Dealing with intellectual property - to buy or not to buy?

This article was first published by BEST Magazine and can be found here.

Ben Lincoln, partner and energy storage specialist at European IP law firm, Potter Clarkson, considers the recent case of Johnson Matthey buying the intellectual property and assets of a counterpart and what it tells us about the importance of due diligence in the process.

When Johnson Matthey (JM) completed the acquisition of fellow lithium-sulfur battery developer and UK company, Oxis Energy, this July, it described the move as having two main benefits. Firstly, the facilities acquired as part of the deal can be adapted for the manufacture of components for green hydrogen production to enable the production of tens of thousands of catalyst coated membrane parts per year for electrolysers, which supports JM’s green hydrogen business.

Secondly, the acquisition of a “considerable IP portfolio in next-generation lithium-sulfur and adjacent battery technologies” presents opportunities for JM’s battery materials business to advance its development of future battery material technologies.

Essentially, the desirability of the deal for JM comes down to property - physical property for the present to support a current need for manufacturing capacity and intellectual property (IP) for the future to support the next generation of technologies.

Having the opportunity to acquire manufacturing capacity that is largely pre-configured for their needs was clearly an advantage for JM. However, the difference between IP and physical property is that the knowledge, skill and development time to generate the IP from scratch can be much more difficult to achieve than building a factory. For many technology companies, and particularly ones who are making new roads into previously undeveloped areas of technology, the IP is the key asset and is what carries the value and makes the company attractive to a buyer or an investor. IP provides the security for future growth which is a significant factor when making an investment. The presence of a substantial and well-managed IP portfolio is a good first indicator that there is something worth investing in but performing effective due diligence is the key to really understanding the IP and the business around it. 


Oxis Energy had a developed intellectual property portfolio. Publicly available data shows that Oxis Energy were in the top five UK filers of patent applications relating to battery technology along with Hyperdrive Innovation Ltd and Nexeon Ltd.

They had made 343 patent filings in total and current figures show that 121 of those became granted patents that are in force and 101 are currently pending applications.

Looking geographically, the Oxis Energy portfolio included the most filings in the United Kingdom and the United States followed closely by patent filings in Europe, Japan, China and South Korea, which appeared to be their key filing territories. There were a lower number of filings in Brazil, Canada, Hong Kong, India and Taiwan, which appear to form the second tier filing choice.

The number of patents, the territories covered and the status of the patents are certainly key indicators of a patent portfolio that will pique the interest of a buyer. However, due diligence should not end there if the true value of the IP and the company as a whole is to be evaluated properly. These headlines are typically what is presented to give a flavour of the extent of the IP portfolio. However, the numbers can only tell a limited part of the story. To determine the appeal and worth of a patent portfolio we need to dig deeper.



Territories covered by family


Lithium-sulphur battery with high specific energy

EP2824739 B1

Europe (DE, ES, FR, IT), China, UK


Pending in: Korea

This patent covers rechargeable lithium-sulphur cells and batteries which have an optimised amount of soluble polysulphides in the electrolyte. The patent also covers an appropriate method of discharging the cells/batteries. The inventors have found that having a concentration of soluble polysulphides in the electrolyte at 70-90% of the saturation concentration of said polysulphide in the electrolyte ensures that not only is there good dissolution of the lithium polysulphides within the electrolyte but that a moderate electrolyte viscosity is maintained. Having a balance between the dissolution of the lithium polysulphides within the electrolyte and the electrolyte viscosity allows the subsequent cells and batteries to achieve the optimal specific energy characteristics.

Connecting contact leads to lithium based electrodes

EP2791998 B1

Europe (AT, DE, ES, FR, IT, NL, PL, SE, TR), Canada, Japan, Korea, Russia


Pending in: China, US

This patent covers a method of connecting a stack of tabs protruding from an electrode stack to the contact lead to obtain a mechanically strong and a low electrical resistance connection between the electrode stack and the contact lead. The patent covers the use of ultrasonic welding to connect the contact lead to the tabs to create a strong bond over a relatively small area of the electrode stack. An advantage of the claimed method is to reduce unnecessary weight and also prevent the exposure of metals other than that used for the electrodes to the electrolyte. This reduces the likelihood of the formation of dendrites during the charge/discharge cycles, which are formed when lithium is plated onto the non-lithium collector and can lead to a risk of a short circuit.

Battery management

GB2569140 B2



Pending in: Brazil, China, Europe, Japan, Korea, US

This patent covers the use of pulsed charging to reduce the onset of the “shuttle effect”. The shuttle effect is described as a parasitic self-discharge process which has been shown to degrade the capacity, lifetime and charging efficiency of lithium sulphur cells. Compared to continuous charging current, the use of pulsed charging reduces the time averaged voltage such that it remains below the threshold at which onset of the shuttle effect occurs. Additionally, the use of pulsed charging is said to promote the balancing of charge between cells connected in series. Varying the duty cycle can also allow the charging of the battery to be optimised whilst minimising the risk of onset of the shuttle effect.


GB2555408 B2



Pending in: Brazil, China, Europe, Japan, Korea, Taiwan, US

This patent covers an interconnect for a battery comprising a plurality of cells and also a battery comprising such a connection. The interconnect has an electrically insulating substrate with a heat sink on a first face and electrically conducting material on the second face. Advantageously, the electrically insulating substrate is thermally conductive, allowing heat to be conducted from one face of the substrate to the other in an effective manner. The advantage of the interconnect is that it allows for the heatsink to be much larger and also allows for surface features to be added to promote cooling. The thickness of the electrically insulating substrate may also be selected to provide a desirable rate of heat transfer between one face of the substrate to the other. The claimed interconnect is also lightweight and rigid which can facilitate a light weight battery assembly.


WO20053604 A1

Pending in: China, Europe, UK, Korea

This application covers sodium or lithium-sulphur electrochemical cells, wherein the liquid electrolyte (which includes a sodium and/or a lithium salt) used in these cells has a polysulphide solubility of less than 500 mM. Having a low, or no, solubility of polysulphides in the liquid electrolyte is beneficial within lithium-sulphur cells as it can inhibit polysulphide shuttle (a phenomenon where the sulphur species reach the negative electrode surface and undergo chemical reduction which can subsequently result in a loss of coulombic efficiency) within the electrolyte.


Due diligence in the world of IP is the process of identifying and assessing the IP rights as part of a buy-out or when an investor makes an investment into a business. It often involves the compilation of a list of the IP and perhaps an assessment of the validity of the IP rights. However, for due diligence to truly effective, we must move beyond the facts. To consider only the spreadsheets and bare validity opinions makes an assumption that the investor is investing in the IP alone. The reality is that investment in a technology based business is typically much more. It is an investment in its ideas, products, people and plans. Accordingly, the due diligence programme should account for this and then it can reveal much more valuable information.

So what are some of the key topics that should be covered when performing due diligence?


Innovation, especially in start-ups but also in scale-ups, can occur before commercial relationships and business processes have been formally defined, which can make determining IP ownership less clear-cut. Generally, the IP owner can be traced back to the creator of the IP. The entitlement to the ownership of rights initially resides with the creator, although there may be an automatic transfer of entitlement arising from employment or contractual obligations. If there are co-creators of the IP, there is the possibility of multiple parties being jointly entitled to the ownership of the IP. Thus, for example, if the IP has been developed in collaboration with a university, consultant or other third party, it is important to check that agreements are in place to clearly transfer ownership of any IP rights to the company. Since an IP right can be challenged on grounds of the rights holder lacking entitlement to ownership, it is crucial to correctly identify the IP creator which will then enable the IP owner to be identified. If ownership issues are identified it is normally possible to draw up agreements to tidy matters up provided the appropriate signatories are available and willing. It is therefore reassuring when buying or investing in a business to see that they maintained an open dialogue about IP ownership and kept clear records of the inventors.


Patents aren’t the only part of an IP portfolio. As well as design and trade mark rights, some of the most valuable assets for a technology company can be trade secrets. It is easy to understand that trade secrets relating to techniques for improving yield in a manufacturing process, for example, are valuable and may not be the subject of a patent but have significant worth. However, less obvious information relating to the research and development can be just as valuable, such as details of failed experiments and tests, which could save valuable time when new problems are encountered. Clearly, the trade secrets of Oxis Energy are not public knowledge but a buyer should ensure the trade secrets and know-how they are acquiring as part of the deal are understood.

Synergistic IP strategy

When IP is an important part of a business a buyer or investor will want to see a close synergy between the IP strategy and the business plan. The presence of a solid IP strategy that shows an understanding of how the IP rights will help to deliver the business plan is reassuring. It demonstrates that the company understands its commercial objectives and responsibilities, including how any investment will be safeguarded during future funding rounds or at exit. It is always encouraging to see IP being discussed at board level, as well as a disciplined approach to processes such as an established innovation capture process and evidence of an internal IP register.

Relevance to the business plan

Seeing that patent applications have been filed as new products and processes are invented is reassuring but it is important to go a step further and ask if the IP rights were acquired and maintained with focus and an eye on the direction of the business. An effective due diligence process should map the rights to the products that are sold and the commercial opportunities described in the business plan to determine if the business has the necessary rights to support the longer term objectives. Prosecuting patent applications and maintaining IP rights around the world can be costly but the expense is wasteful if the IP rights and the business aims have become misaligned as time has gone by.

Handling risk

It is possible that third parties have IP rights that prevent the free exploitation of the IP of a company. Thus, even if a patent has been granted, for example, to a new electrode processing technique, it is still possible to infringe a third party right, which may be directed to the underlying electrode material. An effective IP due diligence process will examine how thoroughly the company has explored its freedom to operate (FTO) position and what steps they have taken to mitigate for any risks that may have been identified. FTO is not an issue that can be left until an opportunity to exit presents itself.

Ultimately, the due diligence required for acquisition of IP is much more than spreadsheets and searches. Due diligence should cover the facts along with how the IP supports the business and how the business manages the IP. This involves understanding the business plan, the knowledge and people in the business and the wider business landscape.