Ventilator manufacturers protected against IP rights and product malfunction

The UK government will cover risk of legal action taken against ventilator manufacturers if new products malfunction or are in breach of intellectual property rights.

Chancellor of the Duchy of Lancaster Michael Gove wrote to the Public Accounts Committee on 3 April notifying them of the arrangement.

In his letter, Gove said: “In this time of crisis for the country, there is a clear and urgent need to scale up the production and supply of essential medical equipment to the National Health Service, in order to save lives.

“I am writing to ask you, therefore, to note two contingent liabilities that flow from this work to increase the production of ventilators.

“The first is to indemnify the third-party Intellectual Property Rights for the designers of the Rapidly Manufactured Ventilator Systems (RMVSs) and for the contract manufacturers of these RMVSs. The second is to indemnify the product liability for the designers of the RMVSs and for the contract manufacturers of RMVSs. Both cases are driven by the unprecedented speed of the development of these medical devices. The indemnities are essential for the emergency provision of ventilators to be procured at pace.”

The government has appealed to manufacturers from the life science sector and beyond to help increase the ventilator capacity of the NHS as the battle against the pandemic continues.

An order for 15,000 ventilators was placed for Penlon’s Prima ES02 model following approval from the MHRA, while an order of 10,000 newly manufactured ventilators from Dyson has been placed.

David Knight, an intellectual property lawyer from Fieldfisher says it is welcome news for manufacturers helping the government meet increased demand, there could be an effect on the IP rights holders in the life science sector.

He said: “While this will be welcome news to businesses who have been manufacturing ventilators in order to meet the increased demand caused by the COVID-19 pandemic, such as Dyson and Rolls Royce; interestingly, the government has not commented on the monetary value of the protection it is offering, however, Gove's letter note that "It is normal practice, when a government department proposes to undertake a contingent liability in excess of £3 million … for the minister concerned to present a departmental Minute to Parliament.

“Despite no clarity on the specifics of the monetary value, it is nonetheless welcome news that manufacturers can meet increased public demand without the fear of facing costly and time-consuming litigation. Whereas, normally, if new ventilator production is based on existing models, manufacturers could have faced the risk of being sued for infringement of any third-party patents or design rights in those models; the government's indemnity intends on shielding manufacturers from such IP infringement claims.

“Manufacturers may also derive some additional comfort from the fact that in the current climate, IP rights holders will perhaps be less likely to bring a claim against a manufacturer which is producing life saving devices during a time of national crisis. This should see the market opening up to more manufacturers who are able to copy patents and design rights of existing models.

"The key debate, which people will be reluctant to voice, will be from those in the life sciences sector who are the IP rights holders and would have usually defended infringement quite fiercely. They could also be impacted by this move in the long-term."

Andrew Pitts, associate and patent attorney at Mewburn Ellis, added: “Given the difficult circumstances, this move has the potential to benefit both the contractors and the few that hold relevant IP rights. The contractors can now proceed without fear of legal or financial risk and the rights holders can try to claim reasonable compensation from the government later, if they so wish.

“The UK government will in effect pay any IP licence costs for the contract manufacturers so that they can concentrate on getting this vital medical equipment to the front line without spending time and money assessing their freedom to operate. As only a few rights holders are likely to be affected, and the scope of the move seems to be limited to these new ventilator systems, this appears to be a pragmatic approach with minimal impact on the wider IP landscape.”