I. Introduction
In 2023, global investments in energy transition projects surged to approximately $1.7 trillion.1 This unprecedented investment level underscores the transformative shift toward cleaner energy sources and technologies. Government incentives and private sector funding are driving rapid innovation in this space. Over $450 billion of taxpayer dollars have been invested into the energy transition and climate change across the Inflation Reduction Act (“IRA”) and the Bipartisan Infrastructure Deal.2 And the impact this has had is clear—in the hydrogen space alone, over 1,300 patents related to clean hydrogen and related technologies were issued through 2023, largely fueled by initiatives such as the Hydrogen and Fuel Cell Technologies Office (HFTO).3
Private investment is also significant in the energy transition space, especially for companies with patent portfolios. A recent International Energy Agency report highlighted that over 80% of later-stage investment in hydrogen startups was directed toward companies with at least one patent application.4 This trend underscores the critical role of intellectual property (“IP”) in attracting investment and fostering technological advancements in the energy sector.
II. Potential Limits on IP Rights in Energy Technology
A. U.S. Government March-In Rights on Government-Funded Inventions
The Bayh-Dole Act of 1980 established the U.S. government’s march-in rights on taxpayer-funded inventions, allowing the U.S. government to intervene and grant licenses for patents under certain conditions:5
1. Failure to Achieve Practical Application: If the patent owner has not taken effective steps to achieve practical application of the invention in the field of use;
2. Health or Safety Needs: If the technology is necessary to address public health or safety concerns;
3. Public Use Requirements: If the technology is needed to meet public use requirements specified by federal regulations; or
4. Domestic Manufacturing Requirements: If the patent owner has not complied with domestic manufacturing requirements under 35 U.S.C. § 204.
“Practical Application” (category 1) is specifically defined in 35 U.S.C. § 201(f) to mean “[manufacture, practice or operate] under such conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.”
Additionally, these march-in rights are made contractual by many funding agreements with federal agencies (e.g., ARPA-E) for taxpayer-funded research and development.6
Although these rights have never been exercised by the U.S. government in the almost 45 years since their inception, new agency rulemaking has brought these rules back into discussion and may make march-in rights more likely to be used in the future. Many agencies have rejected requests to employ march-in rights in situations where taxpayer-funded inventions were on the market but were priced highly because the agency did not consider price one of the factors listed in the Bayh Dole Act considerations.7 However, the December 2023 release of the Draft Interagency Guidance Framework for March-In Rights by the National Institute of Standards and Technology (“NIST”) proposes incorporating pricing as a factor in determining “practical application” and “health and safety” needs.8 Stakeholders have weighed in on this rulemaking, with proponents arguing that exorbitant pricing (e.g., in pharmaceuticals) means that the patent owner has not made the invention available to the public on reasonable terms and are evidence of a failure to meet public health and safety.9 Critics of the rulemaking argue that availability on the market is enough to rule out march-in rights being appropriate, and that market forces set the “reasonable terms” and prices should not be second-guessed by agencies.10 They also stress that employing march-in rights would disincentive critical private investments in tax-payer-funded technology areas.11
While the focus has typically been on pharmaceuticals, the Bayh-Dole Act and the NIST guidance are both agnostic to the technology, and the principles at issue could just as easily impact the energy tech sectors as well. The final rule has yet to issue.
B. Compulsory Licensing in Europe and Worldwide
Under the Paris Convention and the TRIPs Agreement, all WTO members may enforce compulsory licensing.12 That said, compulsory licensing has been rarely used, and, when employed, it has almost exclusively been in the pharmaceutical sector. A few examples include:
• Israel: Issued a compulsory license for AbbVie’s COVID-19 medication in response to the pandemic.13
• Brazil: Implemented compulsory licenses for AIDS medications to address public health needs.14
• India: Granted compulsory licenses for chemotherapy drugs to ensure access to essential treatments.15
• Thailand: Utilized compulsory licenses for various medications.16
Many countries took action during COVID-19 to expand or exercise compulsory license rights. There have been no significant instances of compulsory licensing in the renewables sector to date. That said, there is a growing concern that IP rights might hinder climate change efforts could lead to increased interest in compulsory licensing for renewable technologies.
C. Limits on Clean Energy Patent Enforcement
To enforce a permanent injunction for a patent infringement case, courts analyze the “eBay factors,” which include that the party seeking injunction must demonstrate that “the public interest would not be disserved by issuing a permanent injunction.”17 Similarly, the International Trade Commission (ITC), in issuing exclusion and cease and desist orders, considers public interest factors such as the effect the orders would have on “public health and welfare.”18
One recent case, Siemens Gamesa v. General Electric, 626 F.Supp.3d 468 (D. Mass Sept. 7, 2022), suggests that public interest factors may limit injunctive relief for infringement of patents related to climate change and renewables. In that case, the District of Massachusetts granted an injunction against GE for infringing Siemens’ wind turbine rotor hub patent after a jury found infringement.19 However, the court allowed significant carve-outs to the injunction to allow GE to continue work on the U.S.’s first two commercial-scale offshore wind turbine projects, citing the urgent need to combat climate change and the potential job losses from halting these projects.20
Although the court provided Siemens with financial compensation through an increased royalty of $60,000 per megawatt for the infringing projects, this decision highlights the possibility that injunctive relief could be limited for patents that relate to technology that is used to combat climate change.
This is especially important when considering ITC remedies. Whereas patent owners can at least count on financial awards in the district court even if injunctive relief is limited, the ITC does not provide financial remedies. Thus, patentees considering an ITC action should carefully consider the risk that public interest factors could impede or substantially reduce their remedies at the ITC.
III. Government Incentives for Innovation
A. Legislation
Government incentives play a crucial role in driving investment in energy technologies and renewables. The Inflation Reduction Act (“IRA”) provided $391 billion for climate change and energy security initiatives through tax credits and federal investments.21 Similarly, the Bipartisan Infrastructure Law. allocated $80 billion for electric vehicles (EVs) and electric grid infrastructure.22 These funds are invested through either direct government investment (e.g., through DOE funding opportunities), or though tax credits, both of which encourage parallel private investments.
A case study is helpful to illustrate the impact of this government investment on the innovation ecosystem in energy tech. The Internal Revenue Service’s newly released proposed tax credit for production of clean hydrogen under Section 45V of the IRA, is causing a seismic shift in the industry, highlighting the criticality of intellectual property protection. As clarified by a December 2023 guidance from the IRS, the Section 45V tax credit relates to “green” hydrogen, i.e., hydrogen which is generated using electrolysis powered by renewable energy sources.23 The IRA specifically defines green hydrogen as hydrogen that is produced in which greenhouse gas emissions do not exceed 4 kilograms of carbon dioxide equivalent (“CO2e”), per kilogram of hydrogen.24
Under Section 45V(b)(2) of the IRA, companies receive a tiered tax credit based on the amount of greenhouse gas emissions per kg of H2 produced. The “cleaner” the hydrogen, the higher the tax credit.25 And the increased rewards are significant: the highest tax credit is five times more than the lowest.26
These regulations are driving significant investment in improvements relating to the electrolysis process itself or to any other step in the hydrogen production process that may be used to generate green hydrogen with a low CO2e emission rate to obtain the clean hydrogen production tax credit. With these developments, hydrogen production companies are becoming technology companies who need IP strategies to avoid getting beat by major companies that will move into this space.
No story demonstrates this better than Electric Hydrogen, a green hydrogen company that took advantage of the IRA tax credit by pivoting to focus its efforts on electrolyzer efficiency.27 By doing so, they became the first green hydrogen company valued at $1 billion.28 Already in 2024, they have garnered over $50 million in tax credits and DOE grants.29
B. USPTO Pilot Program on Climate Change Related Inventions
The USPTO’s Climate Change Mitigation Pilot Program offers expedited examination for patents related to climate change mitigation.30 This program allows companies to submit a free Petition to Make Special for inventions designed to:
1. Remove greenhouse gases from the atmosphere;
2. Reduce or prevent additional greenhouse gas emissions; or
3. Monitor, track, or verify greenhouse gas emission reductions.31
Acceptance into the program can significantly shorten the examination period from years to months. Companies involved in green hydrogen technology and other climate-related innovations should consider leveraging this program before it expires on June 7, 2027, or before 4,000 applications are granted special status.32 As of July 30, 2024, there have been 771 applications granted special status under this program.33
As shown in the table here, many other jurisdictions have similar programs, providing some form of accelerated or prioritized examination for various categories of environmentally-beneficial technology.
IV. IP Strategies and Licensing Models
A. Patent Pools
Patent pools offer a collaborative approach to IP management, allowing owners to share patents through conditional licensing. Although these patent pools have been more common in other industries such as telecommunication, they are emerging in energy tech. Patent pools can facilitate innovation by providing access to a broad portfolio of patents. Licensors stand to benefit from cross-license with other licensors, and, if desired encouraging entry to market. Licensees, on the other hand, gain the opportunity to license a large portfolio of patents with relatively low transactions costs.
Two prominent examples of energy tech patent pools include:
• Tulip Innovation: A patent pool created by LG Energy and Panasonic Energy encompassing 5,000 patents related to lithium-ion battery technology, critical for electric vehicles.34
• ESG Smart Pool: An initiative by Maersk and Siemens Energy to streamline licensing for ESG-related technologies, covering 250 patents in ESG-related technology areas including as electrical grid operations and energy systems.35
These pools facilitate access to essential technologies and promote collaboration among industry players who strive to align with broader environmental and social governance goals.
B. Standard Essential Patents (SEPs) and FRAND Licensing
Standard Essential Patents (SEPs) and Fair, Reasonable, and Non-Discriminatory (FRAND) licensing terms are well-established in the telecoms industry but have not yet emerged in the energy sector.36 However, they are often talked about for the climate tech and renewables industry, as the industries mature and standard emerge.37 SEPs ensure interoperability between devices from different manufacturers, while FRAND licensing terms facilitate access to essential technologies.
The telecom model provides a framework for managing IP in high-technology sectors, but disputes over FRAND terms and licensing rates are common. As clean energy technologies develop, similar standards and licensing models may emerge, potentially leading to legal disputes over licensing terms and conditions.
C. Best Practices and Strategies for IP Practitioners
The IP issues emerging in the energy tech and renewables spaces span many practices areas, including patent prosecution, litigation, and tech transactions.
Patent prosecutors and practitioners assisting energy tech clients with patent portfolio strategy should consider whether their clients’ technology is eligible for the USPTO Climate Change Mitigation Pilot Program, and analogous programs in other jurisdictions. Practitioners should also consider whether their clients’ technology applies to tax credits, government funding opportunities, emerging standards, or upcoming agency rulemaking and if so, focus a substantial portion of their patent strategy on capturing those critical aspects.
Litigators should bear in the mind the potentially limited injunction rights of patents in this space, and focus their litigation strategy on financial remedies, to the extent possible. To the extent ITC actions are contemplated, the risk of a limited remedy due to public interest should also be considered.
With respect to tech transactions, the IP terms of government funding agreements should be carefully reviewed for IP ownership and march-in rights terms. And licensing practitioners should consider if patent pools are appropriate for their clients to participate in (as licensor or licensee), and if standards arise, whether any of their client’s patents could be essential.
Regardless of the practice focus, it is incumbent on IP practitioners with clients in energy tech and renewables to stay abreast of the emerging issues in this space, including caselaw about public interest in this space, litigation and patenting trends in the industry, and agency rulemaking.
[1] https://about.bnef.com/blog/global-clean-energy-investment-jumps-17-hits-1-8-trillion-in-2023-according-to-bloombergnef-report/.
[2] https://www.crfb.org/blogs/cbo-scores-ira-238-billion-deficit-reduction (IRA) & https://www.npr.org/2021/07/28/1021768174/bipartisan-senate-negotiators-say-they-reach-a-deal-on-infrastructure-after-hicc (Bipartisan Infrastructure Deal).
[3] https://www.hydrogen.energy.gov/docs/hydrogenprogramlibraries/pdfs/review23/sa190_steele_2023_p-pdf.pdf.
[4] https://prod.iea.org/news/hydrogen-patents-indicate-shift-towards-clean-technologies-such-as-electrolysis-according-to-new-joint-study-by-iea-and-epo.
[5] 35 U.S.C. § 203(a).
[6] See, e.g., https://arpa-e.energy.gov/technologies/project-guidance/pre-award-guidance/funding-agreements.
[7] https://crsreports.congress.gov/product/pdf/IF/IF12582.
[8] Request for Information Regarding the Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights, 88 Fed. Reg. 85,593, 85,599 (Dec. 8, 2023).
[9] https://crsreports.congress.gov/product/pdf/IF/IF12582.
[10] Id.
[11] Id.
[12] Article 31 of the Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1C, 1869 U.N.T.S. 299; Paris Convention for the Protection of Industrial Property, Mar. 20, 1883, as revised July 14, 1967, 21 U.S.T. 1583, 828 U.N.T.S. 305.
[13] https://www.pearlcohen.com/the-worldwide-stakes-of-israeli-compulsory-licenses-for-anti-coronavirus-drugs/
[14] https://www.aidsmap.com/news/may-2007/brazil-issues-compulsory-license-efavirenz
[15] https://www.bmj.com/content/345/bmj.e6015
[16] https://www.tilleke.com/wp-content/uploads/2011/04/compulsory_licensing_developments_TH.pdf
[17] eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006).
[18] 19 U.S.C. §§ 1337(d)(1), (e)(1), (f)(1), (g)(1).
[19] Siemens Gamesa v. General Electric, 626 F.Supp.3d 468, 474-75 (D. Mass Sept. 7, 2022).
[20] Id. at 471-475.
[21] https://www.crfb.org/blogs/cbo-scores-ira-238-billion-deficit-reduction
[22] https://www.npr.org/2021/07/28/1021768174/bipartisan-senate-negotiators-say-they-reach-a-deal-on-infrastructure-after-hicc
[23] https://www.greentechmedia.com/articles/read/green-hydrogen-explained
[24] 26 U.S.C. § 45V(c)(2)(A).
[25] Id. § (b)(2)
[26] Id.
[27] https://techcrunch.com/2023/10/03/electric-hydrogen-is-the-green-hydrogen-industrys-first-unicorn/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAABLfShrOcl4TN6VwRLht59D4ALCxapeymnlL9IQrMVKqjlTQFJkzuFfSEoNcSbaudzr_eGvMim83pZDglK4jOx-Fg13RrGOmgGIeTzIkVMq5zLoOfsXQo8sgCXU4V6rKA82KGyeAcV58INCtyeJl6K22_LJxuhwMWt30lZN-_8zD
[28] https://eh2.com/electric-hydrogen-receives-18-3m-transferable-doe-tax-credit-for-its-gigafactory-in-massachusetts-bringing-total-department-of-energy-support-to-65m/
[29] Id.
[30] https://www.uspto.gov/patents/laws/patent-related-notices/climate-change-mitigation-pilot-program
[31] Id.
[32] Id.
[33] Id.
[34] https://www.morningstar.com/news/business-wire/20240530193743/tulip-innovation-launches-new-patent-licensing-program-based-on-lg-energy-solution-and-panasonic-energy-lithium-ion-battery-technologies
[35] https://www.prnewswire.com/news-releases/maersk-and-siemens-energy-joint-founders-of-ipwes-esg-smart-pool-301980087.html
[36] https://www.potterclarkson.com/insights/standard-essential-patents-and-their-role-in-green-tech-evolution/
[37] https://www.pinsentmasons.com/out-law/analysis/the-new-role-patents-energy-innovation
