IP Protection Waivers Risk Ceding US Tech Leadership, Experts Say

The U.S. should push the World Trade Organization to end trade-related intellectual property waiver conditions, experts told a House subcommittee this week, saying the waiver may help China acquire sensitive U.S. technologies and leapfrog American innovation in biopharma. Several experts during the hearing suggested the waivers could act as a loophole to U.S. export controls and allow Chinese companies to better compete with the U.S. in the biotechnology industry.

Rep. Hank Johnson, D-Ga., said he supported the waiver for the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) negotiated at the World Trade Organization last year (see 2206220032 and 2212190068) to aid in the distribution of COVID-19 vaccines, but he said industry has raised valid fears about any effort that undermines intellectual property protections.

“I do not dismiss the concerns of those who oppose the TRIPS waiver, and particularly those who fear that the Chinese government will take advantage of the waiver to access American technology, and to use this technology to compete with American companies,” Johnson said during the House Judiciary subcommittee hearing. “While we should not allow these concerns to stand in the way of protecting lives during a public health emergency, we should also ensure that proper guardrails are in place so that we do not facilitate placing our technology in the hands of our foreign competitors.”

Marc Busch, a professor of international business diplomacy at Georgetown University, called the TRIPS waiver a mistake, and WTO discussions about expanding the exemption to also cover COVID-19 diagnostics and therapeutics “will make things worse.” He said it will help China and other countries realize “their industrial policy goals” and could subject the U.S. to “economic coercion.”

“China is on the ascent in biopharma,” Busch said, citing a recent study from consultant McKinsey that said China will be “the leader in certain segments” by 2028. “The flow of technologies will undermine U.S. competitiveness,” he said, which could help give China a “lever” to use againt the U.S. in trade disputes.

He pointed to China’s recent “political trade wars” against Australia and Lithuania (see 2212070028), adding that Beijing is now targeting the U.S. with its recent restrictions against American chip company Micron (see 2306020053). “The idea of having a market concentration in any given technology will facilitate that type of economic coercion,” Busch said. “The more that China dominates certain of these sectors of biopharma, the more leverage they'll have through economic coercion, which implicates, of course, U.S. national security.”

China might also be able to indirectly access advanced technologies by using “other countries who avail themselves of the waiver as a point of access for stealing technologies,” said Dennis Shea, former U.S. ambassador to the WTO. Shea, now an official at the Bipartisan Policy Center, specifically pointed to Africa, which may be “appealing” to China as a pharmaceutical investment target because “many of the countries there avail themselves of TRIPS flexibilities.”

Shea also said the WTO shouldn’t extend the TRIPS waiver to cover more items, including green technologies, a proposal he said was recently backed by the WTO director general. “This is a slippery slope,” he said, “which, unfortunately, this precedent with the COVID-19 vaccine waiver has set.”

Shea added that there is “no compelling evidence” to show that IP protections have hindered global access to vaccines. The “primary impediments” have been trade barriers, “customs bottlenecks” and lack of storage capacity.

Marc Sedam, vice president of technology opportunities and ventures, at New York University's Langone Health, warned the waiver also risks stifling biomedical research and funding. He said researchers will fear that any intellectual property resulting from their work will be at risk of theft through the use of the waiver.

“Investors and university tech-transfer leaders can handle known risks: technical risks, market risk -- those things we understand, and we can use our best judgment to figure out how to protect them, commercialize them and get them to reach market,” Sedam said. “But when you add uncertainty to a risky situation, you'll stifle innovation, investment and opportunity.

“Whether it's at the patent office or the WTO, patent uncertainty is an innovation killer.”