Recent BusinessWeek Article Confirms that Energy Innovation is Rampant: Why These Innovations Should be Patented

This current BusinessWeek article entitled "The Real Question: Should Oil be Cheap?" confirms that innovations directed toward energy savings are rampant in these days of high energy prices. Specifically, the article states that "[h]igh energy prices [] water the flowers of innovation, making investments in alternatives pay off . . . ." As I wrote in this blog previously, along with such innovations comes the opportunity for savvy corporate managers to obtain exclusive rights to these energy usage improvements by developing and executing on patent strategies that prevent their competitors from benefiting from their investments in innovation. Moreover, as I wrote in this blog post, I believe that The Pickens Plane will open the floodgates of patenting in the area of wind energy and turbine technology.

I realized after writing these blog posts that some people might find the idea of patenting energy innovations distasteful. Such a perspective might be based on a belief that it is better for society for energy innovations to available for the public to freely use. As such, I thought I would address this potential objection in this post.

Private energy innovation takes place within the confidential confines of the firm. Energy innovators will typically not freely disclose energy innovations outside of the firm in the absence of patent protection. Rather, if an innovator is not able to prevent others, especially his competitors, from using the fruits of his innovation investments, it is unlikely that this energy innovator will disclose his technological advances to the public. The innovator will instead likely maintain the innovation as a trade secret, which will keep the details from the public as long as the technology is kept secret.

You may recognize that if the energy innovator does not obtain patent protection, anyone who can reverse-engineer or independently develop this trade secret energy innovation will be free to use the energy innovation. On balance, however, I believe it is better for many energy innovations to be patented.

When an innovator files for patent protection to an energy savings technology, details of that innovation are available for the public to understand and to improve upon. Moreover, it is quite likely that the energy innovator's patent protection is limited by specific industry or technology. This means that the general concept of the innovation can be freely used outside of the specifically patented subject matter. For example, an energy innovation in glass-making could have broader applications outside of that specific technology area, and if the patent covers only glass making, other industries are freely able to use that energy innovation without incurring patent infringement liability. The disclosure of the technical details to those who can benefit from it also reduces the occurrence of duplicated efforts in development of important energy innovations. I believe these results are a net overall positive for society.

The downside to patenting of energy innovations is that those in the same industry or technology area may be prevented from benefiting from the innovation without incurring patent infringement liability. In the glass-making example, a patent to an energy savings innovation would prevent other glass-makers from benefiting from that patented innovation. However, in my opinion, those who do not seek to innovate to improve should not be allowed to be free-riders to those who invest in innovation.

So, I believe that your company’s energy innovations should be fair game for patenting. The rub is whether company management will realize the value of doing so.