Holy Roman Empire

Chapter 440: Patent Licensing at Bargain Prices

Vienna, the Austrian New Energy Power Company has seen a significant increase in business recently, particularly in its commercial department, which is incredibly busy.

Since Vienna became the “City That Never Sleeps,” various major cities have frequently sent invitations to the company’s headquarters, and naturally, business discussions have followed.

While current commercial value may be lacking, it doesn’t mean there won’t be value in the future. Electricity is the zeitgeist of this era, with a boom soon to come.

A power company might face losses, but a monopolistic power company will never lose money. Even if the government limits prices in the future, reasonable profits will still be ensured.

Controlling a city’s electricity supply means controlling local discourse, especially in industrial cities. To weaken competitors, one only needs to disrupt their power supply during peak usage times, and it would be hard for them to complain.

The future world will rely on electricity, and whoever controls it controls the era. By the late 19th century, almost every conglomerate had its own power company.

The Austrian New Energy Power Company, on the surface, seems like an independent entity, but it is actually a subsidiary of the royal family’s conglomerate. Due to practical needs, this company will become a new conglomerate.

Regardless of the changes, the ultimate controller remains the royal family. Officially, there appears to be no direct connection, and the royal family’s investment shares are less than ten percent.

These shares will be further diluted once the company goes public. Most of the company’s shares are held by various institutions. Upon closer inspection, institutions are backed by other institutions, with cross-holdings that make ownership complex and intricate.

This cannot be hidden from those with insight; as long as the average person remains unaware, it’s fine. Those who can see through it are smart and won’t speak out without evidence.

It’s all legal business, and even if someone speaks out, the impact will be limited. However, the cost of speaking recklessly could be never speaking again.

No one is concerned about the issue of ownership, at least not until the Austrian New Energy Power Company goes public. These issues will not attract attention for now.

Elkeson, the manager of the commercial department at the Austrian New Energy Power Company, has been primarily occupied with replying to telegrams and sending representatives to negotiate with various governments.

His negotiations aren’t limited to Austria; many cities across Europe are his clients. Some cities seek partnerships, while others simply want patent licenses.

Although patent management in this era isn’t very strict, most European countries have patent laws. While small companies or individuals might infringe without consequence, governments cannot take the lead in violating these laws.

If a government were to violate patent laws, it would not only lose face but also risk significant financial penalties if sued.

Most European countries pride themselves on judicial impartiality, and many judicial systems are independent. Courts are eager to set an example of judicial fairness with such cases.

Of course, this applies primarily to governments. The deterrent effect is much weaker when dealing with individuals or private enterprises.

Underpayment or non-payment of patent fees is common, and the amount collected depends entirely on the patent holder’s capabilities.

The government cares about its reputation and fears losing such a lawsuit, but this doesn’t mean that businesses share the same concern. Companies often create a shell entity, and if they lose a lawsuit, they simply declare bankruptcy and start anew with a different shell.

In this regard, the Austrian New Energy Power Company is fortunate. This power system falls under public infrastructure, and the clients are primarily local governments who need to maintain a respectable image.

Since the clients need to maintain a respectable image, the power company involved in this business must also maintain a respectable image. Without patent authorization, it is impossible to win contracts.

Of course, this is also why the Austrian New Energy Power Company doesn’t charge high patent fees. Otherwise, others might develop a new system from scratch to bypass the patent barriers.

With low fees, there is no need for costly new development. Given the number of patented technologies involved, bypassing the patent system would be far more expensive.

After over two months of hard work, Elkeson finally produced some results and knocked on President Marc-Oliver’s office door.

“Come in!”

Marc-Oliver’s voice came from inside.

Elkeson walked into the office and reported, “President, we have completed the initial assessment with the representatives of the Paris Power Company. Both sides have basically reached an agreement on the patent authorization issue. The only trouble is that they require exclusive authorization.”

Unsurprisingly, the first to reach a preliminary agreement were the French. After all, they are quite proud and only need patent authorization. They didn’t even invite the Austrian New Energy Power Company to invest.

If no investment is needed, negotiations naturally become easier. No one would refuse money, and the Austrian New Energy Power Company also requires the funds to expand its operations.

However, for those inviting investment, the commercial department has to adopt a delaying tactic. Contracts can be signed in advance, but when to start construction needs careful consideration.

Currently, costs have not decreased, and starting construction immediately would result in losses. Unless the local government is willing to cover the costs, the Austrian New Energy Power Company cannot afford it.

Having Vienna as an advertisement is enough. With the “City That Never Sleeps” as a promotional tool, the patent fees collected will be sufficient to recoup the initial investment.

Marc-Oliver tapped his right index finger on the table, a habit of his when deep in thought. After a moment of silence, he slowly said, “Tell the French that if they are willing to pay an additional 1 million guilders in patent fees, we will grant them exclusive rights.”

The Austrian New Energy Power Company’s patent fees are not high and vary by country. For example, the patent fee for France is 300,000 guilders, with an annual fee of 0.2 guilders per residential user, 100 guilders per factory or business, and 50,000 guilders per million people annually for city lighting systems.

These rates are not high and include technology transfer fees. For example, the production technology for large generators and power transmission-related technologies.

The development cost of these technologies would not be less than 300,000 guilders. The subsequent patent fee standards may seem substantial, but in reality, they don’t amount to much. After all, patented technologies are time-limited and won’t last into an era of full electrification.

For example, for residential electricity, calculating based on ten percent of the French population, there would be about 4.5 million people, equating to roughly 500,000-600,000 households considering the larger family sizes of the time.

In practice, these numbers are difficult to tally accurately, so the actual amounts are mostly estimates, with the French providing the specific figures.

As long as the discrepancy is not too large, the Austrian New Energy Power Company is not likely to send someone from Austria to investigate, as the cost of such an investigation would be too high.

Industrial electricity usage is even harder to monitor. Companies could easily report multiple factories as one, making accurate auditing very challenging.

This difficulty in monitoring is also why there are no equipment production patent fees. It’s nearly impossible to track how much is produced, and if the other side decides to play tricks, they could evade paying significant amounts.

The only reliably enforceable fee is the city licensing fee. In the short term, only Paris is expected to implement this; other cities will take time. It’s possible that by the time the patent period expires, fewer than ten cities will have adopted the system.

Not every local government is wealthy. Impoverished cities are still the norm in this era, and it’s entirely normal for them to be unable to afford the cost of an electricity supply system.

The patent protection period determines this. According to French law, the city power grid system patent is protected for only eight years, while other related technologies are protected for up to thirty years.

As each patent expires, the corresponding fees will be deducted. How much profit can be made in the end is unknown.

Not granting exclusive licenses is a strategy to collect multiple licensing fees. After all, money in hand is more secure than potential future profits.

However, if the price is high enough, a one-time buyout is possible. Currently, no one can predict how fast electrical technology will advance. Otherwise, the French might opt for a direct buyout of the technology.

Theoretically, this set of patents is very valuable, potentially generating millions of guilders in annual patent fees. In practice, however, no one really knows how much will actually be collected.

An annual income of one to two million is likely, as it is a complete power system, and despite its imperfections, it is still considered high-tech in this era.

In the field of patents, the British are the real leaders. As the birthplace of the Industrial Revolution, they possess the most patented technologies.

However, due to the passage of time, most of their patents have expired. Otherwise, they would be collecting at least ten million pounds annually now.

Obviously, this patent fee collection mainly occurred within Britain. By the time other European countries experienced their industrial revolutions, most British technologies were no longer under patent protection.

The patented technologies of the Austrian New Energy Power Company can be considered to be selling at a bargain as their technology is unfortunately still immature.

The current licensing is actually somewhat deceptive. Buyers will soon realize that while these technologies have great potential, they will not be profitable in the short term.

Unprofitable technologies naturally cannot command high prices. Apart from Paris and London, which feel compelled to keep up appearances, other cities are not as extravagant.

If they wait a bit, even just 2-3 years, the costs could decrease by 20-30%.

The current hype in Paris and London has been significantly influenced by the Austrian New Energy Power Company, which has been buying newspaper articles to promote the “Electric Age,” “Lighting Revolution,” and headlines like “Paris is falling behind” and “London is lagging behind.”

If it weren’t for the enthusiastic response from the people of Paris, the Austrian New Energy Power Company’s patents might still be unsold.

There’s no other way. If you want to keep the technology secret, you can’t register for a patent. But if you don’t register, someone else might, and all your previous investment will be wasted.

The Austrian Patent Office will keep their secrets, but the patent offices in Britain, France, and other countries won’t be so considerate. From the moment an international patent is registered, it becomes an open secret.

Since it’s impossible to keep it confidential, selling it off is the best option. Relying on competitors to play by the rules and not steal the technology is unrealistic.

Most countries’ research capabilities are on a similar level. If they acquire these technologies, it would take Britain and France at most six months to replicate them, and they might even improve upon them.

Unlike future technologies, where science has advanced to a certain level and even openly published data can’t easily be decoded, current technology differences lie mainly in thought processes.

Some technologies can even be reverse-engineered just by examining the product’s exterior.

This is why, in this era, there are no technological barriers. As long as you have money, you can buy what you need. It’s not that people don’t understand the importance of keeping technology confidential, but it’s simply impossible to keep secrets.

The Austrian New Energy Power Company is no different. Without the ability to keep the technology secret, they naturally aim to maximize profits.

If they don’t sell their patented technologies now, it will be much harder to do so in the future. Setting industry standards alone is a difficult temptation to resist.