Tech-Transfer of IPRs in the Domain of Climate Change

Posted On December 24, 2020December 24, 2020

Technological exploration has cost heavily on civilization, and to its rescue, green-technology used in tandem with international cooperation is the only answer. The United Nations Framework Convention on Climate Change (UNFCCC) is an example of collaborative initiatives to curb climate change. There are environmental-friendly technical solutions available in some countries, majorly the first-world countries, but as we know, climate change is not a country-specific issue. Extension of support at all levels beyond traditional borders is a must, and it is here where technology transfer plays a massive role.

What is Tech-Transfer?

To begin with, technology transfer (TT) is the process wherein a particular technology is transferred from the proprietor of the invention to another person/organization/entity. This effort of sharing may include the technology itself, the know-how, skill, knowledge, or any other facility to promote better exploitation of it, which means it is not a mere transfer of hardware or Intellectual Property (IP) assets, but also the craft analogous to such hardware, i.e., the know-how and show-how. The same can be horizontal or vertical.

Vertical transfer means the transfer of products by granting the right to manufacture or by licensing it. Horizontal transfer is more elaborate since it involves joint ventures or cooperation between different stakeholders. What we are addressing here is the horizontal transfer between different governments – usually from developed to developing countries – to cut the cost and ensure better support.

How does the Tech-Transfer of IP Assets Take Place?

They may differ for a different organization but to lay a simple step-by-step mechanism of technology transfer, the following can be followed-up with:-

1. Disclosure of Invention: The disclosure contains the details of an invention along with its novel aspects, the inventive step, and the applicability of the invention.
2. Evaluation: The said technology is evaluated based on its potential commercial value. The evaluation would also depend on the capability of it being converted into an IP asset or being used without any registration of Intellectual Property Rights (IPRs).
3. Protection: After due consultation, the decision to secure a Patent Right is taken. The same would require incurring the cost of registration and also maintenance fees, in some cases, after successful enforcement is made.
4. Commercialization: Once the IP is secured in an exclusive proprietor, the same can be marketed by identifying suitable channels of trade.
5. Negotiation: This is when a third-party is inclined towards the invention and wants to make use of the same by utilizing it within the defined limits set by the proprietor.
6. License: The same is then licensed as a part of further commercialization, the revenue from which may be utilized for reinvesting purposes to build on additional features of the same technology or a new technology altogether.

Such transfer of technology exceeding borders can be availed through channels of international trade to ensure the diffusion of user-friendly technology to the environment. IP, namely, patents, can be effectively absorbed depending on the pricing structure and nature of policies containing the terms of operation. Imitation and reverse-engineering can be difficult as well as time-consuming. Therefore, the tech-transfer of such IP assets is a viable option to avoid such practices.

Technology Transfer and Intellectual Property

Technology transfer is relatively dependent on the nature of the IP regime followed in the participating states to a transaction. The higher the degree of protection of the IP is offered in a receiving party, the greater are its consequences. Such a state’s IP-policy can be a hindrance in both, transfer of technology and capacity building. Therefore, it is generally argued that IPRs reduce the flow of patented technology from developed to developing counties. However, it may not always be so. Strong IPRs might mean an increased market power and market flow.

However, there is a north (developed countries); and south (developing countries) divide when it comes to the absorption of transferred IP through TT. Hence, what TT of a certain IP asset may mean something for the north, may not be for the south.

IPR protection in the south may facilitate tech-transfer through two different channels: Informal and formal. Informal channels include imitation and reverse engineering, which is also prevalent in Japan, South Korea, and Taiwan. If strong IP laws are guaranteed, it may affect this channel. Therefore, the impact of IP on tech-transfer will depend on country-specific factors like technical endowments across different sectors of trade. IP plays a crucial role, and so does the policy because the transfer can be made, but its adoption and implementation will depend on the nature of IP.

Important International Agreements and Conventions

The most fundamental is the UNFCCC (United Nations Framework Convention on Climate Change). In its article 4.5 and 4.7, a clear statement of transfer of technology can be observed. Article 4.5 states that developed countries shall take the initiatives to ‘promote/facilitate/finance’ the transfer/access of Environmentally Sound Technologies (ESTs) and know-how. Article 66.2 of the TRIPS Agreement also provides for the obligation imposed on developed economies to take measures to promote and encourage TT to Least Developed Countries (LDCs).

Out of one such COP in 2010 emerged two important international bodies:

• Technology Executive Committee (TEC): It analyses policies and provides suggestions to support countries in their efforts to adopt ESTs.
• Climate Technology Centre and Network (CTCN): It helps in the implementation of policies, projects, and programs by extending technical assistance, knowledge surrounding the technology, and helping collaborate with other stakeholders. In 2019, it received 240% more requests than earlier.

Merits of Technology Transfer for Developing Countries

To prevent climate change and foster innovation, all require a strong economic footing and recourses as well. Developing countries often lack sophisticated patented technologies to tackle these issues and are, therefore, observed to be dependent on primitive or obsolete technologies, which may cost heavily on the environment. An enabled TT mechanism to facilitate the better reach of such environment-friendly technology is crucial for a holistic climate action plan. China is observed to have benefited from such technical support from first-world nations like Germany, Denmark, and the United States. Such TT also helps in capacity-building, which is the reason why China is doing so well in the solar manufacturing industry.

Tech-Transfer can be of great benefit to developing nations through embracing the following three stages:-

1. Initiation Stage: Technology is imported and stationed.
2. Internalization Stage: There is the adoption of technology through learning and imitation.
3. Generation Stage: Developing technology through R&D initiatives.

Another merit can be realized in the form of ‘karma’ – if you eat, you shall pay the bill. The contribution of developed countries in emissions cannot be denied since the time of the industrial revolution. The developing countries’ liability cannot be based on the same footing, and, therefore, developed countries shall now meet their commitments by directing their recourses in the form of innovation and information to developing countries. It is called the principle of CBDR (common but differentiated responsibility), which can be a win-win game for all.

It has also been observed that while firms share their IP assets, the transfer of technology could lead to spillover benefits due to technology leaking. Where this may be seen as beneficial, it can also hamper the IP-atmosphere by discouraging innovation. The same can be due to a lack of incentive and the easy availability of technology through TT. It also leads to the draining of a country’s financial recourses, which in the long run, may not be a good thing.

Barriers to Technology Transfer

The transfer of technology includes the involvement of several stakeholders and also a smooth transition at all levels. Ensuring undisrupted transfer can be quite a herculean task, and many barriers may prevent the same. Let us identify a few of these issues:

1. Financial Barriers: There is a financial constraint in investing in such technologies due to lack of precedent knowledge as there is no history of such technologies to enable evaluation. Also, there is a lack of information on new technologies and their capabilities. Often, the risk is considered not worth it.
2. Technical Barriers: These are the ones that are specific to a particular trade/sector like agriculture, energy, etc. Each sector faces different issues of R&D cost, the cost of modeling development, lack of inter-sector TT, and so on. An example of this can be adoption costs as well; for instance, to adapt to the ‘matured bio-technologies’ from Sweden, Norway, and Denmark, India had to carry its R&D to meet customized needs. It is an additional cost, which may earlier have been unforeseen.
3. IP Barriers: The access to technology is often hindered due to barriers created by the strong IP laws of the countries capable of providing such access to technology. How does that happen? The rights holder enjoys the monopoly granted through securing patent rights, which discourage the R&D efforts of developing countries as the cost of utilizing it is, generally, exorbitant (royalty/license fee). Even if the transfer occurs, imposing unreasonable restrictions or conditions can make it arduous to adopt the socio-techno benefits ensuing from it to the fullest at the cost of national resources and foreign exchange of the developing country. Let’s take a few examples to clarify this standpoint.

• FM-200, a chemical substitute for halon-1301 for fire protectant goodies, was patented by a US proprietor, which imposed a condition on licensees to satisfy certain design and safety requirements, which after much effort, only enterprises in the US, UK, and Australia could obtain preventing access of Indian firms.
• A sizable number of proprietors operating in partnership in Korea with the US and Japan do not allow transfer or consignment of the technology to any third party.
• To replace harmful CFCs in refrigeration, Indian companies requested TT from US companies owning such replacement technology, which was delivered at a very exorbitant cost of US$25 million.

4. Other Barriers: These may occur in the form of lack of capacity/ mode to facilitate the transfer, the adverse nature of technology, etc.

Concluding Remarks and Suggestions for Enhancement of TT

The many ways in which tech-transfer can take place to prevent the barriers created by monopoly rights through granting patents and other rights surrounding IP are as follows:

1. Voluntary Licenses: The scope and ambit of voluntary licenses should be reflected in the national legislation by adopting international standards and principles like the FRAND terms to ensure equitable benefits.
2. Compulsory Licenses: These are much in trend for the dissemination of pharmaceutical drugs, but the same should be adopted for other forms of technologies that may curb climate change.
3. TRIPS and other Flexibilities: These include the aspects mentioned below:

• WTO Declaration on Patents and Climate Technology can be put into the picture to ensure TT of environment-friendly technology.
• As also proposed by India, green-technologies should be exempted from securing patent rights in furtherance of the greater good. A similar approach was identified by G77 countries, which stated that if IPR requirements are not relaxed, it will affect the access to EST to developing nations.
• Having an effective global IP pool to ensure that all countries alike can make use of technologies at a reasonable rate of interest upon standard terms can be a good initiative.
• International cooperation through networking to ensure the transfer of know-how, operational procedures, and skills can prove to be beneficial.
• Publicly-funded development of technology should be made available at a free/minimum cost. For instance, the US National Institutes of Health (NIH) makes it mandatory to make their publications publicly available within 12 months through the National Library of Medicine.

4. Separate Technology Verticals: Different technologies are at different stages of development, and therefore, each sector should be treated differently to provide for a suitable TT mechanism. For instance, China has segregated technology by embracing renewable energy into three parts to give each segment its due attention. ✅ For more visit: https://www.kashishipr.com/