During these unprecedented times, some people are itching to get back to “normal.” As evidenced by the excitement over the recent re-opening of some states and cities, there is an obvious desire to return to the way of life we remember. However, this likely won’t be fully possible without the development of a vaccine, which, along with health-treatment drugs, is understandably the subject of intensive development efforts.
There are lurking intellectual property (“IP”) law issues in this rush to develop a vaccine. Most notable are the potential issues surrounding possible patent infringement, and sharing (or misappropriation) of trade secrets. Drug manufacturers are racing to find treatment drugs that they can mass-produce and make a sizable profit on. But, should these manufacturers rely on patents or trade secrets to protect their drugs and vaccines? Considerations to be weighed include:
- Duration of protection: would a manufacturer rather have complete security for 20 years (via a patent), or would the manufacturer prefer not to have a set duration on protection?
- Protection from reverse engineering: when creating drugs and vaccines, is it possible for a competitor to reverse engineer every key ingredient? If so, the manufacturer may prefer a complete defense against reverse engineering (even for only 20 years) instead of risking having a competitor reverse engineer the secret ingredient.
- Profitability protection: both patents and trade secret can be effective tools to achieve profitability, but in very different formats. Patents grant the patent holder 20 years of complete control over the market pricing for the drug. But, after patent duration lapses, profitability may drop with an influx of competitors. Trade secrets, on the other hand, can be highly profitable for an indefinite amount of time if the ingredients are highly confidential and nearly impossible to reverse engineer.
- Potential government intervention: patents risk government intervention, either through the Bayh-Doyle Act or Section 1498, should there be an extreme need. A global pandemic rises to the level of need that may induce government intervention. This has led to a growing movement urging the government to use march-in rights against drug manufacturers to license drugs, like Remdesivir, that have already proven successful in combating COVID-19. Further, the government’s threat of Section 1498 intervention alone can be strong enough to force a manufacturer to give up its patent or lower its licensing costs, as was the case in 2001 when the government threatened to purchase Bayer AG’s anthrax antidote patents. On the other hand, trade secrets are fully protected from government intervention and march-in rights.
- Potential sharing or loss of property: patents provide sweeping protections to the invention, but the patent license must meet the “enablement” test. Thus, once the patent duration lapses, or the government intervenes, it is very simple for competitors to recreate the invention as all of the steps and ingredients are publically available. Trade secrets, however, are protected as long as they remain confidential. Should the secret retain complete confidentiality, it can be virtually impossible for a competitor to recreate the invention (unless they successfully reverse engineer it). However, if the secret loses some aspect of its confidentiality, it may no longer qualify as a trade secret. For example, in a recent case, the court rejected the plaintiff’s claim that its drug pricing was a trade secret because it had previously released the price in an email to over 170 recipients as required by the government. Plaintiff’s claim that its drug pricing was a trade secret, and protected from any news reporting, was rejected because the mass publication rendered it no longer “secret.”
While manufacturers have a lot to potentially gain from protecting their health-treatment and vaccine IP, it is unclear how manufacturers will react in the context of a global pandemic. There are many considerations in deciding which IP defense mechanism is a best fit for the manufacturer. But, perhaps faced with the global pandemic, companies will more strongly consider forgoing their IP defenses to quickly save more lives. For example, a Chinese drug manufacturer recreated Gilead’s patented Remdesivir drug after it proved successful in combating COVID-19. When asked about the patent infringement, Gilead’s CEO Daniel O’Day said that they will “not get into a patent dispute.” Other companies can follow Gilead’s lead in the fight against COVID-19 to share their patents and trade secrets prior to government intervention or reverse engineering. Many companies may choose to rise above the push for high profits and instead share their patents and secrets to help conquer the pandemic.