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Technology Transfer for Mitigation and Adaptation

Debates between developing and developed countries over access to technology to mitigate or adapt to climate change tend to overlook the importance of plant varieties. Climate change will increase the importance of the development of new plant varieties that can adapt to changing climactic conditions. Chapter 5 compares intellectual property rights (IPRs) for plant varieties in the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the International Convention for the Protection of New Varieties of Plants (UPOV Convention), and the Convention on Biological Diversity. It concludes that TRIPS Article 27.3(b) provides an appropriate degree of flexibility regarding the policy options available to facilitate adaptation to climate change.

Clean energy technologies are often cited as an example of the kind of technology that needs to be developed and transferred internationally in order to combat climate change. In international debates regarding the effect of IPRs on the transfer of environmental technologies, developing countries often draw upon the experience regarding pharmaceutical patents. However, IPRs play a different role in the renewable energy industries than they do in the pharmaceutical sector, and seem less likely to create barriers to technology access.[1] New plant varieties represent another important technology that developing countries, in particular, will need in order to adapt to the effects of climate change.[2] The applicable intellectual property laws and the technology transfer issues are different for biotechnologies such as plant varieties, where IPRs may create barriers to access that are similar to the pharmaceutical sector. Thus, it is not possible to analyze the subject of intellectual property rights and international technology transfer in a generalized manner. The analysis must be done according to specific categories of technology. In the case of clean energy technologies, the availability of competing technologies will diminish the impact of IPRs on their cost. In the case of new plant varieties, where a technology has no or few substitutes, or IPRs are concentrated in the hands of relatively few firms, IPRs will increase costs due to monopoly pricing power.

In general, developing countries are more vulnerable to the impacts of climate change on agriculture and subsistence farmers. The impact of climate change on agriculture will affect developing countries disproportionately, for several reasons. Climate change will have a greater impact on the viability of traditional plant varieties in developing countries in the tropics than in developed countries in temperate zones. This means that the need for genetically modified organism (GMO) seeds will be greater in developing countries. However, a larger percentage of the population depends on agriculture in developing countries (50 percent in India, for example) and the poorest in developing countries depend on subsistence agriculture. Their poverty means that they rely on collecting seeds from traditional plant varieties to sow future crops. However, climate change will make these varieties increasingly untenable. As production in these varieties decline, developing countries will require greater access to GMO varieties that can raise yields and adapt to climate change. However, the vast majority of the rights to these GMO varieties belong to corporations in the United States, Europe, and Japan. The percentage of GMO crops owned by Monsanto alone is: 91 percent of soy, 97 percent of maize, 63 percent of cotton, and 59 percent of canola. Thus, the food security of developing countries will depend on access to technology from developed countries, in particular private companies from developed countries. This will give a company like Monsanto tremendous bargaining power over developing country governments.[3] The six large multinational companies (DuPont, BASF, Monsanto, Syngenta, Bayer and Dow) not only own the GMO crops, but they have patented 77 percent of all “climate ready crop genes” during June 2008 and June 2010.[4]

Innovations in plant breeding play an important role in a number of public objectives, such as food security, environment, sustainability, and transitions in the rural economy. Farmers and growers have an interest in competition in the seed market. However, stronger intellectual property rights have combined with technological developments to produce increasing consolidation among breeding companies. Strengthening intellectual property rights may conflict with development objectives. Strengthening intellectual property rights, by contributing to a decreasing diversity in breeding companies, also threatens innovation in plant breeding.[5] These negative impacts of intellectual property rights will become more apparent as climate change begins to have a greater impact on crop yields. The combination of climate change, increasing intellectual property rights for new plant varieties and growing demand for food supplies raises serious concerns regarding affordable access to new biotechnologies and food staples in developing countries. Technological developments may also require a reassessment of policies regarding intellectual property rights for new plant varieties. Genetic use restriction technology or terminator genes render the harvested seed sterile. This technology prevents farmers from replanting saved seed and thereby consolidates the seed companies’ monopoly. When applied to seeds that are protected by intellectual property rights, this technology not only prevents infringement of intellectual property rights and farmers’ reuse of seeds, but also ensures the continuation of the monopoly beyond the life of any patent or breeder’s rights.[6] The advent of terminator genes raises the issue of whether, rather than strengthening intellectual property rights, governments should focus on strengthening competition laws to enhance access to new plant varieties that can adapt to climate change. Indeed, as Debra M. Strauss observes, the application of IPRs to biotechnology may undermine the public interest in the security of a global food supply.[7]

Some have proposed the negotiation of an agreement on intellectual property rights on technologies necessary for mitigation efforts in developing countries, based on the WTO decision on compulsory licensing of pharmaceuticals.[8] The benefit of this approach is that the negotiation could take place separately from the negotiation of the Doha Round. Others have argued that pharmaceuticals and environmental technologies are too different to adopt the same approach in the two areas, but have focused mainly on clean energy technologies.[9] It is true that, for environmental technologies such as those that address ozone depletion, the nature of international business strategies differs significantly from those in the pharmaceutical sector.[10] However, the extent to which solutions in one field of technology can be applied to another must take into account the specific legal and economic issues that arise in each area of technology.

In spite ofthe different implications IPRs may have in different technologies, the debate over IPRs and technology transfer tends to divide along North-South lines, whether with respect to clean energy technologies, new plant varieties, or other environmental technologies. In climate change negotiations, developing countries push for financing to acquire technology or relaxation of IPRs to lower the cost of acquiring technology, whereas developed countries tend to defend IPRs. This reflects the concentration of technologies and IPRs in developed countries and the prediction that there will be disproportionate impacts of climate change on developing countries. However, the role that IPRs play in technology transfer in the more scientifically advanced developing nations will be significantly different in poorer, less scientifically advanced nations.[11]

As technologies mature and IPRs expire, their cost will go down. However, newer technologies may be more effective and, hence, more desirable. Many of the relevant technologies are owned by private interests in developed countries, not governments, and may be acquired by private interests in developing countries. Private firms are not likely to transfer technology in a way that would hamper their competitiveness and would be concerned about creating competitors among the recipients of the technologies.

Once we recognize that the environment at any level is a public good, we understand that the same problems of pricing public goods apply with full force. The environmental externality is negative (that is, my action causes harm to others with whom I have no direct market transactions). Therefore, solutions through private markets will not yield socially optimal results. There have been attempts to produce solutions along the line argued by Ronald Coase. More recent literature (propelled by David Levine and Michele Boldrin) has argued that the only solution to the problem of intellectual monopoly is to get rid of it entirely. Thus, patent rights on innovative technological solutions to the problem of climate change can be mitigated through not granting patents (intellectual monopoly) at every turn. Levine and Boldrin have shown that the more global the market is the less there is a case for an intellectual monopoly.[12]

Striking the right balance between incentives to invent new technologies and affordable access to those technologies is a key issue in addressing climate change. The theoretical foundation for IPRs in general, and patents in particular, lies in the economic argument that these monopoly rights are the sine qua non of innovation. In essence, this argument states that, without patents, inventions would cease, making the issue of affordable access to technology a moot point. The same theoretical argument underpins the intellectual property protection provided by breeders’ rights or patents for new plant varieties. We have demonstrated elsewhere that this argument weakens considerably when it comes to incentives to invent treatments for poor country diseases.[13] Biotechnology with respect to plant var?ieties is akin to pharmaceuticals for HIV/AIDS, since demand for the technology to grow weather- and plague-resistant plant varieties is global, and there is sufficient purchasing power of the farmers in developed countries to create adequate incentives to invent the technologies. Similar issues arise regarding the effect of monopoly rights on affordable access to the technology.

With respect to clean energy technologies, while IPRs may have a negative impact on innovation, competition, and affordable access, we argue that the focus of the debate should not be on IPRs for clean energy technologies. First, achieving reforms to the international intellectual property regime is likely to prove difficult. Second, IPRs do not represent the main obstacle to innovation, competition and affordable access for clean energy technologies. For example, the fact that the United States has applied countervailing duties on imports of solar panels from China indicates that IPRs are not a sufficient barrier to competition in this sector. Otherwise, countervailing duties would not be necessary to protect the US solar panel industry from Chinese competition.

With respect to clean energy technologies, the debate on IPRs is misplaced and distracts from the real issues: creating incentives for and removing obstacles to clean energy development and dissemination. In particular, as we argue in Chapter 8, fossil fuel subsidies need to be eliminated and that source of financing reallocated to clean energy technologies. This may require reforms to WTO subsidies law. Countries also need to remove barriers to trade in clean energy technologies, rather than erect such barriers. This, too, may require reforms to WTO subsidies law, although reforms to national countervailing duty law could be undertaken without reforming WTO law. WTO law does not require countries to apply countervailing duties; it merely permits this practice as long as it is done in accordance with the requirements of the SCM Agreement. Dissemination of clean energy technologies can also be facilitated by removing barriers to foreign investment and international trade in services. For these reasons, our analysis of clean energy technology transfer focuses on these issues, rather than on IPRs.

  • [1] John H. Barton, “Intellectual Property and Access to Clean Energy Technologies in DevelopingCountries: An Analysis of Solar Photovoltaic, Biofuel and Wind Technologies” (2007) ICTSDProgramme on Trade and Environment, Issue Paper No. 2 (accessed March 15, 2013).
  • [2] The transfer of agricultural technology for adaptation to climate change is discussed in Intergovernmental Panel on Climate Change, Methodological and Technological Issues in Technology Transfer,ch. 11 (accessedApril 1, 2012).
  • [3] Peter Drahos and Michael Blakeney (eds.), IP in Biodiversity and Agriculture: Regulating theBiosphere (Sweet & Maxwell, London 2001); Carliene Brenner, IntegratingBiotechnology in Agriculture:Incentives, Constraints, and Country Experiences (OECD, Paris 1996); OECD-FAO, AgriculturalOutlook 2008—2017 (OECD-FAO, Paris 2008); Michael Blakeney, Intellectual Property Rights andFood Security (CABI, Wallingford, MA 2009); OECD, The Bioeconomy to 2030: Designing a PolicyAgenda (OECD, Paris 2009); OECD, Biotechnologies in Agricultures and Related Natural Resources to2015 (OECD, Paris 2009).
  • [4] ETC Group, “Gene Giants Stockpile Patents on ‘Climate-ready’ Crops in Bid to become‘Biomassters’ ” (2010) (accessed March 15, 2013).
  • [5] Niels Louwaars et al., “Breeding Business: The Future of Plant Breeding in the Light ofDevelopments in Patent Rights and Plant Breeder’s Rights” (2009) Netherlands Ministry ofAgricul-ture, Nature and Food Quality (LNV), Wageningen, Centre for Genetic Resources (CGN) (accessed March 2, 2012).
  • [6] Enrico Bonadio, “Crop Breeding and Intellectual Property in the Global Village” (2007) 29(5)European Intellectual Property Review 167.
  • [7] Debra M. Strauss, “The Application of TRIPS to GMOs: International Intellectual PropertyRights and Biotechnology” (2009) 45 Stanford Journal of International Law 287, 291.
  • [8] H.A.C. Prasad and J.S. Kochher, “Climate Change and India—Some Major Issues and PolicyImplications” (2009) Working Paper No. 2/2009-DEA, Department ofEconomic Affairs, Ministry ofFinance, Government of India, March 2009 (accessed March 12, 2012).
  • [9] Jerome de Meeus, “Patent Rules under Scrutiny in the United Nations Negotiations on ClimateChange and Technology Transfer: Analysis and Observations,” Paper presented at the 6th AnnualConference of the European Policy for Intellectual Property (EPIP) Association Fine-Tuning IPRDebates, Brussels, September 8, 2011.
  • [10] Jayashree Watal, “Case Study 3 India: The Issue of Technology Transfer in the Context of theMontreal Protocol” in Veena Jha and Ulrich Hoffman (eds), Achieving Objectives of MultilateralEnvironmental Agreements: A Package of Trade Measures and Positive Measures (United NationsConference on Trade and Development UNCTAD/ITCD/TED/6) 45 (accessed March 15, 2013).
  • [11] Barton, “Intellectual Property and Access to Clean Energy Technologies in Developing Countries.”
  • [12] Michele Boldrin and David K. Levine, “IP and Market Size” (accessed March 21, 2012).
  • [13] Bradly J. Condon and Tapen Sinha, “Global Diseases, Global Patents and Differential Treatment in WTO Law: Criteria for Suspending Patent Obligations in Developing Countries” (2005) 26Northwestern Journal of International Law and Business 1.
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