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WTO TRIPS Waiver for COVID-19 Vaccines

Sharing the know-how behind making COVID-19 vaccines is key to scaling up production and addressing emerging variants.

A Q&A WITH ANTHONY D. SO, MD, MPA

The Biden administration announced it would seek a “TRIPS waiver” of intellectual property protections related to COVID vaccines. 

In this Q&A,  Anthony D. So, MD, MPA , a professor of the practice in  International Health , explains the waiver and what it could mean for COVID-19 vaccines.

What’s the TRIPS waiver for COVID vaccines all about?

The TRIPS waiver refers to a proposal, advanced by the governments of South Africa and India, to the World Trade Organization to waive intellectual property rights protection for technologies needed to prevent, contain, or treat COVID-19 “until widespread vaccination is in place globally, and the majority of the world’s population has developed immunity.”

In 1995, when the World Trade Organization came into existence, those signing up as members agreed that in exchange for the lowering of barriers to trade, they would abide by the Agreement on Trade-Related Aspects of Intellectual Property Rights, or TRIPS.

This Agreement, pushed by knowledge-based economies like the United States and the multinational, research-intensive pharmaceutical industry, imposed a base of protections for intellectual property rights, from patents to copyrights. Before this was negotiated, more than 50 countries did not recognize patent protection on pharmaceutical products. The TRIPS Agreement changed that, and after a transition period of 10 years, ratcheted up these requirements on all but the least developed countries.

Middle-income countries like India came into compliance by 2005. The TRIPS waiver just seeks to temporarily suspend these protections until the pandemic has ended, so the world can better access the knowledge needed to combat the worst pandemic in a century.

What’s the rationale behind waiving intellectual property protections for COVID vaccines?

Sharing the know-how behind making COVID-19 vaccines is key to not only scaling up production, but also bringing forward the second generation of vaccines we will need to address emerging variants.

No single vaccine manufacturer can produce enough vaccines to cover the globe, and demand has far outstripped supply, with high-income countries taking the lion’s share of reserved doses. Proponents of a TRIPS waiver wonder how it can be right for a multinational vaccine manufacturer to hold exclusive rights that can stop other firms from stepping up to meet the need for vaccines, particularly in markets not being served by current vaccine producers. They argue that the public already has paid once or twice for such innovation, either upfront in research and development (R&D) costs or through purchase guarantees of these products, or both.

Moderna’s COVID-19 vaccine—one of two now in use based on an mRNA platform—was paid for largely by the U.S. government, and in fact, Moderna has pledged not to enforce its patents related to the COVID-19 vaccine during the pandemic. However, making the Moderna vaccine likely involves other companies’ patented equipment and processes as well, so waiving patent protections on one piece of the process may not help other companies make the entire “recipe.”

This is why a TRIPS waiver is considered important to ensure other vaccine manufacturers would have the freedom to operate. It should also be acknowledged that a TRIPS waiver may accelerate scaling up some COVID-19 vaccines where untapped capacity for vaccine production still exists, and it may also encourage existing vaccine producers to step up their technology transfer efforts.

By noting its willingness to move forward with text-based negotiations over a TRIPS waiver at the World Trade Organization, the United States signaled a seismic shift in policy. However, it is only the beginning of a process.

Who is opposing the TRIPS waiver and why?

Other high-income countries, from EU countries and the United Kingdom to Japan and Australia, have yet to join the United States in supporting negotiations for a TRIPS waiver. Multinational pharmaceutical companies have vocally opposed the waiver, and disclosure forms from the first quarter of 2021 reveal that over 100 lobbyists had been enlisted to oppose the TRIPS waiver.

The main arguments boil down to protecting the incentive for future pharmaceutical innovation. The idea is that companies will be reluctant to invest in new technology if they feel that they cannot reap full financial benefit from their successes.

Yet before COVID-19 hit, R&D for pandemic vaccines was largely neglected by the private sector, and public financing understandably had to support this work. Many of the first COVID-19 vaccines that came to market relied on tax dollars to enable their effective development.

One of the key aspects of producing successful COVID-19 vaccines has been the process of stabilizing the COVID-19 spike protein. This innovation relied largely on public funding, and all of the vaccines currently on the U.S. market rely on this technology. But although they all benefited from publicly funded intellectual property, no vaccine company has stepped forward to join a global effort to voluntarily share its know-how through the COVID-19 Technology Access Pool (C-TAP), launched by WHO with the support of Costa Rica and 40 member state cosponsors.

Another question raised by opponents of the waiver is: Have companies been able to make a strong return on their investment? The answer appears to be yes. In a market almost entirely created by public sector purchase of vaccines for a pandemic, Pfizer brought in $3.5 billion in COVID-19 vaccine revenues in the first quarter of this year, with estimated profit margins in the high 20% range, by far its greatest revenue generator. Pfizer’s partner, BioNTech, received upfront public financing, both from the German government and the European Investment Bank, while Pfizer itself has secured 6 billion dollars thus far from the U.S. government in guaranteed purchases of its COVID-19 vaccine. So even if the TRIPS waiver were to enable other vaccine producers to meet the huge unmet demand, it is hard to argue that the public sector has not already provided multibillion-dollar incentives to bring forward needed innovation.

The pharmaceutical industry has also argued that the TRIPS waiver will not speed the scale-up of COVID-19 vaccines. This argument reflects the fact that the production process is very complex and difficult to develop without extensive support from existing manufacturers.

This may be particularly true for mRNA technology. While mRNA vaccine candidates are emerging in India and China as well, the intellectual property landscape for mRNA vaccines is highly fragmented, with a handful of pharmaceutical companies holding half of these patent applications. The TRIPS waiver would clear the path for these firms to move forward, as they enter clinical testing, without concern over conflicting patent claims that may not be resolved at pandemic speed.

Unlike Pfizer and Moderna, which make mRNA vaccines, AstraZeneca/Oxford has struck many more technology transfer agreements with vaccine producers in low- and middle-income countries for its vaccine based on adenovirus vector technology, which is easier to produce and distribute. Its vaccine price of $3 per dose is also less than half that of Pfizer/BioNTech’s vaccine in the African Union.

With first-generation vaccine producers already focused on booster doses to take on variants affecting high-income countries, will they be as focused when a variant spreads through lower-income country markets that largely remain unvaccinated? Two-thirds of the WTO’s members support the TRIPS waiver because they are unsure that their COVID-19 public health needs will be met by upholding patent protections as usual. Perhaps this reflects the experience of these countries’ governments in securing access to Pfizer/BioNTech vaccines, let alone the building blocks of knowledge to develop second-generation vaccines. Pfizer has been asking governments to put sovereign assets—such as federal bank reserves, embassy buildings, or military bases—as a guarantee against indemnifying the cost of future legal cases.

What else, beyond resolving intellectual property issues, is necessary to scale up vaccine production? 

These negotiations over a TRIPS waiver will not take place overnight, nor will scaling up the technology transfer and ramping up the manufacture of COVID-19 vaccines.   In a perspective piece for Cell’s new translational science journal, we recently discussed the complex issues involved in scaling up vaccine production and, importantly, ensuring that these vaccines make their way not only to high-income countries, but also more equitably to those in need across the globe. This will involve, among other things:

• Public investment in technology transfer
• Contracting of existing and new manufacturing facilities
• Sourcing other inputs like glass vials
• Pooled procurement facilities, from UNICEF to the Pan American Health Organization’s Revolving Fund for Vaccine Access, to buy and deliver the vaccines effectively.

 We will also need to prioritize scaling up second-generation vaccines that have been adapted to address emerging variants or that are better suited for delivery where ultra-cold chains do not exist.

Source:   So AD, Woo J. Achieving path-dependent equity for global COVID-19 vaccine allocation. Med 2021; 2(4): P373-377. DOI: https://doi.org/10.1016/j.medj.2021.03.004

What are the next steps?

For years to come, we will need COVID-19 vaccines. A sustainable and affordable pipeline—one that will deliver in a timely way to all in need, not just to those in wealthy countries—must be put in place.

In the best-case scenario, a TRIPS waiver for sharing COVID-19-related knowledge and technology can lay an important foundation to an innovation ecosystem that ensures a fairer path out of the pandemic than we took going into the pandemic.

But no one doubts that there is a tough road ahead in negotiating the text to this waiver and in all the work that follows so that it might make an effective difference. Other questions will naturally arise, including the approach to intellectual property for tests and treatments for COVID-19, as well as the sharing of key research findings and data.

In the near term, the U.S. should also commit to sharing-and-exchange mechanisms for COVID-19 vaccines, especially as uptake of vaccines slows.

We had proposed a temporal trade, for example, on the U.S.-reserved doses of the not-yet-approved AstraZeneca/Oxford vaccine with countries waiting and ready to use this vaccine now. By just swapping our line in the queue, vaccine doses may reach those in desperate need sooner. More such arrangements will be needed, particularly since AstraZeneca/Oxford vaccine supplies globally have since been disrupted with the unfolding COVID-19 resurgence in India, from where much of its manufacture had been sourced.

In the meantime, the world must not lose any time in scaling up the public sector investment in the rest of the supply chain, from manufacturing to logistical delivery of these vaccines. The U.S. can lead a coalition of the willing to build upon and extend the use of such vaccine platforms through technology transfer. History will remember what is done to meet this moment.

Anthony So, MD, MPA , is a professor of the practice in  International Health  and the founding director of the  Innovation+Design Enabling Access (IDEA) Initiative .

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TRIPS Waivers and Pharmaceutical Innovation

Blog Post by Chris Borges

Published March 15, 2023

By Christopher Borges

On June 22, 2022, the World Trade Organization (WTO) approved a waiver of intellectual property (IP) protections for COVID-19 vaccine patents, previously secured under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). The WTO is currently considering expanding this waiver to include COVID-19 diagnostics and therapeutics in addition to vaccines. As the U.S. International Trade Commission (USITC) investigates the implications of this expansion, it is important to understand what this waiver is intended to accomplish, explore whether it will be effective in the short term, and examine the long run impacts on the bio-pharmaceutical innovation system.

What Is the TRIPS Agreement?

TRIPS refers to a WTO agreement incorporating obligations related to IP protection into the global rules-based trading system. Active since 1995, TRIPS requires most WTO members to adhere to minimum rules for the protection of IP — such as patents, copyrights, and trademarks — and enforce these commitments domestically. By agreeing to respect IP protections, member countries receive certain benefits in return. For example, TRIPS allows WTO members to make exceptions to patent rights so long as they are “limited” and do not violate the “normal” use of the patent. States often employ this provision to advance their science and technology base by allowing their researchers to use patented research tools and techniques.

Why Was There a Call to Waive TRIPS IP Protections for COVID-19 Vaccines?

Despite COVID-19 vaccines being the fastest developed vaccines in history, global access to these vaccines remains uneven. The United States first administered COVID-19 vaccines in December 2020, yet, per the University of Oxford, as of March 1st, 2023, only 28 percent of people in low-income countries have received at least one dose of a COVID-19 vaccine.

Most of the vaccines approved for use are developed by firms in the United States, Europe, China, and Russia, but the Western-made mRNA vaccines are the most effective and therefore the most in-demand vaccines on the market. The wealth of Western nations along with the geographic distribution of mRNA vaccine producers enabled them to reserve large vaccine supplies early in the pandemic, effectively shutting out lower-income countries. Low-income countries currently have a 28 percent vaccination rate, whereas the United States had vaccinated 28 percent of its population by March 23rd, 2021.

Citing this disparity, many developing nations called on the international community to waive TRIPS IP protections for COVID-19 vaccines, based on the notion that allowing any company to manufacture the vaccines will boost production and, ultimately, vaccinations. South Africa and India first proposed a TRIPS waiver for COVID-19 vaccines in October 2020, drawing considerable support from over 100 lower-income countries. High-income countries, however, were initially opposed to the waiver on the grounds that it would have an adverse effect on innovation, drug quality, and drug safety. Negotiations continued for nearly two-years until the waiver was ultimately agreed to, with high-income countries easing their objections  once they were sufficiently supplied with vaccines.

What Does the COVID-19 Vaccine Waiver Do?

The COVID-19 vaccine waiver suspends certain requirements regarding the use of COVID-19 vaccine patents, such as ingredients and manufacturing processes. With this waiver, states can authorize domestic manufacturers to produce COVID-19 vaccines without the permission of the patent rights holder and, crucially, to export those vaccines to other countries.

The waiver was designed to be a short term action, taken as an emergency measure in the midst of a global pandemic. However, as implementing the waiver required all 164 WTO members to agree, it took nearly two years of deliberation to come to consensus. By the time WTO members agreed to the waiver in June 2022, the response to the pandemic had progressed considerably and over 12 billion vaccine doses had been administered.

Why Are There Calls to Expand the TRIPS Waiver?

The WTO is currently considering if the waiver should be expanded to include the production and supply of COVID-19 diagnostics and therapeutics. This would cover a broad category of products, including products utilized for diseases and conditions beyond COVID-19.

To date, the FDA has approved dozens of COVID-19 therapeutics. Oral antiviral treatments paxlovid and molnupiravir were quickly developed by Pfizer and Merck, respectively, and approved by the FDA in late 2021. Remsidivir, a therapeutic first developed in 2009 by Gilead Sciences, was repurposed to treat COVID-19 after studies concluded that it reduces the risk of hospitalization and death in high-risk patients by up to 87 percent.

The efficacy of these COVID-19 treatments prompted low-income countries and international organizations such as UNICEF to demand an expansion of the TRIPS waiver to include these drugs along with diagnostic tests. To continue combating COVID-19 — the World Health Organization (WHO) reported 70,000 new cases on March 1st — they assert that all medical tools must be made available to the fullest extent.

How Effective Is the TRIPS Waiver? How Effective Would the Expansion Be?

The COVID-19 TRIPS waiver has had minimal impact on overall vaccine access. As of the end of 2022, no country had declared intent to make use of the TRIPS waiver.

Global vaccine demand had plummeted by the time the TRIPS waiver was agreed to. In December 2022, the board of Gavi, a nonprofit that supplies vaccines to low- and middle-income countries voted to stop supplying COVID-19 vaccines to most nations due to lack of demand. This drop in demand indicates that the primary issue impeding vaccinations today is not lack of supply, but lack of distribution capacity. Administering COVID-19 vaccines across a population requires significant healthcare infrastructure which some developing countries lack , such as refrigeration to keep vaccines at low temperatures and a well-trained healthcare workforce. To increase global vaccination rates, efforts should focus on building healthcare infrastructure and distribution capacity, not facilitating additional vaccine production.

Currently, the supply of treatments to COVID-19 far outstrips demand as well. This is largely because secure IP rights have incentivized drug inventors to enter over 140 partnerships with manufacturers worldwide, boosting supply while transferring technology and tacit knowledge to these foreign firms. Secure IP rights assure companies that their inventions will not be stolen in the short-term, thereby allowing them to reveal their secrets and participate in these productive manufacturing partnerships. Expanding the TRIPS waiver to therapeutics would have little added benefit to access.

Further, expanding the TRIPS waiver to therapeutics will disincentivize the creation of new COVID-19 treatments. Biopharmaceutical research is expensive and risky — the R&D process for new drugs costs close to $1 billion on average, and only 12 percent of drugs which enter clinical trials are ultimately approved for use. Companies will simply not invest in creating new therapeutics if they will lose ownership of their IP should their huge and risky investment prove fruitful.

Can the COVID-19 TRIPS Waivers Damage the Biopharma Innovation Ecosystem?

IP rights advocates point out that undermining IP protections will weaken incentives for pharmaceutical companies to innovate. Bio-pharmaceutical research and development (R&D) costs are so high that private capital will not invest without the promise of exclusive rights on the output. While quick government action and spending in the early days of the pandemic accelerated the development of COVID-19 vaccines, the rapid response to COVID-19 was built on the long-term stability of IP protections.

For example, the science and technology behind mRNA vaccines, an essential tool in the fight against COVID-19, was supported over decades by both far-sighted government investment as well as through commercialization drawing on considerable private capital expecting a return. The success of mRNA vaccines was not a slam dunk, yet investors took the risk on the understanding that they would receive substantial returns should the technology prove effective. Throughout this long and risky R&D process, the secure and predictable assignment of property rights allowed universities, government labs, and large and small companies to cooperate effectively to develop mRNA vaccine technology, and, ultimately, deliver vaccines in record time.

By removing IP protections on COVID-19 vaccines and treatments, the WTO is weakening the incentives for companies to invest in financially risky technology in the future as, even if their venture is successful, they may lose IP protections which allow them to recoup their investment.

How Will the TRIPS Waivers Impact U.S. National Security?

Global trends such as climate change, urbanization, and rising meat consumption make future pandemics more likely. It is critical that the United States maintain a dynamic and innovative pharmaceutical industry to combat this threat.

Government action, in partnership with private industry, in the early days of the pandemic accelerated the rapid development and scale up of COVID-19 vaccines. Through a myriad of policies such as pre-ordering millions of vaccine doses, Operation Warp Speed expedited the development and roll-out of vaccines by months, saving thousands of lives.

While quick action played a key role in the overall response, however, a crucial lesson from COVID-19 is that waiting until a pandemic is declared to act will be too late. mRNA vaccine technology was developed over decades and sustained by a dynamic and innovative bio-pharmaceutical ecosystem that connects universities, government labs, and large and small firms in the industry. Because of this large body of pre-existing work, much of which was facilitated through the security and predictability afforded by IP protections, pharmaceutical companies were able to prototype COVID-19 vaccines within days of receiving the viral genome. Further, this ecosystem not only rapidly produced dozens of COVID-19 therapeutics, but also possessed an existing supply of drugs that proved effective in treating COVID-19. Without a long-standing healthy innovation ecosystem, this could not have happened.

TRIPS waivers undermine the U.S. pharmaceutical industry by degrading the IP protections which are essential to the pharmaceutical innovation ecosystem. Less innovation in the pharmaceutical industry means fewer vaccines and drugs in the future, leaving the United States and other nations less prepared for future pandemics and other health emergencies.

Christopher Borges is a research intern with the Renewing American Innovation project at the Center for Strategic and International Studies in Washington, D.C.

The Perspectives on Innovation Blog  is produced by the Renewing American Innovation Project at the Center for Strategic and International Studies (CSIS), a private, tax-exempt institution focusing on international public policy issues. Its research is nonpartisan and nonproprietary. CSIS does not take specific policy positions. Accordingly, all views, positions, and conclusions expressed in this publication should be understood to be solely those of the author(s). 

© 2024 by the Center for Strategic and International Studies. All rights reserved.

Chris Borges

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Improving Access to COVID-19 Vaccines: An Analysis of TRIPS Waiver Discourse among WTO Members, Civil Society Organizations, and Pharmaceutical Industry Stakeholders

Jillian kohler.

A professor at the University of Toronto Leslie Dan Faculty of Pharmacy, Dalla Lana School of Public Health, and Munk School of Global Affairs and Public Policy, Toronto, Canada, and founding director of the World Health Organization Collaborating Centre for Governance, Accountability and Transparency in the Pharmaceutical Sector.

A JD candidate at the University of Toronto Faculty of Law, Toronto, Canada, and research associate at the World Health Organization Collaborating Centre for Governance, Accountability and Transparency in the Pharmaceutical Sector.

Lauren Tailor

A PhD student at the University of Toronto Dalla Lana School of Public Health, Toronto, Canada, and a research assistant at the World Health Organization Collaborating Centre for Governance, Accountability and Transparency in the Pharmaceutical Sector.

Throughout the COVID-19 pandemic, international access to COVID-19 vaccines and other health technologies has remained highly asymmetric. This inequity has had a particularly deleterious impact on low- and middle-income countries, engaging concerns about the human rights to health and to the equal enjoyment of the benefits of scientific progress enshrined under articles 12 and 15 of the International Covenant on Economic, Social and Cultural Rights. In response, the relationship between intellectual property rights and public health has reemerged as a subject of global interest. In October 2020, a wholesale waiver of the copyright, patent, industrial design, and undisclosed information sections of the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS Agreement) was proposed by India and South Africa as a legal mechanism to increase access to affordable COVID-19 medical products. Here, we identify and evaluate the TRIPS waiver positions of World Trade Organization (WTO) members and other key stakeholders throughout the waiver’s 20-month period of negotiation at the WTO. In doing so, we find that most stakeholders declined to explicitly contextualize the TRIPS waiver within the human right to health and that historical stakeholder divisions on the relationship between intellectual property and access to medicines appear largely unchanged since the early 2000s HIV/AIDS crisis. Given the WTO’s consensus-based decision-making process, this illuminates key challenges faced by policy makers seeking to leverage the international trading system to improve equitable access to health technologies.

Introduction

Article 12 of the 1966 International Covenant on Economic, Social and Cultural Rights (ICESCR) recognizes every person’s human right to the enjoyment of the highest attainable standard of physical and mental health, while article 15 recognizes every person’s human right to enjoy the benefits of scientific progress. 1 Taken together, this necessarily includes every person’s right to access lifesaving health technologies, such as vaccines, pharmaceuticals, personal protective equipment, and diagnostics. Yet inequities persist, with as many as two billion people in low- and middle-income countries (LMICs) lacking regular access to essential medicines. 2

Throughout the COVID-19 pandemic, global access to COVID-19 vaccines has remained highly asymmetric despite efforts by global institutions, such as COVAX, to advance such access. 3 When combined with general product shortages, price gouging, export restrictions on health supplies, vaccine manufacturing know-how constraints, and “my nation first” procurement approaches by high-income countries, equitable access to COVID-19 diagnostics and health technologies has been severely undermined. 4 This inequity in access to medicines and health technologies has had a particularly deleterious impact on vulnerable groups throughout the pandemic, notably in LMICs. 5 Two years since the start of the pandemic, several high-income countries have achieved full vaccination coverage in 70%–99% of their populations, while only 15.8% of people in low-income countries have received at least a single dose. 6

Amid this unequal access to essential medicines and health technologies, the relationship between intellectual property rights and public health has reemerged as a subject of global concern. Pursuant to the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement), all World Trade Organization (WTO) members have an obligation to respect patents issued within their domestic intellectual property (IP) systems irrespective of a patented invention’s initial country of origin. 7 This includes all patents that protect technology essential to the manufacture of COVID-19 vaccines.

Patents are a type of intellectual property right that provides inventors with the temporary right to exclude others from making, selling, or importing their patented technology. 8 As such, patents serve to limit supply and raise prices when manufacturers exercise their monopoly power to under-produce needed pharmaceuticals or charge prices that are out of reach for the majority of populations. 9 These issues are not new and have been raised in discussions surrounding the supply of pharmaceuticals for major diseases, including HIV/AIDS and hepatitis C. 10 Given that nearly all COVID-19 vaccines approved for use are protected by at least one active or pending patent, similar concerns have been raised in the production of COVID-19 vaccines and the associated consequences that this has on health equity. 11

In October 2020, a wholesale waiver of the copyright, patent, industrial design, and undisclosed information sections of the TRIPS Agreement was proposed by India and South Africa at the WTO on the basis that such a measure would be necessary to ensure that intellectual property rights would not interfere with “timely access to affordable medical products ... or to [the] scaling-up of research, development, manufacturing and supply of medical products essential to combat[ing] COVID-19.” 12 In May 2021, the waiver was clarified as intended to apply to all COVID-19-related health products and technologies, including vaccines, therapeutics, medical devices, and personal protective equipment. 13 In March 2022, a compromise between the European Union, India, South Africa, and the United States was proposed to narrow the applicability of the waiver to just COVID-19 vaccines. 14 The compromise also sought to limit the availability of the waiver to only those countries that exported less than 10% of the world’s vaccines in 2021. 15 Government responses to the waiver and its proposed alternatives have been divided, but as of June 2022, WTO members agreed to a modified version of the limited March 2022 waiver applicable for five years to COVID-19 vaccines. 16 Further conditions notably include a restriction on the waiver’s availability to only developing country WTO members, country obligations to prevent the re-exportation of products made under the waiver, and a six-month extension of discussions on expanding the waiver’s scope to COVID-19 therapeutics and diagnostics. 17

To better understand the justifications and implications of the TRIPS waiver negotiations and June 2022 compromise, we identify and evaluate the positions of WTO members and other key stakeholders with respect to the waiver and its relationship to health as a human right. In doing so, we find that historical stakeholder identities and positions with respect to IP and access to medicines have remained largely unchanged. Given the consensus-based decision-making at the WTO, this suggests that political and structural barriers continue to play a large role in limiting policy makers’ ability to leverage the international trading system to improve equitable access to health technologies.

Methodology

A descriptive, qualitative study drawing on critical policy studies methodologies, focusing on how interests, values, and normative assumptions shape and inform policy formation and implementation, was conducted to analyze the public statements of WTO members, pharmaceutical stakeholders, and civil society organizations with respect to the TRIPS waiver. 18 In particular, a combined inductive and deductive thematic analysis was employed to identify reoccurring TRIPS waiver position rationales expressed across each stakeholder and position class and to specifically search for rationales grounded in human rights-related appeals. 19 Data were independently abstracted by AW and LT, with JK resolving any discrepancies through an additional round of review.

Document identification

Official WTO member positions on the TRIPS waiver were sourced from WTO General Council and TRIPS Council meeting minutes from October 2020 to June 2022, as well as all official WTO member submissions related to the COVID-19 TRIPS waiver. 20 Based on these documents, a final list of all WTO members and their positions with respect to the TRIPS waiver was compiled. This list was then verified for consistency with an internal Médecins Sans Frontières policy tracker, which the organization used to construct its public infographic on TRIPS waiver country positions and shared with the authors upon request. 21

Thirty statements from over 350 civil society organizations included for analysis were extracted from submissions to the WTO’s official COVID-19 public consultation docket and the Canadian Centre for Policy Alternatives TRIPS COVID-19 waiver civil society letter repository (see Appendix 1, available upon request). 22 Sixty-six pharmaceutical companies were included for analysis and were selected based on size (top 20 multinational companies by 2020 revenue) and involvement in COVID-19 product development (COVAX suppliers), with all TRIPS waiver-related press releases recorded. 23 Official statements made by pharmaceutical trade organizations Pharmaceutical Research and Manufacturers of America, Biotechnology Innovation Organization, International Federation of Pharmaceutical Manufacturers and Associations, and European Federation of Pharmaceutical Industries and Associations were also queried (see Appendix 2, available upon request).

Document analysis

Documents were analyzed to identify the following elements: (1) country/organization identity, (2) country/organization position with respect to the TRIPS waiver (support, neutral or undetermined, opposed), and (3) country/organization rationale for their TRIPS waiver position. Stakeholder positions with respect to the TRIPS waiver were determined based on their explicit endorsement or rejection of any iteration of the waiver before the March 2022 compromise, or their qualitative expressions of support for or objection to any iteration of the waiver before the March 2022 compromise. Stakeholders whose positions were expressed in multiple documents were deemed to have adopted the position expressed in the document reporting their most recent public statement. Stakeholders who released statements that did not clearly express support or objection to the TRIPS waiver were classified as neutral or undetermined and, due to the limited public statements available in this category, were not analyzed further for their position rationales. Explicit references to “human rights” or rights-based assertions to health found in these documents were separately extracted for analysis.

Overall, the majority of WTO members and surveyed civil society organizations expressed support for a COVID-19 TRIPS waiver—either in its original October 2020 form or limited March 2022 form. By contrast, nearly all pharmaceutical industry stakeholders who issued public statements voiced opposition to all iterations of the TRIPS waiver. While these positions align strongly with the historical approaches of these stakeholders, a survey of the specific rationales presented by each provides greater insight into the primary sources of axiomatic contention during the COVID-19 TRIPS waiver discussions. The following section provides a breakdown of each of these stakeholder groups’ positions with respect to the waiver, as well as the dominant rationales offered for these positions.

WTO members

Until June 2022, approximately 59% of WTO members expressed support for a TRIPS waiver, either as outright sponsors or through favorable endorsement of the waiver. Approximately 21% of members expressed opposition to the TRIPS waiver (with 28 of the 35 opposing members belonging to the European Union or the European Union delegation itself). The remaining 20% of member positions were undetermined, either because they did not publicly comment on the TRIPS waiver or because their comments refrained from expressing a definitive position with respect to the waiver. The breakdown of WTO member positions and their position rationales is outlined in Table 1 .

WTO member positions regarding the proposed TRIPS waiver

WTO member rationales for supporting a TRIPS waiver

WTO members in support of the TRIPS waiver advanced four main arguments: (1) the TRIPS waiver is required to address IP-based barriers to access that the existing voluntary and compulsory licensing system is ill-equipped to manage; (2) the TRIPS waiver is important as a tool for promoting further COVID-19 solutions that are consistent with the human right to health; (3) the TRIPS waiver should include vaccines, therapeutics, and diagnostics, since a waiver just for vaccines would be insufficient to adequately address COVID-19; and (4) the TRIPS waiver is a legitimate trade policy tool under the existing WTO rules. Below, each rationale is discussed in further detail.

• IP is a barrier to access that cannot be addressed by voluntary or compulsory licensing . Members in support of the TRIPS waiver all adopted the position that IP is actively serving as a supply barrier by preventing the mass manufacture of needed COVID-19 vaccines, therapeutics, and medical devices. Many further argued that this barrier cannot be adequately addressed through voluntary licensing agreements with manufacturers or by issuing compulsory licenses to expand supply. South Africa emphasized that voluntary licensing agreements suffer from a lack of transparency, impose geographic restrictions that often prohibit export even to developing countries, and typically have only a nominal effect on increasing overall market supply. 24 Many countries also argued that the country-by-country and product-by-product approach to compulsory licensing prescribed under articles 31 and 31 bis of the TRIPS Agreement, which enable countries to manufacture and import generic versions of patented products without a patent owner’s consent, undermined the cross-border and widespread use of compulsory licenses required to respond to an international pandemic. India emphasized that ownership disputes among COVID-19 vaccine patent holders would likely compound delays in the articles 31 and 31 bis processes, since countries would potentially need to identify and send notice to multiple litigating owners to ensure compliance with TRIPS compulsory licensing procedures. 25 A lack of domestic legal capacity to engage in compulsory licensing was also highlighted by some states as further support that compulsory licensing is inadequate for supplying COVID-19 vaccines, therapeutics, and medical devices at an international scale. 26
• A TRIPS waiver is a tool consistent with promoting the human right to health . Several WTO members highlighted the sharp inequities among high-income and low-income countries regarding access to COVID-19 vaccines. For example, Bangladesh underscored the effects of vaccine nationalism and the lack of access faced by least developed countries, highlighting that the richest 16% of the world had “pre-booked” the majority of vaccines until 2025. 27 In response to claims by opposing members that COVAX, rather than a TRIPS waiver, was the solution to ensuring equity, supporting members emphasized that “the problem with philanthropy [COVAX] is that it cannot buy equality.” 28 In a position summary document submitted by TRIPS waiver sponsors in September 2021, they underscored that the adoption of the TRIPS waiver would act “as an important political, moral, and economic lever towards encouraging solutions aimed at global equitable access to COVID-19 health products and technologies.” 29 The preambular text of the document emphasized that in seeking equitable health outcomes, the TRIPS waiver was consistent with “the right of everyone to the enjoyment of the highest attainable standard of physical and mental health” protected under article 12 of the ICESCR, as well as the “bold commitment” under United Nations Sustainable Development Goal 3 to ending communicable diseases, achieving universal health coverage, and providing access to safe and effective medicines and vaccines for all. 30
• A TRIPS waiver for just vaccines is insufficient . Several supporting members emphasized the importance of including all relevant health technologies—rather than just vaccines—within the scope of the waiver. In particular, sponsors urged WTO members to recall that “vaccines are necessary but not sufficient” and that personal protective equipment, diagnostics, ventilators, and therapeutics are all essential to preventing the spread and ensuring the treatment of COVID-19. 31
• A TRIPS waiver is an established and accepted option under existing WTO rules . Many supporting members highlighted that under article IX.3 of the WTO Marrakesh Agreement, waivers of obligations imposed under WTO trade agreements can be legitimately employed in exceptional circumstances. 32 In the October 2020 TRIPS Council meeting, this was affirmed by the WTO Secretariat, which stated that the Ministerial Conference “may decide to waive an obligation imposed on a Member by the Marrakesh Agreement or any of the [WTO’s] multilateral trade agreements.” 33 Supporting members have argued that approving a temporary TRIPS waiver to address urgent public health needs during the COVID-19 pandemic should thus be seen as consistent with, rather than an exception to, the rules-based multilateral trading system. 34

WTO member rationales for opposing a TRIPS waiver

Four primary rationales were advanced by WTO members opposed to the TRIPS waiver: (1) a TRIPS waiver would not be effective in increasing global supplies since patents and the TRIPS Agreement are not a barrier to access; (2) access to needed COVID-19 health technologies can be addressed through nominal modifications to the TRIPS compulsory licensing system; (3) a TRIPS waiver would introduce legal uncertainty to the international system, thus undermining existing licensing partnerships that are essential to expanding access; and, (4) a TRIPS waiver would undermine the growth of the IP-dependent health technology sector, contrary to domestic development interests. Below, each rationale is discussed in further detail.

• Patents and existing TRIPS obligations are not a barrier to access . Nearly all opposing members endorsed a view that the patent and other IP protection obligations mandated under the TRIPS Agreement are not a primary factor responsible for limiting access to needed COVID-19 vaccines, therapeutics, or medical devices. Instead, members urged that temporary demand shocks, manufacturing capacity constraints, and supply chain delays were “much more likely to have an impact on access than [intellectual property rights].” 35 Several members cited a 2021 interview with the Serum Institute of India’s CEO Adar Poonawalla, who stated that he believed global supply shortages were due to short-term scale-up delays rather than insufficient licensing to generic manufacturers by patent owners. 36
• Access to needed COVID-19 vaccines, therapeutics, and medical devices can be addressed through minor modifications to existing compulsory licensing rules. The European Union suggested that any IP-related access challenges arising during COVID-19 could instead be addressed through nominal changes to the TRIPS articles 31 and 31 bis compulsory licensing framework. In particular, the European Union argued that delays arising from the system’s existing country-by-country and product-by-product notification requirements could be overcome by implementing an emergency uniform notification requirement. 37 Under this alternate proposal, members would provide the WTO Secretariat with a single compulsory licensing notice outlining all vaccines and recipient countries that they planned on supplying under compulsory license, thus reducing alleged administrative burdens to compulsory licensing faced by members in support of the waiver.
• A TRIPS waiver would undermine existing voluntary licensing partnerships . Several members emphasized that a TRIPS waiver would do more harm than good by destabilizing the international IP framework, and in doing so, jeopardize existing voluntary licensing partnerships between patent holders and third-party manufacturers. In particular, Switzerland highlighted the importance of a “safe regulatory framework” that is “predictable and accountable,” and argued that the TRIPS waiver risked undermining the efforts of the 300+ international partnerships currently working to build production capacity. 38 The need for legal stability to ensure productive and effective technology transfer between originator and generic manufacturers was also underscored.
• A TRIPS waiver would undermine the development of domestic health technology industries . Several WTO members cited concerns that a TRIPS waiver would undermine innovation in the pharmaceutical sector, thus harming the development of their local industries. For example, while Chile acknowledged that “[the protection of] IP is not an end in itself,” it nonetheless viewed IP as an important tool for development. 39 Similarly, during early TRIPS waiver discussions, both Russia and El Salvador emphasized that “promoting and incentivizing innovation as a tool for boosting and accelerating development” was “a top national priority.” 40 As a result, El Salvador found it “difficult to reconcile” the waiver with the domestic development objectives that it had set as a country.” 41

Civil society organizations

Over 350 civil society groups, including access to medicines groups, HIV/AIDS organizations, global health and global justice alliances, and human rights groups, expressed strong support for the TRIPS waiver, with many further arguing that governments should view the waiver as a minimum first step to securing access to needed COVID-19 vaccines, therapeutics, and medical devices. Statements from these groups were often directly addressed to heads of WTO members, with requests that governments view the adoption of the waiver as an urgent matter. Four major rationales were advanced by these organizations: (1) the TRIPS waiver enables countries to overcome IP-based supply barriers that cannot be adequately addressed through voluntary or compulsory licensing; (2) the TRIPS waiver enables countries to uphold their human rights obligations; (3) the TRIPS waiver is a necessary but insufficient step toward achieving equitable access to health technologies during COVID-19; and (4) corporate profit should not be prioritized over equitable access. Below, each rationale is discussed in further detail.

• IP is a barrier to access that cannot be addressed by voluntary or compulsory licensing . Civil society organizations endorsed the view that IP obstructs the production and distribution of affordable COVID-19 health technologies. Many noted that relying solely on voluntary licensing is not a sufficient remedy, as historically it has “failed to leverage global expertise and capacity to scale up manufacturing and deliver equitable access.” 42 Furthermore, the existing compulsory licensing mechanism designed to lawfully circumvent these restrictions was seen to suffer from scaling issues. Many argued that countries are obliged to issue compulsory licenses on a country-by-country and product-by-product basis, and thus that the existing compulsory licensing system is ill-suited for rapid global distribution. It was asserted by many that addressing international access concerns through compulsory licenses “would create a monumental coordination crisis because of the possible need to initiate and win compulsory licensing proceedings in multiple jurisdictions.” 43 Groups highlighted that LMICs have been historically “discouraged from using compulsory licensing for access to medicines due to pressures from their trading partners and pharmaceutical corporations” and that the article 31bis compulsory licensing pathway has been successfully employed only once, to import patented pharmaceuticals to Rwanda. 44 The TRIPS waiver was promoted as a solution to overcoming these IP-related issues at a global scale necessary to addressing an international pandemic.
• A TRIPS waiver enables states to uphold their international human rights obligations . Many civil society organizations emphasized the role of a TRIPS waiver in ensuring equal access to critical health technologies consistent with the human rights to health, to receiving and imparting information, to education, to participating in cultural life, and to equally benefitting from scientific progress. In a letter signed by 107 groups, governments were urged to recognize the inequalities exacerbated by the COVID-19 pandemic, with an emphasis on the resulting unequal access to vital technological knowledge among countries. 45 These groups emphasized the importance of ensuring that essential COVID-19 research is made available immediately and everywhere, and argued that “removing legal barriers to knowledge is… needed for the massive, urgent scale-up of vaccine production.” 46 Others echoed WHO Director-General Tedros Ghebreyesus’s 2021 statement that “profits and patents must come second to the human right to health” in supporting arguments that COVID-19 vaccines, as the “common property of humanity,” must be made available as a matter of human rights. 47 The role of the TRIPS waiver as a tool for redressing global inequalities in access to COVID-related health technologies was asserted in most statements.
• The TRIPS waiver is necessary but insufficient for securing equitable access . Several civil society organizations framed the TRIPS waiver as the necessary but insufficient first of a series of measures that governments must take to ensure equitable access to lifesaving COVID-19 health technologies. 48 In addition, these groups advocated for know-how and technology transfer from patent holders to manufacturers in the Global South, increased direct investment into the expansion of manufacturing capacity in the Global South, and equitable dose sharing from the Global North to the Global South. 49 After the release of the amended waiver in June 2022, over 200 civil society organizations expressed dissatisfaction with the draft ministerial decision and the insufficiency of its application solely to COVID-19 vaccines, its exclusion of some of the world’s largest producers of medical tools, and its restriction of “the free movement and rapid distribution of needed medical products.” 50
• Moral appeal: corporate profits should not be prioritized over equitable access . Many civil society organizations adopted the moral position that governments should not prioritize the financial needs of the pharmaceutical industry over the immediate health of humans in need. Emphasis was placed on the collective state responsibility for human life, as well as the priority of this responsibility over states’ competing responsibilities to honor corporate monopolies. 51

Research-based pharmaceutical companies

Approximately 48.5% of pharmaceutical companies expressed opposition to the proposed TRIPS waiver, either by directly authoring statements or endorsing statements authored by industry-wide associations. These included five companies (AstraZeneca, BioNTech, Janssen, Pfizer, and Sanofi) that are currently partnered with COVAX for the purpose of supplying vaccines to LMICs, as well as pharmaceutical manufacturing trade associations Pharmaceutical Research and Manufacturers of America, International Federation of Pharmaceutical Manufacturers and Associations, and European Federation of Pharmaceutical Industries and Associations. Approximately 7.5% of manufacturers (Bharat Biotech, Biological E, CureVac, Gamaleya, and Moderna) released neutral statements about the TRIPS waiver, indicating a willingness to not enforce their own intellectual property rights but refraining from explicitly endorsing the waiver. The remaining 44% did not release statements about the TRIPS waiver.

The primary arguments advanced against the TRIPS waiver were that (1) a TRIPS waiver would not be effective in increasing global supplies since IP is not a barrier to access; (2) a TRIPS waiver would threaten innovation, thus reducing the pharmaceutical industry’s ability to produce lifesaving technologies; (3) a TRIPS waiver would undermine existing partnerships among manufacturers; and (4) a TRIPS waiver would not rapidly rectify vaccination deficits, which is the ultimate goal of the international COVID-19 response. These arguments are presented below.

• IP is not a barrier to access. Almost all pharmaceutical companies refuted the assertion that IP protection has limited access to patented COVID-19 health technologies throughout the pandemic. Instead, focus was placed on trade restrictions, distribution bottlenecks, and raw material scarcity. 52 Manufacturers emphasized the sufficiency of existing manufacturing capacity and supply chains to provide COVID-19 vaccines to the world’s population, stating that “in 2021, more than 40% of these [3 billion] doses are expected to go to middle- and low-income countries. We believe … that in the next 9 to 12 months, there will be more than enough vaccines produced.” 53 Given these assertions, the Pharmaceutical Research and Manufacturers of America and the International Federation of Pharmaceutical Manufacturers and Associations argued that a TRIPS waiver would be not only unnecessary but harmful to existing manufacturer efforts to expand access through voluntary licensing and technology transfer agreements. 54
• A TRIPS waiver threatens innovation . Pharmaceutical manufacturers frequently expressed their opposition to the TRIPS waiver on grounds that waiving IP protection would threaten innovation. Premised on the assertion that IP protections enable innovators to earn the returns necessary to finance risky pharmaceutical research and development (R&D), manufacturers asserted that a TRIPS waiver would undermine ongoing efforts to develop health technologies for new COVID-19 variants. 55 Manufacturers also cited the proposed waiver’s broader deleterious effects on scientific innovation at large, with Pfizer’s chairman and CEO releasing a public letter expressing concern that a TRIPS waiver would disincentivize scientific investments to the particular detriment of small, investor-dependent biotech innovators. 56
• A TRIPS waiver would undermine existing voluntary licensing partnerships . Throughout the pandemic, manufacturers of patented COVID-19 vaccines have underscored their efforts to ensure expanded access by entering into voluntary licensing agreements with third-party manufacturers. In implementing a waiver that would enable countries to suddenly cease enforcing domestic intellectual property rights, manufacturers argued that WTO members risked placing these ongoing inter-manufacturer supply agreements at risk. 57 Two key rationales were presented to support the assertion that IP enforcement is a vital component to ongoing voluntary licensing agreements. First, manufacturers argued that voluntary licenses enable patent owners to carefully pick partner manufacturers that are best equipped to produce quality products. 58 Without such oversight in place, it was alleged that the safety and efficacy of produced vaccines would be threatened. 59 Second, manufacturers asserted that a TRIPS waiver would exacerbate raw material shortages, thus undermining ongoing partnerships, as “entities with little or no experience in manufacturing vaccines [would be] likely to chase the very raw materials that [current manufacturers] require to scale production.” 60
• A TRIPS waiver is not a sufficiently rapid solution for rectifying international vaccination deficits . Several manufacturers acknowledged the importance of equitable access to vaccines but maintained that the proposed TRIPS waiver would be unable to rapidly rectify existing vaccination deficits. Instead, they asserted that focus should be shifted toward enhancing voluntary technology transfer arrangements, increasing health infrastructure funding, and expanding educational programs to combat vaccine hesitancy. 61 For example, a statement by AstraZeneca’s executive vice president of Europe and Canada emphasized that “the TRIPS process is no quick fix and could take many months—far too late for millions of people in underserved communities”—and advocated for a suite of “urgent response” measures, including not-for-profit pricing commitments by manufacturers, expanded regional supply chains, and voluntary technology transfer agreements with domestic manufacturers in the Global South. 62

Stakeholder rationales align with historic divides on the relationship between IP and access to medicines

Among the 131 WTO members that expressed a definite position with respect to the TRIPS waiver, we found that approximately 73% support the waiver (with 65 of 96 supporters endorsing the waiver as co-sponsors). Over 350 civil society groups overwhelmingly aligned with those WTO members in support of the waiver. By contrast, approximately 86% (30 out of 35) pharmaceutical industry stakeholders who issued or endorsed statements regarding the TRIPS waiver uniformly aligned with those WTO members opposed to the waiver.

WTO members opposed to the TRIPS waiver shared overlapping arguments with pharmaceutical industry stakeholders more frequently than endorsing WTO members did with civil society organizations (see Tables 2 and ​ and3). 3 ). The WTO members that were the most vocally opposed to the TRIPS waiver (the United Kingdom, European Union, and Switzerland) and whose arguments aligned most strongly with pharmaceutical industry stakeholders were also those members in which COVID-19 vaccine manufacturers (AstraZeneca, BioNTech/ Pfizer, and Moderna) maintain headquarters or major manufacturing facilities. By contrast, the WTO members that most frequently expressed support for the TRIPS waiver in alignment with civil society-backed rationales were those countries with large domestic generic manufacturing capacities (e.g., India) or that had previously considered or engaged in compulsory licensing for pharmaceuticals (e.g., South Africa, Malaysia, and Sri Lanka). This aligns with the view that in the context of the WTO, an institution primarily designed to facilitate the commercial exchange of goods and services between countries, many members’ decisions to support health-related proposals likely remain highly dependent on prevailing domestic economic priorities.

Comparison of dominant TRIPS waiver position rationales among supporting stakeholders

Comparison of dominant TRIPS waiver position rationales among opposing WTO members and pharmaceutical industry stakeholders

Notably, several dominant rationales offered by WTO members, pharmaceutical stakeholders, and civil society organizations reflect the same arguments raised during the HIV/AIDS crisis in the early 2000s surrounding the use of compulsory licenses to expand access to antiretrovirals. 63 At the time, pro-compulsory licensing advocates frequently appealed to states’ humanitarian obligations and emphasized the importance of protecting human lives over private profits, while pro-IP advocates rooted their position on grounds of recouping R&D costs, promoting innovation, and securing product quality. 64 The continued use of this language in the context of TRIPS waiver discussions—and the upending endorsement of compulsory licensing by TRIPS waiver opponents as a more feasible solution than the waiver—suggests that the relationship between IP and access to medicine remains highly contentious within the trade and health landscape despite the 2001 Doha Declaration on the TRIPS Agreement and Public Health. 65 Since the WTO operates as a consensus-based decision-making body, this continued division between members presents as a key policy obstacle for states seeking to leverage the international trade system to promote expanded access to health technologies within their domestic health systems.

The TRIPS waiver and human rights

Among all stakeholders, the importance of ensuring equitable access to COVID-19 health technologies has not been refuted. In TRIPS waiver discussions among WTO members, differences in vaccine prices and availability between high-income countries and LMICs were frequently highlighted by members as evidence of ongoing inequalities. For example, South Africa argued that it had been charged US$5.25 per dose for AstraZeneca’s vaccine while European Union members had been charged only US$3.50. 66 Several LMIC members also expressed frustration with the unavailability of vaccines for their own populations due to the bilateral supply deals negotiated in advance between high-income countries and manufacturers.

To varying degrees, all WTO members, civil society organizations, and pharmaceutical industry stakeholders that authored or endorsed statements related to the TRIPS waiver acknowledged the importance of rectifying the asymmetric distribution of COVID-19 vaccines between high-income countries and LMICs. However, only civil society organizations consistently framed this inequality in terms of explicit human rights considerations. Here, inequitable international COVID-19 vaccine deployment was frequently viewed as a violation of the human rights to health and to benefit from scientific progress, enshrined in articles 12 and 15 of the ICESCR. The TRIPS waiver was thus supported as an urgent measure explicitly required to rectify ongoing human rights violations. By contrast, WTO members largely refrained from employing human rights language during TRIPS waiver discussions, with the sole reference to article 12 of the ICESCR found in the preambular text of TRIPS waiver sponsors’ September 2021 position summary document. 67 WTO members opposed to the TRIPS waiver often couched their positions in terms of equitable vaccine access, citing either the independent or combined sufficiency of COVAX and inter-manufacturer voluntary licensing agreements in attaining this goal. Similarly, pharmaceutical manufacturers frequently underscored their post-scaling ability to supply vaccines to LMICs that were previously unable to secure doses at the beginning of the pandemic. Thus, while not always framed in terms of explicit human rights obligations, ensuring equitable international access to COVID-19 vaccines has been recognized as a desirable objective by TRIPS waiver proponents and opponents alike—with the efficacy of the proposed TRIPS waiver in successfully achieving this goal at issue.

Given members’ polarizing positions with respect to the TRIPS waiver and the WTO requirement that resolutions be passed through consensus, it is perhaps unsurprising that TRIPS waiver negotiations have struggled to advance. In an attempt to broker a compromise acceptable to all WTO members, the March 2022 TRIPS waiver solution proposed by the European Union, India, South Africa, and the United States sought to make the TRIPS waiver more palatable to opposing members while still providing members with a more streamlined alternative to the compulsory licensing system in articles 31 and 31 bis of the TRIPS Agreement. 68 Public responses to this proposal were largely critical. Civil society organizations decried the compromise as a partial measure incapable of meaningfully increasing access to COVID-19 health technologies and legally unprecedented in its narrow interpretation of the existing article 31 compulsory licensing regime. 69 Conversely, COVID-19 vaccine manufacturers emphasized the compromise’s lack of necessity given recent reports of vaccine overproduction and global demand reductions. 70 Comparable reactions were also elicited from these groups in response to the narrower June 2022 draft decision text. Notably, while civil society groups and pharmaceutical stakeholders alike demonstrated a strong reluctance to endorse compromises that deviated significantly from their original positions, the June 2022 compromise required many WTO members to endorse positions that they initially opposed. While this indicates that the rules-based international trading system remains capable of encouraging consensus-building among its members, the two years of debate preceding this decision suggest that trade-based public health measures are likely ill-suited as first-line responses to urgent and international public health crises.

Access to lifesaving health technologies, such as COVID-19 vaccines, remains starkly inequitable between countries. Responses by WTO members, civil society organizations, and pharmaceutical industry stakeholders to the proposed TRIPS waiver highlight universal acknowledgment of this unequal health impact of the COVID-19 pandemic. However, where proponents view the TRIPS waiver as a necessary first step toward eliminating IP-driven barriers to access during the pandemic, opponents largely assert that the TRIPS waiver is a political distraction that is both unnecessary and incapable of rapidly expanding the supply of COVID-19 health technologies.

Discourse surrounding the TRIPS waiver suggests that the global community seems to be expressing similar IP and public health arguments as those advanced during the HIV/AIDS crisis. This underscores the continued lack of reliability that countries face when looking to the international trading system as a means to advance public health imperatives and improve access to lifesaving health products. It also suggests the need for deep structural change and how lessons learned are often forgotten.

As WTO members consider the adoption of an expanded TRIPS waiver, the COVID-19 pandemic continues to spread globally with new emerging variants. Without improved international coordination, transparency, and consideration for the health and human rights of all global citizens, states risk remaining ill-prepared for future pandemics and global emergencies. Governments must therefore continue to collectively strive toward the development of equitable solutions so that meaningful progress can be made to improve global access to essential health products. Without decisive action, countries risk being unprepared for future public health crises and continuing to propagate patterns of health inequity.

Acknowledgments

We are grateful for the feedback received from Sharifah Sekalala, Katrina Perhudoff, Lisa Forman, and others during the Connaught Global Challenge Research Program’s “Advancing Rights-Based Access to COVID-19 Vaccines as Part of Universal Health Coverage” paper development workshop on May 17, 2022.

We thank the Connaught Global Challenge Award for funding for this research through the “Advancing Anti-Corruption, Transparency and Accountability Mechanisms to Tackle Corruption in the Pharmaceutical System” and the “Advancing Rights-Based Access to COVID-19 Vaccines as Part of Universal Health Coverage” grants.

Ethics approval

Since this research exclusively employed data obtained from public documents, no ethics approval was required.

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Discussion on the extension of COVID-19 IP waiver

At MC12, trade ministers adopted the Ministerial Decision on the TRIPS Agreement, which gives members greater scope to take direct action to diversify production of COVID-19 vaccines and to override the exclusive effect of patents through a targeted waiver over the next five years. It addresses specific problems identified during the pandemic and aims to help diversify vaccine production capacity. It also contains a commitment that no later than six months from the date of the decision (17 June), members will decide on its possible extension to cover the production and supply of COVID-19 diagnostics and therapeutics.

Many members took the floor to welcome the successful outcome at MC12, saying it proved that WTO members can put aside differences and work together to respond to the most urgent health challenges.

A group of developing members who support an extension of the waiver to cover COVID-19 diagnostics and therapeutics circulated a proposal at the meeting including an indicative timeline for the TRIPS Council's next steps in this regard.

These members argued that the waiver on COVID-19 vaccines falls short of their expectation and is not enough to help developing countries comprehensively address current and future health challenges. Equitable access to therapeutics and diagnostics, as pointed out by the World Health Organization (WHO), is critical in helping detect new cases and new variants. They said this waiver extension needs to be discussed with a sense of urgency given the fact that many least developed countries (LDCs) lack access to life-saving drugs and testing therapeutics.

Many developing countries supported the initiative. They highlighted the joint statement made by the three Director Generals of the WHO, the World Intellectual Property Organization (WIPO) and the WTO in June 2021 reaffirming their commitment to intensifying cooperation in support of access to medical technologies worldwide to tackle the COVID-19 pandemic, including vaccines, therapeutics and diagnostics. There was also a shared view that the negotiation process for the waiver extension should be open, inclusive and transparent.

Other members cautioned that more time was needed to conduct domestic consultations on a possible extension of the waiver to therapeutics and diagnostics. Some members also flagged the importance of an evidence-based negotiation as there was no evidence that intellectual property did indeed constitute a barrier to accessing COVID-19 vaccines. Some also reiterated the need for members to fully make use of all the flexibilities that already exist in the TRIPS Agreement (including compulsory licensing) before requesting new flexibilities.

The chair, Ambassador Lansana Gberie (Sierra Leone), asked members that were ready to engage to commence discussing this matter in various configurations. He encouraged members to individually report on progress to the General Council meeting on 25-26 July while some members may need more time to deliberate on the matter, he noted. The chair will inform members how best to structure discussions on this matter going forward, he added.

Members also agreed to continue exchanges under the agenda item of IP and COVID-19 so that the TRIPS Council can keep abreast of new IP measures in relation to COVID-19 and share relevant experience. The Council also decided that the Secretariat will continue compiling and updating all COVID-related IP measures in its document “ COVID-19: Measures regarding Trade-Related Intellectual Property Rights ” to serve as the basis for members' exchanges.

Members noted that this exercise is also in line with the Ministerial Declaration on the WTO Response to the COVID-19 Pandemic and Preparedness for Future Pandemics which provides for ongoing  analysis of  lessons learned and challenges experienced during the COVID-19 pandemic within the relevant WTO bodies.

IP and innovation: IP licensing opportunities

Under an item on IP and Innovation which had been requested by Australia, Canada, the European Union, Hong Kong China, Japan, Singapore, Switzerland, Chinese Taipei, the United Kingdom and the United States, the co-sponsors presented their new submission with a focus on IP licensing opportunities ( IP/C/W/691 , circulated on 23 June).

The co-sponsors highlighted several major ways owners of IP assets can secure a broader reach for their products and services through licensing agreements, which enable IP owners to allow the licensee to make or sell the invention during the licence period. This includes licensing of patents, copyright, trademarks and know-how.

The proponents shared experiences on how to apply different licensing models and build up a friendly ecosystem to foster IP trading. To overcome the knowledge gap and complexity of implementing IP licensing, these countries have developed various toolkits to provide training, online guidelines, contract templates, legal services and dispute settlement so that small businesses and individuals can effectively participate in IP partnerships.

Members welcomed the discussion on IP innovation and IP licensing, with some sharing their domestic practices. WIPO introduced its recent activities in support of IP licensing, including the establishment of an IP and innovation ecosystems sector, the work of the WIPO arbitration and mediation centre, and guidance to help start-ups develop their IP strategy.

Non-violation and situation complaints

WTO members welcomed the decision adopted at MC12 to extend the moratorium on non-violation and situation complaints (NVSCs) under the TRIPS Agreement until the next Ministerial Conference (MC13). The decision tasked members to continue examining possible scope and modalities for NVSCs and to make recommendations to MC13.

This concerns the longstanding issue of whether members should have the right to bring dispute cases to the WTO if they consider that another member's action or a specific situation has deprived them of an expected benefit under the TRIPS Agreement, even if no specific TRIPS obligation has been violated.

This moratorium was originally set to last for five years (1995–99), but it has been extended a number of times since then in the absence of agreement by members on what the scope and modalities could look like if non-violation and situation complaints were to apply to the TRIPS Agreement.

At the meeting, several developing countries suggested continuing the examination of the scope and modalities of such complaints, with the aim of making it applicable to WTO dispute settlement.  Some members backed the idea of seeking a permanent solution on this matter while others were concerned that allowing NVSC dispute complaints might jeopardize the flexibilities granted in the TRIPS Agreement.

More information on the TRIPS non-violation issue is available  here .

Technical cooperation and capacity building

WIPO briefed the meeting on the  WHO-WIPO-WTO COVID-19 Technical Assistance Platform , which offers a one-stop shop to help members and WTO accession candidates address their capacity building needs to respond to the COVID-19 pandemic.

The chair urged members to submit information on their activities in technical cooperation and capacity building as well as incentives for technology transfer by 12 September in preparation for the end-of-year annual review. Members are encouraged to use the online submission system ( e-TRIPS ) to make submissions.

Other matters

The European Free Trade Association was granted observer status for the next Council meeting.

Next meeting

The next TRIPS Council meeting is scheduled for 12-13 October 2022.

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TRIPS waiver of COVID-19 vaccines: Impact on pharmaceutical industry and what it means to developing countries

Affiliations.

• 1 Faculty of Law Jamia Millia Islamia University New Delhi India.
• 2 Department of Pharmacology Jamia Hamdard University New Delhi India.
• PMID: 34908905
• PMCID: PMC8661626
• DOI: 10.1111/jwip.12198

The WTO was formed in 1995 and since then countries have abide by Trade Related Aspects of Intellectual Property Rights (TRIPS). The agreement provides for comprehensive plan for patenting and protection including those of medical supply units including vaccines and diagnosis. Recently developing countries such as India and South Africa have demanded TRIPS waiver for access to vaccines for all the developing countries The TRIPS waiver demanded, would apply to vaccines, diagnosis, and treatment related to COVID-19. The waiver is important as it would allow member state in researching, manufacturing, and supplying of vaccines. The proposal by the developing countries for temporary waiver of IP rights argues that IP could impede the supply of COVID-19 drugs and vaccines. However, there is no near consensus as most of the developed countries opposed this stance and they even argue that waiving TRIPS is not going to ramp up the manufacturing process. The pharmaceutical industry is also against this stance of developing countries, they put their argument forward that waiving of the IP will inhibit research and development of future prospects.

Keywords: TRIPS; developing countries; public Health; vaccines; waiver.

© 2021 John Wiley & Sons Ltd.

One Step Forward, Two Steps Back? Ensuring a TRIPS Waiver Drives Health Equity

By Rachel Thrasher

Following a 17-month impasse, India, South Africa, the United States and the European Union have, as of March 15, 2022, negotiated a preliminary text for the much-anticipated waiver on Trade-Related Aspects of Intellectual Property Rights (TRIPS waiver) for COVID-19 vaccines. India and South Africa originally proposed a comprehensive TRIPS waiver to the World Trade Organization (WTO) in October 2020, seeking to facilitate greater and more expeditious access to COVID-19 vaccines and related products, particularly for developing countries.

While a significant milestone in the effort to vaccinate the world from COVID-19, the scope of the proposal matters greatly to its utility. As of now, the scope is narrow, with a focus on vaccine patent protection only, though there is room for expansion over the next six months. What does the text currently include? How could it be expanded to allow for maximum impact and what does it mean for the global fight against COVID-19?

Below is a breakdown of the positive developments of this proposed TRIPS compromise , as well as some key areas that should be addressed to boost regional vaccine production and build future pandemic resilience.

What’s included…

To start, the proposed text :

• Allows countries to waive patent rights (under Art. 28.1), pursuant to Art. 31 with some additional flexibilities (noted below).
• Allows countries to waive patent rights even if they don’t have a formal compulsory licensing regime, so they can use any type of government measure or action to get domestic generic production up and running.
• Allows countries to “bundle” the patents for a single vaccine. This is particularly important given the complex networks of patented inputs and processes surrounding mRNA vaccines.
• Allows countries to issue licenses for export without requiring that some percentage be used for domestic supply, and includes export to individual members, international supply channels like COVAX or regional joint initiatives. In this way, the waiver recognizes individual states are not the only actors receiving vaccines.
• Allows “adequate remuneration” calculated for innovators to include consideration of humanitarian and not-for-profit purposes of vaccine distribution.
• Remains in effect for up to five years from the date of the agreement.
• Includes a “peace clause,” prohibiting WTO complaints based on measures implemented under the waiver.
• Allows for further discussion about including diagnostics and therapeutics in the near-term future.

… And what’s not included

At the same time, there are some limitations in the current text, in that it :

• Applies only to countries whose vaccine exports amounted to less than 10 percent of global vaccines exports in 2021, effectively excluding China.
• Relies on the conventional compulsory licensing framework, largely requiring countries to identify through some legal process the need for a vaccine and the firm or firms that are licensed to produce it.
• Requires some remuneration for the patent holders in the case were a license is issued.
• Currently covers only patent protection (TRIPS Art. 28.1) and does not include trade secrets, copyright and other forms of intellectual property that might also place barriers to vaccine production.
• Currently covers only vaccines, not diagnostics, therapeutics or other treatment technology.
• Requires WTO members to police re-exportation so that vaccines may not pass through one country to end in a destination country (and holds countries accountable for failures in this respect).
• Requires members to notify the TRIPS Council of any measure pursuant to the waiver text – a requirement that does not currently exist even for traditional compulsory licenses.

The compromise: Where it came from, and where it must go to achieve global health equity

While the limitations of this proposed text understandably disappoint TRIPS waiver advocates, the outcome is far from surprising. When the United States Trade Representative (USTR) Katherine Tai came out in support of TRIPS waiver negotiations in May 2021, the language was limited to vaccines only. Moreover, the EU counter-proposal , largely a restatement of existing compulsory licensing “flexibilities” already present in the TRIPS Agreement, made it likely that negotiating countries would be reluctant to walk away from that familiar framework. Finally, given the difficulty (both politically and practically) of relying on a waiver to provide access to non-patent IP, such as trade secrets, the lowest hanging fruit was to focus on patent protection alone. 

Nevertheless, the text does respond to some of the real demands of waiver advocates. A major criticism of the EU compulsory licensing approach was that the procedures under TRIPS for compulsory licensing relies on (1) existing domestic laws and procedures not shared by all countries and (2) usually requires a product-by-product licensing process, such that each vaccine candidate might be covered by a network of complex patents . All this puts compulsory licensing out of reach for most of the world’s countries. In allowing countries to “bundle” licenses for patented products, and to rely on a diverse array of domestic legal procedures to issue those licenses, the text begins to address these major concerns. In leaving room for near-term negotiations to expand the scope to diagnostic and therapeutic products, it also responds to demands of earlier TRIPS waiver proponents and acknowledges that vaccines are not the only line of defense against the continuation of the pandemic. Ultimately, the text will need several revisions to effect substantial impact. 

Over the next few months, WTO members will have the opportunity to vote in favor of (or against) this negotiated text, as well as expand its scope beyond vaccines into other health interventions  – an essential component if the world seeks a comprehensive approach to health equity. However, an effective waiver cannot be limited to patent protection, or else many other aspects of protected intellectual property will present obstacles to developing new vaccine production. Moreover, any agreement must not create additional obstacles, such as TRIPS notification and new enforcement requirements. Finally, excluding China risks alienating a potential partner in health product development, exacerbating gaps in communication and cooperation among the world’s leadership. As many have echoed again and again, a TRIPS waiver, in any form, is necessary but not sufficient . Countries must incentivize and enforce parallel efforts to transfer technology and know-how to new vaccine manufacturers and provide financing for this massive effort to ramp up vaccine supply in new parts of the world. 

The proposed text is a significant first step but risks becoming a step backwards if efforts aren’t made to address shortcomings that risk the utility envisioned. It is time for the rest of the WTO member states to ensure a waiver that helps end the COVID-19 pandemic by negotiating a more complete agreement that includes therapeutics and diagnostics, goes beyond only patent IP, extends eligibility to all countries interested in increasing production and does not add onerous new legal obligations .

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Analysis of the 12th WTO Ministerial Conference Decision on the TRIPS Agreement

The MC12 TRIPS Decision makes available a new waiver, with respect to COVID-19 vaccines, of an existing obligation contained in TRIPS Article 31(f) that states that exports under a compulsory licence must be restricted to the non-predominant part of the authorized amount. However, paragraph 9 of the Decision explicitly states that it is without prejudice to existing flexibilities under the TRIPS Agreement, except with respect of paragraph 3(b) that sets out the new waiver. This means inter alia that neither Article 31(f), which still allows the non-predominant part of supply under a compulsory licence to be exported, nor Article 31 bis , which incorporates the first waivers given of Article 31(f), are superseded by this Ministerial Decision. Thus, these two options remain open, there being no restriction on products under Article 31 and pharmaceuticals, being the only products covered under Article 31 bis .     

It is unclear why instead of further simplifying Article 31 bis , WTO Members chose to add a third option through this Decision on COVID-19 vaccines. The waiver of Article 31(f) contained in this Decision is qualified and is subject to several conditions, as is the case in Article 31 bis . The analysis below will try to throw light on how the Decision differs from existing two options from the perspective of developing country Members. This blog first sets out the features of the MC12 TRIPS Decision that are favourable, or at least neutral vis-à-vis the existing options, and then details those that are less favourable or even more restrictive than the existing options. No claim is made to comprehensiveness.

Features of the MC 12 TRIPS Decision that are favourable or neutral vis-à-vis existing options for compulsory licensing under TRIPS

Alternative instruments to grant use without authorization : It has been clarified in paragraph 2 of the Decision that the “law of a Member” referred to in the chapeau of Article 31 is not limited to legal provisions on compulsory licensing, but also includes other acts, such as executive orders, emergency decrees, and judicial or administrative orders. While use of such alternative instruments may not have been ruled out in Article 31 nor Article 31 bis , this appears to have been a useful clarification for some developing country Members.

No requirement of prior authorisation of right owner : Unlike in Article 31 bis, developing country Members that use this Decision need not require the proposed user in their jurisdictions to make efforts to obtain a voluntary licence under reasonable commercial terms within a reasonable period of time as set out in Article 31(b). In practice, Members implementing Article 31bis did have the flexibility to incorporate very short periods of time to try to obtain such licences.

Notifications required but different: The notification requirements to the WTO for developing country Members that use this Decision, either as importers or as exporters, are set out in its paragraph 5 and the corresponding footnote. Unlike in Article 31 bis , both sets of Members will have to notify the name and address of the authorized entity, the products for which the authorization has been granted and the duration of the authorization. In addition, the quantities for which the authorization has been granted and the countries to which the products are to be supplied must be notified (presumably by the exporting Member) as soon as possible after the information is available.  However, unlike in Article 31 bis , importing country Members do not have to notify their intention to be importing Members, nor self-declare (if they are not least developed country Members) that they do not have manufacturing capacity to make these vaccines themselves.

No distinctive marking for exported COVID-19 vaccines: An important difference with Article 31 bis is that exporting developing country Members do not have to require exporters to specifically label or mark their products to distinguish them from originator products. Perhaps, this requirement was removed since there is now an absolute requirement on importing Members to prevent re-exportation (see below). Consequently, exporting country Members do not have to notify the WTO of the distinguishing features of their labelling and marking of COVID-19 vaccines. Since all manufacturers do have to mark and label their exports, the advantage gained may be debatable.  

Features of the MC12 TRIPS Decision that are less favourable vis-à-vis existing options to export under a compulsory licence under TRIPS

Use limited to developing country Members : Unlike in Article 31 and Article 31 bis , only developing country Members of the WTO are eligible to use the Decision either as an importing or as an exporting Member. Indeed, developing country Members with existing capacity are encouraged in footnote 1 of the Decision to make a binding commitment not to avail themselves of the Decision. China’s statement in the General Council meeting on 10 May 2022 is taken as one such binding commitment. The reasoning behind this restriction – whether realistic or not – appears to be that since the goal of the proponents of the original waiver proposal (in IP/C/W/669 and its revision) was to encourage local manufacture in developing countries, the Decision should be used more by those that do not currently have manufacturing and export capacity for COVID-19 vaccines. The goal under Article 31 bis differed – it was to supply generic medicines under export compulsory licences to Member countries that lacked manufacturing capacity, irrespective of where these were manufactured.

Stricter obligation on re-exportation : Those developing country Members that do import under this Decision have a binding obligation to undertake all reasonable efforts to prevent the re-exportation of the products manufactured under this Decision. The Decision allows in footnote 3 that, “in exceptional circumstances”, such an importing Member may re-export COVID-19 vaccines to another developing country Member for humanitarian and not-for-profit purposes, as long as such transactions are notified to the TRIPS Council. In contrast, in the terms set out in in paragraph 3 of the Annex to the TRIPS Agreement, this same obligation was heavily negotiated and is qualified. Here importing Members are only obliged to take measures to prevent re-exportation when such measures are 1) reasonable, 2) within their means, 3) proportionate to their administrative capacities, and 4) proportionate to the risk of trade diversion.

No double remuneration exemption: Compulsory licences – whether issued in the exporting or importing country Members – are subject to adequate remuneration under Article 31(h). However, unlike paragraph 2 of Article 31 bis , which exempts the importing Member from paying remuneration once it has already been paid in the exporting country for the same products and quantities, this Decision makes no mention of this “no double remuneration” clause. This means that those importing developing country Members that use this Decision to import COVID-19 vaccines under a compulsory licence are not explicitly exempted under it from paying adequate remuneration, unlike under Article 31 bis . Since importing Members have to change domestic laws to be exempt from paying patent owners, legal certainty on this point is important.

New standard for remuneration: Deviating from language used in Article 31 bis where remuneration has to be based on the economic value of the authorisation to the importing Member, this Decision makes it optional to take into the account the humanitarian and not-for-profit purpose of the specific vaccine distribution programs aimed at “providing equitable access to COVID-19 vaccines in order to support manufacturers in eligible Members to produce and supply these vaccines at affordable prices for eligible Members.” (Emphasis added).  Thus, a new standard of requiring a humanitarian, not-for-profit royalty rate, which results in both supporting local production in exporting developing countries as well as affordable prices in importing developing countries, is set in this Decision. It is unclear why footnote 4 was added since the paper referred to therein does not explain how such a balance could be found.

Ambiguity on test and other data protection : Paragraph 4 of the Decision states – as if it is a fact – that it is understood that TRIPS Article 39.3 does not prevent a developing country Member from enabling rapid approval for use of a Covid-19 vaccine produced under this Decision. Article 39.3 in TRIPS itself does not mandate regulatory data exclusivity and allows such data to be disclosed in public interest. Article 31 and Article 31 bis are silent about the relationship between the test data and compulsory licence provisions, giving Members the freedom to suspend any data exclusivity provisions in place to benefit the compulsory licensee. In any case, those Members that have introduced regulatory data exclusivity, pursuant to bilateral/plurilateral Free Trade Agreements, may have less flexibility unless those commitments are amended separately.

No special waiver for Regional Trade Agreements with majority LDC membership: Unlike the provision in paragraph 3 of Article 31 bis that was aimed at benefiting African countries in that they need not notify the WTO of use if it was within a RTA with majority membership of least developed countries, there is no corresponding provision in this Decision. This second waiver of Article 31(f) has never been used but was seen as valuable in those negotiations.

Limited duration of the Decision : Unlike in Article 31 or Article 31 bis where there are no time limits, developing country Members can issue authorisations under this Decision for a period of five years from the date of adoption of this Decision. This period could be extended by the General Council taking into account the “exceptional circumstances” of COVID-19 at that time. Presumably, a limited waiver was warranted for a time-limited pandemic. Even the proponents of the original waiver sought the duration of three years in IP/C/W/669/Rev.1, albeit for a much broader waiver of several TRIPS provisions. However, it is unclear whether the authorisations already issued by this date to private companies/third parties could continue to be valid beyond this date as there appears to be no time limit laid down for such authorisations, other than the logical limit up to patent expiry, just as in the case of Article 31 (except a generic requirement to rescind these once the purpose is met) or in Article 31 bis .

To conclude, this Decision includes provisions that, on the one hand, facilitate use without the authorisation of the right holder for the export/import of COVID-19 vaccines and, on the other hand, either includes those that are stricter or cause more legal uncertainty than the existing provisions, or ignores several existing provisions in Article 31 bis that are favourable for developing countries.  Thus, it is legitimate to question whether, on balance, this Decision makes the terms and conditions of waiving Article 31(f) more or less favourable for developing country Members for the export and import of COVID-19 vaccines than those already available inter alia under Article 31(f) and 31 bis . Since these existing legal avenues for export under a compulsory licence remain open, it remains to be seen if the Decision will be acted upon by developing country Members. However, the clarification of points of legal uncertainty may need to be borne in mind when WTO negotiations, which are to be concluded within six months, begin on the inclusion of COVID-19-related diagnostics and therapeutics.

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Jerome Reichman says

July 9, 2022

Very helpful . Well done, best wishes, Jerry Reichman

Jayashree Watal says

July 12, 2022

Thanks Jerry - am glad you found it helpful. Warmly, Jayashree

Fernando dos Santos says

July 14, 2022

Many thanks for this analysis Prof. I am indeed trying to write something on the added value of this Decision. This gave me some insights. Fernando dos Santos

Language selection

Item 15 – waiver from certain provisions of the trips agreement for the prevention, containment and treatment of covid-19.

December 10, 2020 – Intervention by Canada

Thank you Madam Chair.

Canada is pleased that Members were able to reach consensus on the status report, and indeed as to the next steps in this important discussion.

Canada is confident that Members will be able to resolve any concrete obstacles identified by Members in an evidence-based and consensual manner.

Contrary to some reports, Canada has not rejected this proposal. Indeed, at the October meeting of the TRIPS Council, Canada had indicated its interest in hearing about the specific, concrete IP challenges of Members in procuring COVID-19 treatments and other related technologies.

As Canada has expressed at the October meeting of the TRIPS Council, Canada’s longstanding view is that IP rights can serve as an important incentive to innovation, while ensuring that there is an appropriate balance between protecting IP rights and promoting access to medicines and other health care technologies. Canada remains of the view that the multilateral framework under the TRIPS Agreement establishes an important balance in this regard.

In particular, the TRIPS Agreement contains a number of important flexibilities that are affirmed under the Doha Declaration on the TRIPS Agreement and Public Health. Canada also notes that IP rights are only one part of a broad discussion informing the availability and accessibility of medicines; indeed, as the Doha Declaration emphasizes, the TRIPS Agreement is part of the wider national and international legal and regulatory framework to address public health problems.

Canada also has a systemic interest in upholding the international rules-based trading system with the WTO at its core. Canada is fully available and interested in hearing about concrete challenges faced by Members in addressing the pandemic, while noting our very strong preference for approaches to any trade issues that work within and leverage the international trading system to its full extent.

While Canada did hear from a few Members on concrete IP challenges in procuring COVID-19 treatments and other related technologies, and Canada appreciates their engagement, no regime-level weaknesses, obstacles or inefficiencies that would necessitate a waiver have yet been identified. Canada believes that the concerns raised can be addressed through the TRIPS Agreement itself and the flexibilities it contains, chiefly the mechanisms outlined in Articles 31 and 31 bis .

Since October, Canada has heard mostly about concerns in relation to the domestic implementation of Article 31, or in relation to Article 31 bis . Canada does not see these concerns as suggestive of issues with the TRIPS regime such that would necessitate a waiver. Canada remains the only Member to have used the special compulsory licensing system under Article 31 bis , and can thus observe, on the basis of concrete experience, that the system worked as intended. Canada has heard that the Article 31 bis system having been used only once suggests that the system is inadequate. Rather, Canada believes that this suggests that the overall TRIPS regime works well, as part of the broader international framework, and provides Members with sufficient latitude and flexibility, such that there has been limited or no need to issue compulsory licenses under Article 31 bis . Canada’s interest in hearing about the specific, concrete IP challenges of Members, particularly now in relation to COVID-19, very much remains, as does our longstanding and steadfast commitment to balanced international IP rules and to the multilateral framework that the TRIPS Agreement provides to that end.

Canada has reviewed the patent landscape and other information provided by South Africa in IP/C/W/670, and thanks South Africa for compiling this information. While the information provided does give some indications as to the concerns of South Africa and other Members, Canada believes that more concrete information regarding the specific IP issues faced by Members in relation to the TRIPS Agreement, including in respect of the procurement of COVID-19-related goods, the establishment of local production of COVID-19-related goods, and the use of the flexibilities of the TRIPS Agreement in relation to COVID-19, would be most useful in facilitating a constructive, evidence-based discussion, and in fostering mutual understanding. In particular, Canada remains interested in seeking clarification on any IP-related barriers experienced by Members related to, or arising from, the TRIPS Agreement, including with respect to the implementation of TRIPS flexibilities.

On a related note, Madam Chair, Canada would like to take this opportunity to present, for the record, the communication from Australia, Canada, Chile and Mexico of November 27 in IP/C/W/671, and titled Questions on Intellectual-Property Challenges Experienced by Members in Relation to COVID-19 .

There is a need for a comprehensive and global response to the pandemic that leverages the entire multilateral trading system in supporting the research, development, manufacturing, and distribution of safe and effective treatments for COVID-19. This includes key initiatives such as the Access to COVID-19 Tools Accelerator and the COVAX Facility, as well as ongoing work in the WTO and elsewhere towards safeguarding and protecting global supply chains. These and other consensus-based, multilateral solutions represent, we believe, the most effective collective response to these global challenges.

In this spirit, and with a view to promoting further dialogue, and fostering mutual understanding and evidence-based discussion, Canada and co-sponsors Australia, Chile and Mexico submitted, on Friday, November 27, a communication numbered IP/C/W/671 containing a set of questions on IP challenges experienced by Members in relation to COVID-19. This communication seeks to better understand the nature and scope of any concrete IP barriers experienced by Members related to or arising from the TRIPS Agreement such that would constitute impediments to the fight against COVID-19. The co-sponsors would welcome any responses to these questions, such as at the present meeting of the TRIPS Council or ideally in writing as WTO documents. The co-sponsors would also be pleased to answer any questions that Members may have on our communication.

We look forward to an evidence-based and fruitful discussion of these important issues, and also look forward to further exchanges in the TRIPS Council in this regard.

Madam Chairperson, Canada is actively committed to a robust global effort to stop COVID-19 and address its devastating health, social, and economic impacts on people across the world. Canada has shown strong leadership in this regard, including through a contribution of CAD 120 million to the Access to COVID-19 Tools Accelerator, which Canada co-launched with other world leaders in May, a contribution of CAD 220 million to the COVAX Advance Market Commitment to purchase doses for low- and middle-income countries, and an investment of CAD 180 million to address the immediate humanitarian and development impacts of this crisis, helping communities in developing countries mitigate and address the challenges brought about by COVID-19. This funding will support programming aligned with international response plans on priorities, such as essential food security, nutrition, and education initiatives. This new financial support for international efforts to address COVID-19 is in addition to the CAD 200 million in international development assistance provided by Canada to date.

Canada remains actively committed to a robust, multifaceted, and global effort to address the pandemic, one that draws upon all of the necessary resources and tools available in the international rules-based trading system, as well as new mechanisms for global cooperation on the procurement of treatments for COVID-19. As equitable, timely, and affordable access to testing, treatments, and effective vaccines will be critical for controlling and ending this pandemic, we look forward to continued engagement with all members of the international community, including here at the WTO, to finding solutions to these global challenges.

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WASHINGTON – United States Trade Representative Katherine Tai today released a statement announcing the Biden-Harris Administration’s support for waiving intellectual property protections for COVID-19 vaccines.

“This is a global health crisis, and the extraordinary circumstances of the COVID-19 pandemic call for extraordinary measures.  The Administration believes strongly in intellectual property protections, but in service of ending this pandemic, supports the waiver of those protections for COVID-19 vaccines. We will actively participate in text-based negotiations at the World Trade Organization (WTO) needed to make that happen. Those negotiations will take time given the consensus-based nature of the institution and the complexity of the issues involved.  

“The Administration’s aim is to get as many safe and effective vaccines to as many people as fast as possible.  As our vaccine supply for the American people is secured, the Administration will continue to ramp up its efforts – working with the private sector and all possible partners – to expand vaccine manufacturing and distribution.  It will also work to increase the raw materials needed to produce those vaccines.”

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UK Statement on Ministerial Decision on the TRIPS Agreement

UK statement on Paragraph 8 of MC12 Decision on the TRIPS Agreement adopted on 17 June 2022. This statement was delivered at the WTO in Geneva on 14 June 2023.

Paragraph 8 of the Ministerial Decision on the TRIPS Agreement adopted on 17 June 2022.

The MC12 decision on COVID-19 vaccines was brokered in a particular context of the pandemic and was clear in its scope and applicability. The landscape for COVID-19 vaccines is very different to that for therapeutics and diagnostics, both in terms of supply and demand dynamics, and the scope of products covered. At present, the UK has not formed a conclusion on an extension, and we are still considering our position. The UK supports discussions, led by evidence and facts, as a necessary step to determine whether an extension is required, taking into account other factors, including unintended consequences that a broader scope may bring.

We welcomed the discussion papers circulated last year, by Mexico and Switzerland, and Chinese Taipei, as important contributions to the discussion. We understand that pertinent questions raised by these submissions are yet to be addressed.  These relate to, among other things, identifying if any barriers to accessing COVID-19 therapeutics and diagnostics are caused by IP, how product scope could be defined, the current supply and demand dynamics for these products, as well as concerns over the broad scope of a possible extension.

Chinese Taipei’s paper raised two fundamental questions: whether IP rights are the cause of insufficient accessibility, and whether an extension of the Decision will help. Their paper also notes the role of patents in incentivising innovation and how weakening patent protection could adversely affect collective efforts to fight the pandemic.

The UK shares the view that more patent applications do not equal restricting access to products and instead are proof that the current IP framework provides confidence to innovators to develop new products. It is important to note that businesses of various sizes, including micro, small, and medium enterprises, are involved in the development and manufacture of therapeutics and diagnostics. Patent protection is a way to help these businesses, particularly the MSMEs, attract investment. We would therefore be interested to better understand the concerns expressed by some members that a growing number of patent applications should be interpreted as the patent system blocking access to therapeutics and diagnostics.

The paper also helpfully notes that a key factor to increasing production and enhancing access to therapeutics is closer industrial cooperation between originators and generic producers.

The number of voluntary license agreements in place for COVID-19 therapeutics is noted by Mexico and Switzerland in their submission. They say that, as of 11 October 2022, 138 bilateral or Medicines Patents Pool-based voluntary licensing agreements comprising some of the most highly demanded treatments have been signed all over the world. These agreements cover more than 127 countries. The UK recognises the essential role of generic manufacturing and has reiterated that it should be enabled by voluntary licensing agreements which include technology and know-how transfer. It is positive to see these partnerships formed in the COVID-19 therapeutic space. We believe that discussions on how to promote technology transfer and voluntary partnerships can be fruitful, and the UK stands ready to engage constructively with Members on this topic.

We remain of the view that TRIPS strikes the right balance between incentivising innovation and ensuring access through the flexibilities enshrined in the Doha Declaration. Therefore, decisions on TRIPS should be underpinned by evidence-based policy making as businesses of various sizes and all around the world rely on certainty in the international IP framework to seek effective protection for their inventions. Changes that could potentially weaken the ability of this framework to incentivise investment and innovation risk impacting our ability to tackle health emergencies both now and in the future.

Thank you, Chair.

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Dummy’s guide to how trade rules affect access to COVID-19  vaccines

Professor and Distinguished Research Chair, Globalization and Health Equity, L’Université d’Ottawa/University of Ottawa

Professor of Law, Northeastern University

Disclosure statement

Ronald Labonte receives funding from the Canadian Institutes for Health Research and the National Institutes of Health. Ronald Labonte is a member of the People's Health Movement.

Brook K. Baker is affiliated with the Health Global Access Project as a Senior Policy Analyst. He is a civil society representative to Access to COVID-19 Tools Accelerator for Workstream 2 of the Therapeutics Pillar. He is a professor at Northestern University School of Law and an Honorary Research Fellow at the University of KwaZulu Natal, S. Africa.

University of Ottawa provides funding as a founding partner of The Conversation CA-FR.

University of Ottawa provides funding as a member of The Conversation CA.

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The race is on to secure vaccines that will protect people from COVID-19. But it’s already become apparent that there is gross inequality playing out in the procurement and distribution of the new drugs. One reason is intellectual property rights. The World Trade Organisation (WTO) is considering whether to temporarily waive certain rules about Trade-Related Aspects of Intellectual Property Rights (TRIPS), so as to allow more countries access to vaccines, drugs, and medical technologies needed to prevent, contain, or treat COVID-19. Initially proposed by South Africa and India, the waiver has the support of almost 100 developing countries, scores of international NGOs, several UN agencies, and the Director-General of the World Health Organisation. But there is opposition, particularly from countries that are home to large pharmaceutical companies. This means that the decision has yet to move forward within the WTO. Meanwhile, vaccinations are under way in high-income countries that made multiple bilateral advance purchase agreements with pharmaceutical companies. Developing countries are having to wait. Caroline Southey, editor of The Conversation Africa, asks Ronald Labonte and Brook Baker to unpack the issues.

Has the WTO failed developing countries?

No. The failure rests with some of the WTO member states. The WTO is an intergovernmental institution that is rules-bound and whose actions are directed or guided by the many trade treaties (including TRIPS) that it oversees. Those treaties are the products of negotiations between governments of countries that are member states of the WTO. Some member states are withholding support for the proposed TRIPS waiver. These are the US, the UK, Canada, Australia, Japan, Switzerland, Norway, the EU and Brazil. Most are home to pharmaceutical companies benefiting from TRIPS extended patent protections. All have inked advanced purchase agreements with vaccine companies.

Read more: COVID-19 drug and vaccine patents are putting profit before people

Some countries, including Canada and those in the EU, are using voluntary measures, like promises to donate excess vaccine or contributions to the WHO’s COVAX facility , as a defence against the need for the waiver. COVAX now has enough financial commitments to make just over one billion doses available to eligible developing countries by the end of 2021 . But the supply and the roll-out is insufficient to meet the need. The bottom line for the non-supporters appears to be: protect TRIPS patent rights first, worry about globally equitable vaccine access second.

What difference would the waiver make?

The waiver would allow WTO members to choose to neither grant nor enforce certain sections of the TRIPS agreement. This would allow WTO member states to collaborate on manufacturing, scaling up and supplying COVID-19 medical tools equitably.

The waiver would be temporary, in effect only until the WHO declares global herd immunity. It would apply only to those drugs, vaccines and medical technologies related to the prevention, containment or treatment of COVID-19. It would be optional; countries could elect not to abide by the waiver.

WTO member states arguing against the waiver maintain that existing TRIPS flexibilities already allow countries experiencing a public health emergency to issue compulsory licences to domestic pharmaceutical companies to produce generic (and less costly) equivalents. This is true, but the process is cumbersome and does not yet apply to trade secret know-how and cell lines needed to copy vaccines and biologic medicines. Compulsory licences must be issued on a country-by-country, case-by-case basis. Some compulsory licences require prior negotiations with rights holders and some are only for public, non-commercial use. Moreover, even for a single medicine, compulsory licences might need to be issued in the country that produces the active pharmaceutical product, the country that produces the finished product, and the country that imports and uses the medicine.

The rules covering export of a compulsory-licensed product to a country lacking its own production capacity are so complex that this flexibility has only been used once . Countries attempting to invoke these TRIPS flexibilities in the past have been subject to criticisms and trade pressures from the US and the EU in efforts to discourage them from doing so. Attempts to bypass patent rules on several COVID-19 related medical technologies have already faced implementation barriers .

Approving the waiver will not immediately solve all access issues. Underfunded or limited health system capacities in developing countries will remain a challenge. Countries will also need to share manufacturing capacities and the technical production knowledge that newer health technologies require, and allow export to other countries. And countries that want to use the waiver may need to implement their own legislative changes or emergency declarations to do so.

The waiver doesn’t solve these concerns, but it does create an enabling context for their more rapid resolution.

What role are pharmaceutical companies playing in the waiver deliberations?

Member states within the WTO will make the final decision on the waiver. But many are home to rich and powerful pharmaceutical industries or have secured bilateral agreements with them for vaccines or other COVID-19 health products. It is reasonable to infer that domestic lobbying by pharmaceutical companies may be at play, or that support for these industries for some countries has simply become accepted practice. The pharmaceutical industry itself has been vocal in opposing any efforts to undermine the patent system, arguing that intellectual property “is the blood of the private sector”.

Pharmaceutical companies have long argued the need to be rewarded for their risks in researching new discoveries. But what of the $12 billion plus that governments have directly contributed to vaccine discovery and expanded manufacturing? It is true that private funding for the Pfizer/BioNTech vaccine was four times that of public funding . But governments have also entered into $24 billion of advance purchases agreements, including an estimated $21 billion in 2021 for the Pfizer vaccine, sales of which are expected to generate a 60%-80% profit margin .

Is there anything developing countries can do to ensure they don’t get left behind?

Negotiations at the TRIPS Council in January and February may well produce a draft text or declaration on the waiver. When, and if, the waiver or declaration text makes it to the WTO General Council in March, both developing and developed countries should vote in support of it. WTO member state decisions are usually made by consensus. But in the absence of one, they can be passed with a three-fourths majority (123 of 164 members).

Between now and then government leaders of developing countries and others who support the waiver should contact non-supportive member states directly, making their arguments in favour of it. Emphasis should be placed on:

the extent of public financing for COVID-19 medical discoveries,

the degree of UN and broader civil society support for the waiver, including support from global public health leaders,

the slow roll-out of vaccines to developing countries in its absence,

the inequalities this will worsen as some countries are able to access vaccines and treatments and so recover more rapidly than others, and

most countries’ already stated acknowledgement that until everyone receives the vaccine everyone remains at risk.

If the waiver fails, developing countries should explore a collaborative effort to make use of TRIPS Article 73 (Security Exceptions) . A legal interpretation of this article suggests that the pandemic satisfies the conditions set out in the article and its conditions could achieve much the same outcome as the proposed waiver.

Invoking Article 73 might be challenged and have to undergo a formal dispute settlement process. Nonetheless, it is a strategy that merits consideration.

Finally, there is an urgent need to clarify public interest and public health exceptions to TRIPS intellectual property rights. Compulsory licensing for all applicable intellectual property rights should be improved so that full technology transfer and access to vaccines, therapeutics and diagnostics can be more easily guaranteed in the future. This body of work should proceed quickly this year so that the world can better address predictable pandemic threats and global health needs – now and in the future.

• World Trade Organisation
• Developing countries
• COVID-19 vaccines
• TRIPS agreement

Manager, Regional Training Hub

Head of Evidence to Action

Supply Chain - Assistant/Associate Professor (Tenure-Track)

OzGrav Postdoctoral Research Fellow

Casual Facilitator: GERRIC Student Programs - Arts, Design and Architecture

Nonlinearities in the Intellectual Property-Manufacturing Growth Nexus in the Post-TRIPS Era: Evidence from a Dynamic Panel Analysis

• Open access
• Published: 27 August 2024

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• Vincent Jerald R. Ramos   ORCID: orcid.org/0000-0002-9709-4183 1 , 3 &
• Sarah Lynne S. Daway-Ducanes 2  

Discussions around the importance of intellectual property (IP) intensified at the height of the COVID-19 pandemic as countries raced to secure IP-protected goods (e.g., vaccines and medical equipment) necessary to respond quickly and adequately to the threat of the virus’ spread. Building on the growing strand of the literature that reexamines IP’s effect on an array of social and economic outcomes, this paper examines the relationship between quantitative (patents and trademarks) and qualitative (IP protection) measures of IP, on the one hand, and manufacturing growth, on the other hand, accounting for the presence of nonlinearities. Using a two-step system generalized method of moments (SGMM) approach on a panel dataset of 81 countries spanning the post-1995 TRIPS Agreement period, our estimates show that these alternative measures of IP have differential and nonlinear effects on manufacturing growth. In particular, patents have a positive significant marginal effect on manufacturing growth past a minimum scale, whereas trademarks do not have a significant effect. In contrast, stronger IPR protection has a positive effect only up to a critical level of IPR protection, implying that “too much” IPR protection can stifle growth-inducing competing innovation. The paper concludes with a brief discussion on the mechanisms through which IP may contribute to manufacturing growth, and on some policies, which may help realize this potential. Broadly, this paper speaks to academic and policy discussions surrounding optimal IP enforcement and the benefits and consequences of IP.

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Introduction

In light of anticipated bottlenecks in vaccine manufacturing and rollout, India and South Africa filed a joint submission in October 2020 before the World Trade Organization (WTO) to seek time-bound and limited exemptions from select provisions of the 1995 TRIPS Agreement for intellectual property (IP) used in COVID-19 responses. Two decades after developing countries in Africa criticized the role of intellectual property rights (IPR) in preventing the speedy manufacturing and rollout of patented drugs to curb the HIV/AIDS epidemic, IPR was once again in the spotlight of multilateral discussions as COVID-19 vaccine manufacturing know-how and IPR remains concentrated in a handful of firms. Opposing figures argue the importance of maintaining a stringent protection of patent rights so as not to discourage future corporate R&D investments in the pharmaceutical industry. In contrast, supporters of this proposal, including the World Health Organization (WHO) and the African bloc at the WTO, argue that the limited manufacturing capacities of patented firms are among the root causes of global supply bottlenecks—a problem that disproportionately affects poorer countries and one that may be prevented if large vaccine manufacturing hubs in countries such as India are tapped.

The political debates at the multilateral stage reflect the ambiguous relationship between IP and economic growth and development in the empirical literature. Insights from standard models point to the role of stronger IP protection in inducing innovation and growth (Aghion et al., 2001 ). Economists and policymakers alike have been thus interested in studying the channels through which IPR affects firms’ decisions and outcomes, and the economy as a whole. This is especially relevant at this time when a fine line has to be trodden in allowing first-mover pharmaceuticals involved in the costly research and development (R&D) of COVID-19 vaccines to recoup their investments in the form of patents and trademarks, and at the same time, enabling later entrants to benefit from existing know-how and technology to facilitate better the faster and wider production and dissemination of vaccines.

While proponents of a strong and robust IPR regime point to its ability to incentivize investors to spend on R&D, there is a strand in the literature arguing that IP protection may adversely affect growth by creating a barrier to competition, fostering a “chilling effect” and effectively reducing the number of competitive sectors that, in turn, hamper development, especially in less developed economies (Gathii, 2016 ; Heller, 2010 ; Horii & Iwaisako, 2007 ; Neves et al., 2021 ; Ostergard Jr., 2014 ) . “Too much” protection in an economy may have adverse consequences in terms of crowding out and discouraging potential investors and innovators.

The manufacturing sector is relatively understudied particularly with regard to its relationship with IP. This sector is generally more capital-intensive and, in many instances, riddled with higher barriers to entry due to the “lumpy” or indivisible and more sizable scale of investments required (Boeing et al., 2022 ; Daway-Ducanes & Gochoco-Bautista, 2019 ; Nilsen et al., 2009 ). The presence of IP systems may facilitate process innovations that speed up and optimize production while allowing for the innovative firm to exclusively benefit from them. This potentially explains why in the USA, all patent-intensive industries and a large majority of trademark-intensive industries, or those whose R&D spending per employee is higher than the average, are in the manufacturing sector (USPTO, 2012 ). In the EU, 17 of the top 20 patent-intensive industries are in manufacturing (European Patent Office & European Union Intellectual Property Office, 2019 ). This is likewise true in Southeast Asia where trademark-intensive industries account for over 80 percent of the manufacturing sector GDP (Frontier Economics, 2017 ).

In light of this seemingly strong relationship between IP and manufacturing growth, and the recent academic and policy debates surrounding this topic, we address the question, “ What is the association between IPR protection quality and IPR quantity (patents and trademarks) on the one hand, and manufacturing growth on the other? ” Our particular interest is in empirically demonstrating the distinct roles of different IPR measures of quality and quantity on manufacturing growth and the nonlinear patterns that characterize this relationship.

Using Blundell and Bond’s ( 1998 ) and Windmeijer’s ( 2005 ) two-step system generalized method of moments (SGMM) on a panel dataset of 81 countries from 1995 to 2018, our results demonstrate that IPR robustly affects manufacturing sector growth in a nonlinear way. Footnote 1 Our model also accounts for the endogeneity problem arising from reverse causality as growth also tends to affect IPR protection positively (Gold et al., 2019 ; Le et al., 2022 ).

On IPR Protection Quality

Our  estimates suggest that for at least half of the countries in the sample, the total marginal effect of stronger IPR protection on manufacturing growth is positive, in line with the literature on the growth-inducing effects of stronger IPR protection (Adams, 2010 ; Horii & Iwaisako, 2007 ; Kanwar & Evenson, 2003 ; Kim et al., 2012 ). However, this positive marginal effect tapers off and becomes negative after a critical level of IPR protection, also in line with the literature that asserts that “too much” IP protection may stifle growth-enhancing competition (Dosi et al., 2006 ; Dosi & Stiglitz, 2013 ).

On IPR Quantity Measures

For at least half of the countries in the sample, we find that trademarks do not significantly affect manufacturing growth; while patents only start having a positive effect on manufacturing growth after a minimum scale of patents is reached. This is in accordance with the literature, which observes that high-level, cutting-edge technologies used in high-value manufacturing industries often require lumpy investments, which innovating firms try to protect and recover through multiple product and process patents and trademarks (Hall, 2013 ; Hu & Png, 2013 ).

Our contribution to the literature is two-fold. First, we focus on the differential effects of IPR protection quality (proxied by an IPR index) and IP quantity (patents and trademarks per 1000 capita) on a sector-specific outcome, departing from studies that analyze the effects of IPR on overall economic growth. Second, the paper also explores possible nonlinearities, which are especially relevant for countries with relatively weaker IPR regimes by building on prior work demonstrating the nonlinear effects of IP on growth (Das & Mukherjee, 2019 ; Mohtadi & Ruediger, 2014 ; Papageorgiadis & Sharma, 2016 ).

The rest of the paper is organized as follows. The “Theoretical Background” section presents relevant growth theories, while the “Empirical Literature Review and Hypotheses Development” section delves into the seminal and recent empirical literature and presents testable hypotheses. The “ Methodology ” section discusses the data and estimation strategy. The “ Results ” section presents our findings, while the “ Discussion ” section contextualizes and discusses their implications. Finally, the “ Conclusion ” section summarizes the findings and proffers avenues for future research.

Theoretical Background

Defining intellectual property.

Intellectual property (IP) refers to intangible products and creations or outcomes of human thought, and can be thought of us “intellectual capital.” IP is a considered a valuable resource for ensuring the competitive advantage of firms (Kato et al., 2022 ).

In this paper, we focus on two major types of IPR: patents and trademarks. It is important to distinguish between patents and trademarks and their broader effects because they induce different incentives and potentially target different entities (Hall, 2013 ). While patents may be considered as a means to encourage the generation and transfer of new technology (“entry”), trademarks allow existing goods and services to develop a brand following and realize their potential market value (“expansion”).

A patent guarantees its holder the right to exclude other entities from manufacturing, using, or selling an invention (USPTO, 2012 ). In the USA, the two main requirements for patentability are that it: (1) should be a subject and not just an idea—that is, a process, machine, article of manufacture, or composition of matter; and (2) should be useful, novel, and non-obvious (USPTO, 2012 ). The interpretation of whether an invention satisfies these requirements is a subject of policy and legal debate and is guided by an understanding of case law. Patents are granted for a limited period, usually 20 years as a result of the TRIPS agreement, after which it enters the public domain.

A trademark prevents other businesses from naming or branding their goods or services in a “confusingly similar manner” to an existing trademark (Lanham Act of 1946). The distinctiveness of a trademark affects the strength of protection being granted—with arbitrary and fanciful marks being given the strongest protection and generic marks being given no protection (Abercrombie & Fitch v. Huntingworld, 1976). Arbitrary and fanciful marks are usually inherently distinctive and are usually words with had no or a different existing meaning like Airbus and Netflix (INTA, 2023 ).

Meanwhile, IP rights (IPR) are a set of legal and enforceable rights that protect the use and sale of these creations. As IP rights are guaranteed rights allocated to a specific individual or firm, they serve as policy instruments that influence the generation and use of new technology (Dosi & Stiglitz, 2013 ).

The Theoretical IP-Growth Nexus

The theoretical literature on the relationship between IP and economic growth underscores the importance of IPR per se, as intellectual capital (input in production) and its appropriate protection as a catalyst for innovation, productivity enhancement, and economic dynamism. Schumpeterian growth theory posits innovation as the primary driver of long-term economic growth as it fosters a dynamic process of creative destruction through technological progress and innovation (Schumpeter, 1934 ). Robust IPR protection incentivizes inventors or innovators by enabling them to appropriate the returns on risky and costly investments (Aghion et al., 2001 ; Besen & Raskind, 1991 ; Gallini, 2002 ). As such, IPR protection is seen as a critical mechanism not only for promoting innovation-led growth, but also for enhancing the competitiveness of economies in the global marketplace.

Endogenous growth models integrate IPR protection as an endogenous determinant of economic growth (Romer, 1990 ), emphasizing the feedback loop between innovation, technological change, and economic performance. In such models, stronger IPR protection encourages higher levels of knowledge creation, which, in turn, drive productivity gains, income growth, and overall economic development (Grossman & Helpman, 1991 ). Additionally, endogenous growth models highlight the role of human capital accumulation, technology diffusion, and spillover effects in amplifying the positive impact of IPR protection on economic growth (Acemoglu & Linn, 2004 ). By fostering a conducive environment for innovation and knowledge creation, robust IPR protection contributes to sustained increases in living standards and welfare.

Azevedo et al. ( 2014 ) develop a dynamic stochastic general equilibrium framework that integrates endogenous growth theory with the dynamics of IPR protection between the “developed, innovating North” and the “developing, imitating South.” Technological progress arises endogenously through the firms’ innovation efforts, which in turn depend on the strength of IPR protection. Their key results are as follows: (i) stronger IPR protection leads to higher levels of innovation and technological progress, and thus, economic growth in both North and South; (ii) as technological knowledge spills over from North to South (either in terms of foreign direct investments, trade or licensing), the South gradually catches up with the North; and (iii) while stronger IPR protection fosters innovation and economic growth in the North, it may also hinder technology diffusion and economic development in the South by increasing the cost of accessing patented technologies. The third result implies the existence of a non-linear relationship between stronger IPR protection and growth.

IP and Manufacturing Growth

In this paper, we focus specifically on the growth of the manufacturing sector, which has had a critical historical role in effecting overall long-term growth and development. Historically, patent systems have enabled growth-inducing investments in manufacturing. Mokyr ( 2009 ) argues that the patent system provided a “system of incentives” that have facilitated high levels of inventive activity, particularly during the Industrial Revolution, when rapid manufacturing growth propelled unprecedented overall growth in economic output, and standards of living in countries like the USA and Great Britain.

In the case of middle-income countries, Su and Yao ( 2016 ) underscore the importance of the manufacturing sector in three ways. First, manufacturing growth pulls along with it services growth in ways more complementary than otherwise. Second, since manufacturing tends to be more capital- and technology-intensive than other sectors, manufacturing growth promotes greater innovation investments, thereby accelerating the pace of technological accumulation, and improving the utilization of human capital in production. Over time, the production of capital goods yields both incremental technical changes and technological capabilities (Bell & Pavitt, 1993 ).

That the manufacturing sector tends to be more capital- and technology-intensive also makes it inherently more IP-intensive. A 2012 US Patent Office report notes that all patent-intensive industries, such as pharmaceutical drugs, computing, industrial and special-purpose machinery, among others, are in the manufacturing sector. Trademark-intensive industries may also be critical to the manufacturing sector. In Southeast Asia, trademark-intensive industries account for over 80 percent of manufacturing value added (Frontier Economics, 2017 ).

The Dark Side of IPR

While property rights are effective in stimulating creative activity, Arrow ( 1962 ) argues that they are inferior to direct government investments in the “right” R&D activities due to the problems of uncertainty, indivisibility and scale (lumpiness), and appropriability. Risk-averse behavior brought about by the uncertainty of future outcomes and risk exposure tend to result in under-investments in R&D. Moreover, the lumpy costs of R&D activities and the associated IPR that has to be acquired to appropriate the resulting benefits pose as a deterrent, particularly for small, financially constrained firms (Brown et al., 2012 ). This is cited as an argument for large infusions of government financing or support for innovation activities (Boeing et al., 2022 ).

That new knowledge is by nature indivisible and costly to generate or acquire constitute one of the top reasons that firms opt to “invent around” a patent rather than apply for one (Cohen et al., 2000 ). While patents are considered important by pharmaceutical and special-purpose-machinery firms, firms in other sectors prefer using secrecy and lead times or complementary sales to maintain their lead over their competitors (Cohen et al., 2000 ; and Lopez, 2009 ). Indeed, Dosi et al., ( 2006 ); Dosi & Stiglitz, ( 2013 ) argue that, in general, IPR protection is not the most important instrument for firms to “profit from innovation” and as such, should have no substantial impact on the underlying rates of innovation and thus, growth.

In the context of an endogenous growth model, Aghion et al. ( 2001 ) show that a “little imitation,” facilitated by strong antitrust and a reasonably flexible IPR regime, may stimulate growth-enhancing competition and innovation. However, “too much” imitation, engendered by weak IPR enforcement, may lead to growth-hampering effects.

These theoretical results suggest that there are thresholds for IPR enforcement that, when exceeded, may reverse the direction of the effects of IPR. This paper thus explores the nonlinearities in the relationship between IPR and manufacturing growth.

Empirical Literature Review and Hypotheses Development

In this section, we categorize and review the empirical literature on (1) the role of IP in an array of social and economic outcomes, and (2) the relevance of both IP and the manufacturing sector in broader discussions of growth and development.

The Promises and Perils of Intellectual Property

As a form of intellectual capital, IPs such as patents and trademarks are instrumental in building firm-level innovation capabilities and financial performance. Generally, improvements in firm-level intellectual capital efficiency are positively associated with firm performance and increased shareholder value (Habib & Dalwai, 2023 ; Hayaeian & Hesarzadeh, 2023 ).

However, the empirical relationship between IPR protection and economic growth is ambiguous. One strand of the literature finds a positive relationship between IPR on the one hand, and a wide range of outcomes on the other hand, including innovation (Daley, 2014 ; Papageorgiadis & Sharma, 2016 ), foreign direct investments (FDIs) (Adams, 2010 ; Ramos, 2017 ), total factor productivity (Habib et al., 2019 ), and growth and development (Andersen, 2004 ; Branstetter et al., 2011 ; Maskus, 2000 ). However, Das and Mukherjee ( 2019 ) show that this positive association between R&D expenditure (and the accompanying IP spending) and growth only holds true for high and upper-middle income economies. Similarly, Ramos ( 2017 ) qualifies that the positive effect of IPR on FDIs only materializes past a minimum scale of FDI inflows, supporting the idea that there are socioeconomic preconditions for realizing the benefits of greater R&D and IPR.

The nonlinear and countervailing effects of IPR are also observed using other outcomes such as human capital and innovation (Daley, 2014 ; Grossman & Lai, 2004 ; Mohtadi & Ruediger, 2014 ). For countries below a “human capital threshold,” typically measured in terms of average years of schooling, tighter IPR protection has a negative effect on growth (Mohtadi & Ruediger, 2014 ). Further, Daley ( 2014 ) shows that IPR protection has a nonlinear relationship with innovation: a certain scale of IP must first be reached before it can positively affect innovation. Meanwhile, Grossman and Lai ( 2004 ) argue that the deadweight losses from IPR protection are greater if the innovative capacity of a country is too weak to compensate, as is the case for developing countries with smaller domestic markets. Hence, the negative effects of stronger IPR protection may be overcome in countries with larger markets and stronger innovative capacities and activities.

A contrasting literature strand argues against stronger IPR protection especially in the developing country context (Neves et al., 2021 ; Ostergard Jr., 2014 ). Using a comparative analytical framework, Gathii ( 2016 ) finds that strong IPR protection by itself is unlikely to induce higher growth-enhancing FDI inflows in less developed economies. Further, using firm-level information, Takechi ( 2012 ) shows that while IPR protection induces market entry, direct supply of a new product, service, or process is negatively affected in favor of licensing out of fear of infringement risks. The effect of patent quantity on income growth is also found to be weak due to the increased social costs associated with reduced competition (Das & Mukherjee, 2019 ).

While the overarching aim of IPR protection is to encourage costly, lumpy R&D investments, some public interests limit or condition its beneficial effects. Indeed, the papers cited earlier highlight the social costs of “too much” IPR protection. Thus, in many IPR regimes, eminent domain circumscribes the right of exclusivity (Sherwood, 1990 ). Eminent domain enables the public use of a privately funded invention “for the greater good.” Recognizing the societal importance of some forms of innovation, alternative policy mechanisms such as compulsory licensing are put in place to promote public access, while maintaining most of the exclusivity benefits that IPR holders expect to receive.

We contribute to this strand of the literature in two ways. First, we utilize both IP quantity and IPR protection quality measures as alternative determinants of manufacturing growth. Second, we explore the nonlinearities in the IP-manufacturing growth relationship, enabling us to unpack both positive and negative effects of IP and estimate the thresholds that mark the switches in the direction of the relationship.

Table 1 summarizes the literature cited above, separating the papers into those that study the effect of IP on “macro-level outcomes” and those on “micro-level outcomes.”

Intellectual Property-Manufacturing Growth Nexus: Hypotheses Development

On ipr protection.

Prior evidence suggests that the growth-inducing effects of IPR protection on manufacturing mainly occur through the signaling channel. Countries that produce more IPs and protect them through well-crafted and enforced IPR encourage consumer and business confidence, and thus, costly investments in innovation activities. Using firm-level evidence and a commonly used index for patent protection, Smarzynska Javorick ( 2004 ) finds evidence for this “signaling mechanism”: stronger IPR protection positively affects the probability of investment in sectors in the manufacturing sector.

In contrast, the distortionary effects of strengthening IP regimes could not be discounted. IPR protection measures, after all, government-imposed and tend to create market distortions that allow time-bound monopolies to exist. Chu ( 2009 ) finds that stronger IPR protection increases returns on R&D spending and wages of R&D workers, who are mostly skilled, thereby widening the wage inequality between skilled and unskilled labor. Moreover, improvements in IPR protection through stronger enforcement may cause a “chilling effect”: other firms may be discouraged from innovating or improving on the patented technology during the period of validity of the patent out of fear of litigation (Leila, 2014 ). In biomedical research, extensive patenting practices were found to cause an “anticommons” problem, wherein agents underuse scarce resources (i.e., patents) because of overlapping and fragmented IPR regimes that create legal uncertainties (Heller, 2010 ; Heller & Eisenberg, 1998 ).

Accounting for both the theoretical and empirical literature cited above, we test the following hypotheses on the role of IPR protection and its nonlinear relationship with manufacturing growth:

H1a: IPR protection is positively associated with manufacturing growth; and

H1b: There is an inverted U-shaped relationship between IPR protection and manufacturing growth.

H1b takes off from the preceding papers suggesting that IPR protection may positively affect growth, but “too much” of it may stifle growth.

On IP Quantities

As mentioned earlier, patents and trademarks are inherently different forms of IPR and arguably tends to spur different market activities. Whereas patent activity might initiate market entry or a creation of a new product market, trademark activity likely facilitates market expansion through brand recognition. This difference warrants separate analyses of patents and trademarks, although prior findings suggest a non-negative relationship with manufacturing growth.

The existence of scale economies in manufacturing comes from the “lumpy” nature of investments typical in the sector. The need for scale may be explained by the following reasons. First, higher manufacturing growth is often driven by high-level technologies (e.g., artificial intelligence (AI), computer numerical control (CNC) machining, 3D printing, robotics and automation, industrial internet of things (IIoT), augmented reality (AR), and virtual reality (VR)), which require multiple product and process patents and trademarks to enable innovating firms to recover lumpy R&D investments (Dittmar, 2011 ). As such, it is reasonable to expect that a certain scale of accompanying patents and trademarks must be achieved for these technologies to start positively affecting manufacturing growth (Boeing et al., 2022 ). Second, more patents tend to raise the likelihood that there will be more highly valuable IP-protected technologies in the pool that would positively affect manufacturing growth. Footnote 2

Thus so, we hypothesize that:

H2a: Either patent quantity or trademark quantity is positively associated with manufacturing growth; and

H2b: There is a U-shaped relationship between either patent or trademark quantities, on the one hand, and manufacturing growth on the other hand.

H2b takes off from the literature that there are scale economies arising from costly and lumpy R&D investments that firms have to make before they can start reaping the positive effects of IP, embodied in patents and trademarks, on manufacturing growth. Recognizing the different incentive structures and objectives of patents and trademarks, these are separated in the analysis.

Methodology

Model and estimation.

To account for the dynamic nature of manufacturing growth, the paper employs Blundell and Bond’s ( 1998 ) and Windmeijer’s ( 2005 ) two-step system generalized method of moments (SGMM). Building on Arellano and Bond’s ( 1991 ) difference GMM, the system of regressors in differences and levels allows for the correction of endogeneity in dynamic panel estimation procedures (Roodman, 2009 ). In SGMM models, lagged levels of explanatory variables are used as instruments for regressions in differences while the lagged differences of explanatory variables are used as instruments for regressions in levels. Further, two-step system GMM is more suitable in the following cases (Roodman, 2009 ): (i) dealing with independent variables, which are not strictly exogenous; (ii) treating Nickell bias, which is inherent in “small T, large N” datasets; and (iii) using variables that exhibit “random walk,” which is largely the case when dealing with macroeconomic datasets. Moreover, the two-step correction procedure introduced by Windmeijer ( 2005 ) generates more consistent and efficient estimates than one-step estimation procedures.

The paper estimates two models, parsimoniously specified below, to analyze the effect of IPR quality and quantity measures on manufacturing growth on a panel of up to 81 countries, respectively, from 1995 to 2018. A similar approach has been used in prior analysis of the determinants of IPR (Tag, 2021 ). The paper likewise tests for nonlinearities by including the squared terms of the main variables of interest in the model. The estimation equation is patterned from models of growth and is specified as follows:

\({MG}_{i,t}\) is the growth rate of the manufacturing sector in country i in period t . Manufacturing sector growth refers to the year-on-year percentage growth of the value added of industries belonging to the International Standard Industrial Classification (ISIC) divisions 15–37;

\({MG}_{i, t-1}\) is the lagged value of the growth rate of the manufacturing sector of country i . The second lag of manufacturing growth may be included if necessary to correct for second-order serial correlation;

\({IP}_{i, t}\) is alternatively defined as either (i) the IP rights protection (IPR) index in country i in period t as a measure of IP quality; or (ii) either patents per 1000 capita or trademarks per 1000 capita (IPPC) as quantity measures of IP;

\({IP}_{i,t}^{2}\) is the squared value of the relevant IP measure;

\({X}_{i, t}\) is a vector of control variables (defined in more detail below) including a developing country dummy, fixed capital formation (as % of GDP), net foreign direct investment (FDI) inflows (as % of GDP), trade openness, real effective exchange rate, average manufacturing tariff, inflation, and natural logarithm of global manufacturing output;

\({Z}_{i,t}\) is a vector of strictly exogenous regressors, including period dummies and regional dummies Footnote 3 ; and

\({\epsilon }_{i,t}\) is a composite error term, which consists of time-invariant unobservable country-specific effects and observation-specific effects.

To demonstrate robustness, we include additional interaction models in a staggered fashion. In particular, we include interaction terms for regional and developing country indicators to understand the moderating effect of these variables.

The critical mean value of the relevant IP variable is given by:

which is obtained by taking the partial derivative of Eq. ( 1 ) with respect to the relevant measure of IP, and setting this equal to zero. The total marginal effect of IP on manufacturing, which shows how incremental changes in the IP variables affect manufacturing growth, is given by:

where we let \(\widetilde{IP}\) be equal either to the sample mean or sample median of the relevant measure. When \(\widetilde{IP}\) equals the median, a positive marginal effect implies that for at least half of the countries in the sample, an increase in IP (either in terms of protection quality or quantity) has a positive effect on manufacturing growth.

Alternatively, nonlinearities and heterogeneities in the relationship between our measures of IP quantity and quality on the one hand and manufacturing growth on the hand are introduced through interactions between the IP measure and development indicators and regional dummies.

Analytical Sample

For the IPR index (IPR protection measure) model, a balanced panel of 81 countries across all regions and income groups, defined over eight (8) three-year-period averages from 1995–2018, is used. For the IPR per capita (patents and trademarks quantity) model, a similarly balanced panel of 71 countries is used over the same period. The discrepancy in sample size is due to data limitations on the quantity of patents and trademarks. The years covered are purposefully limited to those after the signing of the 1995 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which sets the minimum standards for governments concerning the regulation and protection of IP. The data come from two main sources—the World Development Indicators (WDI) of the World Bank and the Index for Economic Freedom (IEF) developed by the Heritage Foundation. Footnote 4

For measures of IP quantity, the total number of patents and trademarks are from the WDI. Both are transformed to per 1000 capita terms to control for country size. For a measure of IPR protection, the IPR protection index (IPRI) comes from the similarly named IEF component, which relies on a combination of survey data and independent evaluations to provide a quantifiable measure of how strongly a country’s laws protect property rights and the extent to which these are enforced and respected (Miller et al., 2020 ). A higher score (up to a maximum of 100) implies a better quality of IPR protection. We model the effects of IP protection quality, patent quantity, and trademark quantity on manufacturing growth separately to present a more nuanced analysis, recognizing that all these measures may affect growth differently.

All the control variables come from the WDI. The control variables in the vector \(X\) are as follows:

Trade openness is proxied by the value of total trade (sum of exports and imports value added) as a percent of GDP. This is included to control for the impact of trade exposure on the closure of companies in the manufacturing sector in select countries such as Germany (Bertelsmann Stiftung, 2016 ).

Inflation is computed using the GDP deflator, and is used as an indicator of price and macroeconomic stability.

Net FDI inflows (% of GDP) control for the role of FDI inflows as an additional source of capital for productive activities in the domestic economy (Daway-Ducanes & Gochoco-Bautista, 2019 ).

The real effective exchange rates (REER) account for the effect of movements in the real exchange rate on the cost and revenue performance of firms in the manufacturing sector (Dhasmana, 2013 ; Nucci & Pozzolo, 2001 ). An increase in the REER signifies a real local currency appreciation.

Average manufacturing tariff accounts for the extent to which the domestic manufacturing sector is liberalized.

Global manufacturing output (in natural logarithm) captures the size of the country’s sector relative to global production and supply conditions.

Fixed capital formation (% of GDP) is indicative of overall infrastructure development and access to technology, and is included in the model because infrastructure stimulates capital productivity, especially in industrial and manufacturing sectors (Bergman & Sun, 1996 ).

Developing economy dummy takes on the value 1 if country \(i\) in period \(t\) has real GDP per capita of not more than 10,000 USD in 1995.

Tables 2 and 3 present the descriptive statistics of the variables used in the IPR index model and IPPC models, respectively.

Trends in Intellectual Property and Growth

Before reporting our model estimates, we present a global re-appraisal of the trends in intellectual property and manufacturing growth. First, total patent and trademark filings are concentrated and more prevalent in select regional groups. Figure 1 shows that East Asia and the Pacific outperforms the rest of the world significantly in terms of total filings. These countries include “East Asian miracles” like China, Japan, and South Korea and their massive investments in R&D across sectors show in the quantity of IP being generated. Fink et al. ( 2016 ) find that while the surge in patent filings from 1995 to 2008 is generally attributable to subsequent filings, or additional filings of the same invention, the patent surge in East Asian countries like China, Japan, and South Korea are mostly due to new inventions. Indeed, this reflects the pace of technological innovation that helped spur economic growth in these countries, otherwise known as the “East Asian Miracle.” North America comes second in terms of patents filed, driven by patent-intensive industries in the USA such as computer and peripheral equipment and communications equipment (USPTO, 2016 ). Meanwhile, Europe and Central Asia comes as second in terms of trademarks.

Total patents and trademarks by region, 1995–2018

In Fig.  2 , these estimates are adjusted for population size. For the most part, trademarks and patents per capita are stagnant, with the exception of East Asia and the Pacific where per capital patents follow business cycle patterns and per capita trademarks have been increasing over time. Similarly, North American per capita patents show sensitivity to business cycles as evident during the peak of the Global Financial Crisis.

Patents and trademarks per capita, by region

Figure  3 meanwhile presents both IPR index and manufacturing growth in one plot, to see whether changes in IPR governance are associated with changes in manufacturing growth rate. Manufacturing growth tracks business cycles. All regions experienced zero to negative manufacturing growth rates during and shortly after the 2008–2009 Global Financial Crisis; and Southeast Asia saw a significant drop in manufacturing growth during the 1997–1998 Asian Financial Crisis. In more recent years, mean manufacturing growth rates have ranged from 0 to 10 percent, with fast-growing emerging economies in Southeast Asia and South Asia on the upper end of the spectrum and East Asia and the Pacific (without Southeast Asia) and the Middle East and North Africa on the lower end. In terms of the IPR index, Europe and Central Asia appear to have stronger IPR protection regimes, on average, than other regional groups. This is driven by strong inter-country coordination of IP regulation in the European Union. Across all regional groups, there was an improvement in the IP protection index from 2016–onwards (see Fig.  3 ). Among other possible (data-related) determinants, this could have been driven by the expiry of all transitory periods under the TRIPS agreement, meaning that all sectors in all signatory countries now must fully comply with and implement its provisions. Region-wide improvements in the index may also be due to region-wide reforms and agreements. For instance, Southeast Asia had the largest gain in this period, which may be largely explained by ASEAN’s adoption of the IPR Action Plan 2016–2025 composed of actionable comprehensive and strategic objectives (ASEAN, 2016 ). Provisions under this plan are meant to achieve a regional consensus towards improving national IP regimes and increase coordination between ASEAN countries.

Manufacturing growth and IPR index, by region

Intellectual Property Rights Protection and Manufacturing Growth

Finding 1a: for at least half of the countries in the sample, we find a positive marginal effect of stronger ipr protection on manufacturing growth..

The estimation results presented in Table  4 suggest a positive effect of stronger IPR protection, even after controlling for standard time-varying country-specific characteristics. Evaluated at the mean and median levels, the total marginal effects of the IPR protection are robustly positive, as shown in Table  5 . A one-unit increase in the median IPR index increases manufacturing growth by 0.13 percentage point, ceteris paribus .

Finding 1b: There is an inverted-U-shaped relationship between IPR protection and manufacturing growth

The results further suggest that “too much” IPR protection dampens the positive effects of IPR on manufacturing growth. Using the same estimates to calculate marginal effects, the inflection point of the IPR index is at 82.5, after which stronger IPR protection negatively affects manufacturing growth. Note that countries in the top quartile of the sample in terms of income have IPR indices that are above the critical value (Fig.  4 ).

Nonlinear relationship between IPR index and manufacturing growth

Findings 1a and 1b are robust across alternative model specifications that include interaction terms with a developing country dummy and a regional dummy (ASEAN) (see Table  4 ) and alternative temporal measurements (see ESM Appendix Table  4 ). The results hold even after the exclusion of period 8 from the analysis due to potential data-related discrepancies of the IEF survey.

Intellectual Property Per 1000 Capita and Manufacturing Growth

Finding 2a: for at least half of the countries in the sample, we find a robustly negative marginal effect of patent quantity on manufacturing growth, whereas trademarks do not have a statistically significant effect..

Table 6 shows an interesting difference between patents and trademarks: whereas patents have a robustly negative effect on manufacturing growth for at least half of the economies in the sample, trademarks have a consistently statistically insignificant effect. Evaluated at the median level of patents per 1000 capita, a unit increase in patents per 1000 capita is associated with a 4.01-percentage-point reduction in manufacturing growth.

Finding 2b: There is a U-shaped relationship between patents and manufacturing growth, suggesting the existence of scale economies that have to be attained before patents can positively affect manufacturing growth. There is no robust relationship between trademarks and manufacturing growth.

While Table  6 shows that patent quantity per se has a robustly negative effect on manufacturing growth, its squared term has a robustly positive coefficient, suggesting that there is a U-shaped relationship between patent quantity and manufacturing growth. This further implies the existence of a minimum scale of patents that must be reached before it may positively affect manufacturing growth. Using the results from column 2 as parameters for Eq. 4, the minimum scale is 2.03 patents per 1000 capita (see Table  7 , Fig.  5 ).

Nonlinear relationship between patent quantity and manufacturing growth

Findings 2a and 2b support Hypothesis 2 (in terms of patents) and are robust across alternative model specifications (see Table  6 ) that include interaction terms with a developing country dummy (columns 3 to 5), the ASEAN regional dummy (column 5). These additional estimates show that even when including potentially moderating variables, the implications from our main findings hold.

We further note that all regression equations (in Tables 6 and 7 ) pass the necessary diagnostic tests, i.e., (i) the Arellano-Bond test of AR(2) in first differences; (ii) the Hansen J-tests of overidentifying restrictions; (iii) that the number of instruments is not greater than the number of countries in the sample.

As is consistent with Neves et al.’s ( 2021 ) recent meta-analysis of existing empirical studies on the IPR-growth link, we find that stronger IPR protection has manufacturing growth-inducing effects not only on average, but also for at least half of the economies in our sample. This adds manufacturing growth to the list of other macro-level outcomes that are positively affected by stronger IPR protection (Zhang et al. 2015 ; Adams, 2010 ; Chu, 2009 , 2010 ; Falvey et al., 2006 ; Park, 2005 ).

As mentioned in the previous section, there are multiple non-mutually exclusive mechanisms through which stronger IPR protection induces manufacturing growth. The most prominent mechanism cited in the literature is the “signaling mechanism”: stronger IP protection regimes signal to investors and the general public that there exist executive and judicial institutions that guarantee the proper enforcement of property rights (Andersen, 2004 ; Falvey et al., 2006 ; Smarzynska Javorcik, 2004 ). Sending a signal that the government can adequately protect IP minimizes the uncertainty problem espoused by Arrow ( 1962 ).

Second, IP-intensive industries are closely interlinked with the manufacturing sector. In Southeast Asia, for instance, these industries account for over 80 percent of manufacturing GDP (Frontier Economics, 2017 ). The typically export-oriented nature of these industries also means that regulatory improvements, such as improved IPR protection, work hand-in-hand with trade liberalization policies to contribute to sector-wide growth. The large concentration of IP-intensity in manufacturing may help explain this robustly positive relationship. This is likewise consistent with Hu and Png ( 2013 ), who demonstrate that patent rights promote growth through factor accumulation and increased productivity in the manufacturing sector.

Third, stronger IPR protection increases IP value. Stronger IPR protection allows the IPR holder to maximize and capitalize on the IP value over time (Castaldi, 2020 ; Heger & Zaby, 2018 ). More broadly, when enforcement mechanisms against copying and infringement are in place, trademarked-goods can gain popularity and brand recognition over time, thereby positively affecting the whole sector in the long-run. A concrete example would be the trademarks for auto brands (i.e., BMW, Volkswagen) which are strongly protected by the German Patent and Trademark Office. Trademarks establish brand loyalty and global popularity, which helped boost firm-level financial performance in Germany up to 11 years post-filing (Crass et al., 2019 ). Castaldi ( 2020 ) also argues that smaller and younger firms make use of more trademarks than patents, given that hardly any part of their innovations meet the patentability criteria.

However, consistent with existing literature, our results further show that “too much” IPR protection may dampen its positive effects, as this contributes to raising costs across the innovation continuum (i.e., from R&D to the widespread adoption of the new product, services or process), discouraging growth-inducing innovation investments (see, for instance, Neves et al., 2021 ; Gathii, 2016 ; and Ostergard Jr., 2014 ).

The growth-stifling effects of stringent IP regimes reflect the downside of “ market power effects ” of IP regimes. Firms may be deterred from entering a new market or investing in further R&D of an already patented technology for fear of litigation from the IP holder (Galetovic et al., 2015 ; Leila, 2014 ; and Heller & Eisenberg, 1998 ). In effect, “too much” IPR protection to maintain the exclusionary benefits for the holder may have a “ chilling effect ” on what would otherwise have been growth-enhancing competition.

This negative effect of “too much” IPR protection on manufacturing growth may also reflect the underlying appropriability problems discussed earlier. Simply put, firms in specific sectors may not consider IPR as a viable means to protect and profit from their innovation, resulting in sectoral differences as to how stronger IP protection are treated as a “signal” by firms (Cohen et al., 2000 ; Dosi et al., 2006 ). Further, the presence of licensing as an alternative way of exploiting existing patented inventions may also weaken the incentive to innovate when the IPR protection regime is “too strong” (Dey, 2015 ).

As it relates to ongoing policy discussions on the design and enforcement of IPR regulations, our results speak against an unconditional tightening of IPR laws, as this might have growth-hampering implications. Moreover, while alternative policy instruments, such as licensing, may weaken the positive effect of IPR on manufacturing growth, these may minimize the “market power” and “chilling” effects of “too much” IPR protection; and as such, are worth further exploration.

That patents may have a significant effect on manufacturing growth, while trademarks do not (see Table 6 ) may be due to the greater relevance of patents for manufacturing sector growth as opposed to trademarks, which might be more relevant for services sector growth, particularly, the creative sectors, and other branding-dependent sectors. As mentioned previously, manufacturing sector growth tends to depend on costly high-level, cutting-edge technologies; and the patenting of these technologies enable firms to gain or maintain competitive advantage (Kato et al., 2022 ).

The U-shaped relationship between patents and manufacturing growth echoes the nonlinear effects of IP quantity on other aggregates, such as FDI inflows and economic growth, found in the literature—wherein the positive effects of IPR regimes on macro-level outputs only occur past a certain IP threshold (Falvey et al., 2006 ; Hu & Png, 2013 ; Mohtadi & Ruediger, 2014 ; Ramos, 2017 ). Thus, the negative marginal effect of patent quantity on manufacturing growth may be indicative of a lack of scale of patents. Indeed, Lucking et al. ( 2019 ) observe that patents per inventor have in general declined in the last four decades in spite of their positive spillover effects and high social returns.

As mentioned in the previous section, the need for scale may be explained by the large, lumpy investments across the innovation continuum—beginning from costly R&D activities, to product, service or process development and manufacturing, to marketing or sales, and ultimately to the widespread adoption of the new product, service, or process. Indeed, Boeing et al. ( 2022 ) find that while government-financed innovation investments may partially crowd out private sector investments in innovation in China, economy-wide innovation investments still increased. This is because the substantial amount of fixed investments required to finance high-tech equipment and high-skilled inputs are a deterrent for private firms, which are typically financially constrained, resulting in underinvestment in innovation activities.

Past the minimum IP threshold, patented technologies are likely to improve productivity and lower production costs and therefore, effect sector-wide growth (Maradana et al., 2017 ; Tirelli & Spinesi, 2021 ), and generate positive spillover effects that contribute to overall economic growth and well-being.

This paper offers evidence that alternative measures of IP have differential and nonlinear effects on manufacturing growth. For at least half of the countries in the sample, the total marginal effect of IPR protection on manufacturing growth is positive only up to a critical level of IPR protection, implying that more stringent IP regimes can stifle growth-inducing competing innovations. In contrast, patent quantity only starts having a positive marginal effect past a minimum scale, while trademarks have a statistically insignificant effect.

There are two main contributions of this paper on the IP-growth nexus literature. First, whereas previous papers have focused extensively on IPR protection quality, we distinguish between IPR enforcement quality and IP quantity and separately analyze their effects. Further, prior literature has focused on broader macro-level outcomes such as output growth, innovation, and FDI inflows, whereas this paper examines the manufacturing sector in detail, given its proximity and relevance to IP activity. Our second contribution is the estimation and analysis of nonlinearities in this nexus, which are especially relevant for developing countries with weaker IPR regimes. Our results lend evidence to the strand of the literature that has established nonlinear effects of IP on overall economic growth (Das & Mukherjee, 2019 ; Mohtadi & Ruediger, 2014 ; Papageorgiadis & Sharma, 2016 ).

Policy Implications

As was evident during the COVID-19 pandemic, IP policy discussions ought to revolve around the optimal design and enforcement of IP rights. Our results suggest, assuming IP is productive, that there are potential gains from increasing, or at least encouraging an increase in, patenting activity. However, the same cannot be said about IPR protection—extreme stringency in design and enforcement spurs competition-restricting effects with little gains in terms of innovation, while weak enforcement invites infringement and discourages innovation, consistent with earlier arguments made by Dosi et al., ( 2006 ); Dosi & Stiglitz, ( 2013 ). This speaks to the delicate balancing required between IP policy on one hand and antitrust policy on the other (Aghion et al.  2001 ; Heller, 2010 ).

Our results also lend support to the idea of how “too much protection” that concentrates the benefits of IP to the private sector in lieu of an equitable “rewards-sharing” between the public and private sectors (Laplane & Mazzucato, 2020 ; Mazzucato, 2016 ) is ultimately harmful for growth. Specifically, the countervailing effects of IP protection as have been documented in the literature are captured in this paper.

Moving forward, tangential policy designs ought to be considered. The effect of IPR protection on manufacturing may be confounded by the quality of regulatory and judicial institutions. Any improvement in the policy design of IPs is unlikely to affect economic outcomes unless accompanied by improvements in enforcement and the judicial system-at-large since it is the avenue through which these rights are ultimately realized. This is in line with the argument made by Gold et al. ( 2019 ) that IP in and of itself has limited direct effects on growth and any findings that point to such strong causality are out of a belief in other benefits of enforcement rather than actual IP deployment.

Finally, to limit the potential abuse of the “chilling effect” from IP, national competition laws especially those provisions concerning IP ought to be implemented properly. The parameters of the exclusionary benefits of IP should be closely observed and any breaches of it should be subject to antitrust scrutiny.

Limitations and Avenues for Future Research

To the extent that this paper is focused on macro patterns and relationships, discussions of micro-level and firm-specific behavior are therefore limited. Further, the manufacturing sector is far from unidimensional—e.g., automotive industries and pharmaceutical industries likely respond to IP developments differently. Thus, future research may deal with the effects of sector-specific IP on certain economic outcomes. For instance, the kinds of patents and trademarks that are important for manufacturing may not be the same kind of patents and trademarks that are important for the services sector. As was pioneered in recent work, firm-level analysis of the effects of intellectual capital efficiency (Habib & Mourad, 2023 ) seems to be a promising way forward (Habib & Dalwai, 2023 ; Hayaeian & Hesarzadeh, 2023 ). Our results infuse some insights into these papers by urging a closer look into firms that file patents and trademarks and how the intensity of IP activity might have an effect on their growth.

More broadly, in light of our results and in the context of current debates on the role of IPR, we find it worthwhile for countries to evaluate comprehensively the domestic effects of accession to the TRIPS agreement. In doing so, policymakers must recognize the mixed results from the literature and the nonlinearities presented in this paper and in earlier work (Das & Mukherjee, 2019 ; Mohtadi & Ruediger, 2014 ; Papageorgiadis & Sharma, 2016 ) and ask: (1) how critical has the protective power of IPR been in terms of encouraging innovation and development in general; and (2) do current provisions under the TRIPS agreement create a barrier or a technology gap between developed and developing countries? While governments have an array of policy options to promote manufacturing growth, we argue that inducing more IPR should not be absent from the policy mix, while retaining some flexibility in the enforcement regime.

Data Availability

All data used for this analysis are publicly available via the World Bank’s World Development Indicators Open Access Database.

This period covers the years succeeding the signing of the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement in 1995. While there are differences in the actual ratification and adoption of TRIPS by national legislatures, we take the signing of the TRIPS agreement as a starting point in this paper as it is the culmination of various multilateral negotiations that seek to establish and harmonize minimum standards for IP regulation.

This is akin to Kremer’s ( 1998 ) argument that a higher population growth rate raises the probability that a given society will produce more inventors, who would contribute to technological progress, and thus overall economic growth and development.

Period and regional dummies are based on the observation’s year and country location (e.g., a 2008 observation from Germany takes a “1” for the 2007–2009 period dummy and the Europe and Central Asia region dummy).

The IEF is an annual output of the Heritage Foundation, a research and educational institution monitoring the protection of property rights around the world in its annual index. This dataset was used by papers analyzing IP protection by Asongu ( 2015 ) and Asongu and Kodila-Tedika ( 2018 ). Other thinktanks produce a similar index with a property rights protection component (e.g., Fraser Foundation as was used by Le et al. ( 2022 ) with annual data since 2000). However, this dataset contains annual information beginning 1996, the year after the TRIPS agreement was passed. Other indices such as those by Park ( 2005 ) and the WGI likewise do not satisfy our preferred period coverage. Note that the use of this dataset is primarily out of a methodological fit between this paper’s research question and what their instrument captures and should not be taken as an endorsement, support, or belief in any way of the campaigns, positions, and political orientation of the foundation. Operationally, the index ranges from 0 to 100 and was developed based on survey data and independent assessments of the domestic laws and enforcement records.

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Acknowledgements

An earlier version of this paper has benefitted from comments from Gyula Seres in a graduate class on Law and Economics of Innovation. The authors are grateful for the valuable comments and suggestions from participants of the Third Law and Macroeconomics Conference hosted by Yale Law School; the Finance, Law and Economics Working Group of the Institute of New Economic Thinking-Young Scholars Initiative (INET-YSI) Plenary 2020; and the Panel Session on Enduring Issues in Finance, Innovation, and Employment at the 58th Philippine Economics Society Annual Meeting and Conference. We also thank the referees for their inputs. All remaining errors are the authors’ alone.

Open Access funding enabled and organized by Projekt DEAL. The corresponding author benefitted funding from the German Research Foundation (DFG), grant number 390285477/GRK2458. No other funding was received for this project.

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Ramos, V.J.R., Daway-Ducanes, S.L.S. Nonlinearities in the Intellectual Property-Manufacturing Growth Nexus in the Post-TRIPS Era: Evidence from a Dynamic Panel Analysis. J Knowl Econ (2024). https://doi.org/10.1007/s13132-024-02235-x

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DOI : https://doi.org/10.1007/s13132-024-02235-x

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