No, the Government Isn’t “Stealing” the Coronavirus Vaccine

No, the Government Isn’t “Stealing” the Coronavirus Vaccine

Poor coordination on the part of the federal government in addressing the COVID-19 pandemic, combined with a lack of preparedness, has led to some very strange cases of the federal government stealing medical supplies. Larry Hogan announced that he would use the Maryland National Guard to protect coronavirus tests and Massachusetts Governor Charlie Baker, after an order of 3 million masks was confiscated and added to the federal stockpile, had to get creative and use the New England Patriots’ jet to bring 1.4 million masks.

Every mask that the federal government takes is one that can’t be used by the State of Maryland or Commonwealth of Massachusetts. The same cannot be said of the designs for a vaccine or treatment for COVID-19, making the claims of a plan to “confiscate” a coronavirus patent in an op-ed by Adam Mossoff entitled “Congress Plans to Steal the Coronavirus Vaccine” rather curious:

A handful of senior House lawmakers, led by Rep. Jan Schakowsky (D-IL), recently announced a plan “to ensure any COVID-19 drug will be accessible and affordable for all people.” Their proposal bars research firms from patenting their life-saving inventions and it mandates “reasonable” prices.

To achieve these goals, lawmakers would presumably rely — at least in part — on a relatively obscure federal law, the Bayh-Dole Act of 1980. According to Schakowsky and her allies, that statute allows the government to seize drug patents and grant other companies the right to make them if the price was “unreasonable” and one cent of public funding was used in the basic research.

There are two main problems with Mossoff’s arguments. First, while he claims that the “core legal requirement” for the use of march-in rights is that the patent holder isn’t taking “effective steps to achieve practical application,” to use the language of the statute, this is far from the only circumstance under which march-in may be used. 

Also included in the section of Bayh Dole addressing march-in rights is language that allows its use when a federal agency determines “action is necessary to alleviate health or safety needs which are not reasonably satisfied by the contractor, assignee, or their licensees” (emphasis added). 

A future where the assignee of a subject invention needed to treat or cure COVID-19 is unable to produce sufficient quantities is entirely conceivable. In such a circumstance, a federal agency would be completely justified in exercising march-in rights whether or not the assignee has taken “effective steps to achieve practical application.”

The second problem has less to do with his analysis of Bayh-Dole and more to do with the relationship between the government and patent use. In fairness, the information presented in the Schakowsky statement does not refer to any specific legislation, so the assumption that the proposal involved march-in rights was reasonable. But there are other tools available to the federal government that allow them to use patents beyond march-in rights and none of them, if used correctly, would deprive the vaccine developer of their ability to use the design.

First is 28 USC § 1498, which grants the federal government even more expansive powers than under Bayh-Dole. This allows the federal government to, without the permission of the patent holder, use a patented design or license its use so long as it provides “reasonable and entire compensation.” 

Second is traditional eminent domain. While Section 1498 is often referred to using the same terms, there is no clear reason why the government couldn’t use the same power that allows it to purchase a plot of land to purchase a patent and license it to any drug manufacturers.

Third, future legislation could change patent law in some way to require a new vaccine or treatment to either be automatically licensed at a certain price or have the patent automatically transferred to the federal government for licensing. Considering the control Congress has over patent law and the sums of money invested in coronavirus research both before and during the pandemic, very few options are off the table.

Even under circumstances where the right to exclude via a patent is fully transferred to the government, none of these options are theft as long as whichever firm that develops a COVID-19 vaccine is still able to manufacture it. All the government will do is make more widely available the right to do so.

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By |2020-05-22T12:14:08-07:00May 12th, 2020|Blog, Intellectual Property|