Messinger et al.

, Making Waves on the Ocean Energy Patent Landscape, 1 Clean Tech Law & Business 2 (Summer 2009)

Making Waves on the Ocean Energy Patent Landscape

Michael Messinger and Richard Almon*
Abstract
Companies and governments are searching for a way to reduce carbon emissions and carbon dioxide levels in the atmosphere. Generating energy from the ocean is a possible solution. This article describes some of the key technology and players in ocean energy. Then the article discusses the patent landscape for ocean energy, which includes current patent activity in ocean energy and the recent changes making waves on the offensive and defensive uses of patents that impact a companys valuation and options. Finally, the article discusses the practical impact of these patent law changes on ocean energy company patent strategies. Key Words: ocean energy, intellectual property, patent law, renewable energy

I.

INTRODUCTION

Companies are just beginning to tap renewable ocean energy on a large-scale. Companies are rolling out and testing advances in wind, wave, tidal and thermal conversion technologies meeting industry aims to be in the water. Public and private organizations are directing larger levels of funding to support a variety of ventures.1 The drive to commercialize new products and services in the renewable ocean energy sector is an even more urgent matter of global and national public policy as researchers, companies and government officials try to reduce carbon emissions and carbon dioxide levels in the atmosphere. 2 Ocean energy is a small portion of the current renewable energy market but ripe for patented commercialization. No dominant players, supply chains, or technical designs are yet in place. Universities, start-ups, and mature companies are proposing many different proprietary solutions and approaches. Significant technical hurdles must be overcome and profitable business models must be established. Innovation is needed. Historically, patents played an especially critical role in fostering commercialization of new R&D in emerging markets and helping companies secure a return-on-investment (ROI) on their risktaking.3 Indeed, renewable ocean energy development draws from many other industries (e.g., composite materials, nanotechnology, computer, and electronics), that relied upon increasingly sophisticated patent strategies. These patent strategies impacted companies bottom lines positively or negatively in a variety ways. At different stages of funding, venture capitalists (VCs) and investors ask sharp questions on the role of intellectual property (IP) in a companys valuation from freedom-to-operate and defensive perspectives. High-profile licensing campaigns, injunctions, and the emergence of a secondary IP market have raised the stakes on managing IP well. Critics of the patent system, though, maintain that too many patent thickets and too much patent assertion can reduce competition.4

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Oceans have a global reach creating a natural international market for renewable ocean energy. Globalization trends and trade give ocean energy research and development (R&D) a solid international character. In this global setting, two strong trends, somewhat counter to one another, continue to form the patent landscape for ocean energy. First, the creation of enforceable international patent systems (i.e., harmonization) continues in many bi-lateral and multi-lateral efforts between countries and regions. Second, governments in traditionally strong patent countries, primarily the United States, are trimming or cutting back some rights and protections. These recent legal changes affect both patent procurement and enforcementcreating waves across the ocean energy patent landscape. As new ocean energy technology goes in the water, researchers, companies and others are feeling the impacts of these waves and the specific changes in patent law and practices world-wide. This article first describes some of the key technology and players in ocean energy. Then the article discusses the patent landscape for ocean energy. This discussion includes current patent activity in ocean energy and the recent changes making waves on the offensive and defensive uses of patents. Finally, the article discusses the practical impact of these patent law changes on ocean energy company patent strategies.

II.

OCEAN ENERGY TECHNOLOGY

According to a January 2009 article in MIT Technology Review, renewable energy is a fraction of the total energy market for electricity but is expected to increase with demand:5 FIGURE 1. SOURCES OF ELECTRICITY AND GROWING ELECTRICITY DEMAND IN THE UNITE STATES6 At the end of 2008, the total installed global capacity of ocean and river hydrokinetic resources was less than 10 megawatts.7 While this is a small fraction of the 120 gigawatts of total installed global wind capacity, the United Nations estimates that, over the next 20 years, the technically exploitable potential of hydropower will increase to 250 gigawatts.8 Using the ocean as a renewable energy source involves several interrelated technologies, including Ocean Thermal Energy Conversion (OTEC), tidal power, wave energy, subsurface current energy and offshore wind power.9 Although researchers conceived and documented hundreds of ocean energy devices, very few devices progressed to an advanced state of development. The full potential for renewable energy generation is staggering. In one estimate, the International Energy Agency (IEA) determined that, if fully exploited, ocean energy technologies could generate more than 100,000 terawatt-hours of energy per year.10 The State of Maine recently
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committed itself to a goal of generating at least 300 MW per year from offshore wind by 2020. 11 Bridging the gap between the ocean energy that is technically available, and the vast potentially available energy, is the role of innovation.

III.

TECHNICAL CHALLENGES

One of the key technical challenges to successful ocean energy development is the long-term survivability of offshore platforms. 12 The same violent seas that provide maximum wind and wave energy also lead to challenging, often untenable positions for complex, high-tech equipment. As noted by industry analysts comparing different renewable energy sources, [t]he downside for marine renewables is the unknown operations and maintenance (O&M) costs. Whereas O&M represents 10 percent of total project costs for solar, and 20 percent for wind, 40 percent is a ballpark guess for marine renewables. Keeping O&M costs down to 40 percent of total project costs is the key to making these marine resources competitive.13 The 2007 sinking of the cutting edge Finavera AquaBuoy platform in the seas off the coast of Oregon,14 and the mooring difficulties suffered by the Pelamis Wave Energy Converters off the coast of Portugal,15 highlight the realities involved in harnessing such a strong energy source. 16 The next five years will be make or break for the ocean energy business, says industry analyst Peter Asmus, adding each of the five major marine energy technologies remains unproven beyond small pilot projects.17 Another technical challenge to ocean energy development involves the successful transfer of generated energy from offshore locations to onshore distribution. Offshore wind farms highlight this transfer problem. While open ocean wind farms are widely considered to have stronger currents and less environmental impact than do their onshore counterparts, their remote position can cause energy distribution problems.18 On the other hand, offshore wind sites can be located closer to regions of the U.S. electrical grid that can carry more power, such as, New England or California rather than rural Texas.

IV.

THE OCEAN ENERGY INDUSTRY LANDSCAPE

The players in the ocean energy industry responded positively to the call for innovation. As discussed below, over the last few years, they developed many projects and filed many patents. 1. Key Players Most players in the ocean energy space are smaller firms. Larger entities including Scottish Power, Lockheed Martin and Pacific Gas & Electric, are also engaged and seeking new business opportunities in the space. Additionally, oil companies including Chevron, BP and Shell are also involved in the sector. Like most involved in renewable energy, entities in the ocean energy sector are actively obtaining patents. Table 1 displays the results of a quick search, using the U.S. Patent and Trademark Office database,19 of the different ocean technology areas mentioned above, along with the number of issued patents associated with each area. TABLE 1: RESULTS OF SEARCH USING U.S. PATENT AND TRADEMARK OFFICE DATABASE OF ISSUED PATENTS IN OCEAN ENERGY INDUSTRY

Key Words input in USPTO search engine (quick search method)

# of patents (1976-present)

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Wind energy Wave energy and ocean Tide AND electricity Ocean current and electricity Ocean thermal and electricity

1487 677 299 88 93

In wind energy, generally, General Electric is an intellectual property leader with at least 290 patents based on a keyword search of the USPTO search database. SRI International has at least 188 patents that include the term wave. Other examples of ocean technology firms already possessing U.S. issued patents include Northern Power Systems (~18 patents) and Nova Oceanic Energy Systems (~1 patent) based on a keyword search of the USPTO search database. The number of issued U.S. patents for tidal or wave energy per quarter has risen by a factor of four from about two patents in the second quarter of 2002 to over eight patents in the final quarter of 2008.20 One tidal power player is Verdant Power. The company is currently testing turbines in the East River by New York City. 21 The company also patented techniques on kinetic hydropower generation from slow-moving water flows.22 Moreover, at the recent Energy Ocean 2009 Conference held in Rockland, Maine,23 numerous companies, universities, and individuals presented technologies covered by pending or granted patents. 2. Key Technological Innovations The ocean energy space is rife with innovation. Key technological areas under development involve the use of innovative design approaches, sophisticated electronics and the use of newly developed composite materials. Durable composites are lightweight and have great mechanical strength.24 Other manufacturing sectors (e.g., automotive) use durable composites.25 Researchers innovating in the ocean energy field are applying the lessons from these other sectors.26 Researchers are also increasingly using composites to handle additional challenges specific to underwater structural engineering (e.g., corrosion, salt water, and sea life).27 Researchers may also use lightweight composite materials to better strike the balance between efficiency and durability. In contrast to the above described project failures, analysts estimated that the rotors in current ocean energy projects were overdesigned by up to 30%. 28 Innovations in composite fabrication have also allowed the creation of more sophisticated designs that promote efficiency.29 Researchers are also experimenting with other useful properties of composite materials to further enhance the survivability and efficiency of devices. A bi-stable or morphing composite is a material capable of having its aerodynamic or hydrodynamic profile altered rapidly in response to stresses to promote efficiency.30 With bi-stable composite blades, a tidal generator could be smaller, have its survivability enhanced and have increased efficiency. An innovative design approach that may promote survivability and efficiency involves the simplification of offshore components. Because the remote components are the most difficult to deploy and maintain, simplifying their design promotes survivability. In an example of this approach, the Aquamarine Oyster Wave Energy Converter combines an offshore flap, having minimal submerged moving parts, with accessible onshore power generation equipment. 31 This approach also solves the problem of transferring generated power to shore by providing a practical solution.
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3. Recent Patent Law Developments Significant patent law developments have occurred worldwide, which impact the ocean energy companies ability to both procure and enforce patents. First, changes in the international patent framework are leaning in the direction of expanding patent protection.32 Second, recent changes in the United States have trimmed patent procurement and enforcement options in significant ways. a. International Patent Harmonization The 1995 General Agreement on Tariff and Trade Treaty (GATT)33 planted seeds that are now ripening across the globe. The Trade-Related Aspects of Intellectual Property (TRIPs) portion of GATT mandated that signatory countries implement minimum patent standards within, generally, 10 years.34 Many industrialized and developing countries active in ocean energy development have now put in place these minimum standards on patent eligibility, patentability criteria and enforceability. Along with Europe, Japan and the United States, many other countries like Korea, 35 India36 and China37 have active patent offices with full examination. As of 2008, over 130 countries have acceded to the Patent Cooperation Treaty (PCT).38 This Treaty allows an inventor to file a single PCT application for examination in one country and at the same time preserve the ability to file later for substantive patents rights in any of the participating member states. 39 The growth of PCT filings has been steady over the last decade up until the recent 2008-2009 recession (see Figure 1). FIGURE 2. NUMBER OF PCT APPLICATIONS FILED FROM 1978 - 200840

Even in 2008, a time when the global economy was generally contracting, China reported an 11.9% increase in the number of PCT applications filed with China as the originating country. 41 For the first time ever, a Chinese company topped the list of PCT applicants. According to the World Intellectual Property Organizations (WIPO) PTC: The International Patent System Yearly Review 2008 report, Huawei Technologies Co. Ltd., a telecom company based in Shenzhen, China filed 1,737 PCT applications during 2008. 42 This number of applications put Huawei on above Panasonic at 1,729 applications and Philips at 1,551 applications.43 Aside from growth in patent filings, in the last two years, several countries made a number of bilateral agreements to form patent prosecution highways (PPHs).44 Under these agreements, a country (e.g., the United States) agrees to recognize the examination done by another country (e.g., Japan) and to take an application out of turn as a result. In practice, once a first country patent
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office issues an office action on the merits of a patent application, the patent applicant can request PPH treatment on pending counterpart applications in other participating countrys patent offices. These PPH countries then independently examine the cases out of turn. These expedited protection highways can reduce the time of examination and time to grant by months, or even years, for a global patent portfolio. While the PPH process is a positive change in the worldwide patent system, some countries have also introduced impediments. India, for example, changed its patent rules to require inventions made in India by Indian residents to first be screened for national security review and granted a license before inventors can patent applications outside India. 45 Europe has also kept some roadblocks. Software patents, for example, remain contentious in Europe as many softwarerelated inventions must pass hurdles on subject matter exclusion and technical contribution. As reported by the European firm Marks & Clerk, Alison Brimelow, President of the European Patent Office (EPO) has taken a controversial step of referring the issue of software patentability to the Enlarged Board of Appeal (EBoA). Ms. Brimelow has asked for clarification on four questions regarding the exclusion of computer programs as such from patentability, stating that diverging decisions of the Boards of Appeal have created uncertainty.46 In addition to procurement of patent rights, options for enforcement of patent rights in the international community continue to increase. TRIPs and GATT led to participating countries passing significant patent law remedies including injunctions and damages. In China, for example, the Japanese automobile companies successfully asserted patent rights and collected damages. 47 Japan, for example, created a new high court for patents in June 2004 and the court established the court on April 1, 2005. 48 Recognizing the increased availability of patent protection in Asia, invention investment companies like Intellectual Ventures have expanded to that region. 49 Ocean energy companies competing in an international marketplace with global supply chains have the ability to procure patent protection in most countries relevant to their business model. While patent enforcement as a practical matter still varies widely across countries and certain categories of software inventions may not be eligible for patenting in Europe and other countries, most of current ocean energy innovation in composites, electro-mechanical systems, controllers, and connectivity to a smart grid are likely eligible for patent protection. With the implementation of patent standards under TRIPs, the expansion of PCT practice, and fledgling steps at harmonization like PPHs, many ocean energy companies are likely to implement global patent strategies even before their products hit the water. b. Recalibrating the United States Patent System In the United States, a recalibration or trimming of the patent system is underway. Companies are just now feeling the ramifications and incorporating the changes into new patent strategies. This recalibration, also called patent reform, impacts patent procurement and enforcement, and alters the ocean energy patent landscape in the U.S. for both offensive and defensive patent tactics. At the heart of the patent reform debate is whether the U.S. patent system, as strengthened from 1980 to 2002, promotes or hurts innovation.50 All branches of the federal government (judicial, executive, and legislative) are engaged in this debate. By the year 2002, a number of factors converged to expand the issuance and enforcement of patents (see Figure 2). Federal courts, including the Court of the Appeals for the Federal Circuit, the appellate court with exclusive jurisdiction over questions of patent law,51 generally expanded eligible subject matter to biotech,52 software53 and business methods.54 The U.S. Supreme Court took few patent cases; some district courts instituted rocket dockets that allowed companies to bring patent suits to trial in nine to twelve months.55 The USPTO had a significantly higher allowance rate than its peers in Europe and Japan.56 During this time, USPTO worked to reduce pendency (a first office action in 18 months by 1987 was a rallying cry when Mike was a patent
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examiner) and stressed customer service. Application filings increased dramatically to cover new technologies including many directed to aspects of newly eligible subject matter in biotech, software, and e-commerce during the dot.com boom. 57 The private sector also became more vigorous and patent-savvy. Sophisticated patent licensing campaigns by Texas Instruments, IBM and others made real the value of patents.58 FIGURE 3. FACTORS LEADING TO THE EXPANSION OF ISSUANCE AND ENFORCEMENT OF PATENTS

FIGURE 4. ILLUSTRATES THE ISSUES THAT LED TO A CALL FOR PATENT REFORM

Reform Climate Begins

Academics/Government FTC Report 2003 NAS Report 2004 Popular Press Blackberry/RIM Trolls

Courts Supreme Court active

Private Sector USPTO Generics Open Business Models RF Licensing Reject Office Quality of Examination Rulemaking

Rights

Congress Comprehensive Patent Reform Counter Forces

2009 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Beginning in 2003, a reform climate began (see Figure 3). A number of factors converged to counter patent expansion. The Federal Trade Commission and National Academy of Sciences
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issued seminal reports in 2003 59 and 200460 (respectively) calling, essentially, for a recalibration of the patent system in certain areas such as improving examination quality, raising the obviousness standard, and changing available injunctive relief. The U.S. Supreme Court, generally more hostile to patent protection, became more active. At the USPTO, patent pendency began to increase significantly.61 Our experience as patent practitioners, like that of others anecdotally reported to us, was that Examiners referred to internal second-eye review and other hurdles as preventing them from allowing cases without further prosecution. Some in the patent bar began to refer to the USPTO as the reject office. Controversial rulemaking to limit long-established claims and continuation practice also began.62 Congress repeatedly raised, but has not passed, comprehensive bills for patent reform.63 The popular press also reported, often in a negative light, on a threatened shutdown of a popular Blackberry device sold by RIM64 as well as on efforts of non-practicing entities to obtain patents (i.e., entities disparagingly referred to as trolls).65 Different sectors of business emerged with less direct reliance on a patent system (e.g., generic drugs and open source software). As a result of the changes that began in 2003, the United States entered an era of change where policy makers are recalibrating the patent system. That is, the United States is changing the settings of patent law and enforcement. As shown in Figures 4 and 5, these settings can be represented by sliders that move up or down to reflect the adjustments made. Basically, on the patent law side, the USPTO and the federal courts tightened or raised the standards for eligibility, written description, and obviousnessmaking it more difficult for inventors to acquire a patent. On the enforcement side, federal courts diminished or eliminated the ability of the plaintiff to obtain injunctive relief and certain kinds of damages, and to keep a selected venue in certain cases, even as both Congress and federal agencies reviewed and considered similar changes. On the other hand, the ability of an accused infringer to obtain a successful reexamination have fared well. 66 FIGURE 5. ILLUSTRATES HOW PATENT LAW SETTINGS MAY BE ADJUSTED FOR CERTAIN PATENT ISSUES

Patent Law Settings

E lig ib le S u b je c t M atter , U s eful 35 U .S .C . 101

D e s c ri p t i o n 3 5 U . S .C . 1 1 2

N o v e lt y 3 5 U .S . C . 1 0 2

N o t O b v io u s 3 5 U .S . C . 1 0 3

E n f o rc e m e n t - L a w , M a rk e t

2009 Sterne, Kessler, Goldstein, & Fox

P.L.L.C.

All Rights Reserved.

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FIGURE 6. ILLUSTRATES HOW SPECIFIC ENFORCEMENT SETTINGS MAY BE ADJUSTED

Enforcement Settings

In ju n c tio n

D am ages

R eexam

Venue

2009 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

The U.S. Supreme Court and Federal Circuit contributed the most to bringing about these changes. A series of near unanimous decisions and orders by the U.S. Supreme Court from 2006 to 2009 trimmed patentable subject matter and reduced available legal remedies in certain contexts. In eBay, the Court overturned a presumption of injunctive relief for patent cases in favor of a traditional higher standard balancing four equitable factors. 67 This decision made it especially more difficult for non-practicing entities (i.e., companies who are not using their patents) to obtain injunctive relief against others. The Court also made other enforcement changes including: making it easier for companies already paying royalties or under threat of royalties to sue patent owners,68 finding certain patent damages to not extend to foreign sales, 69 and reinforcing the application of patent exhaustion in downstream licensing.70 An en banc decision by the Federal Circuit has also effectively raised the standard for willful infringement by underscoring the requirement that such infringement must be shown to be objectively reckless.71 Perhaps the most dramatic change was in the patentability standards. In KSR,72 the Court reasserted principles of obviousness and made it easier for lower courts to combine information in the prior art to hold inventions unpatentable. The PTO has drawn categories of obviousness from KSR and other case law where inventions are likely to be found obvious as a prima facie matter.73 As set out in Table 2, these include situations where a fact finder considers a claimed invention to be a predictable combination or substitution, a known improvement technique, obvious trial, known or predictable variation in design, or combination taught or suggested in the art. 74

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TABLE 2. SEVEN KSR RATIONALES OF OBVIOUSNESS75

Predictable Combination Combining prior art elements according to known methods to yield predictable results. Predictable Substitution Simple substitution of one known element for another to obtain predictable results. Known Techniques Used to Improve Use of known technique to improve similar devices (methods or products) in the same way. Ready for Improvement Applying a known technique to a known device (method or product) ready for improvement to yield predictable results. Obvious to try Choosing from a finite number of identified, predictable solutions, with a reasonable expectation of success. Variations of Known Work Across Fields Known work in one field of endeavor may prompt variations of it for use in either the same field or a different one based on design incentives or other market forces if the variations would have been predictable to one of ordinary skill in the art. Teaching, Suggestion, or Motivation Some teaching, suggestion, or motivation in the prior art that would have led one of ordinary skill to modify the prior art reference or to combine prior art reference teachings to arrive at the claimed invention.

Recent changes also impacted the scope of eligible patent subject matter. Contrary to a twentyyear trend of expanding eligible patent subject matter to accommodate new technologies including broad biotech, software and e-commerce business methods, courts have begun to signal a cut back.76 The Federal Circuit recently excluded inventions cast as signal claims 77 and pure business methods.78 In Bilski, the Federal Circuit set forth a machine-or-physical transformation test for method claims and struck down a set of claims drawing to a method of managing commoditized risk.79 The ultimate scope of the Bilski decision is currently unclear because it is now pending before the U.S. Supreme Court. Some USPTO authorities and district court judges have already applied the Bilski test broadly to system and computer program product claims for inventions that go beyond business methods to software, data modeling and other technologies. 80 Substantive changes also occurred at the agency level, especially at the United States Patent and Trademark Office, and more may be proposed. Most telling has been the lowering of the overall allowance rate at the USPTO. The current USPTO allowance rate, at 41%, dropped below the most recently reported numbers from both the European, 51% in 2006, and Japanese, 50% in 2007, patent offices.81 The rate of decline in the US allowance rate % has been dramatic and steep (see Figure 6).82 Such a sea change is likely due to multiple factors, but many academics and practitioners attribute the decline to the KSR decision and USPTO administration efforts and policies, such as, the second-eye review of examiners.

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FIGURE 7. THE DECLINE IN THE PATENT ALLOWANCE RATE IN THE UNITED STATES83

In 2007, the USPTO proposed fundamental (and controversial) changes to the open-ended claiming and continuation practice allowed in the United States.84 Several major companies challenged these changes and won at the district level. 85 On appeal, the Federal Circuit upheld significant aspects of these changes to claims practice (but not continuation practice) but parties requested an en banc review by the entire Federal Circuit.86 The USPTO did implement many changes in an effort to improve patent quality and reduce backlog. These changes include hiring a large number of examiners,87 disseminating examination guidelines in seminal areas like written description, obviousness, and computer-related inventions, piloting a peer review of examination for the first time, 88 and setting a larger role for the Board of Patent Appeals and Interferences (BPAI) and Central Reexamination Unit (CRU). The BPAI is now publishing precedential and informative opinions, and upholding Examiners over Applicants in about 77% of decided cases.89 The CRU also expanded and is responsible for all USPTO reexaminations - inter partes and ex parte. Thus, there is now a parallel track for canceling issued patent claims while court litigation proceeds concurrently.90 Finally, members of Congress have reintroduced comprehensive patent reform legislation for 2009.91 Proposed changes cut for and against patent protection and enforcement. Changes under consideration on the patent protection side include introduction of first-to-file, search duties, fee setting, a new microentities status, and assignee filing. Changes under consideration on the patent enforcement side include a damage calculation requirement, willful infringement codification, postgrant review, expanded inter partes reexamination, more openings for third-party prior art submissions, and venue changes.
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V.

CONCLUSION: IMPACT ON OCEAN ENERGY PATENT STRATEGIES

These waves on the ocean energy patent landscape will impact patent strategies in ocean energy going forward. In a nascent, potentially lucrative market like renewable ocean energy, companies will continue to rely upon patents to protect the R&D cream. With many competing designs, technical hurdles to be solved, and lack of clear standards, patents can help companies memorialize their development, create exchangeable assets, and provide exclusive rights in ways other forms of IP cannot. International patent harmonization provides more options for global patent filings. The increasingly IP-savvy investment community and emerging second IP market means more options exist for monetizing global patent portfolios. Recent efforts at patent reform in the United States though require companies to be more strategic in their patent strategies. On the patent protection side, timed-tested techniques like articulating a patent strategy early in a product lifecycle, mining innovation for the most commercially valuable, non-obvious inventions, and executing against a budget are even more important.92 More monetization options exist to enforce patents, but to win in court, patent owners may face more challenges on validity and parallel challenges in USPTO reexamination proceedings. On the other hand, from a freedom-to-operate perspective more options exist to attack issued patents that may block a product release. Fortunately for ocean energy developers, IP management and lawyering can help overcome or avoid obstacles. Good patent drafting techniques may highlight the truly novel aspects of their inventions, and lead to successful results before the USPTO and international patent offices. For example, patent claims well-focused and directed to better machines, materials, or processes for renewable ocean energy may solve important problems and be non-obvious in many applications. To reduce delay in examination, renewable ocean energy inventors and companies may also take advantage of accelerated examination offered for green innovation by the UK and US patent offices.93 In any event, for successful patent procurement and enforcement, renewable ocean energy companies will need to surf the waves of change on the patent landscape.

ENDNOTES
*Michael Messinger (mikem@skgf.com) is a director and Richard Almon (ralmon@skgf.com) is an associate with Washington, D.C.-based intellectual property specialty firm Sterne, Kessler, Goldstein & Fox P.L.L.C. The views expressed herein are those of the authors and should not be attributed to former, present or future clients or any employees of Sterne, Kessler, Goldstein & Fox P.L.L.C. A public and private partnership may be especially important for promoting renewable ocean energy. As economist Jeffrey Sachs puts it, [A] healthy innovation system will use a mix of public financing and patents. For global sustainable development, the mix of public financing and private incentives should be harmonized globally to ensure that the needs of the poor and the global commons are properly addressed and financed by shared contributions of the worlds governments. JEFFREY SACHS, COMMON WEALTH: ECONOMICS FOR CROWDED PLANET 34 (2008).
1 2 3

See RON PERNICK & CLINT WILDER, THE CLEAN TECH REVOLUTION 74-5 (2007).

See F. Scott Kieff, IP Transactions: On the Theory & Practice of Commercializing Innovation, STANFORD L. & ECON. OLIN WORKING PAPER NO. 311 (2005), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=821327. See e.g., Greg Blonder, Cutting Through the Patent Thicket, BUS. WEEK, Dec. http://www.businessweek.com/technology/content/dec2005/tc20051220_827695.htm.
4 5

20,

2005,

David Talbot, Lifeline for Renewable Power: Without a Radically Expanded and Smarter Electrical grid, Wind and Solar Will Remain Niche Power Sources?, MIT REVIEW (Jan/Feb. 2009).
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6 7

See id.

See Peter Asmus, Pike Research, New Kinds of Hydropower Spark Buzz, http://www.pikeresearch.com/blog/new-kinds-of-hydropower-spark-buzz (last visited Aug. 15, 2009). See id; See also EDWARD S. CASSEDY & PETER Z. GROSSMAN, INTRODUCTION TO ENERGY: RESOURCES, TECHNOLOGY, AND SOCIETY 116 (1998); Ute Collier, Hydropower and the Environment: Towards Better Decision Making, UN SYMPOSIUM ON HYDROPOWER & SUSTAINABLE DEV. (2004), available at http://www.un.org/esa/sustdev/sdissues/energy/op/hydro_collier.pdf.
8

See e.g., Cal. Energy Commn, Ocean Energy, http://www.energy.ca.gov/oceanenergy/index.html (last visited Aug. 15, 2009).
9

Stephen Lacey, Ocean Renewable Energy Has Huge Potential But Not Without Giant Hurdles, Renewable Energy World, RENEWABLE ENGERY WORLD, June 24, 2009, http://www.renewableenergyworld.com/rea/news/article/2009/06/ocean-renewable-energy-has-hugepotential-but-not-without-giant-hurdles.
10

See MAINE GOVERNORS TASK FORCE ON WIND POWER DEV., OCEAN ENERGY TASK FORCE INTERIM REPORT (2009), available at http://www.maine.gov/spo/specialprojects/OETF/Documents/OETF_InterimReport.pdf
11 12 13 14

See Lacey, supra note 10. Asmus, supra note 7.

See Finavera Renewables Inc., Opening Comments on Finavera Renewables Inc. on Draft Resolution E-4196, Rejecting PG&Es Power Purchase Agreement with Fenavera Renewables Inc. 2-3 (2008), available at http://www.finavera.com/files/Finavera%20Comments%20re%20CPUC%20Draft%20Resolution%20E4196_October%202%202008.pdf. See Press Release, Pelamis Wave Power, Statement on Aguadoura Project (Jan. 22, 2009), available at http://www.pelamiswave.com/media/statement_on_aguadoura_project.pdf.
15 16 17 18

Lacey, supra note 10. Asmus, supra note 7.

See Wind Energy From Ocean Surface, ALTERNATIVE ENERGY NEWS, Oct. 8, 2008, http://www.alternativeenergy-news.info/wind-energy-ocean-surface.
19 20

See U.S. Patent & Trademark Office, Database Search, http://patft.uspto.gov (last visited Aug. 15, 2009).

See Heslin Rothenberg Farley & Mesiti P.C., Cleantech Group Clean Tech Energy Patent Growth Index, http://cepgi.typepad.com (last visited Aug. 17, 2009). See Robin Shulman, N.Y. Tests Turbines to Produce Power, WASH. POST, Sept. 20, 2008, http://www.washingtonpost.com/wp-dyn/content/article/2008/09/19/AR2008091903729.html.
21 22 23

U.S. Patent No. 7,456,514 (issued Nov. 25, 2008).

See Energy Ocean Conference 2009 Show Guide, http://www.energyocean.com/2009/_pdf/eo2009showguide.pdf. See George Marsh, Wave and Tidal PowerAn Emerging New Market for Composites, RENEWABLE ENERGY FOCUS, May 14, 2009, http://www.renewableenergyfocus.com/view/1710/wave-and-tidal-power-anemerging-new-market-for-composites.
24 25 26 27 28 29

See id. See id. See id. Id.

Karen Mason, Composite Tidal Turbine to Harness Ocean Energy, COMPOSITES TECH., Dec. 1, 2005, http://www.compositesworld.com/articles/composite-tidal-turbine-to-harness-ocean-energy.aspx.
98

Messinger et al., Making Waves on the Ocean Energy Patent Landscape, 1 Clean Tech Law & Business 2 (Summer 2009)

The Power of Being Made Very Small, THE ECONOMIST, http://www.economist.com/sciencetechnology/displayStory.cfm?story_id=13941135.

30

July Aug.

2, 3,

2009, 2009,

Harnessing Wave Power with New 'Oyster' Machine, http://www.sciencedaily.com/releases/2009/07/090730073928.htm.

31 32 33

SCI.

DAILY,

A complete review of international patent law developments is beyond the scope of this article. Round,

See generally, WTO, The Uruguay http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact5_e.htm (last visited Aug. 16, 2009).
34

See generally WTO, Intellectual Property: Protection and Enforcement, http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm7_e.htm (last visited Aug. 16, 2009); WTO, TRIPS Material on the WTO Website, http://www.wto.org/english/tratop_e/trips_e/trips_e.htm (last visited Aug. 16, 2009). Korean Intellectual Property Office, Home http://www.kipo.go.kr/kpo/user.tdf?a=user.main.MainApp (last visited Aug. 16, 2009).
35

Page, Home Page,

Govt of India, Controller General of Patents, http://www.patentoffice.nic.in/ (last visited Aug. 16, 2009).
36 37

Designs

&

Trademarks,

State Intellectual Property Office of the P.R.C., Home Page, http://www.sipo.gov.cn/sipo_English/ (last visited Aug. 16, 2009). WIPO, PCT: THE INTERNATIONAL PATENT SYSTEM YEARLY REVIEW 2008 47 (2009) [hereinafter PCT YEARLY REVIEW], available at http://www.wipo.int/export/sites/www/ipstats/en/statistics/pct/pdf/yearly_review_09.pdf.
38 39 40 41 42 43 44

See id. at 1. See id. at 2. Id. at 10. Id. at 14. Id.

Countries or regions that have piloted or are using PPHs are Canada, Europe, Japan, Australia, Netherlands, and the United States. See e.g., U.S. PTO, Patent Prosecution Highway Between USPTO and JPO, http://www.uspto.gov/web/patents/pph/pph_jpo.html (last visited Aug. 16, 2009); Press Release, U.S. PTO, Patent Prosecution Highway Pilot Program between the United States Patent and Trademark Office and the German Patent and Trademark Office (April 14, 2009), available at http://www.uspto.gov/web/offices/pac/dapp/opla/preognotice/20090414_pph-dpma.pdf; Press Release, U.S. PTO, Continuation of the Patent Prosecution Highway Pilot Program between the USPTO and IP Australia (April 13, 2009), available at http://www.uspto.gov/web/offices/pac/dapp/opla/preognotice/20090413_pph-ipau.pdf; Press Release, European Patent Office, Patent Prosecution Highway Pilot Programme between the European Patent Office and the United States Patent and Trademark Office (Sept. 26, 2008), available at http://www.epo.org/patents/law/legal-texts/InformationEPO/archiveinfo/20080926.html. See Indian Patent Act 39 (2005), available at http://www.dpahuja.com/pages/latest/update1.asp. This practice is not unlike requirements for foreign filing licenses based on residency imposed by the United States, France, and other countries. India does have strong software and biotech development so this change affected a number of high-tech patent application filings. See e.g., D. Rahul Das & Anand K. Sharma, Destination India, 10 DRUG DISCOVERY & DEV. 35 (2007), available at http://www.dddmag.com/destination-india.aspx.
45

See Marks & Clerk Solicitors, Software Patentability Referred to Enlarged Board of Appeal http://www.marks-clerk.com/uk/solicitors/news/newsitem.aspx?item=222 (last visited Aug. 17, 2009).
46

See generally LOREN BRANDT & THOMAS G. RAWSKI, CHINA'S GREAT ECONOMIC TRANSFORMATION 321-22 (2008); Consulate General of the Peoples Republic of China in New York, IPR Disputes Fueled by Auto Makers, http://www.nyconsulate.prchina.org/eng/xw/t156058.htm (last visited Aug.16, 2009). Auto makers from
47

99

Messinger et al., Making Waves on the Ocean Energy Patent Landscape, 1 Clean Tech Law & Business 2 (Summer 2009)

other countries also filed similar lawsuits. See e.g., Wan Zhihong, MAN Files Suit Against Local Firm, CHINA DAILY, Oct. 20, 2006, http://www.chinadaily.com.cn/cndy/2006-10/20/content_712535.htm; Edmunds, Daimler and Fiat Suing Chinese Manufacturers, Saying Products Are Design Rip-offs, EDMUNDS INSIDE LINE, Oct. 16, 2007, http://www.edmunds.com/insideline/do/News/articleId=123045. See Intellectual Property High Court, History: Establishment of http://www.ip.courts.go.jp/eng/aboutus/history.html (last visited Aug. 16, 2009).
48 49

the

IP

High

Court,

See Press Release, Intellectual Ventures, Intellectual Ventures Expands Invention Efforts Globally (Sept. 30, 2008), available at http://www.intven.com/docs/final%20intellectual%20ventures%20asia%20press%20release.pdf (announcing the opening of a Singapore office in 2008). See generally Gerry Elman, Update on US Patent Reform, INTERNET BUS. L. SERVICE, Oct. 22, 2007, http://www.ibls.com/internet_law_news_portal_view.aspx?id=1883&s=latestnews; Heidi Ledford, High Hopes for US Patent Reform, 458 NATURE 952 (2009).
50

See U.S. Court of Appeals for the Federal Circuit, About the Court, http://www.cafc.uscourts.gov/about.html (last visited Aug. 16, 2009).
51

See generally Adam Isaac Hasson, Patenting Biotechnology: Inherent Limits, 2002 B.C. INTELL. PROP. & TECH. F. 041901 (2002), available at http://www.bc.edu/bc_org/avp/law/st_org/iptf/commentary/content/2002041901.html; Rebecca S. Eisenberg, How Can You Patent Genes? 133-38 (in GENETICS: SCIENCE, ETHICS, & PUBLIC POLICY, Thomas A. Shannon ed.) (2002).
52

Dan Tysver, The History of Software Patents: From Benson and Diehr to State Street and Bilski, http://www.bitlaw.com/software-patent/history.html (last visited Aug. 16, 2009).
53

See generally U.S. PTO, Patent Business Methods, http://www.uspto.gov/web/menu/pbmethod/ (last visited Aug. 16, 2009); William Fisher & Geri Zollinger, Business Method Patents Online, Harv. L. School Berkman Center for Internet & Soc. http://cyber.law.harvard.edu/ilaw/BMP/ (last visited Aug. 16, 2009).
54

See Cono A. Carrano, Cecil E. Key & Brian Su, Patent Rocket Dockets: Coming Soon to a Venue Near You?, INTELL. PROP. TODAY (2006), available at http://www.iptoday.com/pdf/2006/12/Carrano-Dec2006.pdf.
55

See OECD, OVERVIEW OF RECENT TRENDS IN PATENT REGIMES IN UNITED STATES, JAPAN AND EUROPE 4, IPR, INNOVATION AND ECONOMIC PERFORMANCE (2003), available at http://www.oecd.org/dataoecd/14/32/11728593.pdf.
56

See e.g., U.S. PTO, Table of Annual U.S. Patent Activity Since 1790, http://www.uspto.gov/go/stats/h_counts.htm (last visited Aug. 16, 2009); U.S. PTO U.S. Patent Statistics Chart Calendar Years 1963 2008, http://www.uspto.gov/go/stats/us_stat.htm; U.S. PTO, Patent Statistics Reports Available For Viewing Statistics By Calendar Year, January 1 to December 31, http://www.uspto.gov/go/stats/reports.htm#by_hist (last visited Aug. 16, 2009).
57 58 59

See FRED WARSHOFKSY, PATENT WARS: THE BATTLE TO OWN THE WORLDS TECHNOLOGY 111 (1994).
AND

FTC, TO PROMOTE INNOVATION: THE PROPER BALANCE OF COMPETITION available at http://www.ftc.gov/os/2003/10/innovationrpt.pdf.

60

PATENT LAW

AND

POLICY (2003),

NATL NATL RES. COUNCIL COMM. ON INTELL. PROP. RIGHTS IN THE KNOWLEDGE-BASED ECONOMY, A PATENT SYSTEM FOR 21ST CENTURY (2004), available at http://www.aipla.org/Content/ContentGroups/Issues_and_Advocacy/Comments2/Patent_and_Trademark_O ffice/2004/PatentRpt.pdf.
THE

This pendency increase is widely reported. See e.g., USPTO, Performance and Accountability Report Fiscal Year 2006Management's Discussion and Analysis, http://www.uspto.gov/web/offices/com/annual/2006/desc_pat_1stpend.html (last visited Aug. 17, 2009) (reporting the steady increase in time to first office action from FY 2003 to FY 2006).
61

See e.g., U.S. PTO Changes to Practice for the Examination of Claims in Patent Applications, Notice of proposed rule-making, 71 Fed. Reg. 61 (Jan. 3, 2006), available at http://www.uspto.gov/web/offices/com/sol/notices/71fr61.pdf; John Doll, USPTO Commissioner for
62

100

Messinger et al., Making Waves on the Ocean Energy Patent Landscape, 1 Clean Tech Law & Business 2 (Summer 2009)

Patents, Slide Presentation at Chicago, IL Town Hall Meeting (Feb. 1, 2006), http://www.uspto.gov/web/offices/pac/dapp/opla/presentation/chicagoslides.ppt.
63

available at

See e.g., Elman, supra note 50; Emily Berger & Richard Esguerra, Patent Reform Act Stalls in the Senate, ELECTRONIC FRONTIER FOUND., May 2, 2009, http://www.eff.org/deeplinks/2008/05/patent-reform-act-stallssenate. See e.g., Teresa Riordan, Contest Over BlackBerry Patent, N.Y. TIMES, June 7, 2004, http://www.nytimes.com/2004/06/07/technology/07patent.html?scp=1&sq=RIM%20patent&st=cse; Bernard Stamler, Battles of the Patents, Like David v. Goliath, N.Y. TIMES, Feb. 21, 2006, http://www.nytimes.com/2006/02/21/business/businessspecial2/21patent.html?scp=5&sq=RIM%20paten t&st=cse.
64

See e.g., Brent Bowers, Easy Days are Over Patent Trolls, N.Y. Times, Aug. 29, 2007, http://www.nytimes.com/2007/08/29/business/worldbusiness/29ihtsbiz.4.7305928.html?scp=4&sq=patent%20trolls&st=cse;Saul Hansell, Trolling for Patents to Fight Patent Trolls, N.Y. TIMES, Mar. 30, 2009, http://bits.blogs.nytimes.com/2009/03/30/trolling-for-patents-to-fightpatent-trolls/?scp=1&sq=patent%20trolls&st=cse.
65

For example, based on published USPTO statistics through June 30, 2009, inter partes reexamination requests are being granted 95% of the time, and 60% of all claims are being cancelled after inter partes reexamination. See USPTO, Inter Partes Reexamination Filing Data June 30, 2009, available at http://www.uspto.gov/web/patents/documents/inter_partes.pdf.
66 67 68 69 70 71

See eBay v. MercExchange, 547 U.S. 388 (2006). See Medimmune v. Genentech, 549 U.S. 118 (2007). See Microsoft v. ATT, 550 U.S. 437 (2007). See Quanta v. LG, 553 U.S. ___, No. 06-937 (2008)

See In re Seagate, 497 F.3d 1360 (Fed. Cir. 2007) (en banc); See also Justin P. Huddleson, Note, Objectively Reckless: A Semi-Empirical Evaluation of In Re Seagate, 15 B.U. J. SCI. & TECH. L. ___ (2009), available at www.bu.edu/law/central/jd/organizations/journals/scitech/documents/Huddleson_WEB.pdf.
72 73

See KSR v. Teleflex, 550 U.S. 398 (2007).

Patent applicants are allowed to traverse prima facie rejections with argument and/or evidence of nonobviousness. See M.P.E.P. 2145 (2008), available at http://www.uspto.gov/web/offices/pac/mpep/documents/2100_2145.htm Id.; See also M.P.E.P. 2143 (2008), http://www.uspto.gov/web/offices/pac/mpep/documents/2100_2143.htm.
74 75 76 77 78 79 80

available

at

Id. See e.g., LabCorp. v. Metabolite, 548 U.S. 124 (2006) (Breyer, denying cert.). See In re Nuitjen, 500 F.3d 1346 (Fed. Cir. 2007). See In re Bilski, 545 F.3d 943 (Fed. Cir. 2008), cert. granted (U.S. Jun. 1, 2009) (No. 08-964). See id.

See Michael V. Messinger et al., Special Feature: BPAI Reaches Beyond Bilski to Machines, INTELL. PROP. TODAY, March 3, 2009, http://www.iptoday.com/news-article.asp?id=3622&type=ip. See U.S. Patent and Trademark Office, PPAC Patents Operations Update, Slide 11 (2009) [hereinafter PPAC Patents Operations Update], available at http://www.uspto.gov/web/offices/com/advisory/ppt_presentation/ppac_2009jun18_patent_operation_up date.ppt, compare with PCT YEARLY REVIEW, supra note 38.
81 82 83

See id. PPAC Patents Operations Update, supra note 81.

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Messinger et al., Making Waves on the Ocean Energy Patent Landscape, 1 Clean Tech Law & Business 2 (Summer 2009)

See U.S. PTO Changes to Practice for the Examination of Claims in Patent Applications, Notice of proposed rule making, supra note 62; U.S. PTO Proposed Changes to Practice for Continuing Applications, Requests for Continued Examination Practice, and Applications Containing Patentably Indistinct Claims, Notice of proposed rulemaking, 71 Fed. Reg. 48 (Jan. 3, 2006), available at http://www.uspto.gov/web/offices/com/sol/notices/71fr48.pdf; See also Bryan C. Diner et al., The USPTO Strikes Back: Proposed Fundamental Changes to the US Patent System, 2 J. OF INTELL. PROP. L. & PRACTICE 331 (2007).
84

See Yuri Mikulka & Spyros J. Lazaris, Tafas v. Doll: Limits on Continuations Invalid; Other Claim Limits May Be OK, LAW UPDATES, May 18, 2009, http://www.lawupdates.com/commentary/itafas_v_doll_i_limits_on_continuations_invalid_other_claim_limits _may_be_o/ (chronicling the battle between major corporations and the PTO).
85

Tafas/GSK v. Doll, ___ F.3d. ___, No. 08-1352 (2009), rehg en banc granted, (Fed. Cir. Jul 6, 2009) (No. 20081352); See also Bureau of Natl Affairs, Parties Move to Defer Tafas En Banc Hearing Pending New PTO Director Confirmation, 78 BNA PATENT, TRADEMARK & COPYRIGHT J. 7/24/2009.
86

USPTO, STRATEGIC PLAN 2007-2012 6 (2007), http://www.uspto.gov/web/offices/com/strat2007/stratplan2007-2012.pdf

87 88

available

at

See Peer to Peer in Cooperation with the USPTO, Community Patent Review,. http://www.peertopatent.org (last visited Aug. 17, 2009) (although the pilot is not currently accepting new applications).
89 90

See PPAC Patents Operations Update, supra note 81 at Slide 15.

Robert Sterne et al., Reexamination Practice with Concurrent District Court or USITC Litigation, SEDONA CONFERENCE ON PATENT LITIGATION (2008), available at http://www.utcle.org/eLibrary/preview.php?asset_file_id=18135. See The Patent Reform Act of 2009, S. 515, 111th Cong. (2009), available at http://olpa.od.nih.gov/tracking/111/senate_bills/session1/s-515.asp.; The Patent Reform Act of 2009, H.R. 1260, 111th Cong. (2009), available at http://olpa.od.nih.gov/tracking/111/house_bills/session1/hr1260.asp.
91 92 93

See Michael V. Messinger & Timothy A. Doyle, Indispensable Tips for IP Savvy VCs, AM. VENTURE 42-3 (2007).

See Peter A. Jackman, Michael V. Messinger & Richard B. Almon, Patent Strategies in a Green Environment, WORLD INTELL. PROP. REV. 23-24 (2009), available at http://64.237.99.107/media/pnc/4/media.954.pdf (discussing more green patent strategies).

102