Hyo Yoon Kang on the financialization of intellectual property & COVID-19

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You cannot afford to miss the nuance and the politics that is captured in The Friday Deep Dives. Sample this: We reported a month ago on “WHO donors seek a new tech transfer hub under ACT-A, C-TAP sidelined.” Last week WHO announced the mRNA tech transfer hub — a development we are still trying to fully understand.


Q&A: Hyo Yoon Kang on the financialization of intellectual property & its implications in a pandemic

Hyo Yoon Kang (Image credit: Shariq Siddiqui)

How does such a skewed patent bargain play out on the global scale? At least since the 1995 TRIPS agreement, what counts as ‘public’ and ‘private’ in the context of IP can no longer be national categories. Yet the understandings of what is ‘public’ and ‘private’ in much of IP law discourse have remained rooted at the national level. The result is a dissonance of legitimacy between a transnationally enforceable IP legal structure and its justification based on 19th century concepts of sovereignty, colonisation and industrialisation.

The history of TRIPS, including the de-facto impracticability of Art. 31 bis, has shown that its institutional design has not exactly been a level playing field from the start, favouring certain multinational corporations over others. We can currently observe the unequal effects of such a legal institutional design in the pharmaceutical industry’s resistance to any compulsory licensing, to the C-TAP and the TRIPS IP waiver proposal. They clearly illustrate that particular, private interests hosted by a minority of nation-states are pitted against the global majority public health interest.

Sciences are implicated in the erosion of the notion of ‘public’ since at least the Bayh-Dole Act 1980, but the relationship between sciences and various industries stretches back to the 19th century [Historians of science, such as Ilana Löwy and Jean-Paul Gaudillière, have written about this, as have historians of chemistry, such as Ernst Homburg and Carsten Reinhardt]. Publicly funded universities and public research organisations are avid users of the intellectual property system, as recent European Patent Office analysis of pharmaceutical patent applications has shown. As much of their interests are monetary in nature now, university sciences, both fundamental and applied, cannot be necessarily understood as pure or public without qualifications: the high profile CRISPR patent dispute involved scientists, universities or public research institutions, and their spin-offs.

It seems therefore odd and disproportionate to me that there doesn’t seem to be a single contract in the UK or US, in which a government has taken co-ownership of a vaccine patent or receives future royalty, precisely because the vaccine development efforts were headed by a venture capitalist or a former pharmaceutical executive who would normally demand such returns on their investments. Beyond this incongruence, there is the fundamental political question if the government should act like a venture capitalist, at all (for example, the UK government runs the biggest venture capital fund in Europe which has received little scrutiny and is also reported to have taken a stake in Vaccitech, the Oxford University spin-off behind the Oxford/AstraZeneca vaccine.) Alternative ways to balance public and private interests could be through IP restrictions on certain subject matters, national compulsory license legislation, and the enforcement of price ceilings on publicly funded inventions, but it will also be interesting to think about higher taxation on IP rent income.

Yet I find the arguments advanced against the waiver proposal claiming that as “patents are not the problem” disingenuous because, even if know-how was shared, tech was transferred, and a vaccine was developed, it would be illegal to produce it without a license, if the substance, its parts, or its process of manufacture, remains under patent protection. The patent holder would continue to hold the power to block vaccine production, regardless of existing or shared expertise and capacity. This is not a good way of clearing all barriers for scaling-up vaccine production in a global pandemic. The IP waiver is therefore necessary as an integral part of a concerted effort to share know-how and scale up production. We need the waiver in order to end the pandemic instead of prolonging it through artificial scarcity. Both IP waiver and tech transfer need to go hand in hand.

From a purely financial perspective, it is not in the vaccine makers’ and their shareholders’ interest to end the pandemic as soon as possible. Even though policy makers and governments are reluctant to push the pharmaceutical players too hard, the pharmaceutical industry, universities and their technology transfer offices will not self-regulate and voluntarily open license their patents through C-TAP or share their know-how in the latest announced WHO Technology Transfer pool, precisely because it is contrary to their rational commercial self-interest to do so. In my view, there must be both a carrot and stick approach towards the vaccine makers to change their present course. This could include the introduction and implementation of national compulsory license measures.

The role of IP law in the capitalisation of knowledge is that it creates a link between knowledge and speculative value through a legal monopoly right.

In a way, this is nothing new. Intellectual property rights have always acted as currencies of international trade (chemical patents in the 19th century, for example), and have been hence nationalistic instruments of trade policy. For example, it is interesting to read patent statistics against the background of different trade dynamics at a given point of time. When you examine patent office rhetoric and self-presentation, you will notice how often they invoke nationalist rhetoric of economic greatness or competitiveness.

What has been novel since roughly the mid-1990s is the pursuit of IP as not only monopoly for extracting monopoly rent in a commodity market, so via monetisation, (this is the case presently in the Covid-19 vaccine oligopoly), but using IP as a financial tool: either to raise more equity or as technique of financial arbitrage. I have analysed the financialisation of patents as assets. The financial forward-looking, speculative function of IP is reflected in the total reversal in the proportion between physical and intangible asset value in the S&P 500 index between 1975 and 2017. The last forty years have been characterised by increasing financialisation of knowledge-making and uses via IP, both through copyright and patent laws. Nowadays inventions, IP and innovation are routinely misleadingly conflated, and this is in part driven the patent offices’ rhetoric itself which equates more IP with more innovation. Patents are seen as a key asset in the so-called “knowledge economy” of disruptive innovations. In turn, knowledge enclosures create new forms of colonial dependencies, as we observe now in this current pandemic.


“WHO will facilitate the establishment of one (or more, as appropriate) technology transfer hub(s) that will use a hub and spoke model (REF) to transfer a comprehensive technology package and provide appropriate training to interested manufacturers in LMICs. This initiative will initially prioritize the mRNA-vaccine technology but could expand to other technologies in the future.

The intention is for these hubs to enable the establishment of production process at an industrial or semi-industrial level permitting training and provision of all necessary standard operating procedures for production and quality control. It is essential that the technology used is either free of intellectual property constraints in LMICs, or that such rights are made available to the technology hub and the future recipients of the technology through non-exclusive licenses to produce, export and distribute the COVID-19 vaccine in LMICs, including through the COVAX facility. Preference will be given to applicants who have already generated clinical data in humans, as such clinical data will contribute to accelerated approval of the vaccines in LMICs.”


“The issuance, IFFIm’s largest since 2006, will raise funding for Gavi’s core immunisation programmes and the Gavi COVAX Advance Market Commitment (AMC). The Vaccine Bonds are backed by pledges from 10 sovereign donors, including recent new commitments from the United Kingdom and Norway.”


“…Gavi entered the market early with Memorandums of Understanding (MOUs), non-legally binding instruments to signal intent between particular manufacturers and COVAX on behalf of AMC-eligible countries and of self-financing participants in the COVAX Facility. An early significant rate limiting factor in respect of converting MOUs into APAs was limited availability of cash at hand and legally binding pledges from donors, as well as low risk tolerance in respect of recoverability of funding in the event of non-success of candidates and eventual licensure. The early and current strategy therefore focused on options negotiation, as well as firm order commitments.”..

“..We have learned that insufficient cash and risk tolerance can be major impediments, particularly as other major purchasers are not as constrained ..”


“Do not require proof of vaccination as a condition of entry, given the limited (although growing) evidence about the performance of vaccines in reducing transmission and the persistent inequity in the global vaccine distribution. States Parties are strongly encouraged to acknowledge the potential for requirements of proof of vaccination to deepen inequities and promote differential freedom of movement.”


“Vials of the Oxford-AstraZeneca vaccine arrived last month by helicopter and were distributed by health workers, who walked from village to village through snow and ice. Vaccinations proceeded in the area’s 13 settlements even after yaks damaged some of the field tents that volunteers had set up for patients.”

New York Times

“The TRIPS Council chair Ambassador Dagfinn Sorli from Norway suggested at the meeting that no clear answers were provided about how certain provisions of the TRIPS Agreement could constitute a barrier, in what seemed to be a false statement, said people familiar with the development.

In sharp contrast to Ambassador Sorli’s statement, the former TRIPS Council chair Ambassador Xolelwa Mlumbi- Peter from South Africa suggested that the time for questions centering on the IPR barriers is over and it is now time for moving rapidly to text-based negotiations so as to arrive at a balanced solution as part of the WTO’s contribution to the TRIPS waiver, said people familiar with the proceedings.”


“ “From what has been reported, I think India definitely has the most infections in the world,” says Ramanan Laxminarayan, director of the Washington, D.C.-based Center for Disease Dynamics, Economics and Policy.

…“For every 30 infections, you’re pretty much only picking up one as a case,” says Laxminarayan, who says a similar disparity likely still exists now, even though India’s testing capacity is higher than last year, because of the signs pointing to the fact that the virus is running rampant in the population. “I would still apply the 30-fold undercount even now,” he says.

If accurate, that math would put the real number of COVID-19 infections to date in India somewhere around 400 million — more than the entire population of the United States. “400 million infections in a country the size of India still means that a billion people are not infected,” Laxminarayan says. “So there’s still plenty of room for infection, even with a lot of people [already] being infected.” “


“With nearly two million people currently infected with coronavirus in India, oxygen is running out, despite many states redirecting all industrial oxygen production to medical purposes. The government said on Thursday it would import 50,000 metric tonnes of medical oxygen.”

The new oxygen plants would have added a capacity of over 4,500 metric tonnes of oxygen per month. This would still have proven inadequate to meet the demand currently seen in the second wave but every additional capacity could have saved lives.


“Critiquing particular ideological contents does not address how ideology operates. Without understanding and critiquing how ideology operates, we risk losing sight of new narratives in the making to legitimise inequalities.”

“The scarcity of vaccine supply can create a black market for both illicit and unregistered or unlicensed vaccines. Such a marketplace openly benefits China and Russia, which have each not adhered to the standard rigors for testing and verifying the safety and efficacy of vaccines. When the United States deployed the Defense Production Act to stimulate domestic vaccine development and production, it inadvertently created shortages abroad. That experience and similar actions by other governments have brought home the lesson that in the future it will be critical to bring about heightened coordination with respect to global supply chains.

The United States cannot ignore the geopolitical dimensions of this emerging crisis. China and Russia are attempting to leverage vaccine donations for diplomatic and political gain, with limited transparency about the development, safety, effectiveness, and approval of vaccines and often pairing efforts with disinformation campaigns targeting U.S. and other Western vaccines.”

CSIS Report




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