Owners of oil and gas installations and pipelines are required to decommission their offshore and onshore infrastructure at the end of a field’s economic life. Regulations are in place around the world to ensure decommissioning is executed in a safe and environmentally sound manner. Some estimates have indicated the United Kingdom Continental Shelf will have 1,616 wells decommissioned between 2020 and 2029. With mature fields located around the world, decommissioning may be set to be big business. However, the aforementioned safety and regulatory requirements often require overcoming technical challenges. The manner in which innovations stemming from addressing these challenges are managed form part of the commercial considerations of businesses operating in or looking to enter the decommissioning sector.
Patents form one avenue available to protect innovations including those relating to decommissioning. Generally patents provide a temporary monopoly to the patent owner to make, use, sell, or import anything falling within the scope of their patent rights in exchange for the public disclosure of the invention. A patent represents the quid pro quo made between the government and innovators. The patent owner gains exclusive rights, while the government ensures information is made publicly available, rather than kept secret, thereby supporting the exchange of information once the patent has expired to the benefit of society at large.
However, patents are not available for all inventions. In most countries, applications for patents are substantively examined prior to being granted. In particular, patent offices around the world determine if the invention described in the application is new (not previously known to the public) and inventive (not obvious in view of what is known to the public). This examination of the patent application takes place in each country or region in which patent protection is pursued. Thus, if a patent applicant wishes to obtain patent protection in the UK, USA, Canada, and Brazil, for example, the patent application must be filed in each of these countries, then examined by the patent office of each country, independently, to ensure the invention is new and inventive, and meets the local requirements. As an aside, the bar for inventiveness is often lower than people might think – marginal improvements over existing technology are frequently patentable. As anyone who has engaged the patent system before will tell you, obtaining patent rights requires a degree of investment of both time and money. However, a number of mechanisms are in place which can be used to align the patent process with commercial business goals.
As mentioned, applications for patents are examined by the patent office in which they are filed. Various offices include mechanisms for speeding up the examination process. For example, the UK Intellectual Property Office (UKIPO) offers a Green Channel in which applicants for patents may submit a request to accelerate search and/or examination of patent applications on the basis that their application is environmentally-friendly. While inventions relating to solar panels or wind turbines may only require a straightforward statement to be afforded the benefit of the Green Channel, other inventions may require greater explanation. For example, a more efficient method of plugging and pressure testing a well may make use of the Green Channel if it uses less energy than conventional methods, or a more effective method which reduces environmental impact. The Green Channel can be used to accelerate patent grant in the UK enabling business owners to quickly obtain exclusivity through granted patent rights. In markets where the technology is being initially used – such as the North Sea which includes a number of mature wells – this market exclusivity may provide a commercial advantage.
Another mechanism for accelerating patent grant is the Patent Prosecution Highway (PPH). The PPH accelerates examination of a patent application on the basis of successful grant of a counterpart patent in another jurisdiction. As patents are territorial they must be separately obtained in each country/region in which protection is desired. The PPH makes use of the examination efforts of one patent office to accelerate examination in another office. For example, a patent may be granted in the US, while a counterpart patent application is still pending in Canada. Amending the claims of the Canadian patent application to correspond with the granted US claims and submitting a PPH request accelerates examination in Canada, potentially leading to quicker grant of a Canadian patent. This may reduce examination timelines, as well as reducing examination costs.
Examination of patent applications may also be accelerated through payment of a fee, such as for the PACE system at the European Patent Office. Similar mechanisms are available in other jurisdictions.
Patents have a 20 year maximum term. However, in order to maintain a patent (and in some territories a patent application) a renewal fee is payable regularly, generally annually. Patent owners file many patent applications every year, and in many different jurisdictions. Once granted, owners are often not mindful of the ongoing costs associated with the patent. Further, renewal fees or annuities around the world are set such that fees increase through the patent term. For example, in some jurisdictions renewal fees double or triple through the term of granted patent rights.
This has particular relevance to the decommissioning global market where managing IP rights in line with territorial commercial activities can serve to control costs. Carefully pruning your patent portfolio by dropping certain national patents as technology loses its applicability in certain markets can ensure patent renewals costs are kept in check while maximising return on net IP spend.
All of the aspects described may be used for strategic spending and R&D budgeting. For example, a patent application may be filed first in the UK where decommissioning opportunities are presently available. The application may make use of the Green Channel to secure expedited grant in order to protect a company’s innovative technology in the British market. Other relevant protection in South America may be allowed to follow normal examination processes if the decommissioning market is yet to fully open to the market. Once decommissioning markets in the UK have started to dry up, UK patents may be allowed to lapse by no longer paying renewal fees – thereby reducing costs and allowing for investment in areas of greater commercial importance.
Protecting innovations in all markets form an important part of a company’s business strategy. The IP professionals in the Energy team at Marks & Clerk have experience across global markets advising clients on technology protection and IP strategy, including commercialisation, licensing, enforcement, portfolio management, and due diligence. For further information please contacts the authors, Tomas Karger and Robbie Gauld.