Intellectual Property Rights Series 14

Intellectual Property
and Technology Transfer
Issues in the Context of
Climate Change

Sangeeta Shashikant
and Martin Khor

TWN 1
Third World Network
 Intellectual Property
and Technology Transfer Issues
in the Context of Climate Change

Sangeeta Shashikant
and Martin Khor

TWN
Third World Network
Intellectual Property and Technology Transfer Issues
in the Context of Climate Change
is published by
Third World Network
131 Jalan Macalister
10400 Penang, Malaysia.
Website: www.twnside.org.sg

© Third World Network 2010

Printed by Jutaprint
2 Solok Sungei Pinang 3, Sg. Pinang
11600 Penang, Malaysia.

ISBN: 978-967-5412-37-0
CONTENTS

1 Introduction 1

2 IPRs and Technology Transfer 2

The General Relationship between IPRs and
Technology Transfer 2
Technology Transfer in the TRIPS Agreement 5
IPRs and Technology Transfer in the Context
of Climate Change Negotiations 9

3 Developing Countries’ Views on IPRs and

Technology Transfer 14

4 Current Patenting Trends in Climate-Related

Technologies 18
Energy Technologies 18
Automobile Pollution Control Technologies 24
Biofuels 26
Climate-Tolerant Crops 26

5 Effects of IPRs on Transfer of Climate Technologies 28

IPRs: A Barrier to Climate-Friendly Technologies? 30
Opportunistic and Anti-Competitive Lawsuits:
Hampering Access to Climate Technologies 38
IPRs and Publicly Funded Technologies 40

6 Measures That Can Be Taken on Intellectual

Property and Climate Technologies 43
Excluding Climate-Friendly Technologies from Patents 43
Strict Application of Patentability Criteria 46
Compulsory Licensing in Developing Countries 47
 International Declaration on IPRs and Climate Technologies 51
Regulating Restrictive Practices in Licensing Agreements
and Anti-Competitive Uses of IPRs 52
Exceptions to Patent Rights 53
Technology Pooling through a Collective Global Approach 54
Sharing of Know-How and Trade Secrets 56
Publicly Funded Technologies 56
Future Technologies 57

7 Some Conclusions 59

Endnotes 61

Bibliography 68
NOTE
This paper was prepared for the United Nations Department of Economic and
Social Affairs as a background paper for the World Economic and Social Sur-
vey 2009.
 1 Introduction

CLIMATE change is now recognized as a major, if not the most important, global
environmental problem. Now that the scientific battle to have this problem
recognized as a potential catastrophe seems to have been won (with a few
exceptions), attention is turning to solutions. A major area in the search for solutions
is the design and spread of more energy-efficient technologies that reduce or
eliminate climate-change-inducing emissions. In the next few years, it can be
expected that these technologies will be increasingly introduced in both developed
and developing countries.

However, intellectual property rights (IPRs) over such technologies may pose a
hindrance to their dissemination and use. In particular, developing countries may
be expected to face such obstacles to the transfer of technology that is aimed at
reducing the sources of climate change. This paper looks at some of the issues
relating to IPRs and the transfer of climate-friendly technologies (also referred to
in this paper as climate technologies).

1
 2 IPRs and Technology Transfer

The General Relationship between IPRs and Technology Transfer

A CENTRAL aspect of technology transfer is the building of local capacity so that

local people, farmers, firms and governments can design and make technologies
which can be diffused in the domestic economy.

Commonly, however, the predominant type of technology supply to developing

countries has tended to be capital goods and equipment.1 For example, one study
showed that 80% of aid to China’s energy sector was focused on funding
construction of new thermal and hydro-power plants wherein the aid was to finance
the export of equipment supplied by foreign firms.2 Studies have also pointed out
that the transfer of plant and equipment to developing countries has often been
based on “turnkey” and “product-in-hand” contracts and that restrictive contract
terms between transnational companies and developing countries’ firms have limited
scope for fostering innovation through “reverse engineering”.3 Often technology
transfer between technology suppliers and importers precludes knowledge sharing
across the economic spectrum.

A comprehensive definition of technology transfer,4 however, involves not only the

purchase and acquisition of equipment but includes the transfer of skills and know-
how to use, operate, maintain as well as to understand the technology hardware
so that further independent innovation is possible by recipient firms.5 It also includes
the ability to make the technology through “imitation” or reverse engineering; to
adapt it to local conditions; and eventually to design and manufacture original
products.6 The process of technology transfer involves progressively climbing
through all these aspects.

2
There are many barriers to effective transfer of technology to developing countries.
Among the barriers that are normally listed are poor infrastructure, inadequate
laws and regulations, lack of absorptive capacity, shortage of skilled personnel,
lack of finance, ignorance of technological issues, high cost of certain technology
agreements, problems created by equipment suppliers, and intellectual property
rights (particularly patents and trade secrets). This paper addresses the barrier of
intellectual property rights.

While some of the abovementioned barriers are linked to conditions in the recipient
countries, a central problem surrounding technology transfer is that firms that possess
technology often have little incentive to transfer it to developing countries.7 Reasons
for this include: (a) liberalization of markets often means technology owners can
directly export the products without resorting to foreign direct investment (FDI)
or licensing; (b) licensing technologies would assist a licensee to become a potential
competitor in a global market or could be seen as subject to “leakages” which
lead to imitation; and (c) for licensing to be a viable and attractive option, the
expected profit should compensate the licensor for his transaction costs and risks.

It is often argued that availability of effective IPR protection provides foreign

companies an incentive to transfer protected technologies to developing countries
and will encourage the inflow of FDI, which in turn will bring about technology
transfer to the host country.

However, evidence that strengthened IPRs (patents, trademarks and trade secrets)
will increase FDI and expand technology transfer flows is limited, ambiguous8 and
thus inconclusive.9 The availability (and enforceability) of IPRs is by no means a
sufficient condition for an increase in FDI or for transfer of technology to occur.
Countries with “weak” IPR regimes have been among the major technology
borrowers (e.g., South Korea, Taiwan, Brazil in the years preceding the coming
into force of the World Trade Organization (WTO)’s Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS)). Meanwhile, many countries
(including many African countries) with IPR regimes comparable to those of
developed countries have a poor record of being technology importers.

A similar scenario is observed in the context of the IPRs-FDI relationship.10 For

example, despite Canada and Italy’s lack of patent protection at various times,
they had no trouble attracting FDI.11 Evidence on a clear cause-effect relationship

3
between strengthened intellectual property (IP) protection and FDI is inconclusive.
According to Gerster (2001), “Economic history does not support this view” (that
strengthened IPRs will increase FDI) and “Other factors are far more decisive”.12
He also adds that “Foreign investors are particularly attracted by market size – in
countries such as India, China or Brazil, for example – even when conditions do
not correspond to textbook descriptions of a market economy. Small countries,
on the other hand, are frequently regarded as marginal and unattractive, even
when they have created admirable market conditions”. A United Nations study on
IPRs and FDI has also found that there is an insufficient linkage between patents
and FDI.13

In fact, strong IP protection can make access to technology more problematic.

Generally, having IPR-protected technology means that the IP holder can control
the use of his technology, and decide when, where and how to use it and whether
to transfer it and the ways in which the technology can be utilized, if at all, in those
countries where protection has been obtained.14 In some cases, increased IP
protection may lead foreign firms to close down manufacturing facilities in
developing countries since the products can be safely exported from other locations.
This effect was notably seen in the area of pharmaceuticals in some Latin American
countries after the introduction of product patent protection for pharmaceuticals.

There are also numerous situations where weak IP regimes have actually facilitated
access to foreign technologies and allowed reverse engineering to take place,
resulting in strengthened indigenous technological capacity. For example, prior to
1970, when India allowed patent protection for pharmaceuticals, multinational
corporations dominated the supply of medicines and the Indian manufacturers
supplied only 32% of the Indian market.15 In 1970, the Indian law was amended
and patents on pharmaceutical products were not allowed anymore. Over the
years the share of the Indian pharmaceutical market supplied by domestic
companies increased to 77%. India also moved from being a net importer of
medicines to a net exporter, with exports worth $3,177 million in 2003-04. It
exports to 65 countries, including developed regions such as the United States
and Europe and developing countries. India has the most US Food and Drug
Administration-approved manufacturing facilities outside the US, which indicates
the high technology and quality standards achieved by Indian manufacturers when
IP protection was lowered. It should also be noted that between 1970 and 1995
India received significant amounts of FDI. Likewise, in Switzerland in the 1880s

4
two of Switzerland’s most important industries, chemicals and textiles, were strongly
opposed to the introduction of patents as it would restrict their use of processes
developed abroad.16

IPRs increase the leverage technology suppliers have to charge royalties higher
than those they would have obtained in the absence of protection.17 Many firms in
developing countries may not be able to afford this higher cost and it reduces the
resources available for local research and development (R&D). Even if they could
afford it, the additional cost would increase the costs of production, making their
products unviable, particularly in an open globalized market. Moreover, there
could be a large drain on a developing country’s foreign exchange as a result of
having to pay foreign IPRs holders for the use of their technology.18 Many
developing countries with serious debt problems will be unable to afford the cost
of using the technologies.

IPRs also deepen negotiating imbalances and lead to the imposition of abusive
practices that restrain competition.19 For example, even if a local firm is willing to
pay the commercial rate for the use of the technology, the patent holder can withhold
permission to the firm or impose onerous conditions, thus making it impossible or
extremely difficult for the technology to be used by the firm.20

Technology Transfer in the TRIPS Agreement

The WTO’s TRIPS Agreement reflects the technological protectionist agenda of

the US and other developed countries. At the time the Agreement was being
negotiated, as well as now, developed countries account for most of the global
resources spent on R&D annually, control most of the patented technology and,
as a result, receive most of the global cross-border royalties and technology
licensing fees. According to Kumar (2002), 10 developed countries account for
84% of resources spent on R&D globally, control 94% of the technological output
in terms of patents taken out in the US between 1977-2000 and received 91% of
global cross-border royalties and technology licensing fees in 1997 (see Table 1).

5
Table 1: Major Source Countries of Technologies, 2000

Country R&D US patents Technology fees

expenditure taken received
(1997) (1977-2000) (1997)

$ billion % of ’000 % of $ billion % of

PPP total total total

USA 212.8 40.8 1337.0 57 33.8 42.2

Japan 90.1 17.3 429.4 18 6.9 8.6
Germany 42.0 8.0 173.8 7 11.9 14.9
France 28.1 5.4 68.2 3 2.2 2.7
UK 22.6 4.3 67.4 3 5.8 7.2
Italy 12.1 2.3 29.0 1 1.6 2.0
Canada 11.4 2.2 48.4 2 1.3 1.6
Netherlands 7.5 1.4 22.0 1 6.2 7.7
Sweden 7.1 1.4 22.9 1 0.4 0.5
Switzerland 4.8 0.9 31.0 1 2.8 3.5

Subtotal 10 438.5 84.0 2229.1 94 72.9 91.0

World 522.0 100.0 2364.9 100 80.1 100.0

Source: Kumar (2002)

The primary objective of proponents of the TRIPS Agreement (i.e., the developed
countries) was to secure protection for owners of IPRs, which largely come from
developed countries. Developing countries’ concerns about the implications of
stronger IPRs on technology transfer received limited attention during the TRIPS
negotiations.21

The TRIPS Agreement has several references and provisions that specifically refer
to technology transfer (e.g., Articles 7, 8, 40 and 66).

Article 7, which contains the objectives of the Agreement, states: “The protection
and enforcement of intellectual property rights should contribute to the promotion

6
of technological innovation and to the transfer and dissemination of technology, to
the mutual advantage of producers and users of technological knowledge and in a
manner conducive to social and economic welfare, and to a balance of rights and
obligations.” Article 7 seems to indicate that the protection and enforcement of
IPRs may not in itself necessarily promote technological innovation and transfer,
but should be implemented to ensure innovation and transfer of technology.

Article 8.2, which is on principles, is another important provision of the TRIPS

Agreement. It recognizes the need for “appropriate measures” “to prevent the
abuse of intellectual property rights by right holders or the resort to practices
which unreasonably restrain trade or adversely affect the international transfer of
technology”, but “provided that they are consistent with the provisions of this
Agreement”. This Article acknowledges the right of WTO Member states to adopt
“appropriate measures” where the IP holders resort to practices which may
adversely affect international transfer of technology.

Article 40 of the TRIPS Agreement contains a set of rules aimed at the “control of
anti-competitive practices” in voluntary licensing. Article 40.1 states WTO
Members’ recognition and agreement that “some licensing practices or conditions
pertaining to intellectual property rights which restrain competition may have adverse
effects on trade and may impede the transfer and dissemination of technology”.
Article 40.2 expressly allows WTO Members to specify “in their legislation licensing
practices or conditions that may in particular cases constitute an abuse of intellectual
property rights having an adverse effect on competition in the relevant market”.
Thus it allows Members to adopt measures to control or prevent restrictive practices
on a case-by-case basis, where the case constitutes an “abuse” of intellectual
property rights which has an “adverse effect on competition in the relevant market”.

Article 40.2 further provides a few examples of practices that may be deemed
restrictive. They include: (i) exclusive grant-back conditions (i.e., provisions that
require the licensee to transfer back improvements on the licensed technology
exclusively to the licensor); (ii) conditions preventing challenges to validity; and
(iii) coercive package licensing (i.e., requiring the licensee to acquire inputs from
the licensor that the licensee does not need).

Article 40.3 provides for a consultation system between Members. A Member

may request consultations with another Member if it believes that a national or

7
domicile of that other Member “is undertaking practices in violation of the requesting
Member’s laws and regulations” and “wishes to secure compliance with such
legislation”, “without prejudice to any action under the law and to the full freedom
of an ultimate decision of either Member”. The Member with whom the consultations
are requested “shall accord full and sympathetic consideration to, and shall afford
adequate opportunity for, consultations with the requesting Member, and shall
cooperate through supply of publicly available non-confidential information of
relevance to the matter in question and of other information available to the Member,
subject to domestic law and to the conclusion of mutually satisfactory agreements
concerning the safeguarding of its confidentiality by the requesting Member”.

A Member whose nationals or domiciliaries are subject to proceedings by another

Member concerning alleged violations of the latter’s legislation on anti-competitive
practices, may also request consultations.22 In such a case, the requesting Member
“shall be granted an opportunity for consultations” with the other Member under
the same conditions as in Article 40.3.

Some analysts contend that there are no records on the actual use of the consultation
system.23

In Article 66.2, the TRIPS Agreement also establishes a specific obligation on

developed countries to take measures to promote and encourage technology
transfer to least developed countries (LDCs). Article 66.2 states: “Developed
country Members shall provide incentives to enterprises and institutions in their
territories for the purpose of promoting and encouraging technology transfer to
least-developed country Members in order to enable them to create a sound and
viable technological base.”

Developing and least developed countries have frequently noted and raised alarm
in the Council for TRIPS, the WTO body which monitors the operation of the
TRIPS Agreement, about the fact that developed countries’ compliance with Article
66.2 is not satisfactory. For example, in a paper to the WTO’s governing General
Council and to the TRIPS Council, the Indian delegation stated: “There has been
little effort to implement this provision (Article 66.2), raising doubts about the
effectiveness of the Agreement to facilitate technology transfers.”24

8
Steps have been taken to reaffirm commitments of developed countries under
Article 66.2 but little has changed with regard to the effective implementation of
the commitments to create a sound and viable technological base in LDCs.
According to Moon (2008), “Based on the evidence from country reports, the
picture of developed-country compliance with 66.2 is rather weak,” although she
noticed an improvement in country reports over time, especially after the 2003
TRIPS Council decision demanding that developed-country Members submit
annual reports on actions taken or planned to fulfil their commitments under Article
66.2.25 The importance of commitments under Article 66.2 has been reaffirmed in
paragraph 11.2 of the implementation Decision adopted by the WTO Ministerial
Conference at the start of the Doha Round of multilateral trade negotiations in
200126 and in paragraph 7 of the Doha Declaration on the TRIPS Agreement and
Public Health.27

There are also other aspects of the Agreement (e.g., provisions on disclosure as
well as compulsory licences) which have implications for technology transfer, but
which are not discussed in this part of the paper. The issues of disclosure of patent
information and compulsory licensing are discussed below.

IPRs and Technology Transfer in the Context of Climate Change

Negotiations

Scientific consensus about climate change has led to increasing emphasis on climate-
friendly technological solutions as the key to moving forward in dealing with the
climate change challenge. Thus, broad diffusion of existing and future technologies
is imperative.

For developing countries, the need for transfer of climate-friendly technologies

has, for a long time, been seen as one of the major aspects of the process of
sustainable development. However, most climate-friendly technologies are
developed in industrialized countries, although potential for these technologies to
make significant reductions in carbon emissions is located in developing countries,
where fossil fuel consumption is increasing rapidly. In sum, migration of global
energy systems to lower-carbon pathways depends upon the successful transfer
and absorption of low-carbon technologies to and within developing-country
economies.28

9
During the 1992 United Nations Conference on Environment and Development
(UNCED) in Rio de Janeiro and the process leading to it, technology transfer and
financial resources were the two major cross-cutting issues, and constituted the
two main demands of the developing countries. In the UNCED negotiating process,
the key issue in technology transfer was IPRs.

The Group of 77 (G77) developing countries argued that IPRs had to be relaxed
in the case of climate-friendly technologies, for otherwise IPRs would hinder the
developing countries’ access to such technologies.29 The developed countries’
delegations were very sensitive on this point and refused to concede. Whilst agreeing
that concessional terms should be encouraged for the transfer of climate-friendly
technologies, they insisted that IPRs (such as patents) be applied and that an
exception should not be made in IPRs regimes on such technologies.

Finally, the chapter on technology in Agenda 21 (a programme of action for

sustainable development adopted at UNCED) called for action to promote and
finance the access to and transfer of environmentally sound technologies to
developing countries on favourable (including concessional and preferential) terms.
But it also says that these terms must be “mutually agreed” upon and also take into
account the need to protect IPRs.

Since UNCED, there has been little or no progress on facilitating the transfer of
climate-friendly technologies to the South.30 In 1993, at the United Nations
Commission on Sustainable Development, a working group on technology transfer
was set up, but after a few years the group was closed down, illustrating the
erosion and loss of importance the subject has suffered. Instead of the concessions
asked for by developing countries, the reverse trend towards much stricter IPRs
regimes (including for climate-friendly technologies) prevailed when the TRIPS
Agreement came into force together with the WTO in 1995.

The UN Framework Convention on Climate Change (UNFCCC) and its Kyoto

Protocol also require Parties to promote and cooperate in the development and
diffusion, including transfer, of technologies that control, reduce or prevent
greenhouse gas emissions.31

Under Article 4.1(h) of the UNFCCC, (all Parties taking into account their common
but differentiated responsibilities shall): “Promote and cooperate in the full, open

10
and prompt exchange of relevant scientific, technological, technical, socio-economic
and legal information related to the climate system and climate change, and to the
economic and social consequences of various response strategies.”

Article 4.3 of the UNFCCC requires developed countries to provide the financial
resources needed by the developing-country Parties to meet the agreed full
incremental costs of implementing necessary measures under the UNFCCC,
including for the related transfer of technology.

Under Article 4.5 of the UNFCCC, developed countries have an obligation to

“take 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, particularly developing country Parties, to enable them to implement
the provisions of the Convention” and to “support the development and
enhancement of endogenous capacities and technologies of developing country
Parties”.

Article 4.7 further states that “The extent to which developing country Parties will
effectively implement their commitments under the Convention will depend on the
effective implementation by developed country Parties of their commitments under
the Convention related to financial resources and transfer of technology …”

It is clear that the extent to which developing-country Parties are required to

implement their own commitments depends on the fulfilment by developed-country
Parties of their commitments on finance and transfer of technology to developing
countries.

The Group of 77 and China stressed at the UNFCCC climate talks in Bangkok in
2008:32 “There needs to be clear commitment from developed countries to meet
their obligations. In accordance with the principles of the Convention, developed
country parties should acknowledge and honour their obligations to provide
technology and financial support for the adaptation and mitigation needs of
developing countries. The failure of Annex I parties [i.e., developed-country Parties]
to date has been a major source of concern.”

The need for solutions to promote effective transfer of technology to developing

countries and, in this context, the importance of enhanced action on technology

11
development and transfer to support action on climate change mitigation and
adaptation is central to enabling effective and sustained implementation of the
UNFCCC beyond 2012. This was explicitly recognized in the Bali Action Plan
adopted by the Conference of the Parties to the UNFCCC in Bali in 2007 (see
Box 1).

Box 1

Technology transfer in the Bali Action Plan

The Bali Action Plan launched “a comprehensive process to enable the full,
effective and sustained implementation of the [UNFCCC] through long-term
cooperative action”, by addressing, inter alia:

“… 1.(d) Enhanced action on technology development and transfer to support

action on mitigation and adaptation, including, inter alia, consideration of:

(i) Effective mechanisms and enhanced means for the removal of obstacles
to, and provision of financial and other incentives for scaling up of the
development and transfer of technology to developing country Parties in
order to promote access to affordable environmentally sound technologies;

(ii) Ways to accelerate deployment, diffusion and transfer of affordable

environmentally sound technologies;

(iii) Cooperation on research and development of current, new and innovative

technology, including win-win solutions;

(iv) The effectiveness of mechanisms and tools for technology cooperation in

specific sectors; …”

12
As negotiations on post-2012 commitments and transfer of technology in the context
of the UNFCCC pick up, there have been numerous calls by developing countries
and others to address the potential adverse effects of IPRs on the transfer of
climate-friendly technologies.

The European Parliament has adopted a resolution that states that an ambitious
post-Kyoto agreement might require “corresponding adjustments” to be made to
other international agreements, including on IP.33

13
 3 Developing Countries’ Views on
IPRs and Technology Transfer

DURING the discussions about the Bali Action Plan in 2008, following the Bali
UNFCCC meeting in December 2007, several developing countries raised the
issue of IP as one of the various obstacles that must be addressed in a systematic
and cross-cutting manner to promote the transfer of technology. Cuba, India,
Tanzania, Indonesia, China and other countries stressed the need to address IP
within technology discussions.34

The issue of IPRs emerged again at the UNFCCC Bonn climate meeting in 2008
wherein developing countries called for the creation of an international mechanism
under the UNFCCC aimed at operationalizing the transfer of technology to
developing countries and to assist in adapting or developing technologies of their
own to address climate change.

Brazil called for the establishment of a “coherent and comprehensive” instrument

for technology development and transfer, i.e., a “Technology Protocol” under the
UNFCCC. It also said there was a need for a technology revolution given the
urgent challenges faced by developing countries. Brazil stressed the importance of
acting beyond the “business as usual scenario” and the need for a “beyond the
box” approach.35

Brazil also called for multilateral funding to disseminate existing technologies

(including those where the patents have expired) as well as know-how to adapt,
use and develop technologies, experience and equipment for mitigating and
adaptation to climate change. In relation to patented technologies, Brazil proposed
a public multilateral fund for purchasing licences with a view to facilitating transfer.
In this context it also stressed the need to consider the use of compulsory licensing,

14
as well as producing a declaration similar to the Doha Declaration on the TRIPS
Agreement and Public Health.

In relation to new technologies, Brazil spoke about the need to foster the
establishment of national and regional technology excellence centres to promote
technology development, deployment and transfer, stimulate capacity building,
improve access to information and establish an appropriate environment for
international cooperation.

India was of the view that the full potential of technology will require mechanisms
across all stages of the technology cycle, which is not just a question of transfer
alone, but also of generating new technologies as well as research, development
and deployment.36 According to India, in the area of new technologies, the transfer
of technology and know-how should be aided by a suitable IPR regime. Private
sector owners of technologies in developed countries could be compensated by
their governments for the transfer and deployment of these technologies in
developing countries. On accelerating technology development, India proposed
joint development with IPR sharing, adding that global financing arrangements
require global public procurement of IPRs to ensure the affordability of the products
and services.

In relation to a wider deployment of technology, South Africa said that there should
be preferential terms provided to developing countries, with the LDCs obtaining
the technologies for free. Pakistan proposed the establishment of an international
system or an agreement on compulsory licensing for climate-friendly technologies
as well as a joint technology pool for transferring technologies to developing
countries at a low cost.

At the Accra climate talks in August 2008,37 the G77 and China proposed a new
technology mechanism to accelerate the development and transfer of technology
and to support the effective implementation of the provisions on technology and
finance in the UNFCCC. The Philippines, presenting the proposal on behalf of the
G77 and China, said that the aim of the proposed mechanism was to enhance the
achievement of the Convention by avoiding the lock-in effects of environmentally
sound technologies and by promoting a shift to sustainable development paths.
The Philippines stressed that “There is in particular an urgent need to provide
access to technologies for adaptation at regional and national levels. This should

15
be enabled by capacity building and by new and additional funding to meet the
costs of integrating adaptation into the development process and of stand-alone
adaptation activities”.38

The proposal sets out institutional arrangements that would be needed to enable
implementation of the Convention’s technology-related obligations to support action
on mitigation and adaptation. It also envisages a Multilateral Climate Technology
Fund and a Technology Action Plan (TAP). The former is intended to finance
enhanced action on technology development and transfer. The latter is aimed at
supporting concrete actions by all countries to enhance implementation of the
Convention by defining policies, actions and funding requirements for all relevant
classes of technologies and by seeking to realize the full potential of technology at
all stages of the technology cycle.

In relation to technologies in the public domain, the Technology Action Plan will
establish a system for international cooperation to ensure that the needs of developing
countries are met through the lowest-cost technology options, and to transfer
know-how about how to use, maintain and adapt technologies to local conditions,
thereby contributing to the development of endogenous technologies.

With regard to patented technologies, the G77 and China’s proposal envisages
the TAP ensuring that privately owned technologies are available on an affordable
basis, including through measures to resolve barriers posed by IPRs. Technologies
that emerged through public funding, which are either wholly or partially owned,
are to be made available on a reduced- or no-cost basis. In relation to future
technologies, it is anticipated that the TAP will support the establishment of national
and regional technology excellence centres and will reinforce North-South, South-
South triangular cooperation, including in the area of joint R&D.

At the UN climate meeting in Poznan in December 2008 as well, developing

countries made similar points.

India said it was imperative to recognize the importance of technology as a

transformation agent and initiate urgent action in this regard. It also highlighted the
lessons learned from the current financial crisis, i.e., the importance of government
action in direction and paradigm setting and political will. Developed countries
could raise important amounts of financial resources at short notice.

16
South Korea said that there was a need for fundamental change in policies on
IPRs and R&D. “The present regime does not integrate climate change as a goal.
IPR is purely to protect the private interest of companies. How can IPR work for
climate change? IPR currently is working for the profit of the private sector,”
South Korea said.39 It further added that government intervention was necessary
for change in public policies in this regard.

China stressed the need for change and for a new ideal institution that removes
barriers and other negative market forces so as to enable technology transfer,
adding that there was a need to find a way to share IPRs in technology development
and research.40 China also reiterated its proposal for a Multilateral Technology
Acquisition Fund to support regional and national R&D in developing countries.

In sum, the numerous statements of developing countries at the various climate

meetings reflect a serious concern about IPRs as a barrier to access and a call for
countries to avoid a “business-as-usual” approach to IPRs, since it is a climate
emergency that the international community is facing. Whenever possible,
developing countries have accentuated the need for a new partnership and
cooperation under the UNFCCC to enable technology development, deployment
and diffusion, including “thinking out of the box” to deal with IPRs.41

In contrast, developed countries stress the importance of IPRs in climate

technologies and thus the maintenance of the status quo.

17
 4 Current Patenting Trends in
Climate-Related Technologies

PATENTING of climate-related technologies has grown significantly especially

since the mid-1990s. In addition, patent filings and grants on these technologies
are largely made or held by entities in developed countries. In comparison, appli-
cants from developing countries own a small share of the patents for such tech-
nologies.

This chapter provides an insight into the patenting trends in relation to climate-
related technologies.

Energy Technologies

On average, the proportion of Patent Cooperation Treaty (PCT)42 filings to pro-

tect renewable energy technologies in relation to all patents increased in most
countries, especially the European Union (EU) and Japan. See Figures 1 and 2
below.

18
Figure 1

Source: OECD (2008)

*Refers to Brazil, China, India, Indonesia, the Russian Federation and South Africa

Figure 2

Source: OECD (2008)

19
In 2005, the EU, the US and Japan had the highest number of renewable energy
patents. Within the EU, Germany, Denmark, the UK and Spain have the highest
share of patents in renewable energy. Denmark had 161 patents taken between
2003 and 2005, focusing on wind energy (OECD 2008). See Figure 3 below.

Figure 3

Source: OECD (2008)

20
Figure 4 below shows patent filings (2001-05) related to solar (thermal and photo)
energy, fuel cell and wind energy by country of origin.

Figure 4

Source: WIPO (2008a)

21
Figure 4 also shows that patent filings in the fields of solar energy and fuel cell are
dominated by Japan, while patent filings in the area of wind energy technology are
almost equally dominated by Germany and Japan. There is no specific mention of
any developing country aside from China, indicating the insignificant role that other
developing countries play in patent filing in the abovementioned technologies.

It is also worth noting that the total number of patent applications in the field of
wind energy was considerably less than that in the other two technological fields.

Statistics compiled by the Organization for Economic Cooperation and Develop-

ment (OECD) in relation to fuel cell technology show that there has been a sharp
increase in the number of patents filed under the PCT to protect inventions on fuel
cells since the mid-1990s, i.e., at an average pace of 25% a year between 1995
and 2005.43 In the field of fuel cells, Japan shows the strongest average growth in
the number of patents. See Figure 5 below.

Figure 5

Source: OECD (2008)

In 2005, 48% of fuel cell patents originated from Japan, with the US following
with about 20% and the EU with 16%. Brazil, China, India, Indonesia, the Rus-
sian Federation and South Africa (BRIICS) held only 1.8% of the patents while
other countries held 13.1% of the share of patents. See Figure 6 below.

22
Figure 6

Source: OECD (2008)

23
Automobile Pollution Control Technologies

Automobile pollution control technologies comprise all technologies used to re-

duce pollutants produced and released into the atmosphere by automobiles.

Figure 7

Source: OECD (2008)

The share of automobile pollution control technology patents in all patent applica-
tions has remained stable over the last 10 years. However, it has more than doubled
in Japan, reaching about 1.7% of international patents originating from Japan.44
See Figure 7.

24
Figure 8

Source: OECD (2008)

In 2005, the EU, Japan and the US held the highest shares in patents for automo-
bile pollution control technologies. The BRIICS countries held only 0.7% of the
patents while other countries held 5.2% of the patents. See Figure 8.

Japan is the second-ranked patenting country in this specific technology field,

behind Germany, which contributes to one-third of patent applications for auto-
motive emissions control.

25
Biofuels

Over the last six years, a total of 2,796 biofuel-related patents were published in
the US, with the number increasing by over 150% in each of the past two years.
Analysis of biofuel-related patents published in 2006 to 2007 revealed the follow-
ing breakdown of patents: biodiesel (299), agricultural biotechnology (110), etha-
nol and other alcohols (42), enzymes (35) and biomass (41). Further broken
down by ownership entity, the patents published in the selected technologies in
2006 to 2007 were 57% owned by corporate entities, 11% owned by universities
or other academic institutions and 32% undesignated (i.e., the patent applications
do not list the patent owner). Worldwide, the highest number of biofuel patents in
2006 to 2007 originated from the US (184), Germany (34), Japan (14), Italy (10)
and France (10). It is claimed that in the US, the patents are owned by 78 differ-
ent entities. It is anticipated that as venture funding and government funding in-
crease, the number of biofuel patents will continue to grow steadily. Future legis-
lation directed towards climate change is also expected to strongly influence biofuel
patents.45

Climate-Tolerant Crops

In the field of climate-tolerant crops, serious concerns have been expressed over
the monopoly a few companies hold over genes in plants. According to the non-
governmental ETC Group (2008), BASF (Germany), Monsanto (US), Bayer
(Germany), Syngenta (Switzerland), DuPont (US) and other biotechnology com-
panies (known as “Gene Giants”) have filed 532 patent documents (a total of 55
patent families) on “climate-ready” genes at patent offices around the world.
Monsanto (the world’s largest seed company) and BASF (the world’s largest
chemical firm) together account for 27 of the 55 patent families identified. Much of
the rest is accounted for by Ceres, Inc. (US – partners with Monsanto), DuPont,
Evogene Ltd. (Israel – partners with Monsanto and DuPont), Mendel Biotech-
nology, Inc. (US – Monsanto holds equity stake) and Syngenta. Ceres, Inc. and
Mendel Biotechnology conduct joint research with Monsanto; thus, together,
Monsanto with its research partners and BASF hold 34 of the 55 patent fami-
lies.46

According to the ETC Group analysis, the Gene Giants are “staking sweeping
patent claims on genes related to environmental stresses – not just those in a single

26
engineered plant species – but also to a substantially similar genetic sequence in
virtually all engineered food crops”. Developed (US, Europe) and developing
countries such as Argentina, Brazil, China and South Africa (major food-produc-
ing countries) are swamped with such patent filings.

In view of the monopolistic grip over “climate-ready” genes by a few Northern

companies that are also major players in the present concentrated seed and chemical
industry,47 there are concerns that the proprietary technologies will concentrate
corporate power, drive up costs, inhibit independent research and undermine farm-
ers’ rights to save and exchange seeds.

27
 5 Effects of IPRs on Transfer
of Climate Technologies

IT is apparent from Chapter 4 that there are an increasing number of patents on

climate-related technology. This trend will likely intensify as climate change concerns
further heighten, funding for R&D increases, and governments adopt legislative
and regulatory frameworks for a greener economy. In addition, most of the climate-
related technology is held by industrialized countries.

Such a trend raises fundamental questions for developing countries, in particular,

whether developing countries will be hampered in their ability to gain, on reasonable
terms, timely access to mitigation and adaptation technologies as well as associated
know-how for purposes of R&D, especially to adapt these technologies to suit
local conditions and for production.

Where technologies are in the public domain (i.e., not patent-protected), the key
supply-side issues are the costs of technology and the transfer of know-how to
use, maintain and adapt the technology to local conditions for developing countries.
For developing countries that have the capacity or ambition, there should be transfer
of know-how on how to produce these technologies instead of simply importing
the equipment. In such a scenario it is important to consider mechanisms to facilitate
the lowest prices being offered to developing countries, as well as to finance the
purchase of technology and the R&D that is needed to adapt and manufacture the
technology. It is also important to consider mechanisms to make available the
know-how (which may in some circumstances be protected as trade secrets48)
that is needed.

The situation is more complex when technologies are patented. Patents grant
exclusive rights to the patent holder, which also means that the inventor may exclude
third parties from utilizing, exploiting or commercializing the protected invention in

28
the countries where the invention is patented. Having exclusive rights enables the
patent holder to have a monopoly over the market and dictate the price it charges
and the basis on which it will license the use of the invention. The patent holder
may impose unreasonable conditions for use of the protected technologies or
simply refuse to license the product to any other entity for fear of competition from
the licensee.

The abuse of patent rights has occurred on numerous occasions in many fields of
technology, resulting in problems of “access” for developing countries. For example,
in the area of pharmaceuticals, due to the monopoly grip of the multinational
pharmaceutical companies over the market, HIV/AIDS treatment initially cost
almost $10,000 per person per year. Only with the introduction of competition
from producers of generic medicines from India (which retailed them at the price
of $200-300 per person per year) did HIV/AIDS treatment become more
affordable for developing-country populations.

The multinational pharmaceutical industry has also been aggressive in enforcing its
patent rights, as well as reluctant to provide licences on reasonable terms to entities
in developing countries, even where the issue was one of life and death of patients
in developing countries. For example, in 2001 the South African government
introduced measures to enable imports of cheap, generic, life-prolonging, HIV-
fighting medications from countries such as Brazil and India. However, it found
itself having to fight 39 pharmaceutical companies that brought an action against
the government on the grounds that the measures were unconstitutional. The lawsuit
was later dropped following strong protests from civil society worldwide. In 2002,
Hazel Tau, working with the Treatment Action Campaign (TAC), filed a complaint
with South Africa’s Competition Commission against the multinational drug
companies GlaxoSmithKline (GSK) and Boehringer Ingelheim (BI). GSK and BI
respectively offered 30% and 15% royalty for licences to produce cheaper versions
of the patented product. The Competition Commission ruled against the companies
inter alia on the grounds of having denied a competitor access to an essential
facility as well as excessive pricing. In a settlement that followed, it was agreed
inter alia that voluntary licences would be granted, export of antiretroviral HIV/
AIDS drugs (ARVs) to sub-Saharan African countries as well as import of cheaper
drugs were permitted, and royalties were reduced to a maximum of 5% of the net
sales of the relevant ARVs.49

29
The pharmaceutical industry’s approach is but one example of the oft-used strategies
of the patent holder. The Intergovernmental Panel on Climate Change (IPCC)
(2000) itself notes that: “Several studies have been done that verify this strategy of
using intellectual property rights as a market advantage and as a strategy to control
markets as well as dominate innovation within industrial sectors.” The same report
elaborates on how scholars had noted problems at company level, and how
companies have prevented the introduction of new technologies in the marketplace
in order to advance and retain their own technological advantages. For example,
in 1994 when Korea was in the process of industrialization, technologies introduced
by the Japanese and the US came with a variety of restrictions, such as prohibition
of consignment to a third party and sharing of improved technologies, as well as
export prohibition and denial of permission to the licensee to deal in competitive
products or technologies.50

These and other examples in other fields of technology (the literature is rife with
problems of “access” as a result of patent thickets,51 patent trolls,52 high royalty
fees, licensing restrictions and other anti-competitive behaviour), seen against the
background of an increasing number of patents (as noted above and likely in the
future in most climate technology sectors), point towards a very strong possibility
of patents being a barrier to the transfer of climate-friendly technologies to
developing countries. Studies on this matter raise IPRs not only as a possible
barrier to transfer of technology but also as a concern that needs action on the part
of UNFCCC Parties negotiating post-2012 commitments. Of course, access to
patents alone by firms in developing countries will not be sufficient for effective
transfer of technology, since full use of the patent may also require access to
know-how.

IPRs: A Barrier to Climate-Friendly Technologies?

There are examples of developing countries and their firms being hampered from
adopting climate-friendly technologies or products due to the existence of patents
on these products, and unreasonable demands made by the patent holders on
companies in developing countries that requested a voluntary licence from the
patent holder.

Watal (1998), in a study on the effect of IPRs on technology transfer in India in the
context of the Montreal Protocol to protect the Earth’s ozone layer, provides two

30
specific cases of the acute problems faced by local firms in their attempts to access
technology from suppliers holding patents.53

One case concerned an Indian company seeking access to HFC-134a (a substitute

for chlorofluorocarbon (CFC), an ozone-depleting substance (ODS) used in
refrigerators and air-conditioners). The patent holder, a transnational company
producing HFC-134a, quoted a high price of $25 million for access to the
technology. The supplier also proposed two alternatives to the sale, namely, that
the Indian firm allows the supplier to take majority ownership in a joint venture to
be set up, or that the Indian firm agrees to export restrictions on HFC-134a
produced in India. Both options were unacceptable to the Indian company. The
quoted price was also unrealistically high as the Indian company estimated that the
technology fee should at most have been between $2 and $8 million.

Indian producers of CFCs were very keen to acquire the technology for making
HFC-134a for domestic and export sale, as most Indian refrigerator manufacturers
wished to convert to using HFC-134a. However, their efforts to access the
technology were unsuccessful. Only a few companies in the developed countries
control the patents and trade secrets related to HFC-134a, and thus developing
countries have to either pay high royalty fees to produce it locally or lose international
markets.54

The second case is that of the ozone-depleting substance halon, used in fire
extinguishers and many other products. The substitute for this ODS is HFC-227ea
(commercially known as FM 200). FM 200 is covered by a method and
composition patent filed by a US company in 1995. It was filed in several countries
including China, Korea and Russia (but not in India, which, up to the time of the
study, did not allow such patents).

The costs to India to produce the alternative to halon 1301 included $1.5 million
for licence fees to produce alternatives just for the halon 1301 sub-sector and
another $1.4 million to convert halon portable systems to ODS-free systems.
Indian firms that tried to acquire the technology faced the problem not only of
finance, but found that the patent owner was not interested in licensing the technology
to wholly owned companies. The patent holder was interested only in joint ventures
in which it would hold a majority share. However, Indian firms did not want to
divest their equity holding but only wanted to buy the technology. Thus, in the case

31
of HFC-227ea, as in the case of HFC-134a, the technology supplier, which also
owned the patent, was unwilling to transfer to India, even on commercial terms.
Thus the users of halon 1301 had to depend entirely on imports of HFC-227ea to
meet their demand.

Watal (1998) concluded that: “Efforts at acquiring substitute technology have not
been successful as the technologies are covered by IPRs and are inaccessible
either on account of the high price quoted by the technology suppliers and/or due
to the conditions laid down by the suppliers. This would require domestically
owned firms to give up their majority equity holding through joint ventures or to
agree to export restrictions in order to gain access to the alternative technology.”55

Korean firms also faced difficulties when they wanted to replace CFCs with
acceptable substitutes HFC-134a and HCFC-141b, which had been patented
by foreign companies in Korea. As mentioned above, many of the technology
agreements between Korean firms and their partners in Japan and the US contain
restrictions such as not being allowed to consign to a third party or to export, and
that the improved technologies should be shared.56 Andersen et al. pointed out in
their study that: “South Korean firms are of the opinion that the concession fees
demanded by technology owners represent a lack of intention to transfer the
alternative technology.”57

According to Korean firms and R&D institutions, there have been cases where
the private and public sector refused to license climate-friendly technologies such
as HFC-134a, fuel cell and IGCC (Integrated Gasification Combined Cycle). In
some cases private sector entities sell their equipment under the condition that the
buyer cannot disassemble the equipment.58

In the case of Korea it was further seen that when it launched its programme to
develop HFC-134a technology, a (foreign) company already having this technology
registered 40 process patents in Korea in 1993 in an attempt to block the
development of similar technology. The patent holder only changed its policy when
Korea neared completion of its own HFC-134a technology. The IPCC (2000)
report notes that the case of Korea is “only one among many”.

Several other recent studies that have analyzed specific sectors of climate-related
technology have also pointed out that protection of IPRs can be a barrier to transfer

32
of technology. The IP holder can prevent access to and use of the protected
technology and associated know-how. This would prevent other firms from imitating
the technology and/or innovating on the basis of new technologies.59

Ockwell et al. (2007) looked at Light Emitting Diode (LED) lighting technology60
and the main barriers that India faces in the transfer of such technology. On IPRs,
the study concludes: “Another barrier relates to the IPR issue associated with
LED manufacturing. It is a highly protected technology. As there are various
processes involved in manufacturing LED chips, each process is patented and
requires huge investment. At present, the cost of investing in both chip manufacturing
and resolving IPR issues is substantially high compared to importing the chips.”

On “biomass technology”, the study found that IPRs, though “not a very important
issue” in this sector in the context of India, have created “some friction between
the European and Indian manufacturers of briquetting61 machines” as “small-scale
industries such as briquetting machine manufacturers are typically ‘copycat’
businesses based on reverse engineering…”. The study also recognizes that Europe
is dominant in biomass fuel of pellets62 and not briquettes; thus it concludes that
“The growth of the pellet market in Europe has some implications for technology
transfer to developing countries like India”.63

On hybrid vehicles,64 Ockwell et al. (2007) found that commercially viable

technologies for hybrid vehicles are held by companies in developed countries.65
The companies involved are not limited to automotive companies but also include
other types of companies such as engineering companies and electrical equipment
developers. They also found that “there may be IPR issues associated with imitating
patented hybrid drive-trains” since companies such as Toyota, GM and BAE
have strict patents relating to their hybrid drive-trains. The issue of IPRs was not
specifically referred to in two other sectors examined by Ockwell et al. (2007),
i.e., coal gasification and improving combustion efficiency.

Ockwell (2008) reviewed three studies on the issue of IPRs in the context of low-
carbon-technology transfer and concluded: “Developing country firms were
generally not observed to have access to the most cutting edge technologies within
the sectors examined.”

33
Barton (2007) looked at three sectors, i.e., solar photovoltaic,66 biofuels and
wind, largely in the context of the bigger emerging economies of Brazil, China and
India. Despite the overall optimistic tone of Barton’s analysis, the study does not
rule out the possibility of IPRs being a barrier for developing countries in the
sectors examined. In fact, Barton raises various concerns regarding “serious
plausible patent issues … likely to arise from the new technologies”; the risk of
broad patents which may “complicate the development of … new more efficient
or less expensive technologies”, and the issue of anti-competitive practices if the
“relative small number of suppliers … cooperate in a way that would violate
competition-law principles”.67

It is also worth mentioning Barton’s observations on other technologies that may

be needed to effectively operationalize climate technologies, especially wind and
photovoltaic technologies. For example, in the photovoltaic and wind sector,
technology such as “inverters”68 may be needed to connect to the electricity grid.
Such technology is continuously evolving, pertains to a more concentrated industry
and is an important area of patent activity.69 Batteries are another technology
related to effective operation of photovoltaic panels when the sun is not shining.70

On Barton’s study, Ockwell (2008) states: “It is notable that for all of the case
studies he examines, uncertainty is expressed as to the likelihood of developing
country firms gaining access to the most advanced technologies in these industries.”

In the case of photovoltaic technology, Barton suggests that access to the newer
thin-film technologies (which are subject to much more extensive patenting than
the older silicon-slice technology) is likely to be difficult. Similarly patent holders
of new methods, enzymes or microorganisms important in the case of biofuels
may be hesitant to make these technologies available to developing-country firms.71
Barton also identifies wind technologies as an area where existing industrial leaders
are hesitant to share their leading technology for fear of creating competitors.

On wind technologies, Ockwell (2008) argues that only the smaller companies
which are likely to gain more from licensing and lose less from competition are
willing to sell licences for use of their technologies. In support, Ockwell refers to a
study by Lewis on how leading wind technology manufacturers in India (Suzlon)
and China (Goldwind) acquired access to wind technology by licence purchases
from second-tier developed-country firms. Lewis argued that it was a disincentive

34
for leading companies to license to potential developing-country competitors that
have cheaper labour and materials available, and that while the technology received
was not necessarily inferior, it had less operational experience.72

Importantly, Ockwell (2008) observes that “the key to ensuring long-term, sustained
uptake of low carbon technologies in developing countries is the development of
low carbon technological capacity within these economies” and this “relies on
access to the knowledge that underpins cutting-edge technological developments,
as well as exposure to the tacit knowledge that is often integral to developing the
absorptive capacity necessary to work with emerging technologies”. Ockwell
argues that for this to happen, access to IPRs is important as it will enable entities
in developing countries to understand and work with or imitate the knowledge that
underlies new low-carbon technologies.

Ockwell also points out that if the intention is to assimilate new technologies and
hence increase the technological capacity of developing countries, then IPRs are
likely to be used by developed-country IP holders to prohibit access. IPR issues
are likely to be less substantial if the idea is to simply sell the technology without
risk of local competition.73 In both scenarios cost may still be a barrier to access.74

There are several arguments that point to a favourable impact of the patent system
on technology transfer. However, often these arguments fail to take into account
the realities and limitations of developing countries.

One argument is that the disclosure of patent information can serve as a major
boost to technology transfer by avoiding duplicative R&D and enabling technological
leapfrogging.75 Disclosure of the claimed invention’s specifications in the patent
application is a provision of Article 29.1 of the TRIPS Agreement. According to
the Article, Members “shall” require disclosure of the invention “in a manner
sufficiently clear and complete for the invention to be carried out by a person
skilled in the art”. Members “may” also require the applicant to “indicate the best
mode for carrying out the invention known to the inventor at the filing date or,
where priority is claimed, at the priority date of the application”.

There are several problems with this argument:76 (i) patent agents usually avoid
including information that would enable competitors to invent around or exploit
the invention on patent expiry; (ii) the applicant also often omits information that

35
would allow the reproduction of all embodiments, when several embodiments of
an invention are claimed; (iii) patent disclosure, while making known information
about the invention, does not allow exploitation of the invention until patent expiry
or unless consent of the patent holder is obtained or measures (e.g., compulsory
licensing) are taken as allowed by the TRIPS Agreement to override the patent
barrier; (iv) where inventions pertain to microorganisms, access to the relevant
technology only becomes possible through access to the biological material, which
may only be allowed for experimental and not for commercial purposes; and (v)
technicians in developing countries often are without experience in a particular
field, thus making it difficult to work the disclosed patent specifications. In addition,
skills and know-how may be needed to work the disclosed patent specification.
The latter is seldom included in the patent application.

Thus, Correa (2005) points out that “the informative effects of patent grants cannot
be deemed a substitute for transfer of technology mechanisms through which
companies in developing countries actually gain access to proven and commercially
viable technologies as well as associated know-how”.77

In addition, most developing countries are at the stage of “initiation” and

“internalization” of technology, wherein they would have to innovate using existing
inventions through reverse engineering while making minor adaptations, rather than
“leapfrogging” over known technology. Thus one should be careful to not overstate
the benefits of patent information in the context of developing countries which are
at different levels of development and have different technological capability and
needs, which further vary sector by sector.

Another frequent argument is that patents can be used as a means to leverage

access to other related technologies.78 This argument would again not work in the
context of developing countries since generally and even in the area of climate
change, patents on most of the technologies are held by developed countries.
Developing countries generally are not major users of the patent system. In 2005,
18 countries were considered intensive users (i.e., had more than 1,000 PCT
filings), making up 94.8% of the filings. Aside from Korea and China, these were
developed countries. The great difference between PCT filings originating from
China and Korea and those from the US, Japan and Germany is also noteworthy.
While Korea and China’s PCT filings numbered less than 10,000, the three
developed countries had between 20,000 and more than 50,000 PCT filings in

36
2005. In 2007, more than 60% of the PCT filings originated from the US, Japan
and Germany.79

It is also argued that there are pre-grant and post-grant mechanisms within the
patent system that can be used to ensure that the resulting effect of the patent
system benefits the public.80 Pre-grant mechanisms referred to are: (i) ensuring
that patents are only granted for technologies that are novel, involve an inventive
step and are industrially applicable, thus avoiding frivolous patents; and (ii) excluding
technologies that would cause damage to the environment. Post-grant mechanisms
referred to include: (i) exceptions and limitations to patent rights; and (ii) interventions
such as compulsory licences and remedies for anti-competitive practices.

While the TRIPS Agreement does provide several flexibilities with regard to pre-
grant and post-grant mechanisms that can be adopted to manage the exclusive
rights given to the patent holder for the benefit of the public, there are significant
difficulties in terms of applying these flexibilities in practice in the context of
developing countries. For example, in most developing countries, including emerging
economies, there is a lack of patent examination capacity, thus making it difficult to
use the pre-grant mechanisms. In relation to post-grant mechanisms, developing
countries often face pressures from multinational companies, as well as developed
countries, when attempting to use such mechanisms (for further elaboration, see
below). Furthermore, in recent years a number of North-South trade agreements
contain provisions that limit the use of pre- and post-grant flexibilities.81

Another argument is that most of the technologies are in the public domain (as the
patent applicant is not interested in seeking patent protection) in most developing
countries82 and thus there should not be any cause for concern. This argument is
problematic because the technology is most likely to be patented in countries that
have the technological capacity to reverse engineer and innovate on the basis of
existing technologies and pose some risk of competition. Thus while it may be true
that patent applicants may not bother to file and maintain an application in all
developing countries, particularly the poorest countries, patent protection will almost
certainly be sought in developing countries where the local industries are likely to
pose a risk of competition. In addition, in many developing countries it is difficult
to ascertain the patent status of technologies, which essentially means that firms in
developing countries may be bullied into abandoning the use of a technology simply
by a mere allegation by the patent holder of a patent being held in that country.

37
A frequent argument of developed countries in relation to the patent system is that
it is an incentive for innovation and will facilitate technology transfer. The relationship
between IP and technology transfer has already been addressed in Chapter 2
above.

The relationship between strengthened patent protection and innovation is also the
subject of much debate. There is now evidence that the impact of the patent
system as an incentive for innovation depends on many conditions such as significant
market, sufficient capital, qualified personnel at the firm level and innovation-
oriented entrepreneurs, as well as a solid scientific base open to collaboration with
industry. There is also evidence that even when such conditions are met, IP may
not promote innovation. For instance, a review of 23 empirical studies found weak
or no evidence that strengthening patent protection increased innovation, only the
number of patents applied for.83 IP protection may be neutral to innovation even in
high-tech sectors, particularly where the product cycle is so short that “if you just
imitate others’ ideas, your products will always be outdated and obsolete”.84

In the context of climate technologies, it is apparent from the section below on

“IPRs and Publicly Funded Technologies” that patent protection is not a sufficient
condition for innovation. Governments of developed countries have to provide
substantial subsidies for R&D. Thus many other types of incentives can be
considered that would still incentivize the private sector to make the investments
required without the exclusivity of the patent system. These could include additional
funding for R&D, tax incentives, monetary prizes for outstanding R&D outcomes,
regulation, etc.

Opportunistic and Anti-Competitive Lawsuits: Hampering Access to

Climate Technologies

IP holders are known to use legal suits in an attempt to preserve their market
monopoly, or to place themselves in such a position as to be able to extract
significant royalties from the opposing entity that has used or intends to use the
protected technology.

Several patent disputes have emerged particularly in the US in the context of

climate technologies. For example, in 1996 Enercon was barred from importing
wind turbines into the US through a proceeding before the US International Trade

38
Commission (ITC)85 (a procedure under which a firm’s imports to the US can be
barred if it is shown that the firm’s product violates a US patent).86 The patent
holder of the technology was Kinetech, a “technology investment and patent
holder”87 company managed by Lachman Goldman Ventures. Gamesa has also
sought to enforce a patent on a strategy to control the turbine speed against GE.88
GE successfully used litigation over patent infringement to block foreign access to
the US market, thus some firms have had to design around the patent in order to
market in the US.89

Toyota, well known for its commercially successful gasoline-electric hybrid vehicle
Prius, was also engaged in a patent infringement battle related to its Hybrid Synergy
Drive brought by Paice LLC (a non-manufacturing patentee) in 2004. The trial
court found that Toyota’s hybrid vehicles infringed Paice’s patents, and awarded
Paice $25 per vehicle. In its appeal to the US Supreme Court, Toyota said Paice
was a “patent litigation company” attempting to “impose a royalty toll on the Prius
and similar Toyota hybrid vehicles based on an obscure patent”.90 However, the
Supreme Court let stand the $4.3 million award against Toyota. According to
reports, Toyota also may have to pay Paice royalties for future vehicles it produces
using the disputed technology. The disputed technology involves a microprocessor
that accepts torque information from both the internal combustion engine and electric
motor.

Paice had sought a permanent injunction which was denied by the courts. What is
interesting in this case is that Paice extended Toyota an offer to license its technology
throughout its motion for a permanent injunction, which in itself became one of the
grounds for the court rejecting the injunction request. Paice does not compete for
market share with the hybrid vehicles and does license its patent to other companies.
However, Paice’s actions suggest an opportunistic behaviour, i.e., that it always
intended to license the technology to Toyota but engaged in protracted court
proceedings to place itself in a more favourable position to extract royalties.

In 2005, Toyota faced another legal challenge from Solomon Technologies Inc.
claiming infringement of its patent, primarily relating to Toyota’s use of the Hybrid
Synergy Drive technology in its Prius and Highlander hybrid vehicles.91 In 2006
Solomon also filed an additional complaint against Toyota with the ITC, seeking
to exclude importation of infringing technology. The court ruled in Toyota’s favour,

39
leading to an appeal by Solomon. Their first lawsuit has been stayed awaiting the
resolution of the ITC case.92

The above examples show how patent holders often use litigation or the threat of
litigation to engage in anti-competitive behaviour, in an attempt either to preserve
their market share or opportunistically to extract benefits such as high royalties.

In the context of developing countries, patent litigation or the threat of litigation

may deter firms in these countries from investing in mitigation and adaptation
technologies. Ockwell et al. (2007) refer to a discussion with Prof. N. Narendran,
Director of Research, Lighting Research Center in New York, which highlighted
that “As there are a number of patents associated with each process and almost all
manufacturers sue each other over patents it is really difficult to resolve IPR issues”.93

Thus, an outcome of extensive litigation could be a disincentive to invest in

innovation. For example, on experimental science the amount of litigation tripled
between 1987 and 1997, and the costs of patent litigation now outweigh the value
of patents to owners by about 2%, constituting a tax on overall research and
development investment.94

IPRs and Publicly Funded Technologies

Governments in developed countries play an important role in providing funding

for R&D in general and climate technologies in particular. According to the UN
Conference on Trade and Development (UNCTAD), in the past decade about
40% of annual national R&D spending within some developed member countries
of the OECD was publicly funded.95 The private sector is often reluctant to invest
in substantial research on its own, especially when the technology lacks short-
term commercial viability.

Governments sponsor a range of R&D that underpins private sector investments

in developing climate technologies.96 For example, in 2001 EU governments spent
more than half of the total expenditure for R&D in renewable energy. The public
sector spent 349.3 million euros while other sectors spent 340 million euros.97
Public sector spending is equally important in the US. For example, for the wind,
biofuels and photovoltaic sectors, the US Department of Energy spent
approximately $356 million.98

40
Sathaye et al. (2005) surveyed government-sponsored R&D in the US, Canada,
the UK, Korea and other OECD countries and found that it is a common practice
for governments to grant ownership of IPRs (patents, copyrights, trademarks,
etc.) to the recipient research institutions.

In the US, government-sponsored research usually ends up being patented.99 This

trend has emerged due to the Bayh-Dole Act introduced in 1980, which gave
non-profit organizations (primarily universities) and small business the right to retain
ownership of their inventions and to patent them and license them to firms.100
Section 204 of the Bayh-Dole Act even allows the inventor to grant “exclusive
licences”, provided that “any products embodying the subject invention or produced
through the use of the subject invention will be manufactured substantially in the
United States”. The latter requirement can be waived in specific circumstances.

Barton (2007) made note of the extensive role the US government played in terms
of funding R&D in solar photovoltaic, biofuel and wind technologies. He also
noted that the technologies that would emerge will almost definitely be protected
by patents. In some cases the patents will be licensed exclusively.101 For example,
Dartmouth College has granted a worldwide exclusive licence to Mascoma to
research and produce ethanol from cellulosic biomass based on several patents
owned by Dartmouth. Dartmouth has also taken an undisclosed equity position in
Mascoma.102 More generally, Barton (2007) identifies access to government-
funded technologies as an important overall concern in the three sectors he
examined.103

The issue of transfer of publicly owned technology was addressed at UNCED in

1992. Agenda 21 (Chapter 34, paragraph 34.18a) states: “Governments and
international organizations should promote the formulation of policies and
programmes for the effective transfer of environmentally sound technologies that
are publicly owned or in the public domain.” Implementation of this provision has,
however, been very weak.104

Policies similar to the Bayh-Dole Act are aimed at improving the industrial
competitiveness of their respective industries. Thus, diffusion of climate technology
would “typically be along a pathway of licensing or royalty payments rather than
use without restriction in the public domain.”105

41
However, given the several environmental challenges facing the international
community and developing countries in particular, and the role governments play
as main drivers of R&D for climate technologies, it is imperative to explore
modalities for the transfer of publicly funded climate technologies to developing
countries. OECD countries, which tend to hold ownership of most of the technology
needed for mitigation and abatement, are in a strategic position to influence
technology flows directly through their influence on the private sector or on public
institutes which receive funding for their R&D. That would allow them to be more
active in transferring technologies to developing countries.106

42
 Measures That Can Be Taken on
6 Intellectual Property and Climate
Technologies

“FUEL-CELL innovation was drowning in a global patent thicket. By 2015, it

was covered by 18,000 patents owned by hundreds of patent holders. Finding
willing licensors, negotiating and paying the required licence fees led to crippling
transaction costs. Most serious was the ability of one or more individual patent
holders to hold the entire fuel-cell development regime to ransom. Patent trolls,
attracted by the huge governmental investments, made things worse: interoperability
in fuel-cell technology was almost entirely lost by the trolls increasingly enforcing
their patents.”

This striking story was related by the European Patent Office (EPO)’s “Blue Skies
Scenario: The Journey to 2025”.107 It foreshadows the difficulties that are likely
to arise from the patent system as it is today. It envisions a lack of political will
among proponents of the IP system to take concrete steps to anticipate and address
problems until catastrophes hit developed countries and force them to rethink the
operation of the patent system.

This chapter explores the options available or which could be made available at
the national and international level to address IPRs and to facilitate technology
transfer to developing countries, which is critical for dealing with climate change.

Excluding Climate-Friendly Technologies from Patents

Prior to the TRIPS Agreement, countries could exclude whichever sectors they
wanted from patenting. Thus, many countries excluded sectors critical for social
and economic development such as the pharmaceutical and chemical sectors.
However, with the advent of the TRIPS Agreement, this was no longer possible.
Article 27.1 of the Agreement requires WTO Members to grant patents “for any

43
inventions, whether products or processes, in all fields of technology, provided
that they are new, involve an inventive step and are capable of industrial
application”.108 The Article further requires that “patents shall be available and
patent rights enjoyable without discrimination as to the place of invention, the field
of technology and whether products are imported or locally produced”.

Thus, the flexibility enjoyed by many countries to exclude sectors from patent
protection was taken away by the TRIPS Agreement’s minimum standards that all
developing-country Members had to adhere to once the transitional period for
implementing the Agreement was over. For example, India was able to exclude
patent protection for pharmaceutical products between 1970 and 2005. In 2005,
due to obligations undertaken under the TRIPS Agreement, it had to begin the
patent examination process for pharmaceutical products and grant patents where
the patentability criteria were fulfilled. During the period of no patent protection
for pharmaceutical products, India had been able to reverse engineer and develop
its own generic drug industry, which today is an important world supplier of
affordable medicines.

The international community could consider reverting to a pre-TRIPS situation

wherein countries (or alternatively, at least developing countries) could exclude
certain critical sectors from patent protection.

The least developed countries already have some flexibility in this regard. LDCs
that are Members of the WTO have a special transition period for the implementation
of the TRIPS Agreement, which was extended and now expires on 1 July 2013.
As such, until the expiry of the transitional period, LDCs do not have to provide IP
protection as required by the TRIPS Agreement. For a variety of reasons, however,
many LDCs already have IP laws (in some cases inherited from their colonial
masters), which many of them have updated or are in the process of updating to
make them compliant with the minimum standards of the TRIPS Agreement. Thus,
despite the availability of transition periods for LDCs, they would still benefit from
an amendment of the TRIPS Agreement that would allow certain sectors to opt
out from patent protection. Without such an amendment, LDCs may be hesitant to
roll back the TRIPS-compliant provisions they have adopted.109

The international community could even go as far as to require all climate-friendly

technologies to be free of IPRs worldwide, to ensure their widest availability as

44
climate change represents a grave and potentially irreversible threat to human
societies.110

The options presented above could apply worldwide or, alternatively, only to
developing countries while patents continue to be granted in the richer markets of
developed countries and royalties are paid in those countries. This is a justifiable
demand if climate change is considered a serious challenge. Developed countries
cannot justify business as usual in the old system while also demanding a radical
departure by developing countries from business as usual in their emissions
pathways.111

Proposals along a similar vein were made by India at the WTO’s Committee on
Trade and Environment in March 1996, in the context of issues relating to TRIPS,
technology and environment from the perspective of developing countries. India
proposed three points for cases where other measures for technology transfer are
not possible and to encourage the global use of environmentally beneficial
technologies. The points were:

(i) Members may have to exclude these technologies from patentability to allow
free production and use of such technologies, as they are essential to safeguard or
improve the environment. Such an exclusion is not incompatible with the TRIPS
Agreement and may have to be incorporated through a suitable amendment;

(ii) For currently patented technologies, Members may revoke patents already
granted, if this is done in consonance with the Paris Convention and is subject to
judicial review;

(iii) To encourage the use of environmentally beneficial technology, Members

should be allowed to reduce the term of patent protection from the present minimum
of 20 years to, say, 10 years, “so as to allow free access to environmentally-
beneficial technologies within a shorter period.”

Given the severity of the climate change challenge facing the international community,
it is important to consider progressive solutions. For example, the TRIPS Agreement
recognizes that in situations of “war or other emergency in international relations”
nothing in TRIPS will be construed as preventing a Member from taking any
action which it considers necessary for the protection of its essential security

45
interests.112 Similarly climate change could justify a systemic relaxation of intellectual
property rights to strike an appropriate balance between private interests and the
global public good.113

India recently reiterated the call to address IPR issues with regard to technologies
for energy efficiency and for clean energy at a climate change summit in Gleneagles.
In its country paper titled “Dealing with the threat of climate change”, one option
proposed by India was to “redefine the extent of patent protection for such
technologies” so that the “protection could exclude the use of such technologies in
developing countries”.

The options mentioned above would require an amendment of the TRIPS

Agreement.

Strict Application of Patentability Criteria

The TRIPS Agreement allows WTO Members to determine on a case-by-case

basis whether to grant a patent for an invention. An invention needs to fulfil three
criteria for it to be granted patent protection. The TRIPS Agreement refers to
these criteria in Article 27.1, i.e., novelty, inventive step and industrial application,
but does not define them. Thus, countries have the right to define the criteria in any
manner they deem fit.

Developed countries, which tend to be generators of technology, often define the

criteria loosely (i.e., adopt low patentability criteria), thus enabling their entities to
file many extensive patents. Such application of the patentability criteria has raised
concerns given the increasing rise of trivial and broad patents. If developing countries
adopt similar loose criteria, the resulting effect will be an increase in the number of
patents granted to foreign applicants from developed countries, which are the
main beneficiaries of the patent system.

The flexibility provided by the TRIPS Agreement allows developing countries to

adopt a much stricter approach to the definition and application of the patentability
criteria, thus limiting the number of patents granted on climate technologies. Without
a patent, a country with some technological capacity would be able to innovate on
the basis of climate technology (which is not patented) through reverse engineering.

46
However, patent issues would still arise in the case of exports where the technology
is patent-protected in the importing country.

The option of strict application of patentability criteria is of limited value. In most

developing countries save for a handful, there is a severe lack of patent examination
capacity. Many patent examination offices grant patents or reject patent applications
on the basis of patents granted by patent offices in developed countries such as
the US Patent and Trademark Office (USPTO) or the European Patent Office.
Thus, even where the national patent law provides for a higher standard of
patentability criteria, in practice in most developing countries these standards may
not be applied. In addition, strict application of patentability criteria would work
only to reduce the number of patents granted, as it would avoid low-quality or
trivial patents. The issue of access to the patented technology would still need to
be addressed.

Compulsory Licensing in Developing Countries

Compulsory licences are licences that are granted by a government to use patents,
copyrighted works or other types of intellectual property without the consent of
the IP holder. In the context of patents, Article 31 of the TRIPS Agreement provides
WTO Member states the right to grant compulsory licences, although no specific
reference to the term “compulsory licence” is made in the said Article. The TRIPS
Agreement gives examples of some grounds for granting compulsory licences, but
does not restrict the possible grounds to those actually cited. WTO Members
have not only the right to issue compulsory licences but also the freedom to determine
the grounds upon which such licences are to be granted. This was confirmed by
the WTO Ministerial Declaration on the TRIPS Agreement and Public Health
adopted in Doha in 2001114 (Doha Declaration on the TRIPS Agreement and
Public Health).

Grounds for issuing compulsory licences could include:115

• refusal to deal (when the patent holder refuses to grant a voluntary licence
which was requested on reasonable commercial terms and conditions within a
reasonable period of time);
• national emergency or other circumstances of extreme urgency;
• to remedy against anti-competitive practices;
• lack or insufficiency of local working of the patent;

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 • public interest;
• public non-commercial use (also known as government-use licence);
• public health;
• security reasons;
• environmental reasons;
• interdependent patents.116

The TRIPS Agreement also lists a number of conditions for issuing compulsory
licences. Some key conditions include:

• The proposed user (of the compulsory licence) must have made efforts to
obtain authorization from the patent owner on reasonable commercial terms
and conditions and must demonstrate that such efforts have not been successful
within a reasonable period of time. However, this requirement is waived where
the compulsory licence is issued for a national emergency or other circumstances
of extreme urgency or public non-commercial use.117

• The patent owner must be paid adequate remuneration in the circumstances

of each case, taking into account the economic value of the authorization.118

• The issued compulsory licence shall be predominantly for the supply of

the domestic market of the Member authorizing such use.119

Most countries provide for compulsory and/or government-use licences in their

laws. These provisions usually list the grounds on which compulsory licences can
be issued as well as conditions for using the licences.

Compulsory licensing is not a unique or exceptional policy. According to Reichman

(2003), “the United States government has broad powers to seize and use any
invention protected by privately owned patents, subject to the payment of
reasonable and entire compensation, and it makes extensive use of this power”.

In the US, compulsory patent licensing provisions have also been addressed in
specific legislation.120 Some relevant examples include:

• The Atomic Energy Act121 allows for such licensing when the patented
innovation is “[u]seful in the production or utilization of special nuclear material

48
 or atomic energy.” The Atomic Energy Commission can determine whether a
compulsory patent licence should be granted and the reasonable royalty owed
by the licensee.

• The Bayh-Dole Act122 permits compulsory patent licensing when a recipient

of federal grants and contracts “has not taken, or is not expected to take within
a reasonable time, effective steps to achieve practical application of the subject
invention.” The federal government can also exercise its “march-in rights” by
showing that a compulsory patent licence is necessary “to alleviate health or
safety needs”, or “to meet requirements for public use specified by Federal
regulations”.

• The Clean Air Act123 also provides for compulsory patent licences when
the patented innovation is necessary to comply with emission requirements, no
reasonable alternative is available, and where non-use of the patented innovation
would lead to a “lessening of competition or a tendency to create a monopoly”.
A district court can, with the Attorney General’s assistance, determine whether
a compulsory patent licence should be granted and set the reasonable terms.

There are many cases of developed-country governments having used or threatened

to use compulsory licences to overcome the patent barrier for various purposes.124
Courts in many of these countries have also exercised compulsory licensing by
opting for payment of royalties by the infringing party to the patent holder, in lieu of
granting an injunction to the patent holder. Developing countries are also increasingly
using the compulsory licensing provision, although largely for purposes of either
importing or producing affordable generic medicines.

A key question that arises is to what extent compulsory licences are sufficient to
overcome the IP barrier and be a vehicle for technology transfer to developing
countries. Usually compulsory licences only permit the use of a patent but do not
oblige the patentee to transfer the technological package developed to execute
the invention. Hence, it is quite useful in situations where trade secrets and know-
how are not important issues and entities in developing countries have some
technological capacity to reverse engineer once a compulsory licence is issued.
However, in developing countries where firms are less technically endowed, a
mechanism that does not ensure access to the required skills and know-how essential

49
for the absorption and operation of the relevant technology, is unlikely to be very
beneficial.125

It is worth noting that there have been some anti-trust cases in the US wherein the
transfer of know-how was required as part of a compulsory licence or settlement
decree. One such instance is a case in 1994 where the US Federal Trade
Commission126 required Dow Chemical to license to a potential entrant “all
formulations, patents, trade secrets, technology, know-how, specifications, designs,
drawings, processes ... [etc.]”. In another case, Federal Trade Commission vs.
Xerox Corporation,127 the barriers of patent and know-how to compete were
eliminated when the consent decree required Xerox to license some of its patents
free of royalty, and others at a low royalty, as well as to offer all its office copier
know-how royalty-free to US patent licensees.128

As seen above, provisions of the TRIPS Agreement (although imperfect) do entitle

developing countries considerable latitude to use compulsory licences to advance
national goals, including those relating to mitigating and adapting to climate change.
Provisions in US laws, including those relating to clean air, confirm this, and provide
a useful example for developing countries (particularly those with technological
and entrepreneurial skills) seeking to ensure that technology is available on a fair
and favourable basis to address the challenges of climate change.129

There are, however, factors specific to developing countries that discourage the
use of compulsory licences. These include:

• Pressures from the patent holders supported by their (developed-country)

governments to not issue or to abandon the compulsory licences (“pressure
factor”). Rather than face stiff opposition from the patent holders (including the
possibility of being embroiled in expensive, protracted and unpredictable litigation
with the patent holder) and political pressures from their governments, entities
in developing countries may attempt to negotiate a voluntary licence, failing
which they may abandon the idea of using the patented invention.

• A compulsory licence may be revoked when the circumstances that led to

its granting have ceased to exist and are unlikely to recur. Although the legitimate
interest of the compulsory licensee should be considered before revocation, it
remains uncertain how this safeguard will be used.

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International Declaration on IPRs and Climate Technologies

The “pressure factor” mentioned above is a major reason why developing countries
are hesitant to use compulsory licences, although it is a recognized core principle
of the patent system, it is enshrined in the TRIPS Agreement and it is often exercised
by developed countries. Whenever developing countries have used or attempted
to use flexibilities available in the TRIPS Agreement, including compulsory licensing,
patent holders and their governments have used any tactic available to intimidate
those countries. Several such incidents have been noted in the context of access to
medicines, thus leading to the Doha Declaration on the TRIPS Agreement and
Public Health.

It is noteworthy that in several cases some developed countries objected to the

use by developing countries of validly issued compulsory licences even when it
was a matter of life and death for patients in the developing countries. Thus, it can
be predicted that some developed countries will raise objections to developing
countries using compulsory licences to access climate-friendly technologies.

Therefore, it will be useful to establish a WTO Declaration on IPRs and Climate

Technologies, using the Doha Declaration on the TRIPS Agreement and Public
Health as an example.130 Such a declaration could reaffirm and/or clarify, inter
alia, that nothing in the TRIPS Agreement prevents WTO Members from taking
measures to deal with the challenges of climate change, including to promote access
to climate-friendly technologies and associated know-how; and that the TRIPS
Agreement shall be interpreted and implemented in a manner supportive of
Members’ right to protect the environment and the right to use flexibilities provided
for in the Agreement. The idea of a declaration on IPRs and climate change
technologies similar to the one on public health was proposed by the Brazilian
Foreign Minister in his speech to the 2007 UNFCCC Conference of the Parties in
Bali.

An important point raised in the Doha Declaration on the TRIPS Agreement and
Public Health is the issue of export to countries with inadequate manufacturing
capacity in the pharmaceutical sector. This issue arose as a result of restrictions
placed on compulsory licences. Under the TRIPS Agreement, a compulsory licence
shall be predominantly for the supply of the domestic market of the Member
authorizing such use (Article 31(f)). This means that the amount that can be exported

51
to another country is limited. In the context of pharmaceuticals, this created problems
since many countries do not have manufacturing capacity. This problem was
recognized in paragraph 6 of the Doha Declaration on the TRIPS Agreement and
Public Health, which states: “We recognize that WTO Members with insufficient
or no manufacturing capacities in the pharmaceutical sector could face difficulties
in making effective use of compulsory licensing under the TRIPS Agreement. We
instruct the Council for TRIPS to find an expeditious solution to this problem and
to report to the General Council before the end of 2002.” After intensive
negotiations that were often deadlocked along North-South lines, a solution was
eventually found in the form of a temporary solution in a WTO General Council
Decision of 30 August 2003. On 6 December 2005, WTO Members agreed to
convert this temporary solution into an amendment of the TRIPS Agreement. As
yet, however, the amendment has not entered into force.

It is important to explore whether similar problems could arise in the context of

climate-friendly technologies and, if so, to identify solutions to resolve such problems.

Regulating Restrictive Practices in Licensing Agreements and Anti-

Competitive Uses of IPRs

There is little in terms of international rules on the relationship between IP and

competition. Therefore, except for some provisions in the TRIPS Agreement,
developing countries are relatively free to follow their own conceptions about
competition law and IP.

Article 40 of the TRIPS Agreement, which has been elaborated on above, contains
a set of rules aimed at the “control of anti-competitive practices” in voluntary
licences. Measures to regulate terms of voluntary licences are important to ensure
that the cost is affordable, and that there are no anti-competitive conditions (such
as high price of licences, restrictions on markets, or insistence on taking a majority
share in the company to which the licence is provided, which have all happened in
recent cases). Article 31 of the TRIPS Agreement allows countries to issue
compulsory licences to remedy anti-competitive behaviour.

Generally, on the issue of competition it is important to note that a majority of

developing countries have little or no tradition in the application of competition law
and policies. In fact, the trend seen in many developing countries is that IPRs have

52
been broadened and strengthened in the absence of an operative body of
competition law.131 Developing countries do not apply competition laws to correct
anti-competitive uses of IPRs due to lack of legislation, weak implementation or
absence of policies to deal with the IP- competition relationship.

Even where competition legislation and policies exist, there are many conditions
missing in developing countries for effective application of the laws to correct anti-
competitive distortions.132 For example, enforcing agencies generally lack the
financial and human resources, as well as the legal mechanisms (such as investigative
tools and the capacity to impose high penalties); enforcing agencies normally have
little expertise on IPRs; and clear criteria or guidelines to deal with anti-competitive
acquisition and use of IPRs have not been established.

Thus, developing countries should establish and strengthen policies and institutions
to deal with abuses emerging from the acquisition and exercise of IPRs. However,
this option, while useful in some specific circumstances, may not resolve all IP-
related barriers to transfer of technology.

Exceptions to Patent Rights

All national patent laws have provisions relating to exceptions to the exclusive
rights granted by a patent, although the scope and content of these provisions vary
from country to country. Exceptions to the exclusive rights granted by patents are
justified on the grounds that in certain circumstances limited use of the patented
inventions is required to achieve public policy purposes of encouraging innovation
and protecting other public interests.

Article 30 of the TRIPS Agreement allows “limited exceptions” to exclusive patent

rights provided that the exceptions satisfy the three-fold test of: (1) not unreasonably
conflicting with the normal exploitation of the patent; (2) not unreasonably
prejudicing the legitimate interests of the patent owner; and (3) taking into account
the legitimate interests of third parties. Thus, under Article 30 countries may, under
certain circumstances, automatically allow the use of the patented invention by a
third party without the consent of the patent holder. The TRIPS Agreement does
not define these circumstances. It is up to each country to define these circumstances
depending on national policies as long as the three-fold test can be satisfied.

53
Some exceptions to patent rights that should be provided in national patent laws,
as they could be relevant to dealing with climate technologies, are: (1) acts done
privately and on a non-commercial scale or for a non-commercial purpose; (2)
uses for scientific research; (3) uses for teaching purposes; and (4) experimentation
on the invention for commercial purposes, for instance to test it or improve on
it.133

Technology Pooling through a Collective Global Approach134

In situations where technologies are patented, a collective or global approach to

enhance access and affordability has been proposed. A “Global Technology Pool
for Climate Change”, for example, could be developed in which patent owners of
climate-friendly technologies are required to place their patents and associated
trade secrets as well as know-how, and make them available to developing-country
firms. Access to the technologies and associated trade secrets and know-how
would be conditioned on payment of a low level of compensation (in some
circumstances, royalty-free) and on standard terms (that are to be negotiated).135
This would manage the patent system, prevent abusive practices by the IP holder
that deny access to developing countries, and make it administratively and financially
easier for access to take place.

Similar approaches have also been advocated by various prominent experts and
academics. One proposal is a compulsory licensing framework that could ensure
that licences to patent are available as a matter of right to third parties.136 On a
similar licence of right model, Prof. William Kingston from the School of Business
Studies at Trinity College in Dublin states: “Of all types of industry and business
which use intellectual property rights, the proposed change (to a licence of rights
regime) would be most beneficial in complex technologies which are rapidly
increasing in importance.”137

Another proposal by Reichman and Lewis (2005) has promoted the idea of a
“compensatory liability regime”, i.e., a liability rule which is an option for one to
use another party’s innovation under specified conditions, which include: (i) how
the innovation may be employed; (ii) the period for which it may be employed; (iii)
the compensation the innovator should receive (or at least a method for determining
it); and (iv) provisions for revising the terms of use upon mutual agreement. On this
model, Reichman has also noted that “the success of multiple players in the relevant

54
technical universe should correspondingly augment the flow of investment and
technical information to that universe as a whole, as players participate in the
industry-wide virtual partnership that a liability rule supports”.138

In all the above ideas, the basic theme is to allow a third party access to and use of
the protected subject matter for specified purposes, without permission but subject
to payment of some compensation to the IP holder for these uses. Payment of
remuneration for patent infringement is found even in the US law. Specifically,
section 1498(a) of Title 28 of the US Code provides in part: “Whenever an invention
described in and covered by a patent of the United States is used or manufactured
by or for the United States without license of the owner thereof or lawful right to
use or manufacture the same, the owner’s remedy shall be by action against the
United States in the United States Claims Court for the recovery of his reasonable
and entire compensation for such use and manufacture.” Reichman and Lewis
(2005) refer to this law as a “de facto liability regime”.139

US courts have also commonly applied a similar principle in their decisions. For
example, in the Paice-Toyota case mentioned above, injunctive relief was denied
to Paice LLC and instead the court allowed Toyota to continue its patent
infringement, although subject to payment of royalties.140 The main case in the US
on the issue of payment of compensation in lieu of granting injunctive relief is eBay
Inc. v. MercExchange LLC.141 The TRIPS Agreement also recognizes the
possibility of WTO Member states limiting remedies for infringement to payment
of compensation.142

From the above it is apparent that the idea of allowing the use of a patent in return
for payment of compensation is a concept that has been around for a while. In the
proposed concept of a global technology pool, the beneficiaries are intended to
be firms in developing countries. Thus patent holders would still be able to extract
high commercial royalties from the richer developed markets.

The nature of the pool should be mandatory in that developed and developing
countries both have to ensure, either through law or policy (e.g., a condition for
receiving public funding for R&D), that the protected subject matter is given to the
global technology pool for climate change for licensing to developing-country firms
as envisaged above.

55
Sharing of Know-How and Trade Secrets

Parties to the UNFCCC may also consider a global cooperation system for sharing
know-how and trade secrets, which is also important, as the lack of this is another
serious barrier to technology transfer.143 Even if a technology is not patented, the
withholding of trade secrets, or how to make the technology, can prevent the
development of endogenous technology in developing countries. This should be a
component of the “Global Technology Pool for Climate Change” proposed above,
as well as any technology transfer framework that emerges under the UNFCCC.

Publicly Funded Technologies

The US, in a presentation at a UNFCCC meeting in 2008, acknowledged that

there is a need for a “global effort to share government-developed and owned
technologies at low or no cost”.144 The sharing should also include the know-
how.

As noted above, the public sector plays a critical role in provision of R&D funding
and the amounts spent are significant. However, it was also noted that governments
particularly in the OECD countries fund R&D programmes as part of their industrial
policy aimed at improving their industrial competitiveness. Thus the inventor (usually
public research institutions, universities and other governmental bodies) is allowed
to claim patents over publicly funded technologies and to license them to the private
sector. As a result, even technologies which are wholly or partially funded by the
public sector are not easily available to firms in developing countries.

On this point it has been contended that governments being the main driver of
public R&D programmes for climate-friendly technologies can play a critical role
in promoting the transfer and dissemination of these technologies and that modalities
for such transfer should be explored and worked out with the aim of building
consensus at a multilateral level.

It is suggested that fully owned government technologies should be transferred at

no cost. Where governments partially fund R&D, they should have partial ownership
of any resulting patent.145 When a licence is issued to a developing-country firm, a
corresponding proportion of the cost of the licence should be waived, thus reducing
the overall cost to developing countries. Incentives can also be given to entities

56
(that are publicly funded) to make the patented technology, with its know-how,
available to developing countries. It has also been proposed that to support no-
and low-cost transfer, developed-country governments should compile a “Publicly
Owned Technology Inventory”.146 Governments can also use their leverage as a
funder of R&D to place conditions on recipients of the grants as to licensing to
firms in developing countries.

One example of publicly funded research being made available to the public is the
mandatory Public Access Policy of the US National Institutes of Health (NIH).
According to the law,147 the Director of NIH shall require all investigators funded
by NIH to submit, or have submitted for them, to the National Library of Medicine’s
PubMed Central digital archive their final peer-reviewed manuscripts upon
acceptance for publication, to be made publicly available no later than 12 months
after the official date of publication.148 Compliance with this Policy is a statutory
requirement and a term and condition of the grant award and cooperative
agreement, in accordance with the NIH Grants Policy Statement.149

This is the first time the US government mandated public access to research funded
by a major government agency. On the passing of the law, Heather Joseph,
Executive Director of SPARC (the Scholarly Publishing and Academic Resources
Coalition), said: “Congress has just unlocked the taxpayers’ $29 billion investment
in NIH … This policy will directly improve the sharing of scientific findings, the
pace of medical advances, and the rate of return on benefits to the taxpayer.”
While the law applies to articles funded by NIH, a similar concept could also be
used to address prompt availability of publicly funded technologies to developing
countries.

Future Technologies

At the UNFCCC meeting in Accra in 2008, the G77 and China put forward a
proposal for the establishment of a Multilateral Climate Technology Fund.150 The
expectation is for the fund to finance enhanced action on technology development
and transfer. More specifically, it is proposed that the fund will finance, inter alia,
support for research, development, manufacture, commercialization, deployment
and diffusion of technologies for adaptation and mitigation and creation of
manufacturing facilities for environmentally sound technologies, etc.

57
The financing of R&D for new technologies by any future fund should be subject
to conditions concerning IPRs. The IPRs on any technology resulting from R&D
financed from the fund should belong to the fund under the UNFCCC. The
technology with its associated know-how should be made available royalty-free
and on fair and reasonable terms to firms in developing countries that would like to
produce or do further R&D (e.g., to adapt the technology to local conditions).
Where countries are more interested in purchasing the technology (that has been
developed through financing under the fund), rather than manufacturing or
conducting R&D, the technology should be made available at prices affordable to
the population of the said developing country. In short, provision of financing for
R&D of new technologies should be subject to certain conditions that ensure
there is no impediment to equitable and affordable access to the products of the
research or follow-on research by others.

58
 7 Some Conclusions

IN light of the imminent challenges posed by climate change and the patenting
trend (with ownership of technology focused in industrialized nations, a trend likely
to continue more robustly in coming years), there is a need for action on the part of
governments negotiating at the UNFCCC to agree to measures that overcome the
IP barrier and facilitate transfer of technology, as well as associated skills and
know-how.

There are several flexibilities available within the TRIPS Agreement such as
compulsory licences, exceptions to patent rights, regulating voluntary licences,
and strict application of patentability criteria, which may enable access to
technologies to a certain degree, but the use of such measures is limited to specific
circumstances. In addition, as mentioned above, in the context of developing
countries, these measures are usually more difficult to put in practice due to the
pressure factor and lack of capacity.

Options such as allowing developing countries to exclude critical sectors from

patenting, as well as a “Global Technology Pool for Climate Change”, need serious
consideration as these options will provide certainty and predictability in accessing
technologies and further enable the much-needed R&D for local adaptation and
competition that would further reduce the cost of the technologies. Both options
also have to include cooperation to share know-how in relation to the critical
technologies for combating climate change. In addition, modalities for access to
publicly funded technologies by developing-country firms need to be explored.

Climate change is truly a serious crisis threatening human well-being and there are
only a few years left to start very strong action. Thus, the situation is similar to
emergency war-like conditions. In such conditions, individual commercial interests

59
such as patents and other intellectual property rights are suspended or managed
in such a manner that there can be concerted action in the most effective way to
face the common threat.

If developed countries treat intellectual property rights as something sacrosanct

and to be upheld at all costs, it would signal that climate change is not a serious
threat for them, as commercial profits for a few are more important on the scale of
values and priorities than the human lives that are at stake due to global warming.151
However, technology transfer to developing countries to enable them to combat
climate change should be the higher priority. Developed countries should also not
treat climate technology as a new source of monopoly profits, as this would damage
the ability of developing countries to phase in existing or new climate-friendly
technologies for both mitigation and adaptation.

60
Endnotes

1
Ockwell et al. (2007), p. 29.
2
Evans (1999), quoted in Ockwell et al. (2007), p. 29.
3
Saad and Zawdie (2005), quoted in Ockwell et al. (2007), p. 29.
4
The Intergovernmental Panel on Climate Change (IPCC) (2000) defines
“technology transfer” as a “broad set of processes covering the flows of know-
how, experience and equipment for mitigating and adapting to climate change
amongst different stakeholders such as governments, private sector entities, financial
institutions, NGOs [non-governmental organizations] and research/education
institutions… It comprises the process of learning to understand, utilize and replicate
the technology, including the capacity to choose it and adapt it to local conditions
and integrate it with indigenous technologies.”
5
Bell (1990), quoted in Ockwell et al. (2007), p. 27.
6
Khor (2008a).
7
Correa (2005), p. 230.
8
Correa (2005), p. 228.
9
Khor (2008a); UNCTAD (1996). See also Correa (2000), pp. 26-37.
10
Correa (2000), p. 27.
11
UNDP (1999), p. 73. See also Gerster (2001).
12
See also CIPR (2001), p. 26, which states: “As regards the analyses of the
impact on foreign investment, we have similar reservations. There is a considerable
literature which discusses the extent to which stronger IPRs influence foreign
investment, licensing behaviour and the transfer of technology. Much of this literature
reaches only tentative conclusions, because of weaknesses in data or methodology.”
13
United Nations (1993).
14
Correa (2005), p. 231.
15
Chaudhuri (2005).
16
Gerster (2001).
17
Correa (2005).
18
Khor (2008a).
19
Correa (2005).
20
See also Khor (2008a).
21
Correa (2005), p. 233.
22
See Article 40.4 of the TRIPS Agreement, available at: http://www.wto.org/
english/docs_e/legal_e/27-trips_04d_e.htm.
23
Correa (2005), p. 238.

61
24
India, Government (2000).
25
Saez (2008); see also Moon (2008).
26
“Reaffirming that the provisions of article 66.2 of the TRIPS Agreement are
mandatory, it is agreed that the TRIPS Council shall put in place a mechanism for
ensuring the monitoring and full implementation of the obligations in question. To
this end, developed-country members shall submit prior to the end of 2002 detailed
reports on the functioning in practice of the incentives provided to their enterprises
for the transfer of technology in pursuance of their commitments under article
66.2. This submission shall be subject to a review in the TRIPS Council and
information shall be updated by Members annually.” See WTO document WT/
MIN(01)/17 (20 November 2001).
27
Paragraph 7 of the Doha Declaration on the TRIPS Agreement and Public
Health: “We reaffirm the commitment of developed-country Members to provide
incentives to their enterprises and institutions to promote and encourage technology
transfer to least-developed country Members pursuant to Article 66.2. We also
agree that the least-developed country Members will not be obliged, with respect
to pharmaceutical products, to implement or apply Sections 5 and 7 of Part II of
the TRIPS Agreement or to enforce rights provided for under these Sections until
1 January 2016, without prejudice to the right of least-developed country Members
to seek other extensions of the transition periods as provided for in Article 66.1 of
the TRIPS Agreement. We instruct the Council for TRIPS to take the necessary
action to give effect to this pursuant to Article 66.1 of the TRIPS Agreement.”
28
Ockwell et al. (2007).
29
Khor (2008a).
30
Khor (2008a).
31
See, e.g., Article 4.1(c) of the UNFCCC and Article 10 of the Kyoto Protocol.
32
Khor (2008c).
33
European Parliament resolution of 29 November 2007 on trade and climate
change (2007/2003(INI)).
34
The first meetings since the Bali conference of the Ad Hoc Working Group on
Further Commitments for Annex I Parties under the Kyoto Protocol and the Ad
Hoc Working Group on Long-term Cooperative Action under the Convention
were held in Bangkok in April 2008.
35
Raman (2008).
36
Raman (2008).
37
Stilwell (2008a).
38
Stilwell (2008a).

62
39
Raman (2008).
40
Raman (2008).
41
Statement by the Philippines on behalf of the G77 and China. The IPR issue
arose in the contact group on “delivering on technology and financing, including
consideration of institutional arrangements”, which met at its second session on 10
December 2008. The contact group is one of four contact groups formed under
the UNFCCC Ad Hoc Working Group on Long-term Cooperative Action under
the Convention (AWG-LCA). See Raman (2008).
42
The Treaty makes it possible to seek patent protection for an invention
simultaneously in each of a large number of countries by filing an “international”
patent application.
43
OECD (2008).
44
OECD (2008).
45
Kamis and Joshi (2008).
46
ETC Group (2008).
47
ETC Group (2008): “After decades of seed industry mergers and acquisitions,
accompanied by a steady decline in public sector plant breeding, the top 10 seeds
companies control 57% of the global seed market.”
48
The TRIPS Agreement makes no reference to “trade secrets” or “know-how”.
However, it does recognize “undisclosed information” as one of the categories of
“intellectual property” (see Article 1.2 of the TRIPS Agreement) and provides for
“protection of undisclosed information” in Article 39. The term “undisclosed
information” is considered as referring to “trade secrets” or “know-how”. The
obligation established under Article 39.1 is limited to the protection of undisclosed
information against unfair competition as provided in Article 10bis of the Paris
Convention. The discipline of unfair competition provides a remedy against acts of
competition contrary to honest business practices, such as confusing or misleading
the customer and discrediting the competitor. Unfair competition rules supplement
in some cases the protection of industrial property rights, such as patents and
trademarks. Unlike the latter, however, the protection against unfair competition
does not entail the granting of exclusive rights. National laws must only provide for
remedies to be applied in cases where dishonest practices have occurred.
49
Love (2008).
50
IPCC (2000).
51
A patent thicket is a dense web of overlapping intellectual property rights that a
company must hack its way through in order to actually commercialize new
technology.

63
52
“Patent troll” is a pejorative term used for a person or company that enforces its
patents against one or more alleged infringers in a manner considered unduly
aggressive or opportunistic, often with no intention to manufacture or market the
patented invention.
53
See also Khor (2002).
54
Khor (2002).
55
See also Khor (2002).
56
Khor (2008b).
57
Andersen, S.O. et al. (2007). Technology Transfer for the Ozone Layer:
Lessons for Climate Change. Earthscan, London. Quoted in Khor (2008b).
58
IPCC (2000), Chapter 3.
59
See Ockwell et al. (2007), p. 40.
60
LED is a semiconductor diode that emits light when an electric current is applied
in the forward direction of the device. LEDs are widely used as indicator lights on
electronic devices and increasingly in higher-power applications such as flashlights
and area lighting.
61
A briquette is a block of flammable matter which is used as fuel to start and
maintain a fire. Biomass briquettes are made from agricultural waste and are a
replacement for fossil fuels such as oil or coal, and can be used to heat boilers in
manufacturing plants, and also have applications in developing countries. Biomass
briquettes are a renewable source of energy and avoid adding fossil carbon to the
atmosphere.
62
Pellets are shorter and narrower compared to briquettes. Pellets can be made
from various biomass materials like sawdust, wood, crop residues or straw.
63
Ockwell et al. (2007), p. 82.
64
Hybrid vehicles are viewed by many as having a significant role to play in
reduction of carbon emissions related to transport, for example buses and private
vehicles. These vehicles combine a conventional internal combustion engine with
battery-driven electric motors to achieve a significant reduction in fuel consumption
and thus carbon emissions.
65
Ockwell et al. (2007), p. 90.
66
A photovoltaic panel produces electricity when exposed to sunlight.
67
Barton (2007), p. 20.
68
For converting direct current to alternating current and could also include
mechanisms to ensure that solar panels operate under efficient conditions and
satisfy the requirements for connecting to the grid.
69
Barton (2007), pp. 11 and 15.

64
70
Barton (2007), p. 9.
71
Ockwell (2008).
72
Lewis (2007), quoted in Ockwell (2008).
73
Ockwell (2008).
74
Lewis (2007).
75
WIPO (2008b).
76
Correa (2005), p. 239.
77
Correa (2005), p. 239.
78
WIPO (2008b).
79
Shashikant (2008).
80
WIPO (2008b).
81
Smith (2008).
82
WIPO (2008b).
83
Boldrin and Levine (2007).
84
Virén and Malkamäki (2002).
85
Enercon GmbH vs. International Trade Commission, 151 F.3d 1376 (CAFC
1998).
86
Barton (2007), p. 16.
87
http://www.lachmangoldman.com
88
Gamesa Eolica, S.A. vs. General Electric Co, 359 F. Supp. 790 (WD Wis.
2005).
89
Ockwell (2008); Barton (2007), p. 16.
90
Rizo (2008).
91
http://www.autoindustry.co.uk/news/13-05-08
92
http://www.autobloggreen.com/2008/04/16/solomon-technologies-completes-
toyota-hybrid-patent-appeal-argum/
93
See Ockwell et al. (2007), p. 69.
94
Shashikant (2006).
95
Khor (2008b) and UNCTAD (1998).
96
IPCC (2000), Chapter 3, p. 95.
97
European Commission (2004).
98
Barton (2007), p. 8.
99
Barton (2007), p. 8.
100
Sathaye et al. (2005), p. 4.
101
Barton (2007), pp. 7-8.
102
Mascoma (2006); Darmourth (2007).
103
Barton (2007), p. 18.

65
104
IPCC (2000).
105
Sathaye et al. (2005).
106
IPCC (2000).
107
European Patent Office (2007).
108
For the purposes of this Article, the terms “inventive step” and “capable of
industrial application” may be deemed by a Member to be synonymous with the
terms “non-obvious” and “useful” respectively.
109
The 29 November 2005 decision of the TRIPS Council on the Extension of
the Transition Period under Article 66.1 for LDCs (IP/C/40), while allowing for a
transitional period until 1 July 2013, also states that “Least-developed country
Members will ensure that any changes in their laws, regulations and practice made
during the additional transitional period do not result in a lesser degree of consistency
with the provisions of the TRIPS Agreement”, i.e., implying that once a TRIPS-
compliant provision is adopted, there can be no rollback of that provision. Some
experts have challenged the legality of the “no-rollback” clause in that decision
since there is nothing in the TRIPS Agreement that prescribes such a clause to
LDCs.
110
TWN (2008).
111
TWN (2008).
112
Article 73 of the TRIPS Agreement.
113
TWN (2008).
114
WT/MIN(01)/DEC/2, 20 November 2001.
115
Correa (2000), p. 243.
116
Article 31(l) of the TRIPS Agreement.
117
Article 31(b) of the TRIPS Agreement.
118
Article 31(h) of the TRIPS Agreement.
119
Article 31(f) of the TRIPS Agreement.
120
Stilwell (2008b).
121
42 USC Sec 2183. See also http://www4.law.cornell.edu/uscode/42/2183.html
and http://www.cptech.org/ip/health/cl/us-misc.html.
122
42 USC Sec 7608. See also http://www4.law.cornell.edu/uscode/42/7608.html.
123
35 USC 203. See also http://www4.law.cornell.edu/uscode/35/203.html.
124
Love (2007).
125
Correa (2005).
126
59 Fed. Reg. 34625-01 (6 July 1994).
127
Federal Trade Commission vs. Xerox Corporation, 86 F.T.C. 364 (1975).
128
Correa (2005), p. 248.

66
129
Stilwell (2008b).
130
TWN (2008).
131
Correa (2007), p. 1.
132
Correa (2007), p. 1.
133
Correa (2000), p. 241.
134
TWN (2008).
135
TWN (2008).
136
European Patent Office (2007), p. 95.
137
Quoted in European Patent Office (2007), p. 95.
138
European Patent Office (2007), p. 95.
139
Reichman and Lewis (2005), p. 350.
140
Paice LLC vs. Toyota Motor Corporation, CAFC 2006-1610-1631.
See also www.ipfrontline.com/printtemplate.asp?id=16410
141
Love (2007): “In May 2006, the US Supreme Court issued an opinion in eBay
v. MercExchange which set the standards under which a court should evaluate
requests for injunctions to enforce a patent owner’s exclusive right to authorize the
use of a patented invention. To get an injunction, a patent owner must show the
court: (1) that it has suffered irreparable injury; (2) that other possible legal remedies,
including the payment of royalties, are inadequate to compensate for that injury;
(3) that considering the balance of hardships between the plaintiff and defendant a
remedy in equity is warranted; and (4) that the public interest would not be disserved
by a permanent injunction. Under this standard, a court can choose to issue a
compulsory license to use the patent rather than enforce the exclusive right, a path
that has been taken several times since May 2006.”
142
Article 44.2 of the TRIPS Agreement.
143
TWN (2008).
144
TWN (2008).
145
TWN (2008).
146
TWN (2008).
147
Consolidated Appropriations Act of 2007 (H.R. 2764).
148
See http://publicaccess.nih.gov/policy.htm.
149
See http://grants.nih.gov/grants/guide/notice-files/NOT-OD-08-033.html.
150
Stilwell (2008a).
151
Khor (2008a).

67
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WIPO (2008b). “Climate Change and the Intellectual Property System: What
Challenges, What Options, What Solutions? – A Summary of the Issues”. Informal
consultation draft, World Intellectual Property Organization, Geneva.

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Intellectual Property Rights Series 13
INTELLECTUAL PROPERTY AND TECHNOLOGY TRANSFER
ISSUES IN THE CONTEXT OF CLIMATE CHANGE

The serious threat to human well-being posed by climate change has imparted a
sense of urgency to the search for remedial measures. Among the most important
steps identified to combat climate change is the application of energy-efficient
technologies that will curb the carbon emissions responsible for global warming.

However, access by developing countries to these climate-friendly technologies

can be impeded by patents and other intellectual property rights (IPRs) over the
technologies, most of which are held by developed-country entities. The mo-
nopoly rights conferred by intellectual property ownership hinder diffusion of these
technologies and undermine the capacity of developing-country parties to use,
maintain and adapt the technologies to local conditions.

This paper examines the relationship between IPRs and technology transfer, and
explores options to overcome the IPR barrier in order to facilitate the dissemina-
tion of climate-friendly technologies to the developing world with the aim of tack-
ling one of the major environmental problems of our time.

SANGEETA SHASHIKANT is a Legal Adviser to the Third World Net-

work as well as the Coordinator of the TWN office in Geneva. MARTIN
KHOR, former TWN Director, is Executive Director of the South Centre.

TWN INTELLECTUAL PROPERTY RIGHTS SERIES

is a series of papers published by the Third World Network to pro-

vide a critical analysis of intellectual property rights protection from
a Third World perspective. A particular focus is given to the WTO
Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS) and its implications for developing countries.

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Third World Network