Legal basis for the exemption of intellectual property rights for the Covid-19 vaccine, The legal basis for exemption from obligations to protect intellectual property rights in the TRIPS Agreement, WTO's discussion regarding the exemption of intellectual property rights for the Covid-19 vaccine, The legal basis for the exemption of intellectual property rights for the Covid-19 vaccine, The importance of the TRIPS Agreement for the exemption of intellectual property rights for the Covid-19 vaccine

Legal basis for the exemption of intellectual property rights for the Covid-19 vaccine

Nowadays, countries around the world are calling for the exemption of intellectual property rights for the Covid-19 vaccine, as well as other related medical devices, methods, etc. to fight the Covid-19 epidemic. However, what is the legal basis for such a request to work in reality? What is the role of the TRIPS agreement in the exemption of intellectual property rights for the Covid-19 vaccine? 

The legal basis for exemption from obligations to protect intellectual property rights in the TRIPS Agreement

The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) within the WTO framework stipulates that countries must provide adequate protection for most objects of IPR, based on the inheritance of previous international IP treaties such as the Paris Convention on Industrial Property Rights, the Bern Convention, etc. The TRIPS Agreement is also flexible on some of its provisions to allow countries to use the IP assets without the consent of the IP rights-holders in certain situations, including circumstances like in a pandemic where the people’s health is in crisis and the world are in an urgent need of the rapid production of a vaccine.

The legal basis for exemption from obligations to protect intellectual property rights in the TRIPS Agreement

During the implementation of the TRIPS Agreement, the member countries have found out that the flexible provisions related to patent protection in the Agreement have not really solved the problem of access to pharmaceuticals for the people of the underdeveloped countries. This is because most of these countries do not have sufficient pharmaceutical production capacity. Therefore, the Doha Declaration on the “TRIPS Agreement and Public Health” dated November 14, 2001 (Declaration No. 254/WTO/VB) and the Protocol to amend the TRIPS Agreement were passed through. These new changes to the provisions of the TRIPS Agreement will further amend the flexibility of these provisions so that countries without pharmaceutical production capacity can access third-party supplies at reasonable prices.

Besides, along with several other WTO agreements, the exemption from obligations under the TRIPS Agreement has been agreed upon by WTO members in Clause 3, Article IX of the Marrakesh Agreement on the establishment of the WTO. Accordingly, in exceptional cases, the Ministerial Conference may decide to waive an obligation for a Member State under any Multilateral Trade Agreement, provided that such a decision is approved by at least three-quarters of the Member States unless otherwise stated. For the TRIPS Agreement, a request for a waiver of an obligation under this Agreement shall be submitted separately to the TRIPS Council for consideration within a period not exceeding 90 days, after which the Council shall submit a report to the Ministerial Conference to issue the final decision.

WTO’s discussion regarding the exemption of intellectual property rights for the Covid-19 vaccine

The United States, the EU, and some other developed countries recently announced their support for the exemption from the obligation to protect IP rights for Covid-19 vaccines. This is a good sign in the fight against the Covid-19 epidemic for the people of the entire world. However, the goal to completely eliminate the disease that many slow and developing countries are struggling with is much more comprehensive and in general, much more difficult to reach.

On October 2, 2020, India and South Africa submitted to the TRIPS Council a proposal for a temporary exemption from the obligations to protect IP rights for medical products and technologies in response to the Covid-19 pandemic. However, the proposal also clearly stated that this exemption is only temporary, just until the world achieves herd immunity. 

WTO’s discussion regarding the exemption of intellectual property rights for the Covid-19 vaccine

The obligations proposed to be waived by India and South Africa include the provisions in Section 1 (Copyright and Related Rights), Section 4 (Industrial Designs), Section 5 (Patents), and Section 7 (Protection of Confidential Information) under part II and the obligations to enforce those sections falls under part III of the TRIPS Agreement. Under this proposal, member countries of the TRIPS Agreement would be able to temporarily suspend IP rights protection globally for products related to Covid-19 including diagnostic kits, therapeutic drugs, vaccines, and medical equipment needed to prevent the spread of the Covid-19 disease. The IP rights applied in the proposal include copyright, related rights, rights to patents, industrial designs, and confidential information.

This issue was discussed at the TRIPS Council and then the WTO General Assembly. The proposal of India and South Africa received mixed reactions from WTO members with two main lines of opinion. 

  • The supporting side has about more than 100 WTO members, including Vietnam and international intergovernmental organizations and non-governmental organizations. They believe that the exemption from some obligations in the TRIPS Agreement is the most comprehensive option in comparison to the implementation of mandatory licensing and other flexibility measures in the TRIPS Agreement. This method is highly effective because it will not reduce the creative impetus as vaccine research institutions still receive huge funding for vaccine development. Another key point in which the exemption route may work is that the world has witnessed the consequences of not applying the previous proposal to exempt IP rights protection for HIV/AIDS drugs. 
  • The objecting side, on the other hand, including some developed countries such as Canada, Switzerland, and some European countries such as Germany, Britain, etc. The reason for most of these countries’ objections is that they can develop the vaccine in their own country and don’t feel that they can gain benefits by sharing the IP rights with other countries, along with many other reasons.

The legal basis for the exemption of intellectual property rights for the Covid-19 vaccine

According to the provisions of the TRIPS Agreement, an invention – innovation in the field of pharmaceuticals can only be patented if it satisfies the following 3 basic requirements: 

  • Novelty (new)
  • Creative (non-obvious)
  • Capable of industrial application (useful)

However, on the contrary, in reality, not every invention/innovation that meets all 3 above requirements can be protected. WTO members have the right to impose certain pre-grant exceptions by decreeing out several non-protected objects, including diagnostic, therapeutic, healing methods, and surgery methods for humans (and animals). The TRIPS Agreement also imposes certain post-grant exceptions that may apply in the pharmaceutical sector. These are:

  • Exceptions to protected patent rights (Article 30)
  • Mandatory licensing of inventions (Article 31)
  • Exhaustion and parallel import of pharmaceuticals (Article 6 and Clause 1, Article 28).

Exceptions to protected patent rights

Article 30 of the TRIPS Agreement stipulates that WTO members can stipulate the acts of using inventions that are not considered to be infringing upon the rights of the patent owner if all 3 following conditions are met: 

  • The act must be limited;
  • The act must not unreasonably conflict with the normal exploitation of the invention;
  • The act must not unreasonably harm the legitimate interests of the patent owner as well as the legitimate interests of third parties.

Mandatory licensing of inventions

Article 31 of the TRIPS Agreement provides for compulsory licensing of an invention without limiting the basis for the competent authorities of WTO members to base on in order to issue decisions on compulsory licensing. The Doha Declaration affirms that WTO members have the power to make decisions on compulsory licensing of patents. Furthermore, they are free to determine the grounds for making such decisions. However, the regulations also stated that the competent authorities of WTO members must comply with several conditions and procedures outlined in Article 31 before making a decision on compulsory transfer, include: 

  • Must base the decision on a case-by-case basis and interest, in which the applicant has tried to obtain permission from the patent owner on commercially reasonable terms and conditions, but after a certain period of time these efforts still produce no results, except for emergency or public, non-commercial use;
  • Limited scope and duration of use at the discretion;
  • Such use is non-exclusive, non-transferable; 
  • To supply mainly the domestic market; 
  • Ensure that the patent owner is adequately compensated, taking into account the economic value of the use of the right;
  • The decision to force the transfer must be reviewed by a higher authority. 

Many countries, including developed countries, have successfully used or threatened to use legislation on forced patent licensing on the pretext of protecting public health to reduce the price of pharmaceutical products and opening the opportunity to access brand-name drugs.

However, the conditions for applying compulsory licensing of inventions mentioned above are still considered to have many shortcomings and are unclear, making the issuance of decisions on compulsory licensing of inventions in practice faces many obstacles, especially the conditions for supplying mainly to the domestic market as prescribed in point f, Article 31. 

The legal basis for the exemption of intellectual property rights for the Covid-19 vaccine

This condition makes a WTO member without the necessary technological capacity to manufacture pharmaceuticals can not import the pharmaceutical product from other members with sufficient manufacturing capacity. Therefore, on August 30, 2003, the WTO General Assembly adopted a Decision on the implementation of paragraph 6 of the Doha Declaration. According to this Decision, the competent authority of a WTO member when issuing a decision on compulsory licensing of the right to use a patent in the manufacture of pharmaceutical products may not be bound by the obligation under Point f of Article 31 of the TRIPS Agreement. With this regulation, they can allow the export of pharmaceutical products manufactured through forced transfer to an importing country when this country does not have sufficient production capacity. 

On December 6, 2005, the WTO General Assembly approved the Protocol to supplement the TRIPS Agreement (adding to Article 31) to formalize the above decision. This Protocol is awaiting ratification by WTO members with the ratification period being extended for a second time to 31 December 2011.

Expiration and parallel import of pharmaceuticals 

Article 6 of the TRIPS Agreement grants WTO members the right to decide for themselves in their national legislation on the regime of expiration of intellectual property rights. Base on the provisions of the law, the IP rights of the owner will expire when the product containing the IP rights is sold for the first time with the permission of the owner within a period of time on the domestic market, regional or international market. 

Although paragraph 1 of Article 28 of the TRIPS Agreement provides that the patent owner has the right to prohibit the importation of the product containing the patent, it is noted that this right to import is subject to the exhausting provisions of national law. If developing and underdeveloped countries choose to expire their international rights, pharmaceutical products sold at low prices abroad will be allowed to be imported to help reduce domestic pharmaceutical prices.

The importance of the TRIPS Agreement for the exemption of intellectual property rights for the Covid-19 vaccine

Although there are several opinions saying that the TRIPS Agreement may limit some provisions on human rights in general and the right to access to pharmaceuticals in particular, it’s still approved by many that the TRIPS Agreement has flexible provisions promoting access to pharmaceuticals. The important issue at the moment is that WTO members, especially developing or underdeveloped countries like Vietnam, must apply these flexible regulations to ensure people’s right to access pharmaceuticals, properly balance the right to IP, and access to pharmaceuticals.

ASL LAW is the top-tier Vietnam law firm for Intellectual Property Services. If you need any advice, please contact us for further information or collaboration.

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