With the renewed global focus on the environment and on developing clean technologies, patenting of clean technologies has become more prolific.
Cleantech Patent Trends
According to a quarterly cleantech patent tracking service started in 2002, The Clean Energy Patent Growth Index (CEPGI),1 which tracks patents issued for solar, wind, electric/hybrid vehicle, hydroelectric, tidal/wave, geothermal, biomass/biofuels, and other renewable energy technologies, the number of cleantech patents granted in the United States rose from about 750 in 2002 to about 925 in 2008. Another study (Miller et al, 2008),2 which tracked issued United States patents in the fields of renewable energy, biofuels/synfuels, systems integration, environmental and water, and transportation, saw an uptick of about 30% during the period from 1998 to 2007. According to Lux Research, over this same time period, U.S. cleantech patents were being granted at a rate twice that of the overall average. The Miller et al paper also reported an increase of about 430% in international (PCT) application filings in the period 1998-2007. Clearly, clean technology businesses are becoming more patent savvy.
The United States continues to move ahead to advance innovation in clean technologies. The United States Patent and Trademark Office (USPTO) recently announced a pilot program3 which provides patent applicants with the opportunity to accelerate examination of U.S. patent applications for green technologies. Eligible patent applications includes those pertaining to environmental quality improvement, energy conservation, development of renewable energy resources and greenhouse gas emission reductions. This program became effective as of December 8, 2009 and will operate for at least 12 months.
Cleantech Patents Are An Important Part Of A Company's Business Strategy
Several reasons combine to explain why clean technology businesses are choosing to patent their inventions. Patents provide their owners with an exclusive right to make, use, and sell an invention, and this exclusive right is actionable in court to block a competitor from interfering with it. Hence, the patent grant provides at least the potential to enjoy monopoly power in the marketplace and enjoy supernormal profits. Even if supernormal profits are not immediately realized, the prospect of enjoying such a business position increases business valuations and attracts investors, which is often a more relevant benefit for a clean technology business which may require relatively greater lead time for commercialization.
As patent activity increases, businesses also tend to adopt defensive patent filing strategies. In this respect, patent portfolios are created for purposes of, among other things, asserting patent rights in retaliation against a patent infringement suit brought by a competitor. This kind of strategy is more likely to exact favourable settlements through cross-licensing between parties of their respective patented technologies.
Patent Issues Peculiar To Clean Technologies
Patenting of clean technologies presents its own unique issues, owing to the fact that clean technologies often integrate multiple technologies, involve cooperation between different organizations, and require greater lead time to market. These issues include: tension between filing immediately and perfecting the invention, careful claim drafting to avoid patentability rejections, joint development issues, and due diligence considerations during acquisition.
Tension Between: (i) Rush To File With The Patent Office, And (ii) Perfecting The Invention
Once you invent, patent protection is not perpetually available. In most countries, with the notable exception of the United States, patents are awarded based on who is first to file. In this respect, expeditious filing is always a consideration, as you have no control over your competitors' rate of innovation and patent filing strategies. As well, certain events, such as public disclosure, immediately compromise patent rights in many jurisdictions, or at least trigger a deadline by which to effect a patent filing, and the United States is no exception in this case. Although you may be able to control public disclosure of your own activities, you have no control over your competitors' tendencies for public disclosure, and this also creates a stress which biases towards expeditious patent filing.
However, as is often the case with clean technologies, significant time may be required to perfect the invention, and understand its boundary conditions, before entering the marketplace. An early patent filing may be premature, as the invention, although sufficiently developed for patenting, may not be fully understood in terms of the complete scope of parameters within which it would be able to operate. In such cases, an expeditious patent filing may be somewhat wasted as it may not provide the broadest possible patent protection. As well, because patent applications are, generally, published 18 months after the first filing, the subject matter of an expeditious patent filing eventually becomes public domain, and functions as prior art vis-à-vis later improvements and renders the later improvements more difficult to patent.
Careful Patent Claim Drafting Is Required
Because clean technologies sometimes incorporate several pre-existing technologies from various scientific and engineering disciplines, it is important to carefully craft the claim language, in light of recent U.S. patent case law. The U.S. Supreme Court's decision in KSR International Co. v. Teleflex Inc.4 has made it more difficult to overcome the obviousness patentability standard during patent prosecution in the United States. Under U.S. patent law (and, similarly, under the patent legislation of most, if not all, other commercially significant jurisdictions), inventions are not patentable if they are considered "obvious" (or, for example, in Europe, lacking of an inventive step) over the prior art. This means that the invention must be more than simply distinguishable over a single piece of prior art. As a practical matter, the obviousness analysis incorporates consideration of more than one piece of prior art (i.e., a "mosaicking" of prior art). Because clean technologies sometimes involve a mosaicking of pre-existing technologies, it is important to wordsmith the patent application and the patent claims for such clean technologies so as to succinctly and accurately capture the integration of the several technologies in order to avoid a rejection under the KSR case.
As suggested above, the creation of clean technologies often involves the integration of several technologies from various disciplines. This may necessitate business organizations to partner with one another in order to successfully develop the technology. In this respect, joint development presents its own unique considerations in the patent law context.
Business organizations conducting joint development must be mindful of patent law consequences even during initial, preliminary discussions, prior to formal creation of the relationship. Initial discussions should be conducted under appropriate non-disclosure agreements which impose confidentiality obligations on each of the parties. As a result, these discussions, and related disclosures, are rendered non-public, thereby not compromising the patentability of anything disclosed. As well, even under these circumstances, business organizations should be reticent about receiving any third party information which is related to their own technology space, or is helpful in progressing their technology, as such input may result in the creation of an unwanted relationship between business organizations owing to potential co-ownership of an improved technology.
Upon deciding to participate in joint development, business organizations should be careful when choosing the business vehicle (corporation, partnership, joint venture, etc.) by which to define and grow the relationship. Generally, any business vehicle which dictates joint ownership of patents should be avoided, whenever possible, due to the complications which may arise in defining each party's rights, vis-à-vis one another. As well, it is important to memorialize the collaboration in a written agreement prior to conducting any collaborative R&D. Otherwise, because of the way prior art is defined under U.S. patent law, and, specifically, because of U.S. patent law's "first-to-invent" scheme, unintended and self-inflicting prior art may be created during the collaboration which could work against patentability of inventions arising out of the collaboration.
Acquisition Of Third Party Patent Rights
In some instances, a business organization, rather than developing all of its own technology, may choose to purchase or license existing patent rights from third parties. This is an excellent strategy where the required technology is not a core technology of the business organization. When taking steps to acquire third party patent technology, it is important to conduct appropriate due diligence to mitigate any risk of acquiring something which is not bargained for. The scope of due diligence varies depending on risk tolerance of the business organization acquiring the technology, on the relative importance of the technology being acquired, and on the acquisition cost. A business organization may want to confirm that the third party actually owns the patented technology, or whether the third party has licensed it to other parties. A more rigorous form of due diligence exercise may entail evaluation of the scope and validity of patent claims, as well as review of the complete patent or patent application to determine whether the invention has been sufficiently described to satisfy enablement and best mode requirements for patentability.
The growth of cleantech patents should continue in the near term as the global push for clean technologies intensifies and countries, such as the U.S., implement programs and stimulus plans geared towards rapidly increasing innovation in clean technologies. Cleantech companies that adequately protect their intellectual property are well positioned to prosper as this sector continues to grow in importance.
1. CEPGI is offered by the New York based firm of Heslin Rothenberg Farley & Mesiti P.C. Further details about CEPGI can be found at http://cepgi.typepad.com/
2. Miller, Todd R., Peterson, James W., Tsang, Christopher T. (2008), "Patent Trends in the Cleantech Industry". Intellectual Property & Technology Law Journal", Vol. 20, No. 7, p. 1.
3. USPTO press release regarding its program to accelerate the examination of certain green technology patent applications - http://www.uspto.gov/news/pr/2009/09_33.jsp
4. KSR International Co. v. Teleflex Inc., 127 S. Ct. 1727 (2007).
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