Posted on 24/5/2024

EPO-EIB study examines the role of patents in driving innovation in clean and sustainable technologies in EU

What are the key takeaways from the European Patent Office’s recent study on Europe’s position in the innovation of clean and sustainable technologies?

The European Patent Office (EPO) has recently released a study conducted jointly with the Europe Investment Bank (EIB) focusing on Europe’s position in the innovation of clean and sustainable technologies.

Patenting trends in clean and sustainable technologies

According to the findings, since 1997, the number of international patent families (IPFs) in clean and sustainable technologies worldwide has surpassed 750,000, constituting nearly 12% of all IPFs.

Notably, the growth rate of IPFs in clean and sustainable technologies has outpaced total patenting activity during this period.

Clean and sustainable technologies cover a broad spectrum of technologies targeting enhanced energy efficiency, the utilization of sustainable resources, pollution and waste reduction, and the mitigation of climate change impacts. Leading the sector is low-carbon energy technology, followed closely by clean mobility solutions. Other technologies in the sector include alternatives to plastics, clean manufacturing, building technologies, ICT advancements, and innovations in climate change adaptation.

The study found that there were two distinct phases of acceleration in cleantech patenting: from 2006 to 2012, primarily driven by the EU and Japan, which contributed 27% and 26% of the total increase in IPFs, respectively; and from 2017 to 2021, with the growth led by China, which contributed to 70% of the surge in IPFs in the sector, followed by the EPO member states (16% of the surge) with Germany, France, and the UK leading the regional contributions.

Patent activity in the sector saw stagnation from 2012 to 2017. However, from 2017 onwards the annual growth rate of patent activity in the sector has been more than twice as fast as the overall growth rate of IPFs across all technologies, demonstrating the resilience of, and the intense focus on, the sector in recent years.

Importantly, despite global competition from countries like Japan, the United States, and China, the study found that Europe remains a prominent player in the cleantech sector.

Geographical spread of clean and sustainable technologies innovators

The study found Europe to be a key player in the innovations of clean and sustainable technologies with the EU accounting for nearly 52,000 International Patent Families (IPFs), representing 22% of all IPFs filed in this field from 2017 to 2021,

The study also found that Europe’s cleantech innovation extends beyond the EU, with other member states of the European Patent Organisation (EPO) contributing an additional 10,000 IPFs, or 4.6% of all IPFs in this field, between 2017 and 2021.

Germany was found to be the largest single contributor within Europe, accounting for nearly 37% of Europe’s share of IPFs, followed by France (14.5%) and the UK (8.5%).

Outside of Europe, Japan (21.1%) and the US (20.2%) have the highest percentage of the global share. However, both countries appear to be seeing a decline in their revealed technological advantage (RTA) index, which is a measure of a country’s specialisation in clean and sustainable innovation relative to its overall capacity for innovation across all technologies. This indicates a decrease in specialization in clean and sustainable technologies in both of these countries.

In contrast, China with a share of 15.6% of the global share is seeing a rapid growth in the number of IPFs in recent years, signalling a key focus on clean and sustainable technologies.

The republic of Korea (10% of the global share), although its RTA has declined from its height in 2018, is still seeing growth in IPFs filed in the sector in recent years.

In relation to areas of technology, the study found EU applicants leading the number of IPFs in climate change mitigation technologies (CCMT) in transportation and treatment of wastewater and waste management, while the US was found to be leading in carbon capture and storage technologies.

Turning to Asia, Japan was found to primarily focus on hydrogen related technologies and low carbon energy, while China was found to dominate in CCMTs in ICT and Korea was found to focus on CCMTs in ICT, hydrogen related technologies and low carbon energy.

Top applicants and the role of patent protection

The study found LG to top the list of IPFs in the sector, followed by Samsung and Toyota. The sole European company in the top ten was the German company Robert Bosch.

Overall, Germany boasts four companies within the top 20 (Siemens, Siemens Energy, and BASF) with the United States also holding a significant presence, with three companies among the top ten: General Electric (5th), Ford (8th), and Raytheon Technologies (9th) and the additional companies General Motors and Qualcomm among the top 20. Huawei, the leading company in ICT within the CCMT field, stands as the sole Chinese representative among the top 20 (11th).

The study found that while more than three-quarters of international patent families (IPFs) in clean and sustainable technologies in the EU and US originate from very large companies, the majority of firms (over 70%) within this sector have fewer than 5,000 employees.

For firms with fewer than 5,000 employees, these companies were found to have typically already commercialized approximately 60% of the technologies for which they filed patent applications between 2011 and 2022, with an additional 28% nearing market launch.

In contrast, medium and large firms (with between 50 and 5,000 employees) were found to typically commercialize around two-thirds of their technologies independently.

The study concluded that small companies often adopt a collaborative approach, with nearly half choosing to commercialize technology jointly with commercial partners or other entities. For example, smaller companies in the sector were found to place greater importance on patents for establishing external partnerships, conducting technology transfers, and attracting investors.

In this regard, registering a patent proved crucial for external collaboration and financing, especially for smaller firms.

Difficulties facing innovation

The study found a notable disparity in the ability of firms to expand across regions, with EU-based innovators in the cleantech sector encountering a financing gap compared to their counterparts in the US.

Despite the growing demand for cleantech solutions, EU innovators were found to struggle to secure significant funding at all stages of growth.

As a result, the study found that more than 30% of EU enterprises highlight a lack of financial resources as a major obstacle to bringing clean and sustainable technologies to market.

This was found to be particularly the case for micro and small businesses with a significant 43% of them highlighting this as a struggle.

However, in light of this, small-scale cleantech innovators still viewed patents as valuable assets, with the majority viewing them as crucial for attracting venture capital (VC) investors or securing collateral for debt financing.

Key takeaways

Europe stands at the forefront of the global push for net-zero emissions, boasting a leading position in cleantech patents. However, fierce global competition necessitates ongoing efforts to maintain Europe’s edge.

Most notably, Cleantech innovation in Europe predominantly relies on debt financing rather than equity, hindering European companies’ ability to scale up due to insufficient funding across various growth stages.

As demonstrated in the study, patents serve as a vital tool for European cleantech companies to safeguard their technological advancements. They also play a pivotal role in commercializing new technologies, forging partnerships, and attracting funding, particularly for small cleantech enterprises. The recent establishment of the Unitary Patent may help encourage these cross-country partnerships by facilitating cost-effective access to uniform patent protection across EU member states.

If you have an invention you would like to protect in the sector or have any queries in relation to how best to utilise your IP, please do not hesitate to contact us.

Wilson Gunn