September 1, 2023 | By Avneet Nehel, Janelle Anderson, and Chad Eggerman
Leading organizations strive for long-term solutions to challenges. The wide-spread adoption of clean technology (“Cleantech”) has emerged as one of the important means to achieve global carbon reduction or neutrality targets to help mitigate and limit risks related to climate change. The Cleantech industry is a vast field that includes a variety of industries aimed at lowering carbon emissions, conserving the environment, and preventing natural resource depletion. Novel approaches are being devised to achieve these sustainability objectives. Such innovation generates new intellectual property (“IP”), yet Cleantech companies are frequently unaware of their technology’s IP. IP is critical in allowing Cleantech manufacturers to safeguard their R&D investment and maximize their revenues in a competitive market.
For continuing investment in Cleantech, technical advances must be supported by a strong IP portfolio. Companies must have sustainable growth accompanied with an IP strategy that complements their commercial expansion. A good intellectual property strategy will not only increase the value of the technology but will also protect future development. The Federal Government of Canada recognizes the importance of innovation in Cleantech and has launched the IP assist program for small and medium-sized businesses in collaboration with the Canadian Intellectual Property Office (“CIPO”). The program is aimed at encouraging private investment in Cleantech in Canada.
With a wealth of natural resources, Canada’s prairie provinces are striving to lead in the lucrative Cleantech industry. With new technologies appearing on a daily basis, there is a growing need to foster innovation. Saskatchewan has its own provincial tax incentive to encourage the creation of intellectual property, while innovation grants in Alberta and Manitoba provide broader funding of up to $100,000 CAD.
Cleantech innovation is growing rapidly in the renewable sector, with solar and wind projects leading the way in Alberta and Saskatchewan. Innovators importing technology from outside Canada require advice on how to transfer their technology into Canada, while innovators establishing IP in Canada require assistance on protecting and registering their invention in Canada. Intellectual property rights are critical to establish ownership and usage of technology in the wind and solar sectors. Registration of your technology as a patent, trademark, or design, as well as ensuring that unregistered IP such as copyright and trade secrets are treated effectively in contracts, permits the enforcement of IP rights against third parties, thereby commercializing and valuing the IP.
A World Intellectual Property Office study in 2020 found that over half of renewables-related patent applications were in solar power generation, with the next highest proportion of patent applications, for wind energy.
Protection of IP in the wind industry is even more vital due to the nature of these projects, which often involve proprietary design work, specialized construction techniques, unique operating and maintenance procedures and engaging consultants and contractors who have access to such proprietary information not normally made public. Information is exchanged at various stages of design, engineering, procurement, construction, turbine installation, operation, and maintenance. A leading market researcher in 2020[1] estimated that, since 1995, the wind energy industry has suffered more than $7 billion CAD in commercial losses associated with intellectual property (IP) risks that could have been avoided.
What constitutes IP and how can risks be avoided?
Wind turbine intellectual property encompasses potentially patentable technologies for producing wind energy with advancements in aerodynamic efficiency, power generation, generator design, rotor blades or towers, and other features. While a patent covers how the wind turbine works, IP protections such as industrial design protect it regardless of how it works. Proper IP registration and contract drafting will ensure the technology is safeguarded.
Solar energy is a distinct industry from wind energy. Parts for solar projects are typically purchased from existing large inventories rather than manufactured for a specific project. Much of the intellectual property created by developers is in the design and construction of solar projects. While manufacturers patent various elements of the equipment, developers and owners of solar projects are typically assigned the manufacturer’s protections and licenses, including software licenses mandating indemnity from the patent owner in the event of third-party infringement of IP. The various assignments of rights can pose challenges for solar projects.
The developer of the solar project must still protect their know-how around equipment design optimization, including factors to consider when selecting a site, topography of the location of the solar array, potential storage as well as design of the project, project development and asset management, all of which, with proper IP protections gives the developer an advantage over its competitors.
Another facet of intellectual property in solar projects which may arise is how to negotiate with an R&D partner, whether it is an academic, industry, or joint venture partner, or service providers to major projects. It is critical to properly draft the contract to ensure that the developer controls the information and intellectual property transmitted between the parties. Any information or intellectual property exchange must not be damaging to current or future initiatives, and it must also establish ownership and use rights for any new IP generated during the project’s lifespan. Any unauthorized publishing of a crucial innovation at an inopportune moment may damage its uniqueness and potential to gain exclusive patent rights and reduce a competitive advantage.
A solar developer, for example, may require the services of engineers, procurement professionals, and construction contractors. The solar developer would have to share confidential information and intellectual property with these contractors. The contracts must be carefully designed to limit information use and disclosure while also prohibiting contractors from exploiting the company’s intellectual property and confidential information. The solar developer may still need to limit the information shared with the contractor to only what is required for project completion.
Renewable technology may also entail copyright, which may contain, among other things, reports, techniques, descriptions, software source code, specifications, schematics, logos, website, or media material. In the absence of an appropriate clause in a contract, the inventor retains the copyright. A wind project comprises contractors in a range of roles, and it is critical to determine who owns the intellectual property in the operation. If the developer does not hold the IP, it must be assigned in writing by the creator.
A proper contract will also protect trade secrets. Before any confidential information is transmitted, developers should ensure that strong confidentiality or non-disclosure agreements are signed. A trade secret can comprise know-how, models, maps, financial or legal information, proprietary manufacturing processes, and strategies that give the developer a competitive advantage. It is also critical to incorporate appropriate indemnity provisions in the contract to defend against potential IP infringement liability.
Proper branding is very vital for technology. A brand that is identified with its products and services provides a competitive advantage. In Canada, brands can be registered as trademarks. A trademark establishes quality, reputation, and dependability in the marketplace. With the prevalence of social media and the digital world, online monitoring is critical for businesses. Understanding the significance of intellectual property provides renewable businesses with additional help at several stages of the project, ranging from branding to engaging technology from power generation and storage to distribution and, finally, consumer use.
The Intellectual Property & Technology (“IPT”) Group at Procido LLP provides support at various stages of energy projects to protect IP and confidentiality. We are familiar with the complexity of IP technology and the development process of energy projects. We also assist with the protection of intellectual property that cannot be registered under traditional protection procedures, which can assist to value the project for financing purposes and maximize the sale price if the project is sold.
The Energy Group at Procido LLP has extensive experience advising on project development, drafting various agreements such as Engineering, Procurement and Construction agreements (EPCs), Power Purchase agreements (PPAs), structuring special purpose entities (SPVs), and work hand-in-hand with the IPT Group to protect and commercialize IP. We also work with legal specialists and law firms around the world to achieve international protection for Canadian ideas while also safeguarding Canadian and non-Canadian innovations in Canada.
Our Energy Group and IPT Group teams collaborate to provide the legal expertise and assistance required for commercialization, market entry and project development. Members of our IPT Group have experience in patent drafting and prosecution, advising on Carbon Capture Utilization and Storage (CCUS) and IP transactions involving the acquisition, licensing, and portfolio management of international and local trademarks, patents, and industrial designs. We also have experience advising on Canadian carbon credit markets.
Cleantech and IP are becoming increasingly intertwined and with strong practices in both, Procido LLP is well-positioned to continue advising clients at the forefront of this innovation.
Disclaimer
This publication is provided as an information service and may include items reported from other sources. We do not warrant its accuracy. This information is not meant as legal opinion or advice. Contact Procido LLP (www.procido.com) to if you require legal advice on the topic discussed in this article.
[1] Wind industry has lost USD 5.2bn to avoidable IP infringements & trade secret theft (renewablesnow.com)