Can the Patent Commons Help Eco-technology Diffusion?

Article
  • 2011•10•13

    Bronwyn H. Hall and Christian Helmers

    The patent system exists to address private underinvestment in research and development due to partial lack of appropriability (reproducibility) of knowledge. Patents are seen as a means to encourage private investment in research and innovation. In the area of environmental protection, however, policy confronts a second externality: the benefits of environmental protection flow largely to those who do not bear the costs. The existence of the second externality means that in the case of environmental protection, allowing firms to appropriate social benefits via their market power and pricing behavior has the drawback that without further policy design, the patent system will tend to inhibit the diffusion of the technologies whose creation it encourages.

    In addition to the welfare cost of limited diffusion, patent protection also has potential negative consequences for subsequent innovation that builds on the protected technologies. However, given the environmental externality, such diffusion and follow-on innovation is highly desirable. This has triggered an active debate on the role and usefulness of patents in the generation of innovation and diffusion of green technologies.

    The Eco-Patent Commons

    The Eco-Patent Commons is a private initiative by a number of large multinational firms such as Sony, IBM, Nokia etc., in collaboration with the World Business Council for Sustainable Development, that offers one potential solution to address the problem of diffusion. In this ‘patent commons’, participating firms pledge patents and commit not to assert them against third parties. While anyone interested can thus enjoy royalty-free access to the protected technologies, pledging firms maintain their ownership by keeping the patents in force. This implies that they bear the direct recurrent costs associated with patent ownership in the form of renewal fees as well as indirect costs from administering patent ownership. The Eco-Patent Commons initiative provides, therefore, a unique opportunity to study what happens to technology diffusion if enforceable patent protection is effectively removed from the pledged technologies.

    The official purpose of this private initiative is to promote the diffusion of green technology and to increase the potential for follow-on innovation. In addition, participating firms may benefit from cooperation and collaboration with potential users attracted by the pledged inventions. Obviously, one can imagine an additional purpose: to improve the reputation and public relations of the participating firms, possibly by contributing patents on inventions of little value and the pledge, therefore, generating little cost to the firm. Alternatively, the patents contributed could be those on inventions that need development effort that the firms in question are not willing to undertake.

    In our recent research, we look at 238 patents taken out in a number of countries on 94 inventions that were pledged by 12 participating firms. We ask whether the Eco-Patent Commons initiative achieves its ambitious official objectives. We address this broad question by answering a range of intermediate questions: (a) Are the patented technologies indeed related to environmental protection? (b) Are the patents that protect these technologies valuable? (c) Will royalty-free access to the Eco-Patent Commons patents lead to more diffusion of the protected technologies and the generation of sequential innovations than otherwise?

    Rough categorization of Eco-Patent Commons technologies. Samples from OECD and Non OECD in total.

    Does it work?

    Our analysis of the 238 patents in the Eco-Patent Commons shows that slightly over 80 percent of the Eco-Patent Commons patents have been contributed by just four firms: Bosch, DuPont, IBM, and Xerox. In almost all cases the patent was first applied for at the US Patent and Trademark Office, the German patent office, or the Japanese patent office, and in most cases at the office corresponding to the headquarters of the applicant.

    Are the patented technologies indeed related to environmental protection? Are the patents that protect these technologies valuable? Our answer to these questions is a qualified ‘Yes’. Pledged patents appear to be ‘green’, although this may be a matter of interpretation. Many of the Eco-Patent Commons patents seem to be related to environmental cleanup or clean manufacturing, but only tangentially to environmental protection and mitigating the effects of global climate change.

    Judging by some indicators of a patent’s value, the patents are more valuable than the average patent held by pledging firms and comparable patents protecting similar technologies. However, they tend to be more derivative of previous technologies and somewhat narrower than other patents in their class, suggesting that they are not for very radical inventions. In fact, in our reading, patents in the commons protect relatively narrow technical solutions to specific problems rather than complex technologies. This also implies that they might be useful on their own and not require complementary patents not contained in the commons. Because they are usually distant from the firm’s technology (patent) portfolio, one reason for pledging them may be that they are not very valuable to the firm holding them.

    In spite of this, pledging firms also appear to maintain at least one patent of a patent family in force after it has been pledged by paying the renewal fees. A comparison with patents protecting similar technologies suggests that the share of patents in force is considerably larger for the Eco-Patent Commons patents, 70 percent are still in force relative to 38 percent of the comparable patents. Most patents that enter the commons are in fact young and most of their statutory lifetime remains.

    Will royalty-free access to the Eco-Patent Commons patents lead to more diffusion of the protected technologies and the generation of sequential innovations than otherwise? Our answer to this question is far less conclusive. Our analysis suggests that pledging these patents, that is making them available royalty-free to third parties, has no discernible impact on the diffusion of the knowledge embedded in the protected technologies to other patenting firms. However, given the short period of time after the patents have been pledged that is available so far, our results are naturally of preliminary nature but invite further scrutiny in the near future.

    Are patent commons a way to address a potential lack of green technology diffusion caused by patent protection? Our analysis of the patents pledged to the Eco-Patent Commons, which is the only existing patent commons specifically targeting green technology, suggests that the pledged patents may prove useful (at least to some extent) in avoiding and mitigating environmental damage. However, it remains to be seen whether they diffuse more as a result of being accessible royalty-free.

  • carol

    Hi Bill & Heather. This one read quite well as-is, I didn’t do much! Are you both okay with it? (Don’t know when you wanted to slot it in the pipeline but I’ve entered it in Bill’s new system). Also: shall I do a deck or do one of you have a good idea for that?

  • bill

    Hi Carol,

    Just two (related) points.

    The fifth paragraph mentions “our recent research”, but even after clicking on the link, I don’t have a clear idea of who “our” refers to. Is it (1) UNU-MERIT, or (2) the Eco-Patent Commons, or (3) the authors of the NBER working paper (Hall and Helmers).

    If 3, then it looks odd to say ‘our” without some explanation when the article is written only by Hall.

    If 1, then we should specify “UNU (or UNU-MERIT) research” and mention the project name.

    And if 2 (and maybe even if 3), it brings up the question of Stephan’s “Third Thought” in his UNU-CRIS Professor Ademola Abass Opinion Piece e-mail message yesterday: “Shouldn’t the idea to present research on the frontpage be the maxim until we do have more clearance on our focus?”

    Or, to focus that question more precisely: Shouldn’t the idea be to present UNU research?

    Did UNU have any role in conducting this research? We claim it did in the excerpt, but other than the profile mention of Hall being a fellow at UNU-MERIT, I don’t see any evidence of UNU participation in the article text.

    That isn’t to say we can’t run non-UNU research, or opinion pieces, but I think as the editorial team we need to clarify the guideline on what we will/won’t publish as an article until/unless we have a specific directive from the RO.

    I’d like to hear everyone’s thoughts/opinion on that question.

    Thanks.

    Bill

  • brendan

    Hi,

    There is a link to a UNU-MERIT working paper and I would suggest we use that for the “our research” link. http://www.merit.unu.edu/publications/wppdf/2011/wp2011-025.pdf

    Perhaps our policy should be along the lines of:

    (1) The researcher/author as a clear UNU affliation/position.
    (2) There is a UNU related publication or a publication that specifically mentions the UNU’s role.
    (3) Expert opinions from UNU faculty, not based on research outputs are acceptable, but preferably they should have clear expertise in the area or be involved in work in progress research.

    Brendan

  • bill

    Thanks for finding that UNU-MERIT working paper, Brendan. That definitely puts a different light on it (though I think we still need to clarify who “our” refers to in the article text.

    Re your policy points, I’m basically in agreement, but would suggest some minor clarifications. (And I’d still like to hear opinions from all on the editorial team.)

    I would say:
    (1) At least one of the authors/researchers has a clear UNU affiliation/position.
    (2) There is a UNU-related publication or a publicly available publication that specifically mentions UNU’s role or, in the absence of such a publication, the article clearly explains the scope of UNU’s involvement.
    (3) Expert opinions from UNU faculty, not based on research outputs, are acceptable if the author has clear expertise in the area or is involved in work-in-progress research. Opinion pieces should, if possible, incorporate a brief mention of how/why the topic is relevant to the work of UNU.

    Bill

    • carol

      Yeah, sorry I didn’t see your question sooner Bill. It was I who approached Dr. Hall to write this article after having seen the working paper on MERIT’s site.

      We will be putting it in the sidebar, (and mentioning it in the deck I was asking if someone else wanted to write) so I left the links she had given in the text, is that ok?

  • stephan

    Hello everybody,
    thanks for discussing these points below. I go inline with the proposed policy of Brendan in point (1) and (2)
    Additional I like to suggest for point (3) to make the effort and do a research, if UNU colleagues researching in the same field and if there are synergies cross institutional. supporting the opinion pieces with quantitive datas. Regarding the clarification who “our” refers, I am looking forward to our workshop and the question which content shall we focus on in future?

    Stephan

  • heather

    Hi all,

    An interesting article (thanks Carol). There are a number of interesting graphs and charts in the original working paper (e.g. breakdowns of the countries and companies that have taken out eco-patents). Perhaps including one or two of these would help make the links with MERIT’s research even clearer.

    On the article “policy guidelines,” I agree with the (3) points from Brendan/Bill and have 4 further questions:

    i) Events – Could an additional (4th) guideline leverage UNU-organized/hosted events? For example: “Analysis, outcomes or discussions resulting from academic conferences/seminars, on issues relevant to UNU, where the UNU was a lead-organizer or host of the event.”
    ii) On guideline (2), publications – Could we expand this to include “UNU-related publications and MULTIMEDIA products…” This would give us scope to feature videos, documentaries etc, whilst obviously linking them to UNU-based research. (For example, we have tentatively discussed an article on the PALM videos when they are ready to launch).
    iii) On guideline (3), expert opinion – I agree, and think that in practice, we would most likely need a “case-by-case” approach. However, does this mean we are ruling out “guest contributions” from (non-UNU) experts in a field relevant to UNU work (which UNU experts could then comment on/debate as follow-up)?
    iv) How would these guidelines relate to some of the “student-outreach” oriented articles we have discussed (E.g. Yunnan summer school on culture and environment)?

    I’m looking forward to the workshop Stephan is coordinating, as I think it will provide a good opportunity for us to nut-out some of these issues.

    Cheers
    Heather

  • heather

    **Sorry, re-posting this comment as I forgot to copy most of you in**

    Hi all,

    An interesting article (thanks Carol). There are a number of interesting graphs and charts in the original working paper (e.g. breakdowns of the countries and companies that have taken out eco-patents). Perhaps including one or two of these would help make the links with MERIT’s research even clearer.

    On the article “policy guidelines,” I agree with the (3) points from Brendan/Bill and have 4 further questions:

    i) Events – Could an additional (4th) guideline leverage UNU-organized/hosted events? For example: “Analysis, outcomes or discussions resulting from academic conferences/seminars, on issues relevant to UNU, where the UNU was a lead-organizer or host of the event.”
    ii) On guideline (2), publications – Could we expand this to include “UNU-related publications and MULTIMEDIA products…” This would give us scope to feature videos, documentaries etc, whilst obviously linking them to UNU-based research. (For example, we have tentatively discussed an article on the PALM videos when they are ready to launch).
    iii) On guideline (3), expert opinion – I agree, and think that in practice, we would most likely need a “case-by-case” approach. However, does this mean we are ruling out “guest contributions” from (non-UNU) experts in a field relevant to UNU work (which UNU experts could then comment on/debate as follow-up)?
    iv) How would these guidelines relate to some of the “student-outreach” oriented articles we have discussed (E.g. Yunnan summer school on culture and environment)?

    I’m looking forward to the workshop Stephan is coordinating, as I think it will provide a good opportunity for us to nut-out some of these issues.

    Cheers
    Heather

  • carol

    Stephan: will you work on the graphics, as suggested by Heather?

    • stephan

      Hi Carol, can you enlighten me, I do not know something about a graphic. Can you or Heather explain it to me?

      Cheers Stephan

      • carol

        See Heather’s comment below

  • stephan

    Hi Heather,

    I inserted the pie chart. Do you miss out some information. With the labels beside, it wasn’t obvious what is what.
    Now the numbers of technologies are shown in the labels too.

    Does this make sense?
    Cheers
    Stephan

    • heather

      The graph makes sense to me, thanks

  • Kenji Watanabe

    Eco patent commons may not be a main driving force for diffusion of green technology at least yet at least point. Diffusion of technology has largely depended on market force. Creating consumer demands via advertisements, building effective supply chain and even retail stores for green technology and Steve Jobsbien way of innovating new devices out of the combinations of existing technologies would certainly help to diffuse green technology.

    Key to the success of diffusing the technology is to make users feel so cool by using green tech.
    Make good looking solar roof panels, set a super cool micro wind turbines in between skyscrapers, aand drive 100% electric Bentz or something.

    Eco patent commons leave open many possibilities to innovate new green technology, but diffusion would be up to innovative market strategies, I think.

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