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In the months leading up to the Copenhagen Summit on Climate Change, IP emerged as a contentious issue, with some countries arguing that IP protection should be weakened to promote the spread of technology and others arguing the protection should remain strong. Progress at the summit itself was so limited that IP was hardly mentioned. But the debate will not go away. Japanese companies such as Honda and Toyota are some of the leading producers of green technology and, as a developed country surrounded by developing economies, Japan has an important role to play in this debate. The Japan Intellectual Property Association has been trying to develop a compromise proposal that will promote the spread of green technology while maintaining respect for IP. This would involve developing a new, more effective and commercially minded Patent Commons.

On September 28 at a global warming negotiation session of the United Nations Framework Convention on Climate Change (UNFCCC), China submitted a statement on technology transfer stating that that environmentally friendly technology (energy conservation or new energy sources) to facilitate climate change issues should be treated as public goods and that the technology should be widely spread by compulsory licensing of the patents relating to energy conservation technology possessed by companies in developed countries to developing countries.

On December 12 2008 at the 14th Conference of the parties to the UNFCCC, the developing countries argued for the foundation of a funds mechanism and that IP should be either coowned or abandoned.

At the 15th conference and the fifth meeting of the parties to the Kyoto Protocol, held in Copenhagen from December 7 to December 18, there was no agreement on what kind of targets should be set and what framework should be put in place after 2013, when the Kyoto protocol will finish.

Before this meeting, environmental specialists and CO^₂ reduction negotiating team members of the Japanese government were discussing IP issues. However, in light of how IP can contribute to the development of new environmental technology, and its transfer, opinions from IP experts are necessary. We need to identify the current functions of intellectual property and to review what intellectual property can do to facilitate the diffusion of environmental technology.

The opposing positions

In Europe, the association of businesses BusinessEurope issued a Joint Communiqué of Opposition to the idea of compulsory licensing of green technology on December 5 2008. On January 19 2009, the EU Trade Directorate-General stated: "Intellectual Property is not becoming an obstacle to the deployment of environment technology."

The US Chamber of Commerce echoed these sentiments with a joint declaration to oppose compulsory licensing on December 5. The Japan Business Federation expressed opposition on November 13 2008. The International Intellectual Property Protection Forum, a body set up by the Japan External Trade Organisation, also issued a Joint Communiqué of Opposition on December 5. In general, the Japanese government advocates discussing what types of technologies are necessary by sectors.

China's position has already been stated. In India, a Special Panel set up by the prime minister stated on July 27 2008 that environmental technology should be treated as in the public domain in the same way as HIV medicines are treated. Similarly, in Brazil the Ministry of Foreign Affairs stated in September 2007 that innovations and technical transfer shall not be impeded by intellectual property.

About JIPA

The Japan Intellectual Property Association (JIPA) is one of the world’s largest IP user organisations. Established as a non-governmental organisation in 1938 it counts about 900 leading Japanese companies as members. JIPA submits recommendations and proposals to the relevant authorities and organisations on the establishment of IP systems overseas and on improvements in implementation of these schemes.

JIPA thinks that simply opposing compulsory licensing of environmental technology will not facilitate its diffusion. Licensing in a conventional way has its limits and we should study possible methods to realistically accelerate the diffusion of green technology.

The state of play

The number of patent filings by Japanese, American or European companies in Africa and developing countries is not high. This means that patents only work as a barrier here in exceptional cases. As patents are usually filed in the countries where competitors exist, patents filed in Japan, the US or Europe are likely to work to block potential rivals.

For environmental issues, the BRIC countries (Brazil, Russia, India and China) are categorised as developing countries. In contrast, from an IP perspective, Chinese companies are rapidly increasing their patent filing activities and have started competing worldwide with Japan, the US and Europe. Many patent filings by these countries in China may work as barriers in an identical manner to how they function in developed countries. Though Russia, India and Brazil have less of a competitive edge in IP compared with China, they agree with China's argument that IP protection could be a problem.

But patent filings in those three countries from Japan, the US and Europe are small. Therefore patents are not working as barriers in those countries. In claiming that the patents owned by Japanese, US and European corporations should be subject to compulsory licences in China, China is making her own rules; on the one hand claiming her own rights outside (in the developed countries), on the other limiting the rights owing to her position as a developing country in terms of environmental issues.

The existence of competitors creates the need for patent filings because their purpose is to maintain and increase competitive edge. Competitors that have the same facilities, manpower and technical level that use other companies' patents will accelerate the diffusion of environmental technology. When facilities, manpower and technical level are insufficient, compulsory licensing of patents will not support the diffusion of environmental technology. Improved facilities, trained workers and disclosure of technical information are necessary.

Patents are expensive to maintain. This means that patents arising from the latest, most useful inventions are maintained and patents covering out-of-date technology are abandoned. However, even in some of these cases certain patents are maintained when the technology is not widely used. The latest environmental technology tends to be exclusively owned. In addition, old environmental technology is likely to be still covered by some patents.

There are compulsory licensing precedents in Zambia, Zimbabwe, Malaysia, Thailand and Brazil that were in accordance with Articles 30 and 31 of TRIPs. The royalty is usually very low (around 0.5%) compared with the industry standard. Moreover, despite the compulsory licence being limited to one territory, the products are exported to neighbouring countries and cause parallel import issues. Therefore, once a compulsory licence is imposed, the patent holder will suffer adverse results. It is likely that the same consequences will occur with the transfer of green technology.

Under these circumstances, it may be possible for patents to act as an obstacle to the diffusion of environmental technology in both developed and developing countries. Enforcement of compulsory licensing has brought negative results for patent owners and industries. JIPA thinks that an alternative to compulsory licensing must be applied to resolve this issue.

The options

There has not been much licensing activity at patent trade fairs. Also, online sales or licence offerings by indicating patent number and invention name has not resulted in substantial deals being concluded. We believe this is because the businessmen that determine the introduction of new technology are not patent experts and patent specifications are in general hard to understand and are not attractive as a tradable article.

Licensing between rival companies occurs to avoid patent litigation. In cases where one party has an insufficient technical level, a series of technical transfers including capital investment, licensing of know-how and technical guidance is necessary. An indication only of patent licensing availability is insufficient.

Because of the two issued mentioned above and because the WBCSD Eco-Patent Commons is free of charge, the only incentive for a business to join is to improve its reputation. This means that the majority of patent lists disclosed in the Eco-Patent Commons are not very useful. It is necessary to make the patent commons royalty bearing to create incentives and to make it more attractive to businesses.

Because of these difficulties, JIPA has proposed a new framework to resolve these negative issues.

JIPA's green technology plan

First, we need to establish a new Patent Commons that covers not only patents but technical information, production facilities, investment plans and human-resources plans. It should be possible to list environmental technology packages that can be built up from scratch on a commercial basis. The framework of these packages must allow for individual patent licences and individual sales of other elements.

Corporations will join this Patent Commons not through compulsion but because it is a business opportunity. They can bring their own green technology packages that will cover the latest technology, not exclude old or commonly used technology and technology that is not patented. Each member is entitled to set its own price for its package.

The green technology packages under the new Patent Commons would be targeted at all nations worldwide not just the developing countries – the use of environmental technology is important even in developed countries. It shall function to accelerate technology trade at a worldwide level. (There are lots of non-widespread and out-of-date technologies in developed countries that are still useful environmental technology.)

The commons should be organised as an international framework, and allow green technology packages not only from Japanese companies but from all corporations worldwide.

It is important that companies offering the packages can decide the price. When a patent is granted, the price is evaluated as a patent licence royalty. In a case where technical information is transferred it is evaluated as know-how value or remuneration for technical guidance. In cases of manufacturing facilities, it would be evaluated as a sales transaction or a lease cost. Old technology packages will be offered at a lower price. Cutting-edge patents will be priced relatively higher. If the pricing is not at the right level, no purchasers will appear and it will be repriced.

If a developing country that has affirmed its commitment to reducing CO^₂ tries to buy a green technology package, payment can be made to the technology owner through public funds such as Official Development Assistance (ODA). When less-developed countries in Africa apply, public funds like ODA are expected to promote the diffusion of environmental technology. Developed countries intending to introduce environmental technology should also consider this framework as an option. Overall, the classification of a country should not change the way in which it approaches buying a green technology package.

The maintenance and continuation of an effective IP system is vital to develop new technology. But the possibility that technology can be monopolised or buried at a right holder's own discretion is inherent in an IP system. By building a framework so that this evil may be lessened, we think that a technology-transfer market can be stimulated and be useful for the spread of environmental technologies.

JIPA is examining the above in cooperation with the Japan Business Federation. JIPA is doing the planning and the Japan Business Federation has appealed for participation from the top management of member companies.

Since the International Centre for Trade and Sustainable Development (ICTSD) introduced the above-mentioned proposal at the Ad-Hoc Working Group on the Kyoto Protocol in Barcelona in November last year some inquiries from overseas have come to JJPA. JIPA would like to develop and complete this framework not as a solely Japanese initiative but as an international project.

Hideo Doi

© Hideo Doi 2010. Hideo Doi is secretary general of the Japan Intellectual Property Association