[A2k] Submission of Ecuador to the WTO TRIPS Council: Contribution of Intellectual Property to Facilitating the Transfer of Environmentally Rational Technology

Thiru Balasubramaniam thiru at keionline.org
Sat Jun 8 02:14:31 PDT 2013







1.     The opening paragraph of the preamble to Marrakesh Agreement
Establishing the World Trade Organization (WTO) lists among the guiding
principles and objectives of the world trading system the objective of
sustainable development together with the protection and preservation of
the environment. It also recognizes that the multilateral trading system
should take into account the Members' asymmetries and different levels of
development. Members reiterated their commitment to these principles at the
WTO's Fourth Ministerial Conference, in paragraph 6 of the Doha Ministerial
Declaration. Hence the Doha mandates also stress the importance
of appropriate coordination between the WTO Agreements and the multilateral
environmental agreements (MEAs), as well as the Members' right to promote
and protect the environment. The Doha Declaration provides, in paragraph
31(i), for the opening of negotiations on the relationship between existing
WTO rules and specific trade obligations set out in multilateral
environmental agreements, while in paragraph 33 it recognizes the
importance of technical assistance and capacity building in the field of
trade and environment to developing countries.

2.     Likewise, in the preamble to the Agreement on Trade-Related Aspects
of Intellectual Property Rights, Members refer twice to the promotion of
technology transfer to developing countries. Furthermore, the provisions on
the basic objectives 1 and principles 2 of the TRIPS Agreement recognize
the need for the development and transfer of technology in order to create
sound and viable technological foundations for protecting public health and
nutrition and to promote the public interest in sectors of vital importance
to their socio-economic and technological development. In addition, in both
letter and spirit these provisions seek to preserve a balance of rights
and obligations between intellectual property producers and consumers, and
recognize the Members' right to adopt multilateral joint measures and
mechanisms in order to "prevent the abuse of intellectual property rights
by right holders or the resort to practices which unreasonably restrain
trade or adversely affect the international transfer of technology". 3


3.     The issue of technology and its transfer is a fundamental aspect of
the fight against climate change and adaptation to and mitigation of its
harmful effects. Hence the timely dissemination and transfer of technology
are essential for achieving that objective, and consequently one of the
major challenges facing the international community in its response to this
problem. 4

4.     The issue of intellectual property rights and the debate over
technological cooperation is becoming a fundamental aspect of how best to
adapt to and combat the harmful effects of climate change, particularly for
developing countries. Discussions in forums concerned with environmental
protection and preservation highlight the fact that lack of information and
excessive protection, inappropriate enforcement and abuse of intellectual
property rights, and particularly patents, without any consideration for
effectively fostering "… social and economic welfare and … a balance of
rights and obligations" between producers and users, 5 can constitute
a kind of barrier to access to this kind of technology, particularly for
developing countries. 6

5.     This is because they create an exclusive exploitation right for the
holder of the invention (product or process) within a specified territory
and for a specific period of time, which occasionally creates a
monopolistic situation characterised by high prices and a restriction of
the dissemination of knowledge for adaptation and use of
environmentally-sound technology (EST) . There are therefore grounds for
arguing that the question of intellectual property rights should also be
included in the discussions on mechanisms for the transfer of ESTs. 7

6.     We believe that this is a valid argument, and therefore share some
ideas on the options that could be considered with regard to intellectual
property rights and climate change in the context of the international
trading system, such as: automatic granting of rights through voluntary
licensing, use of the TRIPS flexibilities, and regulating licensing
costs, inter alia. It is unfortunately the case that the increased
difficulties of access to renewable energy technologies, i.e. ESTs, are
reflected in the restrictive conditions and limitations imposed on
acquiring and implementing them, as seen in the imposition of linked
clauses, retrocession provisions, export prohibitions and so forth. 8

7.     When considering the principle of common but differentiated
responsibilities, development priorities, objectives and circumstances, the
countries parties to the United Nations Framework Convention on Climate
Change (UNFCCC), most of whom are WTO Members, undertook, in Article 4.1 of
the Convention, to promote and cooperate in the development, application
and diffusion, including transfer, of technologies, practices and processes
that control, reduce or prevent emissions of greenhouse gases. It should be
emphasized in this connection that despite this affirmation and the
recognition in this context of the importance of promoting transfer of
ESTs, in the preparatory work for the Cancún Conference and the
negotiations during the Conference on Climate Change on 29 November
2010 participants were unable to agree on a proposal submitted by a number
of developing countries, including Ecuador for the inclusion
of intellectual property provisions in the document. The thrust of the
proposal was basically that the countries parties to the Convention should
agree on action to exclude ESTs from intellectual property rights
protection and fully facilitate the implementation of the "flexibilities"
in the TRIPS Agreement, particularly in the case of the more vulnerable
developing countries. This failure was in particular the result of strong
opposition from the developed countries, led by the United States.

8.     Furthermore, in this context the United Nations General Assembly has
adopted several resolutions on "Protection of Global Climate for Present
and Future Generations of Mankind" 9 and "Promotion of New and Renewable
Sources of Energy" 10 in which it both reaffirms the international
community's commitment to the UNFCCC objective of stabilising greenhouse
gas concentrations in the atmosphere at a level that would prevent
dangerous anthropogenic interference in the ecosystem, and also recognizes
the fundamental role played by innovative renewable energy technologies in
combating and alleviating climate change and its harmful effects.
It therefore calls on the international community and the United Nations
system to raise awareness with regard to greater support for such
technologies, and highlights the importance of continuing the consideration
of this major issue and the need to create at all levels the conditions for
their promotion and use, including measures to improve access to them.

9.     During the United Nations Conference on Sustainable Development in
June 2012, the international community evaluated the progress made in
development and use of new and renewable sources of energy and related
technologies. The Conference addressed two fundamental issues that have a
bearing on the subject of this Communication: (a) the green economy in the
context of sustainable development and poverty eradication, and (b) the
institutional framework for sustainable development. Thus, Member States
affirmed that green economy policies should reduce the technological
dependence of developing countries and contribute to closing the
current technological gap between developed and developing
countries; 11 and recognized the fundamental role played by the transfer
of renewable energy technologies for sustainable development, poverty
eradication, as well as the major challenges and obstacles
facing developing countries in accessing, adopting and using such
technologies, particularly in combating, adapting to and mitigating
the harmful effects of climate change. 12

10.     Accordingly, Ecuador submits this Communication as a contribution
by the multilateral trading system to global strategies to enhance access
to clean energy, increase energy efficiency and accelerate worldwide
implementation of renewable energy technologies from the standpoint of
intellectual property. It puts forward considerations for Members to assess
the benefits of eliminating or reducing the existing restrictions or
barriers and facilitating access to and use of ESTs in the WTO, and
specifically in the Council for Trade-Related Intellectual Property Rights.

11.     By way of example, according to World Bank data the cost of
royalties and licences for the use of intellectual property rights
is increasing rapidly: world flows rose from US$135 billion in 2005 to
reach US$245 billion in 2010. The bulk of these royalties went to the
United States (42%), the European Union (36%), Japan (10%) and Switzerland
(7%), while most developing countries are net importers, that is to say
payers, of royalties and licences. 13

12.     Thus, if the OECD countries represent 78% of total research and
development spending while Asia (excluding Japan) accounts for 19%, Latin
America 2.4%, the Near and Middle East 1.2%, and Africa 0.7%, then, as
Correa puts it, 14 "the world distribution of research and development
budgets is indicative of one of the most dramatic asymmetries" existing
between developed countries and developing countries in the sphere of
technological development in general and ESTs in particular. Moreover,
specifically with regard to ESTs, the available information indicates that
most patents granted for such technologies belong to firms based in North
America, Western Europe and Japan. 15 All in all, OECD data indicates that
in 2005 the European Union accounted for 36.7% of renewable energy patents,
the United States 20.2% and Japan 19.8%, compared with 2.9% for China and
2.3% for Korea. 16

13.     As a Communication from China and India 17 to the WTO Committee on
Trade and Environment (CTE) has already highlighted, intellectual property
rights must not become a barrier for transfer of technology to developing
countries. There must also be coordination and cooperation between
developed countries and the private sector linked with the creation and
diffusion of ESTs to facilitate and assist in combating climate change and
adaptation and/or mitigation of its harmful effects, particularly as
regards technologies designed to reduce and/or eliminate the harmful
accumulation of CO2.

14.     To this end, there must be genuine, real international cooperation
that takes the form of fair and balanced trade between countries leading to
the creation of fair and reasonable patterns of use and trade of new
technologies in the context of a successful green-economy revolution to
which we aspire. 18 It is therefore essential to reorient the world
intellectual property regime in the context of adaptation and/or mitigation
of the harmful effects of climate change, assuming that there is a real
intention to support the efforts of the most vulnerable developing
countries to adapt and to mitigate those effects. 19 The WTO Agreement on
Trade-Related Aspects of Intellectual Property Rights is the cornerstone of
multilateral intellectual property standards and therefore the
most important of the international instruments in this field.

15.     Finally, in the case of environmentally sound technologies linked
to adaptation and/or mitigation of climate change caused by CO2, we
consider that these must be considered a "public good" 20 since by their
nature and purpose they seek to promote global social welfare through
adaptation and/or mitigation of the effects of climate change. This welfare
is reflected in the adoption of government "public policies" designed to
establish remedies and solutions for reducing and/or eliminating the causes
of climate change in the context of promoting public and environmental
health. 21 Such public policy elements were endorsed in the Doha
Declaration on the TRIPS Agreement and Public Health, which states that the
TRIPS Agreement "… does not and should not prevent Members from
taking measures to protect public health". 22


16.     The evaluation and possible revision of the framework for the
protection of intellectual property rights for technological
applications would be one of the most important options for developing
countries with regard to climate change. The aim is, firstly, to reaffirm
the existing flexibilities in the TRIPS Agreement in connection with ESTs,
and secondly, to initiate a process of evaluation to enhance
the flexibility of disciplines on patentability of ESTs, whose use could
produce considerable environmental benefits, thus constituting
efficient tools for effective adaptation and/or mitigation as part of
developing countries' climate change strategies.

17.     As mentioned above, the objectives of this Communication are:

a.   reaffirmation of the existing flexibilities in the TRIPS Agreement so
that Members use them in connection with ESTs, for example through a
declaration addressing flexibilities in the TRIPS Agreement, climate change
and access to ESTs;

b.   initiation of a review of Article 31 of the TRIPS Agreement to
determine which of its provisions may excessively restrict access to and
dissemination of ESTs, and particularly its paragraph (f) and the need to
include provisions on, as the case may be, the transfer of expertise or
know-how to implement compulsory licences;

c.   evaluation of the regulation of voluntary licensing and the conditions
thereof from the standpoint of the most pressing needs of the most
vulnerable developing countries in relation to adaptation to and mitigation
of climate change;

d.   recognition that adaptation to and/or mitigation of the harmful
effects of climate change should be assimilated to the concept of "public
interest", with the adoption of a provision authorizing exemption from
patentability, on a case-by-case basis, for inventions whose exploitation
is vital for the diffusion of ESTs needed for adaptation and/or mitigation
of climate change;

e.   evaluation of Article 33 of the TRIPS Agreement to establish a special
reduction in the term of protection for a patent of [X] years in order to
facilitate free access to specific patented ESTs for adaptation and/or
mitigation of the effects of climate change because of urgent need in the
public interest; and

f.   inclusion of a mechanism in the TRIPS Agreement to promote open and
adaptable technology licensing for results obtained from research into
climate change and ESTs financed through public funds.

In the light of the above points, the application of new flexibilities
included in the TRIPS Agreement would be understood to be only in favour of
the vulnerable developing countries and least developed countries.

18.     It is thus now a question of the WTO, through the TRIPS Council,
considering and discussing the concepts outlined above in order to identify
the most appropriate mechanisms for effectively promoting and facilitating
access by developing countries to technologies applicable for combating
climate change and environmental harm. These flexibility criteria are
directly related to the protection of human, animal or plant life, 23 owing
to the developing and least developed countries' vulnerability to the
adverse effects of climate change.

19.     For the assertion that "intellectual property rights" guarantee the
promotion of innovation and promote the timely and widespread dissemination
of the industrial applications of such innovations is questionable. 24 What
is clear, however, is that for many countries, especially the most
vulnerable countries in which ESTs are most needed for adaptation and/or
mitigation of climate change, it may plausibly be asserted that the patent
system as currently designed can restrict the dissemination of such
technologies through monopolization or abuse of exploitation rights by
right holders or excessive additional costs resulting from payment of
royalties for voluntary licensing of ESTs.


20.     To summarize, the foregoing considerations establish a reference
framework for launching a discussion and provide the opportunity for
defining this issue in relation to the existing "serious environmental
harm" 25 that the world ecosystem is currently suffering, in the light of
scientific findings on the planet's capacity to effectively reverse the
effects which the accumulation of CO2 could have on the atmosphere, through
the use of ecologically rational technologies by developing countries.
While there is now some degree of international regulation of global
environmental damage, as regards climate change, we do not yet have a
binding and enforceable normative reference framework to identify
unauthorized atmospheric emissions as environmental harm and sanction them

21.     It is important to recognize that although the question of climate
change falls within the purview of the United Nations Framework Convention
on Climate Change, it is closely linked with the WTO through the
trade-related effects of response measures. Hence, it should be stressed
that the crosscutting between technology transfer and intellectual property
rights falls under the TRIPS Agreement, highlighting the need for
cooperation and consistency in the actions of both international forums. We
should therefore consider the elements outlined above with a view to
eliminating or reducing restrictions or barriers to access to ESTs, and
consequently facilitating their use by the vulnerable developing countries
and least developed countries.

22.     For this purpose the TRIPS Council could base its work on past
experience that made it possible to achieve a broad consensus on issues of
common interest going beyond purely economic considerations and focusing on
world "public goods" based on the needs of "public interest" and the policy
spaces for tackling situations of force majeure, as is the case of action
to adapt to and/or mitigate the effects of climate change.

23.     Finally, in emulating these positive practices we could consider
adopting at the Bali Ministerial Conference a declaration in which Members
would enshrine the principle that "nothing in the TRIPS Agreement can
minimize or impair the flexibilities provided for in that Agreement, nor
prevent or limit Members taking measures they consider necessary to protect
their population from the effects of climate change and to make use of
"environmentally sound technologies".

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