There is another update in the story of the nanotech/cleantech company A123, which recently declared bankruptcy. According to the Washington Post this weekend, “Wanxiang America, the U.S. arm of a Chinese automotive parts giant, won the bidding for a bankrupt Massachusetts-based lithium battery manufacturer that was once hailed as a cornerstone of President Obama’s quest for American dominance in electric vehicles and battery technology.”
“A123 Systems announced Sunday that Wanxiang would pay $256.6 million for all of A123’s technology, its manufacturing facilities in the United States and China, and its contracts with utilities seeking grid storage and automakers seeking batteries for electric and hybrid vehicles.”
“Wanxiang would not acquire A123’s Ann Arbor, Mich.-based government business, which includes all of its U.S. military contracts. Those would be acquired for $2.25 million by Navitas Systems, a Woodridge, Ill.-based provider of energy storage products for commercial, industrial and government agency customers.” Please see the Washington Post article for more details.
Intellectual property concerns of various stripes apparently did not stop the sale, for now at least.
Media reports re A123 System’s bankruptcy confirm that A123′s intellectual property is an important part throughout the lifecycle of a struggling company. While Johnson Controls was an initial suitor for A123′s assets, the Wanxiang Group is also now inserting itself into the bankruptcy proceeding. However, concern is present that the IP could “go to China.”
In any event, stay tuned. Emerging growth companies should recognize the value of IP thoughout corporate lifecycles, including bankruptcy. In the on-going debate about whether to file patent applications in China, the debaters should note key situations such as this A123 situation where Chinese companies and investors are critical factors.
During a down economy, many nanotechnology companies rely heavily on government grants as the influx of funds from private investors decreseases. As a result, these companies become particularly sensitive to IP disputes since many grants place limits on the use of funds to subsidize legal costs. In some cases, nanotechnology companies may risk bankruptcy if issues dealling with trade secret misappropriation, determintation of joint or sole inventorship, and breach of joint development agreements lead to litigation battles. Thus, stemming from the highly collaborative nature between many nanotech startups, universities, private laboratories, and their respective researchers, these entities must takes steps to ensure that their IP interests are protected throughout the R&D process, especially at the front-end.
In a recent article published in Nanotechnology Law and Business, Foley & Lardner attorneys Reed Christansen, Stephen Maebius, Leon Radomsky, and Steve Rutt, PhD provide examples of nanotechnology companies seeking bankruptcy protection as a result of intellectual property litigation. The authors also summarize steps that nanotech companies can take to protect themselves and to forestall litigation.