Pioneers, who are navigating fragmented intellectual property laws across global markets, must be astute if they are to benefit from the significant commercial and geopolitical value of Covid-19-related ideas and products
Pioneers, who are navigating fragmented intellectual property laws across global markets, must be astute if they are to benefit from the significant commercial and geopolitical value of pandemic-related ideas and products.
The importance of patenting for market domination is well-known in Israel. The first to patent a critical Covid-19 related concept will hold an immediate monopoly over their market and potentially make a significant profit. For example, Sonovia Ltd., an Israeli proprietary antimicrobial mask manufacturer, which has been propelled into the U.S. market as a result of coronavirus, is now gearing towards a Nasdaq initial public offering, aiming for a $50 million valuation.
Repurposing technology for the Covid-19 era is proving equally lucrative. Israel-based startup Newsight Imaging Ltd. recently secured $7 million in funding to adapt its sensor chips—typically used for the automotive and barcode industries—to create virus detection kits.
In the U.K., companies with patents protecting their innovations could, theoretically, enjoy long-term profitability, as they will have the power to dictate pricing and sales for two decades. Covid-19’s persistence and expected resurgence mean that a new vaccine may retain a particularly high value as an ongoing global health staple.
The British government has not (yet) asked companies developing Covid-19-related technologies to forgo their intellectual property rights. This means developers can enforce their patent rights, exclude competitors, and price their inventions accordingly. The U.S. has adopted a similar approach, arguing that mandating intellectual property collaboration amongst researchers and companies will discourage investors from funneling essential funds for the development of key products, as a return on investment will decrease if others can access, use, and manufacture popular technologies without paying for a license.
However, many are urging authorities to override standard IP principles during these times, to ensure that essential Covid-19-related products will be affordable and available to all. Just recently, on May 19, the World Health Organization (WHO) adopted a European Union-sponsored resolution that calls for accessible and effective healthcare in response to the pandemic. One suggested means to this end is through the World Trade Organization’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, to which 164 countries, including Israel, the U.S. and the U.K., are party. The TRIPS Agreement provides for a voluntary system in which companies pool patents and other intellectual property, to facilitate timely, equitable, and affordable access to essential technologies for all.
Crucially, the TRIPS Agreement still allows countries to suspend their patent regime in cases of national health emergencies.
Patent pooling can be enforced by governments by what is known as compulsory licensing. This authorizes a patent’s exploitation without the consent of its holder. The Israeli government, which has such powers, was the first country to grant a compulsory license back in March to import a drug for the treatment of coronavirus patients. Whilst the U.K. has not yet followed suit, British law also provides for compulsory licensing of certain, essential products in times of emergency, such as the present. This area of law is complex and it should be mentioned that patent holders are not left without compensation or recourse.
And yet, parties who believe that their patents have been infringed for Covid-19-related purposes should think twice before taking legal action, at this time, for several reasons.
Firstly, compulsory licensing can be sought and granted retrospectively, even after litigation proceedings have been initiated. If the patent has been legitimately exploited for Covid-19-related purposes during the current emergency, the patent holder’s claims are unlikely to be successful. Furthermore, action taken against entities legitimately exploiting patents for Covid-19 purposes is likely to attract significant negative media attention.
However, patent holders must continue to monitor the use of their patents in the post-coronavirus era. If the patent is exploited for unrelated and commercial purposes, patent holders must act to enforce their IP rights and seek compensation for lost profit.
In an effort to protect the common wellbeing of the global community, many patent holders have waived their exclusive IP rights and granted worldwide, limited-term, royalty-free licenses to those developing products for the diagnosis, prevention or treatment of Covid-19.
To limit the risk of misuse of these essentially “free” licenses, specific terms must set the duration of the waiver, its scope and the specific allowed uses for the IP. These will protect patent holders’ rights once the pandemic subsides. Examples of such terms have already been set by various international initiatives, including the Open Covid Pledge and the Open Covid-19 Declaration.
Be warned, however, that these terms are not perfect or universally applicable, and as such, cannot replace independent legal counsel. But they are a good place to start.
Originally published in Calcalist