GRIDWISE NEWS.   Philip Bane,  September 11, 2008.   Utility Attempts to Patent Advanced Metering

http://www.smartgridnews.com/artman/publish/industry/Utility_Attempts_to_Patent_Advanced_Metering.html

In a move that could have worldwide repercussions, one of North America’s largest utilities has filed to obtain U.S. patent rights to broad uses of an advanced metering infrastructure.

As you will read, Southern California Edison (SCE) has the best of intentions. Even so, we believe the move may cause some confusion and consternation. We are publishing this early warning to alert you to key points:

• What does the patent cover?
• What is SCE’s intent?
• What are the patent issues?
• What are the business issues for utilities and vendors?

Note: SCE will hold an industry Web conference September 19^th to discuss the pending AMI Use Case patent and proposed non-exclusive worldwide royalty free license that has been shared with the industry for comment. Watch for an SCE press release announcing the Webinar.

SCE’s AMI Use Case Patent Filing

The United States Patent & Trademark Office defines a patent as a property right granted by the government “to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States” for a limited time in exchange for public disclosure of the invention when the patent is granted.

The SCE application specifies “a method for communicating between a utility and individual customer location ...via the Internet or via an advanced utility meter.” SCE is attempting a business methods patent covering the way the technology is used (not the underlying technology itself). It broadly covers the business use of any and every AMI technology - regardless of the communications platform – and extends to grid operations. We recommend a thorough reading of SCE’s claims. (See link below.)

SCE’s Motive and Intent

SCE Vice President Paul De Martini is the head of SCE’s Advanced Technologies Group and one of the inventors named in the patent filing. (He and the other inventors have assigned all rights to SCE.) In an exclusive SGN interview, he explained SCE’s intent.

The primary goal, says De Martini, is to ensure SCE and the utility industry can freely use AMI systems to empower customers to manage their energy and to improve operational efficiency. SCE decided to file a business methods patent as a defensive measure. SCE and other utilities have previously been subjected to costly claims for patent infringement on non-AMI technology. SCE decided to file the AMI patent to proactively preclude others from claiming that SCE was violating their technology.

If it gains a patent, SCE intends extend that protection to the rest of the industry by offering a worldwide nonexclusive royalty-free license to anyone interested. SCE is working with EPRI, UtilityAMI and others associations to vet the license terms. De Martini recently used an EPRI meeting to brief a group of utilities on his patent and licensing plans. According to him and other attendees, those utilities were generally receptive to SCE’s draft terms. EPRI is leading an effort to develop a Smart Grid Open Source Repository as a way to share additional use cases with the industry (over and above those covered by the patent application).

Patent Issues

We certainly understand SCE’s concerns. The high-tech industry has many skilled, professional and ethical patent professionals. It also has a dark side of ugly patent infringement lawsuits. Firms have been formed solely to buy up obscure patents, then to extort payments from big companies under threat of lawsuit. Even if a company chooses to pay a license fee to avoid the cost of litigation, it opens itself (and the rest of the industry) to future specious claims of technology infringement.

As many know, SCE has been a leader in applying technology to utility infrastructure. But applying is very different from inventing or discovering. With this filing, SCE is taking the position that it invented certain uses for an AMI system, such as the ability to use a home area network interface in a meter to send energy information to customers. The patent examiners will now have to determine if that is a valid claim.

SGN is not taking a position for or against SCE’s decision to seek a patent, but we are warning that the development of intellectual property in the emerging Smart Grid industry will be controversial and contentious, given that it addresses the heart of a market worth many billions over the next decade.

Business Issues

If SCE is successful, the entire industry will secure the right to use AMI in the manner claimed, since SCE is willing to grant irrevocable royalty free licenses. But utilities and vendors will have to assess whether a license from SCE will provide sufficient safety. First, they must assess if they can live with SCE’s license terms.

If the license terms are satisfactory, they must next determine if there are other areas still unprotected. SCE’s patent application only addresses certain uses for AMI. The situation will be especially problematic for vendors, who must determine what SCE’s patent will mean to their own intellectual property claims. 

With Wealth Comes Pirates

SGN has broadcast the unrivaled economic opportunity for utilities and Smart Grid vendors. (See the link below to How Electronomics Will Make Utility Pros Rich). However, with any economic opportunity comes risk. Although SCE has apparently acted with the best of intentions, its filing highlights the pitfalls facing many utilities and Smart Grid vendors. As SGN highlighted recently in the article The Dangers of Meter Data, North American utilities are dangerously naïve about the upcoming upheaval from data overload, data privacy and lack of security. And about the dangers from unscrupulous patent pirates.

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