Foreign Competition Has Spoiled Some Clean Tech Investments, But It Has Not Had the Same Impact on U.S. Patent Grants

On January 26, 2012, Ener1 Inc., an owner of EnerDel—a battery manufacturer located inIndianawhich received $118.5 million in federal stimulus dollars—filed Chapter 11 bankruptcy.  Recently we posted a blog regarding President Obama’s call for more federal funding for clean technology companies to helpAmericacompete with foreign countries.  Skeptics of federal funding for clean technologies suggest that Ener1 Inc.’s bankruptcy filing is similar to the Solyndra collapse (the bankruptcy of a solar energy company after receiving federal grant money).  On the other hand, some battery industry experts note that Ener1 is not a complete failure because the technology and knowledge base of Ener1 is still secure.  The value of the federal government’s investment in Ener1 will likely unfold as the company tries to restructure its debt and climb out of bankruptcy.

Regardless, Ener1 officers recognize that a contributing factor to the company’s bankruptcy filing was fierce competition from Asian firms that had lower manufacturing costs.  Solar industry experts also cited foreign competition and an influx of cheaper foreign products as a reason for Solyndra’s failure.  Thus, we were curious whether clean technology companies in theU.S., such as Ener1 and Solyndra, are failing to compete with foreign companies because of a lack of innovation or because of other market factors, such as lower manufacturing, construction, and production costs.  To help shed light on this question we analyzed the percentage of patents issued in the Unites States based on an applicant’s nationality for photovoltaic technologies and electric vehicle batteries.

Our rough analysis indicates that while some foreign countries have a sizable share of the market for clean technology patents in theU.S., theU.S.holds a growing market share ofU.S.patents issued for electrical vehicle batteries and solar panel technologies.  The graphs below show the percentage ofU.S.patents issued by applicant’s nationality for electric vehicle batteries and photovoltaic technologies based on a search in the USPTO database.  The graphs on the left show the percentage of patents issued from 1976 to today and the graphs on the right show the percentage of patents issued in the last five years.  Viewed in a very broad context, these graphs suggest that the failure of these clean technology companies may not necessarily be from a lack of innovation.  Other market factors are contributing to these companies failing to compete with foreign firms and those factors should be considered when investing federal dollars.

Note: We have not analyzed the scope of claim coverage of these patents nor factored in the effect of the benefits of being one of the earlier developers in these technologies to gaining market share and acquiring pioneering patents which can be used to discourage new entries into the market and acquire higher levels of royalties or a larger number of patents.

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