By David Fournier, Chair for Patent Prosecution and Portfolio Counseling, Perkins Coie LLP
Special to The Digest
Biocarbons are experiencing significant investment and growth as a drop-in replacement for fossil fuels in energy and metals production. As companies move from found fossil fuels to engineered biofuels, intellectual property rights are increasingly important.
Infringement in production or use of biocarbons under patent protection can subject the infringer to penalties ranging from injunction that would stop their supply and use, to the potential for treble damages. Patent enforcement is real with thousands of enforcement actions each year resulting in billions of dollars of settlements and damages.
National Carbon Technologies (“NCT”) recent acquisition of Cool Planet combines the two most sophisticated technologies and patent holders in the global marketplace regarding biocarbons. Both companies built impressive teams comprised of thought-leaders from the bioenergy and bio-products marketplace to develop and advance new biocarbon process and product technologies. Combined, the two companies invested hundreds of millions of dollars over a decade to create broad and exclusive rights regarding the types of biomass used for biocarbon production, biocarbon production methods, biocarbon products, and biocarbon use in energy, metals production and agriculture.
NCT’s approach in patent consolidation reflects the pending emergence of engineered biofuels in the global market and is reminiscent of what occurred in other markets as transformational technologies gain traction.
Just as Google spent billions to acquire Motorola’s patents in 2012 to bolster its intellectual property portfolio in the smart phone market, NCT’s acquisition expands its intellectual property dominance in the biocarbon market. An important difference, however, is that NCT’s patents in the biocarbon space are implicitly stronger.
Unlike the smart phone market where patents often are dependent on software or simple design changes, NCT’s portfolio covers much deeper technological advances regarding production methods and product embodiments. NCT’s acquisition of Cool Planet is the biocarbon equivalent of combining Microsoft and Apple.
The biocarbon market is large and growing with over $1 trillion annual market potential. As with other markets where companies invest in and develop extensive intellectual property portfolios, it is likely that NCT will assert its patents over competitors with possible outcomes including damages or license agreements. The likelihood of enforcement (and success in enforcement) has increased through NCT’s acquisition of Cool Planet’s broad and complimentary patent portfolio.
As companies like NCT consolidate intellectual property, all market participants including producers and users need to be aware of the importance of intellectual property ownership and the right to produce, sell and use engineered biocarbons.
Every investor in biocarbon production should require demonstration of the freedom to operate. Every customer of biocarbon should require a demonstration of the patent pathway and right to use before purchasing or using such products. Market participants need a map through the intellectual property landscape—much of which may be owned by others. The consequences of failing to do so are significant.
About the Author
David Fournier is the Firmwide Chair for Patent Prosecution and Portfolio Counseling for the global law firm Perkins Coie LLP.