GREEN PATENT SYSTEM:
AN INVENTION FOR INVENTIONS TOWARD SUSTAINABLE DEVELOPMENT

Itaru Nitta
Green Intellectual Property Project, Maryland, USA and Wakabayashi Intellectual Property Law,
Tokyo, Japan
The Green Intellectual Property Project can be reached at www.greenip.org or +1-301-468-7353
(Phone / Facsimile).

INTRODUCTION
Climate change is one of the most heatedly debated topics among global environmentalists.  A
common feature of these debates is the struggle between economic growth liberalists and
environmental green protectionists.  These two groups are frequently depicted as natural
enemies, but this picture is not accurate because they are both ultimately seeking the same
goal, i.e. improved human welfare.

A method that both those apparent enemies can together utilize to promote human welfare is
ecological economics.  The throughput model in ecological economics illustrates the fact that
excessive environmental impact degrades the environment in two principal ways: depletion of
the source and pollution of the sink.  The model also suggests that population, affluence and
technology are the three major factors that determine environmental impact.  Among these
factors, technology is the only one that can constructively reduce environmental impact.  This is
because development or expansion of eco-friendly technologies decreases environmental
impact, while expansion of population and affluence increases it.

Many early prototypes for eco-friendly technologies such as solar power were established over
five decades ago; however, they have failed to become widespread mainly for lack of economic
incentive.  Compared with the lower prices of conventional environmentally-oppressive
technologies, the higher prices of eco-friendly technologies prevent them from penetrating into
society, and low penetration inhibits their mass commercialization which would result in lower
prices.  To break this vicious circle and create the necessary economic incentives, a market
needs investment for eco-friendly technology, namely "environmental investment."

Environmental investment includes financial funding and technology transfer in order to widely
spread eco-friendly technologies.  Financial funding would create capital intensity which would
trigger their mass commercialization.  Mass commercialization would drive down the price of eco-
friendly technology, and a lowed price would accelerate further penetration of eco-friendly
technology into a market.  Having penetrated into a market, eco-friendly technologies can be
effectively distributed through technology transfer.  Technology transfer introduces advanced eco-
friendly technology from one society that has it to another society that needs it, typically from
developed countries to developing countries.  This process saves time and investment in
developing countries because technology transfer allows them to both avoid suffering the degree
of pollution that developed countries have experienced and eliminate the need for expensive and
time-consuming research that developed countries have already conducted.

Environmental investment is involved with two social relationships.  One is the relationship
between the present patent system and economics, and another is the relationship between
economics and the environment (see Figure 1).  In terms of the former relationship, many
scholars generally agree that technological progress is a necessary element for economic
growth (1) and that the monopolistic (2) and disclosure (3) doctrines in the patent system have a
necessary role in driving the technological progress.  For the latter relationship, many conceptual
studies (4,5) conclude that sustainable development (6) is a solution to the conflict between
proponents of economic growth and environmental protection and that implementation of
sustainable development is absolutely imperative even for the near future.





Figure 1: The relationship between the patent system, economics and environmental affairs.
Many studies address the relationship between the present patent system and economics, and the relationship
between economics and environmental affairs.  However, there are few studies on a relationship between the
patent system and environmental affairs.


In contrast to those two relationships, we can hardly find any consideration of the relationship
between the patent system and the environment.  However, the patent system has an
unexamined but firm relationship with environmental issues, which include not only climate
change but also most environmental conflicts.  In other words, a new and effective pathway can
be developed between comprehensive environmental issues and the patent system to
implement sustainable development.  This new pathway would introduce a drastic reform into
the present patent system that would reduce environmental impact and realize sustainable
development.  We could call this new patent system the "green patent system."

To convincingly propose the green patent system, this essay mainly consists of two parts: the
first part provides the reason why the current patent system needs to encompass environmental
issues and the second part introduces the actual workings of the green patent system.  The
green patent system is an eco-friendly patent system that diverts a portion of patent-related
monetary flow to environmental investments.  Patent-related monetary flow includes not only the
revenues of the present patent system such as official fees but also patentee's incomes such as
license royalties and patent infringement compensations.  Environmental investment is a sort of
fund for financial and technology transfer aid to encourage the creation and adoption of eco-
friendly technologies in developing and developed countries.  These funds are finally returned to
the green patent system and further energize it through an increase in patent applications for eco-
friendly technologies.  In addition, this essay briefly evaluates the possibility for the green patent
system to address climate change.

WHY THE PATENT SYSTEM SHOULD WORK
Although many may be surprised at hearing that there is a relationship between the patent
system and environmental issues, there are two driving-concepts that make the patent system
function as an engine to implement sustainable development.  First, both the patent system and
sustainable development are involved with the same social factors, i.e., affluence and
technology.  Affluence and technology, being coupled with population, are two major factors to
determine the strength of society's impact on the environment.  Since reducing environmental
impact is the most substantial step to implement sustainable development, achievement of
sustainable development highly depends on affluence and technology levels of a society.  For
example, high level eco-friendly technologies increase the efficiency of resource usage and
decrease pollution in the environment; in other words, these technologies enable a society to
pursue moderate affluence with reduced throughput of energy and materials.  Eco-friendly
technologies are strongly promoted by the patent system because its monopoly and disclosure
doctrines provide an effective framework to promote technologies and to protect affluence that
technologies generate.  This framework means that the patent system is one of the legal
regimes most involved in affluence and technology.  Since affluence and technology are
common factors in both the patent system and achievement of sustainable development, the
patent system should function to implement sustainable development.

The second driving-concept toward an eco-friendly patent system is that both the patent system
and sustainable development share the same final goal, i.e., ever-lasting human prosperity.  The
ultimate purpose of the patent system is not to blindly promote technologies but to advance
human welfare through promotion of technologies.  This purpose is typically represented by the
fact that the patent system defines "exclusions from patentability (7)."  This provision means that
the patent system does not grant or publish any invention that violates public order and morals.  
In other words, any patent will not be granted for a technology that has only harmful applications.  
The patent system aims to total human welfare, and this aim is just the same as the final goal of
sustainable development: namely, both sustainable development and the patent system share
total human welfare as the final purpose.

The above-mentioned two commonalities between sustainable development and the patent
system -- the relationship with affluence and technology, and the final goal -- lead us to claim that
the patent system should be directly involved in environmental concerns and explicitly include
implementation of sustainable development as its objective.

This claim is further supported by more concrete features of the patent system, which are both
negative and positive for sustainable development.  A negative feature is that the existing patent
system contributes to two major root causes of global environmental degradation: resource
consumption in developed countries and poverty in developing countries.  This negative feature
can be separately analyzed in terms of "internalization of environmental externalities" and
"compensation for environmental degradation."  On the other hand, a positive feature of the
existing patent system is that it has the potential ability to eliminate two major obstacles to
sustainable development: lack of hard laws and of definite funding for environmental protection.  
This positive feature can be also evaluated individually in terms of "international harmonization in
policy and practice," "hard law," "firm financial resource" and "pro-patent policy."

Internalization of Environmental Externalities
Market failure causes environmental externalities, and environmental externalities are attributed
to most environmental degradation.  Since the patent system inevitably involves economic
markets, the system has a responsibility to encompass environmental externalities.

A typical example of environmental externalities is resource exports from developing countries.  
To obtain foreign currency to alleviate their poverty, developing countries have exploited and
exported much of their natural resources.  However, these capital-poor but resource-rich
countries have never obtained reasonable compensation for their numerous exports because
the international market heavily undercuts the prices of natural resources due to environmental
market failure.  If the market prices of natural resources fully reflected or internalized
environmental externalities, developing countries would have to export only a certain amount of
natural resources at reasonable prices for sufficient income to reduce their poverty.  Therefore,
internalizing environmental externalities curbs environmental degradation.  However, if resource
prices increase to the level of true values, including their hidden and future costs, many
economists predict that significant market turmoil would occur.  For example, many studies
report that the "true cost" of gasoline is at least $5.60 per gallon when all environmental
externalities are included (8).  If the price of gasoline rose to this true price in the US, it would
rock the foundation of the US economy similar to how it was threatened by the oil crises in the
1970s (9).  These facts mean that market-based environmental externality internalization is not
realistic because society cannot accept such large fluctuation of prices.

While the market system cannot handle environmental externalities, the patent system can, and
it has a responsibility to internalize these environmental externalities for two reasons.  First,
since all products and services in any market are derivatives from natural resources in the
ultimate sense, under the existing market system they always exclude some environmental
externalities.  This is also true of the products and services which a patent right protects: namely,
patent-protected products and services inherently neglect environmental externalities.  Because
using these protected products and services the patent system contributes to building wealth for
a patentee, the patent-built wealth misses these "inherent environmental externalities."  A way to
internalize the inherent environmental externalities is that the patent system would have a
mechanism to force a patentee to pay the inherent environmental externalities because a
patentee obtains extra patent-built wealth which should be subtracted as the inherent
environmental externalities.

The second reason for the patent system to internalize environmental externalities is that the
patent system accelerates the accumulation of externalities more than just inherent
environmental externalities.  These extra environmental externalities are a product endemic to
the patent system because the patent system helps to concentrate capital or increase capital
intensity for a patentee, and this heightened capital intensity enables a patentee to plow new
investment into further development.  This patent-driven development results in consuming more
environmental resources and generating what can be called "epigenetic environmental
externalities."

The patent system increases capital intensity in four different ways.  First, since the patent
system prohibits unauthorized people from commercializing a protected product or service, a
patentee can monopolize all benefits from the market.  Second, for the same reason, a patentee
can set a favorable price for the protected product or service without competition against other
rivals.  This price is higher and contains more benefit than a price that is a simple result from
equilibrium between supply and demand without patent protection.  Third, a patentee can obtain
an enormous license fee or royalty if a patentee permits other people to commercialize the
protected product or service.  Fourth, a patentee can receive a large amount of compensation if a
patentee wins a patent infringement case.  In addition to increasing capital intensity, these four
ways also guarantee that a patentee collects the investment that he made for developing the new
product.  This guarantee of financial rewards stimulates further investment to develop further
technologies that result in further environmental externalities.  To internalize these epigenetic
environmental externalities, the patent system should demand a patentee to pay for the
externalities.

Compensation for Environmental Degradation
While the patent system has promoted human welfare through the progress of technology, the
system has generated environmental externalities which induce environmental degradation.  
This understanding raises the assertion that the present industrial prosperity that the patent
system has contributed is founded on the sacrifices of environmental degradation.  It also
asserts that major beneficiaries of that prosperity, i.e. developed countries, should pay the
compensation for environmental degradation.

An analogous assertion had already emerged in a more general form of a compelling demand
for the exemption of developing countries from the effort to protect the global environment and for
understanding their giving priority to their own economic growth rather than environmental
protection to reduce their poverty.  This assertion includes;
- Developed countries have the entire responsibility to protect the global environment because
they have enough financial resources which they built at the past and present sacrifices of the
global environment,
- Since developed countries entirely enjoy the benefits resulting from the sacrifices of the global
environment: namely, developed nations are beneficiaries of the rampant developments which
cause global environmental degradation, developed nations have to pay compensation of
environmental degradation, and
- Since developed countries have exploited the global environment for a long time on the pathway
to achieve their wealth, it is now developing countries' turn to follow the same pathway for
promoting their own development.

We can make similar arguments for the patent system based on two reasons.  First, the patent
system is ultimately based on utilizing the natural resources in a way which induces
environmental degradation through economic growth.  This is because the patent system
encourages invention, and invention stimulates technological progress.  Technological progress
induces economic growth as indicated by the endogenous economic growth model -- economic
growth induces technology progress and technology progress results in economic growth.  In
this way, the patent system activates economic growth which causes environmental
degradation.  As the second reason, developed countries have entirely dominated the patent
system.  In other words, developed nations have entirely enjoyed the patent system over five
hundred years since the system was bone in developed countries.  This is because, as its
history clearly explains, the patent system has matured with economic growth in developed
countries, and developing countries' economic power is still too weak to support a system that
encourages birth of new inventions.

In keeping with the two above-mentioned reasons, we can reach several claims for the present
patent system, which are similar to those for developing countries' exemption from
environmental protections;
- The patent system has a responsibility to protect the global environment because the system is
eventually founded on sacrifices of the global environment,
- Developed countries have the entire responsibility to protect the global environment because
they have enough financial resources which the patent system has rendered at the past and
present sacrifices of the global environment, and
- Since developed countries entirely enjoy the benefits resulting from the patent system: namely,
developed nations are beneficiaries of the patent system which causes global environmental
degradation, developed nations have to pay compensation for environmental degradation.
These arguments clearly indicate that the patent system should be directly involved in global
environmental protection and should explicitly include implementation of sustainable
development as its objective.

International Harmonization in Policy and Practice
While the current patent system has the above-mentioned negative features that impede
sustainable development, it has also several positive features that forward sustainable
development.  One of them is "harmonization," i.e., an effort to accommodate a domestic patent
law to an internationally uniformed standard of policy and practice.  Policy and practice
harmonization of the patent system would lend impetus to sustainable development.

For an example of policy harmonization, every member country in the Trade Related Aspect of
Intellectual Property Rights (10) (TRIPs) agreement grants a 20-year domestic patent term
equally to national as well as to foreign patentees under the equal-national and most-favored-
nation treatments.  In addition to these treatments, the principals used to settle patent disputes
also create internationally standardized rules for domestic enforcement of patent rights, and the
concept of right of priority is also a form of policy harmonization.  Policy harmonization
represented by these examples is the result of a long historical effort in the patent system
(although the present patent system still leaves unharmonized aspects such as the principle of
mutual independence and the territoriality principle).  During that effort, the patent system
established its own procedure to create international consensus.  This procedure is based on
supranational viewpoint that focuses on world-wide benefits, and it enables the present patent
system to overcome differences in the desires of any individual country.  For example, the
procedure that was created to reach the TRIPs agreement provides the current guidelines to
achieve an international settlement in the comprehensive fields of intellectual property.  Since the
patent system has considerable expertise in establishing international consensus, the system
could take prompter and more effective actions than construction of a new treaty for the global
environmental protection.  Policy harmonization in the patent system would provide an effective
way to implement sustainable development once the patent system aspired to it.

Practice harmonization under the current patent system is exemplified by the fact that any
examination step in an international phase of the Patent Cooperation Treaty (11) (PCT)
application progresses with the exact same procedure and criteria in each patent administration
office that receives an international application in each jurisdictional area.  These administration
offices independently provide many official documents such as examination reports and
publication gazettes; however, every document has a strictly uniformed format under the control
of the international bureau in the World Intellectual Property Organization (WIPO).  Moreover, each
administration office classifies every invention of all applications into more than a million
categories using the internationally standardized patent code called the International Patent
Classification (IPC).  This classification process shows that the patent system has the ability to
uniformly and concretely handle a technology, i.e., an abstract idea represented in a claim and
specification.  This practical ability would be an advantage for the patent system when the
system encompassed sustainable development.  For example, if a certain environmental
problem emerged, the patent system could address that problem in an internationally-
standardized and concrete manner.

These advantages of policy and practice harmonization in the patent system are emphasized by
the high degree of participation by many countries through more than a hundred bilateral,
regional and multilateral treaties relating to intellectual property (12).  Among them, the PCT was
adhered to by 125 countries as of January, 2005 (13).  Under this treaty, many member countries
take various kinds of practical legal actions in a harmonized way.  For example, applicants from
more than one hundred countries filed one million applications in 2004, a record in the 26-year
PCT history (13), and all of these applicants obey internationally uniformed rules, as explained
above.  This world-wide uniform behavior by such a huge number of participants is the result
from over five hundred years of patent system history, and the system is further actively evolving
toward a more harmonized system.  This fact suggests that if the system was involved with
sustainable development, the patent system could provide a powerful methodology for
sustainable development.

Hard Law
One of the other features of the patent system suitable for promoting sustainable development is
the fact that the patent system is based on hard legislation: namely, the system consists of
legally binding and mandatory instruments including laws, treaties and regulations.  Once the
patent system is aimed at environmental protection, the hardness of the patent system could
open a new way to protect the global environment because lack of hard legal instruments at the
international level is a major obstacle to global environmental protection.  As we saw in three
prominent international environmental conferences, the Stockholm Conference, the Rio Summit
and the Johannesburg Summit, almost all the past international legal instruments for
environmental protection have been soft instruments which are not mandatory and function
solely as policy guidelines.  Since soft legal instruments have no penalty provision for breaches,
environmental ethics are the only substantial factor to determine global environmental issues
under the current system.

In contrast, hard legal instruments have a penalty provision for breaches.  If a person neglects or
violates a hard law, a punishment is imposed, usually including a fine and prison sentence.  
Since a patent law is a hard law, it also has a penalty provision.  Among the penalties in patent
law, loss of patent right is the harshest punishment.  If an applicant or patentee does not
conform to a provision in a patent law, the law eliminates the possibility of granting a patent or
deprives the violator of the existing patent right.  Among legal instruments, only a law has the
exclusive responsibility to create and abolish a certain human right, and right disappearance is
the most severe punishment among penalties of a hard law.

If a patent law eliminates a patent right from a punished patentee, he loses his monopoly in a
market, and anyone else can freely access his invention.  As a result, a punished patentee is not
only no longer able to enjoy any exclusive profit from his invention but also unable to collect his
initial investment to achieve his invention.  This severe punishment would force even an extreme
industrial liberalist to move forward with environmental protection if the patent system
assimilated an environmental provision that demands an applicant or patentee to fulfill an
obligation to protect the environment.  Under this new provision, any applicant or patentee should
perform his environmental duty, such as payment of an environmental fee, in order to obtain and
maintain his patent right.

Firm Financial Resource
While the hardness of the patent system would promote sustainable development by redeeming
the current lack of hard laws for global environmental protection, firm financial resources in the
patent system would also contribute to the achievement of sustainable development because
lack of financial resources for global environmental protection is another major reason why
sustainable development has made little headway.  The abundant financial resources in the
patent system are represented by the words "a patent law is a law for rich people."  In other
words, major players in the present patent system are those who have the financial power to
create an invention and then obtain and maintain its patent right.  They pay various official fees
that provide a huge amount of revenue to the patent system.  For example, the WIPO's revenue in
2004 was $230 million including $180 million (78%) of the official fees for the PCT applications
(14).  A question is how the WIPO has spent this enormous income.  In 2002, the Assemblies of
the Member States of the WIPO approved a plan to spend $130 million for the construction of a
new administrative building and $30 million for the construction of a new conference hall (15).  In
another example, the United States Patent and Trademark Office (USPTO) earned a total of $1.2
billion including $1.0 billion from patent official fees in fiscal year 2003 (16).  By using this
income, almost four times that of the WIPO, the USPTO has annually spent more than $140
million in these five years to construct buildings including gorgeous new headquarters in
Alexandria, VA (16, 17).

Are these patent offices construction firms?  The answer is definitely "no."  The arguments we
discussed for the involvement of the patent system with environmental externalities and
compensations clearly show that the patent system should have had higher responsibility for
global environmental protection than that for construction of new buildings.  If the patent system
spent even a small portion of its current total expenditure in the form of environmental costs, this
new environmental expense would provide substantial financial resources for environmental
protection because of a large amount of the total patent expenditure.  For example, the WIPO's
expenditure in 2004 was $250 million including $210 million in operation costs (84%) and $40
million in infrastructure costs (16%) including building construction costs.  The WIPO also
predicts that its total expenditure will increase in next five years based on the total income
increase caused by the PCT application increase (14).  In fiscal year 2003, the USPTO spent a
total of $1.2 billion, and the USPTO reports that rent, communication, utility, contraction and
depreciation costs traditionally share one-third ($400 million) of its total costs each year (16).  
Like the WIPO, the USPTO also predicts that these costs will increase in next several years
based on the total revenue increase resulting from the increase of patent applications in and
toward the US.  These data indicate that even just two patent offices spend together several
million dollars for non-operation costs every year, and they will increase this type of spending in
the next several years.

Compared to these large and increasing amounts of patent expenditure, the usual costs to treat
most individual elements of ordinary environmental problems or "environmental elemental
costs" are extremely low.  In the case of climate change, an example of environmental elemental
costs to reduce carbon-dioxide emission is the price of one hybrid-car because an elemental
step to curb world-wide carbon-dioxide is replacing a conventional car with a hybrid-car or
introducing a hybrid-car instead of a conventional car.  In this case, the environmental elemental
cost or the price of one hybrid-car (Toyota, Prius) is $20,000.  Since several thousand dollars of a
usual environmental elemental cost is extremely low compared to several hundred million
dollars of the total expenditure to run the current patent system, even a small part of the total
expenditure in the form of environmental costs is effective to curb environmental degradation.  
The annual expenditure of the patent system is equivalent to several hundred thousand
environmental elemental units.

Specifically, the environmental expenditure from the patent system would be effective to promote
environmental protection in emerging economies such as China.  China is facing severe
environmental threats, which are the results of too rapid industrialization and lack of financial
resources to protect its environment.  Although China needs eco-friendly technologies such as
hybrid-cars, China cannot afford to introduce those technologies.  Assuming that the royalty to
produce one hybrid-car in China is a maximum of 5% of the US price of one hybrid-car ($20,000)
(18a), the Chinese auto industry has to pay $1,000 as the royalty to produce each hybrid-car.  
This royalty payment urges the Chinese auto industry to produce more old-fashioned and
inefficient cars, whose patents expired, than hybrid-cars.  If the patent system paid that royalty
instead of Chinese auto industry, Chinese auto industry would be encouraged to produce hybrid-
cars.  From the perspective of the patent system, the amount of environmental spending is
almost an insignificant part of its total expenditures, yet from the perspective of the Chinese
economy, the same amount of environmental spending would be sufficiently large to promote
the production of countless hybrid-cars.  The same process could work for all eco-friendly
technologies gaining a toehold in developing countries.

Although the current official fees already provide considerable revenue to the patent system, a
hike of the official fees would be relatively easy if environmental protection requires more
financial resources.  For example, one patent application for one invention in one foreign country
costs roughly $6,000 which contains only $1,500 of official fees and $4,500 of other expenditures
such as translation and attorney fees (18b).  Because official fees are a much smaller part of the
total cost, a certain percentage increase of official fees does not appear to an applicant as a
significant rise of the total cost to obtain a patent right.

In addition to the income from official fees, the patent system has other potential financial
resources that are generated by the monetary flows concerning patent activities.  An example of
the patent-related monetary flows is royalty payment for a patent license from a patent user to a
patent owner.  Another example is compensation payment for a patent litigation from a patent
infringer to a patent owner.  These patent-related monetary flows provide industrial cooperations
a huge amount of patent income.  For example, in 2003 IBM earned $900 million in patent
income, which is equal to 1% of its total income of $90 billion (19).  These patent incomes are
equivalent or more than the current revenues of the patent system from official fees.  For
environmental protection, the patent system could use a part of those patent incomes generated
through these monetary flows if the patent system included environmental protection as an
objective.

Pro-Patent Policy
The above-mentioned positive factors of the patent system are enhanced by the "pro-patent"
policy (20), i.e. strengthening patent rights in order to stimulate technological progress and to
gain international competitiveness.  Under the Reagan administration (1981-89), the pro-patent
policy was proposed in the "Young Report," which was drafted by the President’s Blue Ribbon
Panel on Industrial Competitiveness, chaired by Mr. John Young (President of Hewlett Packard)
from 1983 to 1985.  This report addressed intellectual property issues, and it also made several
proposals, such as international intellectual property protection, particularly for biotechnology
and computer-related innovations (21).  These proposals provided a base for the TRIPs
agreement in the 1993 GATT round.  Since that report, the US, followed by other pro-patent
countries, has amended their patent laws and modified their patent practices to make patent
rights stronger.  These amendments have potentially induced more environmental degradation
because stronger patent protection has generated higher capital intensity.  However, if the patent
system encompassed environmental issues, the pro-patent policy would conversely promote
environmental protection in generally three ways.

The first way is to extend patent terms.  Under the pro-patent policy, the patent term has already
been extended, typically from seventeen years to twenty years, to satisfy the obligation of the
TRIPs agreement.  The longer the term a patent right has, the longer the time a patentee can
monopolize his invention in the market.  A longer monopoly creates higher capital intensity, and
the higher capital intensity generates larger patent monetary flows through more patent licenses
and infringements.  This increased monetary flow provides more revenue to the patent system,
which could be used for environmental protection.  The second way for environmental protection
is to expand patent scope.  The scope of patent rights, or "subject matter," has been expanded in
various technological fields under the pro-patent policy.  For example, in addition to traditional
subject matter such as new products and their concerns, recent patent systems have been
encompassing methods and models, referred as to "business method patents," that provide a
new way of doing something or a new technical solution to a problem (22).  When a patent
system extensively covers products and methods, inventors file their patent applications for a
wider range of products and methods, which then results in more revenue in the form of official
fees.  Moreover, a patentee can establish a monopoly on a wider range of technologies, and, like
a longer monopoly, a wider monopoly also produces more patent monetary flows through
licenses and infringements.  In these ways, patent incomes increase, and increased incomes
could provide more financial resources for environmental protection.  The third way in the pro-
patent policy for environmental protection is to increase the maximum compensation for patent
infringement damage.  The pro-patent policy has remarkably increased the maximum
compensation for infringement damage.  This increase means that if a patentee wins in a patent
infringement case, he can obtain an enormous fortune from compensation.  Consequently, the
patent-related monetary flow increases and financial resources for environmental protection
accrue within the patent system.  In these ways, the pro-patent policy would make the patent
system more pro-environment.

HOW THE PATENT SYSTEM COULD WORK
The positive and negative arguments above for the current patent system give an incentive for
adding a refinement to the patent system.  The resulting patent system, i.e. the green patent
system, would put a part of patent-related monetary flow such as official fees, license royalties
and patent infringement compensations into a monetary pool such as an environmental trust
fund.  From this monetary pool, the green patent system would offer technology transfer and
financial aid for not only developing but also developed countries to offset the cost of royalties for
eco-friendly technologies and to provide low interest loans or grants for the purchase and
creation of such technologies.  This process would rebalance the public interest with the right of
an inventor: from the current system where the public interest mainly contains the awareness of
an invention by the disclosure doctrine toward a new system which adds the benefit of
environmental protection to the public interest.  Through this balance shift, the green patent
system would encourage society to reduce environmental impact and realize sustainable
development.

The Green Patent System
In short, the green patent system would be a new patent system that has a mechanism to
efficiently create environmental investment from ample financial resources supported by a pro-
patent policy within a framework of hard laws that are internationally harmonized.  Simply put, if
someone needs eco-friendly technology and he cannot afford to access that technology because
of capital shortage or lack of technology in his territory, the green patent system both provides the
necessary financial support and transfers eco-friendly technology in the form of environmental
investment (see Figure 2).  This mechanism provides a compromise for the conflict between
economic growth liberalism and environmental protectionism through the following manners.  
First, since environmental investment resulting from a green patent system is regarded as
compensation for global environmental degradation caused by beneficiaries of the patent
system in developed countries, economic growth liberalists cannot legitimately complain about
paying for the investment.  Second, the process of environmental investment by the green patent
system is another pathway to internalize environmental externality without directly increasing
resource prices rather than a market-based pathway which introduces environmental externality
into market prices.  While a price increase due to a market-based process discourages
economic growth, a non-price-increase process through a green patent system encourages
economic growth by inducing technological progress.  Also, environmental externality
internalization by the green patent system further encourages technological progress through
guaranteeing that a patentee can collect his investment for developing a new product or service
even when his target is a market in developing countries.  Third, new inventions driven by
environmental investment from the green patent system inspires patent activities which
eventually increase financial resources in the patent system.  This self-incentive feature is
similar to ordinary loan investment because it increases its original financial resource through
interest, and differs from a green tax because a tax does not increase its original fund.





Figure 2: The monetary flow in the green patent system.
The center circle represents the green patent system as a re-distributor of patent wealth that provides a
compromise between economic growth and environmental protection.  Starting with the taxation step, the
green patent system collects environmental fees from patent applicants and patentees.  Subsequently, in the
investment step, the system plows environmental investments separately into developing (left hand side) and
developed countries (right hand side).  In the returning step, these environmental investments increase and
finally return to patent applicants and patentees through the promotion of eco-friendly technologies.


Investment and Tax
Environmental investments, i.e., financial and technological aids through the green patent
system, are perceived as a self-incentive green tax or an investment-tax hybrid because the
environmental investments show both tax and investment characteristics in two principal steps --
revenue and expenditure -- in the practical scheme of the green patent system.

Revenue:  The first step is to obtain revenue for environmental investment in a system
comparable with ordinary taxation.  Like tax revenue, there are two ways for the green patent
system to collect "environmental fees" as compensation for environmental degradation to
internalize environmental externalities.  One way is designed to follow the "benefits principle of
taxation;" namely, a patent applicant would pay a "user fee" for environmental consumption.  The
user fee would be rendered as a part of official fees in the patent system (See Table 1).

     Table 1: Revenue as environmental taxation.






The other way to obtain revenue in the green patent system is based on the "ability-to-pay
principle of taxation;" namely, the more wealth a patentee acquires, the more environmental fees
he should pay because more patent-built wealth generates more environmental externalities.  
For example, a patentee acquires income directly from a royalty when he licenses his patent.  He
also obtains compensation for infringement against his patent when he wins a patent
infringement suit.  These direct incomes for a patentee are targets for the ability-to-pay principle
for environmental fees.  When a patentee obtains these incomes, he would pay the
environmental fees from them.

In the benefits and ability-to-pay principles, the person who pays for the environmental fees is a
beneficiary of patent-built wealth which eventually originates from environmental consumption.  
The beneficiary is a market-monopolizer who creates a patent right and dominates a market; in
other words, a market-monopolizer exclusively enjoys patent-built wealth and builds his ample
financial resources, all resulting from usage of natural resources especially exported to
developed countries.  Since in the current patent system, any patent-built wealth misses some
environmental externalities including inherent and epigenetic parts, a market-monopolizer has a
special responsibility to pay compensation for environmental degradation in the form of the
environmental fees.  Two of the most identifiable market-monopolizers are a patent applicant
and patentee.  Records of legal actions in the patent system easily and lawfully designate an
applicant and patentee.  When an applicant files one or more patent applications in a certain
industrial or economic field, he is a highly potential market-monopolizer in the field.  When a
patentee owns one or more patent rights in a certain industrial or economic field, he is an actual
market-monopolizer in the field.  Therefore, a patent applicant and patentee, especially in
developed countries, would be the payers of the environmental fees in the green patent system.  
A patent applicant would pay the environmental fees as a part of the official fees, and a
successful patentee would pay them from patent incomes such as royalty and infringement
compensation.

Expenditure:  The second principal step in the practical scheme for the green patent system is
expenditure of financial resources.  Once the green patent system has collected environmental
fees, it would distribute the new financial resources as environmental investments including
financial funding and technology transfers.  In the form of environmental financial funding, the
green patent system would provide financial aid such as soft loans and grants to spread eco-
friendly technologies.  This financial aid helps users purchase existing eco-friendly technologies
that have high prices due to patent protection and other existing eco-friendly technologies for
which patent rights have already expired but their prices are still high.  This environmental
financial aid also supports researchers creating new eco-friendly technologies which do not yet
exist in any society.  In the form of eco-friendly technology transfer aid, the green patent system
would pay the royalty for patent-protected eco-friendly technologies instead of the user if the user
could not afford it.  This royalty payment promotes distribution of patent-protected eco-friendly
technologies which exist in one society to other societies where that technology does not exist.

Through financial aid and technology transfer, the green patent system aims to address the two
root causes of environmental degradation: poverty in developing countries and consumption in
developed countries.  To curb poverty-induced environmental degradation in developing
countries, the green patent system would promote wider distribution of eco-friendly technologies
which already exist in developed countries.  Since the first priority in developing countries is
economic growth to reduce their poverty, they usually cannot afford to introduce eco-friendly
technologies due to capital shortage.  To support introduction of eco-friendly technologies from
developed countries to developing countries, the green patent system would provide financial aid
and technology transfer aid.  In the form of financial aid, the system would offer soft loans or
grants for developing countries to import eco-friendly technologies which exist and prevail in
developed countries (See the upper part of Table 2).  These existing and prevailing eco-friendly
technologies are popular in developed countries and their patent rights in some cases have
expired; however, these technologies are still novel and expensive for developing countries.  An
example for these technologies is pollution reduction equipment including emission cleaners
such as desulfurizers and scrubbers for pollutant discharged in exhaust gases.

Table 2: Expenditure as environmental investment.

For developing countries to reduce poverty-induced environmental degradation









For developed countries to reduce consumption-induced environmental degradation











In the form of technology transfer aid, the green patent system would pay royalties for patent-
protected eco-friendly technologies instead of a developing country when they cannot pay it.  
These patent-protected eco-friendly technologies exist in developed countries.  However, in
contrast to the technologies that are supported by financial aid, the technologies to be supported
by technology transfer aid are still new technologies even in developed countries.  These new
technologies are gaining bigger share in the market of developed countries, and they are
necessary for both developed and developing countries.  Examples of these technologies
include efficiency improved products such as hybrid cars.  These eco-friendly technologies
decrease pollution and increase resource-usage in developed countries.

The financial aid and technology transfer through the green patent system are regarded as
environmental investment because when there is no domestic producer of a particular eco-
friendly technology in a developing country, financial aid and technology transfer can introduce
the technology into that developing country without trade conflict.  This introduction opens new
markets for eco-friendly technologies in developing countries.  These new markets stimulate
environmental business in developed countries that produce the technology because of an
increase in exports for eco-friendly products and services.  Environmental businesses
stimulated in this way encourage new invention of eco-friendly technologies in developed
countries.  This invention is also inspired by a business guarantee in that the green patent
system offers financial resources for purchase and royalty payments of eco-friendly technology in
a developing country even when that developing country does not itself have enough financial
resources.  As a result, patent applications for eco-friendly technologies increase, and the
increase in the number of patent applications amplify the financial resources in the green patent
system for further environmental investments.

In a similar way the green patent system would decrease poverty-induced environmental
degradation in developing countries, the system would also curb consumption-induced
environmental degradation in developed countries.  While, for developing countries, the green
patent system would contribute to the spread of eco-friendly technologies which exist in
developed countries; for developed countries, the system would contribute to the growth of new
eco-friendly technologies which do not exist or prevail even in developed countries.  To create
and nurture eco-friendly technologies in developed countries, the green patent system would
provide environmental supports which include financial aid and technology transfer in a similar
fashion for developing countries (See the lower part of Table 2).  However, the supports for
developed countries usually have two purposes which differ from the purpose for developing
countries, i.e., introduction of eco-friendly technologies.

One purpose is to create or discover primitive but future eco-friendly technologies that reduce
environmental impact, if any developed country does not have but needs it.  These technologies
do not yet exist even in developed countries and usually there is no patent protection because
research is in an immature stage and the accomplishment level of research does not reach the
requirement for a patent grant.  In those cases where patent rights protect the fledgling
technologies, most of these patents are just at a basic level and far from practical enforcement of
patent rights.  Examples of these technologies include nuclear fusion energy production and
space photovoltaic power generation.  For these technologies, the green patent system would
offer financial aid such as soft loans or grants for capital-short but development-oriented
environmental companies to develop and launch advanced eco-friendly technologies.

The other purpose is to nurture emerging eco-friendly technology until the technology occupies a
significant share in a market.  These technologies exist in developed countries and are usually
protected by many patent rights, but practical usage of these technologies is limited.  Solar and
wind power generation are examples.  For these technologies, the green patent system would
support technology transfer by paying royalties for patent-protected eco-friendly technologies
when an environment-oriented company wants to use a patent right but they cannot pay the
royalty.

The support through financial aid and technology transfer is effective in promoting particularly
fledgling or yet-to-be-unhatched eco-friendly technologies in developed countries because the
markets for these technologies are not fertile and eco-friendly business companies do not have
sufficient capital even in developed countries.  The green patent system supports nurturing and
creating advanced eco-friendly technologies, which effectively reduce consumption in developed
countries.

Like the support for developing countries, the support for developed countries through the green
patent system is also regarded as environmental investment because environmental financial
aid and technology transfer would produce capital and technological intensity for mass
production and further research of advanced eco-friendly technologies.  These new eco-friendly
technologies open and expand new markets for eco-friendly products and services, and these
new markets allow advanced eco-friendly technologies to prevail into a society.  Environmental
markets expanded in this way induce a decrease in prices of eco-friendly products and services
by starting mass-productions of them.  Those mass-productions stimulate environmental
businesses and these businesses encourage new invention of eco-friendly technologies.  This
invention is also inspired by a business guarantee in that the green patent system offers
financial resources for purchase and royalty payments of eco-friendly technologies even when an
environment-oriented company, not only small but also large company, does not itself have
enough financial resources.  As a result, patent applications for advanced eco-friendly
technologies increase, and the increase in the number of patent applications amplify the
financial resources in the green patent system for further environmental investments.

In addition to that investment characteristic, the expenditure step of the green patent system also
has tax characteristics like its revenue step.  The expenditure step returns the environmental
externalities revenue collected from patent applicants and holders to the environment.  Since this
function releases patent wealth into environmental protection, the green patent system can be
understood to work as a wealth redistributor, which is the principal function of the ordinal tax
system.  As a wealth redistributor, the green patent system would collect environmental fees
through each country's patent office or an international patent organization such as WIPO and
WTO, and it would conduct environmental investments through a multilateral development bank
such as the World Bank.  Moreover, an international funding organization based on incomes
from the patent system could be established at the initiative of the three leading countries in the
patent system, i.e., the US, Germany and Japan.

Environmental investments for both developing and developed countries promote environmental
protection through creating and distributing eco-friendly technologies.  This promotion requires, if
needed, only a slight increase in the total cost for obtaining a patent right and does not cause
direct price increase of natural resources or restriction against industrial development.  
Therefore, the expansion of eco-friendly technologies induced by the green patent system fits in
with the philosophies of both economic growth liberalists and environmental protectionists.  
Even an extreme environmental protectionist does not agree with backwardness by aborting all
positive developments by blindly restricting industrial development to protect the natural
environment.  Most people, including economic growth liberalists and environmental
protectionists, want to enjoy the benefits of growth.  In accordance with their desires, the green
patent system would achieve sustainable development through environmental investments to
reduce poverty-induced environmental degradation in developing countries and affluence-
induced environmental degradation in developed countries.

In a nutshell, the green patent system has four ways to expand eco-friendly technologies as
shown in Table 2 (23).  The first is financial aid for developing countries to introduce eco-friendly
technologies through soft loans and grants.  The second is technology transfer aid for
developing countries to introduce eco-friendly technologies through payment of royalties.  The
third is financial aid for developed countries to create new eco-friendly technologies through soft
loans and grants.  Finally the fourth is technology transfer aid for developed countries to nurture
existing but fledgling eco-friendly technologies through payment of royalties.

CLIMATE CHANGE: A TARGET
Among the four ways on which the green patent system could distribute eco-friendly
technologies, the first and second ways, the financial and technology transfer aids for developing
countries such as China, could provide an example of concrete procedures to target climate
change.

As of 2002, China was the second largest emitter of carbon dioxide (13% of the world’s total)
after the US (24%), and China could surpass the US in two decades if China continues to
increase the amount of carbon dioxide emission (24).  A major reason for China's large amount
of carbon dioxide emission is their rapid economic growth (25), which is supported by rushed
industrialization with heavy coal combustion from outdated and inefficient facilities.  China's
inefficiency in coal combustion is characterized by their high carbon dioxide intensity per GDP
compared to low carbon dioxide emission per capita (26).  Although the Chinese government
has exercised initiatives to expand eco-friendly technologies for the reduction of carbon dioxide
emission (27), the lack of development capability of eco-friendly technologies and the capital
shortage to introduce eco-friendly technologies prevent China from effectively decreasing carbon
dioxide emission (28).  To address this situation, developed countries have responded with
financial and technological aid for China.  Some reports (29) estimate that foreign official funding
for China to introduce eco-friendly technologies accounts for several hundred million dollars per
year.  For example, Japan, the biggest donor to China, provided $100 million in grants for
constructing the Sino-Japan Friendship Centre for Environmental Protection (SJC) (30) in 1996.  
The SJC is a research institute affiliated with the State Environmental Protection Administration
(SEPA) of China, and in cooperation with the Japanese International Cooperation Agency (JICA)
(31).

Several reports show that foreign official aid has achieved a certain degree of progress in
China's environmental protection (29); however, these reports also reveal some obstacles to
introducing eco-friendly technologies into China.  For example, JICA has undertaken the Project
for Improvement of Environmental Protection Technology for Metallurgical Combustion
(PIEPTMC) at Beijing since 2002 (32).  This project is an official Japanese program for eco-
friendly technology transfer to the Chinese steel industry, including the improvement of energy
efficiency in coal combustion.  JICA has constructed a pilot plant in the State Steel Research
Institute of China, Beijing to demonstrate high efficiency coal combustion.  In addition, JICA has
deployed activities including equipment provision, joint exercises, as well as dispatch of experts
and workshops (32).  These activities show that the technology transfer for high efficiency of
energy usage in coal combustion has been accomplished from Japan to China at least at the
level of a pilot plant.

However, several critics (33) predict that the widespread applications of those eco-friendly
technologies to actual factories in China would encounter some difficulties because those
technologies were totally developed by the Japanese steel industry, and some of those
technologies are still protected by patents.  These patent protections force the Chinese industry
to pay patent-protected prices, which are much higher than market-equilibrium prices, or
expensive royalties when the Chinese industry imports or produces the patent-protected
products for high efficiency coal combustion to reduce carbon dioxide emission.  While
Japanese industry understands China's financial shortage, Japanese industry cannot offer lower
prices or royalties for patent-protected products because Japanese industry needs to collect
development costs for those coal combustion technologies.  The same patent-related problems
were also pointed out in other projects by JICA (34).

Those patent-related obstacles to the reduction of carbon dioxide emission are potential targets
for the green patent system.  The green patent system would encourage the Chinese industry to
import the products for high efficiency coal combustion if, instead of the Chinese industry, the
patent system paid a part of patent-protected prices as financial aid.  Moreover, the technologies
introduced into China could induce further development of new eco-friendly technologies in the
Chinese industry, which would eventually increase the revenue of the patent system through the
growth of patent applications.  If, as technology transfer aid, the patent system paid patent
royalties instead of the Chinese industry, the system would encourage the Japanese industry to
further develop eco-friendly technologies, which also increases the revenue of the patent
system.  These increased patent revenues would enable the green patent system to spread
more eco-friendly technologies.

CONCLUSION
One day Christopher Columbus was at a dinner which a Spanish gentleman had given in his
honor, and several persons were present who were jealous of the great admiral's success.  They
were proud, conceited fellows, and they very soon began to try to make Columbus
uncomfortable.  "You have discovered strange lands beyond the seas," they said, "but what of
that?  We do not see why there should be so much said about it. Anybody can sail across the
ocean; and anybody can coast along the islands on the other side, just as you have done.  It is
the simplest thing in the world."  Columbus made no answer; but after a while he took an egg
from a dish and said to the company: "Who among you, gentlemen, can make this egg stand on
end?"  One by one those at the table tried the experiment.  When the egg had gone entirely
around and none had succeeded, all said that it could not be done.  Then Columbus took the
egg and struck its small end gently upon the table so as to break the shell a little. After that there
was no trouble in making it stand upright.  "Gentlemen," said he, "what is easier than to do this
which you said was impossible? It is the simplest thing in the world. Anybody can do it,—after he
has been shown how! (35)"

This anecdote is called "The Egg of Columbus," and it represents a typical example of
serendipity in discovery.  Serendipity is a major driving force to create a new system when
different concepts meet over the boundary lines of individual disciplines.  The green patent
system is a kind of Columbus's egg because it results from the serendipitous meeting of the
current patent system and sustainable development.  In other words, the green patent system
itself is an invention to implement sustainable development for future generations.  In addition,
one invention induces other new inventions in the patent system, and this process also works for
the patent system itself.  The green patent system could evolve the patent system itself to more
general social system.  Namely, the green patent system could address not only environmental
concerns including climate change but also more comprehensive social benefits because
environmental affairs are concerned with much broader social phenomena than just
environmental issues.  This evolutional process is similar to the development of the insurance
system.  The insurance system was a mere warranty program specialized for a certain labor in
London in the late 17th century, but now is one of most common social systems.  The patent
system can similarly broaden the range where the system functions.

Endnotes
1. Kamil Idris, Intellectual Property - A Power Tool for Economic Growth (WIPO, Geneva, 2003), available at
http://wipo.int/about-wipo/en/dgo/wipo_pub_888/index_wipo_pub_888.html, (last visited Feb. 11, 2005).

2. A patent right is an exclusive legal right granted for an invention.  For example, if an inventor creates an
alchemical machine, which obtains gold from copper, the patent system would be attractive for the inventor
because he could legally create a monopoly on the machine.  The first step in achieving this monopoly is to
file a patent application with the patent office.  After receiving the application, the patent office starts an
examination about the patentability of the machine in a course of prosecution.  Once the application is
granted as a patent, no one else can access the machine without patentee's permission or "license."  A patent
owner or "patentee" is the only person who can make, use, offer to sell, sell and import the machine for a
certain period of time, called the patent term.  What a patentee has to do to make a huge fortune from the
machine is only pay a patent fee to maintain the patent.  The patent fee may seem expensive at first for an
individual but is actually quite cheap when compared to the eventual possible profits from the protected
machine.  If a patentee finds that someone else is accessing the machine without a license, the patentee can
file litigation to call for compensation for the infringement whether the infringement is direct, contributory or
induced.  These protective and monopolistic doctrines of the patent system inspire inventors because the
doctrines protect each invention from others' theft, imitation or unauthorized use.  As a result, the patent system
promotes the progress of science and technology.

3. A question is whether the protective and monopolistic doctrines of the patent system actually contribute to
the progress of science and technology.  Some inventors can be stimulated by these doctrines, but others,
especially in small but forward-looking companies, might be disappointed.  Inventors in a small company might
think that many inventions have been already done by giant enterprises like a Fortune 500 company, and that
they can hardly create anything new that the giants do not already have a patent on.  This means that the
protective and monopolistic doctrines of the patent system may eliminate the possibility of technological
progress.  In the perspective of progress of technology and science, it would be better for anyone to freely
access any useful inventions.  To overcome this contradiction caused by protective and monopolistic doctrines,
the patent system prescribes disclosure of invention.  To obtain a patent right for an invention, the invention
should be disclosed in public.  Specifically, one and half years or longer after filing the application with the
patent office, the office prints out and distributes the contents of an invention as a official gazette called an
application publication.  The application publication contains claim to the right of the patent and
specification of the technology or idea.  In most cases, the claim is usually amended to meet the requirements
of patent law during a course of prosecution to examine the application.  Once the application is granted for
the patent, the patent office again prints and distributes another official gazette to issue the amended claim
and specification.  After the application publication or issuing the patent, anyone can read the publications
and know the detailed contents of the invention.  Therefore, another subsequent inventor can catch up quickly
with the invention and overtake the invention if the subsequent inventor succeeds in developing much more
advanced technology.  Since the disclosure doctrine of the patent system provides information about new
technology and science to the public, the system helps new inventors to produce the next inventions.  The
disclosure doctrine also makes the different inventors avoid conducting the same study and wasting time and
investment.  Since the disclosure of the invention is a provision to grant the patent right, the right is thought to
be a reward of providing the technical information of the invention to the public.

4. See, e.g., Herman Daly and Kenneth Townsend (eds), Valuing the Earth: Economics, Ecology, Ethics (MIT
Press, MA, 1993).

5. See, e.g., Herman Daly and Joshua Farley, Ecological Economics: Principles and Applications (Island Press,
Washington, D.C., 2004).

6. The concept of sustainable development has rapidly spread to most parts of society in this decade; however,
it is not a recent concept.  A 1972 report from the Club of Rome, "The Limits to Growth," paved the way for this
concept.  After a decade-and-a-half, another report, "Our Common Future," in 1987 by the World Commission
on Environment and Development in the UN, known as the "Brundtland Commission," spread the concept as
well as the exact words "sustainable development."  The Brundtland report defined sustainable development as
"progress that meets the needs of the present without compromising the ability of future generations to meet
their own needs."  In other words, sustainable development means lasting prosperity without reducing the quality
of the present and future lives as well as no degradation of the present and future environments.

7. In the US, General: 35 U.S.C.§101, 620 F.2d 1247, 205 USPQ 1, 220 F.669, MPEP§2106-7, 42 U.S.C.§218
(a); Secrecy order: 35 U.S.C.§181-188: Chapter 17, 35 C.F.R.§5.1-5.33: Part 5, MPEP Chapter 100; in Japan:
Art.32; in EP: Guidelines in EPO C.IV.3.1-3.3, Art.53; in the TRIPs: Art.27(2); in the Paris Convention: Art.4(4);
in the PCT: Rule 39; in the Harmonize Patent Law: Art.10.

8. Michael L. McKinney and Robert M. Schoch, Environmental Science: Systems and Solutions, 3rd edition,
p21 (Jones and Bartlett Publishers, Sudbury, MA, 2003).

9. Geoffrey Dabelko and David Dabelko, Environmental security: Issues of Conflict and Redefinition,
Environmental Change and Security Project Report, pp. 3-13 (spring, 1995).

10. The TRIPs agreement is an international treaty of intellectual property to promote free trade.  In 1995, this
treaty was signed as an annex of the Marrakesh Agreement Establishing the World Trade Organization (WTO) at
the end of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT).  The TRIPs agreement
contains several remarkable features.  Firstly, scholars of intellectual property call the TRIPs agreement the
"Paris-plus" agreement because the TRIPs agreement incorporates the most substantial provisions of the Paris
Convention, and the provisions are obligatory for the TRIPs member countries regardless of whether they are
members of the Paris Convention or not.  (The Paris Convention was signed in 1883 as the first international
treaty to create international intellectual property protections.)  Secondly, in addition to the provisions of the
Paris Convention such as the equal national treatment (Article 3 of the TRIPs), to ensure free trading without
discrimination within member countries, Article 4 of the TRIPs agreement sets the most-favored-nation
treatment (MFN).  This principle roughly means that a member should provide the best benefits to all member
countries equally.  Thirdly, the TRIPs agreement created some general rules for domestic enforcement of
intellectual property rights.  Sometimes disputes about patent enforcement under the TRIPs agreement have
arisen, and the WTO's dispute settlement procedures have been applied.

11. The PCT is administrated by the World Intellectual Property Organization (WIPO), a specialized agency of
the United Nations (UN).  While on the Paris Convention route, an inventor has to separately file his applications
with each country following an individual format specified by that country; on the PCT route, an inventor still
has to file an application in each country, but there is a single format called an international application for all
individual applications in each country.  First of all, an inventor can file an international application with the
US patent office.  The US patent office guarantees that the date of application in the US is the international
application date which is regarded as the domestic application date in each member country.  The US patent
office sends the international application to the International Bureau of the WIPO.  Then, the international
application is subjected to an international search, which results in an international search report containing a
list of relevant "prior art" -- existing publications and references involved in the invention.  When the applicant
requests, the International Bureau also provides an "international preliminary examination report" which has
detailed information about the patentability of the application.  All theses steps, called the "international
phase," are organized by the International Bureau under the centralized and standardized uniform procedures
of the PCT.  However, after the international phase, an inventor has to file the translations of the international
application in each country's language in order to forward the application into the each country.  This process
is called "entering in national phase," and in fact requires an inventor to file his applications with each country
again.  Furthermore the application in the national phase is separately ruled by the individual patent office in
each member country.  In spite of the international search report and the international preliminary examination
report, each country's patent office conducts a prior arts search and exams patentability from the beginning
again.  Of course, the patent office respects the work of the WIPO; however, they make their own decision by
their patent laws and practice.

12. Japanese Patent Office, Information on Foreign Industrial Property Systems, available at
http://www.jpo.go.jp/shiryou_e/s_sonota_e/aippi_e/index.htm, (last visited Feb. 11, 2005).

13. WIPO, PCT Newsletter, January 2005 (WIPO, Geneva, 2005), available at
http://wipo.int/edocs/pctndocs/en/2005/pct_news_2005_1.pdf, (last visited Feb. 22, 2005).

14. WIPO, Revised proposal for program and budget 2004-2005, WO/PBC/7/2, Table 20, (WIPO, Geneva,
2005), available at
http://wipo.int/documents/en/document/govbody/budget/2004_05/pdf/wo_pbc_7_2_part_c.pdf (last visited Feb.
11, 2005).

15. WIPO, Revised proposal for program and budget 2004-2005, 2005, WO/PBC/7/2, page 202, (WIPO, Geneva,
2005), available at
http://wipo.int/documents/en/document/govbody/budget/2004_05/pdf/wo_pbc_7_2_annex_b.pdf (last visited
Feb. 11, 2005).

16. USPTO, United States Patent and Trademark Office Performance and Accountability Report Fiscal Year
2003, Chapter 4.6.2. Results of Operation, (USPTO, VA, 2004), available at
http://www.uspto.gov/web/offices/com/annual/2003/040602_results_of_op.html (last visited Feb. 11, 2005).

17. USPTO, United States Patent and Trademark Office Performance and Accountability Report Fiscal Year
2003, Chapter 5.1.15, Note 9. Program Costs, (USPTO, VA, 2004), available at
http://www.uspto.gov/web/offices/com/annual/2003/050115_note9.html (last visited Feb. 11, 2005).

18a. According to the author's practical experiences.

18b. According to the author's practical experiences.

19. IBM, Year in Review - Results of Continuing Operations 2003, available at
http://www.ibm.com/annualreport/2003/noflash/fr_md_yr.shtml (last visited Feb. 11, 2005).

20. Yoshitake Kihara, U.S. Pro-Patent Policy: A Review of the Last 20 Years, CASRIP Newsletter, pp.11-17
(Winter, 2000) available at
http://www.law.washington.edu/Casrip/newsletter/newsv7i1Kihara.pdf (last visited Jun., 2004).

21. United States President's Commission on Industrial Competitiveness, Global Competition: The New Reality,
Vols. I and II (Government Printing Office, Washington, D.C., 1985).

22. USPTO, Successfully Preparing and Prosecuting a Business Method Patent Application (USPTO, VA:
2001), available at
http://www.uspto.gov/web/menu/pbmethod/aiplapaper.rtf (last visited Feb. 11, 2005).

23. Some critics may assert that the green patent system could further promote the patent domination by
developed countries despite an incentive in developing countries for encouraging invention of eco-friendly
technologies (See, e.g., Ashley Bruce, Patently Obvious (video recording), (Bullfrog Films, PA, 2001)).  In
addition to these four ways of environmental investment, the patent system should have a mechanism to support
eco-friendly inventions in developing countries to further refine the system.

24. Energy Information Administration, Environment, Energy related emissions data, available at
http://www.eia.doe.gov/env/intlenv.htm (last visited Feb. 18, 2005).

25. A recent herald of China's economic power is their meeting with the Group of Seven for the first time at a
dinner on the sideline of the annual meeting of the World Bank and the International Monetary Fund,
September, 2004.  The World Factbook (CIA, 2004) reports that China's export in 2003 ($436 billion) was
already larger than that of France ($347 billion), the United Kingdom ($305 billion), Canada ($279 billion) and
Italy ($278 billion), all of which are members of the Group of Seven.  The Factbook also reports that China in
2003 stood as the second-largest economy ($6 trillion of GDP) in the world after the US ($11 trillion) and that
the annual growth rate of GDP in China has been nearly 10% since 1978.  These data suggest that China could
overtake the US and become the world’s largest economy in a couple of decades if its GDP growth continues at
the same or higher rate.  See, e.g., Elizabeth Becker, Guess Who's Invited to Dinner, New York Times,
September 23, 2004.

26. While China in 2002 emitted a per capita carbon dioxide of 2.57 million metric tons which is around one
eighth of the US's (19.97) and one fourth of Japan's (9.25), China's carbon dioxide emission per thousand dollars
of GDP was 2.75 metric tons, which is around four times of the US's (0.62) and thirteen times of Japan's (0.21).  
See, e.g., Energy Information Administration, Environment, Energy related emissions data, available at
http://www.eia.doe.gov/env/intlenv.htm (last visited Feb. 18, 2005).

27. Since the early 1980s, Beijing and Chinese municipal governments have advanced environmental
protection policies including the reduction of carbon dioxide emission.  These policies have been
implemented by amendment of the constitution and the Basic Law on Environmental Protection (BLEP),
enactment of 6 subsequent national environmental laws, over 20 national environmental regulations, nearly
400 pollutant discharge standards, approximately 600 municipal environmental regulations, and establishment
of the State Environmental Protection Administration (SEPA) as a governmental pledge of environmental
protection.  See, e.g., Gregory Foster and Louise Wise, China, The Environmental Dragon: The Environmental
Security Implications of China’s Rise to Great-Power Status, (Industrial College of The Armed Forces, Fort
Lesley J. McNair, Washington, D.C., 2000).

28. The lack of eco-friendly technologies in China is typically represented by their low number of patent
applications.  See, e.g., WIPO, Yearly Review of the PCT: 2003, (WIPO, Geneva, 2004).  In terms of capital
shortage, while China spent $14 billion in 2002 for environmental protection, about 1.2% of annual GDP (See,
e.g., PlanetSave.Com, China needs to boost spending on environment, March 14, 2003, available at http://www.
planetsave.com/ViewStory.asp?ID=3796, last visited Feb. 18, 2005), several estimations suggest that sufficient
prevention and treatment for environmental degradation in China needs around 10% of their GDP.  See, e.g.,
Aidan Davy, Environment Matters, (World Bank, Washington, D.C., 1996), p. 12.

29. See, e.g., Japanese White Paper on Official Development Assistance 2002, available at
http://www.mofa.go.jp/policy/oda/white/2002/index02.html (last visited Feb. 19, 2005).

30. Home page at http://www.zhb.gov.cn/japan/e_index.htm (last visited Feb. 18, 2005).

31. Home page at http://www.jica.go.jp/english/index.html (last visited Feb. 18, 2005).

32. JICA Project Report (Japanese) available at
http://www.jica.go.jp/china/cooperation/steel/index.html (last visited Feb. 20, 2005).

33. Author's private interview.

34. See, e.g., JICA Project Report (Japanese) available at
http://www.jica.go.jp/evaluation/end/files/13_1_60.html (last visited Feb. 20, 2005).

35. Frances Jenkins Olcott, Good Stories for Great Holidays, #213 (Houghton Mifflin Company, MA, 1914),
available at
http://www.mainlesson.com/display.php?author=olcott&book=holidays&story=egg (Adapted by Baldwin, James)
(last visited Feb. 11, 2005).
GREEN INTELLECTUAL PROPERTY PROJECT
A Tool for Greening Our Society
GIP Progress, Winter, 2003
Environmental
investments
 Purpose
 Technology in
developed countries
 Patent right
Financial aid
(Soft loans and grants)
 To distribute
eco-friendly technologies
from developed countries
to developing countries
 Existing and prevailing
 Effective or expired
Technology transfer aid
(Royalty payment)
 Existing and gaining
market share
 Effective
Environmental
investments
 Purpose
 Technology in
developed countries
 Patent right
Financial aid
(Soft loans and grants)
 To create
eco-friendly technologies
in developed countries
 Not existing
 Not existing
Technology transfer aid
(Royalty payment)
 To nurture eco-friendly
technologies in
developed countries
 Existing
but no substantial
market share
 Effective

Figure 1 will be coming soon...

Figure 2 will be coming soon...
Paid by
 From
Applicant
 Official fees based on the benefit principle
Patentee
 Royalty and compensation based on the ability-to-pay principle