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Applying Patents in the Developing Biomass Industry

By Todd Taylor and Adonis Neblett
Biomass technological development is rapidly advancing. Researchers and entrepreneurs are exploring new methods to convert biomass into energy, fuel or chemicals. Whether you are looking for funding and strategic partners that can help move the technology to market or are on the verge of bringing a revolutionary facility on line, give serious thought to the benefits of seeking patent protection for your ideas as well as to whether patents held by potential competitors might cause problems. Funding sources look to invest in companies that possess unique and protectable intellectual property because protected intellectual property creates a barrier to entry by competitors and helps protect and expand the value of the investor's original investment.

Therefore, entrepreneurs should consider the following regarding intellectual property protection. First, patents generally cover processes, machines and compositions of matter. A patent could be pursued for a unique combination of process steps or an improvement to an existing process. Patents could be applied to a new way to utilize a new enzyme for converting cellulosic biomass into a biofuel, a new system engineered to convert biomass into electricity with high efficiencies and low cost, or even a biobased compound that is stronger than steel.

Patents should be applied for once an invention is created and ideally before it is disclosed to others. Because the rights to obtain a patent can be lost if it is disclosed to others before the patent application is filed, keeping the idea confidential and out of the public eye is important. Another significant timing consideration includes applying before seeking funding, as potential investors will want to see an intellectual property protection strategy in place and steps taken to secure rights.

Patents should be filed for in order to strategically protect intellectual property, adding value to an enterprise. Patent protection prevents competitors from using an idea, method, device or process without approval and gives the inventor rights against anyone who infringes on the patent. The investment in seeking patent protection is an indicator to potential investors of commitment to and the value of the technology.

Investors want to know who owns the technology because patents allow holders to preclude others from using the patented technology, giving the patent holder a competitive edge and therefore, the investor a chance to make more money. Ownership is best established in a written agreement. Agreements with employees, researchers, consultants or contractors should require them to assign patent and technology rights to the patent holder or the holder's company. Without a written agreement, the owner may not own the rights, and this could cause significant problems in the future when trying to prove ownership to an investor. If one does not have exclusive ownership, why would an investor want a
partnership?

Even though a patent or an application may be pending, be aware of patents held by others. Just as the patent allows one to preclude others from using the technology, patents held by others can block one from using their own technology. It's unwise to invest in significant and costly research and development or build a pilot facility only to learn that the facility or part of the process is infringing on another patent. Just as important, knowing what other patents exist may provide a roadmap for finding a better way. This creates the ability to identify weaknesses and opportunities that other patents have missed and could be exploited.

Once a patent is secured, think about how to make it work for you. Licensing can generate revenue by allowing others to use the patent for their own business. A technology license may also be needed to strengthen the process, avoid infringement concerns or to reduce research and development costs.

Todd Taylor is an officer in Fredrikson & Byron's corporate, renewable energy, securities and emerging business groups. Reach him at ttaylor@fredlaw.com or (612) 492-7355. Adonis Neblett is a patent attorney and advisor in the intellectual property department of Fredrikson & Byron. Reach him at aneblett@fredlaw.com or (612) 492-7049.
 

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