The global shift from fossil fuels to greener energy will profoundly impact the profitability and survivability of many businesses in the energy sector.
However, this shift also presents a significant opportunity for innovative energy businesses that are able to adapt to industry changes, protect their competitive advantage and maximise their return on investment (ROI).
How can you maximise your ROI?
The results of the 37th Energy Transition Survey showed that ROI was the top barrier to the diversification of operations from oil and gas to renewable technologies. Intellectual property (IP) rights are assets that can be used in a number of ways to improve profitability and ROI, including:
- Patent Box: 10% UK corporation tax
- Negotiation leverage
- Licensing: New and transferable technologies
- Raising capital
In the UK, innovative companies can reduce their corporation tax to 10% through the UK Government’s Patent Box incentive based on profits derived from patent-protected products or products incorporating a patented item – a potential huge saving over the new 25% rate.
IP rights also provide leverage during supply negotiations. This is often most acute within the energy industry supply chain, where typically, several businesses compete to supply a similar product.
If you own the IP on the product to be supplied, you can exclude competitors from the tendering process and maintain your profit margins, or frustrate your competitors by forcing them to offer alternative, less desirable products.
Licensing of IP rights to third parties can generate an additional revenue stream. This may be derived from (a) new technology developed during transition and/or (b) technology previously utilised in oil and gas that is transferable directly to greener technologies, e.g. cabling and structural jacket technologies used for oil and gas that are also used in the offshore wind industry.
Many companies will require substantial additional capital in the transition from oil and gas to greener energy.
When raising capital, potential investors will want to see a strong IP portfolio in place and a strategy for protecting ongoing developments to prevent copying by competitors, in order to improve ROI by maximising profit margin and market share.
What is stopping your competitors from doing what you do?
If your product is not protected by IP, it is open season for your competitors to copy and sell it at will, without payment and without restriction – and to get a free ride on the back of your time, expertise, and money spent in developing the product and bringing it to market.
It is likely that much of the existing IP for current products will no longer be relevant for new products developed for greener energy. Therefore, (a) an overview of existing IP, (b) an identification of whether it is fit for purpose for the business going forward, and (c) a strategy for protecting new products as they are developed are key for every company wanting to protect its investments made in the transition towards greener energy.
What if you suddenly had to stop making or using your product?
Review one of your products and ask:
What would happen if you had to stop making or using it tomorrow?
Your time and money in developing that product would potentially be wasted, and there may also be knock-on effects such as contractual issues with third parties, downtime with installations, and the like, as well as the management time needed to resolve any dispute.
© Supplied by HGF LtdSo do you know what IP your competitors have?
If you don’t know, you run the constant risk of having to stop supplying or using an “infringing” product.
You may be up to speed with your competitors’ IP in the oil and gas sector, but what about greener technologies?
And do you know who your (new) competitors are?
You may do when it comes to oil and gas, but who will be your competitors as you move towards greener technologies, and do they have IP that may trip you up in the transition from oil and gas?
Where should a business protect its intellectual property?
Traditionally, IP protection in the energy sector has been focused on the geographical regions of oil and gas exploration and production.
However, many renewable technologies are applicable worldwide and the traditional geographical restrictions no longer apply.
Ultimately, every company transitioning from fossil fuels should review its IP strategy to ensure that it is suitable to protect its products in the much more widespread markets for greener technologies.
To find out the latest intellectual property news and updates regarding Offshore Europe, follow HGF Limited on LinkedIn and Twitter or visit our website at hgf.com.
John Johnston is a patent attorney with HGF Limited, and his experience includes drafting and prosecuting patent applications across many jurisdictions, with a focus on the UK, US, Europe, China and Japan.
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