New technology companies need an intellectual property strategy
Published at
Oil & Gas Financial Journal
Publication date
01 March 2008
Abstract
Perhaps the only asset more difficult to find than new hydrocarbon reservoirs is new exploration technology for finding those reservoirs. Development of new exploration technologies requires considerable investment capital that, in turn, requires an intellectual property strategy demonstrating that the new technology provides a competitive advantage in the market, for raising capital and with potential buyers. The goal of the IP management program is the control of unique IP for the exclusive benefit of the company. A strategic patent plan is integral to control of IP.
Consider the case for a new exploration technology company in the oil industry. Often, such a company initially obtains a license for a promising technology from a university or other entity and then proceeds to enhance and market this technology in conjunction with the company’s own research and patent development program. The new technology company may even leverage its research efforts by financially sponsoring research with major universities or private research firms that result in patent rights owned by the company. Eventually, the new exploration technology company will seek to partner with a venture capital firm or large industry partner enabling the company to accelerate its research, development, and marketing.
An example of a new technology company successfully following this route is Spectraseis, a Zürich, Switzerland-based technology company that researches and applies proprietary geophysical technologies to help oil and gas companies reduce risk and more efficiently find and produce hydrocarbon reserves. Spectraseis provides technology and services in the fast-emerging field of low-frequency passive seismic surveys.
Spectraseis initially acquired all existing intellectual property rights that were available for their technology, including licenses and research agreements from the University of Zürich, when the company was founded in 2003. Spectraseis currently sponsors a strong research team with another university, ETH-Zürich, comprised of seven researchers under an agreement that assigns intellectual property rights to the company. The ETH-Zürich research team collaborates with Spectraseis’ own technical staff to improve and enhance low frequency hydrocarbon detection methods using seismic data Spectraseis acquires around the world. Spectraseis is transforming from an R&D focused start-up to an oil industry commercial services provider and recently raised significant capital in order to accelerate its business development.
Spectraseis intellectual property advantage relies on patents, trade secrets, and rapidly developing the technology to maintain their leadership position for low-frequency research and development. Spectraseis favors patent filing in the balance between patents and trade secrets for two reasons. First, patent filing ensures control of the inventive concepts while allowing for the cooperative sharing of information with clients, which in turn leads to further advances in the technology. The second reason is that the upstream oil industry avoids ‘black box’ methodologies. The Spectraseis business plan calls for bringing the technology to market quickly, so slow uptake is not an option.
An intellectual property strategy built around a strong patent portfolio providing competitive advantage in an important new technology is extremely attractive to prospective investors. However, a single patent family may have associated fees that can be upwards of US$400,000 over the effective lifetime of a patent, not to mention the mandatory up-front overhead for patent application preparation work by expert legal counsel. With this necessary investment of company resources and legal expertise, a comprehensive portfolio development strategy – the strategic patent plan – becomes an integral part the company’s evolving business plan.
Consider the case for a new exploration technology company in the oil industry. Often, such a company initially obtains a license for a promising technology from a university or other entity and then proceeds to enhance and market this technology in conjunction with the company’s own research and patent development program. The new technology company may even leverage its research efforts by financially sponsoring research with major universities or private research firms that result in patent rights owned by the company. Eventually, the new exploration technology company will seek to partner with a venture capital firm or large industry partner enabling the company to accelerate its research, development, and marketing.
An example of a new technology company successfully following this route is Spectraseis, a Zürich, Switzerland-based technology company that researches and applies proprietary geophysical technologies to help oil and gas companies reduce risk and more efficiently find and produce hydrocarbon reserves. Spectraseis provides technology and services in the fast-emerging field of low-frequency passive seismic surveys.
Spectraseis initially acquired all existing intellectual property rights that were available for their technology, including licenses and research agreements from the University of Zürich, when the company was founded in 2003. Spectraseis currently sponsors a strong research team with another university, ETH-Zürich, comprised of seven researchers under an agreement that assigns intellectual property rights to the company. The ETH-Zürich research team collaborates with Spectraseis’ own technical staff to improve and enhance low frequency hydrocarbon detection methods using seismic data Spectraseis acquires around the world. Spectraseis is transforming from an R&D focused start-up to an oil industry commercial services provider and recently raised significant capital in order to accelerate its business development.
Spectraseis intellectual property advantage relies on patents, trade secrets, and rapidly developing the technology to maintain their leadership position for low-frequency research and development. Spectraseis favors patent filing in the balance between patents and trade secrets for two reasons. First, patent filing ensures control of the inventive concepts while allowing for the cooperative sharing of information with clients, which in turn leads to further advances in the technology. The second reason is that the upstream oil industry avoids ‘black box’ methodologies. The Spectraseis business plan calls for bringing the technology to market quickly, so slow uptake is not an option.
An intellectual property strategy built around a strong patent portfolio providing competitive advantage in an important new technology is extremely attractive to prospective investors. However, a single patent family may have associated fees that can be upwards of US$400,000 over the effective lifetime of a patent, not to mention the mandatory up-front overhead for patent application preparation work by expert legal counsel. With this necessary investment of company resources and legal expertise, a comprehensive portfolio development strategy – the strategic patent plan – becomes an integral part the company’s evolving business plan.