License to NIH Spike Protein Technology Needed in COVID-19 Vaccines Demonstrates “Available to the Public on Reasonable Terms” Requirement

A March 21, 2021 New York Times article on vaccine access discusses how a technology invented and owned by the National Institutes of Health (NIH) is necessary to make several COVID-19 vaccines. The invention mentioned by the Times, titled Prefusion Coronavirus Spike Proteins and Their Use, has been licensed to BioNTech for the Pfizer-BioNTech vaccine and is also needed to manufacture the Moderna vaccine and other COVID-19 vaccines. 

Under the Bayh-Dole Act, a company that licenses an invention from the federal government is required to make the resultant product, in this case a COVID-19 vaccine, “available to the public on reasonable terms”, an obligation that includes, but is not limited to, reasonable pricing. KEI has located at least one redacted license to this technology, to a company called GeoVax, and has obtained a list of the manufacturers that have been granted such a license (shared below). 

This blog explains how the license agreement illustrates the “practical application” working requirement for licenses to government-owned inventions–obligations that companies will have to accept if they want to use the spike protein on legal grounds. This blog also notes how at a time when access to federally-supported inventions on reasonable terms is more crucial than ever, the National Institute of Standards and Technologies (NIST) is proposing a modification that would eliminate this working requirement.

The Spike Protein Invention 

The spike protein technology discussed in the Times article was conceived in 2016 by scientists with the NIH’s National Institute of Allergy and Infectious Diseases (NIAID) and the University of Texas, and was assigned the number “E-234-2016” by the NIH Office of Technology Transfer. According to the NIH abstract for the invention, it covers two patent applications and one patent, US Application No. 62/412,703 (the “‘703 patent application”), US Application No. 16/344,774, and US Patent No. 10,960,070. According to the NIH, No. 10,960,070 will be issued on March 30, 2021. The ‘703 patent application has been disclosed by scientists in a paper reporting research on the Moderna vaccine, appearing to confirm that the invention is used for that vaccine. A NIAID technology transfer officer told KEI that “[t]his technology has the potential to be useful for many coronavirus vaccines. As such, we consider it a platform technology.” 

According to correspondence with NIAID in December of 2020, the following companies have licenses to this invention:

Medigen Vaccine Biologics Corp.; Noachis Terra, Inc.; OncoSec Medical Incorporated; BioNTech AG; N4 Pharm UK Limited; Dynavax Technologies; RNAceuticals, Inc.; Sanofi Pasteur; GlaxoSmithKline Biologicals SA; Adimmune Corporation; Vaxess Technologies; Meso Scale Diagnostics, LLC; The Binding Site Group Ltd.; ReiThera Srl; GeoVax, Inc.; ExcellGene SA; and Thermo Fisher Scientific Inc.

In September 2020, KEI submitted a Freedom of Information Act request to the NIH seeking all licenses to the spike protein invention. The NIH still has not provided the records. 

The Legal Framework 

All licenses to government-owned inventions must contain a clause stating that the government may terminate the license if the licensee fails to achieve practical application of the licensed invention. 35 U.S.C. § 209(d)(3)(A). This is an obligation to achieve practical application of technologies licensed from the federal government.

Practical application is defined as manufacturing, operating, or practicing an invention in such a manner as “to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.” 35 U.S.C. § 201(f). The “reasonable terms” on which an invention must be available to the public include price. For a detailed overview of “practical application” see the comments of James Love and KEI regarding the NIST proposal to limit march-in rights over prices to the public (NIST-2021-0001-0023). KEI also holds the position that the terms that must be reasonable include the timing of delivery and distribution, which can be important in a pandemic. 

The GeoVax License to the NIAID Spike Protein Invention

The license to the NIAID invention located by KEI is an agreement between NIAID and GeoVax Inc., a biotech company developing a COVID-19 vaccine. The appendix to the license lists E-234-2016 and the associated patent application numbers as being covered by the license. 

The text below captures the practical application “working requirement” in the license. Because all licenses in federally-owned inventions are subject to the Bayh-Dole Act, they will contain this same language.  

2.13.  “Practical Application” means to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and in each case,under these conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.  [Emphasis in the original].

Legal Leverage to Enforce the “On Reasonable Terms” Requirement

To the extent that a vaccine relies upon the NIH’s patented claims, there is some leverage that can be used to expand access to the invention and the cell-lines, data and know-how to make the vaccine. But this leverage is limited.

The Bayh-Dole Act states that licenses to federally-owned inventions “shall contain such terms and conditions as the granting agency considers appropriate” before listing the terms that are required for such licenses, such as the practical application working requirement. 35 U.S.C. § 209(d). As such, agencies may propose terms that do not conflict with the required provisions.

In addition to the requirement that the licensed inventions be made available to the public on reasonable terms, the NIH can propose terms in licensing agreements or funding agreements that companies or recipients may accept or reject, such as some reach-through provisions on sharing background intellectual property and know-how, (subject to some limitations such as the provisions of 35 U.S.C. § 202(f)) if a funding agreement is not under the Other Transactions Authority). Unlike an exclusive license, a non-exclusive license does not include the threat of issuing licenses to third parties (since it is a non-exclusive license). As such, the enforcement of the license terms for a non-exclusive license would be determined by the license. While the government would not terminate exclusivity on a non-exclusive license, it could terminate the license, in whole or in part. 

If the company does not obtain a license, or if the license is terminated for cause, the NIH can pursue remedies for infringement. One of the most powerful remedies is to seek an injunction, to block manufacturing and sale of a vaccine. That is not an appealing remedy in a pandemic, where a leading policy objective is to expand global production.

The other remedy the government can seek in a case of infringement is compensation, under 35 U.S.C. §  284, including the possibility of treble damages for willful infringement.  Although the range of possible outcomes for an infringement trial are significant, there are some factors worth mentioning. A vaccine may rely upon multiple patents, and a court often takes this into account. An infringer may also be comfortable with a court ordered compulsory license (a running royalty for infringement), an outcome common in several medical device cases, for example.

It is also possible that the U.S. government, as a purchaser of vaccines, has included language in some procurement contracts that authorizes the company to use patented inventions, subject to the government compensating the patent holders, under 28 U.S.C. § 1498, which, in these cases, would involve the company benefiting from the government’s ownership of the patent. 

Over time, the willingness of the U.S. government and/or courts to more aggressively enforce a patent might change once the pandemic is “over” or the global supply of the vaccines is not so severely constrained. 

Non-Legal Leverage

The fact that the NIH owns some of the vaccine technology does affect the public narrative, and this can be a significant factor that the federal government can use to justify other actions, including the use of the Defense Production Act or other measures to force technology transfer.

The fact that COVID-19 vaccines using this invention–including Pfizer-BioNTech and Moderna–would not function without an invention conceived and owned by the federal government, together with their legal requirement to achieve practical application, create a moral argument for why the manufacturers should openly share their technologies. This is especially true for Moderna, which accepted U.S. taxpayer funding for all or most of the research on their vaccines (Moderna received over $1 billion on research and development from the U.S. government, representing 100 percent of Moderna’s R&D costs).

The NIST Proposal 

NIST is proposing a modification to a Bayh-Dole Act regulation that would make the practical application requirement optional, by allowing companies that license inventions owned by the federal government to avoid practical application as long as they pay royalties. NIST would also narrow the definition of a “subject invention” and gut the government’s authority to march-in when a company fails to make federally-funded inventions, including vaccines, available to the public or reasonable terms.

Comments on the NIST proposals can be submitted here. They are due April 5, 2021.