The number of U.S. patents granted for clean energy technology has recently dropped following a near 10-year period of growth. In fact, according to the Brookings Institute, the number of CleanTech patents granted in the country fell by a whopping nine percent between 2014 and 2016.
When the economy picks up and things shift again, energy patents should be able to move forward, but for now, the uncertainty with the current Trump administration has brought things to a complete standstill.
White & Case Partner in Silicon Valley, Bijal Vakil sat down with IPWatchdog to discuss trends in clean technology innovation and the impact these trends may have on America’s sustainable future. He also shared insights on CleanTech priorities for the new administration and Congress in the coming year, the state of the U.S. patent system and its current effects on American innovation, and the future of CleanTech. In addition, Kevin Cadwell, Energy IP attorney with Akin Gump in Houston, shared why energy patents are at a standstill and the importance of energy IP in the U.S. economy.
There is no easy explanation as to why number of CleanTech patents granted in the U.S. fell drastically in the last few years, but according to Vakil, research and development to decarbonize the world typically relates to fossil fuel energy prices. Ultimately, when fossil fuels are relatively cheap, innovation and corresponding patent applications typically decrease.
“In the U.S., we had a limited period of growth with incentives from the first Obama administration and when fossil fuel prices dropped, a number of venture capital firms pulled from this industry,” he explained. “However, there seems to have been a consistent uptick in CleanTech patent filings from Japanese, South Korean, and German companies.”
In the high-tech industry, energy IP litigation followed the early 2000s pattern, but then has not yet taken off like many people had predicted it would. There are many possible reasons for this, said Cadwell, including the price of oil dropping, overall patent lawsuits slowing down – due to a combination of factors including 101 challenges, venue uncertainty, etc. – and that many energy IP suits were customer suits not ripe for more extended litigation.
“As of late, we’ve seen a significant shift at the U.S. Patent and Trademark Office in the last five years. There has been a sea of change focus on patent quality as patents that are better quality are, frankly, more valuable, and this will likely increase the incentives to innovate and file patents here,” said Vakil.
There are some new CleanTech priorities for the new administration and Congress in the coming year. While there has been a renewed focus on traditional fossil fuel technology, there is also a simultaneous interest in energy security in a world with political uncertainty. “Irrespective of policy goals relating to CleanTech, technology relating to the security aspect will likely spill over to CleanTech,” Cadwell added.
So, what does the future of CleanTech look like?
Historically, the drive towards investing in CleanTech comes in bursts of technological innovation. While the Trump Administration has suggested policies that seem to focus on fossil-fuel, states and cities in the U.S. are picking up the slack and focusing on playing a larger role to incentive and expand CleanTech.
“In view of the falling prices of wind, solar, natural gas and other CleanTech, we should see a rise in this technology making its way to non-traditional industries, such as commercial real estate (office buildings, shopping malls, and large housing complexes),” said Cadwell.
Historically, we have not seen many competitor-based IP litigation in the energy sector. So, there are not necessarily companies “sitting on energy patents.” Instead, practicing companies are following historical patterns of not asserting affirmatively against competitors. The fact that the NPEs are not suing may be mainly due to several factors including the price of oil as energy companies not seen as the deep pockets they were just a few years ago.
When the economy picks up and as oil prices go up, there is a good chance that we will see more activity in the energy patent space, said Cadwell. But, until then the uncertainty with the current administration has brought things to a standstill.
“Right now, a lot of people are waiting to see what is going to happen…what are this administration’s energy goals, are they more conventional or alternative energy based?” he said. “So, there is a pause as we see what direction regulations (or deregulations) will go, at which point patent owners will have more clarity and be able to determine the best direction for themselves.”
Today, energy and technology are two of the biggest economic drivers. And currently, according to Cadwell, they are intertwined not just because of the IP issues with renewables, alternative energy sources, green energy, etc. “But technology and use of technology for extracting conventional oil is paramount.”