Changing the Bayh-Dole Act to end the deadlock over green technology patents.

News and commentary about environmental issues.
April 21 2010 7:06 AM

License To Green

Can we have clean energy and patents, too?

Also from the Climate Desk: Michael Shellenberger and Ted Nordhaus argue that patents won't matter in the clean-energy revolution.

Developing new green technologies—like cheaper solar panels or methods of extracting energy from ocean tides—is a top priority for combating climate change, because global carbon emissions cannot be stabilized with existing technologies. In rich countries, where most tech development takes place, patents create incentives for innovation. But these new technologies will do little good if they are unaffordable in most of the world.

The tension between promoting new inventions and enabling access to them has created a global deadlock over patent law that's a stumbling block for an international climate treaty. In the run-up to last year's Copenhagen summit, countries like China and India demanded special patent exemptions for green technologies, so they might use these technologies without paying high licensing fees. For example, Chinese car manufacturers are unable to produce low-cost hybrid cars because a small number of companies have patented key components. American companies, however, worry that patent law changes will cut into their profits, and last June, the House unanimously voted to prevent any weakening of international patent rights.

There's a way out of this impasse: The United States could appease its global critics without changing international patent laws—while simultaneously making green technologies cheaper for Americans. Our government can do this simply by changing the way in which federally funded inventions are patented.

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Taxpayer dollars fund 60 percent (PDF) of this country's basic research, most of which occurs at universities. And that pool of money is only growing. Last year's stimulus package added $5 billion to the basic research budgets of the National Science Foundation and Department of Energy in what President Obama called the biggest increase in basic research funding in American history. Game-changing green technologies—such as a method to store solar energy as fuel—will probably emerge in the coming years from government-funded university labs or research centers.

But a 1980 federal law designed to get inventions out of university labs and to consumers will end up limiting worldwide access to these technologies. The Bayh-Dole Act allows universities to grant exclusive rights to private companies; MIT, for example, has more than 30 patented green technologies available for licensing, and Cleveland State University has granted one company a worldwide exclusive license for a new wind-turbine design. These patents do provide companies with an added incentive to commercialize new technologies, but they stifle competition, too. In the end, the public pays twice for new inventions: once for the initial research and again for the high prices of the patented products. Universities do not benefit from this system very much, either—very few earn significant revenue from their licenses, and most fail even to recoup their legal fees.

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The theory behind the Bayh-Dole Act is that companies need the incentive of exclusive patent rights (and the high prices they can then charge) to turn basic research into new consumer products. This may well be true for pharmaceuticals, given the high cost of running clinical trials and getting the necessary FDA approval. For most technologies, however, companies don't need this added incentive to bring a good idea to market. On the contrary, a thicket of patents on basic research findings can make it harder to synthesize the latest knowledge and create a useful, new product. These patent thickets have arisen for fuel cells, wind energy, and carbon sequestration.

So what's the fix? Patents on federally funded inventions should be the exception, not the rule. Fewer patents would mean cheaper green products, both abroad and here in the United States, which would help reduce global carbon emissions. And it wouldn't be too much of a burden to U.S. business interests, since companies that perform their own research, rather than just commercializing federally funded inventions, would still be able to patent their technologies.

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