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Law360 (May 25, 2021, 6:28 p.m. EDT) – As supporters of a World Trade Organization proposal to temporarily remove intellectual property protections for COVID-19 vaccines, are trying to gain more support from the On the part of developed countries, one of the obstacles to consensus building is whether Compulsory licensing will force pharmaceutical companies to disclose trade secrets, experts say.

The waiver, proposed in October and updated on Tuesday, aims to lift restrictions on copyrights, industrial designs, patents and trade secrets related to vaccines and their development, and would allow member countries to manufacture or export their own generic vaccines without fear of facing challenges. at the WTO.

Although the United States initially opposed it, the Biden administration changed course earlier this month, saying he supports lifting IP protections for vaccines. Meanwhile, leaders of the G-20 countries last week only accepted voluntary measures to share IP.

As discussions to reach an agreement on the waiver continue, supporters say it will be critical for drug companies to disclose the know-how to replicate vaccines, as these conditions cannot be easily replicated, especially for mRNA vaccines produced by Pfizer and Moderna. . This disclosure could include the fact that pharmaceutical companies provide training, technical assistance, equipment and corporate documents.

However, pharmaceutical companies are unlikely to voluntarily pass on valuable trade secrets and it is unclear whether they might be forced to do so under compulsory license, experts say.

Lisa Ferri, global co-chair of Mayer Brown’s intellectual property practice, says waiver negotiations will most likely run into a trade secret snag.

“I think most of us in the intellectual property arena would say that would be unworkable, and I can’t imagine member countries agreeing that companies would be forced to transfer proprietary technology or hand over secrets. commercial, ”Ferri said. “And certainly, I can’t imagine any mechanism that would allow it. It’s something companies would never do, because once a trade secret is shared, it is lost,” Ferri said.

The waiver, proposed by South Africa and India and supported by more than 100 other WTO member countries, would specifically suspend four provisions of the 1995 Agreement on Trade-Related Aspects of Intellectual Property Rights , or TRIPS, requiring WTO members to enact laws protecting intellectual property.

The revised version released on Tuesday said the waiver should be in effect for three years. While the original version indicated that the exemption should apply to the prevention, treatment and containment of COVID-19, the revised version specified that it covered “health products and technologies”.

Supporters say this will open avenues for ramping up production to address the disparity in the global distribution of COVID-19 vaccines. Critics, meanwhile, say the waiver will in fact prevent rapid and fair distribution of vaccines and will weaken intellectual property rights, and it has been blocked so far by the EU, UK, Switzerland, Japan and a few others.

Compulsory licenses for patents are already permitted under the TRIPS Agreement and have already been used in public health emergencies, such as to boost the production of AIDS and HIV drugs. But they never demanded the disclosure of trade secrets.

Pharmaceutical companies are likely concerned about the long-term impact of disclosing proprietary or commercial information, as it could undermine plans to develop other therapies and vaccines in the future, Ferri told Law360.

If a waiver were to go into effect in the United States, it would likely spark a wave of lobbying to cancel or reduce it, Ferri said. It could also lead to lawsuits under the Fifth Amendment levy clause, which requires the government to pay fair compensation for the seizure of private property.

“I think you would see our representatives in Congress pressured by the pharmaceutical industry to forcefully reject this,” Ferri said. “But on top of that, the drug companies are probably going to sue, which could potentially tie that up in court for a while as well.”

Powers of foreign government

According to Jorge L. Contreras, a law professor at the University of Utah and former partner of WilmerHale, an open question is whether foreign governments could have jurisdiction to force US companies to disclose trade secrets under compulsory license.

This could be particularly tricky if a US-based company does not have a presence in a country that wishes to issue a compulsory license, as the compulsory disclosure of trade secrets would require a company to take certain actions, such as sending information to the company. ’employees in the country. for training, Contreras told Law360.

“If a country doesn’t have jurisdiction over a drug company, it’s really hard to make that happen. And there’s no way the United States will agree to force its own national companies into it. comply with orders like this, ”Contreras said.

In countries like China where vaccine companies have a presence, like Pfizer, compulsory licenses on trade secrets might be easier to enforce, he said. For example, these governments could impose fines on companies that refuse to comply and seize assets if they refuse to pay.

But enforcement will be more murky when companies have no assets in countries that issue compulsory trade secret licenses. “The US government could allow a foreign government to file a complaint in a US court, but that’s unlikely,” he said.

Ultimately, Contreras said he believed that in most practical cases it “will be impossible” to enforce compulsory licenses on trade secrets.

At this time, it’s unclear what kind of mechanism would allow foreign governments to force a reluctant participant to disclose their trade secrets, according to Charles F. Hauff Jr., partner of Snell & Wilmer LLP.

Whether US companies would have recourse if ordered to disclose trade secrets as part of the waiver is another open question. Under US law, Hauff echoed Mayer Brown’s Ferri that US companies would be entitled to compensation for an illegal take if the US government forced them to share trade secrets.

However, pharmaceutical companies are unlikely to be able to challenge a compulsory trade secret license issued by a foreign government, as the TRIPS waiver would likely remove all legal avenues for such challenges, he said.

“This is one of the troubling things in the discussion and where it is going, because it’s not entirely clear how it would work,” Hauff said.

Brazil takes the first step

Brazil could be the first country to present a master plan. Legislation recently passed by the Brazilian Senate would require pharmaceutical companies to disclose all information needed to make COVID-19 vaccines or risk losing their patent rights or having a patent application denied. The Brazilian House of Representatives has yet to approve the bill and it remains to be seen whether President Jair Bolsonaro will sign it.

Contreras, a law professor at the University of Utah, said the decision was not entirely out of left field as many governments already have mechanisms in place to collect trade secrets as part of the regulatory approval process. – they have just never been used to force public disclosure of this. nature before.

“What would be different about this is that the government, for example of Brazil, would require a company to disclose its trade secrets – not to get its own drug approved, but to help someone else. ‘other to go into business, “Conteras said.

Some see the Brazilian bill as a mechanism that could ultimately do the job and could be emulated or possibly incorporated into the TRIPS waiver. Yuan Qiong Hu, political co-coordinator of the access campaign to Doctors Without Borders, a strong supporter of the TRIPS waiver, told Law360 that the bill was “brilliant.”

Governments and others who have funded research and development for the COVID-19 vaccine have missed an opportunity to demand companies that take that money to spread their know-how, Hu said. The next best thing, she said, is that governments are using regulatory leverage to gain compliance from pharmaceutical companies that are unwilling to disclose know-how to speed up production of COVID-19 vaccines.

“The Brazilian bill makes a very clear link with the obligation to share know-how. I think that’s a great design,” she said. “Normally we don’t force companies to do things unless they behave badly. But for now, we need a legal foundation.”

Meanwhile, Contreras has said he will follow the Brazilian bill closely, paying close attention to what companies will respect and if it will ultimately work. If the waiver is accepted, he said it could encourage other countries to take similar action. But he suggested the waiver might not be as big as his critics claim.

“People, especially in the pharmaceutical industry, are trying to characterize any weakening of intellectual property rights around the world as a major disaster. I don’t think it’s justified in this case,” he said. “The proposed WTO waiver just won’t have such a big impact.”

– Additional reports from Ryan Davis, Andrew Karpan and Adam Lidgett. Edited by Philip Shea.

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