You are here: Home / News Release Archives / 2013 / September / Patents as Information Containment Tools for Natural Gas Industry

Patents as Information Containment Tools for Natural Gas Industry

New research from Penn State and the University of Alberta suggests that patents related to hydraulic fracturing—or fracking—can be used in the industry to limit the availability of information about the fluids expended as part of the natural gas extraction process.
September 3, 2013

New research from Penn State and the University of Alberta suggests that patents related to hydraulic fracturing—or fracking—can be used in the industry to limit the availability of information about the fluids expended as part of the natural gas extraction process.

Though a variety of stakeholders have increasingly questioned potential environmental, safety, and health hazards related to fracking, many of the components used during fracking operations cannot be identified because “they are withheld as proprietary or trade secrets,” according to the researchers.

Many of the components used during fracking operations cannot be identified because “they are withheld as proprietary or trade secrets.”

Researcher Dan Cahoy, a Smeal professor of business law, and colleagues Zhen Lei from Penn State’s College of Earth and Mineral Sciences along with Joel Gehman from the University of Alberta School of Business have found that patents may be controlling or limiting the release of significant information when it comes to certain aspects of fracking.

Cahoy and his colleagues write that disclosure itself will not solve the problem. “Without the ability to analyze the consequences of specific products and processes, the disclosure of their use is largely inconsequential,” he said.

Because patents are meant to facilitate the disclosure of an invention and not its impact, patent rights unexpectedly also serve as a potential barrier to learning more about how the components used in the fracking process impact the environments and communities surrounding it.

The research by Cahoy and others indicates there are two primary ways that patents also can be used for information containment: by limiting follow-on research that can lead to further advancement of the innovation, and by prohibiting third-party use—including testing and analysis—even outside the realm of marketplace competitors.

“Field and laboratory experimentation is necessary to fully capture how the exploitation of shale gasses impacts the environment. Normally, third parties such as NGOs [nongovernmental organizations] and universities would be able to fill this information gap, but patents may play a new and surprising role in limiting this important source of information production,” according to the researchers.

“Field and laboratory experimentation is necessary to fully capture how the exploitation of shale gasses impacts the environment. Normally, third parties such as NGOs [nongovernmental organizations] and universities would be able to fill this information gap, but patents may play a new and surprising role in limiting this important source of information production.”

In a detailed analysis of the natural gas-related patents over the course of their use, the researchers found that patent activity related to fracking increased dramatically around the time the process was becoming more common. Most of this increase is related to fracking fluids, the researchers discovered. Patents that are related to well completion and horizontal drilling have not seen a similar increase.

Using a search of U.S.-issued patents designed to capture those clearly related to fracking, Cahoy and his colleagues find a dramatic increase in patenting in the last 20 years.  The increase is even more pronounced over the last 10 years, and the trend appears to be continuing.  The researchers are currently conducting a broader search for fracking patents to get a more complete picture of the players and technology being captured.

The researchers assert that, through litigation and licensing, much information can be controlled. In matters of public concern, it may be important to assess dramatic patent accumulation. But Cahoy and his colleagues aren’t necessarily touting patent right reform. They pose several other possible solutions available within the law as it currently stands. For instance, they suggest public universities play a larger role in testing and analyzing compounds because of their increased flexibility in avoiding liability.

The paper “Fracking Patents: The Emergence of Patents as Information-Containment Tools in Shale Drilling,” is authored by Daniel R. Cahoy, professor of business law at the Smeal College of Business, Joel Gehman, assistant professor of strategic management and organization and H.E. Pearson Faculty Fellow at the University of Alberta School of Business, and Zhen Lei, assistant professor of energy and environmental economics in the Penn State College of Earth and Mineral Sciences, and appears in the Michigan Telecommunications and Technology Law Review. A copy of the article can be downloaded at: www.mttlr.org/html/home.html.

Recent News
Summer Business Program for High Schoolers Facilitates Diverse Penn State Network 28 Jul

The Business Opportunities Summer Session (BOSS) Program, facilitated by the Penn State Smeal College of Business’ Diversity Enhancement Programs, connects underrepresented high school students with current Penn Staters and alumni to provide an inside look at the business majors and beyond. Currently in its eighth year, the program is helping to create a powerful network as it continues to share the value of a Smeal education with a diverse population.

Why Aren't Consumers Buying Remanufactured Products? 28 Jul

Firms looking to increase market share of remanufactured consumer products will have to overcome a big barrier to do so, according to a recent study from the Penn State Smeal College of Business. Findings from faculty members Meg Meloy and V. Daniel R. Guide, Jr., indicate that consumers perceive many categories of remanufactured products as dirty and disgusting.

Penn State President Emeritus Rodney Erickson Joins Smeal Executive MBA Students in Celebration 25 Jul Penn State President Emeritus Rodney Erickson Joins Smeal Executive MBA Students in Celebration

About 30 students celebrated their completion of the Penn State Smeal Executive MBA Program last month in a pre-commencement ceremony held at the Business Building on Penn State’s University Park campus, with former University president Rodney Erickson delivering the commencement speech.

Smeal's Multimedia Team Recognized for Providing Valuable Student Service 24 Jul

A group of Smeal College of Business staff members were recently recognized for their efforts to provide students with professional portraits for their LinkedIn profiles. The Penn State Information Technology Resource Responsibility award was granted to the Resource, Instruction, and Information Technology (RIIT) Group’s Multimedia Team.

Company Looks to Penn State Smeal for Next Generation Supply Chain Talent 23 Jul

The Penn State Smeal College of Business is one of only two schools from which Burlington Stores, a national off-price retailer headquartered in New Jersey, actively recruits for its Supply Chain Leader Development Program. This leadership program for supply chain graduates is an 18-month program that introduces new graduates to the various roles and responsibilities of leadership at the company.

More Recent News... More Recent News...