There was an interesting interview reported today of David Ames, the CEO of a cellulosic ethanol company, Global Energy Holdings (formerly known as Xethanol, by the way, another strategic name change).  In this article, Mr. Ames describes the business model of Global Energy, namely the use of waste (wood waste, grasses, trash, etc.) to generate ethanol.  One of their first projects is to mine the methane from landfills.  Another great potential technology and a good incremental advance in our effort to wean ourselves from foreign crude.

What was interesting about the article to me was the fact that the company is making use of the fact that it has inherited many millions of dollars worth of research, done with the U.S. Department of Agriculture and the Department of Energy.  I find it interesting because I have seen the contracts that go into any collaboration done with federal dollars.  As with anything with the government, as you might guess, it is the direct opposite of simple.  Importantly, though, from an intellectual property perspective, the government typically reserves rights in any intellectual property that is developed from a project that uses federal dollars, even if non-federal dollars are also used.

What has been a challenge in the recent past is to structure your funding contract with the federal government in such a way as to ensure that any IP that is developed solely by your company (without federal dollars) does not get linked to the federal contract.  This requires planning, foresight and quite a bit of wordsmithing, but you can make sure your rights are protected.   In instances where the line was blurry, though, I’ve seen corporations walk away from the federal money.

Federal dollars are nice, especially in these tough economic times.  Without fleshing out all the details, though, receiving those dollars can cause significant headaches.  As with anything, plan ahead, research the potential pitfalls, and bring a guide along with you to ensure a favorable outcome.

If you had money to spend in these difficult economic times, it sure would be nice to know where the energy industry was going to end up 10, 20, 30 years from now and invest that money there.  With hundreds of billions of dollars being sent overseas to purchase crude oil, when the tide changes to domestically generated energy, there is going to be money to be made.  If you pick the right horse to ride now, you will be well off in the not too distant future.

I have been conducting, for several months, an unscientific survey of numerous articles, discussions with industry experts, and learning everything I can about the industry.  I thought it would be fun to set forth a suggestion as one possible theory regarding the future of US energy needs.  Please chime in with yours, or correct me where you think I have gone astray:

1.  We have reached a level of critical mass whereby sticking with crude oil is unacceptable for the future of America.  Continuing to rely on crude oil will negatively impact our national security (pumping dollars to enemy regimes), our environment (pumping CO2 into the atmosphere), and our economy (pumping jobs overseas instead of creating new ones here by investing in domestic technologies).

2.  That said, it will take time before we are significantly less reliant on crude oil, as compared to our current situation.

3.  In the short term, therefore, we will expand drilling in the US and continue to use alternative energy techologies that have begun to show progress, like geothermal plants, use of solar power, wind generators where appropriate, etc.  These steps will, in the short term, decrease our reliance on foreign crude.  These steps will also buy time until we can significantly lower our overall dependence on crude oil because of the emergence of other technologies.

4.  In preparation for the long term, we should continue to invest in research and implementation of all forms of alternative energy, including biofuels, geothermal, wind, solar, and hydro.  Over time, one or more of these technologies will, through innovation, rise to the top.  Solar might be most efficient in powering homes, wind at powering certain areas of the country, and biofuels at fueling the airline industry, so no single solution needs to be adopted, but the free market should sort out the best technologies from unfeasible technologies.  When this happens, the US will have high electricity capacity.

5.  Also long term, I predict that automobiles will be plugged into the energy grid.  Coal being our most abundant resource, clean coal technologies and expanded use of nuclear power will enable the US to transform from a mostly crude oil-based automotive industry to considerable reliance on electricity.   These forms of electricity will buy more time to develop large scale energy sources from the other alternative energy choices, mentioned above.

In sum, it is my prediction that our energy path will push us to be more reliant on electricity versus crude oil.  To get there, we will need to continue to support our current crude oil needs by more domestic production and incremental advances in alternative energy that will help (just not on a large scale, yet).  That will buy us time to convert our automobiles over to electricity that is supplied by clean coal and nuclear power.  The use of clean coal and nuclear power will, in turn, buy us even more time until the other forms of alternative energy are perfected and can provide large scale electricity production.

What do you think?

It’s interesting to watch the ongoing debate between food producers and ethanol manufacturers.  A recent spat, reported here and here, boiled over into some name calling, with an anti-ethanol group deriding the 30th anniversary of ethanol subsidies by referring to ethanol as a “30-year-old under employed child” living in our basement.

The anti-ethanol campaign has, of course, scored a number of points and has, by many accounts, slanted public opinion against food-based ethanol.  An interesting sign of this occurred today when the company formerly known as SunEthanol announced that it has changed its name to Qteros, austensibly to reflect the name of its key technology, the Q microbe - a super bug that efficiently processes non-food cellulosic material to generate biofuel.  While Qteros does not use corn or other food-based feed stock, it is interesting to see that they have moved away from the name “ethanol” given the bad press surrounding the term.  Does anyone really think Qteros changed its name to more accurately reflect it’s dedication to the Q microbe?

The discovery of the Q microbe - by a University of Massachusetts professor in the woods of Massachusetts - raises an interesting question regarding patentable subject matter.   Can a company patent a microbe found in the woods?   A product found in the identical state in nature is not patentable subject matter.  It is not possible, therefore, for the professor to patent the Q microbe specifically.  But that is not to say a patent cannot be obtained covering the heart of her discovery - the manufacture of biofuel using Q microbe.  The exercise is merely a matter of how you claim that discovery.

For example, looking at the patent that was actually filed on this discovery, the inventor claims a method of making a fuel from biomass material using the following steps:

• Provide a biomass material comprising a high molecular weight carbohydrate;
• Hydrolyzing the biomass material;
• Combine the hydrolyzed biomass material with the Q microbe; and
• Fermenting the hydrolyzed biomass material under conditions and for a time sufficient to produce a fuel.

The inventor will not get a patent covering the microbe per se, but can obtain a patent covering the important part of her discovery - using Q microbe to make biofuel.

After reviewing the algae-to-oil technology, its nice to see a patent was at least filed…

Wow - gas prices were $1.74 this morning on my way into work.  The Alternative Energy movement certainly gained considerable steam as oil prices soared close to $140 per barrel. But, with oil prices dropping to close to $50 per barrel, can alternative energy sources compete? 

Probably not in the short term, but it seems that smart money will continue to pursue green solutions because it seems very unlikely oil prices will stay this low for long.

Solix Biofuels Inc.’s president, Doug Henston, believes that algae-based oil will ultimately be able to compete with crude oil prices at $70-80 per barrel.  The problem is, algae-based oil is not yet a completely viable alternative.  At this time, oil can not be produced on a significant enough scale to effectively compete with crude.  But with the research dollars being focused on accomplishing just that goal, $100 crude probably will have returned by the time algae-to-oil is ready for prime time.  At that point, $80 algae-based oil will look like a bargain and the investments being made now will pay off handsomely.

It’s interesting, as I start this new project of tracking the intersection of alternative energy and intellectual property, I did some quick searching regarding a few companies in the news in the last week.  For example, OriginOil, Inc. issued a press release discussing the great potential of algae-to-oil technology.  I did an assignee search at the US Patent Office and OriginOil has no issued patents and no published (but not yet issued) patents.  Now, it may be the case that OriginOil is so new that it’s patent applications are not yet published (filed less than 18 months ago), but not having any patents even published yet is curious.

I then did a search to see how many patents have published, that are assigned to any company, that have “algae” and “oil” in the patent abstract - only 25.  Issued patents with algae and oil in the abstract - only 27.  It sure seems like there is plenty of opportunity for gaining valuable technology rights in the algae-to-oil arena.  Is the technology still too new, or have these start-ups not taken advantage of the exclusivity rights the patent system affords?

More analysis to come to see if this is a trend in all alternative energy fields, or just an abherration.

UPDATE:  OriginOil has apparently filed four patent applications - none of which have published.

Great article by Paul Ingrassia, the former Detroit bureau chief for The Wall Street Journal.

In an article from November 10, 2008, Mr. Ingrassia wrote regarding a potential bailout of General Motors: “In return for any direct government aid, the board and the management should go. Shareholders should lose their paltry remaining equity. And a government-appointed receiver — someone hard-nosed and nonpolitical — should have broad power to revamp G.M. with a viable business plan and return it to a private operation as soon as possible. That will mean tearing up existing contracts with unions, dealers and suppliers, closing some operations and selling others and downsizing the company…”

In a recent commentary, Thomas Friedman tacked on a great addendum to Mr. Ingrassia’s plan: “I would add other conditions: Any car company that gets taxpayer money must demonstrate a plan for transforming every vehicle in its fleet to a hybrid-electric engine with flex-fuel capability, so its entire fleet can also run on next generation cellulosic ethanol.”

It is an interesting perspective - GM has been hamstrung for years with union obligations and has been beaten to the punch (at least in the Public Relations game) by Honda and, more particularly, Toyota in developing fuel efficient or hybrid vehicles.  Members of Congress, and their constituents are simultaneously feeling the effects of “bailout fatigue.”  While the Big 3 had worked in recent years to wriggle out of some of the costly union obligations (retiree benefits being first and foremost), the high price of gas and the recent economic downturn is going to cause major change much sooner and much more rapidly than the Big 3 would have otherwise have liked.  Whether rapid change comes through the bankruptcy courts or via an entirely new leadership team, the time is right.  The question is: in the current political environment, is a government funded rescue possible?  The unions stand to lose big if GM, Chrysler or Ford fails.  Will President-Elect Obama allow that to happen given that unions played a key role in his election?  Congress is preparing to debate a $25 billion dollar bailout before the inauguration.

Here’s hoping that whatever the outcome, the Big 3 come out as more nimble, green-focused companies that can meet the new demands for fuel efficient and/or hybrid autos.  All three companies have spent time and money investing in alternative energy technologies, as can be seen in a quick review of the Patent Office website.  Can they turn over fast enough to avoid extinction?  We’ll know soon enough….

Welcome to Alternative Energy IP - at the intersection of intellectual property and alternative energy.  I look forward to robust discussions about alternative energy policies, changes and developments, especially those issues that imact or are impacted by intellectual property.  I’ll also provide brief updates, where appropriate, of current IP issues.

Get involved! Comment! Suggest topics for conversations!  I look forward to developing a vibrant community in this important and developing technology area.