Better together? How to avoid common pitfalls in joint ventures

Author

Charles Collins-Chase
Finnegan LLP

Presentation

254th ACS National Meeting - Washington, D.C.
"Intellectual Property Considerations When Entering into a Joint Venture"

Abstract

Renewable energy set records in 2015. Global investment in renewable energy rose 5% to $285.9 billion, exceeding the previous record set in 2011. Perhaps more impressive, roughly 134 GW of renewables were commissioned in 2015 (excluding large hydro). This investment and new capacity comes despite low oil prices that helped protect fossil fuels’ competitive market position.

In 2016 and 2017, these trends seemed to continue, with total renewable energy production in the United States exceeding 2015 levels, including in biofuels. Yet bringing renewable technologies to market is increasingly a capital-intensive process with many technical challenges. Projects are bigger than ever, and companies must overcome uncertain renewable fuel standards and government incentives and ongoing low oil prices. Faced with these challenges, many companies lack the resources and infrastructure to develop and implement renewable energy technology on the scale—and at the cost— the market demands. As a result, the biofuels industry has seen a rise in joint ventures and other collaborative relationships. For example, one study identified nearly 500 renewable energy partnership transactions announced between 2014 and 2015, of which 62% were joint ventures.

Although joint ventures can help companies overcome technological limitations, mitigate risks, and spread the costs of producing a product on a commercial scale, they also create potential pitfalls for companies with intellectual property assets. For example, a company may need to grant its joint venture partners a license to use its patented technologies or even share its trade secrets and other know-how with those partners, who may be industry competitors. Additionally, joint ventures can lead to development of new innovations, and disputes may arise as to who owns the resulting intellectual property and has the right to use it. This presentation will outline the potential perils of joint ventures for companies’ intellectual property portfolios and discuss strategies to protect their patents and trade secrets when entering these agreements.