Rare earth elements and property protection

As existing mineral reserves become depleted and high grade ores become less accessible due to geopolitical factors, process technologies for the extraction and upgrading of low grade mineral reserves will become invaluable. Rare Earth Elements (REE)-containing ores provide an excellent example of this.

REEs, such as neodymium and europium, have become increasingly important as raw materials for the manufacturing of components used in modern electronic devices. However, as demand for these devices has grown, manufacturers risk becoming stripped of this valuable resource. Although high grade ore reserves remain relatively plentiful, many of these are located in jurisdictions whose political forces may render such reserves inaccessible to foreigners.

Process technologies, for extracting and upgrading low grade reserves of rare earth elements, have yet to be developed, at least to any significant commercial degree. For the time being, little attention is invested in solving challenges presented by the extraction and upgrading of low grade mineral resources, so long as producers remain spoiled with the availability of high grade mineral resources. However, the not-too distant future may see the end to the available abundance of high grade mineral resources. This will drive the demand for process technologies used to extract and upgrade lower grade resources.

Along with this growth in demand, having the ability to use process technologies while preventing competitors from doing so will become extremely valuable. This is only possible by engaging the legal regime of intellectual property. There are various kinds of intellectual property, but the ones most relevant to utilizing process technologies are patents and trade secrets.

Patents

Patents are derived from legislation and are jurisdictional in nature. Separate applications for patent grant must be made in each jurisdiction where patent protection is intended to be secured. Patents are of limited duration, typically providing protection for a period of 20 years from the filing of the application for patent grant. Patents are granted for inventions found to be novel and non-obvious over “prior art.” Generally speaking, prior art consists of pre-existing technologies that are in the public domain.

Trade secrets

Trade secrets, on the other hand, arise without engaging any administrative process. Trade secret protection is only possible if the technology is capable of being maintained secret from the public. Trade secrets operate by denying competitors information that is necessary to access and use the technology. In order for a trade secret to be operative, the owner of the trade secret must take steps to prevent dissemination of the trade secret information to the public. The duration of trade secret protection is, potentially, perpetual. However, once the trade secret information becomes public, and irrespective of how this happened, the trade secret and its inherent value become permanently extinguished.

Innovators must choose

Patents and trade secrets are incompatible. The innovator of the technology must, as a practical matter, choose between these two intellectual property protection vehicles. This is because, patents, by their very nature, are public documents which disclose information about the invention-embodying technology. This is antithetical to the survival of any trade secret protection.

Where there is a significant risk that the process technology cannot be maintained a trade secret, the decision to choose between patent and trade secret protection is biased towards patent protection. Such risk is present in circumstances where licensing opportunities exist, high employee mobility prevails within the industry, and where there is a high likelihood that the process technology will, in the future, be independently developed by a competitor. With process technologies for extracting and upgrading rare earth elements, there is a significant opportunity to commercially exploit such technologies across the mining industry.

Doing this would require licensing such technologies to third parties, enabling exploitation of low grade reserves on a global basis. Patent protection offers more advantages to innovators in this case. Licensing to third parties gives up some control over dissemination of the process technology information, making trade secret protection less feasible. Licensees are also more comfortable with technologies that are protected with patents, given the significant consequences they may suffer from the loss of trade secret protection. This is especially so where multiple licensees would be relied upon to control access to the licensed technology, if required to preserve trade secret protection.