India and South Africa submitted a communication to the WTO Council for Trade-Related Aspects of Intellectual Property Rights entitled “Waiver from Certain Provisions of the TRIPS Agreement for the Prevention, Containment and Treatment of COVID-19.” IP/C/W/699 (October 2, 2020). The document and corrections are embedded below.
W669 W669C1The waiver request was made part of the agenda of the Council for TRIPS agenda for its meeting on October 15-16. The WTO Secretariat provided a short press release on the TRIPS Council meeting. The discussion on the waiver proposal is quoted below.
Some 40 members engaged in a substantive discussion on a proposal submitted by India and South Africa for a temporary waiver of certain TRIPS obligations they said would facilitate an appropriate response to COVID-19. The proposal suggests a waiver for all WTO members on the implementation, application and enforcement of certain provisions of the TRIPS Agreement in relation to the “prevention, containment or treatment” of COVID-19. The proponents argued this would avoid barriers to the timely access to affordable medical products including vaccines and medicines or to scaling-up of research, development, manufacturing and supply of essential medical products.
The waiver would cover obligations in four sections of Part II of the TRIPS Agreement (https://www.wto.org/english/docs_e/legal_e/27-trips_04_e.htm) — Section 1 on copyright and related rights, Section 4 on industrial designs, Section 5 on patents and Section 7 on the protection of undisclosed information. It would last for a specific number of years, as agreed by the General Council, and until widespread vaccination is in place globally and the majority of the world’s population is immune. Members would review the waiver annually until its termination.
According to the proponents, an effective response to the COVID-19 pandemic requires rapid access to affordable medical products such as diagnostic kits, medical masks, other personal protective equipment and ventilators as well as vaccines and medicines. The outbreak has led to a swift increase in global demand, with many countries facing shortages, constraining the ability to effectively respond to the outbreak. As new diagnostics, therapeutics and vaccines for COVID-19 are developed, there were significant concerns about how these will be made available promptly in sufficient quantities and at affordable prices to meet global demand.
The proponents argued that many countries — especially developing countries — may face institutional and legal difficulties when using TRIPS flexibilities, including the special compulsory licensing mechanism provided for in Article 31bis (https://www.wto.org/english/res_e/publications_e/ai17_e/trips_art31_bis_oth.pdf ), which they saw as a cumbersome process for the import and export of pharmaceutical products. Now was the time for the WTO as an organization to rise up to the collective call for defeating the pandemic. The WTO would not succeed in its efforts to rebuild the COVID-19 affected economies unless it acts now to first save those lives that are going to build these economies. It is time for members to take collective responsibility and put people’s lives before anything else, they concluded.
While a number of developing and least-developed country members welcomed the proposal as a contribution to the discussion, many were still studying it in their capitals and asked for clarification on certain points, particularly regarding its practical implementation and the possible economic and legal impact of the waiver at national level. A number of developing and developed country members opposed the waiver proposal, noting that there is no indication that intellectual property rights (IPRs) have been a genuine barrier to accessing COVID-19 related medicines and technologies.
While acknowledging that the sustained and continued supply of such medicines and technologies is a difficult task, they observed that non-efficient and underfunded health care and procurement systems, spiking demand and lack of manufacturing capacity are much more likely to impede access to these materials. In the view of these members, solutions can be legitimately sought within the existing IP system as the TRIPS Agreement provides enough tools and sufficient policy space for members to take measures to protect public health. The suspension of IPRs, even for a limited period of time, was not only unnecessary but it would also undermine the collaborative efforts to fight the pandemic that are already under way.
Given this range of positions, the Council chair, Ambassador Xolelwa Mlumbi-Peter of South Africa, said that the item would remain suspended as members continue to consider the proposal. Requests for waivers concerning WTO agreements must be submitted initially to the relevant council for consideration. Axer 90 days, the TRIPS Council has to submit a report to the Ministerial Conference. Given that the proposal was submitted on 2 October, the 90-day time-period expires on 31 December 2020. The TRIPS Council meeting will be reconvened on the item of the waiver proposal as appropriate before that date, the chair said.”
WTO, 20 October 2020, Members discuss intellectual property response to the COVID-19 pandemic, https://www.wto.org/english/news_e/news20_e/trip_20oct20_e.htm.
Waiver provisions in the WTO
Article IX:3 and 4 of the Marrakesh Agreement Establishing the World Trade Organization deal with waivers from obligations WTO Members have assumed.
Article IX- Decision-Making
“3. In exceptional circumstances, the Ministerial Conference may decide to waive an obligation imposed on a Member by this Agreement or any of the Multilateral Trade Agreements, provided that any such decision shall be taken by three-fourths of the Members unless otherwise provided for in this paragraph.
(a) A request for a waiver concerning this Agreement shall be submitted to the Ministerial Conference for consideration pursuant to the practice of decision-making by consensus. The Ministerial Conference shall establish a time period, which shall not exceed 90 days, to consider the request. If consensus is not reached during the time period, any decision to grant a waiver shall be taken by three-fourths of the Members.
(b) A request for a waiver concerning the Multilateral Trade Agreements in Annexes 1A or 1B or 1C and their annexes shall be submitted initially to the Council for Trade in Goods, the Council for Trade in Services or the Council for TRIPS, respectively, for consideration during a time-period which shall not exceed 90 days. At the end of the time period, the relevant Council shall submit a report to the Ministerial Conference.
4. A decision by the Ministerial Conference granting a waiver shall state the exceptional circumstances justifying the decision, the terms and conditions governing the application of the waiver, and the date on which the waiver shall terminate. Any waiver granted for a period of more than one year shall be reviewed by the Ministerial Conference not later than one year after it is granted, and thereafter annually until the waiver terminates. In each review, the Ministerial Conference shall examine whether the exceptional circumstances justifying the waiver still exist and whether the terms and conditions attached to the waiver have been met. The Ministerial Conference, on the basis of the annual review, may extend, modify, or terminate the waiver.”
Some questions from the waiver proposal
The waiver proposal put forward by India and South Africa is extraordinarily broad – covering all WTO Members for a broad range of products not clearly delineated, with the waiver of a broad array of TRIPS obligations without a demonstration of the relevance of the requests for some (e.g., copyright) for a potentially lengthy period of time.
The proposal raises a series of questions that should be addressed to understand whether the waiver is appropriate. These questions include whether such a broad waiver request is appropriate or envisioned by Article IX:3 and 4 of the Marrakesh Agreement? Shouldn’t those requesting a waiver be required to demonstrate that the existing flexibilities within the TRIPS Agreement are inadequate to address concerns they may have? Can two Members request a waiver of obligations for all WTO Members? Can a waiver request be considered where the product scope is lacking clarity, and the uses/needs of the waiver are very broad and potentially open to differing views? To what extent is there a need for those seeking a waiver to present a factual record of actions being taken by governments, companies and international organizations to provide access to medical goods during the pandemic including to developing and least developed countries? Shouldn’t those seeking a waiver identify the extent of existing licenses by major pharmaceutical companies with them or other WTO Members for the production of vaccines or therapeutics to address COVID-19?
Historical usage of waivers have not been as broad as that requested by India and South Africa
Waivers are exceptional by their nature and Article IX:3 talks in terms of a waiver of some obligation for a particular Member, not the waiver of many parts of an agreement for all members. When one looks at waivers granted previously by the WTO, one sees a range of topics — many relate to time for Members to implement changes from updates of the harmonized tariff systems (for individual countries who sought the temporary waiver), some pertain to preferential arrangements between one Member and another or a group of Members and some pertain to waiver of deadlines or specific obligations for least developed countries. Two documents prepared by the WTO Secretariat show waivers granted or continuing in existence in 2019 and all waivers between 1995 AND 2015. The two documents are embedded below.
W795 W718Thus, the present request for a waiver by India and South Africa doesn’t seem to comply with the literal terms of Article IX:3 of the Marrakesh Agreement or with the much more narrow scope of waivers typically considered. As reviewed above, the request would apply to all members, not just India and South Africa. The request also seems overly broad both in terms of products (not clearly defined), uses and provisions to be waived.
Existing flexibilities within the TRIPs Agreement
Because of the importance to all WTO Members of the health of their citizens, there has been a lot of focus and discussion within the WTO on the interface between intellectual property and public health. Under the original TRIPs Agreement and the subsequent amendment to the Agreement in 2005 that took effect as Article 31bis to the TRIPs Agreement in 2017, there is flexibility within the TRIPs Agreement for Members to deal with health emergencies including through compulsory licensing which can include the right to manufacture and export to developing and least developed countries who don’t have pharmaceutical manufacturing capabilities in-country. See TRIPs Agreement Article 31, Article 31bis and WT/L/641. The current language of Articles 31 and 31bis from the patent portion of the TRIPS Agreement are presented below.
Article 31 Other Use Without Authorization of the Right Holder
“Where the law of a Member allows for other use of the subject matter of a patent without the authorization of the right holder, including use by the government or third parties authorized by the government, the following provisions shall be respected:
(a) authorization of such use shall be considered on its individual merits;
(b) such use may only be permitted if, prior to such use, the proposed user has made efforts to obtain authorization from the right holder on reasonable commercial terms and conditions and that such efforts have not been successful within a reasonable period of time. This requirement may be waived by a Member in the case of a national emergency or other circumstances of extreme urgency or in cases of public non-commercial use. In situations of national emergency or other circumstances of extreme urgency, the right holder shall, nevertheless, be notified as soon as reasonably practicable. In the case of public non-commercial use, where the government or contractor, without making a patent search, knows or has demonstrable grounds to know that a valid patent is or will be used by or for the government, the right holder shall be informed promptly;
(c) the scope and duration of such use shall be limited to the purpose for which it was authorized, and in the case of semi-conductor technology shall only be for public non-commercial use or to remedy a practice determined after judicial or administrative process to be anti-competitive;
(d) such use shall be non-exclusive;
(e) such use shall be non-assignable, except with that part of the enterprise or goodwill which enjoys such use;
(f) any such use shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use;
(g) authorization for such use shall be liable, subject to adequate protection of the legitimate interests of the persons so authorized, to be terminated if and when the circumstances which led to it cease to exist and are unlikely to recur. The competent authority shall have the authority to review, upon motivated request, the continued existence of these circumstances;
(h) the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization;
(i) the legal validity of any decision relating to the authorization of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member;
(j) any decision relating to the remuneration provided in respect of such use shall be subject to judicial review or other independent review by a distinct higher authority in that Member;
(k) Members are not obliged to apply the conditions set forth in subparagraphs (b) and (f) where such use is permitted to remedy a practice determined axer judicial or administrative process to be anticompetitive. The need to correct anti-competitive practices may be taken into account in determining the amount of remuneration in such cases. Competent authorities shall have the authority to refuse termination of authorization if and when the conditions which led to such authorization are likely to recur;
(l) where such use is authorized to permit the exploitation of a patent (“the second patent”) which cannot be exploited without infringing another patent (“the first patent”), the following additional conditions shall apply:
(i) the invention claimed in the second patent shall involve an important technical advance of considerable economic significance in relation to the invention claimed in the first patent;
(ii) the owner of the first patent shall be entitled to a cross-license on reasonable terms to use the invention claimed in the second patent; and
(iii) the use authorized in respect of the first patent shall be non-assignable except with the assignment of the second patent.
Article 31bis
1. The obligations of an exporting Member under Article 31(f) shall not apply with respect to the grant by it of a compulsory license to the extent necessary for the purposes of production of a pharmaceutical product(s) and its export to an eligible importing Member(s) in accordance with the terms set out in paragraph 2 of the Annex to this Agreement.
2. Where a compulsory license is granted by an exporting Member under the system set out in this Article and the Annex to this Agreement, adequate remuneration pursuant to Article 31(h) shall be paid in that Member taking into account the economic value to the importing Member of the use that has been authorized in the exporting Member. Where a compulsory license is granted for the same products in the eligible importing Member, the obligation of that Member under Article 31(h) shall not apply in respect of those products for which remuneration in accordance with the first sentence of this paragraph is paid in the exporting Member.
3. With a view to harnessing economies of scale for the purposes of enhancing purchasing power for, and facilitating the local production of, pharmaceutical products: where a developing or least developed country WTO Member is a party to a regional trade agreement within the meaning of Article XXIV of the GATT 1994 and the Decision of 28 November 1979 on Differential and More Favourable Treatment Reciprocity and Fuller Participation of Developing Countries (L/4903), at least half of the current membership of which is made up of countries presently on the United Nations list of least developed countries, the obligation of that Member under Article 31(f) shall not apply to the extent necessary to enable a pharmaceutical product produced or imported under a compulsory licence in that Member to be exported to the markets of those other developing or least developed country parties to the regional trade agreement that share the health problem in question. It is understood that this will not prejudice the territorial nature of the patent rights in question.
4. Members shall not challenge any measures taken in conformity with the provisions of this Article and the Annex to this Agreement under subparagraphs 1(b) and 1(c) of Article XXIII of GATT 1994.
5. This Article and the Annex to this Agreement are without prejudice to the rights, obligations and flexibilities that Members have under the provisions of this Agreement other than paragraphs (f) and (h) of Article 31, including those reaffirmed by the Declaration on the TRIPS Agreement and Public Health (WT/MIN(01)/DEC/2), and to their interpretation. They are also without prejudice to the extent to which pharmaceutical products produced under a compulsory licence can be exported under the provisions of Article 31(f).”
The WTO Secretariat has a page on its website that discusses intellectual property and the public interest, https://www.wto.org/english/tratop_e/trips_e/trips_and_public_interest_e.htm , which reviews both flexibilities for Members in addressing public interest needs as well as current topics being discussed within the TRIPS Council. There also have been publications by the WTO Secretariat, WIPO and WHO on flexibilities in accessing medical technologies. See, e.g., WTO, WIPO and WHO, Promoting Access to Medical Technologies and Innovation, SECOND EDITION, https://www.wto.org/english/res_e/booksp_e/who-wipo-wto_2020_e.pdf . And on October 21, 2020 the WTO held a technical workshop on health, trade and intellectual property in addressing COVID-19. See 21 October 2020, WTO workshop on health, trade and intellectual property: an integrated approach to COVID-19; https://www.wto.org/english/news_e/news20_e/heal_21oct20_e.htm. There is a lengthy combined PowerPoint presentation available from the webpage which was used in the workshop.
Thus, there can be no doubt that the WTO TRIPS Agreement provides significant flexibility to Members to address health emergencies. The waiver proposal from India and South Africa doesn’t review any actual efforts to utilize the flexibilities but just opines that Members won’t be able to effectively utilize them. Such an approach should not be acceptable for such far-reaching requests as the proposal from India and South Africa.
Ongoing efforts by governments, companies and organizations to make medical goods available to developing and least developed countries
Strangely missing from the waiver request submitted by India and South Africa is any mention of the global efforts underway to ensure access to medical goods and vaccines and therapeutics as approved.
There have been various fundraising efforts in 2020 to provide the necessary wherewithal to organizations focused on developing vaccines for global distribution or focused on the distribution of medical goods, vaccines and therapeutics globally.
CEPI and GAVI in coordination with the WHO have extensive efforts underway, including access to large manufacturing capacity for approved vaccines within the pool of vaccines being developed and included in the CEPI portfolio.
In addition, some private companies involved in manufacturing vaccines under development have licensing arrangements with certain producers for distribution to developing and least developing countries. Some companies have made access to the drawings of their medical equipment available to any company wishing to produce the equipment.
Thus, it is hard to understand a need for a broad waiver when there are considerable international cooperation and substantial vaccine capacity available for some of the vaccines in late-stage testing. The WTO membership deserves to have a full compilation of developments and existing actions to facilitate access to medical supplies for developing and least developed countries. The India and South Africa waiver proposal provide none of the relevant information.
While it is not the purpose of this post to develop the full factual record, I provide below some links which supply some information on ongoing developments. See The Guardian, October 20, 2020, India at heart of global efforts to produce Covid vaccine, Country plays central role in development, manufacture, and possible distribution of potential vaccines, https://www.theguardian.com/world/2020/oct/20/india-at-heart-of-global-eworts-to-produce-covidvaccine (“A deal has already been struck for the Serum Institute of India, based in the city of Pune, to produce 1bn doses of the the Oxford/AstraZeneca vaccine, seen as the forerunner in the vaccine race.” “Johnson and Johnson, whose Covid-19 vaccine is also in phase 3 clinical trials, has struck a deal with the Indian pharmaceutical company Biological E to produce up to 500m doses if successful.” “Bharat Biotech, a Hyderabad-based pharmaceutical company, has a deal to manufacture 1bn doses of Washington University’s intranasal vaccine, now in clinical trials, and Indian pharmaceutical giant Dr. Reddy’s has a deal to do a phase 2/3 human trials in India of Russia’s controversial Sputnik vaccine and then produce 100m doses. There are also at least a dozen indigenous vaccines being developed within India. ” “Poonawalla of the Serum Institute said that ‘50% of whatever quantity we manufacture will be kept for India and the remaining will go to low- and middle-income countries.’”).
GAVI, the Vaccine Alliance, October 15, 2020, COVID-19 SITUATION REPORT #19, https://www.gavi.org/sites/default/files/covid/Gavi-COVID-19-Situation-Report-19-20201015.pdf (“COVAX is the vaccines pillar of the Access to COVID-19 Tools (ACT) Accelerator, co-led by Gavi, the Coalition for Epidemic Preparedness Innovations (CEPI) and WHO. Gavi is coordinating the development and implementation of the COVAX Facility, the global procurement mechanism of COVAX. The COVAX Facility will make investments across a broad portfolio of promising vaccine candidates (including those being supported by CEPI) to make sure at-risk investment in manufacturing happens now. Gavi is also coordinating the development and implementation of the Gavi COVAX Advance Market Commitment (AMC), the financing instrument that will support the participation of 92 low- and middle-income countries and economies in the COVAX Facility.
The goals of the COVAX Facility and AMC include:
❖ to support the largest actively managed portfolio of vaccine candidates globally
❖ to deliver 2 billion doses by the end of 2021
❖ to offer a compelling return on investment by delivering COVID-19 vaccines as quickly as possible
❖ to guarantee fair and equitable access to COVID-19 vaccines for all participants
❖ to end the acute phase of the pandemic by the end of 2021”).
CEPI, October 21, 2020, CEPI expands global manufacturing network, reserving manufacturing capacity for more than 1billion doses of COVID-19 vaccines, https://www.gavi.org/vaccineswork/cepi-expandsglobal-manufacturing-network-reserving-manufacturing-capacity-over-1-billion-doses (“CEPI signs agreements with Biofabri (Spain) and GC Pharma (Republic of Korea) to reserve vaccine manufacturing capacity for more than 1 billion doses of COVID-19 vaccines designated by CEPI. CEPI’s strategic investments in vaccine manufacturing at facilities around the world will support the COVAX goal to produce 2 billion doses of safe and effective vaccine by the end of 2021.”).
Conclusion
There is no doubt that the COVID-19 pandemic presents a global health crisis. In response to the crisis there have been activities within the WTO to minimize restrictions on the movement of medical goods and a workshop looking at the interface of trade, intellectual property and public health to help Members address internal needs. The TRIPS Agreement has various flexibilities to permit Members to address health challenges. At the same time there have been extraordinary efforts by many governments, companies and international organizations to cooperate both to develop vaccines and therapeutics but also to speed up manufacturing and work towards equitable distribution of medical goods. Leading pharmaceutical companies have already entered into licensing arrangements to provide billions of doses of vaccines when approved to developing and least developing countries. GAVI and CEPI in coordination with the WHO are working on supporting various vaccine development, securing manufacturing capacity and raising funds to permit broad distribution of vaccines and other products to countries in need and others who have contributed to the group effort.
So factually, it is hard to understand the waiver request filed by India and South Africa. Against a backdrop of how waivers have been used in the past and the lack of a demonstration that existing flexibilities won’t provide acceptable answers, the waiver proposal also is deficient in terms of legal justification. The proposal is not justified, is too broad both in terms of product coverage, Members who would be given waivers, and the range of TRIPS provisions that would be waived for some number of years.
These are serious problems with a proposal that requires TRIPS Council action and referral to the General Council by the end of the year. Thus, the TRIPS Council should recommend against acceptance of the waiver proposal put forward by India and South Africa.
Terence Stewart, former Managing Partner, Law Offices of Stewart and Stewart, and author of the blog, Current Thoughts on Trade.
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