Rise in Patents Provides Challenges, Prospects

By Jeffrey Peterson | February 28, 2012

New biofuels processing innovations continue to be developed
resulting in an explosion in patent activity in the United States Patent and Trademark Office (USPTO) as well as patent offices around the globe. In proprietary technology focused solely on biodiesel processing alone, only a handful of patent applications were filed in 2002 as compared to 130 in 2008 and more than 230 in 2011. As the number of patent applications has gone up significantly, the number of issued patents has correspondingly increased. This grants the applicants rights to their new biofuels processing technologies. Given the administrative delay time involving obtaining patent protection (patent applications can often take three to five years before an issued patent is granted), the large growth in issued patents is just now being seen (e.g., from less than 20 biodiesel processing patents being issued in 2008 to more than 100 in 2011). This expected rise in patent rights of different biodiesel innovations should continue to grow as the large number of applications currently on file work their way through the USPTO.

This growth in patent-protected biodiesel innovations presents new challenges and opportunities for biofuels innovators. One of the opportunities, of course, is participating in the patent process itself to obtain their own proprietary rights for their novel inventions. A granted patent in hand not only secures certain proprietary rights to the innovator but is an asset to attract and secure capital investment.

Another strategic advantage provided by the biofuels patent boom is the unprecedented advantage of being able to monitor competitor’s technological activity by analyzing the published records of the USPTO. Patent applications become public records after 18 months of their filing date, well in advance of the actual issuance of the patent itself. Upon publication of a patent application, any individual can read and analyze the detailed description of the invention itself in the specification of the patent application. Additionally, any individual can track and analyze all of the correspondence the patent applicant submits and receives from the USPTO. By analyzing the records of the patent office, biofuels companies can track the records of their competitors and read the detailed technological disclosures of any of their innovations for which they have filed patent protection. 

An innovator can determine whether the patent applications of competitors are being rejected or challenged by the patent office. Such valuable insight assesses the true scope of proprietary rights that a competitor may or may not have, which cannot be gleaned by complimentary press releases. A company may manage its own intellectual property developments around its developed technology, and in analyzing the patent landscape of other proprietary rights in the field, a company can strategically find opportunities and barriers for technological growth. Analyzing the public patent records of the patent office also allows identification of potential partners having complementary technology, or in identifying a potential licensee whose technology would benefit from the licensed technology of the company. 

Along with the opportunities that come with the increase in patenting of new biofuels technology, patent-protected technologies also raise challenges, specifically increased patent litigation risk and freedom to operate issues. As more issued patents are making their way into the marketplace, patent litigation in the biofuels industry is also on the rise. For example, in the ethanol industry, enzyme giants Novozymes and Danisco recently duked it out in federal court over the alleged infringement by Danisco of Novozymes’ patented enzymes for the production of ethanol. A jury awarded Novozymes more than $18.3 million in damages for this infringement. More recently, biofuels company Gevo filed a lawsuit against Butamax alleging patent infringement over Gevo’s patents for the production of isobutanol. As patent applications continue to make it out of the patent office, additional biofuels litigation will be expected in the coming months and years and companies should take a more active role in monitoring the intellectual property landscape in their industry to avoid potential pitfalls, as well as to find potential opportunities. Moreover, even if a biofuels innovator is not directly involved in litigation, the need for freedom to operate investigations adds another challenge.

The patent system encourages and rewards innovation. As the biofuels industry matures, there will be more and more patent-protected technologies. These patent-protected biofuel technologies result in shifting the landscape of opportunities and challenges for innovators.

Author: Jeffrey Peterson
Partner Attorney, Michael Best & Friedrich
[email protected]

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