Green Intellectual Property: a Tool for Greening a Society
Itaru Nitta*
The aim of this article is to introduce a drastic reform into the present intellectual property (IP) system that would
encourage the development of a truly affluent society while keeping the economic scale at a sustainable level. The resulting
system or "Green Intellectual Property (GIP) system" would stimulate the progress of "green intellectual creations"
including advanced technologies, social models and policies.
In this article, "green" means "sustainable
development-oriented" or "affluent societies reaching beyond traditional economic growth." The GIP system would divert
a part of ample IP-related monetary flow or a "GIP fee" toward a monetary pool or a "GIP trust fund" for greening a
society. IP-related monetary flow includes official fees, license royalties and IP infringement compensations. From this
trust fund, the system would provide "GIP financial aid." If an institution needed the product or service of a green
intellectual creation and was unable to afford access to that creation because of capital shortage or lack of technology and a
social model, the GIP system would offer the necessary financial support in the form of a soft loan and grant for
formulating or purchasing that creation or a royalty assumption for introducing that creation. While the GIP financial aid
would enable the financially weak to access the necessary green intellectual creations, this aid would also provide benefits to
GIP fee payers because it would guarantee that they are able to collect early investments for formulating a new creation
even when its users do not themselves have enough financial power. As a result, the GIP financial aid would raise
originators’ incentives to formulate further green intellectual creations even when the market is not fertile. These effects
would lead to an increase in the number of IP applications, which would eventually amplify the financial resources in the
GIP system itself for further financial aid. This self-incentive feature of the GIP system allows us to view its aid as a
"green investment." Through these GIP fees and financial aid, the GIP system could address three economic aspects: the
sustainable constancy of economic scale, the just distribution of intellectual wealth and the efficient allocation of intellectual
creations. While many criticize that the current IP system fails to deal with these economic aspects, the proposed GIP
system could handle them in three different ranges of economic scope: the ecological, macro and microeconomic.
* Green Intellectual Property Project. The author can be reached at itaru@greenip.org. Reprinted from Intellectual Property
Rights: An Overview, Veena (ed.), pp.139-160, 2007, Icfai University Press, Hyderabad, India. Reprinted by permission of the
publisher.
INTRODUCTION
The traditional forms of intellectual property (IP) rights
include patents, trademarks, designs, copy rights and
geographic indications. Generally, IP rights are exclusive
legal rights with a time limit or “lawful temporary monopoly”
that is granted for intellectual creations as a reward for first
formulating a creation and disclosing the information of that
creation (for other definitions for IP rights, See e.g., Idris,
2003). This definition means that the IP system works to
balance monopolizing intellectual creations and sharing their
information. Namely, the monopolistic principle of the IP
system protects the originator’s creation from intellectual theft
such as unauthorized use and imitation. Contrarily, the
sharing principle of the IP system compels an originator to
disclose full information of her creation to the public before
obtaining an IP right. IP proponents believe that these
principles of the IP system contribute to the progress of human
welfare through the activation of intellectual creations because
the monopolies of intellectual creations inspire originators'
incentives to formulate more intellectual creations. Moreover,
the disclosure of intellectual creations releases new
information which can enable new originators to formulate
further creations. The disclosure of intellectual creations also
causes different originators to avoid repeating the same effort
to formulate the same creation, thus avoiding the waste of time
and investment.
Joseph A. Schumpeter and many
neoclassical economists have asserted that IP rights, especially
patent rights, induce technological progress. Technological
progress increases labor productivity and creates new business
and jobs, which strongly stimulates economic growth (e.g.,
Schumpeter, 1934).
However, this neoclassical economic approach has provoked
criticisms from three different economic perspectives that the
current IP system causes undesirable outcomes (Daly and
Farley, 2004). From the broadest perspective, an undesirable
situation is concerned with the scale of economy which
ecological economists emphasize. Ecological economists
point out a complete lack of respect for a sustainable scale of
economy in the present IP system because the system is based
entirely on traditional growth-oriented economics. From the
second widest view of economics, an undesirable situation is
related to distribution of income and wealth, which is what
macroeconomists address. Macroeconomists argue that the
existing IP system prevents a society from achieving just
distribution of income and wealth because IP monopolies
promote the concentration of capital by an owner of an IP right.
Increased capital concentration is the financial driving force for
further intellectual creations, yet increased capital results in a
larger gap between the rich and the poor. From the narrowest
viewpoint, an undesirable situation is involved with the
allocation of resources, which is what microeconomists focus
on. Microeconomists claim that the IP system inevitably
results in inefficient allocation in the market, which originates
with IP monopolies. While the information of intellectual
creations is originally intangible and therefore a free-accessible
good, the IP system makes this information inaccessible, which
then leads to inefficient allocation of information in the market
with higher market prices than the equilibrium prices.
In contrast to these negative features, I have revealed positive
features of the present IP system; namely, the IP system has an
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unexamined but firm potentiality to propel the attainment of
sustainable development beyond mere stimulation of
intellectual creations (Nitta, 2005). In an earlier article, I
have proposed drastic reform of the present IP system that
would help society to reduce environmental impact (Nitta,
2005). We could call the reformed IP system a "green IP
(GIP) system." Throughout the present article, "green" means
"sustainable development-oriented" or "affluent societies
reaching beyond traditional economic growth."
As a
subsequent study to my earlier proposal, this article
demonstrates that the GIP system can circumvent undesirable
situations caused by the current IP system, and furthermore, the
GIP system strongly promotes the "greening" of a society.
For this demonstration, we will begin with arguments about the
necessity of intellectual progress and the mechanism of the GIP
system which is generalized to include all forms of intellectual
property. Subsequently, we will elucidate the superiorities of
the GIP system and its compatibility with economics.
GREEN INTELLECTUAL CREATIONS
To realize sustainable development, Herman Daly and other
ecological economists have affirmed that a society should
reduce its economic scale to a sustainable level and keep that
scale at a constant where births are equal to deaths at the
lowest rate and the input (depletion) of resources into a society
is equal to the output (pollution) of wastes to the environment
at the smallest amount. Ecological economists refer to this
economic situation as the "steady-state economy" (See, e.g.,
Daly and Townsend, 1993a). However, since the current
growth-oriented economy ultimately originates with
humankind's inherited desire to progress, blind restriction on
the growth of human population and resource consumption
cannot fulfill a constant economic scale for sustainable
development. Even extreme environmental protectionists do
not think that we should revert our standard of living back to
the Stone Age in order to preserve or conserve the natural
environment.
Most people, including economic growth
liberalists and environmental protectionists, want to enjoy the
benefits of progress. To progress while keeping the economic
scale constant, we have to recognize that this constancy
prohibits a society from increasing population and throughputs
(consumption) of resources; however, this does not mean that
we must deny the development of a more sophisticated society
and higher quality of life. Daly emphasizes the contrast
between growth and development; namely, while growth
makes something bigger, development makes something better
(Daly and Townsend, 1993b).
Distinguishing between
growth and development brings us to a conclusion -- a feasible
and probably the sole way for us to progress while keeping the
economic scale constant is not making society's activities
bigger but making them better, i.e., developing a truly affluent
society without increasing the consumption of resources. An
affluent society is a society that provides efficient and
high-quality goods and services, which allows us to enjoy
mental satisfaction, moral progress and improved "art of life"
(as proposed by John Stuart Mill) rather than the superficial
benefits of economic growth (Mill, 1848).
Much empirical evidence shows that the development of a
society highly depends on the progress of intellectual creations
such as comprehensive technologies and broad-perspective
policies. In addition, the development of a society needs firm
social system infrastructures and institutions in order for us to
do anything in that society because stable enforcement of
well-established social rules is a prerequisite for effective
social development. We could call these social systems and
institutions "social models." These social models along with
technologies and policies comprise three major elements of
intellectual creations. In particular, intellectual creations for
greening a society or "green intellectual creations" include
three different types: "green technologies," "green social
models" and "green policies."
These types can be
systematically defined according to the range of social scope,
and they are essential to the development of an affluent society
with a constant economic scale.
Green Technologies
Green technologies are the narrowest-range green intellectual
creations. They are concrete and intensive technologies
directed toward individual social phenomena, and they fall into
two basic classes. The first class is concerned with the
traditional eco-friendly technologies such as those related to
output-reduction and input-reduction.
Output-reduction
technologies reduce environmental pollutions. They typically
include pollution control and technologies for the restoration
and remedy of environmental harms.
Input-reduction
technologies reduce resource consumption in a society. They
include technologies for efficiency improvement in resource
usage, reuse and recycling, renewable resources,
environmental impact assessment, as well as the precaution
and prevention of environmental harms.
While many
researchers have focused on output-reduction technologies,
more effective green technologies are involved in
input-reduction.
Input-reduction leads to a decrease in
consumption of materials and energy and curbs both depletion
and pollution in the environment (e.g., McKinney and Schoch,
2003).
The second class of green technologies contributes to greening
a society with more comprehensive measures.
These
technologies are generally involved in human necessity, for
example medicine and health, hygiene, geriatric care,
agriculture, foodstuff, juvenile and adult education, poverty
alleviation and infrastructures for human life. In addition, the
second class is related to social service improvements such as
information and communications, social impact assessment,
the precaution and prevention of social harms as well as the
restoration and remedy of social harms.
Green Policies
Green policies are the broadest-range green intellectual
creations. They are abstract and extensive policies in politics
and macroeconomics that provide guidelines for greening a
society. The primary example of green political policies is
international environmental laws, which include treaties,
customary law, general principles and prevalent publications
including judicial decisions and the writings of eminent
publicists (Article 38(1) of the International Court of Justice
Statute). A treaty is the written form of an international
agreement between states (Article 2.1(a) of the Vienna
Convention on the Law of Treaties), and that form need not be
called a treaty; it can be called a convention, declartion,
protocol, communique, agreement, or virtually any other name
(Hunter, et. al., 2002a). The two biggest international
environment treaties are the Stockholm Declaration of the
United Nations Conference on the Human Environment and
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the Rio Declaration on Environment and Development
(Agenda 21). Customary law is the unwritten form of an
empirical rule that states regularly obey. An example of
customary law is the UN Law of the Sea Convention. The
general principles of international law are aspects in common
that states share such as the “Right to a Healthy Environment.”
Green political policies also include domestic environmental
law, protocols and rules such as the U.S. Sky Trust.
On the other hand, green macroeconomic policies are the
intellectual creations that address sustainable scale of economy
and just distribution of incomes and welfare. They also
encompass nonmarket goods and services which truly enhance
human welfare. These targets of green macroeconomic
policies are mostly those which the market fails to deal with.
One of the best examples of green macroeconomic policies is
the concept of the steady-state economy, which we have
already discussed. Another example of green macroeconomic
policies is the “principle of subsidiarity,” which was originally
derived from a Catholic tenet, emerged through the European
integration and now functions in the present European Union
(EU). This principle means that what can be well done by a
smaller and simpler institution should not be done by a larger
and more complex institution. Namely, we should solve local
problems not with global measures but local measures -- the
EU government handles only the global EU's issues, and local
issues should be addressed by local governments.
Green Social Models
As we have seen, green intellectual creations include at least
two elements: green technologies as the narrowest creations
and green policies as the broadest. To support the practical
applications of green technologies and the implementation of
green policies, we additionally introduce a middle-range
creation: green social models. Since green policies provide
only general guidelines and they do not bestow specific
instructions, we need green social models, i.e., social systems
and institutions that provide concrete procedures for the
achievement of green policies. Additionally, green social
models could guide the trend of green technologies by acting
as super controls of technological developments to point
technological progress in the right direction. In this situation,
green social models could be regarded as converters of
philosophies in green policies to green technologies which
actually affect our lives.
A typical example of social models is the Official
Development Assistance (ODA).
The ODA is an
international institution that distributes financial and
technological aid through the government or governmental
agencies of several developed countries including US, Japan
and Germany. The first-ever international organization for
ODA was the Organization for European Economic
Co-operation (OEEC), which was established in 1948 with
support from the US and Canada for the reconstruction of
Europe after World War II. In 1961, the OEEC expanded to
include US and Canada and became the Organization for
Economic Cooperation and Development (OECD). ODA
from the OECD was originally the social model to implement a
governmental policy, the Marshall Plan. ODA is also a social
model to guide practical applications of various technologies
through vast financial aid provided by developed countries to
developing countries. This situation allows us to conceive of
ODA as a kind of social models that has successfully converted
a public policy (the Marshall Plan) into technological progress
through financial aid.
Another example of green social models is international
financing institutions for protection of the global environment.
These institutions include pioneers that have already proven to
be useful such as the fledgling "micro-credit" programs (for
example, the Grameen Bank), debt-for-nature swaps (for
example, that of the Beni River Region, Bolivia, by
Conservation International, USA) and national environmental
funds.
The
green
institutions
also
include
usefulness-unproven proposals such as the "Tobin Tax" and the
Global Commons Trust Fund (Hunter, et. al., 2002b).
GREEN INTELLECTUAL PROPERTY (GIP) SYSTEM
As we have discussed, the major elements of green intellectual
creations are advanced technologies, social models and
policies.
Through strong progress in the formulation,
practical applications and wider prevalence of these intellectual
creations, the ultimate objective of the green intellectual
property (GIP) system is to attain the development of a truly
affluent society while keeping the economic scale at a
sustainable level. For this purpose, the GIP system would
divert a part of ample IP-related monetary flow or a "GIP fee"
toward a monetary pool for greening a society or a "GIP trust
fund" (Nitta, 2005). IP-related monetary flow could include
official fees, license royalties and IP infringement
compensations. IP applicants would pay a GIP fee when they
take a legal action to obtain an IP right and IP owners would
also pay a GIP fee when they earn income from a royalty and
compensation. From the GIP trust fund, the GIP system
would provide financial aid for the formulation, practical
applications and wider prevalence of green intellectual
creations. Specifically, if someone needed the product or
service of a green intellectual creation and such person was
unable to afford to access that creation because of capital
shortage or lack of technology and a social model, the GIP
system would offer the necessary financial support in the form
of a royalty payment for introducing that creation or a soft loan
and grant for formulating or purchasing that creation.
Establishing the GIP Trust Fund
A present, the current IP system has the superior ability to
establish a GIP trust fund; namely, the system has ample
financial resources which are supported by the pro-patent
policy within an internationally-harmonized framework of
strictly enforced laws (Nitta, 2005). In the case of the patent
system, the abundant financial resources of this system can be
represented by the statement, "a patent law is a law for rich
people." These words mean that major players in the present
patent system are those who have enough financial power to
create an invention and then obtain and maintain its patent
right. They pay various official fees that provide huge
amounts of revenue to the patent system. For example, the
revenue of the World Intellectual Property Organization
(WIPO) in 2004 was $230 million including $180 million
(78%) of the official fees for the Patent Cooperation Treaty
(PCT) applications (the author converted the original Swiss
franc to US dollar from the data of WIPO, 2005). The WIPO
also predicts that its total income will increase in the next five
years based on the increase in PCT applications. In another
example, the United States Patent and Trademark Office
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(USPTO) earned a total of $1.2 billion including $1.0 billion
from patent official fees in the fiscal year 2003 (USPTO, 2004).
Like the WIPO, the USPTO also predicts that their total
income will increase in the next several years based on the
increase in patent applications in and toward the US. These
data indicate that even just two patent offices' income will
reach roughly $2 billion in the coming years from patent
applications alone. If the patent system allocated even a
small portion of its vast income as the GIP fees, the system
could provide substantial financial resources to establish the
GIP trust fund without soliciting additional official fees.
Although the current official fees could already provide
considerable revenue to the proposed patent system, a hike of
these fees would be relatively easy in the form of the GIP fees
if the GIP trust fund required more financial resources. For
example, one patent application for one invention in one
foreign country costs roughly $6,000 which contains only
$1,500 in official fees and $4,500 that goes toward other
expenditures such as translation and attorney fees (based on the
author's experiences). Because official fees are a much
smaller part of the total cost, a certain percentage increase in
official fees would not appear to an applicant as a significant
rise of the total cost to obtain a patent right.
In addition to the income from official fees, the patent system
has other potential financial resources that could be generated
by the monetary flows concerning patent activities. An
example of the patent-related monetary flows is royalty
payment for a patent license from a user to an owner.
Another example is compensation payment for a litigation
from a patent infringer to an owner. These patent-related
monetary flows provide industrial corporations a huge amount
of patent income. For example, in 2003, IBM earned $900
million in patent income, which is equal to 1% of its total
income of $90 billion (IBM, 2003). These patent incomes are
equivalent or more than the current revenues of the patent
system from official fees. For the GIP trust fund, the patent
system could collect a part of these patent incomes in the form
of green fees from successful patentees.
Promoting Green Intellectual Creations
From the GIP trust fund, the GIP system would offer financial
aid to promote green intellectual creations in three different
measures: the spread of existing creations, the practical
application of fledgling creations and the formulation of new
creations. Looking at an example of the first measure, in
order to distribute already-established creations such as an HIV
medicine, the royalty for that HIV medicine could be paid by
the GIP system rather than the medicine's users such as African
countries that cannot afford to pay. This royalty assumption
by the GIP system would strongly promote the distribution of
green intellectual creations by two adroit features. The first
feature is the reconciliation between environmental
protectionists (usually including green creation's users) and
growth liberalists (frequently including GIP fee payers such as
IP applicants and owners). While this royalty assumption
would enable the financial weak to access the necessary green
intellectual creations, the assumption would also provide
benefits to GIP fee payers because the royalty assumption by
the GIP system would guarantee that they would be able to
collect early investments for formulating a new creation even
when its users do not themselves have enough financial power.
In other words, the royalty guarantee would justify the GIP
fees for GIP fee payers in a remarkable contrast to ordinary
green taxes, which unilaterally burden tax payers.
The second feature of the royalty assumption by the GIP
system is the arousal of further green intellectual creations that
are not profitable for an IP owner but essential for greening a
society. For example, within the present framework of the
existing IP system, pharmaceutical companies may shift their
development activities from an HIV medicine to more
profitable medicines such as an antipodagric for rich man's
gout because rich men with gout in developed countries have
more money than HIV patients in developing countries.
However, if the GIP system guaranteed the royalty for an HIV
medicine, pharmaceutical companies should shift their
activities back to an HIV medicine. Generally, the royalty
guarantee would raise originators’ incentives to formulate
further green intellectual creations even when the market is not
fertile. Since most markets of green intellectual creations are
still immature and many green creation's users do not have the
sufficient financial capacity to introduce green creations, the
GIP system's guarantee would serve as a catalyst for a wider
prevalence of green intellectual creations.
In the second and third measures of financial aid from the GIP
trust fund, the GIP system would encourage the formulation of
new green intellectual creations and the practical application of
fledgling creations as is the case with the prevalence of
existing creations such as an HIV medicine. For example, the
system would provide soft loans or grants to assist basic
research for the formulation and launching new green creations
which no society possesses but every society needs. These
green creations include novel green technologies (e.g., satellite
photovoltaic and nuclear fusion power generation), social
models (e.g., a new financial mechanism) and policies (e.g., a
new treaty). In addition, the soft loans or grants from the GIP
system would also promote the practical usage of green
intellectual creations which were already formulated but have
not matured yet. For instance, the GIP system would help
users purchase nascent but seminal green technologies such as
solar and wind power generation.
Although these
technologies usually have high prices due to IP protections and
the small scale of production, the GIP system’s financial aid
could expand the market shares of such technologies. This
expansion induces mass-production of green technologies and
decreases the price of green technologies. As a result, the
GIP system would effectively promote the practical application
of fledgling technologies in a society. Furthermore, the GIP
system would financially support the practical progress of
trailblazing social models (for example, micro-credit programs
and debt-for-nature swaps) and polices.
Through the
encouragement of the formation and application of these green
creations, the soft loans and grants from the GIP system would
accomplish the reconciliation between GIP fee payers and
users while stimulating the development of green creations.
These features are similar to those of royalty assumption.
Namely, the GIP system's soft loans and grants could stimulate
users' intentions to purchase green creations, which would
expand the reach of emerging creations in a society. This
would provide benefits to GIP fee payers and inspire
originator’s motivation for the formulation of further green
creations.
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While distributing, maturing and formulating green intellectual
creations, the financial aid from the GIP trust fund would
function as a self-amplifying investment which could address
two major root-causes of worldwide unsustainable growth:
poverty in developing countries and consumption in developed
countries. To curb poverty-induced unsustainable growth in
developing countries, the GIP system would help developing
countries introduce green intellectual creations from developed
countries. To reduce consumption-induced unsustainable
growth in developed countries, the GIP system would assist the
formulation of new green creations and the maturation of
emerging creations. These financial supports from the GIP
system would expand green intellectual creations, which would
enlarge the reach of green intellectual creations in a society.
This reach would lead to an increase in IP applications for the
GIP system. As a result, the increase in the number of IP
applications would eventually amplify the financial resources
in the GIP system itself for further financial aid. This
self-incentive feature of the GIP system allows us to view its
aid as an investment or a "green investment." This is because
these green investments would possess the same characteristics
as ordinary loan investments, which increase their original
financial resources through interest. Contrarily, the green
investment would differ from ordinary green taxes, which do
not increase their original funds. In addition, the green
investment would require, if needed, only a slight increase in
the total cost for obtaining an IP right and would not increase
market prices in contrast to the conventional green taxes,
which internalize environmental externalities into market
prices. While a price increase due to a market-based
internalization discourages the market, a non-price-increase
process through the proposed GIP system could encourage the
green market while keeping the economic scale at a sustainable
level by promoting green intellectual creations. That is to say,
this non-price-increase process would provide a reconciliation
for the conflict between economic growth liberalists and
environmental protectionists because such a process would
promote green intellectual creations without apparently
suppressing the market. In accordance with the desires of
both liberalists and protectionists, the GIP system would
provide an approach to the development of an affluent society.
establish the efficient allocation of resources by achieving an
equilibrium between marginal social costs and benefits as a
result of the Pareto optimum (Pigou and Aslanbeigui, 2002).
Internalizing external costs raises market prices and curbs
haphazard economic growth.
Consequently, this
internalization contributes to the attainment of a constant scale
of economy, and the sustainable constancy of economic scale is
one of the major concerns to ecological economists.
COMPATIBILITY OF THE GIP SYSTEM WITH
ECONOMICS
In addition to the superiorities of the GIP system as we have
argued, this system has a remarkable compatibility with
economics. Simply put, the GIP system could address the
sustainable constancy of economic scale, the just distribution
of intellectual wealth and the efficient allocation of intellectual
creations. While many criticize that the current IP system
fails to deal with these economic aspects, the proposed GIP
system could handle them in three different ranges of
economic scope: the ecological, macro and microeconomic
scopes.
By looking at these external costs from an ethical perspective,
a society should force the IP system to pay a compensation for
environmental and social degradation in the form of GIP fees.
The present IP system has contributed to environmental and
social degradation through the promotion of haphazard growth.
Environmental and social degradation includes not only
traditional environmental threats but also social problems such
as poverty, refugees, famine, pestilence and war. This
observation raises at least two arguments, especially for the
present patent system.
First, the patent system has a
responsibility to protect the environment and society because
the system is ultimately founded on sacrifices of the
environment and society. That is to say, the patent system
encourages technological progress, and technological progress
stimulates economic growth as indicated by the endogenous
economic growth model, which states that technological
progress induces more economic growth, which then results in
more technological progress (See e.g., Aghion and Howitt,
1997). In this way, the patent system activates economic
growth, and economic growth causes environmental and social
degradation. Therefore, the patent system should pay the
Pigouvian Effect: An Ecological Economic Aspect
From the broadest perspective of economics -- ecological
economics -- the GIP system would respect the sustainable
scale of economy; namely, the system would have a limiting
effect on the scale of economy in a similar manner to the
Pigouvian scheme. The Pigouvian scheme requires the
market to reflect neglected external costs. Once the market
appropriately reflects all these costs, it will spontaneously
Within the Pigouvian scheme, one of the most notable social
models is the Pigouvian tax, the origin of present-day green
taxes. The imposed Pigouvian tax is theoretically equal to
marginal external costs in order for the market to internalize
externalities. The GIP fees for the proposed GIP trust fund
could be conceived as a pseudo-Pigouvian tax. This is
because, even though the GIP fees would not directly raise
market prices, the fee payment would be a pathway to
internalize two kinds of external costs with which the current
IP system has been involved. The first category of such costs
is "IP-nonspecific external costs." These are general external
costs attributed to inherent market failure. Products and
services in any market ignore some external costs because it is
virtually impossible for the existing market system to consider
all these costs for a certain product or service. This is also
true of the products and services that an IP right protects;
namely, IP-protected products and services inherently overlook
external costs because any activities of the IP system are based
on these IP-protected products and services.
The second category of external costs that the IP system has
been related to is "IP-specific external costs." These costs are
generated by the IP-system's ability to increase capital intensity
through monopolies. These monopolies help to concentrate
capital or increase capital intensity for a monopoly owner, and
this heightened capital intensity then enables that owner to
invest in further development. Such IP-driven development
results in consuming more resources and generating more
external costs. In this way, the IP system generates not only
IP-nonspecific external costs, but also extra IP-specific
external costs. These costs could be internalized by the
payment of the GIP fees under the proposed system.
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costs of such degradation in the form of the GIP fees.
As for the second argument from an ethical perspective,
developed countries carry the entire responsibility to protect
the global environment and society because they have enough
financial resources which the patent system has rendered as a
result of the past and present sacrifices of the global
environment and society. In other words, developed nations
are the beneficiaries of the patent system. Therefore, these
beneficiaries of the patent system -- patent applicants and
patentees in developed countries -- must pay compensation for
the global environmental and social degradation.
In addition to the tax, another notable social model of the
Pigouvian scheme is the Pigouvian subsidy. The Pigouvian
subsidy is a society's payment as a reward to the social unit
that reduces external costs. The amount of the Pigouvian
subsidy is ideally equal to the marginal external costs that a
social unit successfully reduces. The financial aid from the
proposed GIP trust fund would be nothing more than a
Pigouvian subsidy because the GIP system would provide such
aid to users who reduce external costs by utilizing green
intellectual creations.
Since the GIP fee and GIP financial aid would be a form of
Pigouvian tax and subsidy respectively, the GIP system as a
whole would possess both features of these Pigouvian social
models. Moreover, the combination of these models would
render the GIP system a remarkable advantage which we could
call the "Pigouvian effect." For example, some may criticize
the GIP fee because it could curb IP applications, and this curb
might impede the progress of not only traditional
growth-oriented creations but also green intellectual creations.
This criticism ostensibly makes sense; however, the GIP
system would actually inhibit only growth-oriented creations
and conversely promote green intellectual creations. This
selective incentive for green intellectual creations is the
Pigouvian effect, which is a result of the combination of the
GIP fee (the Pigouvian tax) and the financial aid from the GIP
trust fund (the Pigouvian subsidy). This is because the GIP
trust fund would guarantee an IP owner's collection of early
investment in the form of royalty payments while at the same
time inspiring users' incentives to purchase creations as long as
those creations are green. In this circumstance, if the total
amount of an applicant's budget were limited and the GIP fee
increased the total cost of all IP applications, applicants would
decrease the applications of growth-oriented creations and
maintain or, if possible, increase the applications of green
intellectual creations. In other words, the Pigouvian effect
would encourage originators to formulate more green
intellectual creations rather than traditional growth-oriented
creations. As a result, the GIP system could selectively
expand green intellectual creations.
Wealth Re-Distributor: A Macroeconomic Aspect
From the middle perspective of economics -- macroeconomics
-- the GIP system would facilitate a society achieving just
distribution of income and wealth while increasing the
concentration of capital by the owner of an IP right. This
phenomenon is attributed to the fact that the payment of the
GIP fees would set an upper limit on IP-related income, which
corresponds to a macroeconomic procedure known as "capping
income and wealth." A traditional example of a capping
procedure is a tax for income and wealth, such as real estate,
tangible properties and heirlooms. These income taxes would
be comparable to the GIP fee. A successful IP owner acquires
a huge amount of IP income from a royalty when that owner
licenses an IP right.
An IP owner also obtains vast
compensation for infringement on an IP right when that owner
wins an IP infringement suit. When an IP owner acquires
these IP-related incomes, the GIP system would demand that
owner to pay the GIP fee based on the same logic of the
ability-to-pay principle for a regular income tax.
On the other hand, the GIP financial aid corresponds to another
macroeconomic procedure known as "guaranteeing minimum
income," because the GIP financial aid would assist users to
access the necessary green creations. This guaranteeing
procedure generally sets a lower limit on individual income
and wealth. Typical examples of guaranteeing procedure
include welfare programs in which a society provides
monetary and material aid, unemployment insurance, medical
insurance and minimum wage.
Since the proposed capping and guaranteeing procedure would
force the IP system to release IP-related wealth to the
economic weak who need green intellectual creations, the GIP
system could be regarded as a wealth re-distributor. By
setting an upper and lower limit of income and wealth, a
wealth re-distributor would decrease the gap between the rich
and the poor, which would lead to just distribution of income
and wealth in accordance with the principal aspect of the
macroeconomic policies.
There are at least two reasons why just distribution of income
and wealth is critical to greening a society. First, those who
are too poor cannot afford to care about the environment and
society. Second, those who are rich tend to consume a large
amount of finite resources. Poverty in developing nations and
resource consumption in developed nations are two major
factors for unsustainability. Nearsighted approaches for
poverty alleviation urge developing countries toward
growth-oriented macroeconomic policies, which ignore
environmental and social concerns. To earn foreign currency
for eliminating poverty, many developing countries depend
heavily on the exploitation and export of their natural resources.
These exported resources allow free consumption of natural
resources in developed countries without respect for
environmental impact.
From an ethical perspective,
distribution policies should not deprive people of what they
have earned; however, people should pay a fair fee for what
they have received from the environment and society.
To reduce the gap between the rich and the poor for just
distribution at a global level, the Rio Earth Summit Secretariat
estimated that developing countries annually need financial aid
in the amount of $125 billion from the international
community (Agenda 21, Chapter 33.18, Financial Resources
and Mechanisms). However, the total ODA from OECD
countries in 2004 reached only $78.6 billion, and Denmark,
Luxembourg, the Netherlands, Norway and Sweden were still
the only countries to meet the UN's ODA target of 0.7% of
gross national income (DAC, 2005). Moreover, the Global
Environmental Facility (GEF) is the largest international
financial institution specializing in technological adoption for
the implementation of specific environmental obligations, yet
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the GEF has provided only $4.5 billion in grants since 1991
(GEF, 2004).
To complement these existing financial
mechanisms, the GIP system, an international wealth
re-distributor, would collect a part of IP-related wealth through
each country's patent office or an international patent
organization such as WIPO or the World Trade Organization
(WTO). Then, the GIP system would distribute collected
wealth through multilateral development banks such as the
World Bank or local financial institutions such as a
micro-credit bank or debt-for-nature swaps in accordance with
the principle of subsidiarity. Moreover, a new international
funding organization based on incomes from the IP system
could be established through the initiative of three leaders in
the IP system, i.e., the US, the EU and Japan.
Accessibility Reinstatement and Responsibility Shift: A
Microeconomic Aspect
Economics at the narrowest perspective is microeconomics,
and one of the major objectives in microeconomics is the
efficient allocation of goods and services in the market. The
GIP system would contribute to the achievement of efficient
allocation of intellectual resources through two measures.
The first measure would be the reinstatement of accessibility
for green intellectual creations while maintaining IP
monopolies; namely, the GIP financial aid would reinstate
accessibility for the green creations to which the present IP
monopolies block free access. IP monopolies are the main
engine for originator’s incentives for formulating new
creations.
However, these monopolies make resulting
creations inaccessible to unauthorized users, and this
inaccessibility prevents the market from functioning efficiently.
For example, IP inaccessibility allows an IP owner to set any
desired price for that owner's creation, which is usually much
higher than the equilibrium price in an efficient market. This
higher price inhibits the smooth distribution of creations,
which leads to their inefficient allocation. To eliminate the
inaccessibility caused by IP monopolies, the proposed GIP
system would provide financial aid that would make green
intellectual creations accessible to aid recipients.
Aid
recipients could pay royalty and purchase green creations to
incorporate such creations into their society. This reinstated
accessibility would result in a smooth distribution of creations,
which would then realize efficient allocation of those creations
in the market.
The second measure for efficient allocation would be a shift of
responsibility for environmental and social costs from society
to IP applicants and owners. In order for IP applicants to
establish monopolies in the current system, their duty includes
the payment of official fees and the disclosure of intellectual
creations, yet it does not contain the payment of IP-specific
and IP-nonspecific external costs. This situation demands
that society pay those external costs despite the fact that such
costs have been generated by the IP system. In contrast, the
proposed GIP system would shift the responsibility for paying
these costs from society to IP applicants and owners. This
responsibility shift would induce the effective internalization
of IP-specific and IP-nonspecific external costs.
This
internalization would release a society from unjust burden to
pay those IP external costs, which would lead that society to
improved allocation of its financial resources. By using
financial resources that are no longer required for IP external
costs, a society could spend more expenditure for greening that
society.
Even though the proposed GIP system would contribute to
efficient allocation, some economists may still question the
necessity of the IP system, particularly the patent system,
because of several technologies such as computer software and
electronics that patent-free industrial-standard policies have
successfully distributed (e.g., Bollier, 2003).
However,
patent-free industrial-standard policies are usually of benefit
only if a supplier has enough capital resources to quickly
penetrate its new technologies into the market. In contrast,
we could easily predict that capital-short but forward-thinking
suppliers would develop many green technologies. These
suppliers need protections of their inventions through a patent
system which would provide financial resources for the
development of green technologies. Moreover if the present
patent system did not exist, most suppliers would keep their
technologies as trade secrets and people would not be able to
access or even learn those technologies until they became
out-of-date and suppliers disclosed them. This situation
would result in more serious inefficiencies in the market than
the situation of the present patent system because most
technologies are alive for longer than the patent term which is
usually 20 years.
However, even pro-patentists have argued whether patent
monopolies actually contribute to the progress of science and
technology. Some inventors can be stimulated by patent
monopolies, but others, especially capital-short but
forward-thinking suppliers, might be disappointed because
they could think that much research has already been done by
giant enterprises. They also might think that they could
hardly create anything new that the giants do not already have
a patent on. This means that patent monopolies may
eliminate the possibility of technological progress. From the
perspective of sharing information, it is preferable that anyone
freely access any useful invention.
To overcome this
contradiction caused by patent monopolies, the patent system
prescribes disclosure of inventions. Disclosure of inventions
enables subsequent inventors to catch up quickly to others with
existing patents and overtake them.
To obtain a patent right, the invention should be disclosed to
the public. Since the disclosure of inventions is a provision
for granting the patent right, the right is thought to be a reward
for providing the technical information of the invention to the
public (Ballard and Ballard v. Borden, 1952). In other words,
the present IP system works to balance IP owners' interest
through IP monopolies and public interest through information
disclosure. One may consider the current system balances
them, yet soon recognize it fails to do so once IP-specific and
IP non-specific external costs are taken into account. The
proposed GIP system would establish a true balance between
IP monopolies and public interest including not only the
disclosure of intellectual creations but also responsibility for
IP-related external costs.
CONCLUSION
One day Christopher Columbus was at a dinner which a Spanish
gentleman had given in his honor, and several persons were present who
were jealous of the great admiral's success. --- "You have discovered
strange lands beyond the seas," they said, "but what of that? --- Anybody
can sail across the ocean; and anybody can coast along the islands on the
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other side, just as you have done. It is the simplest thing in the world."
Columbus made no answer; but after a while he took an egg from a dish
and said to the company: "Who among you, gentlemen, can make this egg
stand on end?" One by one those at the table tried the experiment.
When the egg had gone entirely around and none had succeeded, all said
that it could not be done. Then Columbus took the egg and struck its
small end gently upon the table so as to break the shell a little. After that
there was no trouble in making it stand upright. "Gentlemen," said he,
"what is easier to do than this which you said was impossible? It is the
simplest thing in the world. Anybody can do it,—after he has been shown
how!" (Olcott, 1914)
and Daly, H.E. and Townsend, K.N. (Editors), 1993. Valuing the Earth:
Economics, Ecology, Ethics. MIT Press, Cambridge, MA.
This anecdote is called "The Egg of Columbus," and it
represents a typical example of serendipity in discovery.
Serendipity is a major driving force to produce a new creation
when different concepts meet over the boundary lines of
individual disciplines. The GIP system is comparable to the
Columbus's egg because it results from the serendipitous
meeting of the current IP system and the greening of society.
In other words, the GIP system itself is an intellectual creation
for greening a society. In addition, one creation induces other
new creations in the IP system, and this process would also
work for the GIP system itself. The GIP system could evolve
the IP system itself to produce more green creations.
DAC (the Development Assistance Committee of the OECD), 2005.
International Development Statistics on CD-ROM, 2005 Edition. OECD,
Paris, France.
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Ballard and Ballard v. Borden, 1952. Ballard and Ballard Co. v. Borden
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Bollier, D., 2003. Silent Theft: The Private Plunder of Our Common
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After reading this article, many may be surprised at the notion
that the IP system has a possibility of providing reconciliation
between growth liberalism and "greenism." Typically, the IP
system has been depicted as the standard-bearer of economic
growth and the natural enemy of environmental concerns;
however, there are two basic driving concepts that make the IP
system function as an engine to implement greenism. First,
both the IP system and greenism can be related to a common
factor, i.e., intellectual creations. The IP system is the legal
regimes most involved in intellectual creations, and greening a
society highly depends on the economic scale of that society,
the level of which intellectual creations determine. The
second driving concept is that both the IP system and greenism
share the same final goal, i.e., long-term human prosperity.
The ultimate purpose of the IP system is not to promote
intellectual creations blindly but to advance human welfare.
This purpose is typically represented by the fact that the IP
system defines "exclusions from patentability" (e.g., 35
U.S.C.§181-188, Secrecy order). This provision means that
the IP system will not publish an application or grant a patent
for any creation that violates public order or morals. In other
words, any IP will not be granted for a creation that has only
harmful applications. The IP system aims to improve human
welfare, and this aim is identical to the final goal of greening a
society. Based on these driving concepts, this article has
proposed the sophisticated infusion of greenism into the
monopolistic principle of the IP system, which would provide a
concrete tool for greening a society through the progress of not
only green technologies but also green policies and social
models. To ensure this progress, the proposed GIP system
would become a new funding system that promotes green
intellectual creations.
ACKNOWLEDGEMENT
The author appreciates valuable comments from Professor Herman E.
Daly, University of Maryland, USA, and Professor James Lee, American
University, Washington, D.C., USA. Much of discussion in this article
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