Griffith Hack Clean & Sustainable Technologies


China breaths fire on Clean IP by Justin Blows
October 15, 2009, 8:27 am
Filed under: Feature

This recent article states that the Chinese environmental technologies market, including renewable energy, is expected to be one trillion US dollars by 2013.  Some foreign companies are taping into this market.  For example, First  Solar, an Arizona based solar company that manufactures solar modules recently won a contract to build a massive 2 GW solar field bigger than Manhattan. 

But many believe that China is raising trade barriers to the importation of renewable energy plant. At the same time China is complaining that patent rights to foreigners are a barrier to importation.  Both of these measures reduce the ability of non-Chinese companies to compete in the clean technology business in China.

So what exactly is China’s position on Clean IP?  I found this emotive news item in China View which puts forward the arguments for weakened patent rights.  The argument goes that weakened patent rights will  increase clean technology transfer into developing nations like China. China View does not hold back:

The developing world, victimized by greenhouse gas (GHG) releases in the West, not only suffer from extreme vagaries of weather that wreak havoc but also are forced to yield ground on development. They are facing costs of around 100 billion euros a year by 2020 and crying out for technology used to treat carbon dioxide, nitrogen dioxide and other GHGs. Yet slow and slim technology transfer remains one of the biggest hurdles for their environmentally sound pathways.

And if you’re looking for particularly strong language …

Unfortunately, techno-rich industrialized nations cling to repulsive standards in technology trade and cross-border licensing. The current intellectual property right (IPR) regime is “unduly biased toward the owners rather than the users of technology”, said the UN World Economic and Social Survey 2009 released recently. Combined with the market power of multinationals in the advanced economies, such a regime could thwart global efforts in environment by suppressing low-emission uses of developing nations.

chinese-dragon-red

In reality cleantech transfer into China is strong.

Shi Zhengrong was educated at the University of New South Wales, Sydney Australia and started Suntech Power in China.  Suntech is a leading manufacturer of photovoltaic solar cells. Suntech made Dr Zhengrong the world’s first solar billionaire.  Suntech has plans to become a commercial superpower like oil company BP.  According to the China daily, in 2008, solar cell production in China accounted for 40 percent of the global output, and seven of the world’s top 15 solar cell manufacturers are Chinese companies.  In fact it is so successful that now the Chinese government wants to slow growth in the industry.

Suntech benefits commercially from a healthy patent portfolio.  That’s good – perhaps with the help of their patent portfolio they will become the energy giant they want to be, help develop China and mitigate climate change.

Wang Chuanfu is another Chinese billionaire. He founded and is the chairman of BYD, a company that manufactures electric cars and the lithium ion batteries that power them. Mr Wang turned out his first plug-in electric car for the market last year. The company has said that it plans to become China’s No 1 carmaker by 2015 and the world leader by 2025. Another case of successful clean technology transfer to China.

BYD also benefits from a healthy patent portfolio.

But if developing nations like China are benefiting from clean IP is there any reason to change the IP system as they are arguing?

Technology transfer and IP rights are going to be one of the big issues in the upcoming Copenhagen meeting. Developing nations believe IP rights are a barrier to the transfer of clean technologies but developed countries strongly defend IP.  But it appears that the arguments being put forward by developing nations, at least in the case of China, are exaggerations. Successful Chinese cleantech companies enjoy commercial success at least in part from their patent portfolios.

This issue may scuttle a global deal on climate change at Copenhagen. As reported in the American Chronicle, a recent 432-0 vote on an amendment to the US Foreign Relations Authorization Act was a signal that an overwhelming majority in the US Congress back intellectual property rights.  This position is directly opposed to China’s view.

In fact, Patents and other form of IP are part of the solution, not the problem.  Some things that are not pointed out by the author of the China View article:

  • Companies develop clean technology and need IP to protect their investment. Why would free enterprise spend all that money if others are going to copy?  The copyists are at an advantage because they do not have to spend on R&D, infrastructure, relationship building, working with governments etc.
  • Protected IP reassure investors that their investment is protected, stimulating investment in clean technologies.
  • Chinese industry has a history of infringement – are they trying to keep this ‘unfair’ advantage by diluting IP rights?
  • IP rights provide legal clarity and certainty for technology transfer – something that is not well understood. How do you licence a technology without a clear legal right? How is a company motivated to transfer out and diffuse technology if there is no transaction centered around a ‘tangible’ property right?  IP rights are part of the solution, not the problem.
  • IP strongly encourages joint ventures because the IP that comes out of the JV can be assigned as required in a structured and well defined way.

If you are interested in reading more about renewable energy and IP in China have a look at this post.

Justin Blows

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