Last month the World Health Organization welcomed the initiative presented by Costa-Rican functionaries to create a platform of solidarity for sharing the patenting rights anti-Covid-19. The topic raises many questions, considering the monopolistic nature of intellectual property rights and various interests involved. Among them, the right to health and to economic initiative.


World Health Organization’s recent initiative
Last May 18th 2020, the World Health Organization welcomed the initiative to create a “Covid-19 – Intellectual Property Pool”. The plan, presented weeks ago by Costa-Rican functionaries, proposes to create a platform of solidarity for sharing the patenting rights, data from tests and other information necessary for the development of drugs, vaccines and diagnosis tests for COVID-19.
The initiative was born from the concern that, in a near future, anti-COVID19 medical products could possibly not be accessible to the world’s poorest populations. According to the initiative, the creation of a platform of voluntary solidarity under the WHO would allow the creation of a path shared among governments, companies, universities and no-profit organizations – the decision-making body of the WHO – is evaluating the adoption of the resolution presented by the European Union. The resolution incorporates Costa Rica’s proposal and aims at ensuring that less developed countries will have access to the use of products claimed by any patent applications for drugs or medical products against Covid-19.
The topic is sensitive, considering the monopolistic nature of intellectual property rights; furthermore, it would require a specific intervention which, despite the exceptional situation created by Covid-19, still respect the general principles of the judicial system and properly regulates any potential economic fallout. The interests at stake are numerous: firstly, there are countries’ national interests, as the COVID-19 vaccine may be used as a competitive advantage at a geopolitical level. Secondly, the intellectual property rights of pharmaceutical companies must be considered, indeed economic returns on any investments made should be guaranteed (in the context of COVID-19 we have seen a unique mobilization of human and financial resources in the history of medical research). Lastly, as a primary assert, public health should be protected since it is a fundamental right recognized by all constitutional charters.

Knowledge sharing or mandatory licensing of patents?
It is necessary to distinguish between two possible methods of international cooperation in the fight against COVID-19. Countries could collaborate in developing and producing new drugs, diagnosis methods and vaccines, also including the cooperation of public institutions such as universities or research centers. In this case, an agreement could be reached, also utilizing the aforementioned “call” made by WHO, with the aim to guarantee equal access to any medical product resulting from the shared research. Alternatively, the private property rights and their negotiating circulation could be regulated in such a way as to guarantee their use to the largest number of people possible. Here the choice could be varied: either, as the WHO suggests, a suspension of the legal monopoly rights on inventions specifically intended for the care and treatment of COVID-19 (moreover it would then be necessary to distinguish with respect to the etiology of symptoms that the COVID-19 has in common with other pathologies), or the remodeling and compression of these rights.
The approach of the voluntary sharing platform differs, in fact, from the proposal – coming from non-governmental organizations and academic experts – instead aiming at urging States to resort to the institution of compulsory licenses. The latter is an instrument of flexibility introduced by the agreement of the World Trade Organization: “Trade-Related Aspects of Intellectual Property Rights” (hereinafter, TRIPS). The compulsory licenses allow for either the production of patented drugs, in the presence of certain circumstances, or the import of these from another country in case the importing country lacks the pharmaceutic-industrial infrastructure necessary (parallel imports), without the patent holder’s consent. The route which allows to activate the compulsory licenses is composed by a series of progressive phases.
Firstly, a national health emergency must be occurring so that a formal request may be made to the rights holder for an immediate authorization for the production of the necessary drugs. If the rights holder were to not grant their consent, then it is possible to proceed to an imposition of a compulsory license (granted that a severe health crisis is underway in the petitioning country) and this in the face of the willingness to pay a reasonable fee to the holder of the patent itself and on condition that the compulsory license is limited temporally and geographically.
In the past few years, several developing countries have resorted to the compulsory license instrument due to the high cost of drugs, facing hard battles with the pharmaceutical industry. Two litigations should therefore be recalled: one in South Africa (cfr. South African Pharmaceutical Manufacturers Association v. The Government of South Africa, Case No. 4183, 1998, High Court of Pretoria) and the other in India (cfr. Novartis AG v. Union of India (UOI) and Ors.; Natco Pharma Ltd. v. Uol & Ors.; M/S Cancer Patients Aid Association v. Uol & Ors) which have involved two big pharma. These last two had accused the mentioned States of having implemented and interpreted the clauses of intellectual property limitations present in the TRIPS in a manner which was too extensive, therefore violating the relative constitutional principles of economic liberties. In the two examined disputes, the national judges highlighted the social and other fundamental rights, like the one to life, health and human dignity, legitimizing the economic policies of the countries cited of application of the clauses of limitation of the intellectual property stipulated by the TRIPS.

Western countries failure to join (so far) the sharing platform
The formal launch of the sharing platform and with it the suspension of industrial property rights for pharmaceutical and medical anti-COVID-19 products had been planned for the 29th May 2020. According to what so far communicated by the WHO, the first countries to join the initiative were Argentina, Bangladesh, Barbados, Belize, Brazil, Bhutan, Chile, Dominican Republic, Ecuador, Egypt, El Salvador, Honduras, Indonesia, Lebanon, Luxembourg, Malesia, Maldives, Mexico, Mongolia, Mozambique, Norway, Oman, Pakistan, Palau, Panama, Peru, Portugal, Saint Vincent and Grenadines, Sri Lanka, South Africa, Sudan, Netherlands, Timor Est, Uruguay and Zimbabwe. Still missing are western countries (the majority of EU members and the USA), together with Israel, China, Japan and India, all countries were the world’s big pharma are headquartered. The current list includes, therefore, many developing countries that do not have particularly developed technological, producing and distributing capabilities.

The measures adopted by individual countries against the monopoly of the Covid-19 vaccine
In pandemic’s current context, the compulsory license instrument, however, has not attracted only developing countries. States like Germany, Israel, Ecuador, Brazil and Chile are moving towards compulsory licenses for patents related to the handling of COVID-19, while the United Kingdom and Canada have both stipulated the decriminalization of the exploitation of patents related to COVID-19. The decriminalization would entail the exclusion of counterfeiting crimes regarding COVID-19 patents.
The compulsory license, instead, would have the goal of ensuring equal access to drugs relating to the cure of the pandemic. Other legal systems, including the Italian one, allow the state to rapidly seize any patent due to public need, for an indemnity to be paid to the owner of the industrial property right. This is a real expropriation procedure, through which a so-called “forced” solidarity of the patent’s owner would be secured, thus eliminating the legal monopoly in which this is expressed. It is believed, however, that in taking into account the current situation, pharmaceutical companies would be interested in spontaneously releasing for free or in any case in a “social-friendly way” any exclusive rights on drugs or vaccines anti-COVID-19, thanks to the immense return in image that such an operation would guarantee.

The expropriation procedure of the patent for national utility in Italy
As far as Italy is concerned, art.141 of the code for industrial property (hereinafter, “c.p.i.”) stipulates that industrial property rights, trademark rights excluded, although in progress of registration and patenting, can be expropriated by the State in the interest of the State’s military defense or for other reasons of public need. The State can expropriate the right as a whole or even just the right to use the invention in the national interest and for a specific period. Second paragraph of art. 141 c.p.i. continues by stating that the expropriation can be limited to the right of use for the State needs, without prejudice to the provisions on compulsory licenses, insofar as they are compatible.
National legislation does not regulate in detail the expropriation of industrial property rights, nor has the subject been the focus of case law. In any case, it is clear – from the dictates of art. 141 c.p.i. – that the expropriation of the industrial property right is subject to certain conditions.
First, the expropriation is adopted with a Presidential Decree at the end of a complex legislative procedure. In particular, the expropriation is issued through a Decree of the President of the Republic, following a proposal of the concerning Minister, in concert with the Ministries of Productive Activities, Economy and Finance, after hearing the opinion of the Appeals Commission. Art. 194 c.p.i. provides that the decree should be sent in copy to the Italian patent and trademark Office and then published in the Official Bulletin unless this creates a prejudice. Furthermore, the decree must be notified to other interested parties. Once all the above notifications have been made, the right object to the expropriation is acquired by the Public Administration, which will be able to use it within the time limits and for the duration envisaged. Finally, according to art. 143 c.p.i. the decree must be annotated in the Register of industrial property rights. Contrary to what happens if the expropriation due to military defense reasons, the secret of the object of the industrial property title is not stipulated for reasons of public need.
The Presidential Decree must specify an indemnity in favor of the industrial property rights holder. Such indemnity is calculated based on the market value, after hearing the opinion of the Appeals Commission. However, the legislation does not provide concrete parameters that should be used to estimate the indemnity. In case of non-agreement – art. 143 c.p.i., indeed, provides that the owner of the industrial property right may disagree with respect to the value of the indemnity established by the Decree – the indemnity must be fixed by a panel of arbitrators who will proceed according to fair appreciation, taking into account also the loss of competitive advantage suffered by the owner of the expropriated right.
As mentioned, the expropriation measure, which eliminates or limits the industrial property right, can be adopted only if there are reasons of public need (as well as in the interest of the country’s military defense).
Therefore, it is necessary to understand if needs of this type could arise in the pandemic’s current emergency situation. The question is only apparently superfluous, as, until today, no health emergency and no disease (even cardiovascular or tumour diseases that nonetheless in numerical terms have an impact far superior to all other diseases) has never been recognized as a reason of public need, such as to justify a State intervention for the regulation of patent protection (suspension) or to induce to force the “solidarity” of private entities. In a broad sense, any resources aimed at safeguarding and preserving human life and health could fall within the concept of “public need” almost by definition. At present, it cannot be foreseen whether the WHO’s declaration of pandemic status is such as to justify the possible expropriation of patents concerning COVID-19 drugs or vaccines.
As there is no case law on the subject, the national courts, if requested, will have to resolve the issue through a balanced weighing of the interests at stake, which in this case are private property and economic initiative (art. 41 of the Constitution) and law to substantial equality and health (articles 3 and 32 of the Constitution).
It is interesting to note how an evaluation of this type has already been the subject of a decision made by Lazio’s TAR, in a case that concerned not the expropriation of the industrial property right on drugs, but the duration of the complementary certificates (cfr. TAR Lazio, sez. III del 30/09/2003, n. 7858, in Banca dati online De Jure). In that instance, TAR stated that art. 41 Cost. “is not, however, an absolute right of the personality that therefore overlooks the limits that the Constitution itself, also thanks to the implementation that the ordinary legislator gives from time to time and within the obvious limits of the reasonableness and substantial equality of citizens, imposes for social needs. In principle, economic efficiency, connected to the stability of relationships and legal traffics (especially for long-term ones) is indeed a protected value, but not hierarchically prevalent compared to other social needs. Indeed, the discipline of the economy, which the Constitution wants dictated by the ordinary legislator, must not only be inspired by the intent to pursue immediately economic purposes (increase in production, financial balance, etc.), but also guided by the need to stimulate and favour the process of social transformation, the main lines of which are traced by art. 3, II para”.
In the case cited, the Italian judges recognized the economic initiative as a value protected by the law, considering it, however, hierarchically not prevalent with respect to the principle of substantial equality provided for in art. 3 Const.
Applying this perspective to the current pandemic situation, with a view to ensuring the full implementation of the principle of substantial equality, the right to ensure access to the COVID-19 vaccine for all citizens could be considered a right superior to that of ensuring compensation and the fair return on investment to the vaccine-producing pharmaceutical industry.

In this situation, whether the choices are made at a supranational level (as for the WHO initiative to define a real suspension of rights arising from patents or in any case to define a technical pool that indicates similar solutions in view of the protection of less fortunate sections of the world population), or that they are taken at national level through the initiation of expropriation measures or the granting of compulsory licenses, it will still be necessary to consider carefully, not only on a juridical level, the future implications of eventual initiatives. Indeed, it will be appropriate to seek and find a balance between the protection of investments made by pharmaceutical companies – but also by private or public institutions – and the pursuit of the aim in question, that is facilitated access to the cures and vaccines. This is also to ensure that pharmaceutical companies continue to invest in research and development, especially in the current pandemic context, and that this type of research can still continue to positively attract private capital. It must be said that a just solidarity initiative in the current situation must not however set a precedent for questioning the need for patent protection of pharmaceutical or medical inventions. The pandemic indeed constitutes a completely atypical situation, not comparable to any other and is a situation such as to justify the introduction of a very special exception, that would then not be able to render ineffective or cancel out (rather, reaffirm) a principle of great importance for technical, economic and social development of each country, the principle of patent protection granted to pharmaceutical and medical inventions.

Luigi Goglia, Camilla Macrì