Indian Ayurveda vis-a-vis Global Herbal Research

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Should I License My Patent?

Having dealt with the subject of ‘Patent Assignment’ in our previous article, we should turn our attention to ‘Patent Licensing’ now. We briefly touch upon the difference between a license agreement and an assignment agreement. The main difference between a license and an assignment is that while the former provides legal title of the property to the Licensor, the latter does not.

To comprehend the difference between licensing and assignment more clearly, it helps to think of a physical property such as a house. Just like you can rent your house to someone else, you can license your patent or patent application to someone else. The tenancy allows the tenant to have rights to your house in exchange for the rental usually paid on monthly basis. In the same way, license allows the patentee to receive the royalty income which is typically a percentage of the profits and may be paid on monthly, quarterly, annually, or on some other basis from the licensee who begins using the patent rights.

License Agreement

An Intellectual Property Licensing Agreement is a written, legally binding contract effectuating an agreement between an owner of intellectual property (“Licensor”) and a party wishing to use that intellectual property for a particular purpose (“Licensee”). One who has a license to use another’s intellectual property does not own it, but merely has the right to use it. Therefore, certain elements must be addressed in any comprehensive Intellectual Property Licensing Agreement. The following are the most important areas to address:

Structure of Patent License Agreement

1 Scope of the License

The first thing a license agreement should do is to clearly define the scope of the license. By licensing a product, you are assigning a limited right to use that property, so you must be sure to retain the ultimate ownership rights. At the same time, you don’t want to be overreaching or too limiting so as to discourage potential customers from using the product.

2 Exclusive vs. Non-Exclusive

Except for custom-made products, a license agreement would typically be non-exclusive, meaning that the licensor can sell the same rights to other users. However, this wouldn’t necessarily allow the licensee to reproduce or pirate the product and sell it to third parties. Sometimes, licenses allow reproduction within a controlled environment such as with enterprise licenses or network licenses. In other cases, a licensor may allow for a resale license, with a royalty being paid to the licensor.

3 Revenue Streams

Next in importance are provisions controlling revenue streams generated by licensed products. With most license agreements on end user software for consumers, for example, a one-time license fee is usually paid when the software is purchased. Other arrangements may include recurring payments such as royalties or monthly lease payments. License agreements may also cover maintenance charges such as ongoing maintenance.

4 Term and Termination

The length of the agreement should be designated. The parties must also agree whether or not the agreement will terminate upon a change of control of licensor or licensee. If a change of control will affect the agreement, it must be defined specifically. In addition, this provision should state whether or not the agreement may be terminated by either party for breach, and if so how.

5 Prohibited Uses

The licensor may wish to prohibit the licensee from using their intellectual property in certain ways that could embarrass or otherwise devalue the property. The licensor will want to include these provisions here.

6 Rights to Transfer and Sublicense

The licensor may or may not wish to grant the licensee the right to transfer or sub-license the property at issue. The licensor may want the right to approve or reject potential sub-licensees, or prevent sub-licenses all together.

These are the most important areas an Intellectual Property License Agreement must address. Further provisions covering the rights to source code (if software is involved), acceptance, testing and training procedures, warranties, limitations on the licensor’s liability, support and maintenance services, nondisclosure of confidential information, indemnity for infringement, enforcement of remedies, and terminating the contract may also be included, if considered necessary.

It is advisable to retain a Patent Attorney in the preparation (and negotiation) of a license or assignment agreement, i.e., one who understands the problems encountered under intellectual property law.

Should I Assign My Patent?

If you are faced with this dilemma of whether to license or assign your patent, it is most likely the case that you are not quite clear about the difference between the two options and how each decision could affect your prospects of making some money from your invention. Yes, even while your patent application is pending before the patent is actually granted, you have a property right in your invention. You knew that you could choose to keep the rights to your invention for yourself or allow someone else, typically a company to use your rights against appropriate compensation.

You were obviously quite excited on these prospects and that kept you motivated to keep working to perfect your invention to a workable proposition. And, finally you now have in hand a granted patent. By this time, you have also realised the economic realities of the world and the industry to which the product of your patent belongs. That leads you to decide for variety of reasons that you shouldn’t be the one to manufacture, market, and distribute your invention yourself. Nonetheless, you are still convinced that your patent holds a promise of making great financial success.

Eventually, therefore, you are now keen to find a buyer for your patent and you have also got some proposals asking for a license or assignment. Not being sure of what the two situations could lead to, you now turn to your Patent Attorney for help. The rest of this article is aimed at resolving this difference to you, so that you could take the most appropriate decision.

Difference between Licensing and Assignment

The major difference between the two is that in a license the licensor while licensing his intellectual property retains an interest in it, whereas in an assignment the assignor transfers all his rights in the property to the assignee once for all.

Assignment – Some Dos and Don’ts

Unlike license agreement, which provides the licensee a right to use but not to own the patent, an assignment agreement involves a complete and exclusive sale of the rights, thus giving the assignee complete ownership to exploit the patent rights in whatever way it is possible. Usually the assignee will pay the assignor cash or stock consideration in exchange for these rights.

The best advantage of selling your patented invention is that you are guaranteed of a payment right away at the price you and the purchaser of your patent have negotiated. However, the one-time payment is all that you will ever receive for your property. Before entering into any such contract with anyone, it is important to take care of the following:

  1. Before selling all of your rights in a patent, make sure this is the best approach for you and your company. You must have a sound valuation of your invention judged by its market potential. Consider hiring professional help from experts who have technical understanding and industry insight.
  2. Before selling, make sure you really own the patent or patent application. Although this may seem obvious, it is often not quite clear to many inventors who create their inventions as part of their employment.
  3. If you are purchasing a patent instead, complete your due diligence exercise and make sure that the seller actually has complete and unique rights in the offered property. If the applicant is yet to be granted the patent, check if the invention is actually a patentable item and fulfils the criteria for grant of a patent. Again, professional help from a Patent Attorney for this exercise is strongly recommended.
  4. It is important that the assignment deed or agreement be carefully reviewed by both parties which may be over-inclusive to the extent possible covering all possible conditions from both sides. It is often naïve to assume that certain trivial conditions need not be expressed.
  5. It is advisable to have your assignment notarized before it is registered with the Indian Patent Office without which its validity cannot be established.

Types of Assignments

An assignment of patent rights may take many forms such as declaration, deed or an agreement.  The provisions of Indian Patent Act also provide an option for you to mortgage your patent, like any other asset or a property you have against appropriate consideration. Accordingly, your patent rights can be used by the one with whom you have mortgaged your patent right till such time that you pay back and end the mortgage terms.

Patent applications filed in India with Form No. 1 in accordance with Indian Patent Act provide all inventors to declare transferring their rights in favour of the applicant, if inventors themselves are not the applicants and / or under employment contract with the applicant which may be a company, institution, research laboratory or a university. This automatically renders the applicant as assignee  and does not normally require any further agreement or deed to be entered and registered.  The first assignee (the applicant) may, however, further sell his rights to someone else by an assignment deed in favour of the second assignee. Likewise, the second assignee may do the same in favour of the third assignee.

It is important, however, that each assignment deed or mortgage be executed in writing with both assignor and assignee discharging it by signing and registering with the Patent Office to take effect. In absence of proper registration of the assignment deed, it may not be accepted as valid in Indian courts, in case of likely dispute requiring litigation.

Assuming that ‘Assignor’ is willing to transfer his IP rights to a company, referred as ‘Assignee’ in return for both a cash payment and stock shares of the company, described below is a general structure of this assignment agreement covering key essential points in its execution.

Structure of Patent Assignment Agreement or Deed

No. Section Details and Components
1 Introduction of Parties Identifies the document as a patent assignment.

  • Provide date on which the agreement is signed.
  • Identify the parties and describe the type of organizations / individuals engaged in the assignment.
  • The party giving its ownership of rights referred to as “Assignor” and the party receiving the same as “Assignee”; these terms to be used throughout the agreement.
2 Definitions This section is sometimes used to provide “definitions” of the key terms used in the agreement. Terms that can have more than one meaning, such as “assets”, “intellectual property” etc. are defined.
3 Assignment of Patents This part constitutes the assignment by “Assignor” and acceptance of the same by “Assignee”. The property being assigned is not described in the main body of the agreement but provides reference to “Schedule” and explains that the full description is given in the enclosed “Schedule”.A complete and detailed description of the property being transferred is given in the “Schedule”
4 Considerations The agreement addresses here the obligations of each party.  These obligations may be to transfer ownership of property by the “Assignor” and payment of money in cash or kind (usually company shares) by the assignee.The amount money to be paid and other considerations, if any are clearly described together with the timing of the payments, be it at the time of closing or at some later point of time.
5 Deliverables The next paragraph addresses the details of the ‘Closing’, such as the location, date, and what each party shall deliver. The deliverables usually include the shares, and/or patent certificates, IP assignment agreement /deed etc. and any accompanying agreements, if any.
4 Representations and Warranties This paragraph deals with Representations and Warranties, where both parties must warrant that they own that which they purport to transfer to the other party (the stocks and the IP rights), and they are duly authorized and have the requisite corporate power to execute the transaction documents.
Both parties should also warrant that the execution of the agreement will not conflict with any federal, state or local laws, the bylaws of their respective corporation, another agreement, and so on. The parties must lastly promise that the assets to be transferred are own free and clear of any encumbrances, unless provided, and that there are no undisclosed liabilities that could have a material adverse effect on the transaction.The Assignor selling the patent rights specifically promises the following:

  • Assignor(s) is / are the sole owners of the patent transferring their rights to Assignee. Or, if there are other owners who are not transferring their interests, the same may be mentioned clearly.
  • The patent has not been sold / assigned previously to any third party.
  • Assignor has the authority to enter the agreement.
  • Additional representations and warranties, if applicable may also be described here.

The Assignee receiving the patent rights specifically swears in that it has the authority to enter into the agreement and has sufficient funds to pay for the assignment. Additional representations and warranties, if applicable may also be added here.

5 Additional Conditions Several other conditions, subject to mutual agreement may also be mentioned, such as the following:

  • Assignee would not retransfer / reassign or mortgage as collateral for loans, until complete payment under this agreement is made
  • Assignor would help any paperwork needed to complete the assignment with the Patent Office.
  • Assignor will stop using the patented invention being transferred and will not challenge the Assignee’s use after the effective date of transfer of rights.
6 Indemnification A description of each party’s future obligations, in the event of patent under question is found to infringe on a third party’s rights is generally helpful.There are two possible options  i) the Assignor takes all responsibility for infringement, promising to pay all expenses and costs relating to the claim,  ii) the Assignor and Assignee jointly share the costs. The term as agreed between the parties may be mentioned.
7 General Matters Lastly, the parties should agree that the agreement sets forth the entire understanding of the parties and supersedes all prior agreements and may also agree to the following:

  1. Any further amendments must be in writing and signed by both parties
  2. The agreement shall be binding upon each party’s heirs, legal representatives, successors, and permitted assigns.
  3. Finally, it may be stated as to which law will govern the interpretation of the agreement.
  4. And, whether the agreement may be executed in two or more counterparts (such as through email, electronic signatures with both parties not being together in one place), and whether the provisions of the agreement are severable.
8 Schedule Complete description of the patent(s) whose rights are being transferred must be clearly identified. The description may include the drawings, if any and patent application number and other relevant details.

References

  1. Patent Assignment & Guidelines – LegalZoom (http://www.legalzoom.com)
  2.  

  3. Warner, Mark (2008); Keys to Drafting Enforceable IP Assignment Agreements, Articlebase, 26 May (http://www.articlesbase.com/law-articles/keys-to-drafting-enforceable-ip-assignment-agreements-576713.html)

How Much is Your Patent Worth?

Introduction

How much is your patent worth? Ask this to someone who owns a patent. The most likely answer to this would be, ‘It depends!’ with a shrug. Clearly such a question is uncomfortable with no clear and definitive answer.

Many people who own patents or are named as inventors in patents they developed do not bother about the true value of their possession. They are quite happy and content with the recognition they get as being inventors or patent owner.

 

Value of Patent for Investor

But for an investor who has put in a substantial amount of money in the development of an invention this is certainly a pertinent question and he is constantly seeking the best possible answer. The value of patent for him is directly linked to the returns he can get on his investments he made in developing the invention. The returns, however, depend on several factors such as what type of industry the invention falls into, for example, a new drug patent will be valued differently than a new cost-saving process for manufacture of a key automotive component. The market structure and demand for both would be quite different and hence the expected returns from the two.

Valuation Techniques

Economists have developed a number of valuation techniques based on different approaches for estimating value of patents or for that matter any intellectual property or assets that can be used across all industries. The underlying difficulties with nearly all these methods is essentially acquiring relevant data or estimates on the basis of which these methods are supposed to work. Nonetheless, these methods are frequently used with certain presumptions and due caution.

Valuation of an intellectual property on a formal basis for reasons of trading and merger or acquisition of business is a fairly involved process. Valuers try to assess the value based on future income by the use of the property in given circumstances.

Thus, the value of an intellectual property cannot be stated out of context; it is more appropriately expressed in terms of particular place, time, and the circumstances and still remains at best a guesstimate and not a precise or exact value.

Different valuation methods provide different perspectives on an asset’s value and in practice several different methods are employed to determine the final value and often settled through negotiations between the parties involved.

The two most common methods of IP evaluation are:

 1.    Income based method (also called discounted cash flow or ‘DCF’ method)

2.     Market based method

The Income Approach

The income approach or DCF method tries to estimate how much income the given patent will generate over its life (usually 20 years). There are many things which go into this calculation such as market size, anticipated growth rate, competition in each successive year of its presumed life. The calculated net income takes into account the costs for marketing, training, advertisement, brand promotion etc. Similarly anticipated growth rate would take into account, growing brand value, risks, taxes etc.

Usually, a spreadsheet of projected income for all successive years is made and a net present value of all future incomes are worked out on certain assumptions. This may look somewhat daunting but after a few trials, one can get a hang of this method and a number of different values can be quickly worked out on different assumptions. This method is also useful when someone is keen to license his patent to someone else. The fact that someone is keen to obtain license for your patent is a sure sign that it has got some value. The value of your patent for the licensee would again be dependent on how much he can make out from your license. The same technique can be applied to work out projected future income for the licensee from your patent and that can be the basis for the price of upfront fee and the yearly royalty you can demand.

Market Approach

The Market-based method essentially looks at comparable market valuations just as it is commonly employed in property market after knowing a going rate for an identical or similar property. Assets that are comparable to those in question are identified, and the valuation is based on their past licensing revenue. Thus, finding comparable transactions is the key to the market valuation method. This is easier said than done; no two assets are the same and the markets in which they could be traded may vary significantly, thus making comparisons quite difficult. While trying to find comparables, it is important to see the nature of previous deals, such as being exclusive or non-exclusive, with rights being granted for a certain region, country or world-wide. It is extremely unlikely that one would find an exact match for the patent or the proposed deal but it is not uncommon to get close enough to put a rough value on your patent.

Where do you find such comparative information? There are specialized market intelligence consultants who keep an eye on such deals and give you the information for a hefty fee. But, if you need to do it yourself from scratch, you could begin your search at the internet with keywords of ‘names of well known companies in the given industrial sector’ + ‘license’ or ‘royalty’. You can slowly build a database of specific deals of patent licensing. You could also gather information from company press releases. But this would certainly be a slow process.

Conclusion

The beauty of all patent valuation methods is that irrespective of the fact that your valuation is perfect or not but you would immediately be driven in the context of market and the demand for your patent. This should help you to get a good insight of the market in which you are operating.

Further Reading

  1. Valuation of Intellectual Property for Indian MSMEs
  2. References cited in the above article

Innovative China

Introduction

The 12th Five Year Plan of China released recently aims at achieving a number of challenging goals with an underlying motto of moving from the lable of ‘Made in China’ to that of ‘Designed/Created in China’ ostensibly to shed ‘copycat’ image of the past and emerging into a country of gifted, creative and innovative minds capable of producing new designs and original new utility products. Clearly, the state is committed to heavily invest in science, technology, education and R&D and further develop its intellectual property rights system. In November, 2011 China also issued a ‘National Patent Development Strategy’ which recognizes the existing weakness of its innovation capacity in terms of inadequate number of core patents held by its market entities, poor mechanism of patent administration and law enforcement as well as weak patent awareness by general public. In implementing the national patent strategy, it advocates for scientific outlook on development while advancing China’s core competitiveness by developing further its patent system to make China an innovative country.

During the last plan itself, China set several milestones in patent filing that astounded the world by a big surprise and many took the reported achievements with great skepticism. Thomson Reuters, a well known and trusted name in providing reliable and well researched information on science and innovation was quick to do a study on the factors driving China’s patent boom and its value to its economy. Putting China’s economic and innovation policies as well as other underlying causes of increased innovation in the context of patent volumes and trends to an analytical framework, it brought out a report examining the key questions. Inspired from this report, this article presets a summary of its key findings along with additional information on the current state of affairs on IP scenario in China.

 

Trends in Patent Filing

According to a report published by WIPO, Intellectual property (IP) filings worldwide rebounded in 2010 after experiencing a considerable drop in 2009. All the major advanced economies registered growth in patent and trademarks filing that exceeded their respective growth in GDP, except in Japan where the decline in growth of patent and trademark filings was less than that in previous year. In this context, the story of China stands apart; during 2010, the growth in its GDP was recorded as 10.3 per cent and against this it’s growth in patent and trademark filings stood at 24.3 and 29.8 per cent respectively.

During the past decade too, China experienced an average yearly growth rate of 22.6%, bringing its yearly patent applications from 63,450 in 2001 to 391,177 in 2010, to emerge as the second largest patent office in the world; in terms of GDP too, it was the second largest economy in 2010.

In the year 2010, China, with 293,066 resident applications, also overtook Japan (with 290,081) to become the top country for resident applications. The US, with 241,977 resident applications, stood third in this ranking. The US residents, however, filed the greatest numbers of applications in foreign countries whereas in China, the applications filed in foreign countries are only about 5% of those filed within the country.

Since 1995, globally R&D expenditure has sharply grown at a rate exceeding the rate of patent filing, resulting in downward trend in patent productivity measured as ‘patents per R&D dollar’ except in China, Japan and the Republic of Korea. While majority of countries had lower patent-to-GDP ratios and patent-to-R&D dollar ratios in 2010 than in 2001, China saw an increase in both ratios from 2001 to 2010.

In the business sector, two Chinese companies were among the top 10 PCT filers globally, with ZTE Corporation having filed 1868 applications (2nd rank) and Huawei Technologies having filed 1527 applications (4th rank).

The prediction made by Thomson Reuters in its report published in 2008 that China would lead the world in terms of published patent applications in 2011 has been realized as reported in its report of 2011. What is remarkable that the number of domestic patent applications has consistently grown to outnumber the foreign patent applications in China? During the years 2001-2005, there were more foreign patent applications than the domestic ones and since 2006 domestic patent applications dominate the foreign applications. Further, the ratio of domestic versus the total (domestic + foreign) applications which was 51.9 per cent in 2006 rose to 72.7 per cent in 2010, so much so that domestic applications are now nearly three times of the foreign applications.

Surge in Technological Fields

There are about a dozen technology areas where almost exponential growth in domestic patent applications has been registered. Of these, there are four fields, namely, electrical machinery, apparatus and energy, digital communication, computer technology and measurement instruments, in which the filing of domestic patent applications in 2010 was in excess of 15000 rising from approx. 5000 in 2006 in each field.

In terms of global share of Chinese domestic applications (ratio of Chinese domestic applications compared to global applications) by technology for 2006-2010, it was found that Chinese domestic pharmaceutical patents occupied a share of close to 40% of global applications. Other important technology fields in this reckoning after pharmaceuticals are food chemistry, basic materials chemistry, biotechnology and digital communication each occupying a share between 30-40 per cent of the global patent activity. Interestingly, a large portion of Chinese pharmaceutical patents belongs to ‘traditional medicine’ but the share of non-traditional medicine is slowly increasing.

Automotive Technology Landscaping

Thomson Reuters’ report also presents the results of a few interesting technology landscaping exercises based on Chinese patent data that give valuable insights. From the automotive technology landscaping study, it was found that among the top 10 companies in China in 2010 four are Chinese, three are Japanese, two are US, and one South Korean; GM Global Tech Operations Inc tops this list with over 600 basic patents in 2010.

It is notable that the Chinese companies in this list are rather new comer in the global market having been established in 1990s. These are: Chery Automobile (founded in 1997), ChongQing Changan Automobile (with roots back to 1862, re-established in 1997), Lifan Ind Group (founded in 1997 as a motorbike unit, began car production in 2006) and Zhejiang Geely Automobile (founded in 1994 as a motorbike unit, began car production in 2001). The Chinese automotive landscape based on published patents (including both domestic and foreign applicants) in 2010 when mapped shows the contours of key interests of technological fields covered in these patents as in Figure 1.

The Thomson Reuter technology landscape map as shown in Figure 1 projects significant clusters for fuel, engine combustion, exhaust technology, and electric vehicle technology but the biggest area of innovation are in automotive information and communication technology. It has been reported that Chinese company Beijing CenNavi Technologies Co. Ltd. is responsible for much of this activity which is aggressively patenting navigable map technology with real-time updating of traffic information.

Looking exclusively the domestic patent filing in automotive sector, the top ten filers as shown in Figure 2 provides another important insight. In addition to the prominent Chinese automotive companies described before, a few more Chinese companies and institutions appear as important contributors. More importantly, however, it is observed that four Chinese universities are also significant contributors in innovations in the automotive sector. It has been reported that the patent portfolio of University of Zhejiang cover a wide and diverse range of fields such as electric vehicle technology, air conditioning, clutch, braking, exhaust, flywheel energy storage systems etc.

     
Figure 1          Please click image for full view.           Figure 2


The current scenario of overwhelming high technology innovations in China should not come with a surprise, considering the erstwhile observations made in the Thomson Reuter study in 2008 which stated that a major shift was occurring in patent filings: agri-based innovation related to food technology grew much more slowly than high-technology innovation. There was a 4,861 per cent increase in domestic Chinese patent applications in digital computers during 1998 to 2008, as against a modest increase of 552 per cent in natural products during same period.

Chinese IP System

The current establishment in China seems to have realized that a well functioning IP system is essential for the country’s progress on industrial competitiveness and socio-economic development. Three decades ago, a modern IP system emerged in China with the implementation of agenda of reforms and economic liberalization. It is remarkable to see China, with one of the youngest IP system, leading the world full of countries with centuries of experience in IP law and enforcement. The trademark law was promulgated in 1982, the patent law in 1985 and the copyright law in 1990. Since then, it has also enacted laws to protect geographical indications (GI), trade secrets, new plant varieties and layout designs of integrated circuits. After accession to the World Trade Organization (WTO) in 2001, China amended its IP laws in line with its international commitments.

The existing patent system in China provides three types of patent rights: invention, utility model and design. An invention patent in China is similar to a US utility patent and protects an invention related to product or process offering technical solution to a problem which is characterized by ‘novelty’, ‘inventiveness’ and ‘industrial usefulness’; the protection for such a patent, if granted is for a period of 20 years. An application for ‘invention patent’ is substantively examined and can take 3 – 5 years before it is granted. A ‘utility model’ patent in China, on the other hand, covers a new technical solution just as for a regular ‘invention patent’ but is not subject to substantive examination and is granted soon after a formal examination of administrative nature that may take an year or less. The ‘utility model’ patent in China has a 10-year term. The Chinese ‘utility model’ patent is similar in scope and legal requirements to such patents granted in many other countries by similar or some other names’ for example, Australian ‘innovation patent’ is quite like the Chinese ‘utility model’ patent. A design patent in China is virtually the same as in other countries and is granted on the ornamental design (shape!) of a functional item. Thus protection for any “new design of a product’s shape, pattern, or combination thereof is provide by Chinese design patents for a term of 10 years. Between ‘invention patent’ and ‘utility model patent’, the latter is the most preferred among the Chinese applicants.

According to State Intellectual Property Office (SIPO), 99.3% of all utility model applications in 2008 were filed by Chinese applicants whereas the remaining (0.7%) were filed by foreign applicants. This is clearly due to the fact that ‘inventiveness’ threshold for the latter is much lower and the examination process for grant of patents much less rigorous. Thus, not everyone in China is on the top end of new inventions; nevertheless, there is a huge population falling in the middle bracket of ‘innovation’ around their products or process which may or may not have new elements of inventions.


The Dark Side of Innovation

Thanks to unrelenting efforts of Chinese political establishment, a sound IP system consistent with international norms and fully compatible with country’s development needs is now operational which came into being at an unprecedented pace. With three major revisions – in 1992, 2000 and 2008 – China’s patent law has become increasingly comprehensive. It is not only being extensively used by locals but also by global innovators and foreign companies alike. A cumulative total of 1 million patent filings from foreign applicants are known to have been received by September 2010.

Such a comprehensive and overwhelming system, however, cannot grow without its attendant problems. The underside of such an otherwise bright story is full of large scale production of counterfeit products, patent piracy and infringement.

Much of this problem has its legacy of shoddy past of the country when there was no IP system and copying anything was the way of life. The image make-over from a country that ‘makes everything’ to that ‘fakes everything’ took place when all sorts of goods as knock-offs of well known international brands began making their way around the globe. The counterfeiting in China is now believed to be at such a large scale that many believe that officials would be reluctant to check it completely and effectively for fear of putting millions out of job. An associated issue with production of counterfeit goods is patent piracy and infringement that is prevalent in China since there is a large population that has no understanding or respect of patent rights.

An interesting story1 appeared on 29 March 2012 in the Financial Times (FT.Com) wherein one Mr Xu Song obtained as many as 799 Chinese furniture design patents, none of which are his own creation. The concerned location is ‘Dongfeng’, a village in China’s eastern Jiangsu province. This is a village where almost every household makes furniture that are sold online. Everyone in that business is expert in copying designs of well known European, Korean and Japanese brands. Until Mr Xu launched his offensive of acquiring patents of all available designs (which is, in fact, far too simple unlike obtaining invention patents), no one in the village knew what a patent was. With legal rights of his design patents, Mr Xu can exert removal of these products from the e-commerce website. Ironically, Mr Xu is quite candid on his achievement and tells openly that he did not copy any design unlike his fellow villagers but merely registered the designs.

Somewhat similar is the case with ‘utility model patents’; many Chinese companies have been reported to be interloping with American and European patented inventions and taking ‘utility model patents’ in their names, especially where the original inventors fail to register their patents in China. Based on such bogus patents in their name, these Chinese companies prevent others, including the original foreign inventors, from producing any products in China.

Clearly, stories of Mr Xu and the like are anti-thesis of the knowledge-economy, the Chinese Leaders are determined to build and the Government seems to have a huge problem at hand in tackling this menace. Thus despite improvements in its IP system, China continues to struggle to put in place an effective IP enforcement machinery; the Chinese court system is stated to be still very archaic and sluggish which rely on original notarized documents only. Further, China-born native lawyers are only allowed to practice in Chinese courts. These problems are major concerns not just for the country looking forward to build a sound knowledge economy but for other countries as well who are keen to invest in Chinese economy. Many advanced countries on their websites in China therefore tend to provide lot of information, with FAQs and ‘Dos and Donts’ with regard to the safeguard of IP for companies interested in doing business in China. European Union, for example, jointly with Chinese Government ran a project known as IPR2 during 2007-11 on the protection of intellectual property rights in China. This project targeted the reliability, efficiency and accessibility of the IP protection system, aimed at establishing a sustainable environment for effective IPR enforcement in China and its website now is a rich source of documents IP protection and judicial enforcement in China.

Chinese Ministry of Commerce for some time now has been reeling statistics with a downward trend of on counterfeit goods sold and copyright violations as a result of the efforts of crackdown. In May 2012, China issued a notification on ‘Key Points of Work on Combating Intellectual Property Infringement and the Manufacture and Sales of Counterfeit and Shoddy Commodities Nationwide for 2012 (hereinafter referred to as the Key Points)’ according to which gigantic efforts in protecting intellectual property rights, particularly in cracking down upon patent violations regarding collective and repeated infringement, as well as patent piracy and fraud are being launched now. These initiatives are expected in series of campaigns on infringements and counterfeits, reinforcing criminal and judicial enforcement, establishment of permanent protection mechanisms and building infrastructures for effective legal dispensation.


Retrieval of Chinese Patents

Looking through Chinese patents is obviously of interest, especially for researchers and Patent Consultants when this has come about as a formidable resource. The Asian Desk of the European Patent Office3 provides excellent notes and guidance on how to search and download Chinese patents. There are quite a few databases from where relevant patents can be searched and retrieved. The EPO website provides screen-shots of search windows of Chinese patent databases with comment boxes in English to make the reader familiar with the types of search windows and how to input the search strings. Invariably, however, the search results with list of patents and further description of these patents are also in Chinese. Thus one needs to get familiar with searching these patents and also get used to get relevant portions translated by copying and pasting in suitable online translation software.

A much simpler way of looking through Chinese patents is also now available that provides instant machine-translations at CPRS database of China Patent Information Centre (CPIC) that went online since 31 December 2011. This database provides Chinese data on patents, utility models and designs is available from 1985 onwards which can also be downloaded in pdf format. Its instant machine translation feature, however, is absolutely cool and provides a seamless connection to Chinese innovation.

Conclusion

With remarkable success of Chinese leadership in the ‘innovation’ space through previous five year plans, the world now awaits to see some major scientific breakthrough coming out from China in its 12th plan period.

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1 Villagers fight over patents in rural China
2 http://www.ipr2.org/
3 http://www.epo.org/searching/asian/china/search.html

Further Reading

  1. Chinese Patenting – Report on the Current State of Innovation in China – 2011: Reuters/Gracie Liang
  2. World Intellectual Property Indicators – 2011: World Intellectual Property Organization, Geneva
  3. (Chinese) National Patent Development Strategy (2011-2020)

Energy Patents Through DOE Funded Research

Introduction

More than twenty six years after Chernobyl and with last year’s nuclear meltdown of Fukushima following an earthquake and tsunami, the world seems to have taken a resolve to move away from the nuclear energy. The answer to this is definitely in developing new alternative energy technologies, the major burden of which falls squarely on the Governments of the day since private sector investment is committed only after these technologies enter into the realm of commercial viability. Clearly many Governments have been consistently investing in research and development in high efficiency and alternate energy technologies for last several decades and many have even announced ambitious programmes of changing their portfolio of energy mix by commercializing new alternative technologies in a big way in near future.

Energy Patents Originating from US Government Funded Research

With such heightened investments in research and innovation in alternate and new energy technologies, albeit largely with Government funding, patent literature continues to grow on these technologies and one could be tempted to search the granted patents and new patent applications in this area. The energy related patents emanating from the projects funded by the Department of Energy, Government of USA during the last two decades are reported to have reportedly grown to a number exceeding 16,000 and this represents an important subset of the overall energy and energy related patents.

Searching Energy Patents

Ordinarily, patent searches are performed most readily using keyword searches which, however, seldom meet the objective of finding the right and genuine set of patents. While too broad a search terms tends to return an unmanageable number of results with a high level of noise, a narrow search term yields too few results. Getting patent search using keywords just right requires that the searcher needs to have extensive patent search experience as well as great deal of familiarity with the subject. In most cases, with a wide variety of subject areas, the alternate and preferred mode of patent search tends to be using classification codes. However, with energy related patents, this mode also presents some degree of a difficulty since these technologies are generally spread across a range of subject areas and one would need to struggle quite a bit before relevant patents are fetched.

We have previously authored two articles for searching relevant patents in the related field on our website for the benefit of our readers. These are:

  1. Searching Climate Change Patents and
  2. Wind Energy Patents

 

Energy Innovation Portal

In this issue, we turn our attention to an Energy Innovation Portal of the Department of Energy (DOE) of the USA that provides an interesting, rich and consolidated source of US energy patents. Nonetheless, this database is exclusively that of the granted patents and the patent applications those that have resulted from the DOE-funded projects since 1992. The site provides a channel with a ‘Visual Patent Search’ tool which seemingly is a very valuable and interesting tool. As depicted on the site, there are sixteen US research and development institutions that have been the recipient of DOE funding during past decades and have been regularly contributing to generation of relevant technologies in energy and related areas the details of which are accessible in variety of different ways through this tool. Altogether, there are more than 16,000 documents covering issued patents as well as published patent applications accessible on this site in energy as well as energy related areas.

Classification and Graphic Visualization of documents

All documents available on the site are divided into following broad groupings, the figures in parentheses indicating the total number of patents in each of these.

  • Energy (4790)
  • Engineering (5545)
  • Devices (3006)
  • Computer Sciences (2714)
  • Math and Physical Sciences (5135)
  • Fabrication and Manufacturing (1330)
  • Sensing, Detecting & Monitoring (2080)
  • Life Science (586)
  • Analysis (249)

Each of these groupings is further broken down in sub-groupings successively to narrowly defined areas that a searcher may be directly interested in. While, it is possible to search a patent in this database through a keyword search, searching through graphic visualization of the above groupings and their sub-groupings offers an interesting and extremely facile mode.

As maintained by the owners of the portal, the purpose is more than simple search of available patent data. Department of Energy’s overall objective is to make the available patent data more accessible to the public, entrepreneurs, investors and other technology seekers. Each topic is tiered, so users can drill down to very specific fields. The site also provides information on licensing and commercialization opportunities including venture capital funding and marketable summaries of available technologies and patents with an ultimate goal to increase the rate and scale of energy efficiency and renewable energy technology market penetration. The site also provides information on webinars organized from time to time on key themes.

The graphic visualization of tiered categories in the form of distinct coloured boxes on the screen is stated to have been created with in-house software, IN-SPIRE™ originally developed by Energy Department’s Pacific Northwest National Laboratory. The software identifies word occurrence patterns across all patent records, and creates “clusters” of results – represented as coloured boxes of groupings and sub-groupings of technology areas, the size of each box being proportional to the word occurrence. This cool feature of patent search is evident from the screen print of the top-tier technology area groupings as shown below. Clicking on either of these major groupings leads one to next screen sub-groupings of the narrow technology areas as well as patent-listings in those areas with relevant summaries. Available links within also lead to full patent details as available on USPTO site.

Conclusion

Despite obvious limitations, the Energy Innovation Portal provides an important and interesting subset of energy and energy related patents, which any serious searcher can not overlook. Further, the portal also provides an interesting example of how a public funded research agency may keep the general public informed of relevant technologies being developed by tax-payers’ money. It is certainly commendable to see how the DOE through this portal tries to develop and promote an alternative energy ecosystem which other similar agencies in other countries may emulate.

Wind Energy Patents

Introduction

Wind energy technology is going through a remarkable phase of development now for past few years. It has been predicted that it would become in more common use than ever before and compete with other sources of conventional energy. Consequently, there is much wind blowing through the patent scenario as well; no other field of renewable energy other than solar (thermal and photovoltaic) is receiving as much attention as the ‘wind energy’. (Picture from here)

Past some years have not only witnessed rising patent registration in the field of ‘wind energy’ across various jurisdictions but have also witnessed increased patent infringement law suits that are being hotly debated in patent law circles. Last month, a Texas Jury, rejecting several of Mitsubishi invalidity grounds, found that it did infringe the GE’s US Patent No. 7, 629, 705 (’705 Patent) and reversed the earlier decision of the Texas federal court. It also awarded GE about $170 million in damages.

Right here in India, not too far ago, as many as dozen patents of Enercon out of about 2 dozen challenged patents, many of which are in the name of its founder Dr Aloys Wobben have been revoked when opposed by its partner in the Indian joint venture. It is worth noting that Dr Wobben launched an aggressive world-wide patent drive since 2001; in US alone he is stated to have a total of 157 patents, 114 in the EPO and 118 in India. The patent law suits of Enercon/Dr Wobben have been chronicled in a series of posts in the ‘SpicyIP’ blog.

Nonetheless, with growing awareness of the possible consequences of greenhouse gas emissions, there has been a significant surge in research and development and thus also of patenting in the related fields, especially since the Kyoto Protocol was signed in 1997. Wind energy technology forms an important component of research and development directed to mitigation of greenhouse gas emissions’ consequences. This article is aimed at explaining technical aspects of this technology and the mechanisms to searching related patents for reference and study.

Wind and wind turbine

A blowing air usually parallel to the earth’s surface is known as ‘wind’. This is, in fact, a different form of solar energy; uneven heating up of the earth’s surface coupled with uneven terrain cause variety of wind patterns manifesting into breeze, cyclone, whirlwind etc. Any wind that moves has kinetic energy embedded in it that can be captured and harnessed by ‘wind turbine’ and converted to other forms of energy such as electricity or mechanical power.

A wind turbine is essentially a device to convert the kinetic energy of the wind into mechanical energy that can be used to drive machinery for grinding materials or food grain or for pumping water (i.e., wind mill) or for producing electricity (i.e., wind generator). For millennium, wind mills have been used in large farms in many countries but the recent surge and focus on research and development in ‘wind turbines’ is largely for producing electricity, preferably that can be fed into an existing grid carrying electricity often produced from other sources of energy, such as fossil fuel. This is in a bid to optimise ‘green power’ generation and cut down on conventional sources of energy. This unprecedented thrust on green power from wind is also due to favourable policy instruments and promotional measures that the Governments in various countries have promulgated where a large potential of wind energy has been estimated.

Wind energy scenario: national and international

According to World Wind Energy Report 2012:

  • All wind turbines installed by the end of 2010 worldwide can generate 430 Terawatthours per annum, more than the total electricity demand of the United Kingdom, the sixth largest economy of the world, and equalling 2,5 % of the global electricity consumption.
  • The wind sector in 2010 had a turnover of 40 billion Euro and employed 670’000 persons worldwide.
  • China became number one in total installed capacity and the center of the international wind industry, and added 18 928 Megawatt within one year, accounting for more than 50 % of the world market for new wind turbines.

According to World Wind Energy Report 2010, the top ten wind power countries in order of installed wind power capacity by the end of 2011 are as follows:

Country Installed Wind Power Capacity (MW)
as on Dec. 2011
China 62,733
United States 46,919
Germany 29,060
Spain 21674
India 16084
France 6800
Italy 6747
United Kingdom 6540
Canada 5265
Portugal 4083
Rest of world 32444
Total 238351


China and Spain in the above list are stated to have achieved remarkable progress in enhancing their installed capacities during last couple of years.

According to the Ministry of New and Renewable Energy (MNRE) in India, the share of renewable based capacity is 10.9% (excluding large hydro) of the total installed capacity of 170 GW in the country, up from 2% at the start of the 10th plan period (2002-2007). This includes 13,065.78 MW of wind, 2,939 MW of small hydro power, 1,562 MW of (bagasse based) cogeneration, 997 MW of biomass, 73.46 MW of ‘waste to power’ and 17.80 MW of solar PV for grid connected renewable at the end of 2010. Wind energy is stated to get further boost in coming years.

Wind turbine basics & types

A number of factors come into play in deciding the most appropriate wind turbine design for a specific location which are determined by aerodynamic modeling taking into account the wind speeds, variability and directions. Such analyses help to determine the optimum tower height, control systems, number of blades and blade shape.

There are two main types of wind turbines: i) horizontal axis wind turbines (HAWT) which are more conventional and are used in large wind farms, ii) vertical axis wind turbine (VAWT). VAWT is relatively less energy efficient as compared to HAWT but also costs less in installation, operation and maintenance. It is lot quieter and affords the generator, gearbox and other components to be placed on the ground, so the tower doesn’t need to support it, and it is more accessible for maintenance.

Wind turbine of any type can be divided into three components in its assembly:

  • Rotor including the blades which cover approximately 20% of the total cost of wind turbine.
  • Generator including control electronics and a gearbox covering a cost of approximately 35% of the cost of the wind turbine.
  • Structural support including tower and rotor yaw mechanism costing approximately 15% of the total cost of wind turbine.

It has been shown that the wind power is proportional to the third power of the speed of the wind, i.e., P ? v3, where P is ‘wind power’ and v is ‘wind speed’. In other words, at double the speed of wind, the potential wind power is nearly eight times. It is imperative, therefore, that the wind turbines should really be efficient at higher wind speeds, especially where the units are aimed at connecting to the electricity grid. It has also been shown that power available increases by a factor of 4 when the diameter of the blades doubles. Thus it obviously is advantageous to have wind turbines with larger rotor blades and placed in areas with high wind speeds. There is, however, an upper limit that all the available wind power can be extracted even with best of engineering designs. Way back in 1919, a scientist known as Betz had shown through empirical calculations that no more than 59.26% of all wind power can be extracted; this is now known as ‘Betz limit’ beyond which no wind power can be practically obtained even with most efficient wind turbines.

Turbine size and output

Wind turbines for commercial electricity generation usually range from 100 kilowatts to 5 megawatts. A typical wind turbine of 1.5 MW seen on some commercial wind farms has a tower 80 m high with a base of 15 m diameter which can weigh as much as 25t or more. The rotor assembly with blades and hub can weigh more than 20 t whereas the nacelle, which contains the generator component, could weigh more than 50 t. Some of the larger wind turbines tend to have rotor diameter exceeding 120 m. Some of the wind turbines now available for home use have rotors between 8 and 25 feet in diameter and generate between a few hundred watts and 6 kilowatts of electricity.

Wind energy and climate change (CPC)

Wind power is generally regarded as green power since it has the potential to mitigate the greenhouse gas emissions. It is of interest to know this relationship. For every kilowatt hour of electricity generated by wind energy, approximately 1.5 pounds of carbon is prevented from going into the atmosphere if that electricity had been sourced from coal fired power plants. Carbon dioxide is a major contributor to global warming induced climate change.

It has been estimated that the current wind technology already has a very favourable carbon foot print according to which the carbon dioxide emissions released to the atmosphere during the manufacture of wind turbines, their installation and servicing over the average 20 year lifecycle are generally ‘paid back’ after the first three to nine months of operation; beyond this, wind power produces no carbon dioxide emissions.

Searching wind energy patents (CPC)

Since climate change mitigation technologies including wind energy technologies like other newly emerging technologies develop very quickly and can be found in many areas of technology in the classification of patent literature, all important patent offices are seized with the problems associated with their coding and de-coding. European Patent Office in association with UNEP and ICTSD, an international NGO has evolved a new tagging scheme whereby all ‘climate change’ related technologies are assigned easily identifiable classes that provide easy access to the general public to climate change mitigation technologies through their espacenet database.

The new classification scheme bearing the code ‘Y02E’ distinguishes all known ‘renewable energy’ sources as follows:

Code Y02E Description
10/10 Geothermal energy
10/20 Hydro energy
10/30 Energy from sea (tidal stream Y02E10/28
10/40 Solar thermal energy
10/50 Solar photovoltaic (PV) energy
10/60 Thermal PV hybrids
10/70 Wind energy


Moving on to a next level of classification in Y02E 10/70, further sub-areas are identifiable as follows:

Y02E 10/72 Wind turbines with rotation axis in wind direction
Y02E 10/72B Blades or rotors
Y02E 10/72D Components or gearbox
Y02E 10/72F Control of turbines
Y02E 10/72H Generator or configuration
Y02E 10/72J Nacelles
Y02E 10/72L Offshore towers
Y02E 10/72N Onshore towers
Y02E 10/74 turbines with rotation axis perpendicular to the wind direction
Y02E 10/76 Power conversion electric or electronic aspects
Y02E 10/76B For grid-connected applications
Y02E 10/76D Concerning power management inside the plant,
(e.g. battery charging/discharging, economical operation,
hybridization with other energy sources)


Please note that all the above wind energy codes for specific group of patents are provided here with active hyperlink. Thus, clicking on these one can reach directly those bunch of patents at European patent database ‘espacenet’.

Conclusion

Wind energy technology is developing at a breathtaking speed with landscape in many countries changing dramatically with mushrooming wind farms. It is of interest to keep an eye on the newer developments on various aspects of wind energy technology. The new classification scheme of European Patent Office with ‘Y02E’ tags provide an invaluable handle to peep into this new exciting world of wind energy patents.


Further Reading

  1. Global Wind Energy Outlook 2010
  2. World Wind Energy Report 2010
  3. Indian Wind Energy Outlook 2011
  4. The UNEP-EPO-ICTSD Project on Patents and Clean Energy