GE Energy Acquires Wind Tower Systems
On Friday, GE Energy announced the acquisition of new tower construction and erection technology from Utah based Wind Tower Systems, LLC. Wind Tower Systems has developed a space frame tower design to accommodate tower heights of over 100 meters that can be installed without the use of heavy lift cranes during construction.
“We see great potential in the addition of this technology to our portfolio not only for our customers but also for the wind industry as a whole,” said Victor Abate, vice president-renewable energy for GE Power & Water. “Taller towers are an essential complement to longer blades. Longer blades capture more energy and in turn improve return on investment for wind farm developers.”
“The taller space frame towers and integrated lifting system concepts, developed with the support of the U.S. DOE and California Energy Commission, have been designed to drive lower wind energy costs,” said Thomas Conroy, CEO of Wind Tower Systems. ”We are delighted that the development of the company’s products will be completed and commercialized by GE.”
Oklahoma's Significant Renewable Energy Legislation is Going Into Effect
An update on Oklahoma from Laura Suesser and Sara Bergan:
The Oklahoma legislature passed three bills (H.B. 2973, S.B. 1787, and H.B. 3028) in 2010 that affect the renewable energy industry. Two have already gone into effect and the third will go into effect on January 1, 2011. A summary of each bill is included below.
The Oklahoma Wind Energy Development Act (the “Act”), H.B. 2973, becomes effective on January 1, 2011 and will be codified in Okla. Stat. tit. 17 §§160.11-17 (2010). The Act includes the following:
- Decommissioning: Decommissioning requirements apply to any wind energy facility entering into or renewing a power purchase agreement (PPA) on or after January 1, 2011. If energy is not being sold under a PPA, the requirements apply to wind energy facilities which commence construction on or after January 1, 2011. The requirements include:
- Restoration: Owners of a wind energy facility must remove wind energy equipment (to a depth of 30”) and restore land surfaces to substantially the same pre-construction condition (excluding roads) within 12 months of abandonment of a project or the end of the useful life of the equipment.
- Cost Estimate and Posting of Financial Security: After the 15th year of operation, facility owners must file a professional estimate of the decommissioning costs together with a financial security (either a surety bond, collateral bond, parent guaranty or letter of credit) to cover such costs. Those failing to so file may incur an administrative penalty of up to $1,500/day.
- Payment Statements and Access to Records: Any owner or operator making payments to landowners based on the amount of electrical energy produced is required to deliver a statement to the landowner, within 10 business days of payment, explaining the payment calculation and a means for the landowner to confirm its accuracy. Landowners have the right to inspect owner/operator records to confirm the accuracy of payments for up to 24 months following payment. Records must be made available for review within the state of Oklahoma.
- Insurance: Owners or operators are required to obtain commercial general liability insurance policy with limits consistent with prevailing industry standards (or a combination of self insurance and excess liability insurance policy), which name the landowner as an additional insured and certificates of insurance must be delivered to landowner prior to commencing construction of the facility.
No Severance of Wind and Solar Rights. Wind and solar right severance was restricted in another Senate bill out of the same session, Oklahoma S.B. 1787. The bill restricts the permanent severing of rights to the airspace above the surface estate for the purpose of developing and operating commercial wind and solar energy conversion systems. Thus wind and solar resource leasing arrangements (broadly defined to include easement and option arrangements) must be made with the legal owner of the surface estate. The bill confirms that wind and solar agreements run with the land and outlines provisions for recording the interest. The bill will be codified in the Okla. Stat. tit. 60 §820.1 (2010) and became effective July 1, 2010 .
15% Renewable Generation Capacity by 2015. The Oklahoma Energy Security Act (the “OES Act”), H.B. 3028, sets a goal that 15% of all installed electric generation capacity within the state be generated from renewable energy sources by 2015. Qualifying renewable energy resources include: wind, solar, photovoltaic, hydropower, hydrogen, geothermal and biomass (including crops, residues, animal waste, MSW and landfill gas). Demand side management can be used to meet up to 25% of the overall 15% goal. Notably the OES Act does not include any provision for the use of renewable energy certificates (RECs) to meet the goal.
Expand Transmission in SW. To better facilitate wind-energy development, the OES Act also directs the legislature to work with the Southwest Power Pool to develop a plan to expand transmission capacity in Oklahoma.
Develop Natural Gas and Add Fueling Stations. Noting the opportunity to develop Oklahoma’s abundant natural gas resources, the OES Act sets natural gas as the preferred choice for any new fossil fuel based electric generation capacity until January 1, 2020. It also sets a goal to develop public CNG fueling stations every 100 miles along the interstate highway system by 2015 and every 50 miles by 2025. The OES Act became effective November 1, 2010 and will be codified in the Okla. Stat. tit. 17 §§801.1-7 (2010).
Mitsubishi Wind Turbine Antitrust Claims Put on Ice
A federal judge has stayed Mitsubishi’s antitrust monopolization claims against General Electric in an Order issued this week. Opening a new front in the battle with General Electric over wind turbine technology, Mitsubishi tried to raise the stakes last May, claiming that General Electric’s patent infringement actions (proceeding in three other venues) were baseless, calculated to help General Electric maintain a monopoly in the market for variable speed wind turbines. Mitsubishi also filed its own patent claims against General Electric, in yet another court. As we reported when the claims were filed last spring, Mitsubishi’s antitrust claims were premised on the theory that General Electric’s patent infringement claims were a “sham.”
Not surprisingly, General Electric asked the court in the Western District of Arkansas to either dismiss Mitsubishi’s claims or stay the claims, pending the outcome of General Electric’s patent infringement lawsuits. On the motion to dismiss, the court found that “[n]either of [General Electric’s] arguments has merit” – holding that there is insufficient evidence in the record to definitively establish that General Electric’s patent infringement claims were not objectively baseless. The court held that pending the outcome of the ongoing patent infringement claims in other courts, Mitsubishi may be able to prove that General Electric engaged in sham litigation with the intent of excluding Mitsubishi from the variable speed wind turbine market. For this reason, it would be inappropriate to dismiss Mitsubishi’s antitrust claims, the court held.
However, the court also noted that Supreme Court precedent establishes that Mitsubishi’s sham litigation claim cannot proceed if General Electric ultimately prevails on one or more of its patent claims against Mitsubishi. Even if a favorable verdict of patent infringement is ultimately overturned, under controlling precedent, a favorable trial verdict is sufficient to establish a patent holder’s probable cause to file its underlying claim – and thus eliminates any sham litigation claim. Because there are pending patent claims before other courts where General Electric may ultimately prevail, the Arkansas court decided to stay Mitsubishi’s antitrust claims while General Electric’s patent claims proceed.
The gambit to raise an antitrust action against General Electric has suffered an initial setback. Much as Mitsubishi may have relished a concurrent antitrust counterattack against General Electric, the Arkansas court, sitting where Mitsubishi (not coincidentally) plans to build a major wind turbine manufacturing plant, has refused to put the cart before the horse. The good news for Mitsubishi of course is that its sham litigation claims survived the motion to dismiss. If Mitsubishi can ultimately prove that General Electric knowingly sued on fraudulently obtained patents, look for more action back in the Western District of Arkansas, but not any time soon.
Competition over Wind Turbine Technology Heats Up
The wind energy businesses at General Electric and Mitsubishi have come to blows over their competing wind turbine technology. At the center of the dispute are the companies’ patent portfolios. The New York Times reports that Mitsubishi opened up the battle on two new fronts on May 20, with an antitrust complaint filed in a U.S. District Court in Arkansas and a patent infringement complaint filed in a U.S. District Court in Florida. (Mitsubishi has put up a page on its web site devoted to the dispute, with media coverage and copies of its complaints.)
That two competing wind turbine manufacturers would develop a dispute over the scope of their patents is not terribly surprising. The technology involved requires substantial capital investments that are worth defending. What’s most interesting is that Mitsubishi has filed antitrust claims arguing that General Electric monopolized the wind turbines market through “baseless claims of patent infringement” – in other words, “sham litigation.”
The Supreme Court has recognized that filing lawsuits (including patent infringement suits) is a right protected by the First Amendment. One can only prevail on a sham litigation theory challenging a given suit by proving that the underlying claims were “objectively baseless.” In the patent context this typically means that a party must prove that the underlying patent was fraudulently obtained, or clearly did not cover the technology found in the “infringing” product. A Federal Trade Commission report explains that a sham litigation claim also requires proof that a defendant deliberately wielded baseless claims as an “anticompetitive weapon.”
Mitsubishi argues that General Electric filed baseless patent infringement claims that prevented Mitsubishi from selling its variable speed wind turbines for almost two years. At the same time, Mitsubishi’s counterattack includes a separate lawsuit arguing that General Electric infringes Mitsubishi patents. Mitsubishi’s theory of how General Electric monopolized the market is that General Electric used its patent infringement suits to scare developers away from Mitsubishi’s allegedly infringing wind turbines. The resulting lost sales, claimed by Mitsubishi, are in the billions. Then again, if General Electric’s patent claims were objectively reasonable (they don’t have to be ultimately successful), General Electric was within its rights to defend its patents.
In an industry requiring major capital for research and development, these types of disputes will not be uncommon. And where there are few competitors, it is easy to challenge an aggressive competitor as a “monopolist.” (Mitsubishi and General Electric share the large scale wind turbine market with only three other major competitors, Gamesa, Siemens, and Vestas.) If Mitsubishi can prove that General Electric’s patent infringement suits really did lack merit, expect Mitsubishi to hold out for a generous cash settlement. If Mitsubishi’s theory is not as strong as its press releases suggest, watch for a different type of settlement, perhaps a cross licensing agreement of Mitsubishi and General Electric patents – a deal which would allow the companies to compete head to head, while maintaining the right to sue other challengers using technology that might infringe the cross licensed patents.
