In 2021, intellectual property again became an issue in international discussions on access to COVID19 vaccines. As with the debate over access to HIV medications in the early 2000’s, the issue was if and how patents were a barrier to accessing medicines. Cutting through the complexity, the core issue now, as then, is whether the patent holders of the vaccines were able to produce and distribute vaccines at sufficient volume and a lower price to meet the current global need, and if not, why they were not licensing as widely as possible to other manufacturers to do so. The data shows that Pfizer and Moderna neither licensed patents nor made trade secrets available to other potential producers and only formed such partnerships when strongly encouraged by governments. The pattern with respect to COVID is highly familiar. It presents one of the direst challenges to the modern intellectual property system. The generation of COVID19 vaccines so quickly and so successfully is a miracle and vindication of the dynamic efficiency of the patent system (although supplemented by a significant amount of publicly funded research). Yet, the inability to provide for access and distribution to populations and countries where there is an obvious need and significant demand is an indictment of the patent system’s static efficiency i.e. its ability to supply products to meet current demand. This is not a mistake or an accident. In order to capture as much of the financial income and benefit for themselves, the vaccine originator companies maintained ownership and control over the primary technology needed to make the vaccines, primarily through trade secrets and restrictive licensing. They didn’t even choose to widely license on reasonable commercial terms the patents and associated trade secrets and know how. The clear lesson from the COVID experience showcasing the explicit licensing behaviour of originator companies is that such firms don’t necessarily have inbuilt incentives to provide for licences and major production. The clarity of the situation with respect to COVID19 vaccines suggests that it is time to revisit the sanguine consensus that intellectual property is not a problem for addressing climate change which presents as much of a dire emergency, and for which we are dependent on technology distribution at rates never before seen in human history. In my 2014 book, I argued that the appropriate focus for the question of whether and how intellectual property (patents and trade secrets primarily) was a barrier to addressing climate change was NOT to ask about the existence of patents, although important, but to ask first, WHERE patents and trade secrets were held, by WHOM, and HOW they were being used. Thus while the pattern of patenting was important (managed largely by looking at patent landscapes that established where patenting was taking place) it was just as important to focus on licensing to developing countries: whether it was occurring, whether there were refusals to license, what the terms were that may or may not make taking a license economically feasible.
What did we learn about barriers to technology transfer to address access to technology products from the COVID19 experience?
Having production occur in emerging economies is not enough. Much of the actual production of COVID vaccines DID take place in developing countries, especially India. Knowledge and Technology WAS transferred to firms in India. However, the limitations placed on how that knowledge was to be used, were so restrictive that there was no access even for India’s own population let alone for other countries. The entirety of production in places like India was to provide for those countries that had gotten to the head of the line first for purchasing products i.e. North America and Europe. Licenses were strictly geographic. Licenses were only to one or two firms and exclusive. This reflects what I have previously argued are the real barriers to technology transfer. The cross-border technology transfer regime that exists right now creates:
- information asymmetries between technology licensors (who are fully cognizant of technology characteristics) and potential licensees (who may not have sufficient information to fully evaluate the usefulness of the technology);
- information asymmetries between technology licensors and licensees as to the nature and scope of the market into which the technology is being licensed making it difficult for licensors to assess the market potential, and thus market value and appropriate price of the license;
- tendencies for technology holders to try to increase the natural (rather than just regulatory) excludability of the technology by masking the full nature and scope of the technology: this can occur even where strong IP protection exists, through selective disclosure in patent applications, or maintenance of key process elements as trade secrets; this impedes normal modes of reverse engineering and imitation in a competitive market
- tendencies to exercise market power to capture elements of product and technology markets upstream and downstream from the technology market in which the patent is held.
This means that the structure of private markets can impede access to public goods in areas such as climate change, public health and food security. In such cases problems with intellectual property manifest as:
- Tendencies for technology licensees to insist on exclusive licenses;
- Tendencies for licensors to insist on transferring only to wholly-owned subsidiaries or majority controlled joint ventures;
- Anti-competitive behaviour that includes:
- Refusals to license;
- Restrictive licensing terms on geographical scope;
- Restrictive licensing terms on exports;
- Engaging in tied sales;
- Attempts to capture upstream and downstream markets;
- Requiring licensees who further develop the technology to grant ownership or, no-cost exclusive or non-exclusive licenses, on those newly developed technologies. These are called grant-back provisions;
- Engaging in collusion; e.g. certain kinds of patent pools;
- Predatory pricing and their behavior aimed at pushing out local market actors;
We saw all of these behaviors during the COVID19 era, souped up and at speed. It tells us that we need to rethink our interventions and focus them on licensing behavior rather than the existence of patents as such.
I wrote during COVID on compulsory licensing and other approaches, and I wrote an article on what a radical approach to Climate Chnage, IP and Technology transfer might look like in my article, Climate Change, Technology Transfer, And Intellectual Property: A ‘Modest Proposal’ For An IP Enforcement Moratorium, 31 Fordham Envtl. L. Rev. 1 (2020).
I also highly recommend Josh Sarnoff’s article Negative-Emission Technologies and Patent Rights after COVID-19, 10 CLIMATE L. 225 (November 2020).
Next, I’ll do a review of more recent general literature on this issue and will follow up with a discussion and analysis of some of the empirical work that has been done over the past 10 years.
Technology, Sustainability & Human Rights 