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TWN Bangkok Climate Change Talks Briefing Paper 2



Brief Note on Technology, IPR and Climate Change 
 


1. If developing countries are to moderate their emissions growth and eventually to cut their emissions, and still have the capacity to have economic growth (of the appropriate type, consistent with sustainable development), the key is for them to have access to climate-friendly technology at affordable prices.
 
2. Technology transfer is not the mere purchase of machines etc. at commercial rates.  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.
 
3. Some technologies are in the public domain, or are not subjected to patents. But many key technologies are patented.  And many technologies of the future will also be patented.
 
4. For these technologies, there must be an understanding that patents should not be an obstacle for developing countries to have access to them at affordable prices.  According to the TRIPS agreement, if there is a patent on a product, a process or a technology, a firm or agency in a country in which the patent is operating can request for a voluntary license from the patent holder, in order for the firm to make or import generic versions of the patented product or technology.  The patent holder will normally charge a price (royalty or license fee) for granting the license.  If the patent holder refuses to give a license, or if the price charged is too high, the firm or agency can apply to the government to grant it a “compulsory license”.  Alternatively, a government that wants to have access to generic versions of a product or technology can itself take the initiative to issue a compulsory license.
 
5. The firm or agency granted a compulsory license would normally have to pay a royalty or remuneration to the patent holder.  In the case of pharmaceutical drugs, the royalty rate offered in recent compulsory licenses by developing countries such as Malaysia, Indonesia, Thailand, ranges from 0.5 to 4 per cent of the price of the generic drug.
 
6.  Under the TRIPS agreement, there is considerable flexibility provided to WTO members states on grounds for issuing compulsory licenses.  These grounds are not restricted, as confirmed by the WTO Ministerial Declaration on TRIPS and Public Health (Doha 2001).  It is not necessary to declare a state of emergency, for example.  Certainly the fact that a country requires a product or technology in order to meet its objectives or responsibilities to mitigate climate change or to adapt to climate change is a most valid ground for compulsory licensing.
 
7.  Compulsory licensing is not a unique or exceptional policy.  In developed countries like the US and the UK, there have been many compulsory licenses granted by the government to facilitate cheaper products and technology in the industrial sector.  In many developing countries, compulsory licenses have been issued for the import or local production of generic drugs.  There is a type of compulsory license known as “government use” which many developing countries have made use of.  This is when the product to be imported or produced in a generic version is to be for public, non-commercial use, for example for medicines distributed by the government in clinics and hospitals.   In such cases, prior negotiation with the patent holder is not necessary although remuneration or royalty to the patent holder is required.
 
8.  Thus compulsory licensing is an option that developing countries must now seriously consider for climate friendly technology.  The Brazilian Foreign Minister Mr Celso Amorim in his speech at the plenary of the Bali climate conference in Dec 2007 said that inspiration should be drawn from the case of TRIPS and medicines, and that a similar statement regarding TRIPS and climate friendly technologies should be considered.  Strictly spaking, it is not necessary for such a statement to be made by Ministers before a country exercises rights that it now has to issue compulsory licenses for climate technologies.  The rights already exists in TRIPS.  However when countries exercise these rights they may be penalised by countries such as the USA.  Therefore developing countries find it useful that an international declaration is made, so that when they exercise their rights they are to some extent more protected politically, which adds to their confidence of exercising what is already their rights under international law (ie TRIPS).  However there is no guarantee that the political declaration will protect a country that exercises its rights – Thailand today faces political pressure from the USA for issuing compulsory licenses on some drugs.  
 
9.  It is also possible to raise the level of ambition for sustainable development, by proposing that environmentally friendly technology should not be patented in the first place (so that the process of compulsory licensing etc is not even required).  There is a strong rationale for this, at least for climate friendly technology and products.  If climate change is truly the serious crisis threatening human survival, and there is only a few years left to start very strong action, then the situation is similar to war-like conditions.  During war (eg the Second World War) individual commercial interests such as patents are suspended so that there can be concerted national action in the most effective way, to face the enemy.  Developing countries require technologies at the cheapest possible prices.  If they otain the needed technology at one quarter the price, they can increase the rate of change to put into effect mitigation and adaptation measures four times faster and four times more effectively.
 
10. There can be many variations for the relaxation of IP in relation to climate friendly products and technologies.  (a) A mandatory ban on patents on climate friendly technologies and products.  (b) A mandatory ban on patents in developing countries only, while patents can still be granted in developed countries.  (c) Developing countries are allowed to exclude patents on climate friendly technologies and products.  (d) Voluntary licenses must be automatically granted on request, which will be free of royalty.
 
11.  There are already examples of developing countries and their firms being hampered from adopting climate friendly technologies or products due to there being patents on these products, and due to the unreasonable demands made by the patent holders on companies in developing countries that requested a voluntary license from the patent holder.  The case of Indian companies finding great difficulties to obtain a voluntary license from the patent holder of a chemical that is a environmentally-friendly substitute to CFCs (which is to be eliminated under the Montreal protocol) is a well documented case.
  
12. In conclusion, any WTO member state is already allowed by the TRIPS agreement to take measures such as compulsory licenses and parallel importation to obtain technologies or products (that are patented) at more affordable prices.  But the processes of negotiating with the patent holder and of issuing compulsory licenses etc can be quite cumbersome to countries not familiar with the procedures.  It is better that developing countries be allowed to exempt such technologies from patenting.  There should not be resistance to this, if we are to take the climate threat seriously.   Developed countries should not treat patents or IPRs as something sacred that has to be upheld at all costs.  That would send a signal that climate change is not a serious threat, as commercial profits for a few are more important on the scale of values and priorities than are the human lives that are at stake due to global warming.  Technology transfer to developing countries to enable them to combat climate change should be the far higher priority.  Developed countries should 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.  The post-Bali process should therefore adopt the principle that developing countries can exempt climate-friendly technologies from patents.  Such a principle would demonstrate that developed countries are serious about resolving the global climate crisis and about assisting developing countries.  It would also help developing to take on mitigation and adaptation measures, which are dependent on the technologies.


Source:Third World Network
Date:Apr 07,2008