On May 29, 2020 the World Health Organization (WHO) officially launched the COVID-19 Technology Access Pool (C-TAP), an initiative which is intended to improve access to existing and new medical technologies, such as therapeutics and vaccines, which are developed in response to the global COVID-19 pandemic.
According to the WHO, the technology pool is meant to ensure better access to existing and new COVID-19 health products through five elements:
1.public disclosure of gene sequences and data;
2.transparent clinical trial publications;
3.funding agreement clauses on availability and trial data publication;
4.promoting the licensing of related technologies to the UN’s Medicines Patent Pool (MPP); and
5.promoting open innovation models and technology transfer.
But what exactly are patent pools? And how to they work to improve access to patented treatments? In this post, we will examine patent pools and the advantages and disadvantages that they provide.
Another potential mechanism to improve the patent system is to address the hurdle to drug development created by overly broad patents. Overly broad patents are those, for example, which are directed to a drug that targets multiple indications, yet only one of those indications is actually being pursued by the patent holder. By referencing multiple indications in the patent application, the patent holder is blocking others from being able to pursue those indications. Faced with either paying the high costs of licensing or being sued for infringement, many potentially lifesaving technologies may never be developed.
The problem presented by overly broad patents can be solved by creating patent pools. A patent pool is an agreement between two or more parties to combine their patents into a single package, or pool. When members of the pool combine their relevant patents together, they can divide the patent rights amongst themselves so that each party takes exclusive or non-exclusive rights to a particular invention covered by the combined patents. Members divide their patent rights along with a promise not to sue one another and without the exchange of licensing fees. This allows each party to the agreement to practice its invention without worrying about the threat of infringement or licensing fees.
If the pool includes all relevant patents, the pool can serve as a platform for freedom to operate within that patent landscape. The pool further stimulates innovation by giving its members the opportunity to use technology generated by the industry to bring new products to market and to carry out further reach and development.
History of Patent Pools
Patent pools have been around for more than a century. One of the original patent pools was created in 1856 for the sewing machine industry. Prior to the creation of the patent pool, sewing machine manufacturers Grover, Baker, Singer, Wheeler, and Wilson were accusing each other of patent infringement. To settle their lawsuits, they all met in Albany, New York. At the meeting, Orlando B. Potter, a lawyer and president of the Grover and Baker Company, proposed that each company pool their patents together instead of spending their money on the infringement suits.
Another example of a patent pool was in the early 1990s, when the US government mandated a patent pool for aircraft manufacturing. The need for increased aircraft production arose during the onset of World War I, however, manufacturers of aircraft were faced with threats of infringement and high royalty charges from the relevant patent holders in the area, namely the Wright Brothers and Glenn Curtiss. The government realized that more planes were needed to assist in the war effort and required the creation of a patent pool. This pool ultimate resulted in the formation of the Manufacturers Aircraft Association.
While patent pools have long been established in other technological areas, patent pools within the pharmaceutical industry are relatively new. In 2008, the World Health Organization (WHO) recognized the important role that patent pools may play in increasing access to drugs. As a result, attempts to establish a patent pool for severe acute respiratory syndrome (SARS) and for neglected tropical diseases have been made. In July 2010, the Medicines Patent Pool was established to foster the development of HIV/AIDS drugs. The Medicines Patent Pool solicits voluntary licenses from patent owners of antiretroviral medicines to create a pooled resource. This pooled resource can then be accessed by drug manufacturers to develop new and adapted formulations of drug products, such as heat-stable products, lower-dose formulations, pediatric medicines and fixed-dose combinations, that will be sold in developing countries.
Advantages of a Patent Pool
A patent pool may be beneficial for all the parties involved, including the drug manufacturers, the patent holders, and the people receiving the treatment. For drug manufacturers, for instance, a patent pool eliminates the uncertainty and expense of negotiating licenses where several different patent holders may hold rights to a single drug or treatment. It also encourages further research by lowering the cost associated with licensing technology to create new medicines.
For patent holders, on the other hand, the patent pool offers the opportunity to enjoy royalty streams from different sources and provides a collaborative platform for enhancing access in developing countries. Since the drugs that are developed as a result of the pool are limited to developing countries, the pool would not affect the patent holders’ rights in higher-income markets. Accordingly, patent holders would be able to continue selling the rights to their drugs and treatment at higher prices in developed markets.
For people living with HIV/AIDS, most importantly, the patent pool would make medicine more affordable. It is estimated that the Medicines Patent Pool could impact an estimated 33.3 million people living with HIV/AIDS.
Patent pools offer several other advantages for members of the pool. First, they can help overcome blocking patents. If all the relevant patents are combined in the pool, then there are no outstanding patents that can act to block the use of those patents.
Second, patent pools can reduce the overall transaction costs associated with the patents by lowering licensing fees and reducing patent infringement suits. They do so by allowing licensees to negotiate with only one party, eliminating the need for potential licensees to conduct their own patent landscape analysis, and eliminating problems associated with royalty stacking. Since patent pools allow members of the pool to use the technology without being sued for patent infringement, patent pools can reduce and even eliminate patent litigation settlements.
Third, patent pools allow intellectual property other than patents to be included in the pool. This is especially important because it allows the inclusion of trade secrets that may be important to the research and development behind the products.
Finally, patent pools further allow members of the pools to share in the risk of developing the technology. By spreading the risk across all members of the pool, no one company is solely responsible for putting in all the time, effort and money in developing a product.
Disadvantages of a Patent Pool
While there are definite advantages to patent pools, there are also several disadvantages to them. One of these disadvantages is the uncertain return on investment that can be generated. Pharmaceutical products are costly to develop, and when companies invest a significant amount of time and money into developing technology that ultimately becomes part of the patent pool, they expect a return on their investment. However, that return will have to be shared amongst the other members of the pool. Determining exactly how the member companies divide the return will be complicated and may depend on a variety of factors, such as a company’s contribution to the initial technology and to the final product, will need to be considered.
Second, patent pools may actually shield invalid patents from being invalidated in court. By protecting invalid patents, patent pools may require that royalties are paid on a technology that would be part of the public domain if the patents were actually litigated in court. This concern could be alleviated if all candidate patents to the pool are reviewed and examined by an impartial expert to determine their validity.
Finally, patent pools may create some antitrust issues by eliminating competition through collusion and price fixing. Companies that are not members of the pool may be at a competitive disadvantage since they will not be able to obtain the necessary licenses to develop a product. Since companies will not have access to the necessary technology, these companies may struggle to prosper.
Patent pools strive to solve the problem of balancing innovation of new drugs and access for all. Companies that are members of the pool would, in theory, benefit because they could develop new therapies.
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.