Vaccine Patents v.s. Public Domain in the Age of the COVID-19 Pandemic

The United States is currently experiencing an ongoing pandemic of the coronavirus disease. In an attempt to limit and mitigate the effects of the virus, multiple pharmaceutical companies have developed and begun widespread distribution of different vaccines, in compliance with federal regulations. [1] In a pandemic of such scale, vaccine development and distribution is critically time-sensitive due to the need to curb the spread of COVID-19. Despite attempts to hasten the vaccine development (such as the FDA’s emergency use authorization protocols), there remain the concerns of both time and money in regards to vaccine distribution and accessibility. [2] In an effort to more effectively distribute vaccines and eliminate the threat of the virus, the federal government has the ability to invoke Section 1498 of Title 28 of the U.S. Code. The statute allows the government to directly control the manufacturing and distribution of the COVID-19 vaccine, provided that the patent owners are provided with appropriate compensation. [3] Given the present circumstances and the detriment of the coronavirus pandemic on the country as a whole, as well as a wealth of historical precedent from previous similar national crises, it is more than appropriate for the American federal government to enact § 1498 and assume control over the production and administration of COVID-19 vaccines.

Section 1498 of Title 28 in the U.S. Code declares, “Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner’s remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture.” [4] Particularly in the context of a national crisis, § 1498 offers several very key features: speed, as the U.S. government can implement the statute and immediately take action; flexibility, where § 1498 can be tailored and used in a variety of different ways (for instance, setting conditions for how long the government will assume control over the patent in question, under what circumstances it will manufacture the product, so on and so forth); ex post determination of the appropriate compensation, and said compensation may be decided by an impartial third party. [5]

Previously, the government had bought or suspended private patents in multiple national crises, most notably during the two world wars. Immediately prior to America’s entrance in World War I, national security and emergency response became a very real, pressing concern for the first time in U.S. history. Specifically, patent clashes arose in regards to aviation technology. The privatization of military aviation manufacturing caused the United States to fall far behind other countries in terms of military aviation. In an effort to keep pace with its European counterparts, the American federal government allocated $1 million to acquire domestic aviation patents and bolster the development and manufacturing of military airplanes. [6] This process of obtaining patents through “condemnation,” or seizure by eminent domain, helped lay the foundation for the future development of § 1498. Similarly, government patent acquisition became relevant once again during the late 1930s, before the United States’ imminent entrance into World War II. Even in the pre-war era, the federal government struggled to combat the effects of several large industrial monopolies on the domestic economy. The existence of such monopolies “encouraged higher prices, constrained supply, and slowed innovation.” [7] Thus, by taking advantage of patents, big businesses were able to bolster their control over the specific good being manufactured, which severely inhibited the ability to meet the needs of supply and innovation during wartime. In response, the House Committee on Patents passed a bill that enabled the Commissioner of Patents to declare certain patents “necessary to the national defense and thereby restrict injunctive relief on those patents during the continuance of the national emergency that the president had declared as of September 1939.” [8] This bill, later titled the “Royal Adjustment Act,” continued to increase in scope as the war reached U.S. territories and the country expended more resources to the wartime effort, giving more control to the federal government. [9]

While § 1498 was not formally invoked in either of the world wars, these two monumental events in American history are previous examples of national crises that present-day lawmakers can refer to in determining the current applicability of the statute to the COVID-19 pandemic. They offer context for the situations in which the legislative and executive branches of government may be motivated to move private patents into public domain. Specifically, in both cases, a privately-patented good was required to ensure the safety and wellbeing of the public, and the government took the appropriate actions to procure it and bring the product into public property. There is a clear parallel between these two states of emergency and the present-day coronavirus pandemic, where a similarly privately-owned product is necessary (in large quantities) to mitigate the dangers posed by a national crisis. Given the effectiveness of § 1498 in the world wars, it is more than reasonable to consider invoking the statute once again to help alleviate the harm of COVID-19. 

Most recently, and also the only instance of using § 1498 in a drug context, was during the anthrax scare of 2001. In the months following the September 11 terrorist attack, the country experienced bioterrorism attacks in the form of anthrax spores, which were laced in anonymous mail with the intent of infecting the recipient. At the time, the only approved cure to anthrax infections was the antibiotic ciprofloxacin, sold as “Cipro.” The federal government intended to amass and prepare large quantities of Cipro as a preventative measure for widespread anthrax infections. However, the German firm Bayer AG, which held the patent on ciprofloxacin, was unable to manufacture the quantity the government had requested—the company reported that it would take nearly 2 years to manufacture the requested amount. “While generic manufacturers estimated that they could fulfill the requisition in three months, Bayer refused to license the patent.” The government thus threatened to use § 1498 to buy a Cipro and then quickly cut a deal with the manufacturer for a much lower price on Cipro. “Although this provision has been largely forgotten, in the 1960s and early 1970s, federal agencies relied on the statute to procure generic medicines, and understood it as a critical tool to curb drug prices.” [10] The crisis-like nature of the anthrax scare mirrors the COVID-19 pandemic, but on a much smaller scale. The government's threats to use Section 1498 in the early 2000s were critical in lowering prices and enabling the necessary distribution of Cipro, saving countless American lives. [11] Given the exigency and more widespread nature, rapidity of spread, and other similarly catastrophic characteristics of the coronavirus today, this provides critical evidence for why there is even more compelling reason to utilize § 1498 now.

Despite the historical context and evidence of success provided by the aforementioned three major national emergencies, § 1498 was not formally invoked in any of these cases. However, in the mid-20th Century, the statute was repeatedly applied in a variety of cases to resolve conflicts between the U.S. government and private manufacturers. These cases are of two main purposes: the federal government aiming to license production for a particular privatived product at a lower cost, or corporate manufacturers seeking compensation from the government for unauthorized usage of their patented invention. [12] In fact, the federal government invoked § 1498 multiple times in the 1950s and 1960s in order to procure generic forms of drugs at reduced prices. Much more recently in 2013 and 2014, multiple hepatitis C treatments were patented at very high prices, and the statute was again considered for its compulsory licensing power in helping the government acquire these drugs at a lower rate for patients without health insurance for whom the medicine was unaffordable. In addition, the Secretary of Health for Louisiana again “urged the federal government to invoke its sovereign immunity under § 1498” for these same drug treatments in 2017. [13] [14]

Prior to its more recent usage in the drug industry, the statute dates back over a century ago in a landmark case regarding the construction of the Capitol building. § 1498’s earliest and most primitive form was first established following 1894’s Schillinger v. United States. In 1870, a patent had been issued to John J. Schillinger for an improvement in making concrete pavement. The technique he outlined in his patent was later used, without citation, by the Architect of the Capitol when proposing plans for laying down concrete pavement on capitol grounds, leading Schillinger to sue the federal government to recover damages for the unauthorized use of his invention. However, under the doctrine of sovereign immunity, the U.S. federal government cannot be sued without its consent, which can only be given by Congress. Thus, the Court of Claims had no jurisdiction over such a claim, and dismissed the case. Despite not receiving the compensation he desired, Schillinger’s case laid the groundwork for § 1498—Congress passed the 28 U.S.C § 1498 into law in 1910, directly following the events of Schillinger v. U.S. Through numerous amendments from other similar cases, § 1498 evolved into the form and provisions that we are familiar with today. [15]

More recently, in 1996’s Zoltek Corp. v. United States, § 1498 was again used in an effort to seek compensation from the federal government. Zoltek Corporation, a company specializing in manufacturing carbon fiber, had filed a patent titled “Controlled Surface Electrical Resistance Carbon Fiber Sheet Product” in 1990, a reissue of the original 1988 patent issued to inventor George Boyd. Lockheed Martin later used the manufacturing techniques detailed in the patent in the design and construction of F-22 fighter jets. As the aerospace technology company was building the jets under a government contract, Zoltek then sued the United States for patent infringement. Initially, the court ruled that the patentee had no grounds to sue for infringement, as the manufacturing process for the F-22 jets occurred in overseas factories, and thus was not subject to the provisions in the Tucker Act, which enabled individuals to file suit against the United States government for certain claims to which it had previously been immune. However, there exists a clause under 1498 such that when the government is subject to suit for alleged infringement by a contractor, “the contractor is immune from individual liability.” [16] 

Despite the versatility and rich history of § 1498, there remains strong opposition to its usage, specifically in regards to concerns about infringement of the Fifth Amendment’s so-called “Takings Clause”. Specifically, the Takings Clause states that “[Nor shall any person’s] private property be taken for public use, without just compensation,” which potentially conflicts with the conditions put forth in § 1498. Because financial recompense is awarded on a case-by-case basis under § 1498 (“its grant of litigation costs to only some entities”) and thus cannot be universally guaranteed as “just compensation”, some believe that the statute is unconstitutional. [17] On a broader scale, many have cautioned against government usage of § 1498 due to possible economic and social consequences. With § 1498, the federal government has the capability of interfering with the market for patented products and eliminating patent monopolies, causing an influx of generic competitors to enter the economy, which in turn could cause unnecessary increases in public spending. However, the criticism of unconstitutionality hinges on the assumption that patents are wholly private property. This perception may have been accurate when patent laws were first created, but has become increasingly unpopular in modern times. [18] Formally, patents do not deny the patent owner government usage of the patented good, and therefore the good cannot be “taken” from them unlike lands or personal possessions. In addition, courts have repeatedly asserted that government patent use is not subject to the Takings Clause, and thus the argument of § 1498 being unconstitutional is moot. [19]

The COVID-19 pandemic is unprecedented in impact and detriment as one of the deadliest pandemics in history. In recent months, researchers have expressed concern over the feasibility of achieving “herd immunity,” i.e., the point where a sufficiently large portion of the population has been immunized against the virus and disease transmission is no longer an active concern. According to experts, roughly 80 percent of Americans must be vaccinated or immune to the pathogen to reach herd immunity, but due to lack of accessibility to vaccines and slipping vaccination rates, this threshold has become increasingly difficult to attain. [20] [21] Fortunately for the federal government, there exists the perfect tool to combat these difficulties. In such a pandemic, the government may invoke § 1498 to aid in the control and eventual elimination of the coronavirus threat. By using the statute to suspend COVID-19 vaccine patents, the government will be able to accelerate vaccination rates, allowing the country to more quickly achieve herd immunity and effectively end the death and destruction brought on by the coronavirus pandemic. 

Edited by Claire Choi

[1] Federal Government Responses to the Coronavirus (COVID-19) Pandemic, 2020-2021, Ballotpedia, online at https://ballotpedia.org/Federal_government_responses_to_the_coronavirus_(COVID-19)_pandemic,_2020-2021 (visited July 12, 2021). 

[2] Commissioner, Office of the, Emergency Use Authorization, U.S. Food and Drug Administration, FDA, online at https://www.fda.gov/emergency-preparedness-and-response/mcm-legal-regulatory-and-policy-framework/emergency-use-authorization (visited July 12, 2021). 

[3] 28 U.S.C. §1498, online at https://www.govinfo.gov/content/pkg/USCODE-2011-title28/pdf/USCODE-2011-title28-partIV-chap91-sec1498.pdf (visited July 12, 2021).

[4] Ibid.

[5] Who's Afraid of Section 1498?: Government Patent Use as Versatile Policy Tool, R Street, online at https://www.rstreet.org/2020/04/27/whos-afraid-of-section-1498-government-patent-use-as-versatile-policy-tool/ (visited July 12, 2021). 

[6] Morten, Christopher J. and Charles Duan, Article: Who’s Afraid of Section 1498? A Case for Government Patent Use in Pandemics and Other National Crises, Yale Journal of Law & Technology, 23, 1 (Fall 2020), online at https://advance.lexis.com/api/document?collection=analytical-materials&id=urn:contentItem:61RM-3MR1-F1P7-B07V-00000-00&context=1516831 (visited July 12, 2021).

[7] Ibid.

[8] Ibid.

[9] Royal Adjustment Act (bill passed during WWII) https://www.loc.gov/law/help/statutes-at-large/77th-congress/session-2/c77s2ch634.pdf

[10] Bayer to Lower Cipro Prices, Wired, online at https://www.wired.com/2001/10/bayer-to-lower-cipro-prices/ (visited July 12, 2021). 

[11] Mad Rush on Web for Anthrax Drug, Wired, online at https://www.wired.com/2001/10/mad-rush-on-web-for-anthrax-drug (visited July 12, 2021).

[12] Humphrey, William Brownell, A History and Analysis of Section 1498 of Title 28 of the United States Code Dealing with the Unlicensed Use of Patents by the United State Government and its Effect on Procurement, Naval Postgraduate School, online at https://apps.dtic.mil/dtic/tr/fulltext/u2/777985.pdf (visited July 12, 2021).

[13] Cubanski, Julliette, Tricia Newman, Sarah True, and Meredith Freed, What’s the Latest on Medicare Drug Price Negotiations, Kaiser Family Foundation, online at https://www.kff.org/report-section/whats-the-latest-on-medicare-drug-price-negotiations-appendix/ (visited July 12, 2021).

[14] Love, James, History of 28 USC 1498, as Reported in Zoltek Corp v US (2009-5135), Knowledge Ecology International, online at https://www.keionline.org/26507 (visited July 12, 2021).

[15] Zoltek Corp v. United States, Justia, online at https://law.justia.com/cases/federal/appellate-courts/cafc/09-5135/09-5135-2012-03-14.html (visited July 12, 2021).

[16] Ibid.

[17] Miller, Joshua I., 28 U.S.C. 1498(A) and the Unconstitutional Taking of Patents, Yale Law Digital Commons, online at https://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=1063&context=yjolt (visited July 12, 2021).

[18] Wills, Kathleen, Proposed Misuse of Section 1498 Relies on the False Claim that Patents Are Not Property, George Mason University Center for Intellectual Property and Innovation Policy, online at https://cpip.gmu.edu/2018/11/14/proposed-misuse-of-section-1498-relies-on-the-false-claim-that-patents-are-not-property/ (visited July 12, 2021).

[19] Brennan, Hannah, Amy Kapczynski, Christine H. Monahan, and Zain Rizvi,  A Prescription for Excessive Drug Pricing: Leveraging Government Patent Use for Health, Yale Law Digital Commons, online at https://digitalcommons.law.yale.edu/cgi/viewcontent.cgi?article=1124&context=yjolt (visited July 12, 2021). 

[20] Mandavilli, Apoorva, Reaching ‘Herd Immunity’ Is Unlikely in the U.S., Experts Now Believe, New York Times, online at nytimes.com/2021/05/03/health/covid-herd-immunity-vaccine.html (visited July 12, 2021).

[21] Petri, William, Herd Immunity Appears Unlikely for COVID-19, but CDC Says VaccinateD People Can Ditch the Mask in Most Settings, The Conversation, online at https://theconversation.com/herd-immunity-appears-unlikely-for-covid-19-but-cdc-says-vaccinated-people-can-ditch-masks-in-most-settings-160228 (visited July 12, 2021).