Why Companies Shouldn’t Be Scared of the Clean Energy Patent Boom

Dec. 4, 2015, 3:36 PM

The U.S. is currently experiencing a boom in clean energy patents, but in interviews with Big Law Business, several experts expressed skepticism that this will lead to an increase in frivolous patent litigation.

On the contrary, they said clean energy patents are unlikely to wind up in the hands of patent trolls, also known by their more technical name, non-practicing entities — essentially, companies that amass patents for the purpose of filing infringement lawsuits.

Bloomberg’s Tom Randall reported on the clean energy patent boom this week:

The number of annual patents has increased fivefold since 2002 and this year is on track to break another record after eight consecutive increases. Most patents in 2015 have been for solar technologies — 586 granted in the first half of the year — followed by fuel cells, electric vehicles, and wind power.

The chart below illustrates this spike.

[Image “Clean Energy Patents diagram” (src=https://bol.bna.com/wp-content/uploads/2015/12/Clean-Energy-Patents-diagram.png)]

Two major reasons came up in discussions for why the clean energy patent boom is unlikely to attract a significant amount of patent troll litigation: First, there simply aren’t that many clean tech patents. Second, those patents relate to hardware, which are often narrowly focused in comparison to the overly broad patents that often spur litigation.

Jay Rafter, a patent litigator at Stoel Rives in Portland, said most people trace the origin of frivolous patent litigation to the dot-com era of the 2000s: Many software companies had acquired rich patent portfolios for technology that was still just in a conceptual stage. When those companies eventually failed, their patent portfolios were purchased out of bankruptcy by non-practicing entities, Rafter said.

Clean energy technology has also been subject to a boom and bust cycle — for instance, ethanol companies failed en masse in late 2007. Still, he doesn’t think their patents will end up in the hands of non-practicing entities because a smaller percentage of clean energy companies have patent portfolios.

“It’s certainly less likely that we’ll have the same troll effect that you had in the dot-com era,” said Rafter.

Rob Merges, a professor at U.C. Berkeley School of Law and former managing director of Ovidian, a company which specializes in valuing patent portfolios, estimated that there are only tens of thousands of clean energy patents compared to hundreds of thousands of software patents granted in the 1990s and early 2000s.

Many of those software patents were considered “pioneering patents” in that they applied to totally new technology and the U.S. Patent and Trademark Office granted overly broad patents that applied across multiple industries, according to Victor Cardona, a partner at Heslin, Rothenberg Farley & Mesiti.

Clean energy tech is different: While any number of small businesses could be affected by a software patent for technology that converts faxes to email, a smaller range of companies will be affected by clean energy patents, that are more likely cover incremental advances in solar panels or wind turbines.

Nonetheless, the clean energy patents may lead to battles between large companies, he said.

The good news about the boom in clean energy patents, Merges said, is that it means companies are investing in this technology. “And that’s just fantastic news from a general perspective of what’s happening in the world,” he said.

To read more articles log in.

Learn more about a Bloomberg Law subscription.