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Declaration on Patented Environmentally Sound Technology

Intellectual Property Rights on Environmentally Sound Technologies

Intellectual Property Rights (IPRs) are indirectly linked to the core objectives of the international climate change regime. The overarching aim of the Paris agreement is to hold the increase in the global temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels to significantly reduce the risks and impacts of climate change.[1] To achieve this goal, research, development, and dissemination of environmentally sound technologies (ESTs) are going to play a crucial role. The importance of technology in moving to a renewable energy-based society and in adapting to a different climate as a consequence of climate change is emphasized in the Paris Agreement’s Article 10.1: “the Parties share a long-term vision on the importance of fully realizing technology development and transfer in order to improve resilience to climate change and to reduce greenhouse gas emissions.”

ESTs can roughly be divided into two categories: climate mitigation technologies and climate adaption technologies. The former can be defined as any technology that contributes to a lowering of GHG-emission.[2] The latter concern a broader category of inventions that share the common goal of adapting to the consequences of climate change in one way or another such as drought-resilient crops or early warning systems for extreme weather events.

The private sector will inevitably be responsible for developing a large part of the urgently needed mitigation and adaption technology. Developed in the private sector, technologies will usually be patented and subject to other IPRs as well. The function of a patent is to confer its owner the exclusive right to prevent third parties to make, use, offer for sale, sell or import the patented product, method, or process without his or her’s consent.[3]    The justification behind the patent system (and IPRs more broadly) can be found in the incentive theory, which stipulates that the promotion of time-limited, exclusive rights to the inventor, gives incentive to create new technologies.[4] Another justification is that IP rights are natural rights. As everyone has a natural property right to their ideas, the creator should obtain the sole right to reap the fruits of his or her work.[5]

Challenges

Based on Article 10.1 read in conjunction with Article 2.1 (a) of the Paris Agreement, it should be clear that the development and transfer of technologies are a key objective of the climate change regime. Similarly, it follows from the objectives of TRIPS (the most recent multilateral treaty on IPRs) in Article 7 that “the protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and the transfer and dissemination of technology (..)”. At first glance, it seems like there is no conflict between the objectives of the two regimes. In the climate change regime, however, the development and transfer of technologies are based on a strict time table to keep the increase in the global average temperature below 2°C. Beyond transfer and dissemination of technology, the foremost task of TRIPS is to enforce and protect IPRs and to promote innovation, which follows from Article 7 of the agreement. The urgent need to develop and disseminate technologies seen from the climate lawyer’s point of view may speak in favor of a softening of IPRs on ESTs, at least under certain circumstances if the needs associated with climate change can be assessed to overrule the IP regimes objective of protecting and enforcing IPRs and promoting innovation. So, in what situations may that be? As I see it, IPRs can pose a barrier to the transfer and dissemination of ESTs in the following ways:

  • If the IP owner refuses to license out technology, charge high licensing fees, attach restrictive terms to a licensing agreement, or apply a strategic patenting strategy to block out potential competitors from commercializing a technology in a given market. These behaviors can collectively be referred to as anti-competitive practices, and they have been reported in various industries in relation to ESTs.[6] As a consequence of anti-competitive practices, the dissemination of EST may be stalled on a case-by-case basis, thereby slowing down the green transitioning and countries’ adaption efforts.
  • Studies show that weak IP protection and enforcement in developing countries may discourage technology transfers and investments from organizations in developed countries.[7] Conversely, if foreign companies can be insured against counterfeiting and maintain a competitive advantage against potential rivals, the incentive to transfer technology naturally increases. The challenge of strengthening the abilities of the IP system in developing countries to induce foreign investments and technology transfers should be seen in context with the broader task of providing financial support and assisting in capacity-building in developing countries. I explore this issue more in-depth in Climate Change as a Facilitator of Growth in Developing Countries.
  • In recent years scholars have criticized the patent system for being fundamentally unsuited to promote inventions that serve the public good such as ESTs.[8] Because ESTs attend to the concern of climate change, a matter of vital public concern, the research, development, and dissemination of these technologies should not be left in the hands of private corporations, where the inventions are subject to the exclusive rights of the owner. The potential legal monopoly that a patent offers to its owner may challenge the access and dissemination of ESTs.

Discussions of IPRs in the international climate change regime

The relationship between intellectual property rights (IPRs) and climate change is practically left untouched in public international law. One exception would be Agenda 21, Chapter 34, which contains a vague reference that “consideration and further exploration should be given to the role of patent protection and IPRs, in particular in the view of developing countries”[9].

The absence of a more thorough guidance to approach IPRs in the climate change regime is remarkable when considering the longstanding political debates surrounding IPRs in the COP-meetings (Conference of the Parties of the UNFCCC)[10], which led up to the adoption of the Paris Agreement in December 2015.

In June 2009, China and the G77 countries (a group consisting of 135 developing countries allying in the UN negotiations) made various suggestions on how IPRs on ESTs could be softened. Among the proposals was[11]:

“(i) the adoption of a Declaration on IPRs and Environmentally Sound Technologies in relevant fora;

(ii) the use to the full flexibilities contained in the TRIPS Agreement including compulsory licensing to access intellectual property protected technologies;

(iii) steps to ensure sharing of publicly funded technologies and related know-how;

(iv) the creation of a “Global Technology Pool for Climate Change” that ensures access to technologies including on royalty-free terms”

More radical measures were also proposed, such as exempting ESTs from patenting and even revoking existing patent rights on ESTs.[12] On the other side of the negotiating table, developed countries such as the EU and the US have firmly and consistently taken a strong stance towards preserving strong IPRs on climate-related technology. The US even opposed the use of compulsory licenses, which is allowed under TRIPS.[13]

The main issue with the developed countries’ refusal to discuss the issue, lies in the global imbalance of innovation in EST. Developing countries are heavily reliant on technology transfers and assistance from developed countries. A study from 2010 which reviewed more than 400.000 patents on clean energy technologies (mitigation technologies), found that almost 80% of the patents were owned in Japan, the United States, Germany, Korea, France, and the United Kingdom, all developed countries.[14] Potential implications between the IP regime and the climate change regime, can thus namely arise in the context of technology transfers from developed to developing countries.

The refusal of developed countries to discuss a softening of IPRs also indicates that modern innovation in ESTs is primarily founded on a closed innovation paradigm where new technologies are being developed and scientific research is being conducted behind closed curtains in the R&D (research & development) departments of private companies. In the closed innovation paradigm, patents and trade secrets are viewed as important safeguards to protect technologies and know-how from leaking outside the walls of the company.  The company can then store up their technologies on the shelf, and exclude anyone else from using the technology, when they finally decide to take it to the market.

Measures to address the key challenges

The core challenges that IPRs pose in the context of the climate change regime have been mentioned above. There are subtle differences in the objectives of the climate change regime and the IP regime. The first thing we should look at is whether climate change can justify measures, which may compromise the objective of TRIPS (and the IP regime) to protect and enforce IPRs.

TRIPS Article 8.1 allows (WTO) members to “adopt measures necessary to protect public health and nutrition, and to promote the public interest in sectors of vital importance to their socio-economic and technological development, provided that such measures are consistentwith the provisions of this Agreement.” As climate change concerns public policy and health, the door may be open to make certain restrictions in IPRs, as long as such measures are necessary and consistent with the provisions of TRIPS

 The Marrakesh Agreement[15] have the status of a constitutional agreement in the WTO regime. It explicitly mentions “sustainable development” and protection and preservation of the environment, as an objective of the WTO in its preamble.

The Doha Declaration[16] is one example of an agreement made on the premise of taking a necessary measure under Article 8.1 of TRIPS. To support developing countries’ access to vital medicines and vaccines, the WTO member found that it was necessary and TRIPS-consistent to allow developing countries a wider access to obtain compulsory licenses in developed countries.[17] More specifically,  the requirements under TRIPS to obtain compulsory licenses predominantly for a domestic market supply (Article 31(f)), which means that compulsory licenses can generally not be obtained abroad, along with the requirement of paying an adequate remuneration (Article 31 (h)) in exchange of a compulsory license, were waived. A similar declaration to the Doha Declaration could theoretically be made on ESTs.

If we suppose that IPRs pose a barrier to the dissemination of ESTs, namely in regards to technology transfers from developed to developing countries, the so-called TRIPS flexibilities are available. The flexibility mechanisms were specifically intended for situations where vital public concerns overrule the objective of protecting and enforcing IPRs. Relevant flexibility mechanism that can be used to accelerate ESTs despite IPRs are:

Patent exemptions (Article 27.2): Under this Article members to the TRIPS agreement may exclude certain inventions from patentability that are necessary “to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment.” Article 27.2 could be applied in two ways in this context, either to exclude ESTs from patenting to promote ESTs as public goods, or to exclude inventions with a negative environmental impact from patenting to prevent the commercialization of polluting inventions. However, Article 27.2 clarifies that patent exclusions relate to the commercial exploitation of the invention within the member states territories. According to a report from UNCTAD (United Nations Convention on Trade and Development) and ICTSD (International Center for Trade and Sustainable Development) “a Member cannot refuse a patent on ordre public or morality grounds and, at the same time, permit the commercialization of the invention”.[18] If the EST cannot be commercialized, it cannot be disseminated or transacted in the market. On this background exempting ESTs from patenting, would obviously not foster technology transfers and the development of ESTs in developing countries.

In regards to exclude polluting inventions from patenting, a strong argument against adopting such as measure would be that patent examiners very rarely have the professional background to assess an inventions environmental impact. Further, many inventions have dual uses, meaning they can be exploited both in ways which either benefit or damage the environment.[19] Excluding all polluting inventions from patenting with reference to Article 27.2 of TRIPS could thus be a practical impossibility, or put unreasonable strain on the national patent offices.Declaration on Patented Environmentally Sound Technology.

Limits to patent rights (Article 30): Patent rights are not absolute. WTO members are allowed to adopt limited exceptions to patent rights which implies that third parties can freely use a patented invention without infringing the patent holder’s ownership rights. Article 30 sets out a three-step-test of cumulative conditions that exceptions under national patent systems have to respect. The conditions are that any exceptions to patent rights must: “(1) be limited, (2) not unreasonably conflict with a normal exploitation of the patent; and (3) not unreasonably prejudice the legitimate interests of the patent owner, taking account of the legitimate interests of third parties.”[20]  TRIPS does not contain any rules or set out any standards as to how the three conditions should be interpreted. Currently, the main authority on the interpretation of Article 30 is the panel’s decision in Canada – Pharmaceutical Patents (2000), [21] which has been subject to strong criticisms from scholars, because the panel refrains from including the objective (Article 7) and the purpose (Article 8.1) of TRIPS in their interpretation of the three-step-test.[22] The panel’s decision seems to indicate that the legitimate exceptions that are allowed under Article 30 is narrowly limited to the traditional exceptions, which already do exist and are implemented in many national patent system such as private use, scientific use, and prior use.Declaration on Patented Environmentally Sound Technology.

Compulsory licensing (Article 31): Compulsory licenses are licenses granted by the government authority, permitting a person or an entity other than the patent holder to produce, import, sell or use the patented technology without the holder’s consent.[23] TRIPS Article 31 lays out a number of requirements that WTO members have to comply with, if a country chooses to provide for compulsory licenses. The most problematic hindrances for a developing country to obtain a compulsory license in a developed country are the requirements in Article 31 (a) authorization (..) shall be considered on its individual merits”, Article 31 (f) (“shall be authorized predominantly for the supply of the domestic market of the Member authorizing such use;”)  and in Article 31 (h) (“the right holder shall be paid adequate remuneration in the circumstances of each case, taking into account the economic value of the authorization;”).Declaration on Patented Environmentally Sound Technology.

Article 31 (a) implies that compulsory licenses can only be evaluated and granted on a case-by-case basis. Such a requirement can be problematic to the dissemination of ESTs, and make the application slow and cumbersome, as complex ESTs (such as windmills, fuel cells and agricultural biotechnologies) consist of multiple patents, and each patent in the family will require a separate license. [24] However, as long as the patents are related to a particular product or product category, it is not considered to be an impediment to grant a license that covers a bundle of different patents.[25] But the authorization to use the patented invention, still has to be granted on its individual merits, which means that a national court is not allowed to automatically issue licenses based on an invention’s positive environmental impacts – an individual assessment has to be made.Declaration on Patented Environmentally Sound Technology.

As mentioned above, Article 31 (f) and (h) were waived in the Doha Agreement, as the WTO members assessed the developing countries’ access to essential medicines to weigh heavier than the protection and enforcement of IPRs.

Article 31 (k) explicitly waives the requirement in Article 31 (f), and modifies the requirement to pay remuneration to the right holder in Article 31 (h) when there is a “need to correct anti-competitive practices”. There are no guidelines or standards to be found in TRIPS concerning what practices that are deemed to be anti-competitive under Article 31 (k). WTO members thus have the discretion to determine their own criteria and definition of the term. In general, the mere refusal to license is rarely anti-competitive, as valid business justifications may exempt the patent owner from an obligation to license. Especially the US courts have shown extreme deference to IPRs in cases where companies with monopolistic market powers have refused to issue out compulsory licenses.[26] Because the meaning of anti-competitive practices is determined on a national level, developing countries cannot rely upon Article 31 (k) to obtain licenses in developed countries.Declaration on Patented Environmentally Sound Technology.

Declaration on ESTs in the WTO Regime  

TRIPS effectively block any substantial changes to the current IP regime. To adopt aggresive measure such as patent exemption on ESTs in an effort to promote the objectives of the climate change regime would also have preposterous consequences on the economy and innovation, since ESTs cover an indeterminable category of inventions. Allowing such huge gaps in IP regulation would compromise the basic incentive of the IP system.

One way in which the climate change regime and the IP regime can unite in CO2-mitigation and adaption to the consequences of climate change is by opening up the use of TRIPS flexibilities for certain product categories, which is urgently needed in small islands states vulnerable to climate change and the least developed countries. The TRIPS flexibilities are already available to WTO members as it is, but the commitment to utilize these flexibilities should be formalized in a WTO Declaration. The Doha Declaration could serve as a model in this regard.  Similar to the Doha Declaration the de facto restriction on compulsory licensing to foreign markets in Article 31 (f), and the requirement to pay adequate remuneration under Article 31 (h) should be waived.Declaration on Patented Environmentally Sound Technology.

An example could be a waiver on photovoltaic systems, carbon capture and storage technologies, and methods to harvest and store rainwater for water supply. In this way mitigation technologies to utilize and store solar energy and adaption technologies to secure water supplies, could be disseminated and further developed in developing countries without any concern of anti-competitive practices, high licensing fees, or IPRs that prohibit unauthorized use.


[1] Paris Agreement to the United Nations Framework Convention on Climate Change, Dec. 12, 2015, T.I.A.S. No. 16-1104, Article 2.1 (a). 

[2] Dalindyebo Shabalala, Technology transfer for climate change and developing country viewpoints on historical responsibilities and common but differentiated responsibilities, Research Handbook on Intellectual Property and Climate Change, Paperback edition 2018, pg. 24.

[3] TRIPS: Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, 1869 U.N.T.S. 299, 33 I.L.M. 1197 (1994), Article 28.1 (a) and (b).

[4] Estelle Derclaye (2008), Intellectual Property Rights and Global Warming, 12 Marquette Intellectual Property Law Review, pg. 266.

[5] Ibid.

[6] IPCC (2000) Methodological and Technological Issues in Technology Transfer, Metz et. al., A Special Report of IPCC Working Group III, Intergovernmental Panel on Climate Change, pg. 99.

[7] See UNEP, EPO, ICTSD (2010), Patents and clean energy: bridging the gap between evidence and policy, Final report and Damien Dussaux, Antoine Dechezleprêtre, Matthieu Glachant Intellectual property rights protection and the international transfer of low-carbon technologies, 2017, hal-01693539.

[8] In regards to ESTs, see Ofer Tur-Sinai (2018), Patents and Climate Change: A Skeptic’s View, Environmental law Vol. 48:211

[9] Agenda 21, United Nations Conference on Environment & Development Rio de Janeiro, Brazil, 3 to 14 June 1992, Chapter 34, 34.10.

[10] See Matthew Rimmer, Beyond the Paris Agreement: Intellectual Property, Innovation Policy, and Climate Justice, 2018 -> https://www.researchgate.net/publication/331204978_Beyond_the_Paris_Agreement_Intellectual_Property_Innovation_Policy_and_Climate_Justice .

[11] Sangeeta Shashikant, Developing Countries Call for No Patents on Climate-friendly Technologies, TWN Bonn News Update, (June 11, 2009). 

[12] Ibid.

[13] Ibid.

[14] UNEP, EPO, ICTSD (2010), Patents and clean energy: bridging the gap between evidence and policy, Final report.

[15] Marrakesh Agreement Establishing the World Trade Organization, Apr. 15, 1994, 1867 U.N.T.S. 154, 33 I.L.M. 1144 (1994). 

[16] World Trade Organization, Ministerial Declaration of 14 November 2001, WTO Doc. WT/MIN(01)/DEC/1, 41 ILM 746 (2002). 

[17] See Decision on the Implementation of Paragraph 6 of the Doha Declaration on TRIPS and Public Health WT/L/540 (August 2003). 

[18] UNCTAD-ICTSD (2005), Resource Book on TRIPS and Development, Cambridge University Press 2005, pg. 276. 

[19] AIPPI (2014), Intellectual Property and Green Technology Report prepared by the members of Special Committee Q198 1 – Intellectual Property and Green Technology, pg. 6. 

[20] Antony Taubman and Jayashree Watal (2010), The WTO TRIPS Agreement – A Practical Overview for Climate Change Policymakers, pg. 7-8. 

[21] WTO Canada – Pharmaceutical Patents (2000) WT/DS114/R 17 March 2000. 

[22] See Wei Zhuang, Intellectual Property Rights and Climate Change, Interpreting TRIPS for Environmentally Sound Technologies, Cambridge University Press 2017, pg. 265f.

[23] Zhuang pg. 278. 

[24] Shabalala, pg. 280.

[25] See Shabalala, pg. 280, and Zhuang pg. 291. 

[26] See Michael A. Carrier, Antitrust and Climate Change, Research Handbook on Intellectual Property and Climate Change, Paperback edition 2018.

Declaration on Patented Environmentally Sound Technology.

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