I spent a lot of time talking to others in the conference about their work in nanotechnology and commercialising their efforts. A lot of the posters in the hall outlined some very basic research which is probably years from commercialisation, but there was also a fair share of small start-up companies (often from universities) who were looking for business (and often investment). The understanding of intellectual property issues varied tremendously. One conference speaker from a company based in Santander highlighted the importance of good patent protection, not only in Spain but also in other countries. She emphasised the need to get good IP advice from the very beginning.

Another speaker (who shall remain nameless) talked about the success his company was having but failed to deal with any questions about how the technology was protected. His company has no patents (at least none published on the ESPACENET database) and some of the technology seemed fairly easy to reverse engineer (but I’m only a mere Physicist and not a real Nanotechnologist). In that case one wonders how the company is protecting its long term value in intellectual assets

Walking around the exhibition and poster wall was fascinating. Some of the people I talked to really understood the value of the intellectual property developed. Others noted that they thought a patent had been filed or that they’d filed a description with a notary to protect their ideas. There seemed to be little appreciation at the conference of the need to identify and review the intellectual property developed and the most appropriate form of protection.

A patent application is only of value if it really protects the business model of the company. Filing a patent on a process so that competitors receive full details of the process (as one company has clearly done) without thinking through and protecting use cases, licensing programmes and business opportunities is often a waste of money and resources. Traditionally some companies had filed details of their ideas with a local notary and relied on these deposits to “prove” that they have prior rights to an invention. That may have been a good strategy when markets are local – but in a global business strategy it has little role to play. Prior use of an idea in Spain does not protect a company from an alleged patent infringement in the United States (or even in France). And it is also not a substitute for a functioning trade secrets policy in which a company polices its disclosure of confidential information.

One research institute revealed that they had been somewhat surprised to find that a former student had put software developed at the institute into the Internet, apparently without permission. They had been looking to commercialise some of the work and if the software continued to be available free of charge there might be little incentive for anyone to take a licence.

There were a few bright spots. Rob met an old acquaintance from German-based seed company Technostart who is involved in the EU’s ProNano project which aims to take thirty ideas through to commercialisation. She’s well aware of the need to ensure that a company’s intellectual property is well-developed. I was also there in my role as Co-Chair of the Licensing Executives Society International’s (LESI) Electronics, IT and Telecommunications committee. LESI runs a number of educations programmes on the bsuiness of intellectual property which are suitable for smaller companies. Together with his friends Jose Miguel Lissen, a patent litigator at Spanish IP firm Gómez-Acebo & Pombo, and Dario Santander from Bardehle’s Barcelona’s office, we’re looking at what value membership of LESI could offer nanotech entrepreneurs in the commercialisation of intellectual property.

The 1990 act stimulated the development of solar technology in Germany and one might have expected German companies to massively profit from the scheme. Indeed Q-Cells, based in Bitterfeld in the former East Germany, benefitted massively and has today become one of the leading suppliers of photvoltaic panels in 2008 (see the Wikipedia article for further information).

Another German company, SiC Processing was listed in the 1998 Guardian/Library House’s CleanTech 100 as one of top 10 companies (see here)

The interesting question for me was to look at the IP protection on the products. Clearly there may be a lot of processing knowledge that companies would chose to protect as trade secrets and not through patents. However, given that the panels can be found on many rooftops and also in do-it-yourself stores, one might expect many innovations to be the subject of patents.

Intriguingly, I was only able to identfy 19 families of published patent applications for Q-Cells. There may be more in the pipline, but that seems a small number for a companies whose balance sheet at the end of December 2008 showed intangible assets with a value of  EUR 48.4 Million

SiC Processing held a single patent – filed initially in Italy in 2005. This was more on recyling than on solar cells itself.

I thought it intriguing to see how this fits into the patent protection of other companies in this technical space. Using the most popular European Classifications from the Q-Cells portfolio, a worldwide search of patent applications showed Japanese companies (Canon, Sanyo, Sharp and Matsushita) dominating the photovoltaic landscape. The first European organisation was the German contract research organisation Fraunhofer Gesellschaft in fifth place. This correlates with the report in EE Times which identified the predominance of Asian companies in the space

The Japanese patent system encourages multiple applications by domestic applicants which tend to be combined when filed outside of Japan. It tends to overemphasise the contributions of Japanese companies when worldwide statistics are used. I therefore limited the search to only patents filed or pending in Europe and identified that Sanyo and Sharp still occupied top spots (first and second with respectively 49 and 47 out of a total 1590). Du Pont came in third place followed by Canonl in fourth pace and Sharp in fifth place. The Fraunhofer Gesellschaft had 26 patents or applications  in total and were in tenth place. Q-Cells only had seven patents or applications using this set of data (which is the most relevant for solar cell photovoltaic panels).

What conclusions can we draw from this? Intriguingly the Japanese companies are putting an increasing amount of research and development work into developing a substantial photovoltaic patent portfolio and clearly in terms of numbers are overtaking German companies in the European marketplace. However, the commercial activities of Japanese companies are much more limited. It is possible that much of the innovation taking place in Europe is on processing matters which is more appropriate to trade secret protection – as you do not want after all to let your competitors know how the silicon is being processed.

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Patent, Photovoltaic, Q-Cells

In my continuing quest to learn IP strategy from the ground up, I’ve been thinking quite a bit about having patents solely as a signal to others about your IP, but for no other key commercial reasons. For some people, having a patent says: “We know about the IP system, we use it, and we are protected.” Conversely, if these same people expect to see patents and don’t (or don’t see “enough”), then they may feel that the company is not doing enough in the IP area with connected negative connotations.

Admittedly, simply counting patents and equating that with sensible (IP) protection is an unsophisticated analysis. But given the specialist nature of IP, I don’t think that this perspective lacks adherents, even among (otherwise very savvy) investors. I’m wondering about when businesses may run into a need to cater to this point of view and how best to address it.

As a concrete example, Widget Company A (WCA) decides that the best way to protect their widget making process is through trade secrets with patenting only the parts that they believe competitors can easily reverse engineer. This IP strategy makes sense for them but means that they patent fewer inventions than they could. A potential investor (very sophisticated generally about investments but with little knowledge about IP) looks at WCA and compares them with other potential widget producing company investments and notes that WCA has a low patent filing rate. They see this and downgrade their analysis of WCA as a potential investment because they think WCA must not be doing something they should on the IP side of things (or maybe they think WCA is less innovative).

The problem would then be that WCA has lost an investment opportunity or has to fight that much harder to prove its worth as an investment because of an initial (negative) snap judgement on patent filings.

(Can you tell I’ve just finished Blink and have been thinking about Timothy Leary, RAW, and reality tunnels?)

Potential solutions could be:

• Educate potential investors (and other communities) about IP in a way that changes their perception about patent filing rates (doesn’t address the immediate issue, not all that practical, and a long term strategy at best);
• Find a way to present to the investor and explain why the rate is “low” and why you actually have a better strategy in place (assumes you have access to the investor and can change their mind); or
• File patents so that your rate matches the perception of what a widget company “should” patent.

So what about the last option? One immediate drawback to patenting when not needed is cost — though you could simply not renew or not pursue an aggressive international strategy in order to reduce costs. This wouldn’t reduce costs in terms of staff time in getting the patent through however.

Another drawback: you could have to change to a sub-optimal IP strategy in order to increase your filing rate. This would mean an accommodation to the commercial decision on the patents vs. trade secrets trade off for some innovations. You could however patent in areas outside of the core bit you are looking to protect (for commercial reasons) with trade secrets as a way to compensate.

What about the times when the benefits of the perception of protection outweighs the costs?

I realize that the above is a bit theoretical and there are other practical considerations, but I also think that there are times when it makes sense to try to address the perception of IP protection. In this case, patents can be a key way to signal competence in intellectual property rights to certain groups of people. Afterall, as recently highlighted over at IP Think Tank, perception is a driver of value.

Any thoughts?