Breaking up the Patent Monopoly for the Benefit of Batteries

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Farella Braun + Martel LLP

PV Magazine - July 23, 2020
 

The patent monopoly is at odds with the global need for battery storage technology. As the world mobilizes towards climate change solutions, companies with battery patents will face increasing pressure to share this critical intellectual property (IP). How they respond will impact our planet’s future.

The effort to make battery technology more widely available could not be more vital. It currently takes 20-30 years for energy sector inventions to reach the mass market. To reach current climate goals, we need to halve the diffusion time for clean technologies globally, according to Bernice Lee et al.’s Who Owns Our Low Carbon Future? Intellectual Property and Energy Technologies.

There are a variety of steps that need to be taken, and quickly, in order for the patent industry to make the innovation we’ll need to change the world: a global licensing database, patent pools, standard setting organizations, co-assigned patents, university-to-industry technology transfer, open to the public and patent pledges.

Global Licensing Database

Licensing has the benefit of being familiar to most sophisticated corporate players and many major universities. Licensing alone may not sufficiently speed diffusion, particularly if the licenses are exclusive. Cross-licensing – agreements between parties to license their IP to each other – may address part of this problem.

Because the existence, let alone terms, of many license agreements are confidential, parties hoping to enter a license have few benchmarks for price or other important terms. One way to provide such benchmarks would be to establish a global database with licensing data and best practices.

Patent Pools

“In a patent pool, multiple patent holders assign or license their individual rights to a central entity, which in turn exploits the collective rights by licensing, manufacturing, or both.” according to Robert P. Merges, Contracting into Liability Rules: Intellectual Property Rights and Collective Rights Organizations. Member patent holders generally must license all patents covering industry-relevant technology, but can use any other members’ IP for a fixed fee. Patent pools can vary widely in size.

Pooling IP may be essential in industries with complex technology that requires access to many, complementary, patents to function meaningfully. They significantly reduce the transaction costs of acquiring IP. However, the technology in a pool is only open to members; a small pool may do little to diffuse clean energy technology. Additionally, potential members may not want to pool royalties, particularly companies with high-value patents.

Standard Setting Organizations

Standard setting organizations (SSOs) are governing bodies of member companies that form technical standards. Like patent pools, member entities will typically contribute IP for the group’s mutual use and may pay royalties into a shared pool. But SSOs go beyond patent pools by writing a catalogue of technical standards to which industry players commit to comply. This effort encourages standardization. And standardization is key to mass production.

On the other hand, SSOs require coordinated collective action and significant up-front investment. Establishing a battery technology SSO may take so much time that it overshadows the benefits.

Co-Assigned Patents

In the United States, and other nations, more than one entity or person can own a patent. Each co-owner may exploit the patent without compensating co-owners or obtaining their consent. This shared ownership obviates the need for a license between the co-owners. This arrangement also increases enforcement power, since all co-owners must join in enforcement actions.

But co-assigned patents may not be a viable global solution. The co-ownership statute does not allow co-owners to “make, use, offer to sell, or sell” the patented invention outside the U.S. (unsurprisingly). Co-owners must also be prepared to incur the additional expense of joining enforcement actions.

University-To-Industry Technology Transfer

Major research universities typically have technology transfer offices responsible for licensing technology invented by students and researchers to private enterprise. These licensed technologies can sometimes spin off into corporations. Many universities also have clean technology competitions, such as the MIT Clean Energy Prize, that encourage student-led startups.

Universities attract bright minds with time and resources to experiment with novel technologies. Dr. John Goodenough, inventor of the lithium-ion battery, is a professor of mechanical engineering at University of Texas at Austin. Universities also have clear monetary and prestige incentives to share their work with private industry. But research institutions may have existing relationships with companies, making access to this technology selective.

Open to the Public: Create a Culture of Open Innovation

The clean energy industry can also look to the example of open source software to guide its response to the need for globally-diffused battery storage technology.

Authors of open source software make the software open to the public; anyone can modify and improve on the source code. Users are still subject to a license, but the license is royalty free and contains minimal restrictions. Some open source licenses require that anyone who modifies the software must release their modifications publicly and free of charge.

These clever licensing schemes would not be possible without a programming culture that valued the free exchange of ideas. Companies with critical clean energy patents could recreate that same culture in the clean energy industry.

Patent Pledge

Patent pledges are a promise not to assert one’s patents against others who use the patented technology. As remarkable as it may seem to promise something for nothing, more than 100 companies have historically taken patent pledges, including Google, IBM, Microsoft, Red Hat, Sun Microsystems, and Twitter.

This amnesty is not without exception; most pledges ends if the party using the patents sues the pledging patent holder. Companies with patent pledges are, in fact, getting something in return: goodwill with the public and, more importantly, with open source developers who rely on the free flow of information to innovate. Indeed, failing to take a patent pledge may tarnish your brand.

Unfortunately, it’s not clear if patent pledges are enforceable in court. Moreover, sharing one’s patent is not at all the same as sharing best practices for producing the invention.

Conclusion

These solutions may seem challenging, but as the effects of climate change are more widely felt, the adoption of one or more of these strategies to make green technology more broadly available appears increasingly essential. Better to understand the available tools now with time yet to strategize for a cleaner future.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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