ECTA: IP and the green agenda

Until quite recently sustainability and, in this particular context, measures against climate change have been thought to be more of a policy than a legal issue, at least in Europe. A decision by the Dutch Supreme Court is tipping the balance in favour of the law.

On December 20, 2019, the court ruled in the case Urgenda Foundation v The State of the Netherlands that the state has an obligation to take measures to decrease greenhouse gas emissions in the Netherlands and to ensure that the Dutch emissions are decreased by 25% by the end of this year compared to the level in 1990.

The court of first instance and the Court of Appeal were of the same opinion. The basic line of argument was that the state had been too passive in reducing the level of emissions and had consequently breached its duty of care, according to the European Convention on Human Rights and the Dutch Constitution.

Without going into any detail with respect to the mentioned case, and without knowing if this is becoming a new trend in Europe, it can be argued that many legal fields have some role to play in order to achieve a sustainable environmental development. This also concerns IP rights.

The environmental requirement in the Treaty on the Functioning of the EU, article 11, and the goal towards further sustainable development have not been directly included in the European IP rights system. The question is: should this be the case? It is stated, however, that these requirements should be balanced with, among others, the protection of ownership and IP rights.

Development goals

Of the 17 United Nations’ (UN) sustainable development goals (SDGs) at least half are directly connected to our environment. In SDG 9, which is concerned with sustainable industry, innovations and infrastructure, it is explicitly stated that innovation and technological progress are the key to finding sustainable solutions for economic and environmental challenges.

Investment in sustainable industries, research, environmentally-friendly technologies and innovation are all important ways to create conditions for a sustainable development.

The connection between sustainable development and technology is expressly emphasised in the World Intellectual Property Organization’s (WIPO) paper “WIPO and the Sustainable Development Goals” from 2018. Here it is stated that “SDG 9 is at the core of our mission to lead the development of the international IP system for the benefit of all”.

While the UN’s Agenda 2030 links the environment and technology together in its SDGs, the WIPO is connecting them to IP rights. IP rights have, in other words, an important role to play.

The relevance of technological innovation for sustainable development is also recognised in Horizon Europe, a Ä100 billion EU research and innovation project that is part of the EU’s planned budget for 2021–2027. One of the EU’s strategic priorities is to secure the implementation of the Paris Agreement on reducing global warming, which came into force in November 2016.

There seems to be, at least in principle, an international and a European foundation for incorporating requirements of sustainability in the IP rights system.

Should IP rights be neutral?

One can take at least three positions with respect to this suggestion. First, one can argue that IP rights regulation in general shall be neutral with respect to subject and to area of application.

"A third, and more serious, argument is about whether it is wise economic policy to put innovation in the hands of governments."

Second, one can hope that businesses adapt to the goals regarding sustainability, which many already do because of, for example, consumer expectations and pressure. This is defined as “weak sustainability”. The corporations, in other words, include sustainability into their business systems. It could, for example, concern a simple thing such as a catering business increasing vegetarian meals in its daily food offering, because this is considered less burdensome for the environment, or decreasing portions to minimise waste.

The third possibility is that companies adapt to what the environment is able to tolerate. This has been considered as “strong sustainability”.

The third suggestion would probably mean that in order to obtain an IP right it should fulfil certain sustainability criteria incorporated in the law. The law could include either sustainability goals to be applied by the registering authorities or criteria to be checked and which the application has to match before approving registration.

A compromise would be to speed up the handling of those applications, which meet certain requirements—a kind of ‘green patent’ application—or award those with a longer term of validity.

Many arguments can be used against “strong regulation”. One is the difficulty of defining sustainability criteria clearly enough. On the other hand, court practice will over time render more precise content to the concepts used, as is already the case with respect to IP rights law.

In addition, general concepts guarantee flexibility and a possibility to take into account new developments. Another argument against “strong regulation” is that trying to achieve several goals with a legislative act usually makes bad law.

A third, and more serious, argument is about whether it is wise economic policy to put innovation in the hands of governments. According to our western market-oriented system governments should facilitate—not direct and control—innovation. This might curb innovations which could have been beneficial in the long run. A compromise would be to award not-so-sustainable inventions with shorter times of validity.

We can look forward to heated debates on these issues. Taking into account that there already are many empirical studies showing that IP rights are a key factor in the success and profitability of businesses, it seems natural to bridge a sustainable development with technology by using IP rights, as WIPO is indicating.

There is certainly room for discussion and measures to be taken concerning how strong an economic incentive the IP right should be. So perhaps after all, the law does have a role to play.

Max Oker-Blom is adjunct professor at the Hanken School of Economics in Helsinki, Finland. He worked for almost two decades as senior vice president, legal, at Fazer Group, a Nordic food service group of companies. He is past-president, immediate past secretary general and an honorary member of the European Communities Trademark Association. He can be contacted at: max.oker-blom@hanken.fi