Inverse Enclosure: Abdicating the Green Technology Landscape

The shift to “better” technology may have a social mandate, but it can be delayed due to entry barriers like switching costs or startup costs. Energy is a particularly good example of a sector facing such challenges. To encourage the switch to more efficient, less polluting, domestic energy sources, governments across the globe provide a push with research funding or specific market interventions like tax incentives and use requirements. Notably, the acceleration of green energy technology has been accompanied by a surge in private patent rights. The issues related to such an increasingly crowded innovation space have been described in the literature and are generally understood by firms and policymakers. However, the politically charged nature of green technology may give rise to a unique and somewhat novel problem in the developed world: an abdication of the technology landscape by a nation that unilaterally reduces or eliminates support.This paper will explore a scenario in which a developed country’s domestic industry becomes hemmed in by foreign-owned patents. Referring to it as inverse enclosure, this work describes a legal landscape that is defined by a nation, but captured by others. It is essentially the inverse of the IP enclosure confronting developing countries. This paper articulates a mechanism for inverse enclosure and posits that it may impact technology innovation and constrain access. A framework for managing the patent landscape is presented as a partial shield against enclosure. Given the importance of technology areas like alternative energy, understanding the risks of inverse enclosure is necessary for both industry and government.