Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Patents have gotten beaten up pretty badly this past year. When the small Washington-based patent holding company NTP tried to use its patents to deprive consumers of their BlackBerries, business writers from the New York Times to the Wall Street Journal decried a patent system “broken beyond repair.” But even while some patent owners like NTP struggle to shake off their “patent troll” label, automakers, their suppliers and others in the clean-energy business are amassing their patent arsenals. And with the potential for new clean-energy technologies to solve the dual problems of emissions and energy interdependence, the value of the patent rights for those breakthroughs will be staggering. Ten years ago, as businesses began to realize the selling power of the Internet, the U.S. Patent and Trademark Office granted thousands of business method patents. Just 23 days after receiving its patent on one-click shopping, Amazon.com sued Barnesandnoble.com, its largest competitor, for infringement, thus planting the seeds for a competitive IP landscape for Web technologies that holds true today. A Seattle district court granted Amazon a preliminary injunction, ordering Barnesandnoble.com to remove the Express Lane feature from its Web site in the midst of a crucial Christmas buying season, and once again demonstrating the raw power of patents. Like the Internet’s impact on e-commerce, technologies that enable vehicles to operate using clean energy produced from hydrogen have the power to change the world. Combustion engines have fed our hunger for automotive power so well and for so long that today’s clean-energy technologies just can’t compete in terms of performance and convenience. Everybody knows, though, that the era of the combustion engine will soon end because of their emissions and their dependence upon a dwindling supply of fuel oil, mostly under foreign control. Currently, the race to develop clean, hydrogen fuel cell technologies revolves around addressing four critical issues that stand in the way of commercialization. These issues, described in greater detail later in this article, are on-board hydrogen storage, water management, reducing platinum costs and reducing membrane costs. Fuel cell developers, including automakers and would-be suppliers, are keenly aware of the immense commercial value of finding solutions in these four areas. That’s why developers continue to invest billions of dollars to perfect hydrogen fuel cells. At the same time, they are wisely building an arsenal of patents to help them recoup that investment through licensing when hydrogen-fuel cell cars become practical. Engineering challenges A basic understanding of how hydrogen-fuel cells work in automobiles will help in understanding the patent landscape. Alternative ideas for clean-powered vehicles using batteries have been around for decades. But battery vehicles need hours of charging time and they weigh too much to be practical. Today’s hybrid vehicles use smaller batteries to deliver automotive power to the wheels at slower speeds, and a traditional combustion engine kicks in at higher speeds to both power the vehicle and trickle-charge the batteries. In hydrogen-powered vehicles, a stack of fuel cells will replace the traditional combustion engine and, like today’s hybrid, will power the vehicle and trickle-charge the batteries at higher speeds. Unlike with gasoline engines, though, hydrogen fed to fuel cells combines, without combustion or burning, with oxygen from air to produce electric power, with pure water as the only emission. Hydrogen is a renewable fuel, but it comes with its own environmental penalties. Although present in air in very small amounts, hydrogen first needs to be made in pure form and in usable quantities. This involves using traditional power sources, most of which generate at least some pollution. On balance, the reduction of emissions at the tailpipe more than offsets the upstream environmental penalties. This brings us to the first critical issue that the automotive industry must tackle from a patent perspective. The challenges related to delivering and storing enough hydrogen onboard a vehicle must first be overcome to make hydrogen vehicles practical. Moreover, the infrastructure does not yet exist for producing, transporting and storing enough hydrogen for vehicular use. Even when pressurized, hydrogen carried onboard a vehicle cannot yet provide enough range to compete with gasoline-fueled vehicles. A second critical problem is water management. A fuel cell has a thin membrane layer that needs to be saturated with water to operate. As the fuel cell operates, water begins to form. That water needs to be drawn away at a rate that keeps it from pooling but leaves behind enough water to keep the membrane from drying out. Water management refers to the balance between flooding and drying out. Fuel cell developers don’t yet know how to maintain that balance over the wide range of operating conditions that drivers demand. Two more problems involve reducing the cost of two key components, the platinum and the membranes. The platinum is what drives the reaction of hydrogen with oxygen from air to make water and electricity. The membranes keep the hydrogen separated from the oxygen, since the platinum needs to act on them separately. Most experts agree that the cost of platinum and membranes must each be reduced by a factor of 10 to make fuel-cell-powered automobiles price-competitive with gasoline-fueled vehicles. Automakers and would-be suppliers are now engaged in a competition to solve these problems. And one of the best indicators of how they view the stakes is relevant patenting activity. Patent trends in this field A reliable way to track this patent arms race is to look at filings under the Patent Cooperation Treaty (PCT). PCT applications do not themselves issue as patents. They simply preserve the option to seek patents in a large number of countries by filing one application and then deferring, for up to 30 months, the decision on whether and where to pursue patents in individual countries. PCT applications are typically filed within one year from an initial provisional filing, after the technical and commercial viability of the technology appear favorable. By contrast, many (if not most) initial filings, including those filed in the United States, are found not to have sufficient commercial potential to warrant proceeding with any further patent filings. For that reason, PCT filings are used to gauge patenting trends for the technologies companies are pursuing seriously. During each successive three-year period, beginning in 1991, the number of PCT filings covering hydrogen fuel cell technologies at least doubled, from 14 in the period 1991-1993 to more than 900 in 2003-2005. The most significant increases occurred in the periods 1997-1999 and 2000-2002, when the number of PCT filings quadrupled from 32 in 1994-1996 to 128 in 1997-1999 and nearly quadrupled again to 438 in 2000-2002. It is interesting to note that those companies making the filings have changed places, with the earlier filers being hydrogen fuel cell developers and the later filers being led by automotive companies. This is a clear indication that the technology in question has left the realm of bench-scale experimentation and is now being seriously pursued on a commercial scale by the major automakers. In the three-year period 1991-1993, hydrogen fuel cell developers made a modest number of PCT filings, with Ballard Power Systems Inc.’s 10 PCT filings far outnumbering the remaining companies’ total of four filings. In the three-year period 1997-1999, German energy and electronics-based giants Siemens A.G. and Forschungszentrum J�lich, together with Ballard, were the predominant companies making hydrogen fuel cell filings. The next tier of PCT filers included Matsushita Electric Industrial Co., the University of California, Toyota Motor Corp., 3M Co., Plug Power Inc. and dbb Fuel Cell Engines (a joint venture of Daimler-Benz and Ballard). By 2003-2005, three of the top six hydrogen fuel cell patent filers were Japanese automakers Toyota, Nissan Motor Co. and Honda Motor Co. U.S. automaker General Motors Corp., United Technologies Co. subsidiary UTC Fuel Cells and Japanese electronics giant Matsushita were the three other leading filers. By now, Ford Motor Co. and DaimlerChrysler A.G. have purchased such substantial ownership positions in Ballard, that Ballard has effectively become their joint fuel cell development arm. When the technical subjects of the approximately 900 PCT applications filed from 2003 to 2005 are compiled, a staggering 87% were for technologies that presume the availability of fuel cells in which the four critical technology-enabling issues mentioned above have been overcome. These include integrating fuel cells into vehicles (41%), constructing fuel cell stacks (36%) and the layered internal arrangement of individual fuel cells. The fewest number of PCT filings in the entire period 1991-2005 were for resolving those four critical issues: on-board hydrogen storage (only 2% of filings), water management (only 2%), reducing platinum costs (only 4%) and reducing membrane costs (only 5%). The compelling conclusion from these figures is that a huge amount of research and development remains before hydrogen fuel cells become viable for vehicles, and that the opportunities for developers to secure patents with immense commercial value remain wide open. A history of patent harmony Even as the major automakers stockpile their patents, precedent argues against the notion that those patents will be asserted aggressively. Up to now, U.S. automakers have been content to let others come up with technological advances, resting assured that they could always get an inexpensive license to use those new technologies. That approach has been in play for more than a century, thanks to George Selden. In 1895, Selden, a patent lawyer from Rochester, N.Y., received a patent for a “Road Engine,” covering the essential features of every combustion engine the infant auto industry had developed. Selden failed at selling engines, so he sold his patent to a group of Wall Street moneymen that formed the Electric Vehicle Co. in 1902. In troll-like fashion, the company immediately offered licenses to the young automakers that were leveraging their patented technology, threatening lawsuits if they were turned down. The two sides eventually signed a nonaggression treaty, agreeing to form a licensing consortium to free one another from patent lawsuits in return for a modest license fee. The licensing scheme built around Selden’s patent disintegrated when, in 1903, Henry Ford decided to fight the patent in court. After eight years of litigation, Ford succeeded in invalidating the patent, earning the entire auto industry the right to make and sell cars free from Selden’s patent. The experience so soured the industry on patents that Ford later said, “No man has a right to profit by a patent only. That produces parasites.” Since Selden, no U.S. automaker has sued another for patent infringement. The wild cards in this competition are the major Japanese automakers, specifically Toyota, Nissan and Honda. The rate at which these companies have been building their arsenals is an indication of their seriousness to recoup their massive investments in fuel cell research and development using the market power that patents provide. These companies are not wedded to the share-and-share-alike approach to patents still prevalent in the American auto industry today. To sum up, the patent positions being staked out by the current developers of fuel cell technologies foretell a paradigm shift in the role of patents in their deployment. Although the patent filings reflect a lack of progress in the technology-enabling issues of hydrogen storage, water management and platinum and membrane costs, the size and seriousness of the players involved-specifically the major U.S. and Japanese automakers-make solutions to technical issues inevitable. The companies that emerge first with solutions to these issues are poised to become the next patent superpowers. Robert W. Fieseler is a shareholder at McAndrews, Held & Malloy in Chicago. He specializes in developing value-oriented patent portfolios, and has represented clients in the clean-energy and fuel cell fields for many years.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.