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Society before profit

Tech industry patent scheme is model for coronavirus vaccines, says Dr Andrei Kirilenko, Reader in Finance.

Illustration of coronavirus vaccine.

The race to find a vaccine and treatments for COVID-19 has brought together companies, universities and governments to share knowledge at an unprecedented rate, which is wonderful and life-affirming. Therefore, we can’t allow a profitmaking race for patents to slow this essential work. The life sciences industry should adopt a crucial model that’s been forged by the technology industry in creating Wi-Fi and other pivotal societal breakthroughs.

Andrei Kirilenko
Dr Andrei Kirilenko

In life sciences, teams of scientists often share knowledge when they work on early-stage research, but each team is free to convert this into its own solution as quickly as possible to gain valuable patents. Yet what works well commercially for a patent race winner may not be best for global public health in this extraordinary quest to beat coronavirus.

Recognising the need for fast-paced collaboration in their lightning-fast sector, tech firms have often agreed to pool intellectual property into something known as standard-essential patents (SEPs), which are patents that cover essential technologies needed to implement a certain interface or dominant tech design such as Wi-Fi or 5G mobile phone networks.

These SEPs simplify the “basics” of the core idea and lay them out as open platforms for everybody to use, and such standardisation helps the research community come up with robust solutions at a much faster pace without sacrificing gains from future IP rights. So, for example, a company that develops a better mobile phone charging mechanism can enjoy the monetary gain from its invention without disrupting other development of mobile technology.

There are many critics of the global technology industry – on grounds such as privacy, concentration and taxation – but we shouldn’t allow these reservations to cloud the pioneering standardisation benefits that tech can lend to the coronavirus discussion.

SEPs have developed pricing mechanisms to address ownership conflicts, in which the parties agree to license the intellectual property to all-comers on a Fair, Reasonable, and Non-Discriminatory (FRAND) basis. This is to prevent “hold-up” where one IP owner raises the licensing fee so high that the final product becomes overpriced and undesirable, or becomes too powerful through a discriminatory selection of who can obtain licenses for the technology.

To date, SEPs have been rare in the pharmaceutical industry, as there is no standard-setting body as there are in many areas of tech such as the GSMA for mobile communications. Yet the crucial need for a quick breakthrough on COVID-19 should overcome such inertia to serve every person’s health and well-being.

The key to implementing SEPs and FRAND pricing in the quest for a coronavirus vaccine and treatments is to treat fairly the full pool of IP that is required for such a complex solution. Parties therefore need to waive their rights (or heavily proscribe them) to litigate their own competing IP once the solution is in the market, and all FRAND terms need to be negotiated up front. In successful SEP tech implementations, the terms of participating are spelled out precisely to avoid such future litigation, conflict, and delay.

There is another route to override patent protection in the interest of public health: an agreement of 164 countries belonging to the World Trade Organization that governments can issue a compulsory license. But my recent research with other academic colleagues shows that such compulsory licensing may reduce incentives to innovate and thus retard long-term economic growth, whereas SEPs with a carefully designed FRAND pricing mechanism can promote greater rates of innovation and improve economic well-being.

The ultimate goal is very clear: in the midst of a global COVID-19 emergency, we need to find a viable new path to the quick development of treatments and vaccines available at reasonable prices. We, therefore, owe it to society to put the public interest above commercial concerns, and the tech industry provides a model we would do well to follow.