17-09-2012, 12:13 PM
INNOVATION AND DIFFUSION OF CLEAN/GREEN TECHNOLOGY: CAN PATENT COMMONS HELP?
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ABSTRACT
This paper explores the characteristics of 238 patents on 94 “inventions” contributed by major multinational
innovators to the “Eco-Patent Commons”, which provides royalty-free access to third parties to patented
climate change related innovations. By comparing the pledged patents to other patents in the same
technologies or held by the same multinationals, we investigate the motives of the contributing firms
as well as the potential for such commons to encourage innovation and diffusion of climate change
related technologies. This study, therefore, indirectly provides evidence on the role of patents in the
development and diffusion of green technologies. More generally, the paper sheds light on the performance
of hybrid forms of knowledge management that combine open innovation and patenting.
Introduction
Numerous well-known economists have called for policies to encourage both public and
private investment in technologies designed to mitigate climate change (Mowery et al.
2010; David et al. 2009; Krugman 2009; Arrow et al. 2008). As Nordhaus (2009), among
others, points out, policy in this area confronts a double externality problem: the first is
private underinvestment in R&D due to partial lack of appropriability and imperfections in
the financial markets and the second is the fact that climate change mitigation and
reduction in greenhouse gases is a classical public good, and one with a substantial
international component. That is, the benefits of climate change mitigation flow largely to
those who do not bear the costs. Hall and Helmers (2010) argue that the existence of the
second externality can impact the desirability of policies designed to deal with the first
externality, shifting policy makers’ preferences towards subsidies and away from
intellectual property (IP) protection.
To make this argument more explicit, consider the usual policies designed to close the gap
between the private and social returns to an activity.4 These are subsidizing (or issuing tax
credits for) the activity, regulating the activity (mandating its performance or controlling
the price of inputs), and internalizing the externality by granting property rights that allow
some appropriation of the social benefits. In the case of R&D investment, the first approach
has been widely used in the past for research directed towards national needs (Mowery,
2010), for corporate R&D via tax credits, and for small and medium-sized enterprises
(SMEs) that face credit constraints. Although the second approach has been used much less
(and is probably less suitable for R&D activities due to their uncertainty and the difficulty
of such micro-management), examples are the mandate of the State of California for sales of
electric-powered automobiles (Kemp, 2005) and the U.S. federal government stimulus
package, which mandates the diffusion of electronic medical records and their effective use
(Blumenthal, 2009).
The Eco-Patent Commons
The creation of the not-for-profit initiative EcoPC is quite recent, in January 2008. It was
established by IBM in cooperation with the World Business Council for Sustainable
Development (WBCSD) and it allows companies to pledge patents that protect green
technologies. Companies as well as individuals can join the commons by pledging at least
one patent.8 Any patent is welcome that protects a technology that confers directly or
indirectly some environmental benefit – so-called green patents. “Green” is defined by a
classification listing IPC subclasses that are considered to describe environmentally
friendly technologies. Yet, there appears to exist considerable flexibility as long as a
pledging firm can show some (direct or indirect) environmental benefit of the pledged
patent. In fact, as we show later, many of the patents contributed appear to be directed
towards mitigating environmental damage from manufacturing, but not specifically
towards climate change mitigation.
Data
The data appendix A describes in detail how we created our EcoPC dataset and control
samples. We started with the list of 121 patents contributed to the EcoPC by the 12
contributing firms which is available on WBCSD’s website.15 We then used the April 2010
edition of EPO’s PATSTAT to draw the following samples of patents:
1. All of the patents with the same set of priority documents as the EcoPC patents,
i.e., all EcoPC equivalents.16
2. Control (1) sample: all patent applications worldwide that were made by the 12
EcoPC firms.
3. Control (2) sample: all patent applications worldwide in the same IPC class as
one of the EcoPC patents (which also share the same priority year and authority
as an EcoPC patent). In addition, we restrict this sample to patents applied for by
firms (i.e., not by individuals/public research institutions).
Descriptive Statistics
In this section of the paper we present some basic information about the patents
contributed to the commons: their ages, legal status, priority authorities, family sizes, the
technology areas, and the firms contributing. In combination with the regression analysis
in Section 6, this allows us to address the first two questions posed in the introduction: are
the patented technologies indeed climate-change related? Are the patents that protect
these technologies valuable?