Offshore wind is expected to play a significant role in many countries’ Net Zero energy strategies. Over the past five years the sector has grown considerably and an increasing number of companies are moving into the sector from a different field, or expanding their operations and entering new markets within the sector. Entering a new market – either in terms of technology or geography – is a very important endeavour for a business and can involve a lot of uncertainty.
Intellectual property (IP) can provide both an opportunity and risk when expanding into new markets. Weak IP may not be fit for purpose in a new market and third party IP may pose a threat to commercial goals, however robust IP rights and thought-out competitor monitoring can help to identify opportunities, attract new customers and partners, and secure a company’s growing share of a new market. In other words, careful planning and management of IP strategy can not only reduce uncertainty and risk, but assist a transition into a new market.
Entering a new geographical market
The current market for offshore wind is often closely tied to government policies and subsidies. Changes in governmental policies can act as a driver for expanding into new geographical markets. One of many examples of this is central subsidies, which has driven the growth of wind power capacity in China in recent years. As these subsidies come to an end, many Chinese OEMs are considering – or have already successfully started – expanding overseas.
IP rights are territorial rights, meaning they are tied to a specific geography. IP strategies will typically focus on obtaining IP rights in key territories. Companies that have traditionally only operated in a specific geographical area (e.g. Europe, or the US) are likely to have IP rights concentrated on those territories. As companies look to expand into territories outside of their traditional markets, the IP (e.g. patents) relating to their activities may be inadequate to protect their position – something that third parties might look to take advantage of.
It is not possible to file a patent application for an invention that is in the public domain and so it likely not to be possible to establish a complete IP portfolio for a new overseas market; however the Paris Convention allows a later-filed application to “claim the priority” of an earlier-filed application for the same invention, provided the subsequent application is filed within 12 months. In practice, this allows companies to file corresponding overseas applications for all patents filed within the past 12 months. This is a powerful tool to establish an initial level of patent protection in a new geographical market.
While most companies have an understanding of the key players, IP rights and risks within their current market, a new market is often a relative unknown. The extent of IP owned by incumbent players and the extent to which this will limit others’ activities is likely to be unclear. Third party IP rights can reduce the profitability of a planned expansion if licences are required or certain commercial activity is threatened due to existing third party IP rights. It is therefore critical that companies entering a new market spend time to understand the existing IP in the territory or sector and how that may impact their planned expansion. Freedom to operate (FTO) is the ability of a company to operate as they wish – free from the impediment of third party IP rights – and FTO searches and reviews can be a powerful tool in identifying, quantifying and ultimately mitigating the risk posed by third party IP rights.
Entering a new technology market
A large proportion of companies operating in the wind sector have expanding into this market from a neighbouring sector – for example the oil & gas sector. This is particularly true for offshore technology suppliers. The majority of technology companies will have an IP strategy and portfolio tailored to support their existing commercial activities and goals. When expanding into a new market it may not be clear whether these existing IP rights (e.g. patents) are fit for purpose in a new market. With regard to patents, their scope, future-proofing and purpose will determine whether they have been drafted in a way to protect activities in new markets. It is therefore important that companies looking to move into a new market conduct due diligence on their existing portfolio to map the relevance and strength of existing IP rights onto their new market. This will not only clarify the degree to which the existing portfolio supports new commercial objectives, but also identify opportunities to strengthen the IP position before entering the market.
Companies can protect their position or carve out opportunities in a new market by filing new IP rights directed towards the new market. It is often beneficial for a company operating in a new sector to try to build up a patent portfolio relatively quickly at the start, in order to protect their position as they grow. Starting to operate in a new technological market will often be fraught with technological problems; overcoming these will often give rise to patentable inventions. In some cases, the use or adaptation of existing technologies in a new field may be protectable by patents. One way to help accelerate the growth of an IP portfolio is for a IP professional to undertake an “invention harvesting” exercise – reviewing all of your existing, ongoing and future technological plans and objectives to identify potentially patentable inventions.
Having a robust IP portfolio supporting an expansion into a new market is very beneficial. Not only will existing IP rights help to keep competitors at bay, it can also act as a powerful marketing tool. IP rights such as patents help to evidence the quality of a technology and provide a level of comfort and security for third parties that you are looking to work with. Strong, relevant IP rights can help attract investment, win tenders, and facilitate commercial and technological partnerships.
A further tool useful when approaching a new market is IP landscaping. Landscaping describes the process of identify and mapping – often visually – IP rights owned by third parties within a certain market or sector. Patent landscaping is a powerful tool to help companies entering a new market to identify activities or products where there are a large number of patents and thus where it may be more difficult or risky to operate. It can also help to identify gaps within the market where there are fewer IP rights, and thus where there may be an opportunity to exploit.
In summary, IP rights play an important role when entering a new market. If unmanaged, IP can become a liability or risk when entering a new market, however, with careful planning, IP is an asset to help smooth the transition into a new market and support growth.