Why companies that take a collaborative approach to innovation will have the best chances for successs in the coming cleantech revolution
We've seen no shortage of hand-wringing in recent months over what the climate treaty set to be negotiated this December in Copenhagen will mean for technology developers. In their efforts to foster innovation and mass deployment of clean energy technologies at relatively low cost, might envoys miss the mark and make it harder for companies to profit from their innovations? That's what the U.S. Chamber of Commerce sees looming in the treaty. Last month the business group said the negotiations represent the "IP battle of the year."
But wherever negotiators end up striking a balance between IP protections and the need to transfer technology to developing countries, the companies that take a collaborative approach to innovation — such as with cross-licensing and open-source platforms—may end up being among the most successful, and as such will be the ones to usher in what Energy Dept. Secretary Steven Chu has called the "revolution" ) in science and technology needed to reduce greenhouse gas emissions and curb fossil fuel use.
Patents Vs. Open-Source
The clean energy industry has reached a stage that mirrors the early days of biotech, with a "much more heightened awareness of the value of IP" than in years past, according to Eric Walters, a partner and chair of the Palo Alto (Calif.) litigation department for the law firm Morrison & Foerster.
The Clean Energy Patent Growth Index, published this month by the IP law firm Heslin Rothenberg Farley & Mesiti, shows a nearly 7% sequential decline in the first quarter, to 243 U.S. patents. But patents are up from the same quarter a year earlier, when the index saw 220 successful patent applications, and significantly higher than 2002. Walters said cleantech companies these days are increasingly "willing to invest significant amounts of money in patents and litigation" to protect trade secrets and "stake out their claim in the IP world."
Yet at the same time that companies are collecting patents for clean energy innovations in record numbers, governments are developing new schemes for making advanced technologies available at relatively low cost (one option is compulsory licensing, a legal requirement for companies to license their technology for a nominal fee if they are not providing it in a certain market). And the U.S. government will likely acquire some of the IP developed by companies funded under programs such as the Energy Dept.'s Advanced Research Projects Agency Energy. Meanwhile, open-source projects—platforms for sharing IP with all comers for free—are also starting to emerge. For example, IBM, Nokia, Pitney Bowes, and Sony created the Eco Patent Commons in partnership with the World Business Council for Sustainable Development, a project that has accumulated pledges for nearly 100 patents to enter the public domain from just nine member companies since its launch last year.
Collaboration Bridges the Gap
Of course, revolution will take more than the 100 innovations that nine companies are willing to give away. And that leaves an opportunity for patent holders to make collaborative plays. In an article published this week on Cleantech Group, Rodger Sadler and Chi Cheung of the IP practice group at Orrick, Herrington & Sutcliffe suggest that nimble clean energy startups focusing on innovation and larger, often slower-moving firms with more manufacturing capacity can benefit from licensing deals (think battery startup Sakti3 teamed up with General Motors). Established companies with extensive patent portfolios, too, can benefit from strategic cross-licensing deals with one another. According to Sadler and Cheung:
"Companies using their portfolios in this collaborative manner will be rewarded with a greater freedom to operate and innovate, while remaining competitors are left in the position of trying to design around a wall of cross-licensed patent portfolios."
"The key to our prosperity in the 21st century lies in our ability to nurture our intellectual capital in science and engineering" to produce "breakthroughs on energy," Energy Dept. chief Chu said earlier this year, as we did with semiconductors, computers, and biotech. But entrepreneurs hoping to capitalize on this international nurturing—even those with killer IP—face a ticking clock and fierce competition. As VantagePoint Venture Partners CEO and Managing Partner Alan Salzman told us recently, "In a world that's innovating quickly, the life cycle of IP is short."
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