Search the archive.

So far, the analysis has focused on various parameters that could result in a gap between market value and social value in different contexts. Yet, even if market demand accurately reflected social value, some types of innovations are more difficult to exclude than others. As a result, expected private returns to inventors under the patent system may not correlate with market value. This point has been recently made by Amy Kapczynski and Talha Syed, who demonstrated, through detailed examples in the context of public health, that the ability to exclude others, upon which the patent system relies in providing incentives to invent, operates in asymmetrical ways for different kinds of information goods.195 Hence, “patent rights have the potential to predictably and systematically distort private investment decisions over innovations by overstating the value of highly excludable information goods and understating the value of highly nonexcludable ones.”196 Ultimately, valuable innovations that happen to be closer to the nonexcludable end of the continuum may be undersupplied by the patent system.

In the environmental context, this may be relevant, for instance, with respect to industrial methods that are designed to “green” certain aspects of the production process of manufactured goods.197 To the extent that the use of such a “green” production method by competitors of the patent owner can be kept in secrecy and is not embedded in the final product, it might not be possible for the owner of a patent on such a method to detect and prove infringement.198 In light of the difficulty to enforce exclusive rights in such inventions, patents may fail to serve as an effective incentive mechanism in this context.

In fact, the patent system may actually contribute to the environmental problem by incentivizing economic activities that negatively impact the environment. Such a potential negative impact of the patent system on the environment has not been studied so far. Technological innovation results in the introduction of a wider selection of products and services to the marketplace, and by doing so, it may bring about an increase in the overall level of consumption. Likewise, innovation may accelerate the pace of development of improvements in a manner that leads to quicker obsolescence of existing products. A discussion of the possible manners by which the patent system may negatively impact the environment is outside the scope of this Article’s analysis. It is sufficient, for the purposes of the discussion herein, to acknowledge that the effectiveness of patents as an incentive mechanism in the environmental domain is limited.

Moving down the R&D chain to concrete technological solutions that are designed for direct implementation by businesses—for example, a cleaner production method—one might think that a market-based platform could actually serve as a good incentive mechanism. After all, such technological solutions may be readily and easily commercialized. Yet, even in this context, it appears that patent incentives cannot adequately promote the development of climate change technologies, as market demand tends to significantly underrepresent the social value of green products and processes.

The reason why a systematic gap between market demand and social value exists in this context has to do with the fact that a cleaner environment constitutes a public good, from which we all benefit, whether we contributed to it or not.121 Thus, just like pollution is a classic example of a negative externality,122 acting in an environmentally responsible manner often has positive externalities.123

While the concern that businesses’ demand for green technologies underrepresents social value has been noted in innovation literature, it is important to acknowledge that a similar effect characterizes individual consumers as well. For a variety of reasons, it appears that consumers cannot be trusted to sufficiently account for the environment while making market choices. This may have an enormous impact on the ability of the patent system to incentivize green innovation, both at the level of consumer end-goods and at more upstream levels.140

The link between consumption patterns and the ability of the patent system to incentivize green innovation has not been sufficiently explored. This dearth of discussion is unsurprising, considering that the prevalent approach to innovation law perceives the state’s role in setting the direction of innovation as rather limited, whereas the market’s invisible hand is generally trusted to direct R&D resources in an efficient manner.141 Such perception relies, to a large extent, on a general tendency to attribute much weight to consumer preferences, without questioning their merit.142 On top of this, up until recently—in proposing and implementing various measures designed to mitigate the environmental impacts of industrialized society, environmental scholars and policy makers have focused almost entirely on industrial targets.143 Environmental policy has generally accepted consumer attitudes as a given,144 and very little attention has been paid to the possibility of addressing environmental harms through a consumption-oriented approach.145 This is starting to change in recent years,146 but the link between consumption patterns and incentives to develop green technologies has yet to be explored.

The final point in this critical analysis of the way patent incentives function in promoting green innovation has to do with the design of the patent system itself. While seemingly extending its protection uniformly to “anything under the sun that is made by man,”203 patent protection only applies to certain types of innovation—technological inventions that meet the statutory patentability criteria. The IP Clause of the U.S. Constitution empowers Congress “[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”204 While the term “Science” is generally understood as referring to knowledge, the term “useful Arts” used by the Framers is commonly equated with the modern-day term “technology.”205 Hence, even though the U.S. Patent Act206 does not impose an explicit requirement that the invention must be in a technological field, the technological character of an invention does constitute a central element in patent-eligibility determinations.207 The requirements of novelty and non-obviousness further reinforce this focus. Hence, non-technological innovations are essentially outside the scope of patent protection.208 Furthermore, within the realm of the technological arts, patent law—with its rather rigid requirements for protection—is often said to be biased towards high-tech inventions over low-tech inventions.209

Notably, green technologies range from high-tech inventions, such as genetically modified seeds for drought resistance, to low-tech inventions, such as mechanical farming techniques.210 The more low-tech an invention is, the higher the chances are that it would not meet the requisite patentability requirements. To illustrate, an attempt to patent a method to improve efficiency of water use by proper irrigation scheduling, or methods of using natural alternatives in lieu of various industrial products, may fail on patenteligibility, novelty, or non-obviousness grounds.

As demonstrated in the Article, one of the main reasons why the effectiveness of patents as an incentive mechanism in the environmental domain is limited is the reliance of patent incentives on market demand in directing innovation.7 To start with, a market-based platform clearly cannot be relied upon to incentivize production of nonmarket goods.8 In the environmental context, this inherent limitation of the patent system comes into effect, for instance, with respect to basic scientific research regarding various fundamental questions related to climate change.9 Yet, even outside the realm of pure basic research, the more upstream a research and development (R&D) project is—i.e., the more removed it is from commercial applications—the higher the uncertainty regarding the market value of such project is likely to be, and the less probable it is that the patent system would provide ample incentives to pursue it.10 Thus, for instance, R&D endeavors designed to explore methods of employing various alternative energy sources in lieu of fossil fuels—which may later serve as the foundation for a wide array of downstream innovative efforts—are not likely to be adequately incentivized by patents.11

Unfortunately, in the context of environmental innovation, the concern that the patent system fails to provide adequate incentives to innovate applies to downstream innovation as well, since market demand tends to underrepresent the social value of green technologies. A cleaner environment constitutes a public good; hence, positive externalities play a significant role in undercutting demand for green products and processes. In deciding whether to purchase and install a pollution-reducing scrubber, for instance, a profit-maximizing firm is likely to focus on its direct costs and benefits, while not ascribing much weight to the substantial beneficial impact on numerous third parties that such a step may yield. If businesses are not willing to pay for climate change technologies a sufficient amount of money that reflects their social value, then the patent system—in its reliance on market demand—is not likely to incentivize development of such technologies at a socially optimal level.12

While the concern that businesses’ demand for green technologies underrepresents social value has been noted in innovation literature,13 this Article highlights that this is true with respect to individual consumers as well. Due to the existence of positive externalities and a variety of other factors explored in a growing body of interdisciplinary work, it appears that consumers cannot be trusted to sufficiently account for the ramifications of their choices on the environment. This may ultimately have a significant impact on the ability of the patent system to incentivize the development of both green consumer products and more upstream technologies, the demand for which derives from the demand for end-products.14

One other factor that may dilute the signal of social value produced by a market-based platform for incentivizing innovation is the inability of consumers to pay for various innovative products and services. Some low-income consumers—including developing countries in their capacity as consumers—may lack the means to pay for climate change technologies, even if they were otherwise willing to do so. This may be highly problematic regarding solutions that are required to address the particular needs of poor populations—for instance, an innovative product or process that would assist a country with a significant reliance on the agricultural sector to adapt to increasing temperatures. Such solutions would never be developed if we only relied on patent incentives.15

A patent fast-track program by itself is unlikely to achieve the rate of innovation needed because of positive externalities. To that effect, this Comment proposes that Congress introduce a patent prize system dedicated to green technology.237 Allowing the government to supplement the market-set value of a patent with its own calculation of social value may account for positive externalities while simultaneously leveraging the market actor’s superior knowledge of their invention’s commercial value.238 Ideally, the government will not have to calculate the value of the patent itself; only the social value will need to be considered. While there are many possible forms for a patent prize system, this Comment argues for a two-part prize consisting of (1) a monetary incentive, and (2) a special certificate that can substantively affect the patent review process. Such a system will offer the most flexibility for inventors and has the potential to maximize the incentive effect on green technology innovation.

In order to ensure that a sufficient amount of resources is allocated to R&D of climate change technologies, there is a need to provide adequate incentives to invest in these directions. Unsurprisingly—considering the central role that patents play in innovation law and policy as a general manner64—policy makers and IP scholars alike have devoted much attention to the patent system as a potential mechanism to promote environmental innovation.65 Among other things, in an effort to “green” the patent system and boost the incentives it provides for the development of environmental technologies, various patent offices around the world have implemented measures to fast-track green patent applications66—yet, at least in the United States, such schemes have not had a significant impact.67 Other measures proposed by scholars in order to bolster patent incentives for green innovation include reducing registration fees,68 lengthening patent term,69 and lowering patentability standards in order to make it easier to obtain environmental patents.70 For the most part, the possibility of relying on patents to incentivize innovation in the field has not been questioned, and as noted above, the main focus of scholars and policy makers has been on concerns regarding restrictions on access to patented technologies.71

Given the urgency of the climate crisis, many governments, businesses, and legal scholars have explored adapting national patent systems to facilitate green technology innovation.18 Patents have long been considered an effective mechanism for incentivizing innovation,19 and many nations—including the United States—have created targeted programs, statutes, and regulations to shorten the time for green technology patents to issue.20 By shortening the application process, inventors may enjoy the exclusivity benefits of patent protection for longer than through the normal process,21 and society would benefit from the rapid disclosure of environmentally-friendly technologies.22 Perhaps counterintuitively, inventors have not participated in these programs at a high level.23

One of the issues that may be driving this low participation is that patents are relatively ineffective at incentivizing green technologies.24 Patent systems fail to fully capture the value of technologies that confer substantial benefits to third parties, which undercuts demand for such technologies.25 Because market demand is the primary driver of a patent’s value, green technologies are at an inherent disadvantage due to the presence of these market dynamics—called “positive externalities.”26 In a study comparing the number of environment-related patent applications under the Patent Cooperation Treaty (PCT)27 with various indicators of “eco-innovation,”28 the share of environment-related patents to total patent applications, the number of environment-related patents per capita, and the number of environment-related patents per $100 billion in Gross Domestic Product (GDP) declined from 2013 to 2017 (the final year evaluated by the study).29 This is concordant with research from the International Energy Agency (IEA) that found that patents of technologies related to power generation, transport, buildings, manufacturing, and carbon capture and storage steadily declined from 2012 to 2018, and that there was no indication these trends would change in the near future.30 In that same period, there was no decrease in patents generally, or in other fields such as health technologies, general engineering, or information and communication technologies.31

The grant of a patent involves a trade off between providing an incentive for innovation and allowing monopolistic rights during the patent term. In the same vein, what seek to be obtained by patent applicants and patent offices may often diverge. On the one hand, applicants’ attempt is usually to obtain the broadest patent right over the invention, namely to receive a grant with the largest scope. In fact, obtaining a grant with larger scope increases the probability of protecting variations of the core invention and blocks competitors’ innovation activity. On the other hand, patent offices have recently understood the importance to issue patents that are of high quality. Uncertainty over the breadth of patent claims and subsequent high litigation costs have been largely identified as undeserved negative consequences of low quality patents. Particular concern regards patents with broad or vague claims. An excessive scope can be exploited for the purpose of rent seeking, particularly by non-practicing entities (NPEs) (Schwartz and Kesan, 2013). In specific industries, characterized by cumulative innovation, unclear patent claim language or too broad patents may hamper subsequent follow-on innovation (Merges and Nelson, 1990). Among different dimension of patent quality, in this paper we focus on patent legal quality, that is we refer to “low quality patents” as those that are “overly broad relative to the inventive contribution or (...) unduly vague or ambiguous” (Marco et al., 2019). In both cases, the patent system is found to be responsible of “either decisional errors in granting patents or systemic errors in legally authorizing such patents in the first instance”(Marco et al., 2019). During the application procedure, it is indeed the scope of the patent, defined by the structure and wording of its claims, together with its allowability, to be discussed by the patent office’s examiner and the applicant. Once the patent is issued, if the applicant is not satisfied with the claims allowed, the negotiations among the two parts may even continue through a prosecution process, leaving space to different degree of uncertainty about the boundaries of the invention (Lemley and Shapiro, 2005). Recent studies have pointed out that a large share of granted patents should be entirely or partially invalidated because they do not meet the criteria of novelty or non-obviousness (Henkel and Zischka, 2019), suggesting widespread errors during the application procedure. Recently, Frakes and Wasserman (2022) suggest that having few time allocated for the examination is causing examiners to grant low quality patents. These “undeserved” monopolistic rights, which some scholars call “probabilistic patents” (Lemley and Shapiro, 2005), represent sources of uncertainty that might hamper the innovation process. In an attempt to solve these issues, several patent system around the world allow administrative procedure of post-grant review, to challenge the validity of newly granted patents.

The patent system ensures that innovators see return on their investment, and that provides the incentive necessary for them to expand the scope of human understanding and share that knowledge with the world. However, the patent system, like all other human institutions, is vulnerable to abuse. This abuse is most notable in the form of low-quality patents that are asserted against innovative companies by entities that often don’t even make any products. The worst of these patent trolls pick up low-quality patents and take advantage of asymmetries in the economics of litigation to make quick cash. Bitmovin has been on the receiving end of several of these dubious suits, which are a very real threat to innovators and other startups. Some studies have estimated that 30% to 40% of issued patents are invalid or low quality.

I caught most of Commerce Secretary Gary Locke's speech (to a surprisingly small audience) yesterday at CES. There really wasn't that much that was worth commenting on, as it was mostly filled with typical political platitudes, and statements that often were based on questionable assumptions. For example, when he spoke about patents, as he's done before, he talked up the importance of approving more patents faster. But, right after that, he also talked about the importance of increasing the quality of approved patents, and getting rid of bad patents. What he didn't explain is how the USPTO would deal with the inherent conflict. If you speed up the pace of approving patents, you're inevitably going to let more bad patents through. It's nice to just say you want to speed up patent approvals while improving the quality of patents, but you have to at least recognize that the two goals are clearly in conflict. There may be ways to mitigate that (though, I'm not convinced any would actually work all that well in the long run), but it seems like the typical political promises of things that work against each other, such as claiming to want to increase government funded social services, while decreasing taxes. The two concepts are inherently in conflict, but politicians make such promises all the time. Still, if Locke really believes it's possible to bridge that conflict, it would be nice if he actually explained how.

Despite having been debated for decades, the issue of patent quality is fraught with controversy. This issue garnered considerable scholarly attention in the United States (US) in the 1990s due to concerns that the increasing volume of so-called “low-quality patents” would undermine innovation. Footnote1 Similar complaints later also gained momentum in the European Union (EU), although its examination process and litigation are considered to be relatively superior.Footnote2 These heated debates propagated worldwide concerns regarding patent quality. Following decades of global debate, most scholars have reached a consensus that low patent quality generates devastating social costs, including stifling innovation, undermining the patent system, raising transaction costs by encouraging more infringement and litigation, and diverting resources away from true innovators.

The implementation of the prioritization procedure, at least from a policy presentation perspective, appears to have positively shortened the examination period. However, of greater significance is whether this acceleration in examination speed will indeed impact the quality of granted patents. The literature on innovation speed and performance contributes to a nuanced understanding of this aspect, dating back to Stalk (1988), who emphasized that rapid innovation contributes to enhancing corporate profits and introduced the concept of “Time-Based Innovation” [46]. In the field of strategic management, speed has become another major source of competitive advantage following quality and price [41,46,47]. However, as research delves deeper, numerous studies indicate diminishing marginal benefits of speed on performance improvement. Scholars like Cohen et al. (1996) suggest a trade-off between shortening the time to market and optimizing performance [48]. For prioritized examination, policy implementation faces a “trade-off” between minimizing granting time and maximizing the precision of examination. According to the resource-based view, the scale of specific resources and integration efficiency are crucial for organizational operations [49]. Under the assumption of constant inputs, as speed increases, organizations gradually enter a state of resource and capability overload, making it challenging to guarantee the provision of high-level products or services [48,50]. In the context of this paper, if the prioritization institution does not entail the addition of dedicated examiners, there is a risk that, in order to complete examination tasks within specific timeframes, examiners may make hasty decisions regarding authorization after hurried assessments, increasing the risk of improperly examined patents. Consequently, the patent prioritization procedure may diminish patent quality.

Amidst the accelerating pace of environmental degradation and climate change, the global landscape of green patenting has witnessed unprecedented growth. The surge in green technology patents is indicative of a profound shift towards innovation that is not just economically viable but environmentally conscious. Green patents, encompassing areas such as renewable energy, pollution control, and sustainable agricultural practices, reflect a growing commitment among nations and corporations to prioritize sustainability in their innovation strategies. This transformation is driven by a recognition of the pivotal role that green technologies will play in shaping a sustainable future.

The rapid increase in green patent filings across the globe underscores a concerted effort to align technological innovation with sustainable development goals. Regions like the UK, which has seen significant uptake in its Green Channel expedited patenting process, and emerging economies such as China and other BRICS nations are making notable strides in promoting eco-innovation. This surge in green patenting is not merely a statistical trend; it is a manifestation of a broader movement to integrate sustainability into the very fabric of our economic and technological advancements.

WASHINGTON — The United States Patent and Trademark Office (USPTO) became a technology partner to the global green-technology platform of the World Intellectual Property Organization (WIPO), WIPO GREEN. WIPO GREEN is a public-private partnership established by WIPO in 2013. Its 145 international partners include major technology companies, intellectual property (IP) offices, business groups, research institutes, and nongovernmental organizations. The partnership provides an online platform for technology exchange, connecting providers and seekers of environmentally friendly technologies, and organizes acceleration projects, conferences, and international events that highlight the availability of green technologies. “By becoming a WIPO GREEN partner, the USPTO joins the effort to help companies, communities, and individuals from around the world identify innovative green technologies and who is producing and selling them,” said Kathi Vidal, Under Secretary of Commerce for Intellectual Property and Director of the USPTO. “This is a critical tool we can use to meet the challenge of global climate change, and helps fulfill President Biden’s promise to engage in international efforts that support climate-aligned technologies and investments.”

The announcement came at a meeting the USPTO Director held with WIPO Director General Daren Tang during the organization’s annual Meetings of the Assemblies in Geneva, Switzerland. The USPTO’s contributions to WIPO GREEN include its own initiatives that are designed to address the challenge of climate change, including: The USPTO Climate Change Mitigation Pilot Program, which accelerates the examination of patent applications involving innovations to reduce greenhouse gas emissions The soon-to-be-announced Patents for Humanity: Clean Energy Technologies awards competition, a green technology–focused version of the USPTO’s highly successful Patents for Humanity awards competition With this announcement, the USPTO joins 10 other IP offices as partners in WIPO GREEN: Brazil, Canada, Chile, Denmark, France, Japan, Lebanon, Morocco, Portugal, and Switzerland.

2. Current Injunction Law Is Equipped to Maintain the Fight Against Climate Change

This Comment argues that the equitable discretion afforded to courts in injunction decisions, as bolstered by eBay, provides adequate assurance that patent infringement proceedings do not harm the public through a lack of access to green technology.218 Cases such as Siemens Gamesa, BASF, and the other above-discussed injunction decisions exemplify the highly practical, fact-specific analysis in which courts can engage when adjudicating an injunction request, especially within the public interest prong.219 Courts have extended this discretion to embrace sensitivity to public environmental concerns.220 The Siemens Gamesa decision is notable for its explicit invocation of climate science to inform its analysis and its subsequent tailored injunction.221 Because injunction cases have not often hinged on the public interest inquiry, the Siemens Gamesa decision will likely have outsized influence going forward when the public interest is threatened.222

The pre-examination search and ESD requirements create three practical problems for inventors: (1) they increase the legal fees for prosecuting anapplication; (2) they push the applicants to narrow the scope of their claims at an early stage; and (3) they render any patents that issue out of this program potentially subject to a greater risk of unenforceability. The third problem has been most troubling to applicants because “[e]ach individual associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the [Patent] Office, which includes a duty to disclose to the [Patent] Office all information known to that individual to be material to patentability.”102 The U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”), which has exclusive nationwide jurisdiction over appeals from all district court cases arising under the patent laws,103 has made clear that a breach of this duty during the prosecution of a patent application constitutes “inequitable conduct” and renders all the claims of the patent unenforceable for the life of the patent.104 Litigating parties seeking to render a patent unenforceable may argue that, among other things, the pre-examination search was insufficient, the applicant did not submit all relevant prior art to the PTO, or the applicant mischaracterized the prior art.105 Thus, patent practitioners have been concerned that the expediency of the revised Accelerated Examination program may open them up to a higher legal risk of having the patent rendered invalid in subsequent litigation. It is too early to know whether recent judicial and legislative actions taken to limit the availability of inequitable conduct claims will affect the popularity of the revised Accelerated Examination program.106

An interesting and important observation is that the propensity to grant a patent with accelerated examination request is much higher than that with regular examination request. The patent grant rate with accelerate examination was 93% while it was only 63% with regular examination request during the sample period. Interestingly, the grant rate of accelerated examination was systematically higher than that of the regular examination, and suggests that patent grant decisions may be a positive function of accelerated examination.

We pay attention to this issue and investigate what causes the difference in grant rate, which is not examined in the literature so far. Two competing hypotheses are possible. The one is that the invention with higher quality may apply for the accelerate examination since it has strong demand for early appropriation of invention results. Harhoff and Stoll (2015), Harhoff and Wagner (2009) and Reitzig (2004) argue that the patent for which the accelerated examination is requested has greater potential value and good quality. An application with accelerate examination is basically moved ahead in line and examined before other applications which were filed earlier. Even though it requires an additional fee, the process is a boon for companies with time-sensitive inventions and applications who will benefit greatly from getting to market as soon as possible. This implies that the higher grant rate of patent application with accelerated examination request should be resulted from the high quality of invention.