The article is based on the recently concluded meeting of the United Nations Framework Convention on Climate Change (UNFCC) in Bonn, Germany. One of the focal points in the agenda of the meeting was discussing the role of technology in cutting down global greenhouse gas emissions. Most of us know that these meetings typically revolve around the issue of distribution of burden between developed and developing nations with the latter citing development as a reason, and a valid one at that, for not being able to do much when it comes to reducing carbon emissions. However, technology for obvious reasons could be the answer to this challenge. Who has the technology, if there is one, and is there a problem with access to such technology? Apparently, availability of technologies is not the problem but the price is, which hinders its access.
According to developing countries, low-carbon technologies require deep pockets and more so, at the scale they are required in such nations. But then what is the reason for the high cost of such technologies? Patents are the culprits, according to them and some of the countries like China and Cuba in their submissions at the UNFCC meet have proposed “policy instruments” as the solution. Now what are these policy instruments? Ah yes, Compulsory Licensing of course.
Wilson feels that these proposals are the latest salvo in what he calls “a campaign against patents on low-carbon technologies” which started with some press reports around the time of the 2007 G8 meeting which sought an “agreement on IPRs on technological efforts in developing countries paralleling the successful agreement on compulsory licensing of pharmaceuticals”. So that’s where the inspiration comes from- the pharma sector. We, on SpicyIP, have in various posts discussed the influence of seeing patents through the pharma prism on other sectors and this is precisely the kind of situation that some of us had in mind. But the issue does not end here; NGOs like Friends of Earth have called for a complete bar on patents on low-carbon technology and amending TRIPS to that end. Subsequently, during the 2007 Bali Summit, the issue of using TRIPS flexibilities towards achieving such an objective was also mooted. But does TRIPS allow for such a provision?
TRIPS makes room for compulsory licensing with regard to patented technologies in cases of “national emergency or other circumstances of extreme urgency or in cases of public non-commercial use”. There is a good chance of global warming falling under this category depending upon how seriously countries perceive this issue and importance they attach to it. But Wilson is of the opinion that the flexibility mechanisms were primarily designed for use in the case of pharmaceuticals, not low-carbon technology. Does that stop one from using these mechanisms in the case of such technologies?
The other question one needs to ask is something which has been raised over and over again in the broader context of IP protection and its role as a driver or the sole driver of innovation. In the absence of IP protection or the presence of a compulsory licensing mechanism for such technologies, will the development in this direction (i.e. research on low-carbon technologies) go dry altogether? If countries decide to seriously cut down on greenhouse emissions, one would think they would naturally look for cost-effective solutions and this may translate into a significant business opportunity for innovators in this field to invest in research.
On the other hand, one may argue that until the time nations pull their socks up on the Kyoto agreement, if the tempo of innovation on low-carbon technologies has to be sustained or increased, patents may be a good way of incentivizing the efforts of innovators and their investors. The World Bank shares this opinion (we would love to hear counter-opinions from our readers); it feels that weak IP regimes are in fact the reason for the sluggish rate of transfer of eco-friendly technologies. Professor Barton of Stanford Law School says weak IP protection is probably a greater obstacle to such transfer than presence of IP protection.
A few other commentators note that given the nascent stage at which low-carbon technologies exist, there are enough and more reasons to ensure strong IP protection. The state of the low-carbon industry has been compared to the state of biotechnology or semi-conductor industry about 25-35 years ago. According to them, the cost impact of patents on these technologies is miniscule compared to the costs of adaptation, labour and material costs involved in individual technologies. One felt that if that is the case, it means that patents do not add much to the overall cost of the technology and so do not represent a significant return to the investments made by the innovators and therefore the presence of patent protection is not the driving factor behind investment in such technologies.
Such an argument is inaccurate because the cost impact of a patent on the technology has been compared with cost impact of other factors; so it is relativistic in nature and makes sense. So what does one do to reduce the cost impact of labour and material costs? Wilson draws our attention to a 2007 World Bank report on International Trade and Climate Change which proposes reduction in or complete removal of tariff and taxes on such technologies which may result in a 7-14% annual increase in the diffusion of such technologies depending on the kind of reduction in tariff.
Wilson concludes by saying that “removing patents may appear to support the diffusion of low carbon technologies, but it will actually undermine it. Removing patents will discourage investment and undermine the tradable nature of property rights that patents confer. Undermining licensing of these technologies will discourage foreign direct investment (FDI) into developing countries to transfer technologies.”
Since an argument in a similar vein but in the context of pharma has been broached earlier, we would like to know the opinions of our readers on this issue.
