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Trending: Call for Papers Volume 3 | Issue 2: International Journal of Advanced Legal Research [ISSN: 2582-7340]

Balancing The Relationship Between Patent Pools And Competition During Covid-19

Interface of Patent Pool and Competition

Patent pools are voluntary agreements among two or more patent holders to license their patents to each other or to third parties. Mostly, pooling is linked with technologies that are multifaceted and require complementary patents to impart effective technical results. Patent pools provide protection to developed technologies. Patent pools are viewed both from legal as well as economic perspective. At the same time, through sharing of intellectual properties they can be advantageous to competition and innovation, as firms can mature novel products and thereby, reduce costs of transaction. Simultaneously, patent pool can provide opportunities for anti-competitive practices like co-operation among competitors however, it can be viewed as a cartel. Sometimes, the “patent-thickets” can lead to increased transaction costs and chilling effects on the development of new products”. 

The categories of pooled patents/technologies for gauging the impact on competition are complementary or substitutes and, in case of a standard environment, they are essential or non-essential. Patents are known to be substitutes only when they shield alternative technologies and do not block each other. The technology under substitute patents do not infringe the other patent and are applicable in parallel thus, competing with each other. Since, in the method of production complementary patents are to be used together therefore, in order to produce the anticipated output, it is necessary to be the holder or licensee of that complementary patent.

Since, substitute patents compete with one another and should not be tied in a pool, if tied it will eradicate competition. However, it is not applicable to complementary patents as competition is not diminished. Therefore, pooling complementary patents is regarded as pro-competitive in the U.S and Europe antitrust commendations. While pooling complementary patents may impact the succeeding innovation and besides that, the innovation may be slowed down too. As a result, outside firms may be discouraged to invest in the research and development (“R&D”).

In the notion of standardization, technical standards are to be met by essential patents. Accordingly, since they are standard-essential, they are always complementary and patent pooling of such patents are not problematic when viewed from the perspective of competition. Moreover, based on the demand of the consumers patents can be commercially viable and therefore, should be “essential” when the impending threats on competition which are created out of a pool are assessed. If the substitutes are available to the technology covered then, patents are considered as non-essential and patent pools comprising of such patents are problematic when viewed from competition’s perspective.

Concept of Medicine Patent Pool (“MPP”)

MPP was established by Unitaid, a UN backed body in 2010 for financing HIV, malaria, and tuberculosis treatments. MPP’s goal is to make the drugs available at a lower price and at the same time ensuring that the generic companies can make a “reasonable profit” in order to remain sustainable in the market.

How will pooling help in combating Covid-19?

The coronavirus infection is disseminating across the globe at a menacing pace and causing deaths. Similar to the outbreak of HIV/AIDS, the outbreak of COVID-19 drew worldwide attention to the difficulties in accessing life-saving drugs in developing and least developing countries and conflicts between a human right that is, right to health and patent rights. Due to the underlying principle of “winner-take-all”, patent law represents challenges to imperative development of health technologies by disclosing the results of useful research timely. The law of patents dejects sharing of unpatentable inventions that might possibly lead to patentable inventions after certain improvements. Moreover, the patent holders have an exclusive right over their patents which adversely impacts the affordable and worldwide supply of pioneering technologies of health as there is presence of supra-competitive pricing and restrictions on manufacturing across the world.

The MPP proclaimed to take account of drugs and diagnostics for combating Covid-19 in their licensing pool on April 3, 2020. However, this enlargement in the MPP is temporary. There is no assurance of accessibility with the emerging Covid-19 treatments therefore, there should be a move from nationalism to internationalism and a shift from exclusivity to inclusivity. Only through the newly launched global Covid-19 IP Pool, a centralised information pool under WHO’s authority, the shift will remain secured. All these will be freely accessible or can be licensed on rational and cost-effective terms. Eventually, there will be improved advancements and affordable treatments.

The two important trepidations with respect to COVID-19’s control and treatment are; firstly, the exigent development of technologies related to health and secondly, equitable and reasonably priced access to such technologies. Hence, assurance is required for the medical technologies to be developed and tested urgently, efficiently, and universally available to all the countries.[i] Likewise, Costa Rica’s proposal for a world-wide intellectual property pooling approach had consideration as it addressed the trepidations.

In the 73rd Assembly of the World Health Organization (“WHO”) a Resolution had taken place which stated that the member-states should make collaborative efforts to provide technologies universally accessible to fight the ongoing pandemic. The access to technology must respect “the provisions of relevant international treaties, including the provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights Agreement (“TRIPS”) and flexibilities within the Doha Declaration on TRIPS and Public Health”. This access to technology concerns vaccines and other necessary components like masks. Lately, there is a persistent demand for protection for intellectual property rights (“IPRs”) to battle the pandemic.

On May 29, 2020, the WHO launched COVID-19 Technology Access Pool (“C-TAP”) accompanied by a Solidarity Call to Action. It is distinct from the existing MPP due to its universal tactic. It includes existing and future rights in patented inventions and designs, regulatory test data, know-how, cell lines, copyrights and blue prints for manufacturing diagnostic tests, devices, drugs, or vaccines. All of these should be universally obtainable as global public goods. C-TAP’s object is to share research and information and pace the development of vaccines and medicines and also, increase the manufacturing capacity for any products, if developed. The WHO also stated the actions to be undertaken by the government or R&D funders under C-TAP. The Pool also requests the supporters to licence products to the MPP.

Further, the flexibilities under the TRIPS can be applied by governments to ensure that IPRs do not become an obstruction in case of innovation and accessibility of health technologies required for Covid-19. Under Article 73(b) of the TRIPS, a country can take action essential for the protection of its indispensable security interests including deferment of the grant of patent protection and indemnity against enforcement actions. A country can embark on parallel importation of desirable products, including the countries where they are originally produced under compulsory licenses. Articles 7 and 8 of the TRIPS provide for technology transfer for mutual advantage which is conducive to technology transfer and stability of rights and right of member nations to undertake measures which beneficial for the health of public and public interest respectively. Therefore, with the increase in number of Covid-19 cases several measures can be implemented by the developing countries in accordance with the TRIPS. The countries can amend the existing laws, rules and regulations or make new laws. Countries like Chile, Germany, Canada are focusing on granting compulsory licenses or authorisations by government with certain countries providing indemnity against infringement of IPRs and usage of competition law.

Countries can adopt procedures for anti-competitive use of IP protected technologies for combating COVID-19. As, the European Commission (“EC”) instigated a preliminary investigation for the abuse of dominant position by Roche, a pharmaceutical company in the Dutch market, as it refused to share the trade-secret for generating a buffer solution that is required for use in testing kits of Covid-19. During the pandemic, the EC will monitor the undertakings taking undue advantage and violating the competition law by entering into anti-competitive agreements or abusing the dominant position of the European Union (“EU”).

The developing countries, in all probability, can use competition law to prevent anti-competitive behaviour by holders of IPR over products which are crucial for COVID-19, The usefulness of fair, reasonable and non-discriminatory (“FRAND”) licensing, in cases of providing licenses for standard essential patents like medicines would help out in licensing of medicinal patents and through this sub-licensing a generic competitive tendency would be generated and it would be regarded as a healthy form of competition. Despite initiatives like MPP, there are criticisms of not being equitable and just in providing access to the facilities. The involvement of politics is omnipresent and it prevents access to vaccines by not favouring the idea of voluntary patent pooling and thus, making it inaccessible for the common good of the global population. These geopolitical and interagency conflicts are to be dealt with in order to make patent pooling a reality on a global level at present and also for future prospects. 

Reference

[i] Baker Brook, “Rationale For Supporting Costa Rica’s Proposal For Emergency Covid-19 Technology IP Pool For All Countries” <http://infojustice.org/archives/42137> accessed October 1, 2020 

Author:Richa Choudhary & Ajay Bagra, Institute of Law, Nirma University, Ahmedabad

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