Green Patents: The patent system's "fuel of interest" and the promotion of technological innovation
*Co-authored with Cyrus Frelinghuysen.
IPLaw360 recently reported that Clean Energy Patents Reached a New High in Q2. According to the most recent Clean Energy Patent Growth Index report, the U.S. Patent and Trademark Office (PTO) issued 274 “green” patents in the second quarter of 2009.[1] One might expect that those who regard technological innovation as a necessary tool to combat climate change would welcome the continued increase in the issuance of green patents. Nonetheless, there remains disagreement regarding whether the patent system and the enforcement of intellectual property rights will promote or hinder technological innovation with regard to climate change.
The debate over whether the patent system adequately promotes the development of technology to manage climate change is related to the ongoing debate over the role of technology transfers in any future climate change treaty. Under the U.N. Framework Convention on Climate Change and the Kyoto Protocol, developed countries have undertaken obligations to promote the development and transfer of environmentally sound technologies to developing countries. Indeed, the draft negotiating text for the UN Climate Change Conference in Copenhagen contains provisions for “compulsory licensing for specific patented technologies,” as well as “pooling and sharing publicly funded technologies and making the technologies available in the public domain at an affordable price.”
Though meant to encourage the development and spread of green technology, such obligations may paradoxically reduce incentive for technological innovation because private parties or the governments of developed countries will balk at devoting resources to the research and development of technology that may be expropriated or subject to a compulsory license under a future climate change treaty. In an apparent effort to ease such concerns, the House of Representatives recently passed legislation that opposes any global climate change treaty that weakens intellectual property rights. Within the context of these debates over how to promote technological innovation and how to structure technology transfers, the growth of green patents suggests that the patent system continues to provide at least part of the necessary incentive for the development of technology to combat climate change.
Leading environmental groups such as Natural Resources Defense Council (NRDC) have recognized for the need for “Developing the Technology of the Future” to address the problem of climate change. In a brief issued earlier this year, NRDC argued that the federal government must take action to spur research and development with regard to clean energy technology because “[t]he private sector tends to under-invest in new low-carbon technologies because of the risk of ‘innovation spillovers’ -- that other companies will benefit from their initial research investment.” Others have offered so-called “inducement prizes” offered to anyone who can develop the technology to counter the effects of greenhouse gas emissions. In September of 2007, Sir Richard Branson and Al Gore launched the Virgin Earth Challenge, pledging to award $25 million to the developer of “a viable technology which will result in the net removal of anthropogenic, atmospheric greenhouse gases each year for at least ten years without countervailing harmful effects.” Similarly, during the 2008 presidential race, Senator John McCain proposed a $300 million prize for “the development of a battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars.”
Plato famously wrote that “necessity is the mother of invention.” Arguably, however, neither “necessity” nor the prospect of “inducement prizes” has been as effective as the patent system in providing the crucial incentive for technological innovation. As Abraham Lincoln (who was granted a patent of his own) once remarked, the creation of patent laws encouraged innovation by adding “the fuel of interest to the fire of genius.”
[1] The patents cover the following technologies: fuel cells (156), wind energy (43), solar energy (36), hybrid/electric vehicles (20), biofuels (13), tidal/wave energy (8), and geothermal energy (2). Corporations that were awarded the most “green” patents include Honda (17), General Motors (15), Toyota (12), General Electric (11), Nissan (9), Panasonic (5), Ford (5), Daimler (4), Enercon GmbH (4), Applied Materials (3), and Bloom Energy (3).
Countdown to Copenhagen: The debate over technology transfers and the protection of intellectual property
The debate over the role of technology transfers in any future climate change treaty is set to intensify as the UN Climate Change Conference in Copenhagen approaches. On one side, there are those who believe that intellectual property (IP) rights should not stand in the way of international cooperation on climate change. For example, Secretary of Energy Stephen Chu has suggested that it may be necessary to “share all intellectual property as much as possible,” especially when it comes to certain vital technology like systems for capturing and storing carbon dioxide. A report issued this month by the Center for American Progress and the Global Climate Network warns: “Intellectual property (IP) law can also act as a barrier, and measures to encourage companies to use or relinquish IP (and in some circumstances to use the flexibility already available through the World Trade Organization’s TRIPs agreement) may be necessary.” The report recommends that “patents could be withdrawn if developers seek inappropriately high rents from their IP protection or use IP to restrict a technology’s use.”
In contrast, groups such as the Global Intellectual Property Center (GIPC) of the US Chamber of Commerce and the Coalition for Innovation, Employment and Development (IDEA), an alliance of multinational corporations, worry that the inclusion of technology transfer provisions in any climate treaty poses a serious threat to the protection of IP rights. For example, a report issued by GIPC warns that there is “a growing movement of anti-IP activists drawn from universities, foundations, non-governmental organizations (NGOs), ideologically driven interest groups, and even governments. These activities promote the idea that IP rights should not be recognized and that the protection of IP impedes progress and hurts the poor.” In an interview with the New York Times, the head of IDEA refuted the notion that IP rights are an obstacle to cooperation on climate change:
“Cooperation and property rights are not mutually exclusive. Indeed, property rights are the solution, not the problem. If property rights become secondary, then we lose the incentive for innovators to pursue their ideas, and the world loses the opportunity to learn and build upon their innovation. Not only does this dampen technological advancements, it also would likely mean a major reduction in private sector investment in research and development funding for new technologies.”
Under Article 4.5 of the U.N. Framework Convention on Climate Change (UNFCCC), as affirmed by Article 10 of the Kyoto Protocol, developed countries have committed to taking “all practicable steps to promote facilitate and finance, as appropriate, the transfer of, or access to, environmentally sound technologies and know-how to other Parties.” On May 19, 2009 the UNFCCC released its draft negotiating text that includes various options for “Measures to address intellectual property rights.” One option provides: “Specific measures {shall} {should} be established to remove barriers to development and transfer of technologies from developed to developing Parties arising from intellectual property rights (IPR) protection, including: (a) Compulsory licensing for specific patented technologies; (b) Pooling and sharing publicly funded technologies and making the technologies available in the public domain at an affordable price; (c) Taking into account the example set by decisions in other relevant international forums relating to IPRs, such as the Doha Declaration on the TRIPs Agreement and Public Health.” The negotiating text includes another proposal that “LDCs [least developed countries] be exempted from patent protection of climate-related technologies for adaptation and mitigation, as required for capacity-building and development needs.”
In response, the US House of Representatives recently passed legislation that opposes any global climate change treaty that weakens IP rights. On June 10, 2009, the House passed H.R. 2410, the Foreign Relations Authorization Act, Fiscal Years 2010 and 2011. Section 1120A is entitled “Statement of Policy Regarding Climate Change” and stipulates that, “with respect to the United Nations Framework Convention on Climate Change, the President, the Secretary of State and the Permanent Representative of the United States to the United Nations should prevent any weakening of, and ensure robust compliance with and enforcement of, existing international legal requirements as of the date of the enactment of this Act for the protection of intellectual property rights related to energy or environmental technology, including wind, solar, biomass, geothermal, hydro, landfill gas, natural gas, marine, trash combustion, fuel cell, hydrogen, micro-turbine, nuclear, clean coal, electric battery, alternative fuel, alternative refueling infrastructure, advanced vehicle, electric grid, or energy-efficiency-related technologies.”
It remains to be seen what position the Obama Administration will take on the issue of technology transfers when climate treaty negotiations begin in Copenhagen in December. However, during the recent G8 Summit, President Obama co-chaired a meeting of the Major Economies Forum on Energy and Climate, which includes non-G8 countries like China, India, and Brazil. The discussions resulted in the Declaration of the Leaders of the Major Economies Forum on Energy and Climate. Leaders agreed to establish a “Global Partnership to drive transformational low-carbon, climate-friendly technologies” and to report in November on “actions plans and roadmaps and to make recommendations for further progress.” They will also “consider ideas for appropriate approaches and arrangements to promote technology development, deployment, and transfer.”
