Floods, sachets, and intellectual property in the circular economy

Metro Manila and other parts of the Philippines are increasingly vulnerable to flooding — a crisis exacerbated by the staggering volume of waste generated annually. Over 21 million metric tons of garbage, including plastic sachets and bottles, clog our rivers, canals, and drainage systems. The result: severe flooding during heavy rains, disrupting lives and livelihoods.

In response, Senate Bill No. 306, also known as the “Philippine Circular Economy Promotion Act” was recently filed by Senator Loren Legarda. The bill proposes a transformative shift from the traditional linear model of production and consumption to a circular economy — one that emphasizes sustainability through repair, reuse, and recycling.

In a linear economy, a gadget is bought, used, and discarded. In a circular economy, that same gadget is repaired, reused, or its parts recycled to create new products. The goal is simple: reduce waste and extend the life cycle of materials.

This theme was the centerpiece of my recent talk at a gathering of Intellectual Property (IP) Law professors from across Asia and the Max Planck Institute in Germany, held at Chiang Mai University in Thailand. We explored the intersection of innovation, IP rights, and environmental sustainability.

At the heart of Senate Bill 306 is the recognition that “innovation is the engine driving the circular economy.” The bill identifies key technologies — mobile platforms, modular design, trace-and-return systems, and 3D printing, among others — as enablers of this new model.

However, for innovation to continue and flourish, it must be rewarded and protected. That is where intellectual property law comes in.

In the Philippines, the IP Code (RA 8293) provides the legal framework to incentivize invention and protects against infringement. However, the exclusive nature of IP rights can sometimes clash with the principles of reuse and repair that sustain the circular economy.

A case decided by the Supreme Court in 1990 illustrates this clash. In Del Monte Corp. v. Court of Appeals (G.R. No. L-7832), the respondent reused Del Monte bottles — purchased from junk shops — to package its own catsup products. Del Monte sued for trademark infringement and unfair competition, citing the bottles’ embossed warning: “Not to be Refilled.” The Court ruled in favor of Del Monte, citing unfair competition.

This decision affirms proprietary control over containers. However, under a circular economy model like SB 306, reuse of containers is not only encouraged — it is essential to sustainable waste management.

The conflict between proprietary rights and environmental goals is further complicated by Republic Act No. 623 (1951), which prohibits unauthorized reuse of marked containers. This legal landscape raises the question I posed during our roundtable discussion: “Is IP a square peg in the circular economy?”

As the Philippines works toward a more sustainable future, reconciling intellectual property rights with environmental concerns will be crucial. The challenge lies in crafting legal frameworks that protect innovation while promoting repair, reuse, and the sharing of know-how.

Senate Bill No. 306 is a step toward environmental sustainability. It highlights four key strategies:

1. Reuse and recycling of physical products

2. Reduction of single-use plastics

3. Community-based recovery systems

4. Refillable packaging models

To support these goals, the bill proposes the creation of a Circular Economy Regulatory Sandbox and a Circular Economy Incentive Code, among others.

Unfortunately, SB 306 is silent on a critical enabler of innovation: intellectual property. The bill does not mention IP rights, ownership, licensing, or protection mechanisms. This omission is a missed opportunity for small and medium enterprises (SMEs) and startups developing proprietary circular technologies.

SMEs are the backbone of the Philippine economy. They account for 99.5% of businesses, generate 63% of employment, and contribute 40% to GDP. Their participation in the circular economy is essential.

Recognizing this, the Intellectual Property Office of the Philippines (IPOPHL) launched the GreenTech Incentive Program last year to support local inventors in developing sustainable innovations. However, as of this September, only six applications have been filed.

This low response reflects the challenges SMEs face: limited financial resources to develop IP strategies; high transaction costs associated with exclusive IP rights; and fear of infringement liability.

Despite these tensions, the current IP Code (RA 8293) contains provisions that can support circular innovation. These include limitations on IP rights, compulsory licensing, and other mechanisms that balance proprietary interests with public good.

Most importantly, Section 2 of the IP Code declares that “the use of intellectual property bears a social function.” This principle is reflected in doctrines such as fair use, experimental use, and patent exhaustion — legal tools that allow society to benefit from innovation without undermining the rights of creators.

Revisiting this principle offers a chance to rethink legal norms that may obstruct circular practices. It invites us to reshape IP law to better align with environmental goals.

In conclusion, the following policy recommendations could strengthen SB 306:

1. Adjust infringement standards to account for environmental imperatives;

2. Promote use rights for recycling goods and their components; and,

3. Encourage open licensing models for sustainable technologies.

By integrating these elements, IP rights can evolve to support — not hinder — the circular economy. The recognition that IP bears a social function affirms that it is not a square peg. It can — and must — be reshaped to fit in a circular economy.

(This article is for general informational and educational purposes only and not offered as and does not constitute legal advice or legal opinion.)

Alex Ferdinand S. Fider is a Senior Partner of the Angara Abello Concepcion Regala & Cruz Law Offices. He is also a lecturer on Intellectual Property Law at the University of the Philippines College of Law and the DLSU Tanada-Diokno School of Law.

88308000

asfider @accralaw.com