The Open COVID Pledge: IP and Risk Mitigation Issues

May 21, 2020Alerts

The “Open COVID Pledge" is an initiative that aims to harness any intellectual property that could aid in combating the pandemic by creating a mechanism for owners to freely share IP assets – without negotiations or royalty payments – as long as the use is specifically related to the fight against COVID-19. 

As outlined at opencovidpledge.org, pledgors must publicly commit to making their IP available, free of charge, for the purpose of fighting the pandemic; implement the pledge via a license falling within prescribed specifications; and submit their pledge to the Open COVID organizers. 

Pledgors may choose from three licensing options:

  • adopt one of three model Open COVID Licenses (OCLs) 
  • create their own Open COVID Compatible License
  • create an Open COVID Alternative License

The model OCLs, created by the Open COVID Pledge organizers and founding pledgors, have four key elements:

  • Grant of a worldwide, limited-term, royalty-free license to their IP rights (including patents and copyrights but excluding trademarks and trade secrets) for the purpose of diagnosing, preventing, containing and treating COVID-19.
  • License term begins on December 1, 2019, and ends one year past a World Health Organization (WHO) declaration of the end of the COVID-19 pandemic, or in some license versions, the earlier of that date or January 1, 2023.
  • Licensor cannot assert regulatory exclusivity in its licensed IP.
  • Licensee cannot sublicense IP.

Compatible license pledgors may create a custom license, so long as it includes at least the following: a public offer of a license that can be accepted by anyone, no royalty fees, grant of one or more IP rights (other than trademarks and trade secrets), no assertion of regulatory exclusivity, and a duration similar to the OCLs. While the granting of broader permissions than those of the model OCL are permitted, narrowing of permissions is not allowed.

Terms impermissible under the compatible licenses may be included in the alternative license, which is a license that does not meet the requirements of an “OCL-compatible” license, but is considered “compatible” with the Open COVID Pledge.

While cooperation and collaboration are essential for the rapid development of a cure for COVID-19, there are certain precautionary measures that companies (IP owners or potential licensees) should undertake in order to avoid controversies and legal battles once the pandemic is over.

Best Practices Checklist

IP owners
IP owners need to balance provision of data sharing and open access to technology during this international crisis, with financial stability and potential legal issues that may arise from participation in the Open COVID Pledge. The IP owners should consider the following:

  • Assess which IP the IP owner is permitted to contribute to the pledge: IP owners should review their contractual obligations and remove any IP that is subject to an existing obligation (e.g., a prior exclusive license).
  • Carefully identify the type of IP that the IP owner wishes to commit to the pledge: For example, a company may commit to the pledge patents relating to a certain technology but wish to protect the corresponding software (e.g., object code or source code) as proprietary in order to protect its confidential protocols and methods.
  • Recognize that one size does not fit all: IP owners should consider drafting their own license agreement for commitment to the Pledge, and include terms that are uniquely tailored to protect their IP rights and interests. Examples of license provisions that can be included in the license are: clear identification of licensed IP; concrete termination date; commercial use restrictions of licensed IP; notice requirements relating to use of licensed IP, compliance with the license terms; commercial use; patent filings, etc.; and terms governing post termination duties and obligations of potential licensee.
  • Update patent portfolio regularly: A pledgor should file patents relating to any new IP promptly to preserve IP rights in derivatives.
  • Practice good recordkeeping: Good recordkeeping and documentation of IP owner’s activities relating to the IP can be crucial in dispute resolution of conflicts that may arise from sharing of IP under an open license.

Potential licensees
For those seeking to use IP licensed under the Open COVID pledge, it may be tempting to rely on IP owners’ altruistic pledges to allow royalty free usage of their IP rights. However, anyone seeking to use the IP should first determine whether the Open COVID license terms fit their current and future needs. For example, if the licensee’s key product falls within the licensed IP and/or requires a sublicense to a future customer, it may give disproportionate bargaining power to the IP owner upon termination of the Open COVID license. In such cases, it may be worth the extra effort and cost to negotiate an individual license.

Those who want to use an IP licensed under the Open COVID Pledge should carefully investigate license terms and be certain to tailor their use of the licensed IP to comply with such terms.

Issues that a licensee should consider include:

  • Investigate what IP is included in the license
    A pledgor can identify the patents and/or copyrights offered for use, and it is imperative to check the scope of IP included in a license.
  • Mitigate liability risks in the absence of warranty and indemnification clauses
    Any person seeking to use licensed IP should endeavor to mitigate third party liability risk by, for example, performing quality testing, seeking regulatory approvals, avoiding unsubstantiated claims of intended use, and including adequate disclaimers on their products.
  • Investigate the scope of the license
    The potential licensee should ensure that its use of the licensed IP does not exceed the scope of the license (e.g., for diagnosis, prevention, or treatment of infections from other pathogens), in order to avoid infringement liability.
  • Avoid trademark infringement claims
    A potential licensee should avoid using the brand name, or other information of a pledgor to, for example, establish credibility of the licensee’s technology/products, or for marketing purposes.
  • Keep good records
    Licensees should document all activities and access relating to the licensed IP. This may play an important role in establishing the licensee’s activities during the resolution of future disputes.