The shift from fossil fuels to greener energy will profoundly
impact the profitability of many businesses in the energy sector.
However, innovation has become an essential facilitator of the
energy transition and this shift presents a significant opportunity
for innovative energy businesses that are able to adapt to industry
changes..
However, innovation often requires significant R&D
expenditure, and having a handle on their IP can allow innovative
businesses to protect their competitive advantage, and maximise
their return on investment (ROI).
Innovation is expensive – how can IP help?
Innovation and technology will play an increasingly important
role in shaping the energy transition in the coming years. This may
be through cost-reduction developments that allow an accelerated
scale-up of low-carbon technology, or through oil and gas companies
diversifying their technology offering in view of a changing energy
landscape.
However, the R&D associated with innovation is often
expensive, and businesses want to know that they will receive a
return on capital expenditure. Fortunately, IP rights are assets
that can be used in a number of ways to improve profitability and
ROI, including:
- Re-deployment of existing IP rights
There are numerous legacy oil and gas technologies finding new
purpose in the energy transition. Perhaps most prominent are
cabling, connector and buoyancy technologies originally developed
for subsea oil and gas operations that are directly transferrable
to offshore wind. Existing IP associated with these technologies
may be re-deployed in order to create a valuable revenue stream
through the licensing of the IP rights to third parties, or by
providing unique value to the market by preventing competitors from
offering the innovative technology.
- Patent Box : 10% UK Corporation Tax
In the UK, innovative businesses can reduce their corporation
tax to 10% through the UK Government’s Patent Box incentive
based on profits derived from patent-protected products or products
incorporating a patented item. This can provide a huge saving when
patented technology is commercialised.
IP rights also provide leverage during supply negotiations. The
energy industry supply chain is becoming ever-more competitive,
where typically several businesses compete to supply a similar
product. If an innovative product is protected by IP rights,
competitors can be excluded from the tendering process, or they can
be forced to offer alternative, less desirable products.
It may be the case that capital investment to fund R&D
activities or commercialise an innovative technology comes from
external investors. Potential investors will want to see a strong
IP portfolio in place and a strategy for protecting ongoing
developments to prevent copying by competitors.
Who owns what?
Collaboration is essential in order to solve some of the most
pressing technical challenges facing the energy industry due to the
opportunity to share resources and expertise. Whether collaboration
takes place between industry partners, or between industry and
academia, one of the most important considerations is to
understand, and agree upon, the ownership of any IP generated as
result of collaborative R&D.
Ownership and/or the right to exploit the IP generated from
collaborative R&D will have a huge impact on the ability of a
party to the collaboration to improve their ROI. At the outset
parties to the collaboration should negotiate an agreement that
covers all aspects of a party’s IP rights and obligations.
Are you free to do what you want to do?
We are currently amidst a global race for green technology
development. A recent report 1 highlighted that the top
patent applicant countries for offshore wind energy (based on the
country of business of the applicant) were China, Republic of
Korea, Germany, Japan, USA and Denmark. The same report found that
patent applicants from these countries also filed patent
applications in other countries.
These patent filing trends can have a significant impact on a
business’ ability to develop and commercialise offshore wind
technology without infringing third party IP rights. For example,
if USA applicants file patent applications in the UK, any resulting
IP rights may significantly impact UK businesses. Therefore,
businesses should ask if they know what IP their competitors
have.
If they don’t, then they run the constant risk of having to
stop supplying or using an “infringing” product or may
find that time and money in developing a product would potentially
be wasted.
Are your competitors free to do what you do?
Ultimately, if your product is not protected by IP, it is open
season for your competitors to copy and sell it at will without
restriction – and to get a free ride on the back of your
time, expertise, and money spent in developing the product and
bringing it to market.
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Footnote
1. Offshore Wind Energy – Patent Insight Report,
European Patent Office in collaboration with the International
Renewable Energy Agency, November 2023
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.
#Intellectual #Property #Role #Innovation #Energy #Transition #Patent
