In the face of several global crises, world leaders have yet to agree on how to handle intellectual property during emergencies. This week, American officials rejected language in a World Health Organization resolution that would allow poor countries to copy Covid-19 vaccines or drugs once these treatments are developed. The American officials claimed such a policy would send “the wrong message to innovators who will be essential to the solutions the whole world needs.” But without such a policy, it’s unlikely many poorer countries would be able to afford life-saving treatment.
The United States’ seemingly religious attachment to intellectual property rights is one of the more sobering similarities between the coronavirus and the climate crisis. Both situations will probably require urgent innovations, and require that such innovations be made widely available, regardless of profit margin. Just as there are sick patients who it isn’t profitable to treat, there are greenhouse gas emissions it won’t be profitable to mitigate. And if we fail to heal those patients or curb those emissions, millions could die.
While much of the technology needed to move the world off of fossil fuels is already on hand, a sustainable energy system will involve bringing a whole range of new technologies into widespread use: longer-lasting battery storage, grid-management software, and processes for decarbonizing sectors like steel and aviation, to name just a few examples. This involves generating an enormous amount of what’s known as intellectual property. Through patents and copyrights, that means certain companies will own the rights to innovations which, in the long run, are no less lifesaving than many medicines.
Back in 2014, Elon Musk made a well-publicized point of releasing all of Tesla’s carmaking patents, waxing poetic about his fealty to an open-source movement. “When I started out with my first company, Zip2, I thought patents were a good thing and worked hard to obtain them,” Musk wrote on the Tesla website. “And maybe they were good long ago, but too often these days they serve merely to stifle progress, entrench the positions of giant corporations and enrich those in the legal profession, rather than the actual inventors.” In the years since, he’s continued taking out patents for battery technology. This year, he patented a grid management system “with capability to control everything from massive grid-scale energy storage installations down to your washing machine.” The various arms of Musk’s empire, of course, have enjoyed sizable support from the U.S. government, from SpaceX to SolarCity to Tesla itself. But you won’t find him handing Uncle Sam much credit.
We’re likely a long way from abolishing the profit motive altogether in clean energy, which is not clear would be desirable in the short-run. But as economists such as Mariana Mazzucato and Dean Baker have suggested, we can change the rules that govern innovation and how its proceeds are shared—particularly given how critical public funding has been in financing breakthroughs through programs like the National Institutes of Health, for pharmaceuticals, and ARPA-E in energy.
The share of U.S. government investment in early-stage research has fallen in recent decades. In the 1960s and 1970s—the era which produced the earliest predecessor to today’s internet—federal funding for basic research topped 70 percent. Today, it’s below 50 percent. That’s still a sizable amount though. Private investors can be reticent to back projects that don’t have a clear path to profitability, leaving funding for basic research and even more pathbreaking, later stage R&D to a government that sees few rewards when results take off. In the clean energy spaces, Mazzucato wrote in the 2013 book The Entrepreneurial State, “VCs typically provide the finance meant to bridge the company’s transition into commercialized production, yet they often cannot provide the capital needed or are unwilling to do so should an expected IPO, merger or acquisition be delayed or prevented by market uncertainty.”
Economists tend to point to the danger of public funds “crowding out” private investments, in line with more general skepticism about the government’s ability to fuel innovation as well as Silicon Valley wunderkinds. Empirical evidence suggests the opposite. A 2019 paper analyzing NIH investment in life sciences found that public investment in basic research increased private sector patenting and even profits: Roughly speaking, $1 of public funding resulted in $1.40 in drug sales. Most of the gains wrought by the government’s early investment, though, are captured entirely by the companies that go on to patent and copyright the results. Analyzing U.S. patent data from 1982 to 2012, Stanford researchers found that publicly backed research produced more disruptive inventions than those arrived at with solely private-sector funding. Stronger patent protections can indeed be a drain on productivity growth, serving less as a protection for innovators than a means for companies to ensnare their competitors in costly legal disputes, thus discouraging smaller firms from engaging in research that might butt up against wealthy competitors.
Governments have many ways to invest in innovation that reach well beyond funding research and development. With vaccines, that’s historically meant promising to buy whatever’s produced, creating a market for lifesaving drugs that might not otherwise exist. Similar procurement policies might be applied to clean energy should the government decide to treat the climate crisis like the emergency that it is. The U.S. Postal Service, for example, could commit to an all-electric fleet. The Department of Education could mandate that large public universities run on microgrids. During World War II, economist J.W. Mason wrote in a recent report, the US government played a key role in bearing the risk for new technological development, dramatically shaping and even creating whole new supply chains through processes ranging from procurement to nationalization.
In that case, the benefit to the public was clear: winning the war. Today, the climate emergency presents another clear need. The Bayh-Dole Act, passed in 1980, gives the government the right to break up patent monopolies in the event of an emergency, and distribute licensing rights to other firms “to alleviate health and safety needs.” As physics PhD student Zachary Eldredge noted recently in The Trouble, the government can also ask forgiveness rather than permission to break patents. “Rather than invoke any direct claim on the patent (as the government has for Bayh-Dole march-in rights), the government can use the technology immediately and pay damages later. Although this may imply that the government needs to directly be involved in the production, the law is clear that contractors or others acting with government authorization are protected,” he wrote. “The net result of either legal strategy is the same: the government is directly able to seize the relevant intellectual property and authorize its use by other parties.” Uncharacteristically, the World Trade Organization—earth’s most reliable enforcer of property rights—generally allows for governments to partake in compulsory licensing, wherein countries can intervene to break up patent monopolies.
If the rapid deployment of clean energy is to rely on anything other than market forces and private sector largesse, such dramatic action may be needed. Today, research and development is concentrated in wealthy countries. Much of that spending is done in North American and Western Europe, both at top research institutions and in big companies. As a result, innovation occurs around the needs and preferences of those countries. This puts the onus on developing countries—those worst hit by climate change, that have historically contributed the least to the problem—to purchase those technologies, whose prices reflect the rents paid to the holders of patents and copyrights. Climate advocates in the so-called Global South have long pointed to the need for technology transfers as part of any comprehensive climate agreement, allowing poorer countries to access clean development without paying exorbitant prices to corporations in the Global North.
Asked if he owned the patent to his world-changing polio vaccines, Dr. Jonas Salk famously answered, “Would you patent the sun?” Today, some companies might try. But whether we’re talking about vaccines or groundbreaking clean energy, life-saving technologies shouldn’t be treated as precious commodities to be hoarded for private gain. In the midst of global emergencies, they’re public goods to be deployed as rapidly as possible.