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Are oil companies creating patent thickets to ward off green tech?
By: Mark Hulbert | November 17, 2020

CHAPEL HILL, N.C. (Callaway Climate Insights) — Are oil and gas companies creating “patent thickets” to hinder our economy’s shift away from fossil fuels?

I’m referring to a phrase introduced 20 years ago by Carl Shapiro, a professor of business strategy at the University of California at Berkeley. He defined a patent thicket to be “a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology.”

The possibility that fossil fuel companies may be creating such thickets for devious purposes was prompted by my recent column about the surprising number of green energy patents that are being awarded to energy companies. Not only are many of the top 50 “green patent” producers in the oil and gas industry, by several different measures these firms’ patents are especially consequential. Many of their patents even are considered blockbuster, in fact.

This led one Callaway Climate Insights reader to wonder: “If their [energy companies’] motive is getting the tech under their control to shelve, eliminating potential future threats, like pharma often does (for better tech that makes their existing large market products irrelevant)?”

I posed that question to Lauren Cohen, a professor at Harvard Business School and one of the co-authors of the research on which I based my column. In an email, he provided two responses:

His first is that we shouldn’t be too quick to assume a conspiracy on the part of oil and gas companies. For that to succeed, it would require “considerable collusion, which seems unlikely. If all of the energy firms were producing cutting-edge green technology, and then just sitting on it, the incentive to deviate [would] be huge.”

“For instance,” Cohen continued, “there is… considerable demand in the end-market for green technology — and consumers are expressing a willingness to pay a premium for it. Given this, the incentive to capture this premium would likely be sufficiently large that one (or many) of the oil companies would find it optimal” to break away from a conspiracy.

Cohen’s second comment is that, in any case, further research is definitely in order to explore whether oil and gas companies are disingenuously creating patent thickets. He said that he and his co-authors will do that.

An unambiguous answer won’t come easily, however: “We first need to improvise a patent thicket metric. … Then, we’ll need to test whether this patent thicket metric for energy firms is different from other firms in the green patent space.”

Stay tuned. I will report their findings when they come.

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