Alternative Energy/Overview of Economics of Intellectual Property in AE
Overview of Economics of Intellectual Property
Data on enclosure: Patenting activity and increase over time
(Copenhagen Economics 2009)
- Between 1998 and 2008 215,000 patent applications were filed for clean energy technologies (specifically wind, solar, fuel cells, geothermal, ocean, biomass, and waste) internationally, of which 22,000 were in developing countries - 7,400 of these were actually owned by residents of those countries and not surpisingly, 6,800 of those were owned by residents of China.
- The worldwide growth rate of patent registrations for the period of 2004-2007 was 120%.
- In 1998 1 in 20 patents was protected in a developing country whereas in 2008 the split was 1 in 5.
- Fuels cell patents and solar energy patents account for 80% of these numbers, and wind energy is a distant third.
- 99.4% of the patents in developing countries were in a small group of emerging markets (China, India, and a few others) whereas the larger majority of developing countries only protected 0.6% of the patents.
- This split has raised concerns among smaller and less wealthy developing countries that the costs of alternative energy technologies will soon rise putting them out of their reach.
- In 2008 these emerging markets accounted for 20% of worldwide patenting.
- This leads to the conclusion that patent rights can't be an obstacle to the transfer of clean energy technology to developing countries since there are very few patents for these technologies registered in these countries. A relaxation of the property rights regime for these technologies would not improve tech transfer to these countries.
- As the world looks for ways to reduce global GHG emissions and developed countries look for ways to facilitate the necessary emissions reductions in developing countries, the Copenhagen report suggests that the insufficiencies in technology transfer to developing countries, may more likely be attributable to some of the following issues:
- insufficient technological knowledge to produce innovative technologies locally,
- insufficient market size to justify local production units
- insufficient financial resources to acquire innovative products
- The study finds that wind technology is the most likely to be patent protected in less developed economies and emerging markets. They account for 15% of the worldwide patent applications in wind technology.
- The very few patents (0.6% mentioned above) owned in the least-developed countries tend to be owned by firms in developed countries.
- The report suggests that firms are less likely to transfer technology to countries where IPR law is enforced loosely - pointing to literature that shows that strengthening IP legislation increases technology transfer because royalty payments represent the sale of IP rights between subsidiaries of a firm.
Image: Clean Energy Spacial Patent Distribution
"As a further indicator of innovation in the sector, the number of U.S. patents granted for clean technology breakthroughs has increased about twenty percent over the past five years, from fewer than 750 in 2002 to around nine-hundred in 2007." (Ward et al, 2008) Also see: Clean Energy Patent Growth Index
The CEPGI (shown below annually) tracks the granting of U.S. patents for the following sub-components: Solar, Wind, Hybrid/electric vehicles, Fuel Cells, Hydroelectric, Tidal/wave, Geothermal, Biomass/biofuels and other clean renewable energy.
Image: Clean Energy Patent Growth Index Chart
As depicted in the below breakdown of the CEPGI by its sub-components, patents in wind, fuel cells, hydroelectric, tidal and geothermal were up in 2008 over 2007 with hydroelectric and tidal patents being at all time highs.
Image: CEPGI Sub-Components Chart
"While the number of U.S. patent applications has steadily increased in recent years, the trend in the number of U.S. patents granted actually fell slightly from 2006-2007.6 This decrease in the number of patents granted may be a result of the U.S. Supreme Court’s ruling in KSR International, Co. v Teleflex, Inc.âarguably the most important patent ruling in yearsâwhich effectively raised the bar for inventors who wish to obtain patent protection for products that rely on new combinations of existing, publicly-known elements. Because alternative energy developments often incorporate older technologies, meaningful advances may be susceptible to being seen by the U.S. Patent and Trademark Office and the courts as merely “ordinary innovation” that “does no more than yield predictable results.” (pg 244) (Ward et al, 2008)