On 24 January 2023, the Science and Security Board (SASB) of the Bulletin of the Atomic Scientists announced that the hands of the Doomsday Clock have been moved forward. The clock, which is a universally recognised indicator of the world’s vulnerability to global catastrophe caused by manmade technologies, now stands at 90 seconds to midnight. The primary reason for moving the Doomsday Clock forward was said to be the war in Ukraine, notably the increased risk of nuclear war.
However, the SASB also consider the war to undermine global efforts to combat climate change. In particular, the SASB state that “countries dependent on Russian oil and gas have sought to diversify their supplies and suppliers, leading to expanded investment in natural gas exactly when such investment should have been shrinking.” The announcement is thus another reminder of the importance of investing in research and development of green energy if we are to mitigate a global climate catastrophe.
One such form of green energy is solar energy, however, sunlight is an intermittent energy source meaning that it is not always reliable. Therefore, we need an efficient means of converting solar energy into another form of energy. This is where artificial photosynthesis may be useful. Plants can survive for periods without sunlight because during the day sunlight, water, and carbon dioxide are converted into chemical energy in the form of sugar.
The ultimate goal of artificial photosynthesis is to mimic this reaction, but on a larger scale and in a more controlled environment. It is hoped that the products produced by artificial photosynthesis could be used in the production of fuel (e.g. for cars), but also for supporting the growth of crops (e.g. using the acetate produced during artificial photosynthesis) in areas of extreme temperatures, drought, floods, and perhaps, even in space.
Historically, artificial photosynthesis involves a photoelectrochemical (PEC) cell comprising a system that activates a photosensitive substance, such as a semiconductor, submerged in a liquid solution to trigger the chemical reaction. More recently, chemical engineers at École Polytechnique Fédérale de Lausanne in Switzerland developed a prototype of an ‘artificial leaf’ which enables water to be harvested directly from humid air using a novel gas diffusion electrode.
The artificial leaf comprises a small transparent wafer of glass fibres that is made by blending and compressing glass wool fibres into a wafer. The wafer is then coated with a thin porous transparent film of a conductor (fluorine-doped tin oxide) which functions as a gas-electrode. A second coating comprising a sunlight absorbing semiconductor material (i.e. copper(i) thiocyanate) is then applied.
Importantly, the novel gas electrodes have two key characteristics. Firstly, unlike previous gas diffusion electrodes, which are typically made from opaque carbon-based materials and are used in fuel cells which do not require sunlight (e.g. zinc-air batteries and nickel-metal hydride batteries) the electrodes used in the artificial leaf are transparent to maximise sunlight exposure of the semiconductor coating. Secondly, the electrodes are porous to maximise the contact with the water in the air. Specifically, unlike PEC cells which comprise a flat surface onto which the semiconductor material is applied, the artificial leaf comprises a three-dimensional structure that vastly increases the surface area to maximise contact with water in the air. The resulting artificial leaf is able to absorb light and convert gas-phase water into hydrogen.
Although, as with other forms of artificial photosynthesis, the solar to hydrogen conversion efficiency of the artificial leaf is relatively low, the prototype offers an important proof of principle that PEC cells can be adapted to use gas-phase water. It is hoped that following optimisation of, for example, the pore size, thickness of the coatings, and the semiconductor and catalyst used, the artificial leaf may be used in solar cells in both arid and humid environments.
Some sources suggest that the artificial photosynthesis market size will grow from 62 million USD in 2022 to 185 million USD in 2030. Currently, the market appears to be largely driven by government funding and grants for research and development (R&D), however, private companies are also increasingly investing in their own R&D. It is perhaps unsurprising that there has been an upwards trend in the number of patent filings relating to this field. Whilst there is still a way to go before the technology is ready for mass consumption, there are encouraging signs that we are moving ever closer to a truly reliable green energy source.
Peter Drucker and Edwards Deming are most often cited as saying that “you can’t manage/improve what you don’t measure.” How do you know which intellectual property (IP) rights to devote more resources to, if you do not know what value it is bringing to the business?
Unlike tangible assets such as cars, houses and machinery, intangible assets (IA) add value through contributions to creating revenue. Examples of IAs include intellectual assets, intellectual capital, and intellectual property. It is not only registered IP rights, such as patents, trade marks, and designs that add value, but the people, contracts, databases, trade secrets, know-how and business efficiencies as well. All of these can be individually valued, or as a combination within a product or service.
Such assets are created by virtue of our skills, experience, and innovative ability to solve problems, hence the intellectual and intangible labels. Businesses and organisations need to understand what intangible assets they possess, identify where these add value to the business or organisation, and finally, put a value on these assets. This process is what we call IA/IP valuation.
Usually, most valuation exercises take place following a trigger event which necessitates it, like a sale, licence agreement, investment round, calculating loss of earnings through infringement of IP, transfer pricing arrangements or even insolvency.
However, there are many benefits to getting ahead of trigger events and starting early. It is advised to get a formal valuation done right after an IP audit. The best practice would also entail updating it regularly as you generate new IAs and relinquish others – it is all about actively managing your portfolio and knowing its value, which can often open up unthought avenues for commercial gain.
Despite its significance and benefits, IP valuation is still shrouded in mystery. The common methods of its calculation fall into three main categories and the differentiating circumstances are the deciding factor as to which one is used. These are the cost method, market method and income method, all conceptually easy to understand, and not just based upon accounting and financial considerations alone, but also a market view of the company, its position within the market and opportunities for growth, including an analysis of risk, a consideration which can greatly affect value.
The cost method looks at the cost to reproduce either the exact same asset, a replication, or a similar asset with the same utility. The premise of value here is that no one would want to pay more for an asset which they could generate internally from scratch. Other considerations include how the asset has aged, or become obsolete, which reduces value. A drawback is that this does not actually give the company an indication of value, but rather opportunity cost and therefore ignores the value which owning the asset contributes to future income.
The market method for IP valuation works the same way as it does for tangible asset valuation. It involves investigating the market prices for a similar house on the same street for example, or the same age and make of a car. Just like a house will be adjusted for having an extension or larger garden, a patent value must be adjusted for countries where it is granted, field of use, claims cover and other factors. This method relies heavily on a liquid market with a lot of exact transactions, which is hard to find in an intangible asset class. Again, it only looks at the current market value, not considering the future capability to generate income.
Considering the drawbacks and the limited usefulness of the above methods, the most common measure of value for IAs and IP is the income method, which looks at financial modelling and forecasts for the business using the IP asset. The cash flows are calculated and then discounted back to today’s value using the discounted cash flow method. This method gives a more realistic valuation in terms of earning capacity and capabilities for the IP over time.
The full process of conducting an IP valuation exercise is supported by a team of people with expertise in financial modelling, market and risk analysis, sector specific knowledge, as well as IP from a commercial and legal perspective. Expert involvement allows for a comprehensive and reliable analysis of the assets and market in question, resulting in an accurate valuation.
Our Mathys & Squire Consulting team is well equipped to answer any further questions you may have.
A recent judgement has been handed down relating to ownership of employee inventions in an academic context which is of relevance to all universities in the UK. The decision of Oxford University Innovation Limited (OUI) vs Oxford Nanoimaging Limited (ONI) was handed down at the end of December 2022, relating to the fairness of revenue split and ownership of invention between OUI and ONI; the judge finding in favour of OUI.
The key issue was whether, or to what extent, OUI were entitled to the rights of inventions made by inventor Mr Jing which was made more complicated by Mr Jing having been a research intern and subsequently a DPhil student at the University of Oxford.
OUI are a wholly owned subsidiary of the University of Oxford and manage the university’s technology transfer and consulting activities. Formed in 1987, OUI has managed the creation of 196 spinout companies and still has shares in 160 of them. ONI is one such spinout; they are a biotech company that focus on making desktop-sized super-resolution microscopes. They were formed in early 2016 and supported by OUI in return for equity to commercialise the research work of Mr Jing (then a DPhil student), Professor Achillefs Kapanidis and Dr Crawford.
Under its statues (specifically Statute XVI, Part B) the University of Oxford owns any intellectual property (IP) created by employees, students or anyone using their facilities, with the IP then being assigned to OUI. In this case, the IP was licenced to ONI in return for 50% equity; OUI bringing the case to court as it claimed around £700,000 in unpaid royalties as a result of their equity share, with ONI refuting that OUI had the rights to them.
One issue the case revolved around was whether Mr Jing was considered to be a ‘consumer’ and thus would be offered protection under the Consumer Rights Act of 2015. The judge commented that there was little case law to guide his decision, instead relying on two guidance notes published by the Competition and Markets Authority in 2015. These describe how undergraduate students are generally to be considered consumers for the maintenance of student confidence in the Higher Education (HE) sector, even if they seek to pursue a career related to their studies in the future. From this starting point and equating features of their respective courses (requirement for certain careers, payments to a HE body etc.), the judge found that in general a DPhil student should also be treated as a consumer. The judge found no reasons specific to Mr Jing in this case that he should not be treated as a consumer.
Another issue the court sought to answer, having concluded Mr Jing to be a consumer, was whether the university’s IP Statute were ‘unfair’ within the meaning of the Unfair Terms in Consumer Contracts Regulations. The judge commented that he felt Mr Jing was defending the case to improve the position of students within the university, rather than doing so for personal benefit. ONI defended on grounds relating to fairness, wording, and implementation of the university’s IP policy.
Despite finding the IP policy to be poorly and too broadly worded, the judge ruled that the policy had been implemented fairly, especially in light of an IP Advisory Group meeting in 2017 that decided to amend the policy to improve its accuracy and ease of understanding and application. For comparison, the judge discusses other UK and US institutions and their share of equity in related inventions. In the US these range from 5% at Massachusetts Institute of Technology (MIT) to 100% at California Institute of Technology, and in the UK from 20% at the University of Cambridge to 67% at the University of Bath. These are however just headline figures; Cambridge for instance stating their share to be negotiable whilst there is nothing said of non-equity benefits received (such as research funding) due to promotion by an organisation such as OUI.
This case once again raises the question of ownership of invention. Although OUI did not challenge that Mr Jing alone devised the licensed IP, his position as an intern for seven months, prior to commencing his DPhil studies, and the unusual way in which he was employed (being contracted on a three month contract but paid for seven months) could have become a focal point within proceedings had ONI distinctly raised this issue. As it was, Mr Jing was under the university’s IP Statutes which at the time required equity to be split equally between the inventors and the university. The judge didn’t find this to be unfair, however it is interesting to note that Oxford University have since updated and modified their equity split in favour of inventors: the default equity split is 80% for founder researchers and 20% for the university with a 90/10 share being agreed in some situations.
The judge found that OUI’s equity split was within the range of other UK universities and that the concept behind the successful microscope design had been developed in an Oxford lab, by an Oxford professor and assisted by a team of researchers funded by research councils. OUI was therefore well within their right to claim their share of revenue due to the support they provided to ONI.
As a result, the judge found that OUI were entitled to the royalties from the success of ONI. The judgement here should however serve as a reminder to ensure any policy or agreement relating to IP is clear and understood by all parties involved. It further exemplifies the need to agree on IP ownership in an academic context, particularly when there may be a power imbalance between senior and junior members of a HE body.
Sign up to our mailing list to receive Mathys Matters, our monthly newsletter covering the latest IP news, industry insights, events and case law.
If you are interested in receiving quarterly newsletters relevant to our core sector groups - IT & engineering ('Inside Wires') and life sciences & chemistry ('Under the Microscope') - please select your preference(s) below:
Please select your practice area(s) of interest: