The US-China Clean Energy Research Center’s Intellectual Property Management Framework – A model for the UNFCCC Technology Mechanism?

Joint research and development (R&D) is seen as a major element and panacea for rebuilding trust between countries in the UNFCCC regarding intellectual property and for addressing the difficult issues between emerging economies (read: China) and other developed economies.  The issue is especially fraught between the US and China and yet US-China bilateral cooperation on climate mitigation technology is deep and ongoing, especially through the Clean Energy Research Centre (CERC).

The projects under the CERC are run under national consortia collaborating across borders, so that benefits may be shared across all national actors. Funding for research is purely nationally based (each funds own participants and contributes own funds to joint research), so there is no cross-subsidization unless otherwise agreed. The CERC agreement very clearly outlines the intellectual property framework for managing the research produced under the projects and work plan (See http://www.us-china-cerc.org/Intellectual_Property.html). This is controlled by the CERC protocol and the attached IP Annex. (See http://www.us-china-cerc.org/pdfs/protocol.pdf).

Some highlights from the Protocol and IP Annex

  • Article I.D – Disputes concerning intellectual property arising under this Protocol shall be resolved through discussions between the concerned participating institutions or, if necessary, the Parties or their designees. Upon mutual agreement of the Parties, a dispute shall be submitted to an arbitral tribunal for binding arbitration in accordance with the applicable rules of international law. Unless the Parties or their designees agree otherwise in writing, the arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL) shall govern.
    • This reflects a model that I (and others) have suggested in my research by providing non-national mechanisms for evaluating and deciding disputes under technology transfer agreements funded by the UNFCCC financial mechanisms. Even while this would remain subject to each country’s rules for recognition of arbitral awards, the certainty in entering into agreements is crucial.
  • Article II.A – Each Party shall be entitled to a non-exclusive, irrevocable, royalty-free license in all countries to translate, reproduce, and publicly distribute scientific and technical journal articles, reports, and books directly arising from cooperation under this Protocol. All publicly distributed copies of a copyrighted work prepared under this provision shall indicate the names of the authors of the work unless an author explicitly declines to be named.
  • Article II.B.2.a – Any intellectual property created by persons employed or sponsored by one Party under cooperative activities […] shall be owned by that Party. Intellectual property created by persons employed or sponsored by both Parties under cooperative activities (involving a research project with a specific scope of work jointly funded by the Parties) shall be jointly owned by the Parties. In addition, each creator shall be entitled to awards, bonuses and royalties in accordance with the policies of the institution employing or sponsoring that person.
    • Crucially, activies funded solely by one parties do not result in IP owned jointly. Only those jointly funded are owned jointly. However, Article II.B.2.B allows the exploitation of ANY IP created under the collaboration on the territory of the other party, subject to any modification within a specific IP Technology Management Plan for a specific project. Thus even where the funding does not allow ownership, use by the party or others it designates within its territory is allowed – a form of access to IP that constitutes some form of transfer, although it works both ways in this case.
  • On trade secrets, the only obligation is to provide such protection according to national law although it does provide a definition:
    • Information may be identified as “business-confidential” if a person having the information may derive an economic benefit from it or may obtain a competitive advantage over those who do not have it, the information is not generally known or publicly available from other sources, and the owner has not previously made the information available without imposing in a timely manner an obligation to keep it confidential.

The Technology Management Plans are where the IP Annex is implemented and thus contain more detailed provisions. The parties have provided an annotated TMP outlining recommendations and shared understandings of definitions and obligations within TMPs – http://www.us-china-cerc.org/pdfs/CERC_ACTC_TMP_Annotated.pdf

Looking at the annotations some key points emerge:

  • There is a real attempt to ensure the ‘joint’ nature of the research and the shared benefit and exploitation of the results of the research.
  • The agreements and the Annex allocate ownership to the Party first, and then, under the parties’ law, to the specific researchers or firms involved. These owners cannot restrict the exploitation and/or licensing agreed to under the TMP, although since the TMP is signed by the Consortium members, they will have agreed to this. Since no collaboration can go forward without a TMP, private sector participants are protected.
  • Background IP is also strongly protected so that IP developed separately from the project before during or after is not subject to the TMP. Licensing of background IP to the project is contemplated and takes place under purely contractual terms, although clearly grant-back provisions[1] or so-called reach-through royalties for technology developed or improved in the project cannot really be part of what is contemplated.
  • For jointly funded projects, there seems to be a contradiction between the TMPs and the IP Annex. Where the IP Annex has a default right of exploitation for the parties where IP developed under the project is allowed to be exploited on the territory of the other party, the TMP envisions that IP developed under jointly funded projects will negotiate good-faith non-exclusive licensing, suggesting that the right to exploit is NOT the default under jointly funded projects. The same appears to be true for non-jointly funded projects (Article 4 and 5 of the annotated TMP).  It remains to be seen how this is to be further interpreted by the parties or any arbitral tribunal that may need to interpret these provisions.

Below are the links to the specific Technology Management Plans (TMPs) negotiated and endorsed over the course of 2011. Each of these was made legally enforceable by national letters of endorsement and reinforced by continuing workshops for participants and researchers in both countries.

The Clean Coal technology, including Carbon Capture and Storage TMP – http://www.us-china-cerc.org/pdfs/CERC-ACTC_TMP_19_Aug_2011.pdf

The Building Efficiency TMP – http://www.us-china-cerc.org/pdfs/CERC-BEE_TMP_22_Sep_2011.pdf

The Clean Vehicles TMP – http://www.us-china-cerc.org/pdfs/CERC-CVC_TMP_20_Sep_2011.pdf

Despite some small confusions, the US-China CERC IP Annex and TMPs suggests a bilateral model that could provide a guidance to the development of agreements for R&D funded by the GCF involving two or more UNFCCC parties (including private participants). Key elements to ensure would be:

  • Dispute settlement through international arbitration;
  • Managing the research through national consortia so that there is a governmental stakeholder in whom the initial IP ownership can reside;
  • The default right to exploitation in the national territory of any party that is a member of the partnership

This CERC also puts the lie to the idea that the US cannot (or should not) discuss IP in international climate negotiations as they have done so quite visibly and extensively within the CERC framework, one which may be easily translatable to the UNFCCC context. An easy step may be to open up the CERC to membership by other countries provided they meet the same requirements and wish to participate on the same terms, and the GCF can make funding available to countries for their participation.  In this same sense, participation in R&D in the International Energy Agency’s Technology Implementing Agreements could be enabled for developing countries.  However, to the extent that these frameworks do not really work on issues of most relevance to many developing countries (e.g. micro-grid, appliance energy efficiency, adaptation research into agriculture) it may be appropriate for the UNFCCC technology mechanisms (the Technology Executive Committee and/or the Climate Technology Centre and Network) to consider the setting up of R&D platforms with much the same kind of framework.

[1] A requirement by a licensing entity that any improvement made during the licensing period to whatever was licensed to the licensee, must be told and given to the licensor when the license expires or per the licensing agreement. Typically, this relates to technology of some kind and includes related know-how acquired (Black’s Law Dictionary)

Recommended Citation: Dalindyebo Shabalala, “The US-China Clean Energy Research Center’s Intellectual Property Management Framework – A model for the UNFCCC Technology Mechanism?”, Technology Transfer for Climate Change (July 29, 2015, 02:30 AM)


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