1. How Intellectual Property Strategies (IPS) Establish Open
Innovation Platforms for the Wind Energy Industry
Stavros Thomas1
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Wind Power Industry Research, Anemorphosis Investigation Analysis Platform
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University of East Anglia,Computer Science Department
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DTU, Technical University of Denmark
Abstract
Intellectual Property Strategies (IPS) - especially those patents relating to technological innovation
in the wind energy industry - is full of heated rhetoric and polemics between business parties. Almost
all the key players have taken a stance on whether it would be a severity risk if the industry policy
makers and regulators underestimate the IPS practises except for the team that may matter the most.
The Wind Power Industry itself (the Team), has not yet holistically proposed how it would classify or
react to a problematic intellectual property rights framework. While many key-players and experts in
the segment keep saying that this is a sign of the industry’s maturation, there are several concerns to be
considered as soon as possible. Unlike the very first days of wind energy, innovation and openness are no
longer freely shared at conferences and public forums. There has been a ten-fold increase in the number
of technologies licensed to the wind power industry from certification Bodies and Institutions since 2010.
However, as the industry comes up with new inventions, the major players - Enercon, GE, Siemens,
Vestas, Nordex and Repower - are spending millions of euros building and maintaining sustainable IP
portfolios to drive profit and gain the strategic upper hand, or, at the very least, bring some constructive
equilibrium into the discussion.
1 A paradox
Open innovation and a sustainable ecosystem of synergistic interactions could address a common problem -
the failure of wind power developers and investors to leverage their IPS financially by profiting from others
use of their own technology through licensing agreements, joint ventures, partnerships, strategic alliances
and other arrangements. In other words, a symbiotic relationship which could create a win/win model.
Examples of such symbiosis in other sectors include Facebook, Amazon Web Stores, Google’s platforms and
applications or the Aviation and Aerospace Industry partnerships.
The most innovative organizations have in place several Intellectual Property approaches, depending on
the situation and complexity, asking multi-directional, context-specific and critical thinking questions. By
doing so, they achieve both short-and long-term advantages while positioning themselves as leaders, and
the strategies they are using for success in the market. However, there is a paradox in this story. Henry
Chesbrough in his book Open Services Innovation: Rethinking Your Business to Grow and Compete in a
New Era states that:
“ Open innovation is a paradigm that assumes that firms can and should use external ideas as well as
internal ideas, and internal and external paths to market, as the firms look to advance their technology.”
Indeed, open innovation is defined as the use of purposive inflows and outflows of knowledge to accelerate
internal innovation, facilitate decision making and improve the markets adaptability framework for external
use of innovation. Since knowledge is not a pathless land, open innovation typically starts with either an
unmet need, around which you build a competitive marketplace, or a network, around which you could also
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Figure 2: Patents facilitate advances throughout the technology life cycle
establish a collaborative community. Once open innovation is adopted, the organization’s boundaries become
permeable and begin to interlink and collaborate. Thus, collaborative development opportunities occur and
this “genesis” allows combining the company’s internal resources with external co-operators and partners.
Figure 1: Open Innovation Vs Closed Innovation.
In contrast, Closed Innovation companies innovate by using only internal resources. Usually during the
innovation process, ideas are evaluated and only the best and most promising ones are selected for their
development and commercialization. The ones that show less potential are abandoned.
Intellectual Property Rights (IPRs) are generally designed to exclude others from using a firm’s protogenic
ideas and inventions. At first glance Open Innovation and IPR seem irreconcilable to each other. That is,
open innovation implies a willingness to allow knowledge produced within the firm to spill over to others
(possibly in with the expectation of receiving knowledge spillovers from others in return) whereas IPR
protections allow innovative entrepreneurs to protect their inventions by excluding others from using that
knowledge or by preventing rivals from patenting related inventions. However, IP practises can also create
barriers to the development of entrepreneurial ideas and hamper knowledge diffusion and innovation.
In spite of this contradiction, some of the world’s largest organizations and companies have embraced
the open innovation model. The Open Innovation Strategy and Policy Group mentions several companies
from the energy sector, such as, Endesa, GE, ABB ,GDF Suez, AkzoNobel, Novozymes, Siemens etc. On
Novozymes’s corporate website, one reads:
“Novozymes has initiated several open innovation actions related to biofuels. Collaborative crowd-foresighting
is focusing on identifying and assessing emerging technologies, needs and problems via roundtables and Twit-
ter. Through crowd-sourcing, the company wants to engage as many brilliant minds as possible to generate
cutting-edge ideas together.”
Another example is GE which establish open innovation methodologies, by launching its Ecomagination
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Challenge that solicits ideas for new business ventures relating to energy and environmental issues (Renewable
Energy, Grid Efficiency, Low Carbon Technologies and Eco Buildings). The latest GE’s Ecomagination
Challenge has been launched in partnership with Saudi Aramco in April 2014, and is aimed at finding
renewable energy solutions for seawater desalination.
Open Innovation is often best carried out through partnerships and strategic alliances. The days of
innovating in isolation are over. It is more than certain that, no one company can be expected to know all
the answers. That’s why the need to regularly work together with a wide network of educational institutes,
governmental bodies, companies and policy makers to jointly develop meaningful new breakthroughs, is
indispensable.
In the wind energy industry sector the example of Dong Energy revolutionizes the industry itself.
Their annual report emphasizes their need to tap into knowledge from universities, research institutes, and
companies worldwide, to the extent that their experts and scientists from the Research and Development
department create virtual labs incorporating information from outside. In May 2007, Novo Nordisk and
DONG Energy together launched the first Climate Partnership in Denmark. Since then, DONG Energy has
entered into several Climate Partnerships and developed a unique partnership model with a variety of Danish
organisations, companies, municipalities and other business stakeholders. They all share the common goal
of decreasing their activities carbon footprint, besides running economically viable and feasible investments.
So the natural question is to ask how the firms in the wind power industry could use the IPR practises in
light of their engagement with sustainable open innovation models? And why do other firms, such as RES,
RWE or Sinovel Wind Group who are also heavy patenters, not even mention the phrase open innovation
on their websites?
2 Business as usual?
A skeptical person could argue that the IPR framework practises being given up by these large firms are not
very valuable and economically feasible to them, and that obsession to open innovation is merely a convenient
way of saying that they are open to taking their competitors ideas and prototypes without giving up any of
their property rights or copyright. It is well known that Industrial rights take a range of forms and include,
among others, patents to protect inventions, trademarks, industrial designs, and commercial names. At one
point, the skeptic would be right that these organizations could not decline their quest for economic profits
and prestige in embracing the open innovation model practises.
Technology can play a prominent role in the entire IPR life cycle development, from the initial Research
and Development phases to the market introduction where competitive IT tools and practises can be pro-
tected with patents and licensed out to third parties in order to optimize value creation and its distribution
among the stakeholders and most important and maximize the ROI. However, technology tools and practises
they offer to the public will not be that which is most valuable to them; it will be that which they have
no plans to develop but where they think there is a possibility that development by others may ultimately
benefit them via knowledge sharing or increased demand for the firm’s own products services.
However, the skeptic would be wrong in supposing that “open innovation” is intrinsically not valuable
enough in modern economies. These organizations have simply recognized four key parameters:
• No organization is able to develop all the technology it needs internally
• The products they produce need to work well with those produced by other firms
• Encourage and include partnerships with competitors and firms with different business models and
Portfolio Management approaches.
• A sustainable IPR framework facilitates the free flow of information by sharing the protected know-
how critical to the original, patented invention. In turn, this process leads to new innovations and
improvements on existing ones
• Not all inventions are patentable
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Bringing all of these important and diverse points together, provides us the impression that managing
IPR carefully and synergistically is only one of the possible ways firms can achieve success. These rights are
embraced by all sectors of industry - small, medium and large companies alike - and by labor organizations,
supply chain stakeholders, tenders and other trade associations. IPR can be used in a plethora of ways
to facilitate the management of open innovation and knowledge sharing. First, to allow policy inventions
to occur and establish structural collaboration agreements, policymakers should provide protective space to
make the necessary codification of an invention or technology when a patent is successfully applied. However,
one should respect the uncertainty, inconsistency and imprecision that is invariably associated with any piece
of technology tool or approach (method)that is to be licensed to another party.
Second, since a firm’s IPR strategy can encourage innovation and provide vital information for others,
hamper the free flow of information and technological development. These property rights are protected
primarily to stimulate innovation, design and the creation of technology. In this category fall inventions
(protected by patents), industrial designs and trade secrets. IPR can be used defensively to negotiate cross
licenses with others in the industry who hold complementary technologies, thus avoiding mutual litigation.
The main purpose is to provide protection for the results of investment in the development of new technology,
thus giving the incentive and means to finance research and development activities and last but not least,
stimulate the creativity.
Third, Intellectual Property protection generally plays a quite different role in the renewable energy
industries than it does in other sectors for example, the pharmaceutical sector. In general, in the pharma-
ceutical sector, an individual patent may have a very substantial impact, for a specific drug may not have
any substitutes. In such circumstances, the patent holder is in a very strong market position and may be
able to charge a price well above production cost. In contrast, in the wind power industry considered here,
the basic approaches to solving the specific technological problems or deal with the potential risks have long
been off-patent. What are usually patented are specific improvements or features or equipment. Thus, there
is competition between a number of patented products and the normal result of competition is to bring
prices down to a point at which royalties and the price increases available with a monopoly are reduced.
Four,IPR are territorial in nature and are governed by national patent laws and regulations. This means
that a patent is valid and enforceable only in the territory of the country in, or for which, protection
is granted, in accordance with the applicable law of that country. Therefore, if an invention needs to be
protected in another country, the owner needs to file another application for a patent in that country. Patents
are also used as an indicator for monitoring the innovation of technologies, the technology competitiveness
of a country or the economic performance of a firm or a market-economy. Quality patents help increase
certainty in the marketplace and will help enhance technological innovation. Thus, owning the rights to
certain inventions only allows a firm to write licensing agreements that encourage the development of a
technology that might otherwise languish on the shelf but at the same time creates significant barriers to
the research and development.
2.1 IPR Tactics and Approaches
Besides the fact that wind energy industry’s companies are actively looking to protect their intellectual
property, Due diligence of potential suppliers is crucial. The Clash of Titans between GE and Mitsubishi,
Gamessa vs Enercon and Enercon with Yogesh Mehra are just some of the most important paradigms to
demonstrate the necessity for effective Due Diligence and Project Portfolio management tactics and method-
ologies. However, the uncertainty comes again since a would-be joint-venture may have robust patents,
but a rogue manager who steals business secrets which are not protected legally except by confidentiality
agreements or an ex-employee who retains computer access.
Other IPR management strategies exist as well. These may involve multiple rather single approaches
or vice versa, and their efforts are tailored to the specific organizational context and problems addressed
by open innovation. As a paradigm, Siemens the wind power manufacturer giant from Germany, in some
cases funds university research without precisely specifying the goal of research or the preferable area of
investigation, something that would be anathema to the academic institutions participants. However, this
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tactic it protects itself by requiring a royalty-free license to any university patents emerging from the research
that it has funded.
2.2 Storm Warning - Storm Patent
Siemens, Dong Energy and London Array - the world’s biggest operating offshore wind farm are all heading
for a UK court showdown with German wind turbine maker Enercon over alleged patent infringement of
’Storm Control’ technology developed by the latter’s founder, Aloys Wobben. The Siemens High Wind Ride
Through application allows a wind turbine to operate at some storm-level wind speeds and is a breakthrough
in stabilizing energy output while Enercon names its Storm Warning system Storm control. GE Energy likely
as a way to avoid a IPR battle with Enercon uses a de-rating approach that collectively de-rates of all the wind
turbines at a wind power plant. Their invention is directed to wind turbine plant operation. In particular,
the invention is directed to wind turbine plant operation of a plurality of wind turbine exposed to high wind
conditions. Spain’s wind power manufacturer Gamesa fought a three year battle to invalidate Enercon’s
patent, but lost the battle in February of 2014. From a business perspective, high levels of competition
between wind turbine manufacturers and developers can only be a good thing. The ongoing battle between
developers can only lead to greater innovation, initially in terms of new applications and then, upgraded
operating systems and infrastructure.
3 Lessons Learned And Challenges
Indeed, as we look more closely at the open innovation processes and approaches, we see that there is no
paradox - in fact the increased attention involved to IPR framework management. The way in which open
innovation operates in a commercial organization empowers co-workers and stakeholders to tackle challenges
and improve their internal structure. There is an important flow of external knowledge into the organization
which turns into projects in co-operation with external partners and causes the purchase and incorporation
of external technologies. At the same time, the innovations generated within the company can be sold as
technology and/or industrial property to other organizations since either they are not applicable within their
business model or because the company has no capacity or experience to develop the invention.
Over recent years, strategic alliances in the wind energy sector have proven to be the secret to success.
When two or more partners join forces the limits of what they can achieve grow significantly. Joint ventures
undoubtedly offer greater ROI over a shorter period of time, reduce competition in the market and facilitate
value creation and its distribution among the stakeholders.
Principally in the wind energy sector partnerships and alliances are entered into for the following reasons:
• bring different skill sets together such as asset development with EPC and O&M expertise;
• enable financial investors to participate and fund the project for development and/or construction
• allow partners to hedge their risk particularly on larger projects with significant capital demand
• allow developers to partner with those with local knowledge in emerging renewable energy markets
• the developmental goals can be achieved in terms of capacity to build capacity
• easier monitoring of the potential impact and risks (open sharing allows open tracking)
• value creation and knowledge sharing
In many ways the wind energy sector is a perfect fit for joint ventures and strategic alliances. There
is a diverse range of expertise and knowledge which is required for each stage of the project development;
planning manufacturing, construction engineering, lenders engineering, interacting with financial and aca-
demic institutions, site control, operations and maintenance, policy makers which lends itself to join ventures
arrangement.
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Based on the studies already conducted, and in collaboration with key partners, Anemorphosis Research
Group will extend the concept of the IPR information platform development in 2015 to a larger framework to
include other information on innovation instruments, in particular IPR standards. The analysis of renewable
energy patent information in specific wind power applications will be expanded in order to better understand
the latest overview and innovation in wind power industry. The case study on renewable energy desalination
has provided valuable insights and will be expanded to other innovative technology fields such as wave
(ocean) energy technology.
References
Kevin Closson, How Intellectual Property Policies Can Create Sustainable Energy Infrastructures (2008)
management Knowledge management Intellectual Property Strategy (The MIT Press Essential Knowledge
series) by John Palfrey, 2014 Essentials of Intellectual Property: Law, Economics, and Strategy by Alexander
I. Poltorak, 2012 Intellectual Property and Competitive Strategies in the 21st Century 2nd Edition by Shahid
Alikhan, 2014 OECD (2014): Open Innovation in global networks. Paris. Seibold, Balthas / Winter, Phillip
(2010): Freedom to innovate. In: Development + Cooperation / D+C, 2010/04, p. 170-172. UNCTAD
(2015): Knowledge, Technological Learning and Innovation for Development. Geneva All articles related to
Intellectual Property Rights (IPR) on energypedia
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