An Update on US Intellectual Property Policy: Highlights of My Conversation with Michael Rosen | American Institute of Enterprise
By Shane Tews
A year ago, the Joe Biden administration announced its support for a World Trade Organization (WTO) proposal that would waive Trade-Related Aspects of Intellectual Property (TRIPS) protections for vaccines and treatments. COVID-19. WTO member states recently agreed to a limited waiver that only covers vaccines and patents, not therapeutics or trade secrets. Both sides of the debate are relatively unhappy with this outcome. Does this mean that it was a good compromise or has the WTO not fulfilled its duties? How does the administration fare on other intellectual property (IP) issues?
In this episode, I welcomed AEI Adjunct Fellow Michael Rosen’s podcast for a review of the TRIPS debate and a more general update on the global IP policy landscape. Michael is AEI’s technical policy team specialist on intellectual property issues; he writes often on intellectual property incentives for innovation and patent reform in Congress and the US Patent and Trademark Office. He is also a book review columnist for The Federalist and National exam.
Below is an edited and abridged transcript of our conversation. You can listen to this and other episodes of Explain to Shane on AEI.org and subscribe via your favorite listening platform. You can also read the full transcript of our discussion here. If you liked this episode, leave us a comment and tell your friends and colleagues to tune in.
Shane Tews: What was the end result of the 12th WTO Ministerial Conference regarding the TRIPS waiver?
Michael Rosen: When we last discussed the waiver in June 2021, the Biden administration had just announced that the United States would favor the proposal presented by India and South Africa at the WTO in October 2020. Under this proposal, there would be a waiver of TRIPS protections for everything related to COVID-19: vaccines, treatments, diagnostics and equipment.
The administration of Donald Trump resisted this proposal and Europe followed the United States. But in May 2021, the Biden administration stepped forward and said it supported the proposal. It was not until June 17, 2022 at the WTO conference in Geneva that the various WTO countries compromised and agreed on a limited waiver to the TRIPS Agreement. This means that TRIPS protections have only been lifted for COVID-19 vaccines, not for treatments, therapeutics, diagnostics or trade secrets. Moreover, it is only in place for five years, so it would have to be renewed.
You mentioned earlier that India and South Africa (as well as Kenya) ended up with a massive surplus of vaccines, so much so that they had to throw away thousands of them because they were expired. It seems incongruous to this whole conversation; am I interpreting things correctly?
You are quite right. It was incongruous from the start, even more so now. Last year, the objections that we talked about and reiterated were that we don’t have a problem with patents; we struggle to reach remote communities in the Global South and get these vaccines into the arms due to many supply chain, frozen storage and cold room transport issues. That was what was preventing getting those doses in weapons in the developing world.
We now have a different problem in addition to the one mentioned above: we now have more supply than demand for these vaccines. The pharmaceutical industry has published its statistics: it has distributed 13 billion doses of vaccines to all major companies – AstraZeneca, Moderna, Pfizer and possibly Johnson & Johnson. Additionally, they plan to release another 20 billion this year. We don’t have a supply problem at all. This is not about allowing other countries to make their own generic versions of these drugs. The problem is getting shot, overcoming vaccine hesitancy and resistance, and transporting those doses to remote corners of the world. This latest WTO ruling does none of that.
Will China be excluded from the waiver?
Initially, the compromise floating around would have excluded some countries that already manufactured 10% or more of the world’s supply of vaccine doses. More importantly, this included China, which manufactures and exports a huge amount of its Sinovac vaccine. There was essentially no reason for China to need access to patents from other companies or countries in order to start making generic versions of these vaccines, because it already produces so many of them on its own. However, it seems that in the end — and we are still studying this to be sure — the provision that would have provided for the exception of China was removed from the final agreement. This means that even China can now manufacture generic versions of Comirnaty and all other Western COVID-19 vaccines.
There have been some recent changes regarding Standard Essential Patents (SEPs). What exactly is happening, and are these changes emblematic of a larger problem?
Let’s start by defining what SEPs are, which is basically what they look like. These are patents that various companies develop and then become an irreplaceable and essential part of a certain technical standard (for example, the 802.11g Wi-Fi standard promulgated by the Institute of Electrical and Electronics Engineers).
When a SEP falls within the standard, it means that when a product conforms to a standard, it also uses that specific SEP. Part of the problem is that there are negotiations over the terms of these patents. In order to be recognized as a SEP, you must make your patent available on so-called “fair, reasonable and non-discriminatory” (FRAND) terms. If a company refuses to accept these terms and uses your patent without your permission, it is infringing your patent. The issue in this situation is whether a SEP owner can obtain an injunction against a SEP violator.
Thinking logically, the answer to this question is yes. And that’s the stance the Trump administration took in 2019 when it released its guidelines alongside the US Patent and Trademark Office and the National Institute of Standards and Technology. They said appropriate remedies for patent infringement – including injunctive relief – should be available to SEP holders.
So what happened? In late 2021, the Biden administration issued new guidance that retracted the Trump administration statement from 2019. The Biden administration essentially asserted that, generally speaking, when an MS holder has made a commitment FRAND voluntary, the various factors that enter into the analysis of the injunction militate against the seizure of an injunction.
This created quite a storm among the patent community and patent practitioners. By June 2022, the Biden administration had backed out of its new guidelines, but still withdrawn the Trump administration’s 2019 guidelines. The Biden administration’s patents are just overboard. It’s unclear what they’re doing.
What other issues in the IP space should people focus on?
One issue that is starting to come to the fore involves the International Trade Commission (ITC), a quasi-independent unit within the Department of Commerce designed to prevent the unfair importation of different products into the United States that harm the country and society. American public interest. One of the main ways to do this is to target products that infringe the patents of what are supposed to be domestic industries. (Domestic industries are American companies or foreign companies that have a substantial presence in the United States.) The ITC has recently come under fire for a practice some entities have undertaken where so-called “patent trolls” or ” “patent assertion entities” engage in various means of proving that they somehow have a national industry, but they are actually deploying smokescreens.
Congress has reintroduced a bill that would clamp down on this type of abuse (also known as “domestic industry by subpoena”). This abuse happens when one of those patent trolls, who doesn’t make anything, manages to get a patent infringement ruling or settlement with someone who actually makes a product. They then license that product and claim to use the legitimate business as their domestic industry. This company then becomes the reason why this patent claim entity is able to obtain injection relief from the ITC.
This relief is extremely powerful. This is called an “exclusion order”. This means that whatever product the offending company produces cannot be imported into the United States. Customs officers show up at ports, inspect boats and destroy counterfeit items as they arrive. It is therefore an extremely powerful tool for these companies.
Under this new bipartisan legislation, some things would change. More importantly, it would require the legitimate company that the patent troll is exploiting to sign the ITC complaint and become a party to that complaint. It would also require the ITC to conclude that excluding infringing goods would be in the public interest. They should make an affirmative ruling that this is indeed the case, when now it is essentially the opposite. Thus, there are several ways in which this legislation could be very beneficial.