Going Round on IP and Climate Change

March 16th, 2015 by Eric Lane Leave a reply »

The Bulletin of the Atomic Scientists recently published a spirited debate on the role of intellectual property rights (IPR) in commercialization and transfer of climate mitigation technologies.

The participants, who debated via a series of essays and responses, were Carlos M. Correa, director of the Center for Interdisciplinary Studies on Industrial Property and Economics at the University of Buenos Aires, Frederick M. Abbott, professor of international law at Florida State University College of Law, and Ahmed Abdel Latif of the International Centre for Trade and Sustainable Development.

Correa kicked off Round 1 with an essay entitled “The burden of intellectual property rights” in which he lays out the case for patents acting as a barrier to diffusion of green technologies to developing countries and for those countries to use compulsory licenses to access the technologies they need.

The essay makes some valid points.  Correa persuasively took on the argument of IPR defenders that the dearth of green tech patents in the poorer developed countries means patents do not stand in the way of green tech transfer and acquisition.  He noted, probably correctly, that these countries must rely on technology produced elsewhere, such as China and India, so patents in those countries are relevant to green tech transfer to the ultimate target markets, including developed countries.

I agree to a large extent with Correa’s notion that IPRs should function not only as an incentive to innovators but more broadly as a vehicle for diffusion and commercialization of the technologies being developed and patented.  However, I think he goes too far in saying that the IP system should “ensure that new technologies are accessible to all countries.”   I don’t believe it is the role of the IP system to guarantee accessibility to innovation.

One misstep in the essay is the attempt to refute the point made by Professor Abbott and others that green tech patents rarely confer market power because most fundamental green technologies are off-patent and there is competition among the tremendous diversity of green technologies.

Correa counters that “many patents cover minor or trivial developments and may be used to block genuine innovation and competition.”  By definition, though, a patent directed to an incremental improvement will not block use of the earlier technology (without the improvement), and such a patent is highly unlikely to confer market power.

Correa also cites studies that show large numbers of patent applications filed on green technologies in recent years.  But these statistics are meaningless absent information on the inventions being patented and how those inventions compare to the many green tech inventions which are off-patent.

Where I strongly disagree with the essay is in its insistence that IPRs are a (clear and present) problem for developing countries seeking access to green technologies.  The support for this – presented in Correa’s Round 2 response entitled “The problem is real” – is that the problem has been recognized in environmental summits and climate change treaty talks over the years and countries such as Ecuador have proposed patent exemptions and reductions in patent terms.

Correa emphatically states that IPRs pose an actual problem:

But a problem does exist – insofar as the system of private appropriation of innovations may delay for 20 years (the normal duration of a patent) the introduction of new technologies into developing countries (the majority of the world). (emphasis in original)

While raising IPRs as a discussion topic and putting forth policy proposals may reflect a concern over IPRs as a potential problem, they do not make it an actual one.  The statement about patent term seems to recognize this distinction by admitting that a patent “may” delay introduction of new technologies.

While the possibility of a refusal to license patented green technology is mentioned, no documented cases of such refusals are discussed.

Perhaps this is why the Round 1 essay closes by calling for developing countries to use compulsory licenses to access to green technologies “whenever they find it convenient.”  Use of compulsory licenses when necessary may be an unattainable standard.

In his Round 1 contribution, entitled “A problem, but not without solutions,” Professor Abbott argues for a “middle path” between the defenders of IPRs and those calling for compulsory licensing of green tech patents.  One such path could be joint ventures between enterprises in developed and developing countries, facilitated by government policies to make investment in developing countries more attractive.

Abbott also proposes patent pooling, direct voluntary licensing, product development partnerships, and development buyout funds to purchase technology from high-income countries and share it globally.

Finally, Professor Abbott notes that IPRs are not the only factors that could be restricting access to green technologies in poorer countries; he writes that “entrenched economic actors” such as utilities may not want to introduce renewable energy technologies in some countries.  I would add to the list of non-IP factors in the poorer developing countries small market size, lack of infrastructure, and insufficient skilled labor.

As always, Ahmed Abdel Latif is a voice of reason in a contentious dispute.  That voice comes through in his essay, “Disputed impact, but not to be ignored” in which Abdel Latif calls for a “structured, incremental, and constructive debate on the issues.”

He thinks this debate should start by looking at practical initiatives that might encourage diffusion of green technologies into developing countries and later address the controversial issues such as changing IP regimes.

Whether the IP system needs changes, Abdel Latif reminds us, is still an open question.  Particularly, the essay notes that “the impact of intellectual property rights on low-carbon technologies in developing countries is both complex and hard to quantify.”  With the diversity of green technologies out there and the limited empirical research done so far, we still don’t have a clear picture of the role of IPRs.

Hence, the constructive debate Abdel Latif proposes, without giving undue weight to either side, but acknowledging the importance of IPRs:

The importance of intellectual property rights should be neither overestimated nor underestimated.  What’s certain is that intellectual property rights cannot be ignored.

As long as we have passionate and intelligent people like Correa, Abbott and Abdel Latif, we can be sure the role of IPRs in climate change will not be ignored.

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