Green Patents: International Trade Commission terminates investigation into allegations of infringement of wind turbine technology patents
Co-authored with Cyrus Frelinghuysen.
On January 8, 2010, the US International Trade Commission (ITC) issued a notice of its decision to terminate a Section 337 investigation into whether Mitsubishi Heavy Industries Ltd. and two of its subsidiaries had infringed three General Electric (GE) patents related to wind turbine technology. GE plans to appeal the ITC’s decision to the U.S. Court of Appeals for the Federal Circuit. The investigation stemmed from a February 2008 GE complaint with the ITC. GE claimed that wind turbines imported by Mitsubishi infringed GE’s U.S. Patent Nos. 5,083,039; 7,321,221; and 6,921,985.
On August 7, 2009, the administrative law judge assigned to the investigation issued an initial determination finding a violation of Section 337. On review, however, the ITC commissioners reversed that determination. In its opinion, the ITC found that all three of GE’s patents were valid but that there was no infringement. In addition, the ITC concluded that GE had not shown the existence of a protectable domestic industry with respect to one of the patents. GE is planning to appeal the ITC’s decision to the Federal Circuit. In addition, GE recently filed a complaint against Mitsubishi in the US District Court for the Northern District of Texas alleging infringement of two more of GE’s 148 patents relating to wind turbine technology.
These cases involve two major players in the rapidly expanding wind turbine industry. According to a June 2009 report issued by the ITC, from 2003 to 2008, imports of wind-powered generating sets increased more than 600 percent to $2.5 billion annually, and GE’s domestic wind turbine sales rose by over 300 percent during the same period. In 2008, GE was the leading wind turbine manufacturer in the United States, with a 43 percent market share, while Mitsubishi was ranked seventh. Globally, GE was the world’s second largest supplier of wind turbines, with a 16.7 percent market share, while Mitsubishi was ranked eleventh, with a 2.6 percent market share.
The ITC investigation attracted considerable attention from lawmakers, in part because of the US government’s desire to promote the development of clean energy technology and the use of renewable energy. Seventeen members of Congress wrote to the ITC prior to the issuance of its final determination. Senators Blanche Lincoln and Mark Pryor of Arkansas, where Mitsubishi plans to construct a $100 million wind turbine manufacturing facility, wrote a letter stating, “[p]romoting a diversity of technologies in the wind energy sector will be essential if the nation is to achieve the Administration’s goal of developing 20 percent of our electricity from wind by 2030.” President Obama has made reference to achieving such a goal, which was the subject of a July 2008 US Department of Energy report entitled 20% Wind Energy by 2030: Increasing Wind Energy’s Contribution to U.S. Electricity Supply. Meanwhile, Senators Charles Schumer and Kirsten Gillibrand of New York, where GE recently opened its $45 million Renewable Energy Global Headquarters, wrote a letter warning that: “Any efforts that weaken intellectual property right protections relating to clean technology pose a substantial competitive risk to U.S. businesses and workers and inhibit the creation of new green jobs and the transition to a green economy.”
The ITC’s investigation is another example of what appears to be a steady increase in litigation over clean energy patents. Last year we reported on a lawsuit between Paice LLC and Toyota Motor Company over patents related to hybrid electric vehicles. Paice has since filed a complaint with the ITC alleging that Toyota has violated Section 337 by importing hybrid electric vehicles and components that infringe Paice’s U.S. Patent No. 5,343,970. The investigation is Certain Hybrid Electric Vehicles and Components Thereof, Inv. No. 337-TA-688.
U.S. PTO launches Green Technology Pilot Program to fast track processing of green patents
Co-authored with Cyrus Frelinghuysen.
On December 7th, just hours before the United Nations Climate Change Conference was set to begin in Copenhagen, the U.S. Patent and Trademark Office (PTO) announced the launch of its Green Technology Pilot Program to speed the processing of green patents. The Program is initially set to run for only twelve months. At the end of that period, the PTO will determine whether to extend the program based both on the efficacy of the program and on feedback from participants. In addition, under the program, the PTO will accept a maximum of 3000 applications, but will reevaluate the resources needed to extend the program should the PTO receive more than 3000 applications.
The announcement was made at a joint event held by the Department of Commerce and the Department of Energy. At the event, Department of Energy Secretary Steven Chu also announced that $100 million in funding from the American Recovery and Reinvestment Act, which President Obama signed into law in February, will be made available to accelerate innovation in green technology, increase America’s competitiveness, and create jobs.
Regarding the new Green Technology Pilot Program, U.S. Commerce Secretary Gary Locke explained that, “American competitiveness depends on innovation, and innovation depends on creative Americans developing new technology. By ensuring that many new products will receive patent protection more quickly, we can encourage our brightest innovators to invest needed resources in developing new technologies and help bring those technologies to market more quickly.” Echoing that view, PTO Director David Kappos declared, “Every day an important green tech innovation is hindered from coming to market is another day we harm our planet and another day lost in creating green businesses and green jobs. Applications in this pilot program will see a significant savings in pendency, which will help bring green innovations to market more quickly.”
Ordinarily, the PTO processes patent applications in the order the applications are received. Under the new Green Technology Pilot Program, however, applications related to “green technologies,” i.e., applications pertaining to environmental quality, energy conservation, development of renewable energy resources, or greenhouse gas emission reduction, will be granted accelerated examination, provided those applications meet the program’s requirements. Secretary Locke told reporters that the goal of the program is to reduce the time it takes to review an application from 40 months to 12 months, allowing inventors to secure funding and launch businesses more quickly.
Reaction to the launch of the Green Technology Pilot Program has been generally positive. Carl Horton, Chief Intellectual Property Counsel of General Electric, said, “We hail this initiative as an excellent incentive to fuel further innovation of clean technology and a terrific mechanism to speed the dissemination of these patented technologies throughout the world.” In Q3 of 2009, General Electric was granted four fuel cell and four wind technology patents, according the to the latest CEPGI report.
According to the most recent Clean Energy Patent Growth Index (CEPGI) report, the PTO granted 271 green patents in Q3 of 2009, bringing the total number of green patents issued in 2009 to 788.
Green Patents: The patent system's "fuel of interest" and the promotion of technological innovation
*Co-authored with Cyrus Frelinghuysen.
IPLaw360 recently reported that Clean Energy Patents Reached a New High in Q2. According to the most recent Clean Energy Patent Growth Index report, the U.S. Patent and Trademark Office (PTO) issued 274 “green” patents in the second quarter of 2009.[1] One might expect that those who regard technological innovation as a necessary tool to combat climate change would welcome the continued increase in the issuance of green patents. Nonetheless, there remains disagreement regarding whether the patent system and the enforcement of intellectual property rights will promote or hinder technological innovation with regard to climate change.
The debate over whether the patent system adequately promotes the development of technology to manage climate change is related to the ongoing debate over the role of technology transfers in any future climate change treaty. Under the U.N. Framework Convention on Climate Change and the Kyoto Protocol, developed countries have undertaken obligations to promote the development and transfer of environmentally sound technologies to developing countries. Indeed, the draft negotiating text for the UN Climate Change Conference in Copenhagen contains provisions for “compulsory licensing for specific patented technologies,” as well as “pooling and sharing publicly funded technologies and making the technologies available in the public domain at an affordable price.”
Though meant to encourage the development and spread of green technology, such obligations may paradoxically reduce incentive for technological innovation because private parties or the governments of developed countries will balk at devoting resources to the research and development of technology that may be expropriated or subject to a compulsory license under a future climate change treaty. In an apparent effort to ease such concerns, the House of Representatives recently passed legislation that opposes any global climate change treaty that weakens intellectual property rights. Within the context of these debates over how to promote technological innovation and how to structure technology transfers, the growth of green patents suggests that the patent system continues to provide at least part of the necessary incentive for the development of technology to combat climate change.
Leading environmental groups such as Natural Resources Defense Council (NRDC) have recognized for the need for “Developing the Technology of the Future” to address the problem of climate change. In a brief issued earlier this year, NRDC argued that the federal government must take action to spur research and development with regard to clean energy technology because “[t]he private sector tends to under-invest in new low-carbon technologies because of the risk of ‘innovation spillovers’ -- that other companies will benefit from their initial research investment.” Others have offered so-called “inducement prizes” offered to anyone who can develop the technology to counter the effects of greenhouse gas emissions. In September of 2007, Sir Richard Branson and Al Gore launched the Virgin Earth Challenge, pledging to award $25 million to the developer of “a viable technology which will result in the net removal of anthropogenic, atmospheric greenhouse gases each year for at least ten years without countervailing harmful effects.” Similarly, during the 2008 presidential race, Senator John McCain proposed a $300 million prize for “the development of a battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars.”
Plato famously wrote that “necessity is the mother of invention.” Arguably, however, neither “necessity” nor the prospect of “inducement prizes” has been as effective as the patent system in providing the crucial incentive for technological innovation. As Abraham Lincoln (who was granted a patent of his own) once remarked, the creation of patent laws encouraged innovation by adding “the fuel of interest to the fire of genius.”
[1] The patents cover the following technologies: fuel cells (156), wind energy (43), solar energy (36), hybrid/electric vehicles (20), biofuels (13), tidal/wave energy (8), and geothermal energy (2). Corporations that were awarded the most “green” patents include Honda (17), General Motors (15), Toyota (12), General Electric (11), Nissan (9), Panasonic (5), Ford (5), Daimler (4), Enercon GmbH (4), Applied Materials (3), and Bloom Energy (3).
Countdown to Copenhagen: The debate over technology transfers and the protection of intellectual property
The debate over the role of technology transfers in any future climate change treaty is set to intensify as the UN Climate Change Conference in Copenhagen approaches. On one side, there are those who believe that intellectual property (IP) rights should not stand in the way of international cooperation on climate change. For example, Secretary of Energy Stephen Chu has suggested that it may be necessary to “share all intellectual property as much as possible,” especially when it comes to certain vital technology like systems for capturing and storing carbon dioxide. A report issued this month by the Center for American Progress and the Global Climate Network warns: “Intellectual property (IP) law can also act as a barrier, and measures to encourage companies to use or relinquish IP (and in some circumstances to use the flexibility already available through the World Trade Organization’s TRIPs agreement) may be necessary.” The report recommends that “patents could be withdrawn if developers seek inappropriately high rents from their IP protection or use IP to restrict a technology’s use.”
In contrast, groups such as the Global Intellectual Property Center (GIPC) of the US Chamber of Commerce and the Coalition for Innovation, Employment and Development (IDEA), an alliance of multinational corporations, worry that the inclusion of technology transfer provisions in any climate treaty poses a serious threat to the protection of IP rights. For example, a report issued by GIPC warns that there is “a growing movement of anti-IP activists drawn from universities, foundations, non-governmental organizations (NGOs), ideologically driven interest groups, and even governments. These activities promote the idea that IP rights should not be recognized and that the protection of IP impedes progress and hurts the poor.” In an interview with the New York Times, the head of IDEA refuted the notion that IP rights are an obstacle to cooperation on climate change:
“Cooperation and property rights are not mutually exclusive. Indeed, property rights are the solution, not the problem. If property rights become secondary, then we lose the incentive for innovators to pursue their ideas, and the world loses the opportunity to learn and build upon their innovation. Not only does this dampen technological advancements, it also would likely mean a major reduction in private sector investment in research and development funding for new technologies.”
Under Article 4.5 of the U.N. Framework Convention on Climate Change (UNFCCC), as affirmed by Article 10 of the Kyoto Protocol, developed countries have committed to taking “all practicable steps to promote facilitate and finance, as appropriate, the transfer of, or access to, environmentally sound technologies and know-how to other Parties.” On May 19, 2009 the UNFCCC released its draft negotiating text that includes various options for “Measures to address intellectual property rights.” One option provides: “Specific measures {shall} {should} be established to remove barriers to development and transfer of technologies from developed to developing Parties arising from intellectual property rights (IPR) protection, including: (a) Compulsory licensing for specific patented technologies; (b) Pooling and sharing publicly funded technologies and making the technologies available in the public domain at an affordable price; (c) Taking into account the example set by decisions in other relevant international forums relating to IPRs, such as the Doha Declaration on the TRIPs Agreement and Public Health.” The negotiating text includes another proposal that “LDCs [least developed countries] be exempted from patent protection of climate-related technologies for adaptation and mitigation, as required for capacity-building and development needs.”
In response, the US House of Representatives recently passed legislation that opposes any global climate change treaty that weakens IP rights. On June 10, 2009, the House passed H.R. 2410, the Foreign Relations Authorization Act, Fiscal Years 2010 and 2011. Section 1120A is entitled “Statement of Policy Regarding Climate Change” and stipulates that, “with respect to the United Nations Framework Convention on Climate Change, the President, the Secretary of State and the Permanent Representative of the United States to the United Nations should prevent any weakening of, and ensure robust compliance with and enforcement of, existing international legal requirements as of the date of the enactment of this Act for the protection of intellectual property rights related to energy or environmental technology, including wind, solar, biomass, geothermal, hydro, landfill gas, natural gas, marine, trash combustion, fuel cell, hydrogen, micro-turbine, nuclear, clean coal, electric battery, alternative fuel, alternative refueling infrastructure, advanced vehicle, electric grid, or energy-efficiency-related technologies.”
It remains to be seen what position the Obama Administration will take on the issue of technology transfers when climate treaty negotiations begin in Copenhagen in December. However, during the recent G8 Summit, President Obama co-chaired a meeting of the Major Economies Forum on Energy and Climate, which includes non-G8 countries like China, India, and Brazil. The discussions resulted in the Declaration of the Leaders of the Major Economies Forum on Energy and Climate. Leaders agreed to establish a “Global Partnership to drive transformational low-carbon, climate-friendly technologies” and to report in November on “actions plans and roadmaps and to make recommendations for further progress.” They will also “consider ideas for appropriate approaches and arrangements to promote technology development, deployment, and transfer.”
Energy companies settle Clean Air Act claims by agreeing to spend $6M on pollution reducing technology
Six energy companies have agreed to spend nearly $6.4 million to install pollution reducing technology to settle claims that they violated the Clean Air Act. Lawyers with the Department of Justice filed the proposed consent decrees with the federal district court in Salt Lake City on Friday, April 17th. While not admitting to any Clean Air Act violations, the companies also agreed to pay a combined $632,000 in civil penalties.
The companies, Bill Barrett Corp.; Miller, Dyer & Co.; Whiting Oil and Gas Corp.; Wind River Corp.; XTO Energy Inc.; and Dominion Exploration and Production, Inc., operate natural gas production facilities including wellheads, pipelines, and compressor stations on remote parts of the Uintah and Ouray Indian Reservations in Utah. According to complaints filed by the Justice Department concurrently with the proposed consent decrees, the companies violated the CAA by exceeding emissions standards for hazardous air pollutants, failing to monitor and report those emissions, and failing to obtain proper permits in connection with their natural gas production operations.
The EPA estimates that the pollution control technology mandated by the settlements will reduce air pollution by more than 1,300 tons per year including a reduction in greenhouse gases equivalent to taking 7,600 cars off the road. The EPA also claims that the settlement will conserve enough natural gas to heat approximately 1,080 homes annually.
According to a spokesman for the Justice Department’s Environmental and Natural Resources Division, the settlements “not only obtain compliance with the law and control emission sources, but will reduce greenhouse gas emissions and bring more natural gas to the marketplace.”
The consent decrees will be subject to a 30 day public comment period before they are finalized. Proposed Consent Decree, 74 Fed. Reg. 19,984 (Apr. 30, 2009).
Green Patents: setting royalties for clean technology
Co-authored with Cyrus Frelinghuysen.
On April 17th, Judge David J. Folsom of the US District Court for the Eastern District of Texas issued an order in Paice LLC v. Toyota Motor Corp., increasing the royalty rate that the Toyota Motor Company must pay Paice LLC for sales of Prius, Highlander, and the Lexus RX400h vehicles found to infringe a Paice patent involving hybrid vehicle technology. Judge Folsom had previously ordered Toyota to pay $25 per infringing vehicle but on remand raised the rate to roughly $98 per vehicle.
The decision stems from a series of lawsuits Paice brought against Toyota alleging infringement of its patents related to hybrid electric vehicles. Paice filed its complaint in this particular case in June 2004. A jury later found that Toyota had infringed two claims of US Patent No. 5,343,970 for drive trains for hybrid electric vehicles. Paice was awarded $4,269,950 for past infringement, but Judge Folsom denied Paice’s request for injunctive relief in light of the Supreme Court’s decision in eBay, Inc. v. MercExchange, LLC, 547 U.S. 388 (2006). Instead, Judge Folsom ordered Toyota to pay Paice an “ongoing royalty” of $25 per infringing vehicle until the expiration of the patent.
On appeal, Paice argued that the district court did not have the authority to impose an ongoing royalty and, even if it did, that the jury should have determined the amount of the royalty. The Federal Circuit affirmed the infringement verdict as well as the district court’s imposition of an ongoing royalty without a jury determination on the issue: “In most cases, where the district court determines that a permanent injunction is not warranted, the district court may wish to allow the parties to negotiate a license amongst themselves regarding future use of a patented invention before imposing an ongoing royalty. Should the parties fail to come to an agreement, the district court could step in to assess a reasonable royalty in light of the ongoing infringement.” The Federal Circuit then remanded the case to the district court because Judge Folsom provided no reasoning to support his selection of $25 per infringing vehicle as the appropriate rate.
On remand, Toyota argued that the rate should be lowered from $25 to $16, largely “because Toyota has experienced increased costs and is no longer making as much profit on the infringing vehicles that is attributable to ‘hybridness.’” In contrast, Paice argued for a higher rate based on the high price of gas and modifications to federal fuel efficiency laws, which it argued have increased demand for hybrid vehicles. Judge Folsom ultimately set the rate at less than 0.5% of the wholesale price for each of the vehicles, remarking that, “These royalty rates continue to allow Toyota to make a reasonable profit.”
As litigation on “clean” energy patents increases, we expect to see similar arguments over the value of such technology compared to conventional fuel sources in determining reasonable royalty damages.
Major Economies Forum on Energy and Climate to address emissions targets, clean energy tech, more
President Obama has announced the launch of the Major Economies Forum on Energy and Climate. A preparatory session will be held at the Department of State in Washington, DC on April 27-28 and further talks will take place in La Maddalena, Italy in July. The goal of these meetings is to lay the diplomatic foundation for a successful outcome at the UN climate change negotiations to be held in Copenhagen, Denmark in December.
The leaders of the 17 major economies attending this preparatory session are expected to discuss emission targets, technology funding, sectoral agreements, deforestation, trade tariffs, and issues that deal with economically viable options for reducing greenhouse gases. President Obama, who has recently turned his attention to the need for more clean-energy funding in the US, also expects the meeting to “advance the exploration of concrete incentives and joint ventures that increase the supply of clean energy while cutting greenhouse gas emissions,” according to the White House press release.
With US leadership and the forum’s political momentum, climate-change experts are hopeful that the UN Copenhagen talks will be able to forge foundational principles for a post-Kyoto Protocol agreement, although they doubtful that a formal accord will be signed in December.
The 17 major economies invited to attend are: Australia, Brazil, Canada, China, the European Union, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Russia, South Africa, the United Kingdom, and the United States. Denmark and the United Nations were also invited to participate in the dialogue.
Signs point to US-China cooperation on climate change
Ever since President Obama announced in his Inaugural Address that the United States will “work tirelessly” to “roll back the specter of a warming planet,” momentum has been building for the world’s top two leading emitters of greenhouse gases to cooperate on the issue of climate change. Many feel the time is ripe for such cooperation. For example, earlier this year, the Brookings Institution released a report on Overcoming Obstacles to US-China Cooperation on Climate Change, while the Pew Center on Global Climate Change and the Asia Society produced A Roadmap for US-China Cooperation and Climate Change, a project which was co-chaired by current Secretary of Energy Steven Chu.
It was no great surprise, therefore, that last month during her first trip abroad as Secretary of State, Hillary Clinton visited the People’s Republic of China with her Special Envoy on Climate Change Todd Stern to propose a new partnership to combat climate change. According to Secretary Clinton, “the United States and China will build an important partnership to develop and deploy clean energy technologies designed to speed our transformation to low-carbon economies.” Secretary Clinton and her counterpart Yang Jiechi also agreed that the two countries would work together to produce a new comprehensive climate change treaty at the fifteenth Conference of the Parties to the United Nations Framework Convention on Climate Change to be held in Copenhagen in December.
The budding US-China partnership on climate change has grown out of the larger cooperative framework established by the US-China Strategic Economic Dialogue (SED), which was established in September 2006 by Presidents George W. Bush and Hu Jintao. During the fourth meeting of the SED in June 2008, the countries established the US-China Ten Year Energy and Environment Cooperation Framework. One product of that collaboration is the concept of EcoPartnerships, which are voluntary agreements between US and Chinese entities – such as cities, corporations, universities, etc. – to advance the energy security, economic growth, and environmental sustainability of the partners. For example, the Ford Motor Company, Changan Auto Group, the City of Denver, and the Municipality of Chongqing have created an EcoPartnership that will focus on projects like developing electrified vehicle technologies, green city planning, efficient urban transportation, and grid integration.
Taken as a whole, all these developments bode well for increased U.S.-China cooperation on climate change. As the Chinese philosopher Lao-tzu once remarked, “千里之行, 始于足下” (“The journey of a thousand miles begins with the first step”).
"Green" patent issuances hit record high in 2008
IPLaw360 reports that more clean energy patents issued in 2008 than in any year since the data has been tracked. According to the Clean Energy Patent Growth Index report, Fuel cell patents account for the highest proportion of the 928 newly-issued patents, while there was also substantial growth in the number of wind patents. Also on the rise were patents issued in hydroelectric, tidal, and geothermal technologies.
As clean energy technology becomes more pervasive in the marketplace, we expect to see an increase in litigation on such patents as companies begin to monetize their growing portfolios in this area to get a return on these investments. Others may seek to exclude competitors from these emerging markets.
Investment in "clean" technologies likely to fuel rise in IP litigation
A recent Australasian Legal News report noted that "climate change work flows will . . . provide a good line of business for intellectual property (IP) lawyers." Investment in "clean" technologies – those that either replace technologies that generate greenhouse gases, or that reduce greenhouse gas emissions from existing technologies – is expected to rise around the globe. The report projects that there will be "significant patent and trademark litigation work, since companies will try to protect their innovations and brands in the credit crunch as they position for the recovery."
This discussion of IP litigation in the climate arena comes at a time when the World Intellectual Property Organization (WIPO) and others are wrestling with how to "accelerate the transfer of affordable climate friendly technologies to developing countries." This issue is the subject of a report by the International Centre for Trade and Sustainable Development (ICTSD) entitled “Climate Change, Technology Transfer and Intellectual Property Rights.” WIPO’s July 2009 Conference on Intellectual Property and Global Challenges will address “the interface of intellectual property with other areas of public policy” including climate change.
These developments suggest that global warming law and litigation will not simply be the arena of environmental lawyers.
