Stem is a Millbrae, California, startup that sells and leases its battery energy storage system, which is marketed as a way to reduce consumers’ energy bills. Specifically, the company makes a lithium-ion battery connected to analytics software that determines the best times to draw energy from the battery, thereby reducing electricity demand charges.
As more demand side energy efficiency / smart grid technologies are being offered as services (with leasing of equipment rather than sale), I’ve been thinking about what this might mean for green patent drafting. One of the things patent prosecutors consider when preparing a patent application is how to draft the claims to ensnare as many different potential infringers in the chain of commerce as possible.
On this score, it is important to keep in mind the acts that can constitute infringement, viz., making, using, selling, offering for sale, and importing into the United States.
In conventional scenarios, the competitors that could be infringers are typically manufacturers that make, offer for sale, and sell competing products as well as the end users of the products. There could be distributors in the chain too, but these may or may not be viable infringement targets because of the patent exhaustion doctrine, which holds that an unrestricted authorized sale of a patented product “exhausts” the patent holder’s rights to control the use and sale of the product.
Taking Stem’s battery energy storage as a service as an example, the company owns at least one U.S. patent and one pending patent application relating to its technology. Both are entitled “High speed feedback adjustment of power charge / discharge from an energy storage system” and are Publication No. 2013/0207591 (‘591 Application), which is a continuation of U.S. Patent No. 8,350,521 (‘521 Patent).
Generally speaking, the ‘521 Patent and ‘591 Application are directed to smart charge systems and power management methods in which power demand load data and variable generator power data are synchronized in time and used to provide optimal charge/discharge instructions to an energy storage unit.
The simplest infringement scenario, of course, would be competing manufacturers that make and sell products that infringe the ‘521 Patent by their manufacturing and sales activities; there also could be end users who infringe by their use. But what about a competitor that simply leases infringing systems to end users?
This hypothetical competitor has situated itself at a spot in the commercial chain where it may be able to avoid a charge of direct infringement because it is not making, selling, offering for sale, or importing an infringing product. Depending on how the claims of the relevant patent are written, this competitor may not be using the product either. It’s conceivable that the end users may be the only direct infringers in this scenario.
However, the patentee may have a case for inducing infringement against a competing storage as a service lessor if the patent claims are drafted carefully. Section 271(b) of the patent statute provides that anyone who “actively induces” infringement of a patent is an infringer. This means that someone who himself does not infringe, but induces another to do so (e.g., by providing a product with advertising or instructions about an infringing use), may be held liable for inducement, a form of secondary liability for patent infringement.
The ‘521 Patent (and the ‘591 Application) contains both system and method claims: claims directed to a smart charge system and claims directed to a method of power monitoring and management. Independent claim 1 of the ‘521 patent is directed to a smart charge system including a premise sensor for measuring premise power information, a variable generator sensor for measuring generator power information, an energy storage unit, and a control computer that receives synchronized information from the sensors and energy storage unit and provides charge/discharge instructions.
It’s possible that an end user of the smart charge system might, through use of the system, be a direct infringer of claim 1 of the ‘521 Patent and the company leasing the system could be liable for inducing the infringement of the end user.
A better candidate for inducement is independent claim 10 of the ‘521 Patent because this is a method claim:
10. A method of power monitoring and management comprising:
providing, at a controller, a desired limit load;
receiving, at the controller, power demand load information;
receiving, at the controller, variable generator power information; and
transmitting, from the controller to an energy storage unit, a charge/discharge instruction based on the desired limit load, the power demand load information, and the variable generator power information.
Even if the end user isn’t using the whole system with all the components recited in claim 1, or if a different system is being used, the storage as a service lessor could still be liable for inducing infringement if it directs or instructs the end user to carry out the method steps recited in independent claim 10.
Having method claims in a patent provides better protection and greater flexibility for enforcement by exposing more players and activities in the commercial chain to potential infringement liability. As clean tech companies continue to explore new business models, careful green patent claim drafting will become more important to ensure optimal protection.