treatments, but also to use new and existing treatments to eliminate COVID-19.
We are now in a time of uncertainty due to the current COVID-19 pandemic and we do not know how long this period will last. While most people are now working from home and it is easy to fall into a routine of just watching TV all day, now is the perfect time for a company to take this relative “down time” to review, build, and expand upon its IP assets.
Certainly not an exhaustive list, but below are three ways a company can use this time strategically to plan for the next phases of its development.
First, mine your notebooks for new IP ideas. I credit one of my clients with this idea. Review all the data and research generated over the past year or two that you previously did not have time to review. You never know what interesting information you missed the first time around because you were simply looking at the main findings. These jewels of information could provide valuable support for upcoming patent applications or could provide ideas for new patent applications and inventions all together. Take this period to really review your data and information and find new ideas or new uses for that information.
Second, review your landscape studies and strategically map your ideas. Landscape studies can be an important source of information for companies. These studies not only provide a glimpse of the “state of the art” of a particular technology space, but they also show you what opportunities exist for further development. As with the previous point, you may not have had time to thoroughly review your landscape studies initially, or you may not have even conducted one, but now is the ideal time to review those studies and get ideas of what you can work on next. Moreover, reviewing your landscape studies can provide additional insights into the new ideas you found from mining your notebooks. Either the landscape studies will reveal players who are already working on those ideas, or it will reveal open space for you to explore. Either way, reviewing your landscape studies can provide new ideas for further development.
Finally, explore potential partnerships. Based on the new information you found from either mining your notebooks or reviewing your landscape studies, you may have ideas for exploring potential collaborations with others in the industry. Another benefit from landscape studies is that they reveal who the main players are in a space, including companies and inventors. You could use this time to reach out to players in the space and explore ideas for development. For instance, if your company specializes in antibody discovery, but lacks expertise in developing vaccines, you may explore collaborations with a company that has that vaccine expertise. With many companies pausing clinical trials and halting projects, now is a good time to reach out to those companies and explore new ideas.
While it is easy to get distracted by the turmoil around us, I encourage companies, including startups and aspiring entrepreneurs, to take this time to review and reflect upon all the information that they have generated and brainstorm ideas that can either be used to support their existing IP, or ones that can turn into new IP.
Force majeure clauses are typically overlooked in agreements as merely “boilerplate” language, however, subtle differences in the language can have significant effects on the parties. With the potential business disruptions caused by the current COVID-19 outbreak, many impacted service providers and vendors are rightfully concerned about their exposure. What their rights and obligations will be will depend on the “force majeure” clauses that can be found in the back of their agreements.
In general, a “force majeure” event is an act beyond a party’s reasonable control. “Force majeure” means “superior force” in Latin. A force majeure clause, therefore, is a contractual provision that excuses a party’s obligation to perform under an agreement if the circumstances giving rise to the failure are beyond the party’s control. Below are several examples of a force majeure clauses and how they may be construed in an emergency situation such as this.
In the event either Party is delayed from performing any act required under this Agreement due to (i) flood, fire, earthquake or explosion; (ii) war, invasion, hostilities, terrorist threats or acts, riot or other civil unrest; (iii) government order or law; (iv) actions, embargoes or blockades in effect on or after the date of this Agreement; or (v) shortage of adequate power or transportation facilities, then performance of such act shall be extended for the reasonable period of such delay, and either Party shall be granted a reasonable period of time to perform after the cessation of the reason for the delay.
Under this this first example, only an occurrence that is specifically stated in the clause would constitute a force majeure event. Thus, the event in question would have to be one of (i) through (v) to trigger this clause. Since a “pandemic” or “epidemic” is not specifically stated, a failure or delay caused by the COVID-19 pandemic probably would not be covered in this situation.
In the event either Party is delayed from performing any act required under this Agreement due to, (i) acts of God; (ii) flood, fire, earthquake or explosion; (iii) war, invasion, hostilities, terrorist threats or acts, riot or other civil unrest; (iv) government order or law; (v) actions, embargoes or blockades in effect on or after the date of this Agreement; (vi) national or regional emergency; or (vii) shortage of adequate power or transportation facilities, then performance of such act shall be extended for the reasonable period of such delay, and either Party shall be granted a reasonable period of time to perform after the cessation of the reason for the delay.
Clause 2 is better than Clause 1 because, while it does not specifically mention “pandemics” or “epidemics,” it does mention “acts of God” and “national or regional emergency.” These two categories could give you some leeway when it comes to a health emergency such as COVID-19. Of course, it would be better to specifically name “pandemics” or “epidemics” or even “health emergencies” to eliminate confusion but having some additional categories which could encompass a pandemic could be helpful.
But what if you don’t list every possible situation that could lead to a force majeure? Clause 3 can help with that.
In the event either Party is delayed from performing any act required under this Agreement due to (i) acts of God; (ii) flood, fire, earthquake or explosion; (iii) war, invasion, hostilities, terrorist threats or acts, riot or other civil unrest; (iv) government order or law; (v) actions, embargoes or blockades in effect on or after the date of this Agreement; (vi) national or regional emergency; (vii) shortage of adequate power or transportation facilities, except to the extent such failure was caused by the party invoking this Section, or (viii) due to any cause beyond the reasonable control of a Party (collectively, a “Force Majeure Event”), then performance of such act shall be extended for the reasonable period of such delay, and either Party shall be granted a reasonable period of time to perform after the cessation of the reason for the delay. Regardless for the excuse of the Force Majeure Event, if such Party is not able to perform within ninety (90) days after such event, the other Party may terminate the Agreement.
Clause 3 contains the catch-all provision which allows the force majeure clause to be triggered for any cause “beyond the reasonable control of a Party.” Under such a definition, there is no need to name every single possible cause as the catch-all would cover causes that are “beyond the reasonable control of a Party.” Since pandemics and epidemics are “beyond the reasonable control of a Party,” disruptions caused by COVID-19 would likely be covered.
Clause 3 further adds two additional points worth noting. First, this clause requires that the force majeure event cannot have been caused by the party invoking this Section. This makes sense because it would not be fair for the non-performing party to benefit from its negligence or poor planning that resulted in the force majeure event. While this is unlikely in the context of COVID-19, it is good practice to include such limitations in force majeure provisions.
Second, Clause 3 allows the other party to terminate the agreement after ninety (90) days. This provides the other party the option to walk away from this Agreement and not be tied to a vendor who cannot provide services or supplies for an extended period of time. While a force majeure clause provides some flexibility to the non-performing party, it should also not force the other party to be stuck in a situation where it is not receiving the benefits of its contract.
As seen from the above examples, force majeure clauses should not be treated as merely “boilerplate” provisions as small differences can have significant repercussions on the rights and obligations of each party. Force majeure provisions should therefore be reviewed carefully, with particular attention given to the potential causes that could trigger them.
We previously addressed both freedom-to-operate and patentability analyses and what the benefits of each are. In this post, we will examine landscape analyses and the five pieces of information that can be learned from conducting one. At BPLG, we love landscape studies because of the valuable information they provide. We can use this information to not only guide our IP strategy, but also to help expand our product pipeline.
Provides a look at the market today
At its heart, a landscape analysis is essentially a look at the market to understand the existing technology and trends in a given technological area. Such an analysis involves looking at the past, present, and future trends in technology and learning important details about a given technology. Based on this information, companies, entrepreneurs, researchers, and scientists gain an understanding of the “state of the art” which ultimately helps them plan a research strategy to build, expand, improve, or modify that art.
Early insight into what the patenting activity of competitors
A landscape analysis can further provide early insight into what competitors have in the development pipeline and what products competitors are innovating. Examining patent filing trends together with market research is useful in determining the commercial phase (e.g., infancy, mature, or declining) of the technology and understanding the general trend of certain technology areas. Understanding this information can help companies better plan the development of their own products and allow them to identify which products should be developed and which should be abandoned.
Identify gaps for innovation
Similar to a patentability study, a landscape analysis can also help uncover further opportunities for development and ultimately patenting. If a landscape study reveals patent filings for an antibody in the field of inflammation, but not in the field of cardiovascular disease, for instance, this gap could encourage the development of products in the field of cardiovascular disease. The landscape study may further reveal other modifications that could be made to the product (e.g., changes in formulation, dosage amount, etc.) that could be pursued. Overall, understanding the patent filing trends is important in guiding a company to areas that worth pursuing commercially and those that should be avoided.
Explore opportunities for collaboration
Furthermore, a landscape study can help identify potential partners for collaborations. Since a patentability study identifies patents and patent applications directed to similar content, the assignees of those patents and applications can be found on those documents. This will allow a company to reach out to the assignees to discuss possible collaborations or identify opportunities for in- or out-licensing.
Identifies inventors to hire or collaborate with
Similar to the previous point, a landscape study can identify inventors who are developing new and exciting technology. Knowing what patent applications are being filed can help companies explore potential opportunities to either hire those inventors or collaborate with them on future projects.
When done correctly, a landscape study provides valuable information about the current market and its trends. Based on this information, a company can evaluate opportunities for developing new products, abandoning existing products, and exploring possible collaborations within the same space.
Imagine you conducted an FTO analysis and it turned out your invention was found to infringe a third-party patent. What can you do? This post will discuss three possible solutions that will help you practice your invention after it was found to infringe a third-party patent.
The purpose of an FTO analysis is to determine whether a product infringes another issued patent. This analysis is done by identifying patents and patent applications that, if later issued as patents, may be infringed when commercializing your product. This analysis is done by examining the claims of the issued third party patents and asking whether your product or service contains each and every element of that third-party patent claim. We discussed FTOs in detail here.
The first option when encountering a blocking third-party patent is to design around that third-party patent. This requires identifying an alternative way to develop the desired product without infringing the patent.
An example of designing around may be seen with a drug-eluting stent. A drug-eluting stent is a peripheral or coronary stent or scaffold, placed into peripheral or coronary arteries to release the drugs slowly into a patient's body. Assume that a company has developed a new drug and wants to use a stent to deliver the drug into the patients’ bodies. By developing a new drug, the company will likely satisfy the requirements of patentability; however, the issue resides with the stent. If a third-party owns the stent patent, the company will have to find an alternative design to the stent if it wants to continue using it.
If the original stent patent is broad enough, however, the company may not be able to design around the stent in a way that accomplishes its goals. If designing around becomes unfeasible, the next option may be a solution.
In situations where no design alternative is acceptable or possible, such as with the stent example above, a company may have no other option but to enter into a license agreement with the owner of the third-party patent.
A license is a contractual agreement in which the patent owner promises not to sue the licensee for patent infringement as long as the licensee abides by the terms of the agreement, which usually involves the payment of certain fees. Such an agreement allows the owner of a patent to retain ownership of the patented products or services while permitting the company (e.g., the licensee) to make, use, offer for sale, or sell the patented product or service. Once a license agreement is in place, the company can market the new product without infringing the third-party patent.
Challenge the Third-Party Patent
If the company cannot design around a third-party patent and cannot, or does not want to license the third party patent, then another option is to challenge the third party patent. If the company successfully challenges a patent and invalidates it, it clears the path to commercialization by removing that third-party patent as a hurdle.
Even if the patent challenge does not result in the invalidation of the third-party patent, it could allow the company to enter into a settlement agreement with the third-party patent holder, thereby allowing the company to commercialize its product. While the company may have to pay a licensing fee as part of the settlement, it would allow the company to practice its invention without having to worry about being sued for infringement by the third-party patent holder.
Inter partes review (IPR) proceedings have become a popular method by which someone can challenge an issued patent based on prior art (either Section 102 or Section 103) grounds. IPRs allow for a relatively quick and cost-effective means by which third party patents can be challenged. Moreover, they have yielded favorable results for the challenger, in part due to the lower burden of proof that a petitioner must satisfy. We previously discussed IPRs here and here.
Third-party patents can also be challenged in a traditional district court litigation. While longer and generally more costly than an IPR, district court litigation allows patents to be challenged on grounds in addition to those involving prior art. Challenges directed to inappropriate subject matter or written description, among others, can thus be raised in district court but not in an IPR.
If your product or service is found to infringe a third-party patent, not all hope is lost. There are still several options for practicing your invention.
We previously addressed what a freedom to operate analysis is and what information it provides. In this post, we will examine patentability analyses and the five pieces of information that can be gained from conducting one.
Uncovering hurdles to patentability
The first piece of information gained from a patentability study is simply uncovering prior art that may present hurdles to obtaining a patent. This is, after all, the purpose of a patentability analysis.
A patentability study is done by identifying prior art, both patent and non-patent, which may interfere with an invention satisfying the standards of patentability, novelty (Section 102) and non-obviousness (Section 103). To this end, a patentability study will uncover any printed publications—such as journal articles, scientific papers, textbooks, abstracts, conference presentations, and any other papers—that have been published and that may impact patentability. A good patentability study should not be limited only to patents and publications published only in the U.S. but should be global in scope. Both prior art hurdles, Section 102, and Section 103 are based on publications worldwide and in any language.
In the Section 102 case of In re Hall, an invalidating piece of prior art reference, a doctoral dissertation, was found in the basement of a library in Germany. The reference was neither available online nor written in English, but it was indexed according to the author's name and title in the library’s indexing system. As such, the court decided the reference could have been accessible by anyone visiting the library to look through the indexing system as early as 1977.
While such references may be difficult to find, a good patentability study should uncover these and other potentially problematic references. Once uncovered, those references can help a company better formulate a strategy for differentiating a product to satisfy patentability requirements.
Draft better patent applications
Knowing what prior references you may be faced with during patent prosecution can also help you better draft patent applications with adequate support to later overcome any such prior art rejections. If you know what possible rejections the USPTO can come up with based on the prior art, you can begin crafting your responses and making sure support for those responses is in the patent application when it is filed.
Identify possible blocking IP
A patentability study can also help uncover potential blocking third-party IP, the type that would come up in an FTO. Not only will a patentability study show you which patents have already been issued, but it will show which applications and claims are still pending. Knowing which applications are pending is important because pending applications could quickly turn into potentially problematic blocking patents if they are not monitored and carefully examined. Having this information can help you proactively mitigate a potential problem with blocking IP.
Identify opportunities for expanding development pipeline
A patentability study can also help uncover further opportunities for development and patenting. When dealing with a lot of prior, the patentability analysis is important in helping guide a company to patentable areas or to help avoid pursuing a product with too much prior art.
For instance, if a drug were previously patented for cancer indications, you will not likely be able to patent the drug composition (without modification of the composition) nor will you be able to patent the use of the drug for cancer treatment. You may, however, be able to patent the drug for other indications, such as treating cardiovascular disease or neuroinflammation. You may also be able to patent a different dosage form of the drug. Instead of having an immediate-release formulation, you may be able to patent a sustained or extended-release formulation.
In general, a patentability study will reveal options for patenting products as well as existing hurdles.
Explore opportunities for collaboration
Finally, a patentability study can help you identify potential partners for collaborations. Since a patentability study identifies patents and patent applications directed to similar content, the inventors and assignees of those patents and applications can be found on the documents. This will allow a company to reach out to the assignees to discuss possible collaborations and even to try to hire personnel with certain know-how and skill sets.
When complete, a patentability study provides valuable information about what is already in the public domain with respect to your product. Based on this information, a company can evaluate opportunities for patenting a new product, developing a pipeline of products, or exploring possible collaborations with other parties within the same space.
BioPharma Law Blog posts updates and analyses on IP topics, FDA regulatory issues, emerging legal developments, and other news in the constantly evolving world of biotech, pharma, and medical devices.