Fracking Patents: The Emergence of Patents as Information Containment Tools in Shale Drilling

52 Pages Posted: 23 May 2012 Last revised: 6 Apr 2014

Daniel R. Cahoy

Pennsylvania State University - Mary Jean and Frank P. Smeal College of Business Administration

Joel Gehman

University of Alberta - Department of Strategic Management and Organization

Zhen Lei

Pennsylvania State University

Date Written: May 22, 2012

Abstract

The advantages of new sources of energy must often be weighed against environmental, health and safety concerns related to new production technology. The rapid development of unconventional oil and gas fields, such as the Barnett and Marcellus Shales, are no exception. Information about extraction hazards is an extremely important issue. In general, patents are viewed as a positive force in this regard, providing a vehicle for disseminating information in exchange for a limited property right over an invention. However, there is an emerging recognition that patents can also be used to control the creation of new information by limiting the evaluation of an invention by third parties. Such control is more likely in situations where third-party use and assessment may produce information damaging to the patent owner.

This paper will explore the relationship between patents and information control in the context of natural gas extraction. It will describe the substantial growth of patents in hydraulic fracturing, the technology used to extract gas from the widely discussed Marcellus Shale in the eastern United States. The paper will then explain how patents on hydraulic fracturing fluids could potentially be used to prevent testing by third parties. Analogies in agricultural biotech and genetic treatments are used to support these claims. An understanding of the role of patents as information control mechanisms is critical to the safe employment of new technology. If patents substantially limit information creation or disclosure, government intervention to permit experimental use and environmental, health and safety testing may be necessary. However, options do exist under current law that should be considered before patent rights are encumbered.

Keywords: Patents, Hydraulic Fracturing, Shale Drilling, Information Containment, Information Disclosure

JEL Classification: O31, O32, O34, K11, K32, Q42, Q43, Q48, D82

Suggested Citation

Cahoy, Daniel R. and Gehman, Joel and Lei, Zhen, Fracking Patents: The Emergence of Patents as Information Containment Tools in Shale Drilling (May 22, 2012). 19 Michigan Telecommunications and Technology Law Review 279 (2013). Available at SSRN: https://ssrn.com/abstract=2065032 or http://dx.doi.org/10.2139/ssrn.2065032

Daniel R. Cahoy

Pennsylvania State University - Mary Jean and Frank P. Smeal College of Business Administration ( email )

310 Business Building
University Park, PA 16802
United States
814-865-6205 (Phone)
814-865-6284 (Fax)

Joel Gehman (Contact Author)

University of Alberta - Department of Strategic Management and Organization ( email )

Edmonton, Alberta T6G 2R6
Canada
(780) 248-5855 (Phone)

HOME PAGE: http://www.joelgehman.com

Zhen Lei

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

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