Freedom-to-operate for battery technology
08
Jul
2024
How to navigate the complex patent landscape in this field

A new business venture in the field of lithium-ion batteries (LIBs) has been made recently. In May 2024 Tulip Innovation offered a one-stop shop providing a licence for more than 5,000 LIB patents originating from LG and Panasonic’s[1] decades of innovation in the field. Tulip is based in Hungary, which aims to become Europe’s leader in battery manufacture, and presumably have their eye on extracting licensing revenue as more gigafactories tool up in Europe and elsewhere.

Notwithstanding the geography, one of the reasons why Tulip’s business model may well prove successful touches on one of the issues which we encounter from day-to-day while working on IP in this field. This issue is ensuring freedom-to-operate (FTO), i.e. that the risk of a new technology infringing any of the myriad of LIB patents is acceptably low. In such a crowded field, FTO projects can be daunting, and the reasons for this are complex. It is not just because there are many patents out there (circumstances which are commonplace in any field at the forefront of innovation); it is also because of the nature of the patents.

There are many patents protecting the fundamental materials which form an LIB, e.g. the active anode or cathode materials. Both anode and cathode materials can be mixed metal oxides, typically protected by compositional claims covering various elements in specific ratios, but the periodic table only provides so many metals to choose from. Thus, there is a risk of an innovative new anode material falling within the scope of claims which were really intended to protect cathode materials, and vice versa. Second-generation patents can be thrown into the mix, some of which protect active materials broadly in a compositional sense but with narrowly defined physical parameters, meaning that there could be regions of particle size, porosity, or surface area, for example, where there is an FTO risk for a new active material.

Even if satisfied that the fundamental materials patents are not a problem, there are downstream patents protecting LIBs at electrode- or cell-levels which may need to be considered. These might protect a certain class of active material, claimed broadly, when used in combination with a specific binder, conductive additive, electrolyte composition, etc. A primary manufacturer of a new active material might not directly infringe the electrode- or cell-level patents, but their customers (large-scale battery manufacturers) could do – and may well want some sort of assurance that they can use this innovative material without risking infringement. There is also indirect infringement to think about, where the primary manufacturer supplying an active material which is essential to the invention of an electrode- or cell-level patent could be deemed to be infringing.

There are also process patents, which become relevant when a new material is to be synthesised and fabricated into LIBs at commercial scale. This fact-pattern where many different types of patent can be relevant to FTO is presumably what Tulip are referring to with their statement that they “enhance battery manufacturers’ freedom to operate by providing a clear pathway to innovation in an otherwise complex patent landscape”.

All this is not to say that analysing FTO is unmanageable. With knowledge of the type of patents to expect in the field, search strings can be formulated such that the net is cast widely enough to capture the potentially relevant patents, but not so widely as to deluge the patent attorney and technical team with numerous search hits. An attorney with the right technical background will be able to swiftly dismiss irrelevant search hits, keeping legal costs to a reasonable level. Thus, a materials innovator should not be put off by the myriad of LIB patents, and indeed may well never need to consider a bulk licence of the sort offered by Tulip.

We speculate that Tulip is largely aiming their 5,000-strong patent thicket at industrial-scale battery manufacturers with deep pockets, e.g. those looking to churn out established LIB technology at scale. For those parties it may well make sense to simply take a licence, rather than consider FTO in detail. It will be interesting to see whether Tulip equivalents spring up over the next few years, as there are plenty of big patent filers in the field of LIBs other than LG and Panasonic, who may well wish to monetise their patent estates in this way.

Finally, given the bulk licensing model, presumably the value of any individual patent out of the 5,000 is low. This perhaps reflects the fact that today’s established technology, including that powering our phones and EVs, still relies on innovations made many years ago, e.g. cathode materials invented in the 80s and 90s which have since become commoditised[2]. It seems to us that a two-tier market is emerging, where a quantity-over-quality approach is a perfectly valid business model to approach patenting today’s technology, but where a small number of carefully drafted patents protecting key concepts of the next generation of battery technology may well prove exceptionally valuable. Naturally, ensuring FTO and having your own robust patent protection in place for new battery technology is the optimum strategy.

Footnotes

[1] Tesla fans may be aware that Panasonic made a multi-billion-dollar investment in the first gigafactory in Nevada.
[2] Cathode materials based on lithium cobalt oxide or lithium iron phosphate.