Analysis

Pandemic Collaborations Pose Risk Of Future Patent Disputes

By Ryan Davis
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Law360 (June 8, 2020, 5:28 PM EDT) -- As companies and researchers around the world launch collaborations to fight the COVID-19 pandemic, the urgency in pursuing results could increase the risk of patent disputes unless precautions are taken, experts say.

In an effort to develop vaccines, treatments, protective equipment and other needed items, many companies are working with rivals, businesses in other sectors, governments and universities. And while questions about patent rights related to these partnerships may now seem secondary to saving lives, they can't be ignored.

Early discussions and negotiations about the rights the collaborators will have to each other's patents and how ownership of any inventions will be split up can help head off difficult litigation down the line.

Business collaborations happen every day, but "my only concern with the COVID situation is people are in a hurry, and there may be less time and less patience" to take steps necessary to clarify rights early on, said Sarah Chapin Columbia of McDermott Will & Emery LLP.

"It may be that those things don't get cataloged at the front end, and if a drug is successful and there's a lot of money at stake, it may mean fights in the future," she said.

Some companies may be forming business arrangements with the aim of working together to create a treatment or product, while other companies may be freeing up their intellectual property for others to use through initiatives like the Open COVID Pledge. Both approaches present possible IP issues to consider.

For attorneys working with companies involved in these collaborations, it's important to remind everyone that disputes do happen and documenting specific issues early will be helpful in the long-run, Marylee Jenkins of Arent Fox LLP said.

"I refer to it as the marriage and folks don't want to focus on the divorce. So there's generally a lack of good documentation of how the partnership is going to work," Jenkins said.

In the "hyperspeed mode" of fighting the pandemic, where people are focused on results, that problem might be more acute, she said. Among the issues collaborators should consider confronting head-on are who is going to do what, how far resulting patent rights extend and what countries they cover.

"I think it's important to work with your legal counsel and get them involved very quickly in the early part of the collaboration. Don't wait until the end," Jenkins said.

When companies come together to collaborate, "there's always the question of who owns what," and that should be a focal point of early conversations, Jeanne Gills of Foley & Lardner LLP said.

The collaborators "both individually own what we bring to the table, but who owns an improvement on what we've brought the table, and who owns any new IP that flows from our collaboration?" Gills said. "Those kinds of things should be thought about and put into an agreement at the beginning."

One solution might be to divide up rights that arise from the collaboration geographically, with each party holding rights in different countries, or by field of use, so one partner will hold rights to one area of technology and the other will hold them in another, Gills said.

However, drawing those lines may be tricky, she said, so companies may want to consider an agreement that both sides will share in the fruits of the labor, "and not worry about who did more or who did what, because in the current time, I think it's a lot more difficult to sort some of that out."

Similarly, collaborators might consider setting parameters on who will be able to file for patents on the work that they do together to avoid situations where one party might file a patent without notifying the other and argue that it is based on work they did independently rather than as part of the collaboration.

Even if research and development collaborations for a vaccine or treatment are moving at a breakneck pace, it's important for attorneys to emphasize to clients the importance of meticulous record-keeping about who is doing what, which could be crucial to potential future disputes about ownership or inventorship.

"There's a bit of a sense of urgency around some of the work that's being done in connection with COVID, and so things are happening quicker, and that may lead to cutting corners," Dan Young of Wolf Greenfield & Sacks PC said. "You want to take a step back and make sure you're addressing key issues related to intellectual property."

Through the Open COVID Pledge, numerous companies — mostly in the technology industry — and universities have said they will provide free and temporary licenses to their intellectual property for use in fighting the pandemic. Those that are making their IP subject to the pledge and those taking advantage of it should think carefully about the legal implications of doing so, attorneys say.

"For entities that are choosing to make this pledge for the benefit of the common good, that's a laudable commitment, but they should be particularly mindful about how they make the pledge," Darren Donnelly of Polsinelli PC said.

For instance, they may want to try to limit how much of their intellectual property they are making publicly available or make it available for some uses but not others. When companies offering free licenses under the pledge make clear what uses of the IP are permitted, that can help avoid disputes.

For companies that want to use patents that have been made available through the pledge, it's important to understand that those patents may not be the only ones they need, Connie Lindman of Frost Brown Todd LLC said.

Any given product may be covered by multiple patents, and the product a company may want to create may require patents beyond those included in the pledge, she said.

"That's the big risk for the companies that want to use it," she said. "They need to understand that it does not short circuit all of the due diligence that they would normally want to do before launching a product."

In addition to potential infringement, those using intellectual property made available through the pledge should consider whether they could be exposed to other types of liability, Foley & Lardner's Gills said.

She used the example of a company from another field that is thinking about pivoting to making masks using patents from the pledge. It will want to know if the owner of the patents will offer indemnity for a patent, product liability or other type of lawsuit related to masks.

"As a licensee, even if you're getting a free license or reduced fee license, you have to be concerned about liability and who's on the hook," she said.

Most of the patents that have been committed to the pledge are in the technology industry, with few if any from the pharmaceutical or life sciences industries, which have historically placed a greater value on their patents and would be reluctant to give them away. As a result, it's difficult to gauge how the pledge will play out in practice.

"We'll have to wait to see if the effect is really there, and whether opening up these patents allows others to create things to fight the pandemic," Frost Brown's Lindman said. "It's just way too early to tell."

While the Open COVID Pledge makes patents freely available during the course of the pandemic, there's another step companies could take if they really want to send a strong message, Arent Fox's Jenkins said. It's possible for companies to dedicate their patent to the public, effectively announcing that they're giving up their rights and making the patents free for all to use.

"That is certainly something that a company can do if they really want to show that it's driven by the general good, especially during a pandemic," she said.

--Editing by Kelly Duncan and Nicole Bleier.

For a reprint of this article, please contact reprints@law360.com.

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