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
 
CONTENT
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