Patents & Power: Navigating Intellectual Property in Mitigating Climate Change (Issue VII)
This article is dedicated to the late S. Donald Gonson: the smartest problem-solver, sharpest lawyer, keenest economist, and best granddad I’ve ever known.
While crucial environmental technologies across a number of different sectors continue to advance, topics of exclusivity and ownership come to a head with their social and economic value across the globe. Patents have long existed as a way for inventors to protect their creation and license it out to those demanding the technology they’ve created. Though patents provide an effective way to organize and certify technology by ownership, patents gatekeep some inventions with a higher necessity to the general public, like designs for carbon sequestration, renewable energy, and sustainable transportation. This is not to say that patents and the structure of ownership surrounding them are inherently inefficient; patent systems have led to the successful sharing of ideas credited to their rightful owners, as well as simplifying major disputes between some of the world’s largest inventors and innovators surrounding ownership. However, climate change is worsening around the world, causing record-high temperatures and unpredictable weather events. Greenhouse gases continue to pollute our atmosphere and reduce the quality of life around the world, and forward-thinking technologies aiming to mitigate these effects tend to be protected quickly and extensively. Evidently, it is important to consider the positive and negative impacts of patents and intellectual property laws as they relate to important emerging sustainable technologies. In doing so, the patent system doesn’t emerge as the most significant driver of innovation in environmental technology.
As a quick summary, patents exist to aid inventors in establishing ownership and promoting innovation. A patent is seen as a useful way to take control of the commercial use of an invention or another form of “intellectual property” or “IP” (non-physical property that may have some value in being owned by its creator). The World Intellectual Property Organization (or WIPO) notes that patents help promote innovation and invention, and that “an inventor or small business knows there is a good chance that they will get a return on the time, effort and money they invested in developing a technology” (“Innovation and Intellectual Property” 2022). It is immediately apparent that patents are hugely effective in giving credit where credit is due. Patents are also paramount in driving research and development (R+D), trading ideas as assets, bringing up the value of small businesses, and mapping the flow of technology R+D across time and space (“Innovation and Intellectual Property” 2022). GlobalData (2023) accounts for some emerging environmental technologies that benefit greatly from patents, including:
Renewable Energy: As different forms of renewable energy emerge – like nuclear fission vs. fusion or small modular reactors for nuclear power – patents are being filed to protect critical innovation in the energy space.
Direct Air Capture/Carbon Capture and Storage: New technologies focused on ridding the air of some of the carbon emitted across the globe are being protected at a high rate, and have been for the last 10-20 years.
Transportation: Luxury EV automakers like Tesla and Rivian have been joined by household names like BMW, Hyundai, Ford, Volkswagen, and Kia, among others, to top the list of sustainable automobiles today. Millions of EV patents have been filed across the world while emerging technologies are also being logged, like Musk’s “Hyperloop” or more advanced sustainable bus systems in major cities.
Patents are incredibly useful in mapping research and development in these areas. Patents have been essential in providing exclusive, traceable ownership rights to creators, from startups to large household names like the ones listed above. Patent data is also incredibly valuable for creating a timeline for inventions or other intellectual property. This data is also used to map the process from conception to consumption.
Reading patent trends can provide a good understanding of where environmental technologies currently stand. In each of the areas mentioned above, patent activities can suggest where each of these technologies is currently and where each may be going. For renewable energy, patent activity was highest around 2012-2014, with registration numbers higher than pre-2007/2008 and around the same as that 2-year period (“Patenting Trends in Renewable Energy” 2020). Solar remains the most registered environmental technology from the 2000s through the present day. Because patents normally last 20 years, most of the registered patents are at or a little behind the 10-year mark, meaning that they have around another 10 years before being released to the public. This suggests that renewable energy (mainly solar) has been developed for a number of years and continues to be perfected but at a slower rate, likely due to scale affecting the market for solar. Patents for wind energy continue to increase in registration, suggesting more research in this field. Energy patent registration across the world, and data to map it, can be owed in part to WIPO’s Patent Cooperation Treaty (PCT), which allows for a single application to license “in more than 150 countries,”(“Patenting Trends in Renewable Energy” 2020). For electric vehicles, it’s found that EV patents are mostly “lower quality” (“Electric Vehicle Patent Trends & Technology Trajectory” 2020), suggesting room for improvement in the space, and a market gaining demand after a 2020 low in registration. Automakers looking to release the next revolutionary EV will likely pour money and time into research in the coming years as the electric vehicle market picks up internationally. And for DAC/CCaS, researcher Bingyun Li and his colleagues note the patent landscape suggests a less mature market that will see a great increase in research and development over the coming years, and that “future technology focuses should be on fast CO2 transport kinetics, safety, and cost reduction” (Li et al. 2013).
Unsurprisingly, patents have both negative and positive effects on the development of sustainable technology. These influences boil down to impacts on the research and development timeline of both emerging technologies and access to these technologies.
To begin with some of the positive impacts of patents on sustainable and environmentally-conscious tech, the apparent main value of patents concerns the protection of inventions by creators. This can benefit those producing more specialized products within a larger active market, like electric vehicles. Environmental technologies also can benefit the patent system, including the financial incentive of capitalizing on invention-creation, research, and development (“R&D, Innovation and Patents” n.d.). Finally, another way the patent system positively impacts green technology is by facilitating organized commercialization and scaling up these technologies. This process provides economic and financial incentives to the patent holder, often in the form of higher revenue from the patented invention (Guellec 2007). Thus, protecting IP tends to legitimize the inventions to interested markets and the patent holders themselves.
However, this exclusivity can be damaging to these critical emerging technologies. Patents provide a crucial barrier for entry to smaller companies or smaller countries. Competition in markets is also hindered (“Barriers to Entry” 2022), including but not limited to those focused on or moving towards more environmentally-conscious solutions. For example, most of the present-day environmental technology rollout exists in the US, Europe, and Asia, leaving out some of the more critical areas near the equator and some countries in the global South.
Patents can be a barrier to a “free exchange of ideas” in markets and between researchers; so much so that sharing information related to particular technologies can result in major consequences, as exemplified by the case of the overpricing of pharma (Gubby 2020). In a time when it is so important to roll out critical technology and information to the world, patents can significantly slow this process down. Patents can also limit access to technologies, research, and development as much as the process promotes it. Some environmental scientists may not have the same extent of access to patented works when compared to less protected technologies and may have trouble advancing vital research for new sustainable inventions.
Patents can also keep technology that may benefit from scale priced high, behind a hefty contract or a royalty. Tur-Sinai (2018) notes in “Patents and Climate Change: A Skeptic’s View” that “market demand for environmental technologies tends to underrepresent their social value” and that “patents cannot serve as an effective [incentive] in this domain.” A mismatch between market demand and social necessities reveals that patents may not serve as the powerful incentive to research that WIPO claims it to be.
So, the question becomes: how can we look to maximize the positive effects of driving research and development while mitigating some of the negative externalities, such as barriers to access for smaller entities and crucial research efforts? Within the existing patent system, some simple, high-level solutions might include lowering royalty rates, upping maintenance fees for the registrant, and limiting the area of registration or the length of the patent’s validity. Lowering royalty rates is helpful in decreasing the barrier to entry for smaller entities, allowing them to access the technology at a lower cost per unit, while simultaneously increasing the maintenance fee for certain applications could be a valuable incentive to help the registrant reconsider exclusivity for a more impactful technology. Limiting the area of registration (several countries’ registration individually vs. 150 countries through the PCT) may allow smaller countries to perform vital research on energy and carbon capture without having to worry as much about exclusivity. Decreasing the length of the validity of the patent would allow for the public domain to access an essential sustainable technology much sooner. In addition to these solutions, Tur-Sinai (2018) suggests that an answer within the patent system for correcting the mismatch between social need and market demand could include “looking beyond IP and increasing the use of other incentive mechanisms, including prizes and research subsidies” and “integrating into innovation policy” measures like command-and-control regulation, cap-and-trade/carbon tax, and better dissemination of information. In reality, the US Patent and Trademark Office (or USPTO) rolled out the Climate Change Mitigation Pilot Program last year (2022), detailing quicker vetting of patent applications for “technologies that mitigate climate change by reducing greenhouse gas emissions” (“USPTO Announces Launch of Climate Change Mitigation Pilot Program” 2022). Hopefully, the necessity of sustainable technologies, in combination with this pilot program, will mean faster development for renewable tech and an incentive for future development. Aided by necessary considerations of greater access to researchers and countries around the world and in equating market pricing with social value, this pilot program and investment in sustainability by big names like SpaceX, ExxonMobil, and even governments, may lead us to a sustainable and innovative, yet equitable, future across the globe.
References:
“Barriers to Entry.” 2022. Corporate Finance Institute. November 29, 2022. https://corporatefinanceinstitute.com/resources/economics/barriers-to-entry/.
“Electric Vehicle Patent Trends & Technology Trajectory.” 2020. InQuartik. August 2020. https://www.inquartik.com/blog/trends-electric-vehicle-patent-trends-chassis/.
Gubby, Helen. 2020. “Is the Patent System a Barrier to Inclusive Prosperity? The Biomedical Perspective.” Global Policy 11 (1): 46–55. https://doi.org/10.1111/1758-5899.12730.
Guellec, Dominique. 2007. “Patents as an Incentive to Innovate.” In The Economics of the European Patent System, by Dominique Guellec and Bruno van Pottelsberghe de la Potterie, 1st ed., 46–84. Oxford University PressOxford. https://doi.org/10.1093/acprof:oso/9780199216987.003.0003.
“Innovation and Intellectual Property.” 2022. 2022. https://www.wipo.int/ip-outreach/en/ipday/2017/innovation_and_intellectual_property.html.
Li, Bingyun, Yuhua Duan, David Luebke, and Bryan Morreale. 2013. “Advances in CO2 Capture Technology: A Patent Review.” Applied Energy 102 (February): 1439–47. https://doi.org/10.1016/j.apenergy.2012.09.009.
“Patenting Trends in Renewable Energy.” 2020. WIPO Magazine. March 2020. https://www.wipo.int/wipo_magazine/en/2020/01/article_0008.html.
“R&D, Innovation and Patents.” n.d. Accessed February 8, 2023. https://www.wipo.int/patent-law/en/developments/research.html.
“Rise in Number of Green Patents - GlobalData.” 2023. 2023. https://www.globaldata.com/esg/environment/patents/signals/.
Tur-Sinai, Ofer. 2018. “Patents and Climate Change: A Skeptic’s View.” Environmental Law 48 (1): 211–61. https://www.jstor.org/stable/44633536.
“USPTO Announces Launch of Climate Change Mitigation Pilot Program.” 2022. Text. June 3, 2022. https://www.uspto.gov/about-us/news-updates/uspto-announces-launch-climate-change-mitigation-pilot-program.