This current BusinessWeek article entitled “The Real Question: Should Oil be Cheap?” confirms that innovations directed toward energy savings are rampant in these days of high energy prices. Specifically, the article states that “[h]igh energy prices  water the flowers of innovation, making investments in alternatives pay off . . . .” As I wrote in this blog previously, along with such innovations comes the opportunity for savvy corporate managers to obtain exclusive rights to these energy usage improvements by developing and executing on patent strategies that prevent their competitors from benefiting from their investments in innovation. Moreover, as I wrote in this blog post, I believe that The Pickens Plan will open the floodgates of patenting in the area of wind energy and turbine technology.
I realized after writing these blog posts that some people might find the idea of patenting energy innovations distasteful. Such a perspective might be based on a belief that it is better for society for energy innovations to available for the public to freely use. As such, I thought I would address this potential objection in this post.
Private energy innovation takes place within the confidential confines of the firm. Energy innovators will typically not freely disclose energy innovations outside of the firm in the absence of patent protection. Rather, if an innovator is not able to prevent others, especially his competitors, from using the fruits of his innovation investments, it is unlikely that this energy innovator will disclose his technological advances to the public. The innovator will instead likely maintain the innovation as a trade secret, which will keep the details from the public as long as the technology is kept secret.
You may recognize that if the energy innovator does not obtain patent protection, anyone who can reverse-engineer or independently develop this trade secret energy innovation will be free to use the energy innovation. On balance, however, I believe it is better for many energy innovations to be patented.