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Intellectual Property and the Coronavirus

The outbreak of the coronavirus pandemic almost immediately set in motion a race to develop antiviral medication and a vaccination for the disease. Although the SARS-CoV-2 virus strain belongs to a well-known family of viruses, the COVID-19 disease, which is caused by this virus, was unknown until recently, and there is still no recognized treatment. Seriously ill patients are currently being treated with experimental treatments, which have not yet been fully proven.

In the field of viral treatments – as well as in other medical fields – research programs dedicated to identify suitable treatments can be divided into two main categories. One of the main research program aimed at discovering novel compounds, namely compounds that could delay or block the mechanism of action of the coronavirus within the body's cells; and another research program earmarked for examining the efficacy of previously known drugs for the treatment of new diseases.

The efficacy of compounds that have been proven effective against viruses with varying degrees of similarity to the coronavirus, as well as those designated for the therapeutic treatment of other diseases, such as malaria, is likewise being evaluated for the treatment of the coronavirus. The advantage of the second approach is clear: an approved drug (even for a different disease), has already been proven safe. Therefore, the approval process for the new indication would not only be shorter, but would also require an investment of lesser resources.

The scope of legal protection covering the results to be obtained from either research program demonstrates the sensitive balance that exists between the patent law and the consequential legal protection of pharmaceutical preparations.

A novel compound will usually enjoy stronger protection under the Israeli Patents Law, 1967 (the Patents Law). A patent protecting a new compound enables the patentee to prevent any commercial use of that compound.

In addition, the term of patent protection afforded to a new compound can be extended for up to five years in excess of the twenty-year monopoly period enjoyed by all patents.

Furthermore, a drug consisting of a novel compound may be granted additional protection, independent of the patent protection, thereby limiting the date from which competing companies would be eligible to market generic drugs containing the same compound, namely, Data Exclusivity. In Israel, data exclusivity applies only to novel compounds and not, for example, to new indications.

The scope of patent protection granted to a known compound, once it is discovered to be useful for a new indication, is more limited, in that it does not protect the compound itself, but rather only use of the compound for the new indication.

In general, patent protection for a new use of a known compound depends on whether the new use would have been obvious to researchers in the relevant field. In the case at hand, if it was clear that a drug for the treatment of malaria or AIDS might be tried for the coronavirus as well, and there was even an expectation that such treatment could be effective, it could be argued that the use of such drug should not be granted patent protection.

Patents protecting a new medical use are challenging and raise complex issues when it comes to determining the scope of the relevant protection. On the one hand, the patentee can prevent commercial use of the compound for the new indication. On the other hand, the patentee cannot prevent use of the compound for different and known indications. For example, if a compound known to be effective for the treatment of HIV was discovered to be effective also for the treatment of the coronavirus, a patent protecting the new indication should not hinder the known use for HIV treatment. In such case, drug manufacturers using the known compound would normally not cite (i.e., "carve out") the new protected indication on the relevant leaflets.

But the "carve out" strategy may not be so simple. The patentee would probably attempt, by implementing legal, regulatory and commercial measures, to prevent or limit the use of the known compound, in order to maximize its profits for discovering the new indication. In this context, the question arises whether protected use, which is relevant for a specific segment of the market, could hinder permissible use relevant for another segment of the market? This question has been a source of debate in different jurisdictions. Various legal tools (such as the contributory infringement doctrine) have been cited in this debate, and it appears that the last word in the matter still remains to be spoken.

Nevertheless, obtaining a patent does not necessarily guarantee patent protection in unusual times such as those being experienced during the current coronavirus crisis. The growing public health challenge posed by the COVID-19 pandemic in Israel coupled with concerns over a worsening of the outbreak, have created an urgent need for large quantities of potentially effective therapies for treatment of the virus. One such therapy is AbbVie's antiretroviral drug KALTERA® (lopinavir/ritonavir), indicated for the treatment of HIV.

As it turned out, AbbVie is currently unable to supply Israel's public health system with the required quantities of KALTERA®. At the same time, it transpired that a generic version of KALTERA® is available from a generic manufacturer operating in India. However, since KALTERA® is said to be covered by three Israeli patents assigned to AbbVie ("the KALTERA Patents), the last of which is set to expire in 2024 – the importation into Israel of the generic product from India would constitute patent infringement, and is thus prohibited.

The Patents Law includes several provisions which may be pertinent in the context of the exploitation of inventions in view of public needs. In addition to provisions allowing for the grant of compulsory licenses by the Commissioner of Patents under certain strict conditions (and in timelines that are apparently less relevant to the current crisis), the Patents Law also provides, in section 104, that a Minister designated by the government "may permit the exploitation of an invention by Government Departments or by any enterprise or agency of the State, even though a patent has already been granted for it or applied for, if it appears to the Minister that it is necessary so to do in the interests of the defence of the State or the maintenance of essential supplies and services". The Patents Law further provides, in section 105, that "the Minister may, if it appears to him that it is necessary to do so for the purposes mentioned in section 104, grant a permit under that section to a person operating under a contract with the State, with a view to ensuring or facilitating the execution of that contract and for the requirements of the State only.

Under these unusual and dramatic circumstances, and as a similarly unusual measure, the Minister of Health, Mr. Yaacov Litzman, exercised his power under sections 104 and 105 of the Patents Law, and permitted the exploitation of the KALTERA Patents by the Ministry of Health's Emergency Department and a private company, KS Kim International. Since the permit impinges upon AbbVie's exclusive patent rights, it is narrowly defined: the permitted exploitation of the KALTERA Patents is confined to the importation into Israel of generic KALTERA from a particular generic manufacturer, for the sole purpose of treating patients infected with the coronavirus. Accordingly, the permit does not allow for the use of generic KALTERA® imported thereunder, for the indication of KALTERA®, namely the treatment of HIV.

The issuance of the permit does not entail that AbbVie is deprived of compensation for the exploitation of the KALTERA Patents. According to the Patents Law, once a permit under sections 104 or 105 is issued, the State of Israel must pay the patent owner, or its exclusive licensee, royalties that will be agreed upon between the parties. In the absence of such an agreement, the royalty rate will be determined by the Royalties and Compensations Committee (the Committee), a statutory committee acting under the Patents Law and chaired by a former Justice of the Supreme Court, the Patents Commissioner, and a member of the academia.

If the Committee ends up being required to determine the royalty rate, the Patents Law provides that in doing so, the Committee must take into consideration, inter alia, the scope and nature of exploitation allowed under the permit. The Committee may also take into consideration royalty rates stipulated in licences similar in terms to the issued permit. Notably, however, the Committee's decisions are not subject to an appeal, and can only be challenged by way of a petition to the High Court of Justice (HCJ). The HCJ has already held, albeit in the context of the Committee's decisions in matters relating to compensation for employee inventions, that the scope of the court's intervention in the Committee's decisions is extremely limited, and reserved for exceptional cases.

It therefore remains to be seen whether the unusual permit issued today by the Minister of Health to exploit the KALTERA Patents will also be followed by similarly unusual proceedings before the Committee, to determine the royalties to be paid to AbbVie.

It should be noted that while the permit relates to a specific importer and specific supplier, it stands to reason that if other importers and suppliers of generic KALTERA® are found, the Minister of Health will issue similar permits.