Top 5 Things Any Biofuel Company Should Be Doing to Protect its IP

By David B. Fournier, Partner and Firmwide Chair of the Patent Prosecution and Portfolio Counseling Practice at Perkins Coie LLC and Linda Falcon, Associate attorney at Perkins Coie LLC

Special to The Digest

The global biofuels market size is in excess of $100 billion and is expected to grow at a compound annual growth rate approaching 7% over the next decade.  Like any competitive, high growth industry, winners and losers will emerge.  Technological innovation will, of course, be a primary driver of success.  However, those companies that take proactive steps to protect their intellectual property will have a decided advantage and those who do not will be at a significant competitive disadvantage.  Here, we review five things any biofuels company should do to protect its intellectual property. Your top competitors likely already are.

1. Balancing the Competing Interests of Fundraising and IP Protection

Innovation protected by robust intellectual property is the lifeblood of most technology companies. Yet innovation, and the process of securing intellectual property, is not possible without funding.  Early stage technology companies often struggle to balance the competing interests of fundraising activity, which necessitates public disclosure, and pursuit of intellectual property, which mandates minimal or delayed disclosures.

It is critical to educate your employees – and yourself – to ensure that personnel privy to confidential research understand the potential consequences of public disclosures, including what “public” means, and that this applies to fundraising activity. Otherwise, the patentability of your technology could be jeopardized and fundraising efforts useless. This is especially critical where protection outside the U.S. is desired. To prevent public disclosure, discussions and materials should be high-level and not be “enabling.” A public disclosure can result in a loss of patentability when it provides enough of a description of the invention for a person “of ordinary skill in the art” to make and use it. However, ex-U.S. jurisdictions typically have a broader interpretation of such disclosures leading to more adverse impacts on intellectual property rights.

Whether a solo angel investor or an organized venture capital firm, an investor’s livelihood is based on finding the next “big thing,” and that means talking to a lot of companies. In a typical year, an active venture capital firm looking to make 10 investments will review around 1,200 companies, leading to approximately 500 face-to-face meetings. Signing a non-disclosure agreement with each company they meet would be counter-productive to their business model and open them up to unnecessary legal risk.

A smart way to protect your invention is to file a provisional patent application before discussions with potential outside investors. In fundraising, a provisional patent application can serve to establish your claim to the technology. It allows you to speak freely about aspects of your invention disclosed in the provisional and allows features surrounding the core technology to be further developed. Further, investors know that it can take years for a patent application to mature into an issued patent, and by filing a provisional patent application early on, you display prudence and an understanding of the patent process.

2. Establish an Effective Trade secret Protection Program

Not all innovation can or should be the subject of a patent filing.  Part of the patent bargain is that the public gets disclosure of the best mode of making and using the claimed invention in exchange for a limited 20-year monopoly.  Patent filings become public, and if the end result is not a granted patent or is a granted patent of insufficient scope to deter your competitors, the patent may not have any real value.  Often, innovations are not effectively protectable by patents. For example, the innovation may not be patent eligible under the patent statutes or, if the invention becomes known via the patent filing, it could be easily designed around. Some innovations are more effectively protected as a trade secret because the innovation cannot be reverse engineered, is unlikely to be discovered by others, and, when effectively managed as a trade secret, is not limited to the 20-year term associated with patents.

In addition to inventions, there are additional categories of information that, unknown to others, can provide a business with a competitive advantage.   This includes information such as proprietary processes, future product designs, customer and supplier information, and sensitive financial, accounting, and employee information.  All these categories of data can be protected by an effective trade secret program.

Successful trade secret protection programs are layered and multi-faceted.  At its core, a trade secret protection program involves a combination of policy, education, agreements, restricted access, and technology designed to keep ideas and information confidential.

First, make sure your company has a written trade secret protection policy.  This policy should be explained and provided to new hires, and employees should be educated on the policy periodically.  Access to sensitive company information should be restricted appropriately.  If information is not required for an employee to perform their duties, they should not have access to it.

It goes without saying that company networks and computers should be tightly controlled, and outside access prevented.  Taking that a step further, different employees should have different levels of access to computer files and electronic documents depending on their specific role, level, and need for access.  Sensitive paper documents and electronic media should be marked as trade secret or company confidential and should, of course, be stored in a secure location with limited access.

All sensitive disclosures outside of the company should be done under the protection of a confidentiality agreement and your most sensitive trade secrets should not be disclosed at all. Finally, all visitors to your company facility should be required to sign in and out when entering and leaving company facilities and should always be accompanied by an employee while on company premises.

3. Monitor Your Competitors’ Patent Filings

Many companies focus exclusively on their own intellectual property without considering the developing technology and strategies of their competitors. That is a mistake.  Monitoring your key competitors’ patent filings can offer critical competitive insight into what markets and geographies they are planning to enter and what technology they are focusing on.  It is relatively simple and inexpensive to set up a monthly patent watch service, by assignee name or key word, to allow you to monitor your competitors’ patent filings. In addition to the competitive intelligence, such monitoring may also provide you with an opportunity to take proactive steps to oppose their patent filings.

4. File Early

File early, but with a global perspective. In light of the America Invents Act (AIA) first inventor to file provisions – as well as the potential of “public disclosures” discussed above – filing early can be critical. However, in a field where international protection is routinely desired, it s essential to understand what degree of disclosure in a provisional patent application is necessary to obtain the early filing date in ex-U.S. jurisdictions, which often require more, and specifically tailored, detail than the U.S. patent laws require. Working examples are often required by examiners even where the law may not explicitly require it, particularly in China. Don’t let a lack of time for finesse deter you from filing; the provisional patent application need not be a burden. Simplicity is acceptable and the specification will not be examined. The disclosure can be as informal as PowerPoint presentations, manuals, and laboratory notebook entries, and chemical and mathematical formulae in the description need not be described. Any flowcharts and photographs should be referenced in the description.

Using the English language isn’t even required, though a translation will be necessary when converting to a nonprovisional utility application. While the provisional application does not require claims, it is advisable to include at least one claim, reviewed carefully by the inventors, so that you can have confidence there is enough detail in the description to support the claims.

5. Know your market and anticipate its future

What is required to obtain patent protection changes jurisdictionally and can change rapidly for policy and other reasons, particularly with the increasing focus on climate change. Work with a firm that can facilitate global protection and be counseled on changing regulations in target markets that can provide funding opportunities, as well as inspiration for patentable modifications to current commercial products. Investing in patent drafting that fully considers ex-U.S. patentability requirements will avoid prosecution costs, and even litigation costs, later. While the AIA more recently widened the path for U.S. post grant challenges, such opportunities for competitors to present challenges have been available outside the U.S., too. Profitability and success can make you more of a target, so keeping a successful future in mind is wise.

David B. Fournier is a Partner and Firmwide Chair of the Patent Prosecution and Portfolio Counseling Practice at Perkins Coie LLC.  Linda Falcon is an Associate attorney at Perkins Coie LLC.