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In Delaware and Colorado,
and Butamax have entered into worldwide patent cross-license and
settlement agreements, ending a patent dispute related to
technologies for the production of bio-based isobutanol. This
settlement ends all of the lawsuits and creates a new relationship
between the companies, aimed at leveraging each other’s strengths
and accelerating development of competitive supply for bio-based
The cross-license agreement grants both parties patent licenses
to all fields for isobutanol and is structured to develop robust
and sustainable isobutanol markets. The license will be royalty
bearing for Butamax in certain fields and royalty bearing for Gevo
in other fields. There are also a number of fields that are
royalty-free for both companies. Both parties can sell up to 30
million gallons per year royalty-free into any field.
The Digest’s 2015 5-Minute Guide
The Digest’s 2015 5-Minute Guide
breakout: The Digest’s 2015 8-Slide Guide to Gevo
breakout: The Digest’s 2015 8-Slide Guide to Butamax
Butamax will take the lead role in developing the market for
isobutanol as an on-road gasoline blendstock. This will include
progressing ongoing programs to gain required EPA approvals for
mainstream use of 16% isobutanol as a gasoline blend component.
Butamax has also conducted joint research with Underwriters
Laboratories (UL), which has demonstrated that these blends can be
used safely in fuel storage and dispensing equipment meeting
current UL standards. It is expected that UL’s guidance will clear
the way for state government agencies to consider and approve the
dispensing of biobutanol-gasoline fuel blends in the U.S.
In parallel, Gevo will lead development of the jet fuel market.
Gevo has been producing and selling alcohol-to-jet fuel (ATJ)
derived from isobutanol since 2011. To date, Gevo’s ATJ has been
produced at its demo biorefinery in Silsbee, TX, using isobutanol
produced at its Luverne, MN, fermentation facility. The company
has successfully flown tests flights with the U.S. Air Force, U.S.
Army, and U.S. Navy and now expects to secure the MIL-SPEC
certification (JP-8 and JP-5) enabling bids on future RFPs for
renewable jet fuel by the Defense Logistics Agency. Gevo also
intends to begin test flights with the commercial aviation
industry, including Alaska Airlines, following receipt of ASTM
International certification, expected before the end of 2015.
While Butamax and Gevo have cross-licensed all of their patents
for making and using isobutanol, both parties will have their own
biocatalyst and process technologies. Both Butamax and Gevo are
free to license their respective technology packages to third
parties. A third party licensee would be granted a sub-license,
and would be subject to terms and conditions that are consistent
with the cross-license between Butamax and Gevo.
“We are very pleased to have reached this amicable and fair
settlement. Setting up the marketing relationships, as we have
done, brings to bear the capabilities of each of the companies,”
said Dr. Patrick Gruber, Gevo’s Chief Executive Officer. “We very
much look forward to developing a very large, growing and
profitable isobutanol market in conjunction with Butamax.”
“The aim of these agreements is to accelerate development of
markets for bio-based isobutanol,” commented Butamax Chief
Executive Officer Paul Beckwith. “This will create exciting
opportunities for ethanol producers to expand their businesses by
becoming isobutanol producers, at the same time enabling the most
competitive isobutanol supply for customers.”
Both parties have agreed to keep all details relating to these
agreements confidential, other than what is disclosed in this
press release and the attachment, or is otherwise required to be
disclosed by law.
Cowen & Company’s Jeffrey Osborne writes:
The ongoing litigation has been a
source of investor concern as it has led to increased operating
expenses, higher cash burn levels and also likely delayed any
license agreements in the U.S. given the ongoing litigation. We
see the new agreement, signed this weekend ahead of the trial
that was slated to start today as a long-term positive for the
company. We are not making any changes to our estimates at this
This patent cross-licensing
agreement will aim to leverage each company’s respective
strengths to drive forward the development of bio-based
isobutanol with the aim of developing a robust market for
isobutanol. Per licensing agreement, Butamax and Gevo will be
licensed to all fields, however, certain fields will be royalty
bearing only for one of the respective companies and some fields
will be royalty free for both companies.
Butamax and Gevo have agreed to global settlement and cross
license agreements resolving the ongoing intellectual property
dispute and all current district court litigations will be
dismissed by the parties.
Under the agreements Butamax and Gevo have licensed all of their
respective patents to each other, with rights to sub-license their
Both parties are free to sell up to 30 million gallons per year
royalty-free into any field, after which, certain fields bear
royalties per the table image:
The parties have agreed to leverage each other’s regulatory
approval and market development activities in order to accelerate
the pace of market growth and to reduce duplication. Specifically:
Butamax will focus on gaining required approvals to support
direct blending of bio-based isobutanol into on-road automotive
gasoline, and is expected to market isobutanol for this
application on behalf of both Butamax and Gevo.
Gevo will focus on gaining required approvals to support use of
renewable ATJ made from bio-based isobutanol, and is expected to
market isobutanol for this application on behalf of both Gevo and
The licensing technology packages offered by Butamax and Gevo
will differ at least as follows:
The parties will not exchange or utilize each other’s proprietary
The parties’ proprietary microorganisms will utilize different
enzymes in the biobutanol pathway.
The parties’ process engineering designs will include different
product recovery systems
was originally published.
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