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Conference programme 

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Poster session

Lead Session Chair:
Stephan Barth, Managing Director, ForWind - Center for Wind Energy Research, Germany
Philip Totaro Totaro & Asssociates, Germany
Co-authors:
Philip Totaro (1) F P
(1) Totaro & Asssociates, Hamburg, Germany

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Poster
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Presenter's biography

Biographies are supplied directly by presenters at OFFSHORE 2015 and are published here unedited

Philip Totaro is the Founder and CEO of Totaro & Associates, a market research and innovation strategy consultancy with offices in Hamburg, Germany and Houston, TX. Mr. Totaro is regarded worldwide as the foremost expert on wind industry technology and IPR matters. He has helped cultivate and disposition over 500 innovations, and his assessments have led to over 300 issued patents. His strategic market analysis has led to the funding justification of over $500M in R&D investment and the development of multi-million dollar product and service offerings. He has provided legal and technical due-diligence for over $1B in M&A.

Abstract

The Value of Independent IPR Certification to Project Financiers & Wind Turbine Purchasers

Introduction

There was a point in time at which independent technical certification of a wind turbine architecture was not mandated. Nowadays, third-party technical certification is a necessity to secure project finance and a sensible precaution by a turbine manufacturer to avoid downstream wind project liabilities. Presently, independent IPR infringement risk certification is not mandated in the wind industry, or virtually any other industry where project finance is utilized. Most turbine OEMs provide their own data and validation to turbine purchasers and project financiers, but only if asked, and typically only in matters related to patent infringement litigation recognized in the public domain.

Approach

Litigation damage awards are not insignificant, but they pale in comparison to commercial losses and brand tarnishing resulting from perceived infringement of IPR. Looking at past precedent in the industry we can see that while most IP disputes are settled, market segment leaders are willing and able to utilize every weapon in their arsenal to exclude competition from markets and deny billions in revenue. While indemnity insurance can partially plug these gaps, that remains a stop-gap measure if the insurer can’t quantify IPR infringement risk. In this manner, an independent IPR risk assessment can provide the needed clarity.

Main body of abstract

The process of IPR infringement risk mitigation works by starting off with a comprehensive patent landscape and catalogue of IPR and technology in the industry. From a study which was conducted, conventional patent search tools and methods were compared to a wind patent landscape which had been rigorously reviewed. Results on one category of technology indicate that the conventional patent search methodology employed by IP search firms or law firms will result in an incomplete set of results, false positive results, and results which require significant further study and examination.

In a case study which is presented here, one particular turbine manufacturer was seeking product validation for entry into a new market. The composite risk score was quantified at 18 of 3,200 patents being high risk, indicating immediate mitigation action was required on those matters. Nevertheless, in this case, the turbine manufacturer was still well below the industry average in the highest risk categories of patents.

The detailed risk mitigation of the 18 identified patents found that 5 of the patents had extremely broad claim breadth and were not actually being utilized, while the other 13 patents were deemed invalid. This clean bill of health enabled the turbine manufacturer to obtain an intellectual property indemnity insurance policy and qualify for preferred project financing.

Conclusion

Cost effective visibility to IPR infringement liability is possible and risk mitigation will bring the wind industry in-line with the mainstream. The protocol for risk mitigation utilizes independent legal counsel, validity evaluation, and patent license agreements, if necessary. Therefore, the existing legal infrastructure is not displaced, only more intelligently leveraged. Many times, the engagement of legal counsel is unnecessary which saves significant cost to the process for all parties involved.


Learning objectives
1. What are the market drivers influencing the need for greater focus on IPR certification?
2. How does an independent IPR certification process work, and can it be integrated into the type certificate?
3. What are the implications to OEMs, owners, installers, and underwriters of IPR infringement?