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The impact of COVID-19 on the intellectual property legal landscape

April 27, 2020

By Mark Stallion

There are at least two primary questions intellectual property attorneys and their clients should address in the current pandemic or the next pandemic or other crisis event. The first is, what administrative concerns should we consider when maintaining and seeking intellectual property protection for crisis critical innovations? The second is, what should an intellectual property owner’s enforcement strategy be for crisis critical innovations?

Prior to addressing those questions, let’s look at the present state of affairs. In the current global pandemic, society is looking to past innovations and searching for new ones to address what some would categorize as a crisis moment. Many would predict that crisis moments like the present COVID-19 pandemic will occur again and again like birth pains with greater frequency. If these predictions are true, we should use this crisis moment to be better prepared for the next birth pain. There are many business and legal issues that have arisen during our current crisis moment, and some of those legal issues reside in the intellectual property space.

Intellectual property is often described as a construct or a mechanism or a means of protecting one’s innovations. Further, let’s keep in mind that it is often during challenging times or when faced with a problem for which no one has presented a reasonable solution that past innovations are leveraged or new innovations are birthed. Therefore, during a crisis moment, there are often crisis critical innovations that are direly needed. In light of the dire need for crisis critical innovations that are often the subject of an intellectual property right, how should one handle their intellectual property rights during such a crisis moment? This applies for both past innovations protected by an intellectual property right and new innovations that can be the subject of a new intellectual property right.

Crisis critical innovations, past or new, relevant for a particular crisis moment, could be in the area of research and development, manufacturing, distribution, or a specific technology or product. These innovations could be protected by patents, designs, trademarks, copyrights, trade secrets, proprietary information, data rights, and privacy rights. The innovations and related rights are often owned by those who have historically produced innovations relevant to a particular crisis moment. However, given the dire need, there will likely also be newcomers with new innovations.

Question 1: Administrative concerns to consider

Thankfully, intellectual property offices internationally have taken action to make sure intellectual property rights may remain safe if you cannot meet a deadline due to the COVID-19 outbreak. However, every effort should be made to meet deadlines leveraging the electronic filing tools available. Many offices are requiring that you file a request or a petition for an extension without actually changing the deadline. To the extent possible, leverage electronic filing as long as electronic filing systems remain functional. Intellectual property filings, both in the U.S. and abroad, should be accomplished as of the standard statutory or procedural deadline, notwithstanding any modifications the USPTO or other jurisdictions may make to deadlines .

Further, as it relates to new innovations and the time bars preventing seeking patent protection associated with not filing a patent application prior to a public disclosure, it is important to still file a patent application prior to public disclosure. In the current crisis moment, there is an obvious reason to rush to the market with a new helpful innovation for the public benefit even beyond self-interest. Therefore, intellectual property owners/applicants and their attorneys need to be diligent and vigilant with filings, while not delaying a product getting to the market. Also, keep in mind that just because you seek procurement of intellectual property rights during this time, that does not mean you have to aggressively enforce these rights during the current crisis moment or in future crisis moments. Your intellectual property will also have value outside of these crisis moments and may be leveraged in ways that are not necessarily crisis critical innovations.

From an administrative perspective, the following are some helpful links with national updates and updates from international patent offices:

It is important to keep in mind that even with the provisions being made for the patent and trademark U.S. deadlines, even during crisis moments, that does not relieve the burden of response in other jurisdictions, including deadlines for international applications, foreign fee payments, and the like. There are similar concerns about maintaining intellectual property rights across all jurisdictions, as each may or may not recognize altered deadlines elsewhere.

Question 2: Enforcement strategy:

There are various issues that may arise on the enforcement front during crisis moments, including:

  • counterfeit critical innovative products hitting the market domestically and/or being imported that use your branding or your design;
  • infringing products;
  • misappropriation of trade secrets, due to the likely high turnover of personnel
  • current licensing arrangements, particularly exclusive licensing arrangements, being impacted due to lack of enforcement or royalty-free licensing
  • sharing your intellectual property as part of a research and development collaboration to develop critical innovative solutions while still maintaining your intellectual property rights;
  • data rights and privacy when conducting contact tracing and infectious spread and other analytics;
  • offering of royalty free licenses or compulsory licenses; and many other issues.

When addressing any of these issues, it is important to maintain a balanced approach, balancing the public need and preserving your intellectual property right, while keeping your eye on the changing legal landscape. One must also first identify if in fact they are an owner of a critical innovative product that is protected by an intellectual property right. Although several of these issues are interrelated, let’s discuss one at a time.

Counterfeit products using your branding:

Inevitably, given the high demand for critical innovative products, counterfeits are hitting the market domestically or being imported that misappropriate a brand or a design. In critical moments, the demand for critical innovative products far exceeds the available supply. Often the incumbent brand and/or design owner can’t ramp up fast enough to meet the demand.

So how does the incumbent balance the public need with their own intellectual property right? One option is to do nothing and put your rights at risk. A second option is to aggressively enforce, thereby hurting the public and your goodwill reputation. The third option is to get ahead of the curve by quickly offering strategic licenses to licensees who can ramp up quickly and/or offering royalty free licenses both with limited scope, field of use and a short but potential renewable term. The third option appears to generally be the best solution, but circumstances may dictate otherwise.

Infringing products:

Similar to the issue of counterfeit products, there may be products hitting the market that infringe a patent right of an incumbent. The potential options for response are similar to those for counterfeiting. Again, the third option appears to generally be the best solution, but circumstances may dictate otherwise.

Turnover of personnel and trade secret misappropriation:

During tumultuous times, particularly if there is an economic downturn, companies often begin to rethink their business strategy, and individuals begin to consider potential moves. That said, there can be a significant number of personnel turning over in a short time, some of whom may have had access to trade secrets. Therefore, an owner of trade secrets must keep a handle on and police any transitions including conducting probative entry and exit interviews with certain personnel. In the case of trade secret misappropriation, enforcement may be the best option because if any trade secret is shared, it should be on the owner’s terms and not the result of a misappropriation without the owner’s knowledge.

Current licensing arrangements – some exclusive:

License arrangements, particularly exclusive license arrangements that existed prior to the crisis moment, may be at risk of being devalued if others are delivering crisis innovative products that would have otherwise been reserved for the licensee. Licensors have the obligation to preserve the rights of their licensees and at the same time preserve their own rights, including the right to license. Again, in this case, the best option is likely to get ahead of the curve by quickly offering strategic licenses to licensees who can ramp up quickly and/or offering royalty free licenses both with limited scope, field of use and a short but potential renewable term, but only to meet the demand that current licensees can’t meet.

Offering limited licenses:

A consideration may be potentially affirmatively and proactively offering royalty free licenses with limited scope and field of use and limited term, rather than waiting on a compulsory license being instituted by a government. But don’t just simply not enforce, and don’t just simply keep silent.

If a crisis continues to worsen, incumbent intellectual property owners of critically innovative products will inevitably feel the pressure of meeting the public need ‒ as they should, because those owners of critically innovative products who have benefited from the protections under the laws of an orderly society also have some obligation to the very society that provided those protective laws. Further, preservation of goodwill in the public eye is in the owner’s best interest. Therefore, get ahead of the curve and be proactive.

Sharing of technology and information between private and public institutions:

This may include technology, proprietary information, know-how, trade secrets and collaborations. During crisis moments, collaboration is always critical to solving the problem quickly and efficiently. Collaboration agreements are pretty standard and commonplace, so get them in place quickly and move forward. Even if every “T” is not crossed and every “I” is not dotted, a basic agreement is better than no agreement. Also, please, document, document, document everything.

Availability of open data for analyzing the progression of the virus:

Information, in particular BIG DATA, can be the gold standard during crisis moments. The questions become, who owns the data, how will the data be shared and are there some privacy concerns? Further, who owns the analytic that crunches the data and/or the resulting data the analytic outputs? Generally, handlers or owners of data should be agile while maintaining best security practices by controlling and tracking access.

If you are a newcomer

If you are not an incumbent or owner, but a newcomer to a technology or a product who is legitimately trying to meet a real demand and is rightly positioned to do so, keep the following in mind. First, misappropriating another’s brand for selfish gain is never an appropriate option under any circumstance. One option is to go ahead and willfully infringe an existing critical innovative product by reverse-engineering an incumbent’s product to meet the need, then deal with the fallout later and hope for grace. A second option is to create a new design from scratch, assuming they are rightly positioned with a design team and supply chain. With this option, they may also file for their own intellectual property rights. A third option is to quickly seek a license from an incumbent asking for preferred royalty rates to offset the investment to ramp up. The third option appears to be the most balanced, but again, circumstances may dictate otherwise.

Conclusions

The above issues when combined may appear to be daunting, but the general recommendation is to act early, proactively, quickly and with a balanced approach, never tossing conventional wisdoms aside. Never be draconian, and never price gouge with the potential of damaging your brand and long-term goodwill for a temporary gain.

The tide may be changing because even governments with a long track record of enforcing global intellectual property rules on behalf of corporations are suddenly rethinking these issues as the international community grapples with the COVID-19 pandemic – keeping in mind that this may be the first of many birth pains. Crisis moments like the present often leave a lasting mark, and the intellectual property landscape is not immune – no pun intended.

As a final note, intellectual property owners and applicants should work in unison with legal counsel to continuously monitor domestic and international rules, procedures and policies because there will likely be further changes.

Link to COVID-19 Resources page

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