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1 August 2012PatentsSusan Gorman

IP and energy: going green's growing importance

The theme underlying the use of the word ‘green’ revolves around environmental issues: ‘green’ structures that are resource-efficient, ‘green’ political figures or organisations that support environmentalism, ‘green’ serving ware that is biodegradable and compostable, and ‘green’ energy that reduces our dependence on traditional energy sources, such as petroleum, coal and natural gas.

Yet while many of today’s ‘green’ products may simply be exploiting the cachet of being green and will not have staying power (Kermit the Frog® notwithstanding), green energy seems to be one area that will not be disappearing any time soon.

Green energy is a catchphrase for energy produced from many types of alternative and renewable or sustainable sources such as the action of biological organisms, solar, wind, hydroelectric, geothermal, wave power and tidal power. Each of these technological categories has undergone remarkable growth in the last decade and shows no sign of slowing down.

For example, in 2002 only a handful of companies were geared towards generating biofuels or products used in the production of biofuels. Biofuels Digest’s Advanced Biofuels & Chemicals Project Database, version 2.0, reports that in 2009 there were 41 companies actively producing biofuels, in 2012 there were 113, and within the next four years 130 companies are expected to be producing.

These figures do not include the small, entrepreneurial companies that are springing up to take advantage of this new frontier. In San Diego alone, there are about 30 companies involved in some aspect of biofuels R&D or production, only five of which are listed in the Biofuels Digest report.

Intellectual property is especially important for all these green energy companies. Because the field of green energy is so new, the patent landscape is fairly wide open for innovations in these technologies and, in many cases, there are no compulsory reagents or processes.

This means that many of the innovations around which these companies are built have the potential to become industry standards. In such cases, strong patent claims with broad scope make it far more likely that a company will be able to make a profit from its patented technology, either through licensing to others or by blocking its competitors.

The opportunities presented by the lack of standard reagents and processes are particularly evident in the biofuels area. Most biofuel production processes rely on three distinct ingredients: feedstock, enzymes, and fermentation organisms.

Feedstock refers to the starting material from which the biofuel is made, enzymes work to make the sugars and starch in the feedstock more available, thereby decreasing production time and increasing efficiency, and fermentation organisms turn the sugars and starch from the starting materials into fuel.

A large number of choices exist for each of the three ingredients. Consequently, a unique process for biofuel production can be generated by using different combinations of the available ingredients. This is demonstrated by the 150 or so patent applications published by the USPTO since 2008 directed to feedstocks, enzymes, and biofuels.

This abundance of unique ingredients allows tailoring the biofuel process to use feedstock that is locally available, which in turn opens up the potential for multiple feedstocks and processes to become ‘standards’ for particular geographical areas.

Generating and enforcing IP within each of the categories of green energy creates unique concerns which require thoughtful attention. There are, however, some considerations that are shared among all these technologies. It is clear that a global strategic plan is needed because worldwide energy consumption is increasing at a fast pace, opening up nascent markets across the globe.

In China, for example, energy demands have doubled over the last decade and it has surpassed the US to become the world’s biggest energy user. The US Energy Information Administration’s International Energy Outlook of 2011 projected that worldwide energy consumption will approximately double by 2035, and that China and India will be responsible for about half of that growth.

Consequently, no matter in which specific category of green energy the innovations occur, patent protection in such countries will be vital in order for a company to exploit its technology fully.

“IT IS CLEAR THAT A GLOBAL STRATEGIC PLAN IS NEEDED BECAUSE WORLDWIDE ENERGY CONSUMPTION IS INCREASING AT A FAST PACE, OPENING UP NASCENT MARKETS ACROSS THE GLOBE.”

However, obtaining patent protection in some jurisdictions can be difficult, especially when living organisms are involved, whether they are plants, animals or microbes. Many countries in Asia, Africa and South America exclude living organisms from patentable subject matter, or have significant exceptions.

For example, India excludes genetically modified multicellular organisms from patentability, along with processes for their production or propagation, but allows patents on microorganisms and microbiological processes.

On the other hand, while China does not issue patents for plants or animals that are capable of propagation, whether generated by traditional breeding methods or by biotechnological means, it is possible to patent some processes for making them.

As a result of such differences in patent laws, global protection of some innovations will require diverse strategies that are country or region-dependent and that focus on particular aspects of the overall invention. Companies in many different countries are currently pursuing innovations in green energy and will presumably be seeking patent protection within their own borders.

These applications can serve to guide others and it may be possible to develop a winning strategy by carefully monitoring their progress within the home jurisdiction.

Companies must also consider whether the patents obtained can be enforced. While patent enforcement has traditionally been strong in the US, Europe, Canada, Australia and Japan, many practitioners consider that the enforcement efforts of a large number of nations have lagged behind, although that trend seems to be changing as more countries realise the positive effects that a strong system for IP rights has on business development.

We expect continued strengthening of patent enforcement as innovation becomes more global and more jurisdictions adopt similar standards. So while some nations may not currently have a robust enforcement strategy, that situation could easily change during the life of a patent. We suspect that this is particularly true when multiple innovations are used to accomplish the green energy result within a particular country.

Turning again to the example of biofuels, the first patent for a biodiesel process was obtained in 1980 in Brazil, which today is a leader in ethanol generation. There are currently several different projects underway in Brazil which use processes developed in Brazil, feedstock developed in the US, enzymes developed in Europe and fermentation organisms developed in all of those countries.

These types of situations are becoming far more common and encourage enforcement of the associated patents, if only to ensure sustainability of the industry within that country.

It is clear that green energy is here to stay. What is less clear is how the patent landscape will evolve as more companies choose to pursue innovations in this space. Will a single standard appear within each category of green energy, or will multiple technologies be accepted? And can this new growth area be a force in the movement to harmonise patent laws? Perhaps we should ask Kermit—he’s been around for a while.

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