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Introduction
Patents are jurisdictional rights, meaning applicants need to actively choose countries in which they want protection. Regardless of the filing strategy chosen, there will be a deadline for filing overseas applications with limited flexibility on filing new applications after this deadline. Given the cost involved with national patent prosecution, maintenance and enforcement, having a sensible plan for overseas filings that covers the key territories without unnecessary ‘country bloat’ is critical to a successful IP strategy.
In traditional energy markets, companies have developed an established filing routine based on decades of experience in a relatively stable and established market. This makes it straightforward to determine where certain technologies need to be protected, based on an intimate knowledge of the demand for the technology, activity of competitors or product transport routes, for example.
In the clean energy sector markets are less established. Technologies and markets underpinning the energy transition are evolving at a rapid pace and are far less established than those of traditional energy generation. The sector is characterized by rapid growth and a high number of new entrants to the market. This changing environment and less intimate market knowledge makes it more difficult to establish an overseas IP filing strategy.
This article looks at a number of the key technologies driving the energy transition and examines territorial factors to be considered when deciding on an overseas filing programme. Although the article focuses on patents, similar considerations apply for other IP rights. For each technology, four different factors are considered:
- Current and potential future market size – patents are designed to provide exclusivity for a product or method. To best leverage this exclusivity, key end-user markets should be an important consideration in filing strategies. In many – but not all – cases, this will be where the technology or output of it will be put into use, so having protection in these territories is often critical.
- Key sector players and largest patent filers – tracking where a sector’s most influential companies and/or largest patent filers are located can help guide foreign filing decisions. Having IP rights in countries where the market leaders are based can be an effective strategy to help control the implementation of your technology and leveraging the exclusivity it provides. This is because companies will often develop, test, make or use technology their home country, even if it does not represent the largest end market for the technology. In sectors where collaborations are common, the key players are likely to be candidates for such collaborations and having protection in their corresponding countries can be beneficial.
- Research hubs and countries with technology specialisms – sometimes a country may develop expertise in a certain technology despite not being a key end-market for the technology or the base for the largest companies within that sector. This may be due to a large a cluster of SME technology companies within the area, or universities or research organisations. For the same reason as with the key companies within a sector, it is often beneficial to consider protection in these territories. This is particularly the case for technologies where there is the opportunity for further development. Partnerships are a critical part of the energy transition and having patents covering key research and development hubs can help secure and monetize collaborations.
- Trade and transport – finally, where physical products are being transported, it can be valuable to consider transport routes IP protection strategy, especially where protection in the ultimate destination may be harder to put in place or enforce. Patents can be used to control the importation and storage of products, so protection in major transportation hubs can – if managed properly – be a powerful tool in controlling the dissemination of protected technology.
Ultimately every company must prepare a filing strategy suitable for their specific market and technology – there is no such thing as a one-size-fits-all approach. We recommend doing so by thinking through the above factors, along with the geographical capabilities and objectives of the specific company. The following overarching comments for three key renewable sectors may help demonstrate the sorts of considerations that can go into a foreign filing strategy.
Hydrogen
Reconfiguring the hydrogen value chain to align with Net Zero goals is key to the energy transition. In many applications, such as long-distance transportation and industrial manufacturing, hydrogen is one of the only viable alternatives to fossil fuels and using hydrogen produced from low-emissions sources has the potential to greatly reduce reliance on fossil fuels in these sectors. Countries around the world are stepping up their support of and focus on hydrogen technologies across the value chain – from production, to storage and distribution, and ultimately its end-use. This creates a very competitive and evolving market landscape.
Current and future market size
China is the largest producer and consumer of hydrogen, mainly due to its extensive chemical and refining sectors. The majority of this is production is emissions-intensive – from natural gas or coal. However, the Chinese government recently released a long-term plan for hydrogen focusing on the development and proliferation of clean hydrogen and it is seen as a “frontier” area. There is therefore likely to be significant, and increasing, demand for clean hydrogen technologies in China, albeit tempered by China’s preference for home-grown technology.
The United States is the second largest producer and consumer of hydrogen, mainly due to its demand in refining processes. and is benefitting from the Infrastructure Investment and Jobs Act of 2021, which contained a $9.5 billion budget to boost clean hydrogen development.
The Middle East lies in third place in terms of hydrogen demand, with the vast majority of its hydrogen being produced from fossil fuels. Europe and the UK is the next largest consumer and benefits from some of the most comprehensive public funding systems for clean hydrogen R&D and implementation.
India is the fifth largest consumer of hydrogen, with a significant portion of its demand due to its extensive steel manufacturing sector. India’s focus on green hydrogen is expected to grow significantly over the coming years due to the launch the Government’s Green Hydrogen Mission.
Largest patent filers
The hydrogen value chain includes a complicated ecosystem of different technologies, markets and end-uses. As such, vastly different landscapes exist in different parts of the value chain and patent filing strategy must be tailored to the specific sector.
Across the whole of the value chain, automotive companies dominate clean hydrogen technology patents, with Toyota, Mitsubishi and Honda from Japan and Kia and Hyundai from Korea leading the way. These companies naturally focus on end-use applications but also have significant numbers of patents to storage, distribution and transformation technologies.
US and European companies in particular have a stronger showing in production, storage, distribution and transformation technologies, with Air Liquide (France), Linde (Germany), Air Products (US), BASF (Germany), Siemens (Germany), General Electric (US) and Shell (UK) being particularly prevalent filers in these sectors.
Research hubs and countries with technology specialisms
Overall, European applicants file the most clean hydrogen focused patent applications, at least partially due to the high level of governmental focus and support for hydrogen projects across the EU. In terms of overall filing numbers Europe is closely followed by Japanese and US applicants. Japan has the strongest filing numbers for industrial applications of hydrogen – buoyed by its particularly strong showing in the automotive sector, while European applicants lead in production, storage, distribution and transformation technologies – again mimicking the trends seen when looking at the largest filing companies. Taken independently, applicants from Germany and France are noticeably ahead of those from other European countries, but significantly lower than Japan and the US.
France is home to the top three patent-filing research institutes, while Korea also has a particularly strong research ecosystem with five of the remaining top 10. Meanwhile, the US has the most patent-filing start-ups with hydrogen-focused tech, followed by Europe.
One metric for gauging a country’s specialism in a certain technology is to consider their “revealed technology advantage”(RTA) based on their patent filings. The RTA is a metric used by the European Patent Office to compare how specialized countries are in terms of patent filings in certain fields of technology. A country is given an RTA number, defined as a country’s global share of patents in a particular field of technology divided by the country’s global share of patents in all fields of technology. A number greater than one indicates a specialism, or technology advantage. Using this metric, both Europe and Japan demonstrate a noticeable specialism across the hydrogen value chain. Korea has a specialism in end-use applications, but not other parts of the value chain. The US and China, while being significant filers in this area, do not have a technology advantage in the clean hydrogen technology sector.
Trade and transport
China is largely self-sufficient in terms of hydrogen production and use, however it lags behind the key technology exporters of Europe, Japan, Korea and the US in terms of innovation and patent filings in each of the three key areas of production, storage/distribution, and end-use. The majority of trade into and out of China is either by sea, for example via Shanghai or Hong Kong, or by rail through Russia, Eastern Europe and Germany. The Chinese ecosystem often makes it difficult for external technology companies to enter the market, but there is an increasing movement of Chinese technology companies to take a more global view and to expand their operations outside of their borders.
Similar to China, the Middle East is largely self-sufficient in terms of hydrogen generation but is less advanced in terms of green hydrogen technology development. The majority of trade to or from the Middle East is done by sea, often via Europe’s largest ports in the Netherlands, Belgium and Germany. For technologies being imported into or exported from this region, protection in these transport hubs may provide some level of control either instead or, or in addition to, direct filings in these countries.
Summary and conclusions
Given the size of their markets, it appears to be important to have a strategy for China and the US for any hydrogen-focused patent portfolio. China’s Intellectual Property infrastructure has developed significantly over the past few decades and its increasing focus on clean hydrogen technology is already evident in increasing patent filing numbers. Depending on the technology – and if importation into or exportation out of China is considered likely – protection in transport hubs such as Germany and Hong Kong may also be worth consideration. Meanwhile, the US’ demand for hydrogen coupled with its increasing investment in this sector is only going to increase competition within the market and increase the value of IP.
Europe is both a key market and a technology hub for the hydrogen value chain and so is also an important jurisdiction to consider. While Japan and Korea do not have a large hydrogen consumption, they have technology advantages in this sector and are likely to be technology-exporters, so IP protection in these countries is also likely to be valuable as the market evolves, demand grows and countries are looking more and more towards technological advances to sustain this appetite.
Finally, India and the Middle East both have a large hydrogen market but appear to have less of a technical specialism in the sector. Far fewer patent applications are filed by India and Middle East originating companies, research institutes and startup clusters than their European and Asian counterparts. In India, this may be due to the National Green Hydrogen Mission only recently being launched, as well as the oft-cited inefficiencies of the Indian Patent Office. Notwithstanding this, it appears that India is increasingly going to be key market for hydrogen and companies looking to operate in India should have an IP strategy for doing so. In both cases, IP strategies need to consider where exactly business is likely to be done and the degree to which patent protection will support their endeavors. Depending on the importance of the market, some companies may invest significant resources into acquiring protection in these territories, while others may rely on rights covering the location of their main competitors, transport routes and/or technology centres.
Solar
Solar technology has experienced rapid growth and maturity in recent decades and the continuous advancements and decreasing costs have contributed to the increasing viability and acceptance of solar tech as a mainstream energy solution, with a myriad of generation technologies ranging from photovoltaics and concentrated solar power to the more recent organic photovoltaics and perovskite cells. Rapid improvements have also been made in areas of technology relating to installation, storage and transfer. Unlike less established generation technologies, solar has a more predictable – in terms of ongoing research and anticipated technology – and regulated – in terms of national government policies – market.
Current and future market size
China tops the list of countries that produce the most solar power, by a large margin. They produce 100GW more than Europe and thrice as much as the USA. The Chinese PV capacity represented 33% of total global installations in 2021 however it’s interesting to note that in 2017, China’s market share was over 51%. This decline in dominance by China is a direct result of various countries refocusing their energy strategy towards renewables and providing subsidies for the transition. However, as the largest emitter of greenhouse gasses - China is still aggressively targeting net-zero emissions by 2060 and have historically delivered on their short-term energy targets.
China’s dominance in the solar PV market is such that nearly 80% of the solar cells manufactured are made in China, they control around 64% of polysilicon material worldwide which is used to make PV cells and they control almost all solar ingots and solar wafers.
Europe, being second on the list aims to make solar power its biggest source of energy by the end of this decade. The recent Russia-Ukraine conflict has exposed various European countries’ reliance on imported natural gas and has forced them to adopt alternatives that are also green. Back in 2012, Germany had a booming solar market but lack of government support in Europe and investments in China saw the shift of solar advancements from Europe to Asia. The creation of a new European solar PV Industry Alliance combined with various local policies have resulted in a rapid rise in solar PV installations in the past few years – growing from 28.1GW in 2021 to 41.4GW in 2022. Germany leads this followed by Spain, Poland and then the Netherlands.
The USA is the third on the list and although the USA was the pioneer in solar technology, various factors such as domestic demand, government support and manufacturing capacity have reduced the production of American solar PV products. Recent policy changes and global cooperation to shift to renewables is once again reviving the infrastructure for the USA to directly challenge China’s dominance and further discount the cost of PV.
Japan and India round off the list as major solar power producers with the former having an installed capacity of 84.9GW in 2021 and the latter having 63.3GW. India is set to target 280GW of solar power by 2030 making it an exciting and young (but well-tested) market for future solar growth.
Largest patent filers
Solar accounted for more than half of the published PCT applications for renewables in 2019 (having grown by 678 percent) compared to just over a quarter in 2002. Since 2009, solar technology has dominated the market. The investment in innovation mirrors the increase in solar energy production globally.
Interestingly, there are clear distinctions in terms of patenting trends between innovation relating to the cells themselves, and relating to supporting systems such as mounting, tracking and power conversion.
Despite not being one of the leading markets for solar PV usage, over the decade 2010 to 2019, Korea and Japan top the leader board for most international patent families for applications relating to solar cell technology. Europe and the US follow, with China coming in fifth. It should be noted, however, that Chinese applicants are often less likely to file internationally compared to their overseas counterparts, so the picture when looking at Chinese patents is quite different.
Looking at international patenting activity in the supporting systems sector, Europe leads from the US, followed by Japan, Korea and China some distance behind. Within Europe, Germany, Spain and France all have a significant share of solar innovation.
The African potential
Though its promise is yet mostly unrealized across the African continent, solar energy may be a cheap and environmentally friendly answer to the persistent power problems that plague many African nations. Contrary to Europe and North America, which have significant installed capacity but lower average rates of solar energy potential, many African nations show a stark discrepancy between the high photovoltaic power potential and its meagre installed capacity Due to issues like infrastructure limitations, regulations and inability to attract foreign investment.
China has maintained a substantial presence on the African continent and continues to be one of the major financiers of infrastructure projects in sub-Saharan Africa, with total investments of $155 billion over the past two decades. By way of the investments and garnering local support, China’s influence in Africa also extends to policy and regulations. Combining with technological transfer and financial support – China is tapping into the natural resources of Africa such as cobalt, copper and Lithium to ensure a stable supply chain for its own solar industry whilst also developing the green energy industry in Africa.
International alliances, collaborations, and frameworks can make it easier for solar patents to be shared and transferred across territories, boosting localized solutions and enabling nations to use solar energy successfully. Licensing against complete transfer of rights would play a crucial role in how the technology can be used locally to benefit the end user.
Summary and conclusions
China represents, by far and away, the largest market for solar companies and so should be a key consideration in all IP strategies. However, given that it may not be a viable market for the majority of non-Chinese companies because of the maturity of the market and the established local operators, combined with the challenge of enforcing patents in China, it not necessarily the case that all inventions should be protected in China. Filing patents at transport links into and out of China, such as Hong Kong or other transport hubs, may also provide a viable way to control imports into and out of China.
As with hydrogen, Japan and Korea are likely to be technology exporters in the solar market and, as such, are likely to be sensible destinations for patent protection. Depending on the technology, Europe and the US are also likely to be high up on the priority list for protection – in particular for supporting technologies such as mounting, tracking and power conversion. Within Europe, Germany, Spain and France all have a significant share of solar innovation.
Finally, Africa may be a key territory moving forward if the significant challenges in funding, infrastructure and support can be addressed. Patents last for 20 years and it is not unforeseeable that significant progress be made in this time, so it is likely that a robust IP strategy should also seriously consider protection within Africa.
Wind
Like the other technologies discussed here, wind energy is projected to be central to meeting Net Zero targets and is a key focus for the majority of countries’ energy independence and clean energy goals. Onshore technology is the more established technology and, over the last five years, has focused on maximizing electricity produced per megawatt capacity installed to unlock more sites with lower speeds. Offshore wind is less established and is expected to grow rapidly, opening the door to significant potential.
Market size
China has the most installed capacity by a large margin and is a market leader for both onshore and offshore generation. Generous government incentives and support programs were successful in stimulating rapid growth of the sector. Government support has reduced somewhat in recent years, but this is not expected to greatly affect the market for wind energy in China. It has, however, resulted in a number of the largest Chinese OEMs are starting to look outside of China and work on projects in Europe and around the world. This means that Chinese-developed technology is being exposed to the wider market in a way that it wasn’t in the preceding 10 years.
The EU is the second largest wind market. The largest contributor to this is Germany, with Spain in second and France in third. Denmark, while not one of the largest producers in terms of outright capacity, is noteworthy given its heavy reliance on wind energy with 56% of its power generation being achieved using wind power in 2020. Both Norway and Sweden have plans in place that are likely to significantly grow their wind energy capacity over the coming decade, and so are also markets to watch.
The US lies in third, largely thanks to supporting government policies and lower wind costs. The UK and India also have significant wind energy capacity, with the UK having a particular strength in offshore wind energy.
All of the countries mentioned above are expected to significantly increase their wind energy capacity over the coming years in line with government Net Zero strategies. They are therefore expected to maintain their relevance in the wind sector.
Key players and research hubs
The wind sector obviously encompasses a large range of technological sectors from seismic surveying and drilling to turbine manufacture, grid management and weather monitoring. Each of these different sub-sectors and technologies will have their own market environment. It is therefore critical that companies work closely with an attorney experienced in this field when putting together an IP strategy, to tailor the plan to the specifics of the technology.
Looking at the sector for turbine manufacturing as an example, the largest companies are largely aligned with the largest markets. China regularly has six of the ten largest turbine manufacturers, including Goldwind, Envision, Mingyang, Windey, Sany and CRRC. GE is the only US-based company, with European based Vestas, Siemens Gamesa and Nordex completing the top ten. These companies not only represent the largest manufacturers, but are also the largest innovators within this sector of the market.
Broadly speaking, the Chinese-based companies lead the way in terms of number of filings, but have historically focused their patenting activity on China and have comparatively few international patent families. This is starting to change to some degree, as Chinese companies look to expand overseas. It is expected that over the next few years, Chinese originating wind companies will rapidly expand their international patent portfolios.
GE, Vestas, Siemens Gamesa and Nordex focus their patent filings on the main markets of Europe (including the UK), the US and China. A significant number of patents are also filed in countries that may experience significant growth moving forward, such as India. In Europe, the majority of filings are in force in Germany, France, the UK and Spain. Denmark also has a large degree of protection, likely due to both its focus on wind energy and Vestas being headquartered there. European countries such as Sweden, Norway, the Netherlands and Italy appear to be of secondary importance, but still have a significant degree of protection from these large filers.
Summary and conclusions
As with many renewable sectors, China, Europe and the US are the main markets. In the turbine sub-sector they also represent the locations of the major players and research centres. An IP strategy for a company operating in this sector therefore ought to have a robust plan for protection in these countries. Within Europe there are a wide range of countries in which protection is typically sought, and these again align with the major markets: Germany, France, the UK, Spain and Denmark are the frontrunners for turbine manufacturers, with countries such as Sweden, the Netherlands, Norway and Italy also having increasing capacity and so becoming of increasing interest for IP protection.
