Addressing the green patent global deadlock through Bayh-Dole reform.

• Author: Ouellette, Lisa Larrimore

Without a global commitment to dramatically reduce greenhouse gas emissions, climate change will very likely cause catastrophic damage in this century. (1) Carbon taxes or cap-and-trade systems are insufficient to produce the necessary emissions reduction; increased green technology research is also critical. (2) Intellectual property (IP) rights can provide an incentive for the development of these technologies, but they can also impede technology dissemination--any climate change treaty must balance this controversial tradeoff between innovation and access. (3)

During climate treaty negotiations, developing countries like China have argued that patents limit their access to green technologies. (4) Based on these submissions, the May 2009 United Nations climate treaty negotiating text contained proposals that weaken IP rights for green technologies. (5) In response, the U.S. House of Representatives passed a bill in June stating that "with respect to the United Nations Framework Convention on Climate Change, the [United States] should prevent any weakening of, and ensure robust compliance with and enforcement of, existing international legal requirements ... for the protection of intellectual property rights related to [green technologies]." (6) Developing countries, however, continue to propose excluding green technologies from patentability and revoking existing green patents. (7) This divide between rich and poor countries over green IP is contributing to the delay in reaching a meaningful climate change treaty. (8)

This Comment argues that the United States could reduce IP-related market inefficiencies and appease its global critics--without changing international IP laws--by making nonpatenting or nonexclusive licenses the default for federally funded technologies. Part I demonstrates that most basic green energy research in the United States, including much of the research at universities and national laboratories, is funded by the federal government. Part II discusses problems with the current patent regime for government-funded research. Part III offers a normative analysis of why a socially responsible policy for government-funded green technologies ought to favor nonpatenting and nonexclusive licenses. Finally, Part IV analyzes possibilities for reform and suggests that even without congressional action, agencies that distribute federal research money could nudge universities toward responsible licensing practices by including these practices in grant evaluation criteria.

1. THE CRITICAL ROLE OF FEDERAL FUNDING IN BASIC GREEN TECHNOLOGY RESEARCH

   Government funding will lead to new green technologies to combat climate change. In 2006, sixty percent of basic research in the United States was funded by the federal government, twenty-one percent was funded directly by universities and other nonprofits, and only fifteen percent was funded by industry. (9) The relative importance of government-funded basic research will increase with rising funding levels. The 2009 stimulus package provided $2 billion for basic science research within the Department of Energy (DOE) and $3 billion for the National Science Foundation

   (NSF), (10) a significant addition to their respective 2009 budgets of $4.77 billion and $5.18 billion. (11) President Obama noted that the Act "represents the biggest increase in basic research funding" in American history, commenting that "we are taking big steps down the road to energy independence, laying the groundwork for new green energy economies." (12)

   Researchers are using this federal funding for basic research projects that might lead to game-changing green technologies, (13) but IP policy could limit the dissemination of these inventions. In 1980, the Bayh-Dole Act clarified that recipients of federal research grants can patent these new technologies "to promote the utilization of inventions arising from federally supported research," (14) and universities and other federally funded entities have begun patenting many of their researchers' discoveries. (15) Many new green technologies will thus be protected by public-sector patents, (16) which can hinder public access to these results, both in the United States and worldwide.

2. PUBLIC SECTOR PATENTS AS IMPEDIMENTS TO GREEN TECHNOLOGIES

   The Bayh-Dole Act has been highly controversial over its nearly thirty-year history. Proponents argue that it has led to economic growth, particularly in the biotechnology industry. (17) Critics counter that Bayh-Dole has negatively affected the practice and norms of science, (18) created "anticommons" problems and contributed to patent hold-ups, (19) and led to unnecessary increases in consumer prices. (20)

   Patents are not needed to motivate university researchers to innovate; instead, the justification for Bayh-Dole patents is that they provide the incentive to commercialize. (21) Under this commercialization theory, corporations need exclusive rights to attract the capital required to turn university inventions into commercial products. As Mark Lemley has noted, however, "the validity of commercialization theory depends a great deal on the industry in question." (22) Patents are certainly not always a prerequisite for commercialization, as many technologies arising from federal research funding were commercialized without patents prior to Bayh-Dole. (23) Exclusive patent rights might be needed in the pharmaceutical and biotechnology industries, given the high cost of gaining FDA approval for a new drug and the low cost of imitation. In engineering fields like green energy, however, although significant capital may be necessary to bring new technologies to market, (24) patents are typically unnecessary for commercialization due to a lower ratio of regulatory barriers to imitation costs, (25) the cumulative nature of innovation, (26) and other methods of obtaining competitive advantage. (27)

   Indeed, even pro-IP reports present no evidence that green patents are necessary for commercialization or for public-sector innovation. A European study argued that green patents provide needed private-sector innovation incentives and that "[patented] technologies are not necessarily more expensive," but it did not argue that patents help commercialization (as opposed to innovation). (28) The U.S. Chamber of Commerce's congressional testimony on IP and global warming similarly focused on the private-sector innovation justification for green patents. (29) Commercialization theory thus fails to justify exclusive patent rights on most government-funded green technologies.

   There is concern, however, that patents actually hinder the spread of these new technologies. Benjamin Sovacool's interviews with energy experts indicated that patents can "prevent, complicate, or delay commercialization" for a wide range of...