LAW MANTRA THINK BEYOND OTHERS

(National Monthly Journal, I.S.S.N 2321 6417)

Green Shift: An Eco-Friendly Patent Regime for Sustainable Development

Abstract: The task of the patent system in growth and progress of an economy is of utmost
importance, but this role is quite controversial as the patent system results in the development
of economy of a country by promoting technological innovation but it does this at the cost of
environment. The existing patent regime does not take into account the environmental
externalities. Although it contribute to the welfare of society nevertheless by promoting
development of new technologies to gain market leadership and avail the benefits of monopoly
privileges, results in the depletion of natural resources thereby causing environment
degradation. This paper attempts to identify the issues and challenges confronted by the
existing patent regime. It further suggests different ways to overcome these challenges and
create an eco friendly patent regime. This paper argues for the need of a green shift to
recognize environmental externalities and advocate ways of creating a sustainable patent
regime.

Keywords: Development; Economy; Environment; Innovation; Patent; Sustainable.

Introduction
Technological development and innovation have been playing strategic role in the growth of a
country and is increasingly adopting significant role in shaping the economic policy in every
country. However, this modernism for economic growth is responsible for much of the
environmental degradation. The current patent regime does not recognize environmental
degradation at the cost of which it is promoting economic growth. Patent system is an active
agent of global ecological degradation as it contributes to consumption plus depletion of
natural resources.
Patent regime is a legal mechanism to protect innovation and originality to promote new
technologies. Countries that can develop new technologies and make greater innovation can
develop faster than the countries with slow technological innovation. The current patent system
plays an important role in promoting human welfare as it increases wealth of patentee by
granting monopoly privileges to him. But the role is quite arguable as it also results in static


losses in the short run because of the dead-weight loss that occurs due to monopoly pricing.
There is no doubt that patent system is a driver of human welfare but in the process of
promoting this welfare it develops certain externalities that results in environmental
degradation.
Achieving economic growth on sustainable scale is the issue demanding utmost attention by
the existing patent regime. The need of the hour calls for a green shift which takes account of
development of a new patent regime that allows invention and promotion of eco friendly
technologies thereby eliminating negative environmental impact of technological innovation.
This has to be borne in mind that the role played by patent regime in addressing environmental
issues is of extreme significance; consequently as a side job green patent regime will ensure
sustainable human development too. It can no longer flourish in isolation and the time has
come to break the silence and internalize environmental externalities. Indeed the invention and
transfer of new renewable and environmentally friendly technologies are fundamental to attain
sustainable human development.
Despite of numerous endeavors, environmental law has failed to slot in the concept of Good
for environment technological innovation within its domain. But the proposed patent regime
can provide greater incentives for environmental innovation and can overcome this pitfall of
environmental law. Apart from this even the market system is not in a position to tackle the
internalization of environmental externalities so once again the existing patent regime can
come to the rescue and can solve this problem.
This article puts forth various ways of creating an eco friendly patent regime to promote green
innovation. Apart from this it also suggests various methods of internalizing environmental
externalities. Furthermore, this article also explores whether patent system can be used to find
answers to the questions where environmental law and market system have failed. It proposes
methods of developing a patent regime that ensures sustainable economic growth.

Patent Controversy
A patent can be defined as a grant of exclusive rights to an inventor over his invention for a
limited period of time. The exclusive rights conferred include the right to make, use, exercise,
sell or distribute the invention. The term of a patent is twenty years, after the expiry of which,
the invention would fall into the public domain.
From this definition it is very much clear that patent system is a mechanism to trigger
technological innovation and R&D in technological field.


It is a widely accepted view that economic growth of a county depends on its technological
progress and since patent system aims at propelling technological innovation we can say that
economic growth of a country depends on patent system.
Patent law has stimulated a never ending competition in the industrial sector for the production
of products having the elements of innovation and novelty. Companies are continuously
competing with each other to gain leadership in market or use them as a leverage for license or
to get damages in case of patent infringement. The process of technological innovation
involves the use of natural resources, emission of green house gases and discharge of the waste
in river or dumping it in ground. All these procedures involved have an adverse impact on the
environment. So this production and consumption process has a direct impact on environment
because of the green house gas emission and depletion of natural resources. So, it can be said
that the patent system acting as a catalyst for technological progress is responsible for
environmental degradation.
Patent is granted to anything having these elements regardless of its impact on environment.
The dark part of the scenario can be very well concluded from the US Supreme Court
judgment in the case of Diamond v. Chakrabarty, [1980] 447 U.S. 303, 309, stressing that
patent should be granted to anything under the sun that is made by man. Such a statement
shows a sheer disregard on the part of the American judicial system for addressing
environmental issues and favoring ruthless technological development. The US patent Act has
no provision to take account of environmental impact of patent law.
In Europe the decision given by EPO in Plant cell/Plant Genetic Systems v (Opposition by
Greenpeace) T-356/93 [1995] E.P.O.R. 357 affirms that the concept of ordre public covers
the protection of public security and the physical integrity of individuals as part of society but
on the other hand concluded that the revocation of a patent on the grounds that the
exploitation of the invention for which the patent has been granted would seriously prejudice
the environment presupposes that the threat to the environment be sufficiently substantiated at
the time the decision to revoke the patent is taken by the EPO. The above mentioned decision
is an example of environmental neutrality as Art 53 (a) of EPC does not allow the patenting of
those inventions the commercial exploitation of which would be contrary to "ordre public" or
morality. but the European system treats it as externality.
Although, there is no doubt that the current patent system contributes to the welfare of society
but it is doing so at the cost of environmental degradation. By granting monopoly rights to the
patentee the patent law is encouraging investment in this area which in turn is giving rise to
indiscriminate exploitation of natural resources. Therefore, it can be said that patent system


though contributes to the welfare of society but results in the increase in environmental
externalities thereby causes depletion of natural resources.
The role of patent regime in the economic development of a country is quite controversial as it
results in the static loss in the short run and dynamic gains in long run. The monopoly right that
is granted to the patentee for its technological innovation deprives the common people to freely
enjoy the technological innovation developed by him because of the fact that the patentee has
monopoly rights, he can charge whatever amount of bucks he wants from the people for using
his product, so people who are not capable of paying that much of amount have to forgo the
benefit of the product. So, this economic benefit that is forgone by the people because of their
incapability to pay the price which occurs due to monopoly pricing results in the development
of dead weight loss. Nevertheless, on the other hand, patent system also results in the dynamic
gain in the long run, as it stimulates people to get into this practice of developing innovative
and novel products so as to gain market leadership and to avail similar privilege of monopoly
rights. So, in the former case of dead weight loss the patent system is definitely not very useful
for the society while in the latter case of dynamic gain although it contributes to the welfare
and development of the economy but as already stated, does it at the cost of environment. So it
is very difficult to state the overall contribution of patent system in the progress of a country.
Although, it is not argued that there should be complete ban on innovation of technologies for
the sake of sustainability but what is being argued is a need to create a balance between the
two. Agreed! that it is not possible for the market economy to recognize environmental
externalities but there comes patent law to rescue as in patent law we can create a mechanism
in which a liability is imposed on patentee to internalize environmental externality by paying a
part out of profit that accrues to him because of the monopoly rights.
Apart from this, the patent system also needs to harmonize the interest of developed and
developing countries for addressing environmental issues. Developing countries always
demand an exclusion from the responsibility of addressing the environmental issues involved
in the patent law and the argument they put forth is that for the growth of their economy the
contribution of patent system is indispensable and that the developed countries are taking
undue advantage of the benefits arising from the exploitation of the environment. Developed
countries, on the other hand, are not ready to give such leverage to developing countries.
Therefore, this conflict of interest of the developed and the developing countries needs to be
harmonized by mutual agreements and compromise.
2. Radical Change: the Path Ahead
It is important to acknowledge that patent system is not responsible for environmental
degradation and so just the patent regime alone cannot all by itself help cure the environmental


and whole sustainability problem. But, as we have already seen that patent system does a
noteworthy job in promoting technological advancement leading to economic growth, so there
is a need to maintain a balance between economic growth and environmental sustainability.
Following are some of the recommended approaches to ensure that the future technological
advancement is economically sustainable:


Mutual Recognition:
If there is a mutual consensus among different countries on the policy that if there is an
application for patent for a technology that is environment friendly then, granting of patent in
one of the countries would lead to its recognition in all those countries which had consented for
it without any second review procedure. It will serve as a great incentive for the patentee as it
will spur the trend of producing or developing green technology.
Enhanced Application fee:
It involves the method of increasing the patent application fee for granting of patent of those
technologies that do not fulfill the criteria of sustainability. Other way round, this can also be
done by subsidizing the application fee for those technologies that come within the ambit of
green technologies.
Green Tax:
The GIP Tax is a kind of "green tax" to internalize the ecological and sociological externalities
that patent monopolies induce (Nitta, 2005a-c). The Tax would be collected from successful
patentees based on their patent-related earnings, including license royalties and infringement
compensations by enforcing a patent right. These patentees would pay the Tax in addition to
paying a maintenance fee for their patent.

Financial assistance:
It involves the concept of giving of financial assistance by the government so as to encourage
innovators to generate and promote green technology. Such an approach can be of great help
because the process of developing or creating technologies to get it patented so as to acquire
market leadership involves incurring of a huge amount of expenditure and if governments
starts providing financial assistance then, such a step will greatly boost up the morale of such
innovators and will lead to the development of green technologies.





Amendment in existing Laws:
There is an imperative need of amendment in the existing patent law in order to recognize
environmental externalities. Amendment may involve imposition of heavy fines on such
innovators who cause substantial damage to environment and for this the law needs to
prescribe a minimum limit that must be adhered by innovators in the creation of technologies.
This recommendation of incorporating such a radical change is proposed in the context of
developed countries and not developing countries. Such a proposal is put forth because
developed countries have managed to advance their economy by ruthless ecological
exploitation and keeping environment at stake but developing countries cannot incorporate
such stringent laws as it will adversely affect their advancement and economic growth.

Conclusions
For a very long period patent system has been recognized as a mechanism to accelerate
economic development of a country, but with the change in the scenario there is a need to
modify this notion. Although, patent system is definitely a toll for the welfare of the society but
it leads to the excessive use of natural resources causing environmental degradation. The
current patent regime does not take into account the environmental externalities, so there is a
need of green shift in the existing patent regime so that it can internalize the environmental
externalities. The present situation calls for the need of a patent system that leads to sustainable
economic development. This paper calls for the development of an eco-friendly patent regime
which may ensure sustainable economic growth of countries.

The findings of this work show that sustainable economic growth of countries can be ensured
with the help of this green shift in the existing patent regime. Although, it is definitely not
argued that patent system is the sole responsible factor contributing to the environmental
degradation, the solutions put forth in the article can be of great help in the creation of an eco-
friendly patent regime.



By:- Puja Kumari and Arpita Sharma,