Sustainable Technological Development. The Battle over Intellectual Property

Olena O. Hladyuk – Associate, Sergii Koziakov & Partners
#04 April 2011 Ukrainian Journal of Business Law (UJBL)

“Sustainable Technological Development. The Battle over Intellectual Property”

Today, innovation policy plays a key role in handling many global environmental problems. It affects the development and dissemination of technical decisions to respond to the complex challenges posed by climate change.

So-called “Sustainable Technological Development” has enormous importance in a wide range of areas, from Synthetic Biology to Nanotechnology. However, in these areas, international efforts to mitigate the implications of climate change collide with the interests of those who lobby for the full patent protection of intellectual property. In other words, the extensive high-tech business development runs up against those whose interests are directly linked to its monopoly.

According to international organizations interested in climate change mitigation, the resolution of the issue of technology transfer is the key to successful negotiation in this regard. However, the company which owns the patents on high-tech development, fear that international climate change negotiations, taking place under the auspices of the United Nations, would undermine their position on exclusive ownership of patents.

High-tech businesses want to ensure that patent rights have an absolute supremacy and worry that actions of environmental groups would break the order of things which they have received under the World Trade Organization (WTO).

WTO as an organization, which aims to promote “free trade”, is quite influential in all matters relating to trade policies of member countries. However, on the protection of patents in the industry of high-tech research, aimed at mitigating the implications of climate change, it is the most costly form of protectionism in the world. WTO rules on Trade-Related Aspects of Intellectual Property Rights (TRIPS) are a glaring example of this. These rules are intended to enforce patents and copyrights serious high-tech businesses worldwide, thus forced to respect the intellectual property patent protection in this sector.
In the pharmaceutical industry, where in order to limit the patent monopoly the World Trade Organization uses the institution of “compulsory license”, the situation is quite different. This institution provides a balance between the interests of society and the patent owner and does not allow a situation where the public interests remain outstanding through the restrictions imposed by the patent owner.

The European Parliament has repeatedly proposed to explore the possibility of amending the WTO agreement on Trade-Related Aspects of Intellectual Property Rights, in order to recognize the compulsory license “environmentally necessary”. But a significant obstacle to the transfer of Environmentally Sound Technologies (ESTs) is the low level of protection of intellectual property rights in some developing countries.

WIPO’s contribution to solving the problem of Sustainable Technological Development

At the beginning of this year, the World Intellectual Property Organization (WIPO) appointed the Conference on Innovation and Climate Change. Previously, in September 2008 Geneva hosted the thirty-sixth (18th extraordinary) Session of the General Assembly of WIPO. The report on the results of this Session focused inter alia on Sustainable Technological Development.

The Delegation of Ukraine, endorsing the statement made ??by the Delegation of the Russian Federation on behalf of the Group of Eastern Europe, Caucasus and Central Asia (Group), noted the gravity of the issue of technology transfer for climate change mitigation.

The Group particularly noted the necessity of WIPO’s (Organization) substantial contribution to the Sustainable Technological Development. Commending the work of the newly created Committee on Intellectual Property and Development, it hoped that the implementation of the proposals agreed during its work would enable the Organization, within its mandate, to achieve concrete results.

Noting the importance of continuing the work of the Standing Committee on Patent Law (Committee), the Group stated “the necessity of identification the mechanisms that enable countries — not only those who generate knowledge, but also those who want to develop their economy based on qualitatively new technological knowledge – to develop regulatory standards of patent law to significantly facilitate the process of technology transfer and ensure the implementation of new technologies and new facilities and advances in science and technology in the economies of these countries”.

The Group drew particular attention to the growing number of abuses in the patent field, which impede the implementation of innovations in the economy, and proposed to put a powerful barrier of “patent trolls” and “trademark clones” because the abuse of law inhibits economic development.

Aggressive ways to abuse of patent rights in high-tech industry

The system of patent law in the high-tech industry is designed to facilitate the development and dissemination of new technical decisions to mitigate the implications of climate change. Its goal is to create favorable conditions for innovation and transfer of Environmentally Sound Technologies, including the establishment of a commercial return on investment in their development.

In Ukraine due to lack of funding for research institutes and the almost complete absence of market commercialization the highest achievements of our scientists, the patents on high-tech designs received by foreign companies. In fact: if the developers of new technologies are unable to implement them, the patents on these designs purchased by so-called “Patent Trolls” (Non-Manufacturing Patentees or Patent Marketers). Patent Trolls are specialized firms whose activities are not to design and manufacture of new technologies but acquire of the relatively low price of patents on existing designs. Thus, a patent trolls have a portfolio of patents for designs that are most in demand.

“Patent trolls” inflict the greatest harm to innovation and technology transfer. Using patents these firms not only block the unauthorized use of their designs, they wait until large firms will start to use it in their activities and in the most active phase of using they file a lawsuits against violators.

A typical method of patent troll is filing applications for various promising options for technology development, formulated in the most general and imprecise manner. The next step is to wait until someone actually invents a technology, and then, as usual – filing a lawsuit. This is so-called “Blocking Patents» (Umbrella Patents), the owner of which is a potential patent troll.

A glaring example of patent troll can be called the American company Intellectual Ventures. This is a private company, seeks to invest in “pure invention”. But this company’s business model raises questions about its real purposes. On the one hand, by the efforts of Intellectual Ventures was published best-selling book “SuperFreakonomics”, which calls to deal with problems, caused by global climate change. On the other hand – Intellectual Ventures as a patent troll, which has a large portfolio of patents, is blocking the technology transfer, causing irreparable harm to the ecological situation worldwide.
Thus, under the pretext of combating the effects of climate change, patent trolls actually monopolize the sector of high-tech designs. As a result, “status quo” existed between the patent protection of high-tech designs and technology transfer is not in the interest of those companies that are unable to withstand patent-based power of hi-tech market Giants.

Therefore, to ensure environmental security around the world, the patent protection and copyright monopolies should not create obstacles to the development and transfer of new Environmentally Sound Technologies.