- Published: 03 June 2014 03 June 2014
New research from IntelStor, suggests wind turbine OEMs could use intellectual property rights (IPR) to exclude or drive up costs of independent service providers (ISPs) in the increasingly competitive wind services market.
While patent infringement litigation has been used as a tool for achieving commercial and legal goals in the past, such as preventing competitors from gaining market share, the unfortunate net result of past IPR litigation for turbine purchasers has been a constricted supply chain with higher prices and a reduced selection of ‘bankable’ turbines. Nowadays, a shift towards turbine OEM provided services is seeing IPR being leveraged in long-term service agreements (LTSAs). The strength of the position the OEMs have on IPR ownership affords them significant negotiating leverage on these LTSAs, specifically in restrictions on retrofits, remanufacturing and third-party spares. Even for turbines which are off-warranty, the patents held by some OEMs could preclude an ISP from performing service on their turbines unless they are licensed and/or certified to do so. The study indicates this would be similar to how automotive vehicle manufacturers use special tools, which are patent protected, or hold copyrights on vehicle diagnostics codes so that independent repair shops must obtain the tools along with accredited certification to perform either in-warranty or even out-of-warranty service. The cost of that certification process is distributed amongst the customer base and the vehicle OEMs receive a royalty for the intellectual capital they license to the accreditation agencies for the repair shop / technician certification. The net result for wind is likely to be higher costs for both OEM or third-party services and spares with turbine purchasers and owners / operators bearing the brunt of the cost. This cost ultimately gets passed onto rate-payers.