20 Apr
2020

How UK Crown Use provisions apply to suppliers of emergency Covid-19 treatments

Those seeking to respond to government requests for companies to produce coronavirus-related treatments and equipment face potential IP infringement risks. But, as Marks & Clerk’s Jonathan Solomon explains, there are ways for responding entities and rights holders to mitigate the IP risks associated with the fight against Covid-19

In the absence of a vaccine, other therapeutics, or sufficient medical devices and medical equipment to tackle the Covid-19 pandemic, governments have urged a variety of manufacturers to consider switching parts of their production to making essential items, such as oxygen concentrators, ventilators and personal protective equipment. Many pharmaceutical companies and labs have also increased testing for virus detection, vaccines and other therapeutics.

There is a risk that, in responding to these calls, organisations will breach a variety of intellectual property rights; and the possibility of infringing others’ rights may dissuade some entities from acting for fear of liability. While some rights holders may choose not to enforce their IP rights in such circumstances, entities responding to government requests in the UK may also be able to make use of Crown Use provisions. It is possible, furthermore, for IP holders to play their part in tackling the pandemic by making their rights available to third parties without having to forfeit all future compensation and rights relating to their inventions.

Will IP rights be enforced?     

Given the severity of the situation and the deadly threat posed by Covid-19, some rights holders may chose not to enforce their IPR for altruistic reasons. A number of pharmaceutical companies have already announced an intention not to defend patent rights for certain pharmaceutical drugs.

For example, AbbVie has announced that it will not defend its patent rights to HIV therapy Kaletra, after the drug was identified as a possible treatment for Covid-19. Although the use of Kaletra as a treatment for Covid-19 is subject to successful clinical trials, the move would allow for the global use of generics to treat the virus. The strategy may cause AbbVie to lose out on significant revenues but allows for the wider use of the therapeutics to treat the disease and generated positive publicity for the company.

Rights holders will also need to consider the potential negative consequences of enforcing patent rights in the current pandemic. Any enforcement action taken to enforce IP is likely to result in preventing, or delaying, the provision of essential pharmaceuticals, medical devices and medical equipment to patients during the pandemic. This is likely to attract substantial negative media attention and may cause significant reputational damage to the rights holder, who may ultimately be unsuccessful in any attempt to enforce their IP.

Some rights holders may delay enforcement action until the current pandemic and media attention has subsided. The Limitation Act 1980 provides that the limitation period for the enforcement of IPR is six years from the date on which the cause of action accrues. This option also risks negative publicity.

On balance, although it seems unlikely that rights holders will enforce IPR relating to essential items in the current pandemic, some risk of litigation and liability remains. If, for example, infringing medical devices were produced for treating victims of the virus but subsequently used for unrelated purposes, it would not be unreasonable for rights holders to seek compensation, particularly if those unrelated purposes were cannibalising the rights holder’s own sales.  Therefore, it is important to consider the other defences that may be available for companies responding to government requests.

Crown Use Provisions

The commonly used defences against patent infringement claims will be of little assistance, but the seldom-used Crown Use provisions may provide some reassurance.

Section 55(1) of the Patents Act provides that any government department and any person authorised in writing by a government department may, for services of the Crown, conduct acts, without the consent of the patent proprietor or exclusive licensee, which would otherwise be patent infringement. The acts include, but are not limited to making, using; importing;  keeping; making use of processes (patented processes); supplying (or offering to supply) the means relating to an essential element for putting the invention into effect; and/or disposing (or offering to dispose) of anything made, used, imported or kept in the exercise of the Crown Use provisions.

The legislation also provides a qualified right to sell specified drugs and medicines (those required for the provision of primary medical services and are specified for this purpose in regulations by the Secretary of State). Although these provisions are unlikely to extend to medical devices and equipment, such as ventilators or personal protective equipment, this qualified right to sell may extend to pharmaceuticals developed or used for the treatment of Covid-19.

Lord Justice Diplock considered the meaning of “services of the Crown” in the case of Pfizer Corp v Minister of Health [1965] RPC 261 over half a century ago, holding that: “an act is done for ‘the services (or service) of the Crown’ if it is done for the purpose of the performance of a duty or the exercise of a power which is imposed upon or vested in the executive government of the United Kingdom by statute or by prerogative.” In this case, services of the Crown included supplying a patented drug to NHS hospitals for administration to outpatients and inpatients.

More recently, the court held in IPCOM v Vodafone [2020] EWHC 132 (Pat) that the Crown Use defence was available to Vodafone in the provision of a system that provided privileged access to mobile phone networks to organisations involved in responding to emergencies. Douglas Campbell QC (sitting as a Deputy High Court Judge) held that this system was a service to the Crown because it benefited the Crown by protecting the operation of emergency services in the course of their duties. Therefore, by parity of reasoning, it appears that the provision of pharmaceuticals, medical devices and medical equipment for use by the NHS will fall within the definition of services to the Crown.

In addition to the above, there are special provisions for Crown Use during ‘a period of emergency”. In a period of emergency, the powers granted under section 55 are extended to include the power to use the invention for any purpose, which appears to be necessary or expedient for a variety of reasons aimed at the protection of life.

The legislation also requires that responding entities have written authorisation from the government to avail of the Crown Use provisions. In the current circumstances, it is unclear how easily such authorisation will be obtained. This may cause further concerns for responding entities. However, the written authorisation is not required before the infringing act takes place: it can be retrospective. Therefore, responding entities have the additional comfort that, even if they act now, without written authorisation, their ability to rely on the Crown Use provision is not barred and the defence may be available if litigation arises in the future, provided the necessary authorisation is obtained.

Furthermore, although the Crown Use provisions provide that the patentee will be entitled to compensation for the use of their patent, such compensation is payable by the government department concerned and not the responding entity.

It is conceivable that the provision of medical devices and medical equipment could also infringe design rights. Similar provisions, as those set out above for patents, exist for UK Registered and Unregistered Designs. The legislation includes provisions relating to use of the design rights for services of the Crown, special provisions for use in an emergency; and the provision of compensation. A more limited regime for Crown Use also exists for Community Registered and Unregistered Designs.

Post-pandemic use

Despite the current circumstances and the desire of some rights holders to make their rights available to help tackle this pandemic, rights holders do have a legitimate interest in protecting against the post-pandemic use of their IP. For example, rights holders may wish to ensure that products made for treating illness caused by Covid-19 are not subsequently used for unrelated indications or use without compensation. Therefore, to the extent that companies announce they will not enforce their rights, this should be expressed in terms limited to the pandemic and where rights holders licence their IP this should be done on terms limited to prevent post-pandemic use.

Furthermore, the government is under an obligation to notify the rights holder of the use as soon as practicable if the Crown Use provisions are used. The legislation also provides that the use of any invention in accordance with the Crown Use provisions shall be made on such terms as may be agreed either before or after the use. It is advisable that any rights holders contacted by the government regarding Crown Use should attempt to negotiate terms limiting use to the pandemic, such as seeking to limit use of their rights to a set duration.

Jonathan Solomon

Associate | Marks & Clerk

[email protected]

London