Maximizing Patent Opportunities and Funding in Clean and Green-Tech Start-Ups


Clean and green technologies have secured an estimated $2.9 billion in investment in North America in 2006[1] and $3.7 billion in 2007,[2] and investors are quite eager to fuel further developments in areas such as alternative fuels from renewable sources, efficient solar power generation, lighting requiring less electricity, carbon credit trading, high capacity batteries and capacitors, and water purification. One of the cornerstones in building a viable new business is the technology and protection of rights to the entity’s intellectual creations. What do investors in clean and green technologies want to know about intellectual property issues, and what can an entrepreneur in this field do to maximize valuation?

Prior to investing in any company, investors typically want assurances that: (1) the company can operate without significant risk of litigation and possible injunction for infringing IP rights of others; (2) the company can protect or enlarge its anticipated market using its intellectual property; and (3) the company owns its intellectual property free and clear of claims from third parties. After investing, investors often remain apprised of these three issues through their members’ participation on boards

of directors of the companies in which they invested.

This is the first in a series of articles on what clean and green-tech companies can do to maximize their IP opportunities to enlarge their markets and obtain investment. This article explains in brief what investors assess in patent diligence and after investment, and what measures a company can take to maximize valuation and opportunities from patent. (The companion piece by Mike Ward and Tim Young in this edition provides particular insights into patent protection for biofuels.) Future

articles will discuss other aspects of an effective intellectual property strategy, such as the role that

trademarks and trade secrets play in maximizing company value.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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