The Role of IP Rights in Green Technologies Innovation

The Role of IP Rights in Green Technologies Innovation

When it comes to climate change, intellectual property (“IP”) can be a matter of ‘life and death’!

In 2013 the World Intellectual Property Organization (“WIPO”) joined the fight against global climate change by launching an on-line marketplace for green technology called WIPO GREEN; a platform aimed at accelerating the development and diffusion of green technologies through connecting technology owners and developers with individuals looking to commercialise, license and distribute green technologies to address global environmental challenges. In 2019 WIPO announced that the platform had reached a milestone, 3,000 entries. Once developers have protected their IP there is more incentive to commit the IP to ventures, partnerships, and generally diffuse their potentially-world-changing technologies, while affording them some protection over their own investment.

But, can WIPO and the protection of IP rights make a tangible difference in the battle against global climate change?

I believe it can and here is why:

Patents play a critical role in encouraging innovation and investment of green technologies. Patents provide temporary exclusive rights that enable companies to obtain a part of the added value of their inventions and the investments made, in order to develop and introduce them to market. Additionally, they work as value-signal generators, in particular towards investors and potential partners. Patents underpin several types of technology collaboration and plausible partnerships, which enhance technological diffusion and development. For instance, collaboration between government and startups could help meet the climate challenges while growing small businesses. The University of Cambridge (2019) showed that the patenting activity of new green technology startup companies in the US climbs by over 73% on average every time there is a collaboration with a government agency towards green-tech development. Granted patents also go some way to justifying investment in technology.

With every patent published, the recompilation of the patents becomes a library with the most innovative and strong information regarding the newest technologies. It becomes a collection of information and knowledge that can be used by other entities in the regionalization of technologies, as, for example, technology developed in the UK related to solar energy that can be adapted to solar energy-fluent countries like Egypt and Libya.

Trade secrets are a key element on green technology diffusion in every country. Trade secrets are comprised of confidential information that is either unsuitable for patenting or is tactically protected as trade secrets as an alternative to patenting. It is invariably commercially valuable. Trade secrets play a key role of safeguarding the channels for know-how exchanges by generating a safe setting for the diffusion of proprietary knowledge. For instance, the US Government has taken action over the appropriation of proprietary trade secrets by Chinese entities from renewable energy companies including SolarWorld and the American Superconductor Corporation. Trade secrets often protect tacit knowledge related to the processes of implanting, improving and adapting patented technologies. Trade secrets relating to green technologies is likely to be crucial for both developed and developing countries that need to adapt green technologies according to their local conditions.

Without effective trade secrets protection, companies could find that they are spending significant resources on the physical protection of their secrets, instead of investing in technological innovation. There is a proven existing positive correlation between R&D investment and stronger trade secrets protection.

IP works as a source of invention and diffusion through Open Innovation. Green technology often falls within the bracket of “open innovation”; where companies work with external stakeholders and collaborators to enhance innovation. As there is often a high degree of complexity regarding environmental technologies, and due to the global scope of climate change and environmental concerns, open innovation supported by strong IP rights protection is required to amplify the invention and diffusion of these technologies.

Collaborative agreements that involve the public and private sector, along with research institutions and organizations, have had success in the stimulation of developments and diffusion of green technologies. WIPO Green is one of these agreements. Another is the Eco-Patents Commons initiative by IBM, Nokia, Sony and Pitney Bowes. Established in 2008, this not-for-profit initiative provides royalty-free access to a range of patents covering environmentally friendly inventions with the purpose of encouraging the diffusion of valuable green technologies; these include energy conservation, pollution prevention, recycling, water conservation, among other technologies.

Stronger IP rights on green technologies enable scalability. The Clean Energy Patent Growth Index reported an upwards trend in green patents applications globally since the early 2000’s, with the majority focusing on alternative and renewable energy sources, including wind, sun, geothermal, hybrid vehicles and biofuels. A clear example is related to the newly granted patent of French green chemistry company Carbios: a biotechnological process that enables PET plastic waste recycling.

IP protection enables green technology creation, adaptation and distribution. Non-renewable resources are finite, and climate change is a reality. It is necessary to adopt a change towards a more sustainable lifestyle based on green technologies, which is part of the development of new global environmental policies – stronger protection of IP rights is an integral part of this process.

What can we do?

Metis Partners IP Valuation teams have already seen first-hand how identifying, protecting and valuing core IP has helped green tech companies both invest in further R&D and diffuse their tech through partnerships and co-initiatives. We valued “green IP” to help:

  • Raise additional finance for a green tech company to bring a prototype to market;
  • Raise growth finance using core IP as collateral, particularly our experience helping with valuing IP assets of a sustainable urban farming company;
  • Facilitate a joint green initiative by ring-fencing and valuing IP that was to be committed to the venture; and,
  • Prevent innovative IP from being lost; by selling IP assets from insolvency to enable the tech to be commercialised rather than losing the investment in green made to date. For example, we valued and sold the IP assets of CatalySystems, an innovative water decontamination technology; and selling the assets of a wind turbine servicing company.

Author: Jorge Orendain, Analyst

Email: jorge@metispartners.com

Tel: +44 (0)141 353 3011

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