Patent Pooling And Diffusion Of Green Technology: A Critical Analysis

Patent pool is an association of two or more companies to cross-license their patents in respect to a particular technology. In other words, this is an agreement between companies to license or permit one another or any third party to use the patents owned by them.

"The aggregation of intellectual property rights which are the subject of cross-licensing, whether they are transferred directly by patentee to licensee or through some medium, such as a joint venture, set up specifically to administer the patent pool."^[1]

Patent pools can also be defined as an agreement between two or more patent owners to licence one or more of their patents to one another or to third parties. Often, patent pools are connected to complex technologies that require complimentary patents to offer effective technical solutions. ^[2]Generally, mature technologies come under the purview of patent pools. Frequently, patent pools also represent the basis for industry standards that supply firms with the necessary technologies to develop compatible products and services.

Patent pools basically originated as most of the technologies involve various patents and owners and it is impossible to adopt such technology without infringing any one's technology or without an effective means to obtain necessary license to use the various patents. Other reason for origination of patent pools was to avoid the competitors suing each other in order to keep out each other from the technology.

The concept of patent pooling has emerged as a vital tool in the areas of nanotechnology, biotechnology, pharmaceuticals, clean energy technologies, etc. They are of great use to developing countries like India to attain access to advanced and expensive technologies. However, anti- competitive attributes have been witnessed in developed countries like the US. In the international patent regime, patent pooling is a commercially viable concept.

Patent Pooling And Green Technology In India

With the rapid technological advancement and industrialization, patenting in India has also taken a massive leap. Though the Indian patent regime is known to be rigid in its operation, the landscape of patenting in India has opened a new gateway for innovators at both national and global platforms.

Patent pooling is an emerging concept in the patenting domain of India. Big innovators have captured the Indian with great efforts owing to the stringent patent regime in India and they are often reluctant to pool their technology with another competitor in the Indian market. However, the only area where patent pooling is shown have a noticeable impact in India is cheap and affordable health care facilities.

Recently, one Indian generic drug manufacture Aurobindo Pharma Limited and MedChem, joined the Medicines Patent Pool (MPP) for manufacturing of several anti-retroviral medicines. This enabled Aurobindo Pharma to have access the patented drugs of that Gilead which was recently introduced into the pool. Now, Aurobindo can manufacture and sell tenofovir in larger number of countries without paying any royalty^[3].

According to UNEP and the OECD green indicators^[4], India is one of the fastest growing green economies in the world.

Many technology creators in India are working towards green innovation and it is important that they receive the support of policy makers so as to get a due return on their investment. Policy makers should also ensure that such technologies are easily accessed by the consumers in order to build a green ecosystem.

It is noteworthy that India being a country at a post-development stage has taken active measures to access green technology. In the past few years, Indian foreign policy has targeted to obtain licence to use clean technologies that are innovated in developed nations. India has witnessed a tremendous growth in R&D activities in various fields such as renewable sources of energy, industry, agriculture, biotechnology, etc. The prime focus of these activities has been to enhance eco-friendly innovation^[5]. There are a few government and private organizations which are involved in greening various prominent sectors of growth. The number of green patent applications in the last decade has increased exponentially. Thus, it has also been opined that like many countries (e.g. Brazil, Korea, US, etc.), India should also fast-track patent applications pertaining to green technology.

Also, in the light of the fact that the Indian Patents Act, 1970 is silent as to the operation and execution of patent pools, there is a need for Indian policymakers to fine tune the patent system to make room for patent pooling (both national and cross-national) and diffusion of environment friendly technologies.

As far as the Patents Act is concerned, there is no provision that facilitates the creation of patent pools or cross-licensing of patents.

However, with the formulation of a policy to that effect, innovators in India would be able to pool their patents and share market monopoly. Hence, government interference in this regard is required.

Section 102 of the Patents Act provides for acquisition of patents by the Central Government in public interest. However, this provision cannot be interpreted to mean that patent pools can be created under this section by the interference of the government because that would mean the loss of monopoly of patent-holders.

From the point of view of antitrust, it is possible that some patent pools work in adverse manner in the market and thus, there is strict regulation of such agreements under the Competition Act, 2002. It can be perceived as a barrier in the way of creation of patent pools.

Section 3(3) of the Competition Act, 2002 deals with those horizontal agreements between associations or enterprises which: (a) directly or indirectly determine the sale prices; (b) limit or control production, supply, technical development, investment or provision of services; (c) share the market, source of production or provision of sources by way of allocation of geographical area of the market, type of goods or services, number of market customers or in any other similar way; (d) directly or indirectly result in bid rigging or collusive bidding. It provides that any such agreement shall be presumed to have appreciable adverse effect on the market.

The Section, however, in its proviso, excludes agreements entered into by way of joint ventures if such agreement increases efficiency in production, supply, distribution, storage, acquisition or control of goods or provision of services.

Section 3(4), on the other hand, deals with vertical agreements, and provides that any agreement amongst enterprises or persons at different levels of the production chain in various markets, in respect of production, supply, distribution, price or trade in goods or provision of services, including: (a) tie-in arrangements; (b) exclusive supply agreement; (c) exclusive distribution agreement; (d) refusal to deal; (e) resale price maintenance; shall be deemed to have an appreciable adverse effect on competition in India.

The confluence of combinations pertaining to IPR and fair competition has been dealt with in Section 3(5) of the Competition Act, 2002. It provides that any licence granted with reasonable conditions to exploit the monopoly attached to an IPR would not constitute an anti-competitive agreement.

The term reasonable conditions'may be interpreted to mean that if any licensing arrangement has the effect of adversely affecting the prices, quality or variety of goods and services then the arrangement would fall in the category of anti-competitive agreement.

The Competition Commission of India (CCI) has regarded patent pooling as a restrictive practice which is exclusive of the bundle of rights forming an IPR as recognized under Section 3(5). Further, CCI has also identified some situations where patent pools could be deemed as anti-competitive. For instance, when two firms pool their patents and agree not to grant licence to third parties while fixing prices as well, the arrangement shall be considered as anti-competitive.

In an innovation market, if certain technologies are locked in limited hands and new entrants are strategically isolated from the market, it becomes difficult for third parties to compete. Therefore, in the light of the guidelines provided by the CCI, especially in absence of judicial pronouncements on the matter, it is imperative for the innovators who are engaged in patent pooling practices to ensure that their agreements do not entail antitrust litigation.

The role of the judiciary in interpreting the law pertaining to patenting and competition cannot be ignored.

The judges must take up the responsibility to clear ambiguities in the matter so that the practice of patent pools can be used in an ethical and economically and socially beneficial manner.

A study of the recent trends in the field of patent pooling, cross-licensing and diffusion of green technologies reveals that innovation firms around the globe have become aware of the fact that their investment R&D in developing their technologies must be aligned with the globally recognized environmental goals. In other words, innovators cannot afford to relentlessly apply for technologies which are harmful to the global climate. It is also made quite clear that commercial as well as cross-national patent pools will be created only when the recipient market has a robust patent protection regime. Thus, India, to promote diffusion of green technology via patent pool mechanism, must enhance support for green development through liberalized monetary policies. The patent holders will naturally be inclined towards the market which gives them an edge over the competitors while raising their goodwill as they contribute new climate- friendly innovations in countries where they are required.

Considering the interface between intellectual property and competition has covered the global commercial market. Thus, the policymakers and innovators across the globe must work in synergy to make efficient use of the patent thicket that is created in the competitive market. Patent pools must be diligently regulated to yield pro-competitive impact.

The focus of policymakers around the global has always been on creation of patent pools in the sector of pharmaceuticals as epidemics, terminal diseases, deadly outbreaks, etc. have been serious issues especially in under-developed countries. Pharmaceutical giants have exercised great commercial leverage by offering their invented products to the governments. However, it is also imperative for the major innovative companies around the globe to come together to use the new patent pooling system for developing and disseminating climate friendly technologies like they have been doing in the sectors of pharmaceuticals, biotechnology, nanotechnology, radiology, etc.

In order to attract creation of patent pools in green technologies, both developing and developed economies must take proactive steps. Private players engaged in development of environment friendly technologies need incentives to pool and further licence their technologies. Thus, efficient competition and IP regimes properly balanced with environmental safeguards should be the vision plan for the coming decades.

Views are personal.