The Achilles Heel of U.S. Centric Cleantech Energy Patent Portfolios

The global drive toward decarbonization in the energy sector is continuing unabated, however unevenly. The level of engagement in this energy transition differs in various countries around the world, across the public and private sector, and across investor networks internationally. 

In certain sectors, from battery to solar, from wind to hydrogen, there are new hubs of innovation emerging across the world as the companies, and economy, of tomorrow begins to emerge today.  This energy transition requires innovation, and it’s no surprise that innovators around the world are pursuing patent protection for their new technologies.  While the U.S. remains a formidable innovation presence across nearly all sectors, the worldwide competition has increased in tandem with the so-called “rise of the rest”.

This increase in competition in the cleantech energy transition space has created an Achilles heel for U.S. based companies.  Specifically, the presence of ever more non-U.S. prior art documents, products, and activity will complicate the successful post-grant use of U.S. centric patent portfolios to achieve the myriad business objectives for which the patents were obtained in the first place.

To step back for a moment, innovative U.S. based companies are pursuing patents at or near historically high levels from solar to wind, hydrogen to hydro-electric, and most prominently in the battery and electric vehicle sectors.  These patents are then used as tools, or corporate assets, to achieve defined business objectives – such as protection of market share, creation of barriers to entry, protection of competitive differentiators, or as leverage-creators for acquisition, sales, or licensing activity, among other important uses.

There is often an urge to obtain patent protection with the broadest possible claims, based on the limits of the teachings of prior that surface during examination of the patent applications, and it should be noted that the U.S. Patent Office does an excellent job in searching for such prior art to determine these boundaries of patent protection. 

Once the patents are obtained, the patent owners will use these tangible corporate assets to achieve the above-noted business objectives.  In so doing, the alleged infringers or potential licensees will often perform their own search to confirm the validity of the patents being asserted against them.  As you would expect, these entities are highly motivated to find prior art documents that bring into question the validity of the patents that interfere with their business operations. 

This is where a new Achilles heel is emerging.  There are extremely advanced technologies in the energy transition space being developed outside the U.S. – from Asia to the Middle East and beyond.  This harder to find non-U.S. prior art will be discovered by motivated companies who will search the international nooks and crannies, and this prior art will be used to question the validity of U.S. based patent portfolios that may have been obtained in the absence of consideration of such prior art evidence. 

Herein lies the risk to U.S. companies.  For example, China is with world’s largest EV market and manufacturer, and one of China’s greatest strengths lies in its battery and related technologies.  The body of related art documents describing this technology, from university papers to Chinese patent filings and publicly available products is increasing in parallel with this increase in innovation and related research and development activity. 

The owners of U.S. based patent portfolios that push the envelope in terms of breadth will increasingly discover that they have overstepped the appropriate boundaries of patent protection and encroached on prior art as previously described in other publications abroad.  This jeopardizes the validity of overbroad patent portfolios and could even render them largely useless.

Those who avoid the reality of increased foreign competition when building their patent portfolios are doing so at their peril.  The result will be the illusion of patent protection, rather than actual patent protection, something that will be exposed during any business dispute with a sophisticated adversary. 

Precision is the hedge against this growing threat.  To avoid these consequentially negative outcomes, U.S. based patent portfolio development should include patent protection dedicated to the specific details of the technology within the field of use of the corporate patent owner, rather than field-agnostic patent coverage of a particular innovation in a vacuum.

Thus, the practice tip for innovators in the energy transition sector, and cleantech in general, is to recognize the technological leaders may now be abroad, with less visibility in the U.S., and to hedge against this reality by preparing at least a segment of their patent portfolio in a more narrow manner, in anticipation of unconsidered prior art arising in the first instance after your patents have been granted.  This proactive consideration of the unexpected will result in a stronger and more robust patent portfolio that will allow one to keep their edge and continue to grow their business in the rapidly changing energy sector.