Technology Transfer Pervades the Business End of Climate Talks

Buried throughout the text of a climate change bill that Senate Foreign Relations Chairman John Kerry introduced this month are no fewer than 17 references to U.S. companies’ intellectual property rights and the necessity of protecting them.

It’s a testament to the low-profile, highly complicated and perhaps unlikely role that patent law is playing as U.S. negotiators in Copenhagen and lawmakers back in the House and Senate try to negotiate a global climate deal and a U.S. emissions cap.

Many developing countries, including China, have argued that if they agree to cap carbon emissions, they should get access to the kind of technology that rich countries have had a head start in developing. Some developing countries want the ability to issue “compulsory licenses,” which would allow them to use blueprints designed in the United States to build their own emissions technology — essentially free of cost.

That could cost American businesses billions of dollars in lost revenue and potentially remove their incentive to invest in the new technology. And it would affect the very companies that have been most supportive of congressional Democrats’ effort to write a climate change law: technology companies, like General Electric Co., that stand to make billions from rising demand for technology to limit carbon emissions.

As a result, negotiators and lawmakers like Kerry, D-Mass., are treading carefully, promising to protect intellectual property rights but looking for ways to deal with the reality that patents on technology from the developed world can prevent some poor countries from dealing with climate change.

“There’s going to have to be some kind of recognition of the issue of technology transfer, and it may have to be some sort of subsidy . . . but it would be an absolute disaster if the vehicle for doing that was any kind of limit on property rights,” says Bruce Lehman, undersecretary of Commerce for intellectual property and commissioner of the U.S. Patent and Trademark Office during the Clinton administration.

Under international trade rules, compulsory licensing effectively allows the government in a developing country to grant its companies the right outside of a patent to manufacture products made elsewhere, with only “adequate remuneration” going to the patent holder. It was used most famously in the 1990s, when non-governmental organizations pressured Western pharmaceutical companies to permit poorer countries to produce cheaper versions of drugs to combat HIV/AIDS and malaria.

Developing governments and their allies seek to apply the same moral logic to the climate debate, arguing that strong intellectual property protections prevent poor countries from accessing needed technology. Many feel that smaller and poorer African, Asian and Latin American countries — unlike advanced developing countries such as China, India and Brazil — deserve help in accessing technology they cannot afford.

A potential solution is a global institution charged with getting smaller-scale clean-energy technology — not the type that will compete with investments by multinational companies — into the hands of developing countries, Robert Collier, a visiting scholar at the Center for Environmental Public Policy at the University of California at Berkeley, said by telephone from Copenhagen.

But when it comes to China, Lehman says any relaxation of intellectual property rights could take the research and development investment incentive away from U.S. companies and Silicon Valley venture capitalists. “China’s going to be one of the biggest markets for the sale of these technologies,” he said, noting that multinational companies “have to account to shareholders for more than just their national markets.”

China’s reputation for abusing U.S. patent rights hasn’t helped. In a letter to Chinese president Hu Jintao last week, Senate Majority Leader Harry Reid, D-Nev., blasted “continuing high levels of piracy” in China, and the “maintenance of restrictions on the access of U.S. companies and products to the Chinese market.”

U.S. companies are especially worried that China will reverse-engineer American technology and “re-export it down their throats and take their markets away from them,” Collier said.

Arguing that stronger protection of intellectual property rights would encourage U.S. businesses to invest more quickly and expansively in new carbon technology, lawmakers have repeatedly warned the administration not to accept any international deal that would erode patent rights.

The omnibus spending package (HR 3288)cleared for the president’s signature on Dec. 13 would require the secretary of State to report to Congress on actions taken during global negotiations to protect intellectual property rights. In addition, the Kerry bill (S 2835) would direct the secretary of State to set up mechanisms to prevent U.S. climate aid from being spent on activities that undermine “robust” enforcement under international trade law of intellectual property rights for clean technology.

Pro-business groups like the U.S. Chamber of Commerce and the National Association of Manufacturers have been urging U.S. officials to keep patents off the table at Copenhagen.

“In our view,” Mark Esper, executive vice president of the Chamber’s Global Intellectual Property Center, wrote Dec. 8 on the group’s blog, “a Copenhagen Summit with NO mention of [intellectual property] at all is a successful conclusion.”

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