Tips for Collaborating in Aerospace Electrification

Aerospace companies collaborating with battery technology companies are at the forefront of aircraft electrification. Fully electric, large-scale commercial aircraft are not feasible with current technology, but electrification continues to gain prominence in the transportation industry, and aerospace is no exception. The Paris Agreement adopted in 2015 to reduce the effects of global warming has widespread public support. Fully electric and hybrid vehicles are now commonplace in areas with supportive charging infrastructure. And, the Biden Administration has ordered government buildings and vehicles to rely on renewable energy by 2050. Public mood is driving innovation in electrification. And strong patent protection can encourage this innovation by incentivizing inventors.

In the United States, aircraft account for about 8% of transportation energy consumption. Unlike other transportation industries, which expect decreases in energy demand, the U.S. Energy Information Administration expects a sustained increase in energy demand in the aerospace industry from now until 2050 at an annual growth rate of about 1.1%. Motivational drivers for electrification in aerospace include the regional travel market, noise reduction, increased accessibility, and environmental concerns.

Though fully electric jumbo jets may still be several decades away, electrification in aerospace is well-positioned to meet the high demands of the regional travel market. Regional airports are vastly under-utilized because commercial airlines cannot economically justify the cost of regional travel on a scale suitable to meet regional travel demands. And while limited battery capacity may keep large commercial aircraft an uneconomical choice in this century, battery-powered aircraft may soon be able to support regional markets. As federal agencies fund research and technology and state governments push for more innovation, it’s no wonder that aerospace companies are teaming up with battery technology companies to meet market demands.

These two industries are destined to work together. Advancing battery technologies is key to electrification in aerospace. And given the need to build aircraft with the same long service lives the aerospace industry has come to expect, a multi-disciplinary approach is gaining traction. Just last year, in May 2022, Lilium and Livent, leaders in electric aircraft and lithium technology, respectively, announced a collaboration to advance high-performance lithium batteries. In October 2022, Amprius and BAE Systems announced a three-year collaborative project to develop “light weight high-energy batteries specifically developed for electrically powered flight applications.” Similarly, aerospace giant Airbus and automotive leader Renault announced that engineers from both companies would be partnering to improve battery technologies in both industries. These joint efforts form the foundation of electrification of the aerospace industry.

Avoiding patent pitfalls in joint research efforts

But joint efforts raise challenges for protecting innovation using patents. Patents allow small and large inventors alike to recoup the costs of research and development efforts through a period of exclusivity to practice patented inventions. The scope of patent protection, however, may vary based on ownership of the patent. For example, a single company is only permitted to own a single patent for each invention. Meanwhile, two separate companies should not be permitted to own separate patents on the same invention. So, if two patent applications are too closely related, the Patent Office will reject one application for double patenting. If the same company owns both applications, that company can overcome this rejection by agreeing that both resulting patents will be commonly owned and expire at the same time, by filing a terminal disclaimer.

Terminal disclaimers, though, cannot be filed if different companies own the related patent applications. Instead, a double patenting rejection cannot be overcome and will bar a patent. In In re Hubbell, the court held that obviousness-type double patenting applied to an earlier filed patent application that shared two common inventors with a later filed, but first-to-issue, patent, despite a lack of common ownership and lack of identical inventive entities. The court found that “obviousness-type double patenting may exist between an issued patent and an application filed by ‘the same inventive entity, or by a different inventive entity having a common inventor, and/or by a common assignee/owner.’” The court reasoned that the double patenting rejection still served the secondary purpose of the doctrine, to prevent infringement suits by multiple patent owners. In re Hubbell exemplifies an insurmountable patenting rejection that collaborating innovative entities should avoid.

Maintaining strong patent protection in collaborative enterprises

Recognizing the need for collaborative invention, Congress passed the Cooperative Research and Technology Enhancement Act of 2004 (the CREATE Act). The CREATE Act provides that collaborative entities inventing under the scope of a joint research agreement can be treated as common owners and employ terminal disclaimers. As In re Hubbell explains, “otherwise unrelated persons can be treated as common owners under the statute if: (1) they are parties to a joint research agreement that was in effect on or before the claimed invention was made; (2) the claimed invention was made as a result of activities undertaken within the scope of the joint research agreement; and (3) ‘the application for patent for the claimed invention discloses or is amended to disclose the names of the parties to the joint research agreement.’”

To avoid joint research issues from In re Hubbell, companies working together on electrification in the aerospace industry should work with intellectual property counsel to ensure that the results of joint research ventures will have strong patent protection. Intellectual property counsel can assist with preparing joint research agreements to prevent common ownership issues from In re Hubbell.

Licensing pre-collaboration research efforts

Even with a strong joint research agreement, companies that collaborate on electrification of aerospace projects may face additional issues that require input from intellectual property counsel to protect prior inventions. It’s not unusual for companies to simultaneously and independently develop technologies before deciding to work together, especially when the companies occupy different industries. The recent joint venture between Airbus and Renault is a prime example. Both companies are already involved in developing better battery technology for their respective industries and have only recently decided to collaborate. Even assuming they now have a joint research agreement, the common-owner exception under the CREATE Act will not apply to applications or patents either party owned before entering such an agreement and will not apply to inventions outside the scope of a joint research agreement.

For many collaborators, licensing is a better option to protect inventions made prior to or outside the scope of a joint research agreement. Consider a company wanting to pick up research where a collaborator left off. Strategic licensing agreements make it possible for one company to expound upon a collaborator’s innovative patents or applications, and even control the prosecution of the licensed inventions, without subjecting itself to common ownership or joint research issues. This option can promote collaborative research without the need to prepare a joint research agreement.

But licenses must be carefully drafted, too, to avoid transferring ownership rights through an assignment. Courts employ an “all substantial rights” test to determine whether the agreement is a true licensing agreement or an assignment masquerading as a license. In Immunex Corp. v. Sandoz Inc., the court found that the mere label of “license” does not automatically render a document between the collaborative parties a license under the law. Instead, the court considered the substance of the rights granted to the licensee and those retained by the licensor. “[W]hat matters is the effect of the agreement on the parties’ respective rights.” The court held that the agreement was a license because the licensor retained two rights: (1) a secondary right to sue for infringement and (2) the right to veto an assignment of the licensee’s interest under the agreement to any unrelated party. In other words, the licensor did not transfer all substantial rights because it retained both enforcement and alien rights. With the aid of intellectual property counsel, companies can carefully craft licensing agreements that allow collaboration without an inadvertent change in patent ownership.

Have a plan before collaborating

Aerospace companies collaborating with battery technology companies can maintain patent protection with proper foresight and preparation. Joint research agreements are a common option for collaborators wishing to be treated as common owners for patent prosecution management. When collaborating companies need to maintain protection for patents that were developed outside of a joint research agreement, strategic licensing can provide protection without inhibiting innovation. By working with intellectual property counsel, inventors working on electrification projects can ensure that the results of joint research projects will have strong patent protection.