Patent Wars

A Boston court recently banned GE from marketing Haliade-X in the US on the grounds that it infringes a SiemensGamesa patent. This high-profile case is, by now, the latest chapter in the patent wars that have been seen in the renewable market. In this article, we review some of the most famous ones.

 

Renewables, both wind and solar, is a relatively young sector and there is a lot of competition among technologists to capture the market. Technology has advanced very rapidly in the last decade and innovations have been key to the success or failure of some companies. As can be seen in the graph below, renewable energies are patent-intensive compared to other more mature technologies such as fossil fuels.

 

It is therefore a perfect scenario to try to transform intellectual property policy into a commercial and strategic tool. In other words, trying to block competitors’ access to certain markets or customers by means of patents. This in itself would be enough for an article as it does not seem to be the aim of the IP protection system, but today we will not talk about this but about some of the most famous cases of “patent wars” in the world of wind and solar energy.

 

Effects of Patent Wars

According to the expert on intellectual property in the wind sector, Phillip Totaro of IntelStor, from 1995 to 2018, patent wars in the wind sector alone have resulted in total commercial losses of €5.2 billion. This total comes from both direct damages and losses in equipment sales and O&M services.

 

GE vs SGRE offshore (2020)

Let’s start with the most recent and one of the ones that has had the most resonance in the market. It all started in July 2020 when GE sued SGRE for patent infringement related to ZVRT and LVRT grid connection technology. SiemensGamesa decided to fight back and reviewed the Haliade-X technology for IP weaknesses and found them; in September of the same year, it sued GE in the US for patent infringement related to Direct drive technology. GE decided that the best strategy was to up the ante and sued SGRE in the UK as well, trying to do damage in the world’s leading offshore market.

But in the end nothing has turned out as GE had hoped. SGRE was found not guilty of infringing GE’s patents and what has been a bombshell: the US court found GE guilty of infringing SGRE’s patents and sentenced it to not be able to sell the Haliade-X in the US and to pay $30,000/MW on the 2 projects it has already contracted (Vineyard and Ocean Wind), which results in the pricely sum of $60mill.

 

GE has already announced that it will appeal the ruling (although in parallel it will redesign the Haliade-X to avoid the patents) but the damage has already been done and even more so when in the recent and historic Inflation Reduction Act of the USA, one of the main axes of growth is offshore wind with local manufacture, a law under which Haliade-X would have been the market leader and which has now been paralysed. As can be seen, Haliade-X’s current pipeline is divided between the UK and the USA, and with this ruling, it will be seriously affected.

 

AMSC vs Sinovel (2011)

 

This is without a doubt my favourite one, as it seems to be taken from the script of a spy movie. It all starts in 2011, a year in which Chinese manufacturers are in full expansion and growth. Among them is Sinovel, a Chinese giant that aspires to conquer the world market. But it has the same problem as other Chinese manufacturers: it has no technology of its own and depends on Western suppliers. Specifically, Sinovel has an agreement with the American company AMSC to supply it with power electronics and control for its 1.5MW models. But it all blew up when in 2011 Sinovel refused to honour the $800m supply contract and severed relations with AMSC.

 

But AMSC is shocked to see Sinovel overnight “develop” its own control and uncover a plot worthy of a Hollywood script: Sinovel’s chief technology officer had convinced AMSC employee Dejan Karabasevic to sign on with Sinovel but on one small condition: that he take the source code for AMSC’s control on his laptop. According to the FBI investigation, Sinovel was persuasive enough to convince Karabasevic: he offered him 2 million dollars, women (sic), houses and a new life in China…the thing is that Karabasevic accepted and stole the software.

 

The case was taken to the US courts by AMSC and in 2018 it obtained a favourable ruling, although along the way, this case almost bankrupted the company.

 

As for Sinovel, that case was the beginning of its fall from grace. From being in the top 3 of global OEMs to almost disappearing completely. It seems that it fell out of favour with the Chinese government, perhaps among other things because of the bad image it gave to the world. Moreover, this case partly served to change China’s attitude towards intellectual property, as the times when China was the Wild West in IP matters are over and it is now a more reliable country in these respects.

 

And what happened to Karabasevic? Well, he was sentenced to 1 year in prison and showed total regret, claiming that it was the biggest mistake of his life. Apparently he returned to Serbia and still lives there.

 

There is a lot of information on the internet about this case as it had a lot of repercussion in the USA, as it exemplified what was understood to be “massive technology theft by China”.

 

Huawei vs SolarEdge (2018)

The solar world is also fast unravelling when it comes to patents. This is one of the most talked-about wars in the sector as it was fought by two solar inverter giants. In 2018, China’s Huawei sued Israel’s SolarEdge in China for infringing its patents and SolarEdge countered with a cross-suit also in China. Subsequent cross-suits followed in Germany, expanding the products affected.

 

And the result is one of the most common in these cross-patent wars, especially when the protagonists are similar giants: a global licensing agreement reached earlier this year. This way they closed all open cases and avoided new cross-claims in the future.

 

GE vs MHI (2008)

Back to wind power and once again the king of patent lawsuits: GE. This time to try (and succeed) to stop a potential competitor in the USA. Mitsubishi, the Japanese giant, had ambitious plans to expand into the juicy American wind market in the mid-2000s and developed its new 2.4 MW platform. And GE, not wanting any more competitors in its core market, sued MHI in 2010 for infringing LVRT’s famous variable speed patent.

 

Mitsubishi countered by suing GE for attempting to monopolise the market through the famous variable speed patent, accusing GE (not without reason) of using the patent as a marketing tool rather than as a technology. But the US courts did not see it that way and dismissed this lawsuit while condemning MHI in 2012 to pay $170m to GE.

 

Finally, in 2013 the two reached a secret patent settlement but the damage was done. Mitsubishi had stopped marketing its product in the US due to the uncertainty of the lawsuits and subsequently never returned to the onshore market, and GE succeeded in nullifying a strong rival through patent litigation. Years later, MHI would enter the offshore market with Vestas, but that is another story…

 

GE vs all (GE’s variable speed patent)

And we leave for last the mother of all wind patents, a patent that has been at the centre of many of the subsequent wars: the famous US5083039 on variable speed and on which the DFIG doubly fed generator technology is based.

 

The story of this patent and how it ended up in GE‘s hands is a curious one. Originally developed by German manufacturer Tacke, it was bought by Enron Wind. When Enron went bankrupt, its wind business was bought by GE, which found itself with this patent. The curious thing is that experts say that companies like Enercon or Kenertech were already using this technology when Tacke patented it, although it seems that they could never prove it.

 

The fact is that GE saw that this patent was gold because with it it could sue almost all competitors in the USA. It started with Enercon who withdrew from the US market and although it later reached a patent agreement with GE, it never returned to the US market. Vestas and Gamesa opted to use an alternative technology: OptiSlip in the case of Vestas and RCC or rotor current control in the case of Gamesa. The problem was that the models lost 10% of rated power. Both also reached agreements with GE. We have already seen the case of MHI and other manufacturers such as DeWind tried new technologies such as Voith turbo’s WinDrive. This article summarises very well the alternative technologies that were developed at the time.

 

By the way, the variable speed patent has expired, but it will go down in history as the one that caused the most headaches in the wind energy world (and also made GE a lot of money).

 

The protection of intellectual property is a strategic area in any technology company, but even more so in sectors such as wind or solar where innovation is rapid and, as we have seen in this article, there are companies that have a very aggressive strategy with respect to their patents, which are used more as a commercial tool than a technological tool.