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Green technology innovation versus patent law

By Mauricio Guaragna Nov 26, 2010

Chinese car makers claim that patents blocks their ability to produce low-cost hybrid cars.

The Copenhagen Summit in 2009 emphasized a tension that patent law creates between developing and developed economies when we talk about sustainable development and the promotion of innovation. One issue that caused the most controversy was the call to exclude patents over climate change mitigation or adaptation technologies from intellectual property protection, including the revocation of any existing intellectual property rights. While there was no consensus regarding this issue in the summit, China, India and other countries still demand patent exemptions for the development of green technologies.

One year later, we have to ask ourselves if the current patent system is doing its job in supporting the development of new green technologies for combating climate change. The motivation for the patent system is to promote innovation, but many say that it is now a risk factor in the handling of large-scale changes and crises. The argument is that patents of “broad scope” coupled with high licensing fees often hinder or block subsequent innovation and restrict the use of the “information” generated by research and development. For example, in China car manufacturers claim that they are unable to produce low-cost hybrid cars because of a small number of companies that have patented key components.

Although patents do provide incentives to commercialize new technologies, they stifle competition. Due to the monopolistic nature of patents, society should take care not to over-reward the patent holder. Instead, the system should take into account whether the effect of monopolising a particular technology will be good or bad for society as a whole. The European Patent Office tackled this dilemma when it issued a scenario paper imagining the patent system in 2025.  Two of the most interesting scenarios they considered were: 1) that an avian flu pandemic prompts a mass social movement to abolish patents over all health technology, leading instead to direct government investment and prize systems; and 2) that the climate change crisis prompts the emergence of a two-tier system, open source for all green technologies, software, energy and biotech, while traditional patents are retained only for old “industrial” age technologies with well defined boundaries.

While the patent system may be reshaped or cease to exist some day, until then we should look into alternatives which can exist within the current system. Approaches such as open source licensing may offer an effective response to innovation hold-ups. Green technology is an area where these techniques may be feasible. For example, the World Business Council for Sustainable Development (WBCSD) has compiled a portfolio of patents, called the Eco-Patent Commons, which could be used in manufacturing and business processes. The idea is that companies could pledge patents that save energy and water, reduce the production of hazardous waste, increase recycling or reduce the amount of material used in a process. Whether this particular portfolio will work or not, is difficult to say since the businesses involved are well known for strategic and aggressive patent strategy and some have been acquiring patents of highly dubious merit. For this reason, it is not clear how many of these pledged patents are genuinely useful for others to exploit. So while its initial benefit remains in doubt, the WBCSD approach is innovative and it highlights a way in which intellectual property management can be tailored in a sophisticated way to advance specific technological fields. After all, unless societies agree to overhaul the current patent system, alternative techniques like open source style licensing are some of the only tools currently available to improve the rapid development of technological innovation needed to handle crises like climate change.

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