Do we need new IP laws to better cope with future crises?

In early April, Michael Gove, the Chancellor of the Duchy of Lancaster, wrote to the UK parliament’s Public Accounts Committee. His letter notified it of the decision to protect companies supporting the UK government in its struggle to increase the nation’s stock of ventilators. These machines were urgently needed to assist in treating the expected high numbers of seriously ill COVID-19 affected patients.

Gove pledged that the government would indemnify these companies against the financial burden of any IP infringement claims (as well as product liability claims) as a result of their producing “rapidly manufactured ventilator systems” to help in the crisis.

This promise followed the government’s mid-March “call to action” plea to UK companies, with suitable manufacturing abilities, to volunteer to help increase the National Health Service’s (NHS) stock of ventilators. At that time, the NHS was believed to have just over 8,000 ventilators in its inventory.

The government did not provide specific information as to the projected numbers of ventilators thought to be needed at the peak of the COVID-19 crisis, but reports that Prime Minister Boris Johnson requested help to produce 30,000 additional ventilators indicate the government’s estimations of the shortfall.

Would-be volunteers to help with the manufacture of ventilators faced many obstacles. Although the basic principles behind the workings of such machines are well known, modern devices are complex machines packed with the latest technology. Further, from a legal perspective, the contractual framework is complex and raises various uncertainties, particularly regarding IP interests and know-how. As a result, questions have arisen as to whether this legal backdrop caused a delay in the production of vital equipment to help afflicted patients with their treatment for COVID-19.

Manufacturing considerations

Traditionally, a prudent company looking to enter a new market or launch a new product would carry out large amounts of research and due diligence before proceeding with investment in product design and launch. This would likely include carrying out ‘freedom to operate’ searches designed to assess the company’s ability to participate in that field without infringing other parties’ existing IP rights, such as patent and design rights. Products would then be developed with this information in mind or adapted to reduce the risk of third party infringement issues arising.

In an unprecedented situation, such as the suspected UK ventilator shortage, was it really viable to expect companies to contend with such issues when trying to assist urgently in the provision of life-saving equipment? One option would have been for existing rights owners simply to allow other companies to use their designs/inventions and provide them with the specifications and know-how to do so.

However, this could be difficult for rights owners. Might they be giving up competitive advantages in a highly specialist market? What about confidential information, relationships with exclusive suppliers, or the reputation of their products?

Many companies will have originally invested in R&D or specialist tooling in expectation of a projected return on that investment. They will have had to meet strict regulatory standards in order for their products to be lawfully supplied. While some businesses might be large enough to take the hit in the short term of allowing others to make and sell ‘their’ products, for others this might put their very existence at risk.

The government can rely on some existing UK laws, such as the Crown Use exemptions, which allow the government, without a licence from a design right or patent owner, to “do anything for the purpose of supplying articles for the services of the Crown”. This legislation sets out limited specific circumstances in which rights holders can claim compensation.

However, these laws are applicable only to the Crown and rely on the Crown passing those rights on to its nominees (the companies it has chosen to assist with production) so as to protect them from any claims for damages from rights owners. Normally, such an extension of rights and protection would traditionally be governed by a contract between the government and the manufacturer which needs to be negotiated, drafted and executed. All of this can take time—not ideal in a situation where a government is under tremendous pressure in a national crisis and when a company is entering a completely new business area.

It must be sensible, therefore, to consider whether a more streamlined process could be implemented for use in future crises, to save valuable time and to encourage more support from industry. The aim would be to provide comfort at an earlier stage to public-spirited companies who are prepared to support the government. It would also protect companies who may have the most to lose from enabling others to produce things in competition with them.

One potential way to achieve such an outcome would be for standardised template licence agreements to be drawn up for use in specific circumstances, with provisions about royalties. These would need to be prepared and agreed between the government and industry bodies. By agreeing parameters as far as possible in advance, there would be transparency for companies looking to assist and a clear mechanism through which they could do so, and existing rights owners would be reassured that their interests would not be thrown out of the window.

Looking forward

At the time of writing (mid-May), according to the government, there have not yet been any instances of a patient needing a ventilator in the UK being denied access to one through lack of availability.

However, mixed messages have come from ministers as to how many new ventilators have been produced and supplied since the crisis began, and from what source. Whatever the true picture, we can surmise that a considerable amount of time and resources could probably have been saved if more straightforward procedures were already in place.

Furthermore, there are other considerations about whether new IP rights may have been created by the companies helping out. They may have modified or improved existing rights owners’ designs and inventions, and it is unclear whether these changes can be protected and exploited in the future.

It remains to be seen what the full legacy of the COVID-19 crisis will be and how it will impact future policymaking. Nevertheless, prudent lawmakers and policy influencers should attempt to learn lessons from this crisis so that the UK is better placed in the event of future pandemics or crises.

Debra Goldwyn is a solicitor at Wedlake Bell. She can be contacted at: dgoldwyn@wedlakebell.com