Climate Change Related Technology Transfer

Climate Change Related Technology Transfer Ma Zhongfa Professor of Fudan Law School November 9th, 2015 1

CONTENT 1.Introduction 2.The Provisions on Technology Transfer in Related International Treaties 3.Defects of the Current legal system on Green Technology Transfer and the Reasons 4.Ways to Improve the Legal Regime on Green Technology Transfer 5. Conclusion 2

INTRODUCTION Environmental pollution (EP) and climate change (CC) are two of the most serious challenges for human beings, which international community has taken seriously since 1970s. EP and CC are the results of economic development since the Industrialization Revolution in 18 th century and they are mainly caused by human s inappropriate utilization of technologies. Basically, the solution to tackle the problems relies on green technologies Due to imbalance and uneven level of technologies in different regions and countries, green technology transfer (GTT) is unavoidable. Most of green technologies exist in form of certain types of intellectual property (IP) rights. GTT in the context of EP and CC involves the presence of a "double externality": EP and CC are typical examples of negative externality while technologies are the typical cases of the positive externality. The key issue is how to take advantages of green technologies in form of IPRs to contain the pollution---through GTT to setoff the negative externality of EP and CC. 3

ENVIRONMENTAL POLLUTION The litter problem on the coast of Guyana, 2010 Air pollution in the US, 1973 4

GLOBAL WARMING 5

GENERAL SURVEY OF INTERNATIONAL REGIME ON TT Up to now, there s been no universal treaty on international technology transfer (ITT) The provisions on ITT are scattered throughout treaties and other documents. There are many METs/MEAs, declarations or other instruments developed at international environmental protection conferences in which ITT has been provided. However, the provisions on ITT are generally soft law, for it is very difficult to enforce them. 6

BIG ISSUE ON RELATIONSHIP BETWEEN IP AND TT Some studies show that the current IP regime is a barrier to TT. Some demonstrate that IP is not. Others say that there is no clear evidence to illustrate that IP regime is a barrier or an incentive. IP regimes based on national levels will encourage the innovation and the development of green technologies, and further transfer and diffuse of such technologies: To LDC, it s of no use to strengthen strong IP protection; To developing countries with a little technical capacity, it s reasonable to establish a little stronger IP regime. Proper TT on the basis of reasonable and fair terms can help IP holders gain their profits and give full play of technologies. 7

2. THE PROVISIONS ON EST TRANSFER IN INTERNATIONAL TREATIES CONCERNING TECHNOLOGY TRANSFER Provisions on EST transfer UNDER WTO Framework: TRIPS Agreement Article 7: one objective of IP regime to promote technological innovation,tt, and dissemination of technology Article 8: one principle---it shall not unreasonably restrain trade or adversely affect the international transfer of technology Art. 31 Compulsory licensing: in the case of public health, or a national emergency or other circums. of extreme urgency or in cases of public non-commercial use. Art. 40 Control of anti-competitive practices in contractual licenses: Members agree that some licensing practices or conditions pertaining to IP rights which restrain competition may have adverse effects on trade and may impede the transfer and dissemination of technology. Nothing shall prevent Mems from specifying in their legislation licensing practices or conditions that may constitute an abuse of IP rights in relevant market. A Member may adopt appropriate measures to prevent or control such practices, including exclusive grantback conditions, conditions preventing challenges to validity and coercive package licensing. 8

WTO FRAMEWORK-2 Clause 66.2 of TRIPS Agreement: Developed country Members shall provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging TT to LDC Members in order to enable them to create a sound and viable technological base. ANNEX of TRIMS Agreement: restrict the requirements of local production made by developing countries; Article 9 of Agreement on the Application of Sanitary and Phytosanitary Measures (1994): Members agree to facilitate the provision of technical assistance to other Members either bilaterally or through the appropriate international organizations. 9

2.ITT IN INTERNATIONAL LEGAL INSTRUMENTS Provisions on ITT in the legal instruments developed at International Environmental Conferences: Prin 20 of Stockholm Declaration 1972: the free flow of up-to-date scientific information and transfer of experience must be supported and assisted, to facilitate the solution of env tal problems, and env tal technologies should be made available to dping countries on terms encouraging their wide dissemination without constituting an economic burden on the dping countries. Prin 7 of Rio de Janeiro Declaration 1992:states shall cooperate in a spirit of global partnership protect and restore the health and integrity of the Earth's ecosystem; States have common but differentiated responsibilities. Agenda 21(1992): the phrase technology transfer is mentioned for 48 times and ESTs for 59 times and the issues on ESTs transfer were discussed mainly in chapter 34 "Transfer of EST, cooperation and capacity-building" and chapter 35"Science for sustainable development. Para. 18 of Johannesburg Declaration on Sustainable Development 2002:we ll work together to help one another ensure capacity- building, use modern technology to bring about development and make sure that there is TT, human resource development, education and training to banish underdevelopment forever. 10

2. PROVISIONS ON TT IN MULTILATERAL ENVIRONMENTAL TREATIES Article 4 of Vienna Convention for the Protection of Ozone Layer (1985): The Parties shall co-operate,...taking into account in particular the needs of the developing countries, in promoting...the development and transfer of technology and knowledge. Art.10A of Montreal Protocol on Ozone Depleting Substances(1987, 1992 Rev.): Each Party shall take every practicable step, consistent with the programmes supported by the financial mechanism, to ensure:(a) that the best available, environmentally safe substitutes and related technologies are expeditiously transferred to Parties operating under paragraph 1 of Article 5; and (b) that the transfers referred to in subparagraph (a) occur under fair and most favourable conditions. 11

MET--3 Articles 16,17,20 & 21 of Convention on Biological Diversity(1992) ; Art. 16:Access to and Transfer of Technology 1. Each Party, recognizing that...that both access to and transfer of technology among them are essential elements for the attainment of the objectives of the Convention, undertakes subject to the provisions of this Article to provide and/or facilitate access for and transfer to other Parties of technologies that are relevant to the conservation and sustainable use of biological diversity or make use of genetic resources and do not cause significant damage to the environment. 2. Access to and transfer of technology to developing countries shall be provided and/or facilitated under fair and most favourable terms, including on concessional and preferential terms where mutually agreed, and, where necessary, in accordance with the financial mechanism established by Art. 20 and 21. In the case of technology subject to patents and other IPRs, such access and transfer shall be provided on terms which recognize and are consistent with the adequate and effective protection of IPRs. The application of this paragraph shall be consistent with paragraphs 3, 4 and 5 below. 12

MET-4 3. Each Party shall take legislative, administrative or policy measures, as appropriate, with the aim that Parties,in particular those that are developing countries, which provide genetic resources are provided access to and transfer of technology which makes use of those resources, on mutually agreed terms, including technology protected by patents and other IPRs, where necessary, through the provisions of Articles 20 and 21 and in accordance with international law and consistent with paragraphs 4 and 5 below. 4. Each Party shall take legislative, administrative or policy measures, as appropriate, with the aim that the private sector facilitates access to, joint development and transfer of technology referred to in paragraph 1 above for the benefit of both governmental institutions and the private sector of developing countries and in this regard shall abide by the obligations. 5. The Parties, recognizing that patents and other IPRs may have an influence on the implementation of the Convention, shall cooperate in this regard subject to national legislation and international law in order to ensure that such rights are supportive of and do not run counter to its objectives. Article 17. Exchange of Information Art. 20 & 21:Financial Resources and Mechanism. 13

MET-5-OTHERS Article 8 of Energy Charter Treaty(1994) ; The Parties agree to promote access to and transfer of energy technology on a commercial and non-discriminatory basis to assist effective trade in Energy Materials and Products and Investment and to implement the objectives of the Charter subject to their laws and regulations, and to the protection of IPRs. Accordingly, to the extent necessary to give effect to paragraph (1) the Parties shall eliminate existing and create no new obstacles to the transfer of technology in the field of Energy Materials and Products and related equipment and services, subject to non-proliferation and other international obligations. Chapter 18 of The United Nations Convention to Combat Desertification (1994); Arts. 20 &22 of Cartagena Protocol Biosatety to CBD (2000) Articles 13 and 14 Minamata Convention on Mercury (2013). Art.14:Capacity-building, technical assistance and technology transfer: Clause 14.3:Developed Parties and other Parties within their capabilities shall promote and facilitate, supported by the private sector and other relevant stakeholders as appropriate, development, transfer and diffusion of, and access to, up-to-date environmentally sound alternative technologies to developing Parties, in particular the IDCsand small island developing States, and Parties with economies in transition, to strengthen their capacity to effectively implement the Convention. 14

2. SPECIFIC TREATIES ON CLIMATE CHANGE-UNFCCC Clause 4.5 of United Nations Framework Convention on Climate Change (UNFCCC ) specifically requires developed country Parties to take all practicable steps to promote, facilitate and finance, as appropriate, the transfer of, or access to, ESTs and know-how to other Parties, particularly developing country Parties, to enable them to implement the provisions of the Convention ; and to support the development and enhancement of endogenous capacities and technologies of developing country Parties in the process. Moreover, other parties and organizations in a similar position are also required to assist in facilitating transfer of ESTs. Cornerstone provision on EST TRANSFER IN aspect of CC 15

2. SPECIFIC TREATIES ON CLIMATE CHANGE-UNFCCC Other Clauses 4.1,4.3,4.7 and 11.1 also concern EST transfer Clauses 4.1 All Parties shall: (c) Promote and cooperate in the development, application and diffusion, including transfer, of technologies, practices and processes that control, reduce or prevent anthropogenic emissions of greenhouse gases 4.3: The developed country Parties shall also provide such financial resources, including for the transfer of technology, needed by the developing country Parties to meet the agreed full incremental costs of implementing measures that are covered by paragraph 1 of this Article 4.7: The extent to which developing country Parties will effectively implement their commitments under the Convention will depend on the effective implementation by developed country Parties of their commitments under the Convention related to financial resources and transfer of technology 11.1: A mechanism for the provision of financial resources on a grant or concessional basis, including for the transfer of technology, is hereby defined. It shall function under the guidance of and be accountable to the Conference of the Parties, which shall decide on its policies,programme priorities and eligibility criteria related to this Convention. 16

2. THE KYOTO PROTOCOL The protocol provides that developed countries shall implement and/or further elaborate policies and measures, such as: research on, and promotion, development and increased use of, new and renewable forms of energy, of CO2 sequestration technologies and of advanced and innovative ESTs. the parties are required to cooperate in the promotion of effective modalities for the development, application and diffusion of, and take all practicable steps to promote, facilitate and finance, as appropriate, the transfer of, or access to, ESTs, know-how, practices and processes pertinent to climate change, in particular to developing countries; the purpose of CMD is to assist developing countries in achieving sustainable development and in contributing to the ultimate objective of the Convention of assisting developed countries in achieving compliance with their quantified emission limitation and reduction commitments. 17

2.STIPULATIONS IN COPS DECISIONS-1 Since 1997, the issues on TT have almost been discussed at every COP and decisions made on development and transfer of technology appeared 17 times (except for COP6 and COP9), but often been neglected to certain degrees. Howeve, COP7, COP13, COP15 and COP16 respectively held in 2001, 2007,2009 and 2010, taking more notice of the issues; COP7: reaching an agreement on the implementation of a TT framework which included five themes and deciding to establish an expert group on technology transfer (EGTT) ; COP 13 :Bali Action Plan was accepted by COP which especially emphasized the commitments to TT to be performed, mandated an ad-hoc body to focus on key elements of long-term cooperation, including technology transfer. COP 15 :Reaching the Copenhagen Accord, containing 3 articles involving TT and the decision of establishing technology mechanism. 18

2.STIPULATIONS IN COPS DECISIONS-1 COP 16: Cancun Agreement: Terminating the mandate of EGTT at the conclusion of COP16, Starting to establish Technology Mechanism, consisting of a Technology Executive Committee and a Climate Technology Centre and Network, to enhance and accelerate action on technology development and transfer consistent with international obligations; TM, operational in 2012, plays a meaningful role in making a "real" difference as envisaged by the Can Agreements, which accelerates international, regional and national technology development and transfer action that supports mitigation and adaptation on the ground at a scale that can make an impact on the global effort. TEC, as the policy component of the TM, facilitates the effective implementation of the TM, consistent with its functions. CTCN, the implementation component of the TM, facilitates the effective implementation of TM. One of the primary functions of the CTCN is to respond to requests from developing country Parties, sent through their national designated entities, on matters related to the development and transfer of technology. 2012 Doha Gateway In Doha, COP 18 elected UNEP as the host of the Climate Technology Centre. Parties also agreed on the constitution of the Advisory Board to the CTCN, thereby making the Technology Mechanism fully operational. 19

3. DEFECTS AND REASONS The existing international treaties and international legal documents have their own defects the provisions on TT are too ABSTRACT and generic, such as appropriate, cooperate, encourage, facilitate, or promote, exert efforts, assist, used widely, which lack hard characters. mandatory sanction mechanisms and compliance mechanisms are lacking in the current international legal regime of GTT to ensure that the parties fulfill their obligations and if a party fails to perform its obligations, there is no enforceable sanction mechanism. Except for CBD, there are few provisions on IPRs in METs it is unclear on how to copy with IPR issues and GTT,and such issues have seldom been attached importance to the official meetings concerning climate change and environmental protection. 20

3. DEFECTS AND REASONS--2 The differences between the domestic and international intellectual property regimes in developed countries have constituted a big obstacle to technology transfer The technology export control policy and the foreign trade system of developed countries have distorted the regular technology transfer The existing mechanisms, such as compulsory license regime, financial mechanism) on technology transfer have seldom played their due roles. CDM does not work well: in order to acquire emission reduction units, developed countries may slacken the pace of developing new technologies and may not exert their best efforts to reduce the emission of GHG by taking full advantage of developing countries lack of advanced technologies and funds, which could result in developed countries increasing their own GHG while not transferring the most advanced ESTs 21

3. REASONS The fundamental reasons are that governments commitments are often in conflict with interests and needs of the domestic enterprises or other private sectors. Commercial activities of enterprises as technology suppliers become the fundamental obstacle to TT. Enterprises in developed countries possess most of global advanced technologies. Their profit-oriented intention of business activities always prevail over the international obligations of their governments when transferring their technology. 22

3. REASONS--2 Governments, which emphasize the protection of private property rights, could not require private sectors to transfer technology to others just because they have to fulfill their international obligations, for their domestic laws prescribe intellectual property rights as private property rights. ESTs are in the scope of private property rights, and it is difficult tor the governments to keep their promises on ESTs transfer at international level, combined with the absence of effective international dispute settlement system concerning international liability of states which fail to perform obligations in this field 23

4. WAY OUT--1 In the past 40 years, it has been proved hard to find an effective way to promote TT under the UN framework (including WIPO, UNFCCC, UNEP, UNCTAD). The decisive factor of private commercial activities is to pursue profit maximization, which means to maximize the profit of a rational economic man, while mitigating GHG emission which is related to the public interest is less tempting for them. There is no effective dispute settlement mechanism within UN framework. The implementation of Kyoto Protocol and other treaties mainly depends on willingness and voluntariness of the parties to them and the private sectors. 24

SUGGESTIONS FROM SCHOLARS-1 The regulations proposed by SOME developing countries include patent pooling, royalty-free compulsory licensing of green technologies, excluding green technologies from patenting, and even revoking existing patent rights on green technologies. speedier grants of patents will spur the development and diffusion of green technologies. To establish a Global Technology Pool for Climate Change that promotes and ensures access to intellectual property protected technologies on non-exclusive royalty-free terms. IPR reduces transaction costs for technology transfer by establishing a regulatory framework, whereby R&D costs can be recovered by firms and incentives for future investment. IPR is not a barrier, rather an incentive for technology transfer, and so stronger IP protection regime shall be developed. Exclude products that provide immediate harm to the environment from patentability. 25

SUGGESTIONS FROM SCHOLARS-2 The existing IPR system does not match the increasing needs for accelerating [development, transfer, and diffusion] of GTs to meet challenges of climate change and IPR sharing agreements may be regarded as solutions. compulsory licensing or a use it or lose it scheme would best effectuate technology transfer. Recommend a joint UNFCCC-private sector approach: under the conditions of IP protection and TNAs, private sectors will be bound to a segmented/parallel market pricing structure: may charge market prices to developed and emerging parties, but must supply technology to LDCs and poor developing nations on a marginal cost basis. Develop green technology packages to promote GTT. 26

4. WAY OUT MY GERNERAL OPINION-1 No IPR protection, no GTT, and thus IPR regime concerning GT with the protection as the core shall be maintained and improved "one-size-fits-all" harmonization of intellectual property rights is not welfareenhancing for less developed countries (and possibly not even for emerging economies),we shall adopt different protection measures for different countries at different economic and technical level: LDCs (about 48): they do not have technical basis and strong IP protection may make them lag behind more Most developing countries (about 110): adopt the appropriate IP regime Big developing countries with certain technical basis, such as China, India, Russia, Brazil and South Africa, shall establish a little more stronger protection regime than that of most developing countries Developed countries may adopt the strongest IP protection regime. 27

LEGAL BASIS FOR THE SUGGESTION 27.2:Members may exclude from patentability inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect ordre public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment... Art.30:Members may provide limited exceptions to the exclusive rights conferred by a patent, provided that such exceptions do not unreasonably conflict with a normal exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner 28

WAY OUT MY GERNERAL OPINION-2 shortening protection duration of patents of GT; disclosing technical information on GT earlier, promoting fast-track examination and grant process of GT patents; allowing most developing countries to adopt more flexible policies to enforce international IP treaties in accordance with the exceptions provided in them. Besides these, the other issues on IP concerning technology transfer in field of addressing environmental pollution shall also be attached importance to, such as compulsory licensing, competition concerning technology transfer, patent pool and public funded R&D technologies Without know-how, it may be useless to only transfer patented technologies, and so show-how shall also be supplied. 29

4. WAY OUT FURTHER THINKING-CONCLUDING ITTA UNDER WTO -1 Under the conditions of appropriately/duely protecting IPRs, it s more practicable and effective to conclude an ITT agreement under WTO on the basis of relative provisions scattered in the existing treaties on environmental protection than to rely on UN system, and,to some extent, the necessities and the possibilities for concluding such an agreement have already been well prepared. In the context of globalization, considering human s common and long-term interests, human rights protection, co-benefits of stakeholders and sustainable development, and recognizing the inventors multi-motivations, IP regime shall be reformed to facilitate green technology transfer, such as shortening protection duration, disclosing technical information earlier, promoting fast-track examination process and allowing most developing countries to adopt more flexible policies to enforce international IP treaties in accordance with the exceptions provided in them. Besides these, the other issues on IP concerning technology transfer in field of addressing environmental pollution, such as compulsory licensing, competition concerning technology transfer, patent pool and public funded R&D technologies, shall also be attached importance to. 30

BASIS---UNIVERSAL DECLARATION OF HUMAN RIGHTS 1948 Art. 3:Everyone has the right to life, liberty and security of person. Article 25: (1) Everyone has the right to a standard of living adequate for the health and wellbeing of himself and of his family, including food, housing...and the right to security in the event of sickness...or other lack of livelihood in circumstances beyond his control. Article 27: (1) Everyone has the right freely to...enjoy the arts and to share in scientific advancement and its benefits. (2) Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author. 31

IN L COVENANT ON ECONOMIC, SOCIAL AND CULTURAL RIGHTS-1 Article 11: The Parties recognize the right of everyone to an adequate standard of living for himself and his family and to the continuous improvement of living conditions, and will take appropriate steps to ensure the realization of this right with recognizing the essential importance of in l co-operation based on free consent. The Parties, recognizing the right of everyone to be free from hunger, shall take, individually and through in l co-operation, the measures, which are needed: To improve methods of production, conservation and distribution of food by making full use of technical and scientific knowledge, by disseminating knowledge of the principles of nutrition and by developing or reforming agrarian systems in such a way as to achieve the most efficient development and utilization of natural resources 32

IN L COVENANT ON ECONOMIC, SOCIAL AND CULTURAL RIGHTS-2 Article 12: The Parties to the present Covenant recognize the right of everyone to the enjoyment of the highest attainable standard of physical and mental health. The steps to be taken by the Parties to the present Covenant to achieve the full realization of this right shall include those necessary for: The improvement of all aspects of environmental and industrial hygiene; The prevention, treatment and control of epidemic, endemic, occupational and other diseases; Article 15: The Parties to the present Covenant recognize the right of everyone: (b) To enjoy the benefits of scientific progress and its applications; (c) To benefit from the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author. The steps to be taken by the Parties to the present Covenant to achieve the full realization of this right shall include those necessary for the conservation, the development and the diffusion of science and culture. 33

4. WAY OUT--- FRAMEWORK OF ITT UNDER WTO-2 REASONS OF Necessities Need OF Solving the Theoretical Problem on GTs Transferred Smoothly Universally common interests of the human beings It s a great challenge for the international community to make ESTs owned by private sectors actually work for targets of GHG emission reductions through the platform of governmental powers, and the main way is to connect the obligations of TT with international trade to impact right holders interests by legal bindings. The Need of Solving Practical Problems on ESTs Transferred Smoothly We shall not only rely on governments to take actions, but have to inspire the enterprises and other private sectors, and all kinds of bodies as well in order to stimulate enterprises to participate in mitigating emission and transferring ESTs. ITT cannot be accomplished just by governments and it needs more actors such as international organizations like WIPO,WTO to participate in. Under the current conditions, among all IOs, only WTO satisfies such requirements and is capable of providing relatively good platform for negotiation and communication, which finally takes full advantages of a package of agreements to restrict the members with WTO rules and its dispute settlement system to promote ESTs transfer. 34

4. WAY OUT--- FRAMEWORK OF ITT UNDER WTO-3 Reasons of possibilities The provisions in different international treaties have accumulated great references for making such an international agreement. TRIPS Agreement s objective and principle focus on promoting the flow and diffusion of technology, and it has exceptional articles leaving much space for the parties to make laws which are favorable to TT. EGTT, WGTTT and Technology Mechanism have provided great experience to establish the agreement. Comparing with other international institutions, WTO may be a more enforceable one to harmonize IP issues and GTT. In aspect of dispute settlement, there are no any cases dealt with by DSB, even there are some provisions on ITT, and members of WTO failed to perform their obligations. 35

CONCLUSION-1 EP and global CC have become significant topics drawing the human race s attention at present, and GTT is one of the focuses for tackling these problems. Countries are launching various cooperation positively and signed a lot of international treaties to PROTECT environmental protection contain climate change. Technology-related IPRs has been identified as a private right and over 90% key technology is owned by TNCs in developed countries which emphasize a lot on protecting private right, while most environmental protection treaties are the consensus on the rights and obligations of governments, so the conflicts between the government promise and the right protection of the private persons who hold technologies have frequently occurred. In the countries whose governments are the representatives of private interest groups, the government promise made under the pressure from the international community usually cannot be admitted and implemented by the multinational corporations and private sectors who purse maximum private interests. The intellectual property regime should be part of a solution and not a barrier to 36 international GTT

CONCLUSION-2 Appropriate protection of IPRs regime shall be established to avoid over-protectionism of patents. Compulsory licensing may be applied to GT patents. GTT shall be based on reasonable and fair terms, not free of charge. However, a universal international treaty that coordinates private interest and government promise may be an effective solution to this problem, which links ESTs transfer with international trade through the private interests of the trade to make international obligations performed. The relatively successful practice of the international treaties and agreements under WTO has offered good reference to making the ITT agreement. Therefore, reaching an ITT agreement in the Doha Round on the base of the existing international treaties and legislation, is a feasible way for the human race to overcome the dilemma of global warming and to reach the expected goal of GHG emission. 37

THANKS THANK YOU VERY MUCH FOR YOUR ATTENTION 38