Net power through nuclear fusion, a long dreamed-of goal, may finally be within reach. Fusion technology is moving out of the lab and many companies, including recently-founded ones, are striving to commercialize technologies that promise to make fusion a reality.
These fusion startups are driven by the shared dream of carbon-free energy to combat climate change. Scientists in this space may prefer to be open in sharing details of their technology with academia and other fusion companies. Yet these companies are businesses that need capital to grow, and fusion commercialization often depends on private funding sources. These investors typically look for robust intellectual property (IP) when choosing which company to back, particularly in new industries with rising competition.
COMMENTARY
As a result, fusion companies may have a simultaneous drive to be open with others but also need to keep many aspects of their technology proprietary through patents or trade secrets. This could inhibit other fusion companies from operating, which is at odds with the aspiration of fusion companies working together to defeat climate change.
Given these opposing goals, how can fusion companies obtain and protect their IP, while also collaborating with an open community?
In the past 20 years, more and more companies have developed a successful business model that treats their IP in a more open and less insular way. In the past, many companies would stockpile patents for their most important technologies and use them as a deterrent for other companies who impinge on their business, or as ammunition in the event of a lawsuit. While this approach met with success at the time, it is becoming more common for companies to treat their IP as an integral part of their business strategy that can be leveraged and monetized in a variety of ways, particularly through licensing.
This approach could be very attractive for many fusion companies. Patents' value can vary significantly—some are worth little while others are crown jewels. It is difficult to forecast which patents will be in which category. Patent value, however, could be estimated by analyzing factors like the marketplace of potential users of the technology, detectability, and availability of alternative technologies.
For instance, patents that cover high-level operation of a fusion power system, such as a system controlling a plasma, might have a low monetary value due to the potentially small number of potential infringers, the difficulty of knowing which are practicing the patented technology, and the unavailability of a market for licensing the (fusion-specific) technology to non-fusion companies.
Such patents may have some limited value for striking deals with direct competitors, but a competitor who is confirmed to be infringing the patent may be a dicey prospect for suit, not only because of the risk of a countersuit over patents but also because of the potential reputational impact of a lawsuit between competitors in a small industry where the parties know each other. Though it is certainly possible that a patent covering high-level fusion concepts might have some value as a basis for a cross-licensing deal or as a defensive asset if sued by a competitor.
But there are many other technologies developed by fusion companies with uses outside of the industry by non-fusion companies, such as companies in wind power, photonics, heating, neutronics, isotope production, space propulsion, desalination, etc. Patents that cover such technologies have a much greater potential to be licensed and provide a revenue stream for fusion companies. Licensing these types of technology can also create and grow new markets, and bring new revenue to fusion companies.
For example, fusion companies often need a relatively small number of specialized parts from supply chain vendors, but the vendors may be hesitant to provide these parts without a long term purchasing commitment due to the investment to make a run of parts. Typically these service agreements assign IP rights to the fusion company, whether for technology developed prior to production or during production. This often means the parts have to be purchased at a premium, but also hurts the wider community of fusion and non-fusion purchasers of this technology by limiting the availability of necessary parts. If the fusion company instead licenses the IP to the vendor, the vendor becomes free to scale up to meet the demands of various customers and can sell a lot more parts, while the fusion company gains new revenue in the form of a royalty from the vendor for each part sold.
This type of strategy allows a fusion company to add a revenue stream to their company, which attracts investors while sharing and licensing their technology freely. Partnering with vendors to develop the fusion technology ecosystem and supply chain in this way should benefit the fusion community at large and other industries.
It's important to note that these options are unavailable to a company that foregoes building an IP portfolio, but remain options to a company that builds the IP. Patents, trade secrets, and other IP that are readily licensed to others can enable a fusion company to achieve its goal of publicly sharing fusion science while allowing it (as IP holder) to “turn the dial” on the extent to which their IP is enforced.
Since patents are public documents, the technology becomes public through the patenting process. The patent holder can take a dynamic strategy in deciding which technology to license, which to enforce, and which to hold, and how aggressively or widely to do so. Without holding patents or other IP, a fusion company cannot make these decisions; with the patents and other IP, however, there are options available to either the fusion competitor or its future acquirers or other stakeholders. Holding patents and other IP also provides defensive options should other fusion companies decide to assert their IP rights against you.
It is worth noting that these strategies assume that the fusion company owns the IP, or has a right to sublicense it. In many cases, fusion technology is developed jointly with academic institutions or other entities, and the necessary rights to take this approach may not be available. It may therefore be important for fusion companies to gain these rights as early as possible. This level of control also plays into the choice of what to file patent applications on, which can make a big difference in licensing opportunities.
The licensable value of a patent is not only related to the type of technology and the size of its potential market, but also to how easy it is to design around, and also how much investment is needed to get commercial value from the license. A patented technology may be very desirable for fusion applications, but if a competitor is just going to use a different technology in its place, there's not as much value in a license. Similarly, if a vendor would need to spend a lot of money to start making any money from a technology they are licensing, the value to them is diminished.
Fusion companies should therefore consider obtaining the rights to strong patent protection early to maximize licensing potential. There are a number of accelerated examination programs at the patent office that can be leveraged to fast-track the patenting process and avoid the several year-long wait for examination that often occurs.
By taking longer to obtain a patent, or waiting to monetize your IP, a fusion company risks their technology being rendered obsolete by others. While it's tempting to believe that a patent sitting on the shelf will remain monetizable until you choose to use it as such, competitors can often render the related technology obsolete by developing alternatives, dramatically reducing your patent's value.
In sum, having and exercising robust IP rights, and not merely laying the groundwork for IP rights later or sitting on your IP rights, can enable fusion companies to effectively straddle their goals of collaborating in a shared purpose while protecting and growing their commercial interests.
Originally published by Power Magazine.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
