Holy Roman Empire - Chapter 440

Chapter 440: Chapter 13, Tearful Patent Licensing Blowout Sale
 

Vienna, business at the Austrian New Energy Power Company, has increased significantly recently, with the commercial department being particularly busy.

Ever since Vienna transformed into the City that Never Sleeps, the company’s headquarters have been frequently invited by various major cities, naturally leading to business negotiations.

The lack of commercial value now does not mean that there will be no commercial value in the future. Electric power is the trend of this era, and the gushing age is coming.

An electric power company can suffer losses, but a monopolistic electric power company will never incur losses. Even if the government were to limit prices in the future, they would still have to leave a reasonable profit margin.

Controlling a city’s power supply means holding sway over local discourse, especially in industrial cities.

To hit competitors, just give them a power cut every now and then during peak usage times, and they will not be able to complain.

In a future where the world cannot do without electricity, whoever controls electric power, controls the era. By the end of the 19th century, nearly every consortium had its own electric power company.

On the surface, the Austrian New Energy Power Company appears to be an independent entity, but in reality, it is a subsidiary of the Royal Consortium. Due to practical needs, this company will become a new consortium.

No matter how it changes, the final controllers are always the royal family. Of course, officially, there is no direct relationship between the two, and the shares invested by the royal family do not seem to constitute more than ten percent.

Even that shareholding will continue to dilute once the company goes public, with the majority of shares held by various institutions. A closer look behind these institutions reveals cross-holdings and a complex network of ownership sufficient to baffle anyone.

This doesn’t fool the determined, but as long as it’s not obvious to the general public, it’s sufficient. Those who can make it out are clever, and without evidence, they will not speak recklessly.

All this is legitimate business; even if spoken about, it has a limited impact. But the cost of speaking carelessly could well be the permanent loss of that ability.

Nobody cares about the issue of shares, at least not until the Austrian New Energy Power Company goes public. Only then might these issues attract attention.

Elkson was the commercial department manager at the Austrian New Energy Power Company. Recently, his main task was to respond to telegrams and then send representatives to negotiate with the government.

Negotiations were not limited to Austria; many cities in Europe were his clients. Some cities required cooperation, while others needed simple patent licensing.

Although patent management in this era is not very strict, nearly all European countries have patent laws. Small companies and individuals breaking them is not a big deal, but governments obviously cannot be seen leading the violation.

If the government leads in breaking patent laws, and that gets out, the loss is more than just face. Legal disputes would also mean paying a significant sum.

Most European countries pride themselves on judicial fairness, hence many judicial systems are independent. In such cases, courts are eager to establish precedents of judicial fairness.

Of course, this only applies to governments. When facing individuals or private enterprises, the deterrent isn’t as strong.

Withholding patent fees or underpaying is common. How much can be collected entirely depends on the patent owner’s capability.

Governments care about face and avoid such sure-loss lawsuits; but that doesn’t mean businesses are also scared. Often, businesses operate under a shell company, and if they lose a lawsuit, they can simply declare bankruptcy and continue under a new name.

In this respect, the Austrian New Energy Power Company is lucky. Their electrical system is part of public infrastructure, and their main clients are local governments, all of whom need to save face.

Clients need to mind their image, and the electric power companies engaging in this business must also be cautious. Without patent authorization, it’s impossible to win the bid.

Of course, this is also why the Austrian New Energy Power Company collects less in patent fees; otherwise, others would simply create a new system and circumvent patent barriers.

Without hefty fees, there’s no need to reinvent the wheel. With so many patents involved, circumventing the intellectual property system would require significantly higher costs.

After more than two months of hard work, Elkson finally came up with the first result and knocked on President Mark Oliver’s office door.

“Come in!”

Mark Oliver’s voice sounded.

Elkson entered the office and reported, “President, we have completed preliminary assessments with representatives from the Paris Power Company and have nearly reached a consensus on patent licensing. The only trouble is that they require exclusive licensing.”

As expected, the French were the first to reach a preliminary intent. They are proud enough to simply need patent authorization and did not invite the Austrian New Energy Power Company to invest.

Not needing investment naturally makes negotiations easier. Nobody will quarrel with money, and the Austrian New Energy Power Company also needs funds to expand its scale now.

On the contrary, for those inviting investment, the commercial department has had to employ delay tactics. Contracts can be signed in advance, but when to start construction needs consideration.

After all, costs have not yet been reduced. To start construction immediately would mean operating at a loss. Unless local governments are willing to foot the bill, the Austrian New Energy Power Company can’t afford it.

Having Vienna as an advertisement is enough. The patent licensing fees that can be collected with the “City that Never Sleeps” advertisement are already sufficient to recoup previous investments.

Mark Oliver tapped his right index finger on the table, a habit he had when pondering. After a moment of silence, he slowly spoke, “Tell the French, if they are willing to pay an additional one million Divine Shield for the patent licensing fee, they will get the exclusive license.”

The Austrian New Energy Power Company’s patent licensing fees are not high, and they differ from one country to another. For instance, France’s patent licensing fee is 300,000 Divine Shields, with residential electricity consumption being charged at a standard rate of 0.2 Divine Shields per user per year, factories and businesses at 100 Divine Shields each per year, and each city’s lighting system at 50,000 Divine Shields per million people per year…

This standard isn’t high, and it includes related technology transfer fees, such as those for large generator production technology and power transmission technology, among others.

The research and development costs of these technologies all exceed 300,000 Divine Shields. The later patent fee collection standards may seem high, but in reality, they aren’t much. After all, patent technology has a time limit and won’t see revenues from widespread adoption.

For instance, taking into account that the French residential electrification covers only 10% of the population, that amounts to only about 4.5 million people, which given the demographic abundance of the time, equates to the households being about five or six hundred thousand.

When it comes to actual settlements, it’s difficult to gather accurate statistics, so it’s essentially an estimate, with the French having the final say on the specific data.

As long as the discrepancy isn’t too large, the Austrian New Energy Power Company, being Austrian, is unlikely to send someone to investigate, as the cost of investigation is too high.

It’s even more difficult to tally industrial electricity consumption; considering several factories as one for accounting purposes can lead to fudging the figures, and checking this is very challenging.

This is why there was no patent fee for equipment production—the numbers produced are simply untrackable, and if the other party plays tricks, very little money can be collected.

The only secure source of revenue is the city licensing fee, and for the short term, only Paris will be paying it, with other cities having to wait. It’s probable that not even ten cities will have adopted it by the time the patents expire.

Not every local government is wealthily endowed; impoverished cities were still mainstream in this era, with no funds to invest in an electrical supply system being more norm than not.

The patent protection period is crucial; according to French law, a city’s electrical grid system only has eight years, and other related patent technologies are capped at thirty years at most.

When each patent technology’s protection period expires, the corresponding fees will be deducted. How much the final revenue will be is still an unknown.

The refusal to grant an exclusive license is an attempt to collect multiple licensing fees. After all, money in hand is one’s own, while potential gains may not be realized.

If the price is high enough, a one-time buyout isn’t out of the question. No one knows how fast power technology will develop in the future, otherwise the French might have likely bought out the technology directly.

In theory, these patents are quite valuable, potentially earning several million Divine Shields in patent fees each year, but in reality, no one knows the exact figure.

It’s estimated that a few million, perhaps one or two million, can be earned annually—after all, it’s an entire power system and, despite some shortcomings, it’s cutting-edge technology for this era.

The British lead in this area; as the cradle of the Industrial Revolution, they possess the most patents.

However, due to time, most of their patent technologies have expired; otherwise, they would be collecting tens of millions of British Pounds every year by now.

Obviously, the British only collected patent fees domestically. By the time the rest of Europe ignited their Industrial Revolutions, most of their technology was no longer under patent protection.

The Austrian New Energy Power Company could be said to be having a fire sale of their patent technology. They had no choice; their technology was still unripe.

The current licensing is essentially a trap for buyers, who’ll soon discover these technologies have a bright future but will not turn a profit in the short term.

Technology that doesn’t turn a profit can’t command a high price. Aside from Paris and London, which are keeping up appearances, other cities don’t have such deep pockets.

Just waiting a little longer—perhaps just two or three years—could see costs fall by twenty to thirty percent.

The bustling scenes in Paris and London haven’t excluded the Austrian New Energy Power Company’s influence, buying newspapers and touting phrases like “the era of electricity,” “lighting revolution,” “Paris is falling behind,” and “London is falling behind”…

If it weren’t for the robust support of the Parisians, the Austrian New Energy Power Company’s patent technology sales might have stalled.

There’s no choice; to maintain technological secrecy, one must avoid registering patents; but without patent registration, if someone else preemptively claims it, the previous investments are lost.

The Austrian Patent Office will keep their secrets, but the patent offices of England and France and others won’t have such international spirit. Transnational patent technology, from the moment of registration, becomes a public secret.

Since secrecy is unattainable, it’s better to sell—would one expect competitors to play fair and not steal the technology?

Everyone’s research and development are virtually on the same level. With access to these technologies, England and France could replicate and possibly even improve them within six months.

Unlike future technology, where technological advancement has reached a point where even if high-tech data is made public, it’s not easily deciphered, during this era, the gap lies merely in thought processes.

Some technologies can be reverse-engineered just by examining the exterior of the product.

This is why, in this era, there are no technological barriers set up—if you have money, you can buy the technology. It’s not that people aren’t aware of the importance of keeping technology secure, but rather that it is impossible to keep it secret.

The Austrian New Energy Power Company is no different, maximizing their benefits under the impossibility of maintaining technological secrecy.

If they don’t sell their patent technology now, it will be harder to do so in the future. Merely setting industry standards is an irresistible temptation.