On October 8, 2020, the Cambridge-based biotech company Moderna did something curious. It announced that it was temporarily suspending patent enforcement around the vaccine candidate it developed in partnership with the US government. “We feel,” the company stated, “a special obligation under the current circumstances.”
The tone of regal magnanimity suggested Moderna was just happy to help, doing its part during a difficult time. As with its colleagues in the wider world of pharma and biotech, the company was broadcasting a message that profits and market position were the very last things on its mind.
Suspending enforcement around valuable intellectual property in the midst of a public health crisis appeared, at first glance, like a credible display of noblesse oblige, to be welcomed even if it carried a whiff of incense meant to displace the stink of recent corporate scandals. The media dutifully covered Moderna’s patent pledge as evidence of corporate social commitment in a time of crisis. The patent pledge was widely reported on the assumption that it would, as Reuters put, “allow other drugmakers to develop shots using the company’s technology.”
The company was safe in its assumption that scrutiny would stop there, and the public impression would remain that of a sacrifice to help end the pandemic. But this impression is false, and not just because Moderna’s legal claims on technologies developed with government money is provisional in the first place. Moderna’s patent pledge was an empty gesture for another reason quite apart from its long-standing junior partnership with the National Institutes of Health (NIH).
Their entire ploy was premised on outdated public perceptions about how intellectual property works in the twenty-first century.
Modern Patents on Biomedicines Almost Never Contain the Information Needed to Mass Produce Them
The patent is a form of intellectual property, not a synonym. As inherited shorthand for knowledge monopolies, “patent” is a throwback, a progressively old-fashioned catchall reference that obscures more than it explains, like calling the supercomputer in your pocket a telephone.
Understanding why requires revisiting the patent’s origins as a social contract. Emerging in Renaissance Italy, the first patents functioned as royal permission slips; having one meant you could benefit exclusively from a technology, process, or trade. This privilege was half of a limited-term bargain with the sovereign: in exchange for the monopoly, the recipient of the patent agreed to introduce a new and productive form of knowledge into the realm, to be diffused when the patent expired.
As technological invention grew more complex, patents required more detailed information to serve as effective notes of collateral: to get the monopoly privilege, inventors had to reveal and submit all of their knowledge — sometimes called “trade secrets” — to the state. Until 1880, the US Patent and Trademark Office required applicants to submit miniature, three-dimensional models, along with blueprints, instructions, and diagrams containing everything that someone “skilled in the art” would need to reproduce the invention. When the monopoly term expired, the secrets were spilled into the public domain and, it was hoped, made productive at lower, newly competitive prices.
In 2021, that social contract is as quaint as the miniature riverboat buoyancy device a young Abraham Lincoln submitted for patent consideration in 1849.
In high technology fields like biomedicine, modern patent applications rarely contain the knowledge required to manufacture the invention. This is by political design, the result of an industry push to change the rules under an obliging Reagan administration and that era’s Democratic Congress. Four decades later, the patent game is one of deterring reproduction, even and especially by those most “skilled in the art.” Key aspects of an invention and its practice are systematically shielded, often indefinitely, by a layered intellectual property barricade involving patents, copyright, and “undisclosed information,” a broad, opaque and relatively new category of intellectual property (IP) that contains three subcategories vital to making things like vaccines: know-how, trade secrets, and data.
It is within these categories, not in the publicly filed patent, that the most valuable secrets are kept.
Industry-oriented legal theorists and intellectual property law professionals sometimes call undisclosed information “the padlock on the patent.” Rare is the new technology without these padlocks to secure a corporation’s crown jewels beyond reach — before, during, and after the term of the legal monopoly. According to the US Defend Trade Secrets Act of 2016 (DTSA), which together with the Uniform Trade Secrets Act of 1985 (UTSA) has been integrated into the global intellectual property regime enforced by the World Trade Organization (WTO), anything a company deems valuable can be shielded by an undisclosed information claim, including
all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes, whether tangible or intangible, and whether or how stored, compiled, or memorialized physically, electronically, graphically, photographically or in writing.
This list begins to explain why Moderna was happy to exchange its patents for a good news cycle. The most important information safely lay elsewhere. Pharma and biotechs trying to establish and protect monopolies can hide just about anything under “undisclosed information,” including technical designs and specs, process and quality control procedures, best production methods, instruction manuals, and trial data.
Unlike patents, claims on “undisclosed information” have no legal term limit. By enjoying infinite life, the category voids the original patent bargain not once, but twice: it allows companies to withhold necessary information from the public domain, which then serves to block competition and extend the granted monopoly beyond the agreed terms.
In the age of undisclosed information, applicants are no longer required to provide governments with meaningful collateral in exchange for the benefits of government-protected monopolies. Instead, they can provide partial maps to technologies they have no intention of revealing in full — fragments designed to frustrate, obfuscate, and occlude, providing knowledge that’s necessary but not sufficient to actually make the thing.
The New Intellectual Property Regime Has Other Ways of Protecting Their Valuable Secrets
The IP professionals employed by today’s drug companies descend from the cigar-chomping patent lawyers of last century, who, as much as anyone, are responsible for the growth and power of the modern pharmaceutical and biotech industries. But their twenty-first-century descendants don’t really identify as lawyers. They see themselves as white hats in a double-game of industrial espionage, practitioners in the art of “competitive intelligence.”
In the years after the passage of the UTSA in 1985, a unified theory of post-patent IP management began to take shape at corporate-sponsored law school clinics devoted to the art of defending and extending monopolies. One of the most influential was the Center for the Law of Innovation and Entrepreneurship at Franklin Pierce University, directed by Karl F. Jorda, a former head of IP for the Swiss pharma company Ciba, which merged with Sandoz to form Novartis in 1996.
In Jorda’s description of the new paradigm, trade secrets had become “the crown jewels of corporations” and patents merely “the tips of icebergs in an ocean of trade secrets.” The task of the modern IP professional is not to file successful patent applications and, as the US Constitution’s progress clause puts it, “promote the progress of science and the useful arts.” Quite the opposite — the point is to oversee, in Jorda’s words, the “synergistic integration of patents and trade secrets to secure invulnerable exclusivity.”
This “invulnerable exclusivity” is harmless enough when it protects secret soda formulas and hamburger mystery sauces. It’s less cute when it blocks countries from using their legal right to manufacture and import lifesaving medicines. But that is exactly the kind of activity the new IP regime was designed to frustrate.
During a media call held in May 2020, the director of the pharmaceutical industry’s global trade association, Thomas Cueni, was asked about the possibility that developing countries might issue compulsory licenses to break patents on COVID-19 vaccines. He shrugged off the question by saying out loud what Moderna’s executives intentionally left unsaid.
“The focus on IP in vaccines shows a lack of understanding, because with vaccines, it’s all about know-how,” said Cueni. “In the history of IP, there’s never been a compulsory license for vaccines. Not for nothing. It really doesn’t solve the problem.”
The Global Corporate War to Protect the Intellectual Property Behind Vaccines like Moderna’s
Like the WTO intellectual property regime of which it is an integral part, the rise of undisclosed information as the black box of IP was an American project.
Until the 1970s, the patent was still considered the primary container for relevant information related to an invention. As part of a general panic over technological competition, especially from rising Asian economies, the 1985 UTSA established a near-national code, knocking off the last remnant of the state-by-state intellectual property system in place since the eighteenth century.
The law not only enshrined trade secrets as a category of IP, it broadened their scope to the point of parody by tautologically defining them as anything that derives “independent economic value because it is not generally known or readily ascertainable” and “is the subject of efforts to maintain secrecy.”
In 1996, the US Economic Espionage Act gave the ’85 law an extra set of teeth by making it a federal crime to steal trade secrets, which it further defined down as whatever a corporation “has taken reasonable measures to keep secret” and “believes valuable.” (Eight years before the Industrial Espionage Act was passed, the public was introduced to the darker side of trade secrets when the administration of the University of Florida sent one of its undergraduates to prison on charges of “theft of trade secrets” after he used data gathered while working as an assistant in a joint research project between the university and a local power company.) Two years prior, Washington inserted similar language into the intellectual property clauses of the North American Free Trade Agreement (NAFTA) and the WTO Treaty of Marrakech, effectively globalizing a corporate-led legal revolution that uprooted the millennia-deep social contract origins of intellectual property.
In the context of the WTO, the adoption of US trade secret policy has major implications for the nations’ legal right to issue compulsory licenses, a right confirmed in 2003 at the WTO Doha conference. If key aspects of a complex biopharmaceutical process are kept behind padlocked silos, then you might as well make a paper airplane with the actual product patent.
“Without access to the knowhow, a third party will not be able to produce the invention in an efficient and commercially viable way,” writes Christopher Garrison, a legal adviser to the Medicines Law & Policy research center. “Practically speaking, the exploitation of the compulsory license would be frustrated. Even if an employee of the owner of the patent and know-how believed it unconscionable not to permit the third party to make and sell the product under a compulsory [patent] license lawfully granted on public health grounds, they would be restrained from disclosing the know-how through the threat of legal actions against them.”
This works to the patent holder’s advantage in more ways than one. Historically, compulsory licensing has been deployed as a threat more than an actual weapon. When a government has all the information it needs to begin generic production of a drug, it has a decent chance of forcing the patent owner to join them at the negotiating table, giving both sides a chance to hammer out a compromise. In the first year of the pandemic, India used this power to force Gilead into issuing multiple licenses for the local production of discounted remdesivir. Most famously, it was the fulcrum used by South Africa and India in the battle to make AIDS combination therapies affordable to poor and middle-income countries.
For this weapon of the weak to work, however, the threat has to be credible. If the drug company knows its invention is padlocked beyond reach by trade secrets and know-how, the threat of a compulsory license can be safely ignored — or, in the case of Thomas Cueni, dismissed with a subtly taunting reminder that some locks cannot be picked.
The vaccines at the center of today’s IP debate illustrate the difference. Unlike HIV/AIDS antiretrovirals — classic “small molecule” drugs easily reverse-engineered and manufactured using existing technology — bio-based medicines and new-generation vaccines are more complex, with the needed technologies and manufacturing specs padlocked by trade secrets, along with biological materials like cell lines. Acquiring this information requires the active and willing participation of the patent owner to share its secrets to show exactly how they work, an aspect of licensing deals known as tech-transfer.
The incredible shrinking utility of the traditional patent is a modern feature of all high-technology fields. Around 80 percent of license agreements now include technology transfer clauses covering trade secrets and other forms of undisclosed knowledge. The international IP consultant Robert Sherwood calls trade secrets the “workhorse of technology transfer.” More and more, you can’t build anything without trade secrets, and no policy tool short of a federal police raid can force companies to give them up.
Let’s imagine a nation invokes its right to issue a compulsory license during a public health crisis. The government must first gather the political will and courage to challenge the combined weight of the multinational drug company and its allied embassies.
The drug company that owns the patent has three options. It can try to block the compulsory license with legal challenges and private threats; it can offer to negotiate a compromise; and, if the threat involves a medicine surrounded by a trade secret moat , it can place its thumb on its nose and wag its fingers.
In the third case, the scientists tasked with making the off-patent version must rely on the partial information found in public filings. Even if they can assemble a working recipe for the final product, they must do the same for every component and active ingredient, which may themselves be under padlock — a matryoshka doll of trade secrets.
If the scientists clear these hurdles, they must then produce a functioning manufacturing design without access to hundreds and possibly thousands of trade secrets and pieces of technical know-how. Before the rise of trade secrets, patents were required to include all information related to the product’s “best production method.” Now, patentees are allowed to meet a much lower standard for production methods; it can keep the details of the “best method” secret until the end of time. Needless to say, the scientists will have to do all of this without the support and training the patent holder provides to its chosen licensees paying market rates.
If its native or contracted scientists somehow overcome all of this, and manage to produce an exact molecular replica of the original patented medicine, our hypothetical government is still not done. Its scientists must now confront the big boss of pharmaceutical IP — the system’s last fail-safe against low-cost generic competition.
He will usually be found with his feet up, sitting behind a desk at the country’s own regulatory agency. His name is Data.
Corporations Can Use “Data Exclusivity” to Protect Their Monopolies
The IP right to data is exactly what it sounds like: a right to exclusive control over data amassed during the researching, developing, and testing of a new drug or vaccine. Data rights serve a number of purposes. During the early stages of a “vaccine race,” for example, it allows the suppression of knowledge concerning failures and dead ends, which, if made transparent, could give competing researchers an advantage. Early in the pandemic, advocates of open science supported the creation of IP and knowledge pools for precisely this reason: to deepen collaboration and knowledge exchange rather than impede it. The benefits of open data seemed especially self-evident when it came to large-scale human vaccine trials.
The transparent global comparative trials planned by the World Health Organization never happened, however, because in pharma and biotech, the diamonds of data are the trial results submitted to regulators. While some of this data is made public as part of the approval process — bits are published in medical journals, others posted on sites featuring public trial and regulatory information — companies maintain proprietary control over the key data containing proof of a drug’s safety and efficacy. Not having access to this data can present insurmountable cost and regulatory barriers to introducing generics.
“If the originator company has trial data exclusivity, you will have to repeat everything and reinvent the wheel,” says K. M. Gopakumar, the legal adviser to the Third World Network. “Even if you copy the original invention perfectly, and there is no patent on the other product, the claim on protected data turns the regulatory agencies into enforcers of trade secrets.”
Drug companies have built an industry on lying about the cost of developing new drugs, but they are being honest when they say clinical trials are expensive. They’re so expensive, in fact, that generic drug companies often can’t afford to run them. They instead focus on proving their product is close to identical to the name-brand drug. Regulators can then approve the generic drug based on the name-brand trial data. This is not possible, however, when the name-brand company maintains exclusivity on its data.
The durations of data exclusivity windows vary between countries, but their expansion is a regular subject of political pressure applied by the North against the South in bilateral and regional trade negotiations, such as the recently negotiated United States–Mexico–Canada Agreement. When other IP locks fail to stop a would-be competitor, data can serve as an effective final layer of security.
“In the 1990s, patents were considered the primary puzzle for access-to-medicines advocates to solve,” says Christopher Morten, a patent lawyer who used to represent the pharmaceutical industry and now teaches at NYU. “Today, it’s proprietary clinical trial data, regulatory exclusivities, and other forms of non-patent exclusivity.”
When drug companies are out of options, they can wield data to protect even the weakest and seemingly most vulnerable monopoly claims. In one notorious case, GSK used proprietary trial data to create and control a market in unpatented medical-grade fish oil worth billions. More commonly, exclusive data creates zombie monopolies that roam the earth long after the product patent has expired.
This strange phenomenon was seen following the 2016 signing of the EU-Ukraine Deep and Comprehensive Free Trade Area agreement (DCFTA). As part of the deal, Ukraine was forced to adopt the EU policy of granting drug companies eight years’ data exclusivity. When it signed the deal, Ukraine was importing a generic version of Gilead’s pricey Hepatitis C treatment from Egypt.
Despite having no patent on its name-brand drug in Ukraine, Gilead sued the Ukrainian government for infringing on its trial data, which Kiev had used as the basis for granting a license to the (chemically identical) Egyptian generic. Under the terms of the EU trade pact, Ukraine was forced to revoke the Egyptian company’s license and grant Gilead a de facto retroactive monopoly on its thousand-dollar-a-pill branded version of the drug.
The Moderna executives who graciously offered to temporarily suspend patent enforcement understand all of this very well. If patents contained the crown jewels of their company’s considerable (if legally vulnerable) IP wealth, it never would have offered them to the world. But they don’t, and they haven’t for some time. Only in history books and Mark Twain stories is the patent still a symbol of a fair, short-term deal between inventors and society, based on temporary reward for the long-term diffusion of knowledge for broad social benefit.
It is well past time to discard nineteenth-century conceptions of the patent and see them as they are: one of several interlocking components in an intellectual property fortress designed to secure what Jorda, the IP theorist and old Ciba exec, described without blushing as “invulnerable exclusivity.”