What developers and financiers of wind farm projects need to know.

I attended the AWEA Fall Symposium in Carlsbad in November 2011.  While it was a good industry gathering, I was intrigued by a panel discussion in which a representative from a major US developer and O&M (operations & maintenance) service provider to wind farms indicated that his organization will sometimes sidestep the turbine OEM (original equipment manufacturer) when it comes to sourcing spare parts.

Generally speaking, the turbine supply agreements which wind turbine OEMs sign with their own customers cover the breadth of their patent protection, but typically only a use license is provided.  The ability to modify turbines or use substitutes may not be implicitly provided to the owner/operator of the turbine, calling into question some of the proposed methods developers and O&M service providers may use to help control cost.

Aspects of this topic were previously covered in in this space in a post entitled Infringement Issues in an Emerging Wind Power Cottage Industry.  

Interestingly, in other industries, like automotive, we have seen the OEMs create features of certain key components which mean the components or the service can only be provided by an OEM representative or certified technician.  This locks in an aftermarket revenue stream for the OEM, and is something they will not want to lose out on as more ‘modern’ turbine fleets begin to come off warranty and age.

As the O&M cost structure and optimization of wind farm operations becomes more of a hot button issue, we will see what steps if any OEMs will take to ensure revenue streams in this increasingly competitive market.  Assertion of patent rights is certainly a tool in the toolbox.

Nevertheless, this topic got me to thinking about other areas in which there may be vulnerability of developers, and thus the financiers of wind farm projects, to assertion of patent rights from turbine OEMs.

As we have seen in other industries, as competition emerges and the industry matures, IP owners begin to assert their rights if they feel there is diminishment of their commercial enterprise. 

We have seen GE assert its patent rights against many other turbine OEMs on variable speed technology, and even go to court with Mitsubishi in a suit which could have profound implications on future assertion within the industry.  AMSC also recently made public the theft of trade secrets by one of its customers.

This begs an important question: Will the turbine OEMs, who have accumulated over 4300 US patents and applications on all aspects of wind turbine technology, begin to seek targets other than their OEM competition for licensing revenue in a US market which is increasingly cost competitive?

For instance, there are many OEMs and key component suppliers with patents on methods of power factor control and curtailment for wind farms.  These two particular aspects of wind farm operation and optimization are  not only noteworthy for freedom to operate by the competitor OEMs, but operators of wind farms may need to start paying attention too. 

U.S. Patent No. 6,479,907 owned by ABB, U.S. Patent No. 6,891,281 owned by Enercon, and U.S. Patent No. 7,663,260 owned by Nordex are good examples of hardware and control methodologies already being employed. 

What recourse does a wind farm operator or turbine OEM have to refuse a curtailment order from an ISO if they know that it would infringe on a third party or competitor’s patent?

Also, U.S. Patent No. 7,318,154 owned by GE, which enables remote monitoring and control of wind farms via the SCADA system, could potentially be important to anyone operating a wind farm.  FIG. 1 of this patent is shown here:

Nowadays, even connection of energy storage technology or use of high voltage direct current HVDC is becoming more pervasively talked about and deployed in wind, with plenty of pioneering patents and applications on both aspects of technology already in process.

The question is whether or not an OEM would jeopardize a customer or potential customer relationship and turbine sales to assert its patent rights on developers, O&M providers or owners/operators of wind farms for which they did not supply turbines (and the aforementioned use licenses).

Is there a need to add IP due diligence to wind farm development efforts?  Perhaps, but there is a long way to go from patents which “may be highly relevant” to getting lawyered up in an effort to fend off opposition.  That being said, being proactive could reduce the odds of excessive damage awards.

As FERC continues to evolve their regulations regarding operation of wind farms, we will see if the OEMs can remain one step ahead with patent protection on technologies which could become the new standard for optimized performance of a wind farm or cost mitigation of O&M.

Philip Totaro is the Principal at Totaro & Associates, a consulting firm focused on innovation strategy, competitive intelligence, product development and patent search. 

To get a deeper look into the patent landscape of the horizontal axis, utility-scale wind industry please visit www.totaro-associates.com and ask about Wind Patent Watch™, a subscription service providing a weekly digest and analysis of the published patents and applications from the wind industry.

WindFlip AS is a Norwegian company that has developed WindFlip, a novel approach to transporting pre-assembled wind turbines to offshore locations.

The approach is described in International Application Publication No. WO 2011/051804, entitled “Partially Submersible Wind Turbine Transport Vessel” (’804 Application).

WindFlip is a specialized barge for transporting assembled offshore wind turbines. The assembled wind turbine (24) is transported on a turbine transport vessel (10) in a nearly horizontal position, as shown below in Figure 1 of the ’804 Application.

Once the vessel (10) reaches its destination, it tilts to a vertical position using seawater.  More particularly, twenty-nine air-filled displacement tanks are located in the hull (22) of the vessel (10). 

The displacement tanks are sequentially filled with seawater, sinking the stern (16) of the vessel (10) and the base of the turbine (24), until both are at a vertical position, as shown in Figure 4.

Once the turbine (24) and vessel (10) are oriented approximately 90 degrees to the sea surface, the turbine (24) is released and maneuvered to pre-installed anchors.  After releasing the turbine (24), the vessel returns to a horizontal position by forcing the seawater out of the displacement tanks with compressed air.

See an animation of the process here.

Traditional offshore wind turbine transportation requires deep ocean depths due to the turbines’ draft. WindFlip allows pre-assembled wind turbines to be transported to offshore locations despite shallow or variable ocean depths.

Principle Power is a Seattle, Washington-based renewable energy technology company that developed WindFloat, an offshore wind power turbine and platform.  The platform can be assembled on shore and then towed to a site offshore where it is moored and connected to a power station. 

Principle Power recently deployed its first WindFloat system off the coast of Portugal, the first offshore turbine to be located in open Atlantic waters (read more about the first deployment here and here).

The WindFloat technology is described in U.S. Patent Application Publication No. 2011/0037264, entitled “Column-stabilized offshore platform with water-entrapment plates and asymmetric mooring system for support of offshore wind turbines” (’264 Application).

The platform comprises columns (102, 103) interconnected with a truss structure composed of main beams (115), bracing beams (116), and cross beams (117).  A wind tower (111) is attached to one of the base columns (102, 103).

A wind turbine (125) is attached to the wind tower (111).  At the base of the columns are horizontal water-entrapment plates (107).  The submerged plates (107) are designed to provide hydrodynamic added-mass and dampening, resulting in reduced platform motion - particularly in heavy seas. 

The turbine platform can also include active ballast systems for stabilization.  The columns (102,103) can be hollow and and house the active ballast system, which transfers water between tanks within the columns.  The active ballast system is designed to keep the mean position of the platform horizontal and to keep the turbine as upright as possible.

According to Principle Power, unlike conventional offshore wind turbines, the stabilization features of the WindFloat allow the platform to withstand the high wind and wave energy found in deeper waters.  Wind turbines located far from shore overcome disadvantages of their close-to-shore counterparts because they do not block the shore view and lessen navigational obstructions and potential hazards to water vessel and aircraft while tapping into previously inaccessible wind resources.

David Gibbs is a contributor to Green Patent Blog.  David is currently in his third and final year at Thomas Jefferson School of Law in San Diego.  He received his undergraduate degree in Geology from the University of California, Berkeley.

 Part II:  Cost Estimation

Analysis and cost estimation of GE’s patent portfolio suggests a bubble… but will it break?

Part I of this article analyzed GE’s industry-leading wind patent portfolio. 

Part II asks whether the pace of growth of GE’s patent portfolio is sustainable, since each application has a certain cost associated with it and the revenue generated from licensing must exist in order to justify the continued scope of the portfolio. 

The spike in GE’s patent filings starting in 2003 after the Enron Wind acquisition and again in 2008 with a focus on future licensing is reminiscent of the huge increase in the pace of filings from Aloys Wobben, Chairman of Enercon GmbH, in 2002 – 2003 after the settlement of the International Trade Commission (ITC) matter in which Kenetech/Zond/Enron Wind/GE effectively denied Enercon entry into the US market.

The portfolio of Enercon patent filings proved to be unsustainable as is evidenced by the sharp drop-off in their number of filings per annum in the past few years, in spite of new innovation being developed on their liquid cooled generator.

Based on a patent budget calculator which we developed to assess the year-over-year costs for cultivation and maintenance of a patent portfolio, we have been able to determine the approximate costs for maintaining their portfolio.  Certain assumptions had to be made in this analysis, so there is likely some variability in the cost, however we believe it to be accurate within an order of magnitude.

Even though the patent landscape we have analyzed covered only the US, we know GE uses the US as their primary priority filing locale and their foreign filing strategy can be inferred from a look at the family members of their US patents. 

Assumptions are as follows:

• The majority of their filings are US, CN, and EP.
  • Filings which were categorized as L or M will follow this protocol for cost calculation.
  • Important inventions get filed in a broader scope of countries, specifically US, CN, EP (note: sometimes DK and DE are used explicitly instead of an EP filing, especially if the invention originated from their German R&D/Engineering center), IN, MX, JP, KR, CA, BR and AU.
    • Filings which were categorized as M/H or H will follow this protocol for cost calculation.
    • Filings per annum used in the calculation from 2001 – 2010 were actual numbers.
      • Filings prior to 2001 were not very significant and were excluded from the calculation for simplicity.
      • Filings from 2010+ were assumed at the same average rate per annum from 2008 – 2010 for filings out until 2020.

The results of this calculation based on the scope of GE’s portfolio and following the protocol outlined above shows that the cost is quite substantial particularly in the out years.  In 2020 alone they will spend US$31M on prosecuting and maintaining their portfolio.

Continued turbine sales as well as licensing will clearly be necessary to support that size of portfolio. 

With the expiration of a core patent in February of this year, US5083039 (‘039), which covered field oriented control of an induction generator as well as dynamic VAR control at the turbine, a new suite of technologies has emerged technologically, but not necessarily on the assertive license front.

GE’s recent acquisition of Converteam also adds to their portfolio of full power conversion and permanent magnet generator technology.  This architecture is quickly becoming the most pervasively deployed platform amongst the wind turbine supply base. 

It remains to be seen if this technology architecture will be part of the next wave of assertion and licensing.  If history has anything to say, then you can bet on future licensing.

However, the scope of those efforts may be affected by the outcome of the ongoing Mitsubishi litigation.  If GE is successful in upholding the validity of their patents against Mitsubishi then one will presume they will be emboldened to pursue licenses on the new technology platform. 

If Mitsubishi prevails, then we could see another round of lawsuits from the licensees of ‘039 and the other DFIG related technologies demanding their royalty payments back.  This could leave GE gun-shy to broadly license the way they did with ‘039 and other related patents.

Whatever the future holds, GE now holds a substantial lead while the rest of the industry struggles to catch up.

Philip Totaro is the Principal at Totaro & Associates, a consulting firm focused on innovation strategy, competitive intelligence, product development and patent search. 

To get a deeper look into the patent landscape of the horizontal axis, utility-scale wind industry please visit www.totaro-associates.com and ask about Wind Patent Watch™, a subscription service providing a weekly digest and analysis of the published patents and applications from General Electric and the rest of the industry.

Part I:  Patent Portfolio Analysis of an Industry Leader

Wind Industry Leader

General Electric Company (GE) has vastly outpaced all of their competitors in intellectual property (IP) protection in many industries, but particularly wind turbines.  The chart below reflects data from our efforts in analyzing the landscape of issued patents and pending applications from the horizontal axis, utility-scale wind sector and indicates just how far ahead they are. 

The scope of their portfolio can certainly be intimidating to those who have not taken the time to analyze it in depth.

It is interesting to note that while they are better than the industry averages, GE’s portfolio is not vastly superior to most of their competition on a percentage basis as it relates to the number of high risk patents and apps (2% for GE vs. 1% for the Industry) and medium/high risk patents and apps (15% for GE vs. 10% for the Industry) represented on the chart above in red and orange respectively. 

However, the scale that their portfolio has achieved affords them the luxury of having greater numbers of patents in key areas of technology.  While they have over 20% of the patents and applications in the sector, the important trend is how much of the high and medium/high relevance patents and applications they hold.

GE has also been one of the top utilizers of the “Green Patent Fast Track” in the USPTO, and the 500^th patent granted under the program was a GE patent relating to blade winglet technology to enhance performance.

GE’s Component Focus Mirrors Industry Trends

Deeper analysis of their portfolio indicates the areas of focus for the components and technologies in their portfolio. 

Their component focus has been in those same areas which the industry has rallied around.  Blade aero performance and structure, controls for performance optimization and load mitigation as well as electrical system reliability enhancement are all trends which are seen throughout every wind turbine OEM.

A look at their technology focus indicates they are mostly in line with industry trends on this as well.

Issued Patents v. Pending Applications Reveals Most Recent Innovations

A comparison of the issued patents in their portfolio vs. the pending applications reveals some interesting trends as well. 

Here we offer a comparison of the issued patents and the pending applications broken down by component keyword.  The differences between the two charts indicate areas where innovation has occurred in the past vs. more recently. 

From this it is clear that while blades are the highest component on the cumulative chart, that is largely due to influx of innovation on manufacturing process, the swept blades, circulation control, as well as the serrated trailing edge being utilized on the new 1.6-100m platform.  Additionally, blade manufacturing processes, tools, as well as transportation fixtures and techniques. 

Power factor control / VAR support and more recently sensor system accuracy have become important areas.  Tower reliability improvements, braced designs and self erection capabilities are also trending.

GE Issued Patents – Breakdown by Component

GE Pending Applications – Breakdown by Component

We also offer a comparison of the issued patents and the pending applications broken down by technology keyword.  Performance optimization has dominated their product strategy in the past few years, and their patent portfolio reflects that trend as well.  Other areas include:

• Component reliability enhancements continue as well as condition monitoring systems and integration of feedback to control turbine output
• Blade aero performance enhancements as well as controls-based energy output optimization
• Component transportation fixtures as well as segmented components which can be transported and assembled on-site
• Blade manufacturing and structure
• On-site component repair techniques
• Component “cost-out” activities to try and improve marginal cost of each turbine in this present era of depressed market prices

GE Issued Patents – Breakdown by Technology

GE Pending Applications – Breakdown by Technology 

Patent Strategies Bracket the Competition

GE is also famous for identifying key technologies which are required within the industry at a future point in time, such as power factor control, VAR support or more recently curtailment, and then develop a multi-patent “fence” around those technologies. 

They also look to bracket around their competition with patents.  This is accomplished by identifying the High or Medium/High risk patents or applications of their competitors and analyzing the weaknesses of those claims to determine areas of potential IP capture, coupled with assessment of competitive intelligence to determine where their competition is going technologically. 

In developing the breadth of this portfolio they have followed some basic tenets of IP strategy in seeking blanket protection in most areas of technology and components in the industry space. 

This is the result of their focused brainstorming sessions and engagement of a broad swath of engineering as well as internal and external Legal/IP team members to identify patentable inventions and complete invention disclosures and applications. 

These protocols, established in the mid-2000s have served them well in the last few years where the number of filings has doubled compared to previous years. 

Part II of this article will look at the costs associated with pursuing and sustaining this portfolio.

Philip Totaro is the Principal at Totaro & Associates, a consulting firm focused on innovation strategy, competitive intelligence, product development and patent search. 

To get a deeper look into the patent landscape of the horizontal axis, utility-scale wind industry please visit www.totaro-associates.com and ask about Wind Patent Watch™, a subscription service providing a weekly digest and analysis of the published patents and applications from General Electric and the rest of the industry.

Back in February we released the preliminary results of a patent landscape report, which identified both historical and future trends in the horizontal axis, utility-scale wind turbine industry. 

We now have a more comprehensive view of those trends as a result of the analysis on the landscape of pending applications.  With the completion of this work we have now analyzed over 1,900 US patents and over 1,500 published US pending applications.

There are now as many pending applications as issued patents, with 1,552 issued patents, 387 expired patents, and 1,561 pending applications.  This confirms the deep focus on IP as a competitive differentiator in addition to a focus on product strategy.  Top tier companies have vastly outstripped their competition in terms of the number of filings.

I.  Industry Relevance:  GE Leads

Once again an assessment of the relevance of the patent to the industry was performed and results were classified as low, medium, medium/high, and high.  Definitions of this classification method are below. 

The assessment of industry relevance serves the purpose of indicating the degree to which the patent owner has or is likely to assert their rights and seek licenses or otherwise enforce the patent.  This should be an indication of the proverbial landmines to watch out for when navigating a technology and product roadmap through the landscape.

• Low – Not relevant to the currently pervasive set of technologies and products in the industry.
• Medium – May have been relevant in the past, but as technology evolves it is less prevalent.  These are likely to shift to low in the future.
• Medium/High – Important items which the industry needs to be cognizant of, but these can likely be avoided / mitigated.  Influence of things like technology trends and grid standards will ultimately determine relevance.
• High – Critical item which has been asserted, licensed or enforced, or else it is highly likely to be in the future.

For pending applications there is obviously a certain amount of variability and attempted claim breadth which does not ultimately manifest in the issued patent, if it subsequently issues at all. 

Therefore, we are providing an assessment of industry relevance on the basis of the claim set published without investigation of the file history of each pending application to determine the likely scope of the subsequently issued claims at this point.

II.  Component  Trends:  Blade Aero Dominates, Controls & Sensors Surge, Blade Structure/Manufacturing and Offshore Installation Emerge

The majority of the filing trends have been maintained, but a few noteworthy trend differences from the issued and expired patent landscape previously discussed and the comprehensive portfolio including all pending applications are clear.

Controls & Sensors have taken over the #2 spot behind Blades as the most commonly patented component in the wind turbine and this category is making a run at becoming #1. 

Meanwhile, for the current #1 category, blade aero performance continues to be the dominant trend, but blade structure and manufacturing has quickly become an emerging trend with more recent applications. 

The majority of the other categories have stayed in their relatively same positions when comparing the overall portfolio to just the currently issued patents, but one new category which has emerged is offshore installation vessels.  This demonstrates that there is a concerted effort to make offshore more than just an important market segment, but a potential trend in technology development.

III.  Technology Trends:  Reliability Remains King

As for technologies, very few dramatic changes have occurred towards the top of the list, with Reliability still king in the wind industry. 

The interesting trends are the emergence of Construction & Assembly (particularly in the transportation area), Manufacturing, Cost / Weight Reduction, and Service & Repair as wind OEMs, component vendors, and balance of plant (BOP) contractors get into the mix with ways to be more cost effective and improve quality in those areas.

We at Totaro & Associates are currently working to expand this product offering to the Global patent landscape, so please stay tuned for more to come on this. 

While this work remains ongoing, we do not expect the trends to change dramatically.  This is due to the fact that the majority of results in the US patent landscape are part of patent families which are filed internationally.

As a result of this work we are now able to track patents and published applications in the US on a weekly basis. 

Introducing Wind Patent Watch

We are now pleased to launch Wind Patent Watch™, a subscription service which delivers these landscape results as well as our assessment of the relevance to the industry and justification as well as the synopsis of the invention for each patent and application.  Please visit www.totaro-associates.com/windpatentwatch for more information.

Mr. Philip Totaro is the Principal at Totaro & Associates, a consulting firm focused on innovation strategy, competitive intelligence, product development and patent search.