Contributed by Ryan J. Schermerhorn and Christopher Zahn | Marshall, Gerstein & Borun LLP
As consolidation accelerates across the renewable energy sector, it is important to remember how intellectual property can influence both transaction risk and company valuation. Companies that build a strong IP strategy early are often better positioned for future financing, strategic partnerships, licensing opportunities, and acquisitions. Different IP rights protect innovation in different ways: patents, which are the focus of this article, protect disclosed technologies for a limited period, while trade secrets protect confidential know-how for as long as it remains secret.
For technology-focused companies, selecting and implementing the appropriate IP strategy requires attention well before an acquisition.
If patent protection is desired, companies must identify technical innovations before public disclosures or personnel turnover create problems, determine whether patents will serve offensive or defensive objectives, and prioritize commercially significant advances. Companies must then work with legal counsel to develop technically robust patent applications, identify the correct inventors, pursue claims at appropriate product and system levels, and control disclosure risks associated with AI-assisted development.
Once a company decides which innovations warrant patent protection, it must identify them early enough to pursue meaningful rights. Renewable energy advances rarely emerge as finished products. Instead, they typically evolve through iterative improvements during prototype testing, software releases, manufacturing scale-up, certification, and pilot deployment. Each stage can produce patent-protectable improvements that distinguish the company from competitors, even when engineers might otherwise view them as routine problem-solving.
While patent applications must often be filed before manufacturing scale-up, certification, pilot development, or a commercial market has emerged, waiting until product launch to review these improvements for IP protection creates several risks, including that technical information may already have been shared with investors, suppliers, customers, utilities, certification bodies, or development partners, potentially undermining or even blocking later patent filings. In addition, when a product incorporates multiple iterations that are difficult to reconstruct or explain in a patent application, the employees who understood those changes may no longer be available or willing to help. These issues can become especially significant during M&A diligence, when a buyer evaluates whether the target company truly owns the IP to the technology supporting the transaction.
Accordingly, all companies, particularly those early in development, should tie invention collection to operational milestones rather than waiting for product launch or relying on employees to independently recognize and report inventions. Useful triggers may include gate review meetings, grant submissions, successful prototype testing, selection of a product architecture, achievement of a performance threshold, release of control software, or deployment at a pilot site. Periodic invention-harvesting discussions among technical personnel, management, and patent counsel can then identify developments worth evaluating.
The goal is not to document every engineering change, but to create a reliable record that supports informed filing decisions while the relevant facts and contributors remain available.
That evaluation should also identify innovations that are better maintained as trade secrets, such as manufacturing tolerances, process settings, calibration methods, datasets, and other information that competitors cannot readily observe or reverse-engineer. Unlike patents, however, trade secrets retain value only while they remain confidential. Companies should identify key trade secrets, limit access to what is needed, use appropriate confidentiality agreements, and handle protected information during employee departures. These measures also matter during M&A diligence, when a buyer will evaluate whether the company’s confidential know-how is both commercially valuable and meaningfully protected.
Once a company establishes a process for identifying inventions, it must convert those inventions into a cohesive and strategically useful patent portfolio. Rather than filing whenever an engineer submits an invention disclosure, the portfolio strategy should reflect the company’s products, competitive position, limited resources, and likely role in a future transaction. It should consider the following:
First, accurate inventorship is an important starting point in a fast-moving sector, particularly when founders, employees, contractors, university collaborators, and outside engineers may contribute to the same development. Because turnover can make contributions difficult to reconstruct years later, companies should document who proposed the relevant technical solutions, conduct inventor interviews while contributors remain available, and use departure procedures to identify unreported inventions or ensure assignment documents transferring ownership rights to the company are executed before departure. This record can also help a future buyer understand how the portfolio relates to the company’s development history. Similarly, this record may be useful if founders, engineers, or other important contributors leave a company and head to or start a rival company that may want to leverage those previous contributions.
Second, companies should consider the levels at which each invention requires protection within the broader portfolio. Depending on the technology, claims may address an overall energy system, an individual product or component, a manufacturing process, or a control method. For example, a battery innovation may support claims to the complete storage system as well as thermal-management components and control logic. Component claims may reach a supplier that provides only part of a system, while system claims can protect the interaction among multiple components. The objective, however, is not to generate the largest possible number of applications (at least not usually), but to prioritize filings that support current products, future revenue, or meaningful competitive differentiation.
The underlying disclosures must also contain enough technical depth to support useful claims of varying scope as the technology evolves. Describing only the current prototype may leave the patent vulnerable to straightforward design-arounds or unable to cover later product generations. The disclosure should identify alternative materials, configurations, operating ranges, control approaches, and responses to failure conditions. For software-based inventions, it should explain the relevant inputs, processing, decision logic, outputs, and effects on physical equipment. Structured inventor interviews are often valuable because inventors can work with legal counsel to identify practical alternatives and ways a competitor might implement the same concept differently.
Management should also decide what role the patent portfolio will serve and keep those goals in mind during invention harvesting. An offensive portfolio may seek claims that prevent competitors from adopting core technology or create licensing opportunities, with some expectation of acting against infringers. A defensive portfolio may seek claims that discourage competitors’ assertions, preserve leverage in negotiations, support future cross-licensing, or raise funding, and will generally come at a lower cost by virtue of not depending on active enforcement and because the scope of the obtained claims is often less important for defensive portfolios. However, under either approach, the most useful claims typically address conduct that can be detected and attributed to a particular commercial actor, as those claims are less speculative and may be more valuable to future stakeholders or investors.
Enforcement decisions should likewise reflect the company’s broader transaction strategy. Asserting a patent can show that the portfolio has commercial significance and may deter copying, but it is not inexpensive and can also invite counterclaims (such as the infringement of another company’s patent portfolio), consume management resources, expose confidential information, and create unresolved liabilities. Management should therefore consider not only whether a claim is strong, but whether enforcement advances the company’s long-term competitive, financing, and M&A objectives.
Finally, companies should account for the increasing use of AI tools during technical development. Engineers may use external platforms to analyze results, troubleshoot software, or explore designs, but entering confidential information into those tools may transmit it outside the company’s controlled environment and undermine protection strategy. Companies should establish rules governing approved tools, permissible inputs, data retention, and external use of generated material. Patent review should occur before AI-assisted technical content is incorporated into presentations, publications, customer materials, or other public disclosures.
In summary, renewable energy companies can use the following checklist during product development and periodically revisit it before fundraising, licensing, enforcement, or M&A discussions:
- Tie invention reviews to engineering and commercialization milestones
- Identify potential public disclosures before they occur
- Identify valuable trade secrets and protect them through documented access controls, confidentiality obligations, and employee-departure procedures
- Document inventor contributions before personnel depart
- Align offensive and defensive filing decisions with business objectives
- Prioritize protection for commercially important systems, products, and components
- Draft applications to address product evolution and competitor design-arounds
- Control confidential information submitted to external AI tools
- Regularly map the patent portfolio to current products and future growth
DISCLAIMER: The information contained in this article is for informational purposes only and is not legal advice or a substitute for obtaining legal advice from an attorney. Views expressed are those of the author and are not to be attributed to Marshall, Gerstein & Borun LLP or any of its former, present, or future clients.
Ryan J. Schermerhorn is a partner at the intellectual property law firm Marshall, Gerstein & Borun LLP. Ryan may be reached at [email protected].
Christopher Zahn is an associate with the intellectual property law firm Marshall, Gerstein & Borun LLP. Christopher may be reached at [email protected].
