Introduction
The advent of industrialisation and scientific development has come at the cost of exploiting natural resources, leading to global warming and climate change. In the 21st century, there has been a push for sustainable innovation and Environmentally Sound Technologies (‘ESTs’). However, there is a growing disparity among nations regarding access to such sustainable technologies. The Global South, primarily comprising United Nations designated Least Developed Countries (‘LDCs’), grapples with economic challenges due to poverty and structural barriers.
Despite the potential of ESTs in addressing climate change, recent studies reveal that the developed western countries, also collectively referred to as the Global North, hold patents for almost all ESTs. Consequently, the LDCs are required to rely on the Global North to transfer technology to combat climate change. Despite the existence of legal treaties addressing climate change and technology transfer, they often fall short in considering the challenges posed by strict patent protection regime under the World Trade Organisation’s Agreement on Trade Related Aspects of Intellectual Property Rights (“WTO TRIPS Agreement”), the principal legal text dealing with intellectual property rights (“IPR”) aspects of technology transfer and trade.
This article aims to critically analyse whether the patent protection framework under the WTO TRIPS Agreement impedes the technology transfer of ESTs to the Global South. The scope of the article is restricted to reviewing the provisions pertaining to patents under the WTO TRIPS Agreement to understand and comment on the legal framework of the technology transfer regime.
Analysing The Restrictions on Transfer of Environmentally-Sound Technologies
The transfer of technology can be understood as the process of flow of technology from one entity to another, often to address the disparities in levels of technological advancement between them. This transfer can manifest as either a primary flow or a dual flow. Our analysis focuses on the primary flow of technology from the Global North to the Global South.
ESTs refer to methods designed to execute tasks similar to conventional technology but in a sustainable manner, aiming to reduce ecological impact by efficiently managing industrial waste and residues to prevent pollution. The term was initially defined in Agenda 21 of the United Nations Action Plan on Sustainable Development in 1992. Subsequently, the Kyoto Protocol, adopted as an addendum to the United Nations Framework Convention on Climate Change, addressed the reduction of greenhouse gas emissions and, in Article 10, emphasised the “[…] transfer of, or access to, environmentally sound technologies, know-how, practices and processes pertinent to climate change, in particular to developing countries […].” Since then, ESTs have been a focal point in discussions related to climate change and sustainable development.
The WTO TRIPS Agreement is the central legal document dealing with technology transfer and its IPR aspects. Article 7 of the WTO TRIPS Agreement lays down diffusion and transfer of technology and a balance of rights and obligations, among others, as one of the main objectives of the WTO TRIPS Agreement. This is further expounded upon by Article 66 which deals with LDC members to the WTO TRIPS Agreement. Article 66(1) allows LDC members an exemption for a certain time period from applying the provisions of the WTO TRIPS Agreement. This is followed by Article 66(2) which deals with technology transfer. It reads as:
“Developed country Members shall provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least-developed country Members in order to enable them to create a sound and viable technological base.”
A brief background on the emergence of the WTO TRIPS Agreement is required to contextualise the analysis of Article 66. Preceding the WTO TRIPS Agreement, the IPR framework was governed by numerous treaties instead of a central treaty. While the developed nations of the Global North pushed for a centralised international framework, the Global South was against this change. Negotiations ensued, leading to concessions and benefits granted to the Global South in exchange for their acceptance of a restructured IPR protection framework under the WTO TRIPS Agreement.
Therefore, a brief perusal of the background of the WTO TRIPS Agreement indicates that the participation of LDCs in the treaty has consistently hinged on the commitment to receive beneficial treatment, despite their acceptance of a stringent IPR framework introduced to address the concerns of the Global North. The language of Article 66(2) reveals an interesting perspective vis-à-vis its mandatory nature. The Global North’s obligation with respect to technology transfer is limited to the extent of providing “[…] incentives to enterprises and institutions […].” Further, phrases like “[…] for the purpose of promoting and encouraging technology transfer […]” allow latitude to deflect responsibility by merely offering incentives and delegating the promotion of technology transfer to institutions and enterprises. Consequently, the only provision facilitating technology transfer to LDCs for the promotion of differential treatment within an otherwise rigorous IPR framework appears to be rendered redundant.
Compulsory Licensing for ESTs under the TRIPS Agreement
The WTO TRIPS Agreement provides some margin of discretion to the Member States to implement its provisions in their domestic context, a policy broadly termed ‘TRIPS flexibilities’. Paragraph 6 of the Preamble and Article 66(1) of the WTO TRIPS Agreement refers to the term ‘flexibilities’ in the context of LDC’s obligations during the transition period. There is no consensus regarding the scope of TRIPS flexibilities. The World Intellectual Property Organisation has noted that flexibilities refer to the “[…] different options through which TRIPS obligations can be transposed into national law so that national interests are accommodated yet TRIPS provisions and principles are complied with.” Therefore, the domestic legislative framework must be compatible with the broad framework of the WTO TRIPS Agreement. However, the Member State has some room to manoeuvre in designing the policy. Compulsory licensing is one such example of TRIPS flexibilities.
Article 31 of the WTO TRIPS Agreement refers to compulsory licensing as ‘other use without the authorisation of the holder’. It does not provide a list of grounds under which a Member State may invoke Article 31. It is left to the Member States to decide on such grounds in their domestic framework which must comply with the WTO TRIPS Agreement. Article 31 allows the ‘other use’ of a patented product without the approval of the patent-holder provided that the conditions stipulated under Article 31(a) to (l) are complied with. The government can use the patented product or issue a license to a third party to produce or process the patented product. Under the WTO TRIPS Agreement framework, the requirement to obtain a voluntary license can be waived in cases of national emergency, or other extreme urgencues, or other anti-competitive practices. In these instances, the governments can directly issue a compulsory license. However, the Member States can invoke compulsory licenses only to fulfil the demands of the domestic markets.
The Doha Declaration on the TRIPS Agreement and Public Health (“Doha Declaration”) recognised the Member State’s right to grant compulsory licenses and their flexibility to decide on the grounds for invoking them in the domestic setup. In the context of generic drugs, it noted that LDCs do not have the necessary manufacturing infrastructure in the pharmaceutical industry. In light of this, compulsory licensing as a tool becomes meaningless for the LDCs. To mitigate this ‘Paragraph 6 issue’, in 2003, the Member States agreed to a temporary waiver of Article 31(f) of the WTO TRIPS Agreement to import generic drugs produced under compulsory licenses from other Member States. Subsequently, the WTO TRIPS Agreement was amended to introduce Article 31bis to make the Paragraph 6 rule permanent.
Although compulsory licensing has traditionally been discussed in the context of generic drugs, it can also be applied to ESTs. However, the Article 31(f) waiver applies only to generic drug manufacturing. Further, there is no scope for interpreting ESTs as generic drugs as there is no similarity. However, the underlying rationale remains the same. The Global South does not possess the required infrastructure and the technical know-how to manufacture ESTs domestically. Consider a theoretical situation where a Global North country mandates the compulsory licensing of ESTs for exporting it to a Global South country. Thus, in this case, the Global North country would be restricted by Article 31(f) of the WTO TRIPS Agreement. It would be interesting to explore whether the spirit of the Doha Declaration and the Paragraph 6 issue can be applied to mutatis mutandis in the context of ESTs.
Furthermore, it is imperative to acknowledge that the compulsory licensing framework is inherently time-bound. It is a provisional solution that ceases to remain in existence once the prevailing circumstances has been sufficiently mitigated. In the context of climate change, scientists are unsure about the time horizon within which we will observe a significant improvement in the environment. There are also ongoing debates regarding the classification of the climate change crisis as an emergency. It remains the discretion of the governments as the WTO TRIPS Agreement is silent on the precise definition of ‘emergency’. This becomes a concern for the EST manufacturer under the compulsory licensing regime primarily due to the uncertainty regarding the time limit of license. Considering the significant investment incurred by the manufacturers in the research and development of ESTs, the non-exclusive nature of the license coupled with the ambiguity concerning the time horizon would create substantial impediments for the manufacturer in realising any return on their investments. In case of withdrawal of the compulsory license by the government, the manufacturers would find themselves compelled to compete directly with the original patent holder. In light of these multifaceted challenges, it is reasonable to expect that EST manufacturers would be disincentivised to proceed under the compulsory licensing regime.
Conclusion
This article was a modest attempt in understanding the structural barriers inherent in the WTO TRIPS regime for transfer of ESTs from the Global North to the Global South. It examined the extant patent protection framework under the WTO TRIPS Agreement regime to highlight the restrictions on technology transfer of ESTs, with emphasis on Articles 7 and 66 of the WTO TRIPS Agreement. Further, this article reviewed the compulsory licensing regime under the WTO TRIPS Agreement. Our finding suggests that the WTO TRIPS Agreement regime creates challenges to the compulsory licensing of ESTs.
In light of this, we call for reducing stringent patent protections under the WTO TRIPS Agreement by allowing the LDCs the maximum level of flexibility. Further, to implement Articles 7 and 66 of the WTO TRIPS Agreement, specific amendments are required to expand the scope of TRIPS flexibilities regarding technology transfer and compulsory licensing of ESTs.
Sourav Paul and Tridib Mandal are fourth year students at National University of Juridical Sciences, Kolkata.
Image: Micha Huigen for NY Times
Jindal Forum for International and Economic Laws 