Shale innovators find fortification in unitary patent system

To hedge against uncertainty in an emerging marketplace, innovators in Europe’s emerging shale oil and gas industry should consider using the incoming unitary patent system to protect their innovations, says Stuart Latham, partner and patent attorney at Withers & Rogers.

There is a high degree of uncertainty about where shale oil and gas reserves are located and how economical it will be to extract them. This can make it difficult for technology-led businesses to seek patent protection, as they do not know which territories will end up being key markets for shale oil and gas extraction in the future. For example, some early indicators have shown that there could be significant reserves of shale gas in Romania, Lithuania and Poland. However, some US corporates have since pulled back from exploration projects in these countries and it is not yet clear if extraction will be viable, at least in the near term.

Adding to the uncertainty, the governments of some European countries have indicated that they are unwilling to permit the extraction of shale oil and gas due to safety concerns, while others are only willing to do so with strict regulatory controls.   As such, despite appearing to have significant shale gas reserves, countries such as France and Germany may not support the growth of local shale industries.

The European shale landscape brings fresh challenges in comparison to what we are seeing in the US.  Those developing innovative solutions directed to safer extraction, or resource efficiency such as water recycling, could be well-placed to profit within this emerging market.   Yet, innovators in the sector are finding it difficult to plan ahead in terms of their protection strategy and there is a real concern that their activity could slow as a result. If they are unable to predict the market potential for new technologies, innovators may not be able to justify further R&D investment.

However, help is at hand in the form of the unitary patent system, which could be in force in the first half of next year. Among the benefits of the new system is an opportunity for businesses to apply for a single Unitary Patent, spanning all participating countries of the EU, without the need to validate the patent at jurisdictional level.  For shale oil and gas innovators, the new system could provide a cost-effective way to obtain protection across the EU as markets and regulatory environments evolve within it.

While it will be cost effective for most innovative businesses, the Unitary Patent will be especially beneficial to those that are innovating in dynamic or evolving markets like the European shale industry. A single renewal fee will be payable annually on each Unitary Patent, which will be equivalent to the current cost of renewal fees in the 'top four' European countries – UK, Germany, France and Holland.

Once a European patent has been granted, the patent owner will normally validate it in just a handful of EU countries. By contrast, the new Unitary Patent has the potential in time to cover 27 of the 28 member states for a similar cost. The coverage provided in these ‘bonus’ countries could deliver unexpected benefits to some companies particularly if there is uncertainty about where market opportunities could arise in the future.

The benefits of the unitary patent system will be far-reaching but there are a number of emerging industry sectors which stand to gain more than most from the impressive geographical coverage it will provide. As well as the European shale industry, innovators in high-tech areas like the ‘internet of things’, autonomous driving and drones could be among those to reap most reward from the incoming changes.

More information on the unitary patent system  can be found at the European Patent Office and Withers & Rogers