The Accelerating Need for IP Protection in Clean Energy
“With the transition of clean energy companies into technology companies, intellectual property will become an area of increased emphasis as businesses determine new ways to efficiently create clean energy.”
In the dynamic world of renewable energy, companies are quickly innovating new technology and entering the clean energy arms race to generate more energy with less equipment. These innovations are often driven by the introduction of new regulations in furtherance of the federal governments announced goal of reaching 100% carbon-free electricity nation-wide by 2035. Companies can adapt swiftly to regulatory changes resulting from this goal and build their IP portfolios to drive further innovation as well as protect their research and development investment. In this discussion, we will examine the ever-evolving competitive landscape and highlight the growing importance of securing IP rights as a crucial battleground for participants in the clean energy market. We’ll also explore strategies that can assist businesses in navigating this new terrain and capitalizing on the opportunities it offers in the era of clean energy.
Government Incentives are Shaping Clean Energy Innovation
The government is gradually investing more and more resources in clean energy. In one example, the Bureau of Land Management recently announced the “Final Rule” which updates existing regulations to reduce acreage rents and capacity fees for wind and solar energy projects as well as provides greater predictability for future solar and wind project authorizations. In another example, the Clean Hydrogen Production Tax Credit outlined in Section 45V of the Inflation Reduction Act of 2022 provides incentives for companies to generate green hydrogen. Green hydrogen is hydrogen energy that is generated using renewable energy sources. The Clean Hydrogen Production Tax Credit organizes the tax credits into different tiers in which there is a greater tax credit award for companies that produce cleaner forms of hydrogen. These rules and regulations are likely just the beginning of the federal government’s efforts to reach 100% carbon-free electricity nation-wide.
Innovation in Clean Energy is Becoming More Prominent
The new rules and regulations regarding clean energy are causing companies to increasingly improve or change the technology that is used to produce energy to make the production process cleaner and more efficient. A quick search on the Internet will display new clean energy companies that are popping up every day as well as existing clean energy companies that are hiring technical specialists to improve their clean energy technology. Many companies are already raising their funding rounds based on improvements relating to building their technology.
One area where innovation is becoming more prominent is in the solar energy space. Previously, solar energy companies focused on grabbing large amounts of land on which to place solar panels. Companies that bought the most land could generate the most energy. This continuum is gradually changing as companies are incorporating batteries into their systems that bring a whole host of new technology to improve energy generation, from optimizing control of the batteries to provide energy to the energy grid to improving the underlying structure of the batteries to make the batteries have a longer shelf-life, charge and discharge faster, and have increased capacity. The shift from a land grab to building the most efficient technology creates a field that is ripe for innovation and will let companies separate themselves from other companies with improved technology. This shift will likely result in the solar energy companies transitioning to technology companies as they build on their innovations over time.
Another area in which innovation is becoming more prominent is in the hydrogen space. With the proposed tiered green hydrogen tax credit, companies will endeavor to build the most efficient and carbon-free hydrogen generation plants. Companies will continue to innovate to improve their hydrogen production and processes.
The Critical Role of Intellectual Property in the Clean Energy Sector
With the transition of clean energy companies into technology companies, intellectual property will become an area of increased emphasis as businesses determine new ways to efficiently create clean energy. Size alone will no longer be enough to generate the most energy compared to competitors. Instead, the companies that will survive or that will have the most success will focus on using efficient, clean, and effective technology. These efficiencies will often originate from new technologies that involve protectable innovations. If companies do not procure patent protection to help guard these innovations in a timely manner, other companies may copy the technology for their own purposes.
Moving into the tech sector without a well-defined intellectual property (IP) strategy is fraught with avoidable risks. For instance, a company might lack the capabilities to establish extensive facilities for clean energy production. Such companies could instead focus on developing more efficient technologies or those that qualify for top-tier federal tax incentives. It’s crucial for companies to secure IP protection for these innovations to prevent imitation and to limit market competition. A robust IP strategy can prevent businesses from over-committing to clean energy technologies that might simply be replicated by others. Moreover, it is vital for companies to conduct thorough due diligence, including freedom-to-operate searches, to ensure their technologies do not violate the IP rights of others.
Obtain IP Protection Sooner Rather than Later
It is important to expedite the process for obtaining IP protection. For instance, given the new drive to create clean energy that will likely result from the new tax credits and government incentives, there could be a large amount of space available for protection as companies attempt to “gold rush” obtaining new technologies that separate themselves from other clean energy companies. The space may be available because there may not be a significant amount of available technology that will block the protection of new technology geared towards improving the efficiency of producing clean energy. Accordingly, companies may be rewarded with broad patent protection if they file for patent protection early. In contrast, companies that wait to file for patent protection may have to settle for smaller slivers of protection that may be easy to design around by competitors. Thus, it is important for companies to quickly develop an IP strategy or risk losing rights to their innovations to companies that are active in the technology and patent space.
The U.S. Patent and Trademark Office (USPTO) has recently aligned with the federal government’s goal of reaching 100% carbon-free electricity by 2035. For instance, the USPTO recently launched the Climate Change Mitigation Pilot Program in which the USPTO will grant accelerated examination to patent applications “involving technologies that reduce, remove, prevent, and/or monitor greenhouse gas emissions.” A patent application that was accepted into the program will receive examination substantially faster than applications that are not a part of the program, in some cases reducing the time it takes for examination to begin from a few years to just a few months. Standard expedited examination prior to this new pilot program costs companies thousands of dollars in government fees for each individual application, but the Climate Change Mitigation Pilot Program can make the acceleration free for applicable innovations. Companies innovating in clean energy technology should take advantage of the program now before the program expires on June 7, 2027, or before a total of 4,000 applications have been granted special status under the program, whichever occurs first.
Next Steps
For companies that have not yet developed an IP strategy to enhance their clean energy initiatives and safeguard their innovations against competitors, there are essential steps to begin the process. Initially, a company should evaluate the technology it uses to generate clean energy, specifically pinpointing innovations that resolve unique technical challenges. Next, the company should identify potential proprietary technologies and align the technologies with the company’s strategic business goals. The company should obtain protection for the innovations. This focused approach ensures that valuable technologies are protected through strategic patent filings, supporting the company’s broader business objectives. Moreover, companies should consider participating in the Climate Change Mitigation Pilot Program, which accelerates the patent examination process, allowing for quicker protection. This proactive strategy not only secures a competitive edge but also leverages potential tax benefits, positioning the company to thrive on its own terms in the intellectual property landscape.
We recommend determining and executing on an effective, focused IP strategy to protect your clean energy technology innovations and to avoid encroaching on the IP rights of others in this rapidly evolving economic sector.
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Author: tomwang
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James C. De Vellis
James De Vellis is a partner with Foley & Lardner. James is an intellectual property lawyer focusing on patent portfolio development, related counseling, and post-grant practice. He is a partner […see more]
R. Evan Glass
Evan Glass is an associate and intellectual property lawyer with Foley & Lardner LLP. Evan counsels clients in intellectual property matters, with an emphasis on patents. His experience includes patent […see more]
