Patents fail for green tech—positive externalities, no ability to pay, and trades off with low-tech solutions

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

One other reason explored in the Article for the inability of the patent system to adequately promote green innovation derives from its reliance on a mechanism of exclusive rights. Some types of innovations are more difficult to exclude than others, and patent incentives have limited effectiveness in promoting highly nonexcludable innovations. This may be the case, for instance, with respect to certain industrial processes that are designed to “green” production of manufactured goods. To the extent that the use of such a production process by competitors of the patent owner can be kept in secrecy and is not embedded in the final product, it might not be possible to detect and prove infringement. As a result, patents may fail to serve as an effective incentive mechanism in this context as well.16

Finally, the Article explores the possibility that, by focusing on technological products and processes that meet the statutory patentability criteria, the patent system may divert resources away from engaging in the development of low-tech innovations (e.g., a method to improve efficiency of water use by proper irrigation scheduling) or non-technological innovations (e.g., creative methods to enable people to reduce consumption) that may be highly valuable in mitigating and adapting to climate change.17

For these reasons, this Article concludes that patent law is far from being an ideal incentive mechanism in the context of climate change innovation. Notably, the problems identified in the Article cannot be addressed by adjusting patent doctrine or revising the patenting process, because they derive from the very nature of the patent system as a market-based private property mechanism to incentivize innovation—and the market (by hypothesis) does not exist or is inefficient in ways the patent system cannot cure.