IPR and low-carbon technologies

In the final segment of a four-part series, Ian Harvey discusses how China can use intellectual property rights to promote the adoption of low-carbon technologies.

China is even more of a key player in addressing climate change than it perhaps realises. Not only is it the largest emitter of carbon dioxide (CO2), but its history of creativity over the millennia is beginning to re-emerge as new low-carbon technologies are likely to come from China’s universities and companies. As the first article in this series notes, the country has also made remarkable progress in developing a strong intellectual property (IP) system, largely unrecognised by the rest of the world. China’s leaders have a better grasp of the importance of intellectual property rights (IPRs) to a modern economy than most western politicians. With China being both a major user and supplier of low-carbon technologies, it should play a significant role in helping key institutions structure their IPR framework and processes to create the right conditions for the massive development and the adoption of these technologies.

The World Trade Organisation (WTO) is the organisation administering the key international treaty on IP — The Agreement on Trade Related Aspects of Intellectual Property, or “TRIPS” — that came into effect on January 1, 1995. The WTO is actively involved in trade and business issues as well as broader economic ones. The TRIPS Council within the WTO would be the likely best forum to establish an IPR working party to deal with low-carbon IPR issues. The WTO has procedures for resolving conflicts and should be an effective forum for resolving debates and enforcing agreements about access to IPRs.

The lead institution in IPR matters is the World Intellectual Property Organisation (WIPO). This body has been an effective organisation in constructing legally-workable global systems for IPRs. But the WIPO is not the right organisation to become deeply involved in solving complex trade, economic and business issues involving IPRs. This is because the WIPO has neither the experience nor the staff to do so, nor does its constitution allow for enforcement mechanisms, which the WTO does.

Business organisations such as the Confederation of British Industry (CBI) in the United Kingdom and the International Chambers of Commerce (ICC) have shown that they can think constructively about climate change and IPRs, respectively. These, and similar business-related organisations, should be used in helping to develop effective solutions to potential problems or market failures.

An international IPR working group should analyse the issues specific to the energy revolution and climate change based on facts and data and subsequently allow the issues to be discussed and economically sensible solutions to be developed. It would also be useful for such a group to disseminate the facts about IPRs, as these papers have aimed to do. The author’s experience in IPR discussions related to climate change is that open hostility to IPRs is often removed entirely by a factual explanation, with real examples of what IPRs do, how they are used and why they are so important for creating solutions to problems.

China has the potential to play a key IPR role in finding structural routes to low-carbon solutions. As argued in the first paper, contrary to common perceptions, China is well advanced in developing itself as an economy that will be based on IP. In discussions with Chinese officials and businesses over the past few years, it is clear that they see IPRs as an essential building block for an innovative society. China’s achievement in developing its IPR is not well known. It could be reflected in four areas:

•Much of the data showing China’s performance in IPR exists in the public domain. However, this information is well hidden in official reports that do not focus on key facts. IP officials and professionals worldwide are known for not communicating well with others. China could change this model.

•Some data would be very useful in understanding the progress that China has made. One example would be the success rate of foreign companies which successfully sue infringers in China. I estimate this to be over 90% in China compared with 35% in the United States. Knowing the outcome of patent litigation both nationally and by jurisdiction would be helpful, both in making the case and for companies who wish to choose the best jurisdiction in which to litigate. Hard data such as this probably exists, but officials may be reluctant to use it for fear that countries such as the United States could use it to attack China’s record. The benefits are likely to outweigh the risks.

•Officials might benefit from professional assistance (possibly foreign) in identifying the right facts, extracting them and finding mechanisms for getting them into the public domain in target countries.

•Improve the optics: there are some continuing problems, such as the continuing sale of counterfeit products in areas frequented by foreigners, such as the silk market in Beijing. These provide ready ammunition for those who want to attack China’s record on IPR enforcement. Officials might want to reflect upon whether a city and country which put on such a well-organised Olympic Games is really unable to stop these obvious IPR infringements.

China has been one of the most innovative societies for most of the past 2,000 years, but the last two centuries have been somewhat of an aberration. Joseph Needham, the Cambridge chronicler of China’s scientific milestones, identified China’s failure to embrace the industrial revolution as stemming from “inhibition by the scholarly bureaucrats” – the classically-educated mandarins who did not understand the science, technology or marketplace for the products of the industrial revolution. That is a useful warning as we think how best to promote the development of low-carbon technologies.

China has become the largest emitter of CO2. It recognises this fact and has expressed its willingness to address this issue in various ways, including through carbon capture and storage (CCS). In a recent discussion between Chinese representatives and a large western company, the Chinese were asking for clarity in the ownership of IPRs in a proposed CCS project. Given the high level of investment by both sides, the input of existing IPRs and the likely creation of new IPRs, they reasonably asked who was going to benefit from what. In this case it was the western company directors who said “IPRs don’t matter”. They did not understand and they were wrong.

The development of low-carbon technologies is an opportunity for developed countries to work with the China in creative ways. The Group of Eight (G8), for example, should acknowledge how far China has come in nurturing a supportive environment for IPRs. These countries should work with China to map out how best to create an IPR environment that will stimulate the creation and deployment of new low-carbon technologies. Such a move should be welcomed by China, and taken very seriously. This joint developed-developing country approach would also counter the efforts of interest groups in certain countries who work to minimise IPRs on largely protectionist grounds.

Given the large number, high quality and creativity of Chinese scientists and technologists, it is quite likely that important new low-carbon technologies will come from China. It will be in China’s own interests as well as ours to come up with solutions which will work for everyone.

This article is the fourth part of a series about intellectual property. Read the other parts here:

Myths and legends

Technology in a warming world

Technology and IP: problems and solutions

© Ian Harvey, October 2008                                                                         

Ian Harvey is chairman of the Intellectual Property Institute. This article includes work undertaken for Tony Blair’s “Breaking the Climate Deadlock” initiative and the Climate Group.

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