Compulsory Licensing in TRIPS: Chinese and Indian Comparative Advantage in the Manufacture and Exportation of Green Technologies

• Author: Rishi R. Gupta
• Position: J.D. candidate at American University Washington College of Law, class of 2014
• Pages: 21-21

21SPRING 2012

COMPULSORY LICENSING IN TRIPS: CHINESE

AND INDIAN COMPARATIVE ADVANTAGE IN THE

MANUFACTURE AND EXPORTATION OF GREEN

TECHNOLOGIES

by Rishi R. Gupta*

Challengers to the United States’ global inf‌luence, such

as Brazil, China, and India, have criticized heavy pol-

luters like the United States and the United Kingdom

for signif‌icantly contributing to the world’s total carbon emis-

sions but failing to share its green technologies with the rest

of the world.1 Utilizing Rio+20 to redef‌ine Article 31(b) of the

World Trade Organization’s Trade-Related Aspects of Intellec-

tual Property Rights (TRIPS) agreement should create an inter-

national framework for transfer of green technology through

a patent process called compulsory licensing.2 Compulsory

licensing allows a country to bypass a patent and create a

generic copy of a technology by licensing it within its borders.3

Currently, the United States holds the largest number of

patents for green technology in various sectors, including:

wind, solar photovoltaic, concentrated solar power, biomass-

to-electricity, and carbon capture and storage.4 Unfortunately,

given the long statutory periods provided to patent holders and

the high costs of entering the green technology market, these

patents effectively provide the patent holder with a twenty

year monopoly.5 Thus, this intellectual property barrier inhib-

its f‌inancially strapped developing countries from acquiring

the newest and most effective technologies, preventing them

from mitigating the environmental consequences of their rapid

growth.6 At the same time, China and India have a compara-

tive advantage in the manufacturing of green technologies over

companies in the United States and are able to produce these

technologies at much lower costs.7

While a compulsory license typically requires a country to

prove that it attempted and failed to secure a voluntary license,

the TRIPS agreement waives this requirement in cases of

national emergency, circumstances of extreme urgency, or for

public non-commercial use.8 Specif‌ically, the WTO should use

Rio+20 to recognize that greenhouse gas emissions are a cir-

cumstance of “extreme urgency.”9 In 2003 at Doha, the WTO

extended compulsory licenses to the exportation of pharma-

ceuticals, allowing a country with the requisite manufacturing

capacity to obtain a compulsory license to manufacture phar-

maceutical products that alleviate public health problems.10

Brazil and Thailand have used the WTO’s 2003 decision to

spread cheaper AIDS medication and put pressure on patent

holders to decrease their prices.11 This manufacturing and

exportation model of compulsory licensing could be similarly

employed in countries like China and India for transfer and dis-

semination of green technology.12

However, this type of compulsory licensing is often

criticized because of its potential harm to economic growth

in patent holding countries and the expansion of future green

technologies.13 Critics argue that strong patents reward patent

holders for their innovations, thereby incentivizing future inno-

vations in green technology.14 These enforceable patents are

generally regarded as necessary to guarantee prof‌its for the pat-

ent holder.15 Some of this impact would be mitigated, however,

because compulsory licensing requires that the licensor pay

the patent holder adequate remuneration, which typically takes

the form of royalties.16 Moreover, the need for compulsor y

licenses usually arises in countries where the patent holder has

chosen not to make its green technology available, so there is

not a signif‌icant loss in either prof‌its or incentives to innovate

because these countries were already shut out of the market.17

Beyond economics, the environmental impact of compul-

sory green technology licenses in China and India would be

extremely positive for the entire globe. Primarily, technology

transfer through compulsory licensing would speed up global

green technology development by allowing companies in China

and India to begin innovating and improving on cur rently held

patents without having to wait the full twenty years.18 Indeed,

by impeding research and development in China and India,

the current intellectual property regime severely limits the

possibility of follow-on innovations that could lead to further

breakthroughs in the f‌ield.19

The proliferation of advanced green technologies in the

economically developing countries of China, the world’s larg-

est emitter of greenhouse gas emissions, and India, the fourth

largest emitter, would be felt immediately. 20 Other developing

countries could attain greater means to reduce their emissions

because compulsory licensing would signif‌icantly reduce high

start-up costs by allowing China and India to manufacture

signif‌icantly cheaper green technologies.21 Smaller, developing

countries would also see a signif‌icant decrease in the cost of

green technology due to China and India’s cheaper manufactur-

ing capabilities in wind and solar energy. 22

*Rishi R. Gupta is a J.D. candidate at American University Washington College

of Law, class of 2014.

continued on page 54