Technology Transfer and Intellectual Property Rights – Not as Scary as it Sounds

by Anjali Appadurai

The climate regime is huge, transboundary, multidimensional. The UNFCCC, being the only body facilitating multilateral negotiations on climate change, is made up of a maze of different issues and tracks. The fundamental premise of the climate debate is that developed and developing countries are responsible to different extents for the current level of global emissions, but are also vulnerable to different extents. Under the foundational principles of “historical responsibility”, “common but differentiated responsibility” and “polluter pays”, developed countries have the responsibility to support their developing neighbours in mitigation of and adaptation to the effects of climate change.

How can they support them? Through finance, through capacity-building, and through technology transfer. Tech Transfer is a crucial area under the UNFCCC. In order to fulfill the increasingly more stringent emissions targets that are imposed upon them, developing countries need access to clean technologies. There is a fundamental tension in the climate world: developed countries got to the level of affluence  they are at through intense carbon-heavy industrialization. Now developing countries want their chance to do the same, but we have already run out of atmospheric space. Providing access to clean technologies enables developing countries to develop “sustainably”, using fewer emissions. The idea is to transition to a low-carbon economy.

What are the problems with tech transfer within the UNFCCC? The most contentious one is the issue of Intellectual Property Rights (IPRs). IPRs, usually in the form of patents, limit access to transboundary flows of technology and information. You may have heard of IPRs in the context of their most controversial subject – generic pharmaceutical drugs, suboxone vs methadone. IPRs that are too restrictive give the market power over technologies that should (we think) be available to all countries who need them. They raise prices above the social optimal level, making technology and information too expensive for some and affordable for others. IPRs also grant the right to limit the development of certain technologies past a certain point – one of the things that make them particularly harmful for economies in transition. IPRs essentially block or limit access to clean technologies that would otherwise help developing countries with their mitigation targets; in fact, developed countries are required to provide these technologies. Article 4.5 of the Convention states:

The developed country Parties and other developed Parties included in Annex II shall 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. In this process, the developed country Parties shall support the development and enhancement of endogenous capacities and technologies of developing country Parties. Other Parties and organizations in a position to do so may also assist in facilitating the transfer of such technologies.

It’s a two-sided coin, though, because IPRs also provide incentive for innovation in clean technologies. The transition to a low-emission economy can only occur through constant development and refinement of new and existing technologies. Without IPRs, the private sector really has no incentive to keep producing technologies (or so they say). The challenge is to keep IPRs at a balanced level which allows for an adequate flow of information, technology and training across borders, while finding ways to incentivize innovation. It is here that the public sector comes in as a crucial component. There must be a balance between private IP rights and public policy regulation.

It is this balance that is a source of conflict within the UNFCCC. Some countries don’t believe that IPRs are too stringent, or that more transfer of information and technology is needed for increased mitigation. Some other countries firmly state that increased flows of technology are needed in order for countries to be able to transition to cleaner economies. Enter TRIPS, or Trade-Related Aspects of Intellectual Property Rights – an agreement under the World Trade Organization (WTO), and the most comprehensive standard in the world for minimum IPR protection. Article 7 of TRIPS states that the objective of IPRs should be to contribute “to the promotion 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...” Article 8 also says that measures “may be needed to prevent the abuse of intellectual property rights by right holders or the resort to practices which … adversely affect the international transfer of technology.”

It sounds great, doesn’t it? Well, the devil is always in the details. It’s highly questionable whether TRIPS actually facilitates a fair balance between technology transfer and IPRs. It doesn’t, for example, provide a comprehensive framework for national and international policies – which is of course an essential component in the IPR/tech transfer balance. Also, prior to the creation of TRIPS, over 40 countries didn’t provide patent protection to pharmaceutical companies. TRIPS granted these companies all the patent protection they wanted and more. If IPRs provide incentive for the private sector to innovate, couldn’t the public sector provide alternative incentives to achieve the same thing? Perhaps subsidies? Well TRIPS also calls for that, but studies have shown very little connection between what its member countries end up doing and what the Agreement itself calls for. There are no safeguards, no follow-up mechanisms to make sure that technology is being delivered. TRIPS has been widely criticized for facilitating the redistribution of wealth disproportionately to the private sector, as well as imposing IPR laws on sectors or countries that would otherwise have had less stringent standards, thereby creating an artificial shortage of information and technology. By trying to facilitate global technology transfer by regulating IPR laws, TRIPS actually limits some countries while giving other countries (or rather, their private sectors) way too much leeway. It actually limits both innovation and technology transfer while limiting access to crucial technologies such as life-saving drugs, but let’s return to its relevance under the UNFCCC…

TRIPS provides a number of flexibility mechanisms which provide room for countries to adjust their own IPR laws in certain sectors. There are a few types of flexibilities, including compulsory licensing, exceptions to patent rights, and voluntary licenses. Within the UNFCCC, there is currently a heated debate going on about the inclusion of TRIPS flexibilities in the official text of the Convention, giving developing countries some allowances for the increase transfer of clean technology. India is the most vociferous proponent and the original Party to spearhead this debate. Obviously, developed countries have no intention of allowing the UNFCCC to punch some holes in their airtight IPR and trade regimes. Their argument is that TRIPS is a separate entity form the UNFCCC, and should not be dragged into climate talks. To this developing countries reply that TRIPS is the most comprehensive multilateral agreement on IPRs and therefore is the most effective mechanism to target in order to create an optimal clean technology regime. India has been joined by many other developing countries – most notably Ecuador, Bolivia, Bangladesh and China – in calling for a full discussion of the limits of IPR within the discussions of technology transfer under the UNFCCC. IPRs are a contentious issue and talks over these are kept very hush-hush at the conference, which is why I probably won’t be writing updates in this area until the very end when official decisions are made.

There is plenty more to come on technology transfer under the UNFCCC – IPRs are just the tip (or rather, TRIP) of the iceberg, but they are one of the main blockages to tech transfer at this conference.

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