IP stakeholders must do more to understand their role in relation to climate change mitigation.
A good starting point is developing an awareness of the IP carbon footprint of the enterprise, something that most IP leaders fail to do. Fabrice Mattei talks in this article about the work that he is doing at Rouse to help IP leaders in this process of carbon footprint understanding.
The time is now...
The transition to a low carbon economy is happening now.
In response to this, companies are implementing strategies which push the responsibility of carbon emissions throughout their supply chains, making this issue relevant to businesses of all industries and sizes. Growing consumer interest in green products has also led companies to develop and market products (e.g KimberlyClark’s Scott Naturals) and services (e.g. HI Hotel) focusing on carbon emissions and climate change. Carbon labeling is also logically gaining considerable interest among IPRs owners. Over the last decade, laws codifying national and international responses to climate change have grown in number, specificity, and importance. As these laws have recognized new rights and created new duties, litigation has quickly followed. As a result, courts are adjudicating a growing number of disputes over actions or inaction related to climate change not just against governments but also companies and their technologies. As of March 2017, climate change cases had been filed in 24 countries (25 if one counts the European Union), with 654 cases filed in the U.S. and over 230 cases filed in all other countries combined[1]. Increasingly, companies need to have effective and credible IP strategies to ensure success in a world constrained by carbon. In this uncertain context, the introduction of the IP carbon footprint created by our firm represents an innovative and fundamental tool for business.
The Paris Agreement on Climate Change
The Paris Agreement on Climate Change (“CC”) adopted during the COP 21 in 2016 has established a new international framework for the parties to the United Nations Framework Convention on Climate Change (“UNFCCC”) to fight against climate change. It is based on countries' National Determined Contributions (“NDCs”) as key approach to mitigation, adaptation, and financial, technological and capacity-building support. At the international level, regular reviews of countries' NDCs’ every 5 years will strengthen transparency, and drive countries' NDCs to meet the goal of keeping the global average temperature increase well below 2 degrees Celsius compared to pre-industrial levels by the end of the century.
The new CC regime needs support from other policy regimes in order to succeed. Under the Paris Agreement, access to environmentally beneficial and climate-friendly technologies and know-how is a key driver of mitigation, and increasingly also of adaptation activities to climate change. The trade policy agenda under the WTO, which includes IP, is among the most critical ones. Trade liberalisation can on the one hand support the uptake of climate-friendly goods and services and foster the deployment of clean technologies, while, on the other hand, NDCs can collide with trade rules due to conflicting principles and priorities. A useful indicator are the WTO disputes that have emerged recently, which centre on renewable energy and trade in environmental goods and services. The inclusion of environmental and climate policy provisions in regional trade agreements (“RTAs”) also reveals that there is a demand for policy coordination between the two.
Intellectual Property Carbon Footprint
Each country has a cap on the amount of carbon they are allowed to release into the atmosphere. CO2 emissions trading allows countries that have higher carbon emissions to purchase the right to release more CO2 into the atmosphere from countries that have lower carbon emissions. The carbon trade markets which is gradually turning global (China, Europe, Japan, California, Quebec) also provides the ability of companies to trade their polluting rights through a regulatory system known as cap and trade. In other words, companies that pollute less can sell their unused pollution rights to companies that pollute more. The goal is to ensure that companies do not exceed a baseline level of pollution and to provide a financial incentive for companies to pollute less.
The IP Carbon footprint focuses on the CO2 emissions resulting from the acquisition, exploitation or lack of exploitation of IPRs, expressed as CO2 equivalent. The calculation method captures the full life cycle of IPRs ranging from their creation to enforcement. Internal and external, positive and negative CC effects are calculated.
For example:
Environmentally friendly technologies having environmental regulations implemented at an appropriate time within the innovation sequence;
Diffusion of climate-friendly technologies and know-how to countries facing severe CC issues;
Environmentally friendly technologies for which a platform is given allowing to demonstrate proof-of-concept to potential users/licensees;
Carbon footprint incurred in enforcing IPRs (raid action, destruction of goods etc);
Efficiency in expediting the examination, publication and grant of environmental friendly technologies;
Impactful evaluation of environmental friendly technologies;
Financing of IPRs under the Green Fund or other CC related funds;
Recourse to litigation vs. settlement assorted with licensing scheme
The IP carbon footprint offers a range of benefits to IPR owners, for example:
Enhancing transparency in the energy consumed by the acquisition and exploitation of IPRs;
Increase awareness of IPRs owners' environmental and efficiency credentials among customers, staff and stakeholders;
Differentiation of IPRs in a crowded marketplace;
Identify ‘hotspots’ and opportunities for energy efficiency IP strategies;
Ensure a verified system that can deliver reliable results risk and compliance, particularly relevant in the context of growth of CC litigation;
Help meet the requirements of regulatory schemes on CC;
Identify and manage risks around energy supplies;
The IP carbon footprint should be seen not just as a tool in the fight against climate change but also as a way to boost business performance. If you’re leading an IP team or have responsibility for IP strategy in your enterprise and would like to know more about how this tool applies to your business, please contact the IP Carbon Footprint team.
[1] Sabin Center-Arnold & Porter Kaye Scholer Climate Change Litigation databases, available at http://wordpress2.ei.columbia.edu/climatechange-litigation/