LINKS BETWEEN PATENT RULES AND ACCESS TO GREEN TECHNOLOGY COME UNDER SCRUTINY

On the eve of an international conference on climate change in Bali, the European Parliament has called for examining the impact of intellectual property protections on the spread of environmentally sound technologies, suggesting that WTO rules might be impeding their diffusion.

Wider use of energy-saving technology would help curb greenhouse gas emissions. However, the extent to which patent protections play a major role in raising the cost of using such technology remains uncertain.

In a resolution adopted on 29 November, the European Parliament pointed to the "urgent need to develop production, consumption and trade patterns that mitigate climate change and its economic impact." It said that the Clean Development Mechanism, the Kyoto Protocol's principal system for technology transfer, "is not yet sufficient to significantly shift investment patterns in those sectors that have the greatest impact on climate change, such as power generation, transport and industrial energy use."

Given this insufficiency, the parliament urged the European Commission, which negotiates trade agreements on behalf of EU members, to push for removing tariff and non-tariff barriers that "prevent or slow the dissemination of low carbon technologies." To this end, it also recommended "launching a study on possible amendments to the WTO Agreement on Trade-related Aspects of Intellectual Property Rights in order to allow for the compulsory licensing of environmentally necessary technologies, within the framework of clear and stringent rules for the protection of intellectual property." Compulsory licensing effectively suspends patents on a technology, allowing for the production of generic copies against the payment of a royalty to the patent-holder.

The EU could help promote the development of global-scale 'climate-friendly' industries by working to lower barriers to 'green' trade through measures such as "removing tariffs on 'green' goods at the WTO level" and "reshaping the rules on intellectual property rights," the parliament noted.

The resolution pointed to the EU's status as a key player in alternative energy technologies, particularly in the wind and solar sector. "The EU should become a market leader in the worldwide export of environmental goods and services," it said.

Chinese officials, currently resisting heavy pressure from some industrialised nations to accept binding caps on greenhouse gas emissions, have increasingly been arguing that intellectual property protections are putting energy-saving technologies out of the reach of developing countries. "I think we have to resolve a lot of barriers on the so-called intellectual property rights issues," Zhou Dadi of China's Energy Research Institute said last week, reports Reuters. "That means if you really want to help China to speed up the technology transfer process, we have to really think about how to help China cover the high costs. Most of them are not based on material, they're based on intellectual property rights." Zhou expressed hope that China would raise the issue in Bali.

However, some studies reveal that the key barriers encountered by developing countries may not be related to intellectual property protection, but to trade barriers and other issues related to market structures.

John Barton, an emeritus professor of law at Stanford University and a leading authority on technology transfer, has demonstrated that there is a difference between the renewable energy sector (solar, photo-voltaic, biofuels, and wind) and the pharmaceutical sector, the classic example of how compulsory licences have been used to create dramatically cheaper drugs and expand access to medicine. In the pharmaceutical sector, patents and the associated monopoly rights often have a substantial upward impact on price, as there may be no substitutes for a new medicine, he wrote this month in Bridges Trade BioRes Review. In contrast, in the renewable energy sector, patent protections have long expired on the basic technologies used. Thus, only specific improvements or features tend to be patented. As a result, several competing patented products exist - and the competition usually brings prices down compared what might be charged under a monopoly.

"Any judgment about the [European] Parliament's proposal about compulsory licensing needs to be made only after we know better whether there is a problem," Barton told Bridges. He succinctly summarised the dilemma of a compulsory licensing policy for green technologies: "the risks of not granting a compulsory license readily enough are that technology will be monopolized and priced too high; the risks of granting such a license too readily are that incentives for private research will be decreased."

Barton said that in the cases he had studied, intellectual property-related obstacles to technology transfer were relatively smaller. In these sectors, intellectual property was generally accessible either through competitively priced products, or through modest royalty fees. However, he said that other sectors, notably the automobile industry, merited further study. He suspected that the real problem in some instances might lie more in the realm of anti-competitive practices than that of intellectual property.

That said, Barton noted that the development and transfer of green technologies transfer "is absolutely crucial to the world's future." He suggested that developed countries could try to promote innovation through means other than patent protection, for instance by committing a portion of technology development funding to the needs of developing countries, and working with developing country firms on such research.

The European Parliament's resolution on trade and climate change is available online at http://www.europarl.europa.eu/sides/getDoc.do?Type=TA&Reference=P6-TA-2007-0576&language=EN.

ICTSD reporting; "Patenting and access to clean energy technologies in developing countries," BRIDGES TRADE BIORES REVIEW, 3 December 2007; "China says rethink of IPR needed for energy saving," REUTERS, 28 November 2007.