By Brian Houston, general manager, aerosol propellants and blowing agents, Solstice Advanced Materials US, Inc.
As the hydrofluoroolefin (HFO) market expands to meet global sustainability requirements, a growing number of suppliers are entering the market without access to relevant intellectual property (IP) rights – putting your business at legal and operational risk.
Around the world, original equipment manufacturers (OEMs) and resellers are transitioning from high global warming potential (GWP) hydrofluorocarbon (HFC) propellants to sustainable alternatives built on next generation HFO technology, such as HFO-1234ze and HFO-1233zd.
What’s driving the transition? Regulatory frameworks including the Kigali Amendment to the Montreal Protocol, EU F-gas Regulation and US AIM Act are mandating change.
Operationally, companies can standardise on environmentally acceptable HFOs without sacrificing performance.
However, OEMs and resellers need to be vigilant about negligent or unscrupulous
HFO suppliers operating in violation of other companies’ IP rights. Such companies are found throughout the world but are particularly prevalent in China, and unfortunately, they’re increasing in number.
At Solstice Advanced Materials – created through the 2025 spin-off of Honeywell’s Advanced Materials business – our investment in the research, development and commercialisation of HFO technology is protected by over 2,000 pending applications and issued patents covering compositions, their manufacture and use. To us, IP infringement isn’t just a legal issue – it’s a business continuity issue for our customers. It’s therefore vital that end users understand what qualities to look for in a supplier and to ensure that supplier has rights to all relevant IP.
Understanding the risks of IP infringement
Ben Pleune, a Charlotte, North Carolina-based partner in Alston & Bird’s Intellectual Property Litigation Group, explains that global IP laws exist to grant inventors exclusive rights to their inventions and encourage innovation. However, using IP without permission “undermines the intended benefits of IP protection and allows infringers to unfairly compete. IP infringers are able to leap past the research and development stage, conferring the benefit of the innovation at a significantly reduced cost.”
Choosing a partner without the requisite legal rights exposes your business to five critical risks:
1. Supply chain disruption: Sourcing HFO propellants, for example, from a partner that does not own or hold a license to relevant patents can cause sudden, costly business disruption should that supplier be ordered by a court to halt operations. Your production could be interrupted with very little warning.
2. Technical challenges: Vendors may lack the technical resources, experience or track record of safe and reliable supply you require, leading to downtime or business interruption.
3. Reputational damage: When suppliers’ products infringe IP, their customers risk infringement and breach of contract claims with downstream customers. This damages your reputation and erodes trust with customers, partners and investors.
4. Liability: IP infringement liability extends from the manufacturer to intermediaries and ultimately the end user. As Pleune warns: “Entities that attempt to acquire cheap goods without properly vetting the risk may ultimately run afoul of more robust IP regimes in the US, Canada or Europe. A US company purchasing infringing products from Asia, for example, could be liable for importing and selling infringing articles.”
5. Financial penalties: Litigation is time consuming, expensive and distracts from running your core business and meeting customer requirements. Damages awarded in successful IP litigation can be very high, particularly in the US.
How to select a reputable HFO supplier
Finding an HFO partner you can trust – one with robust technical support capabilities, a reliable supply chain and the requisite IP rights – is essential. Here’s how to evaluate potential partners:
1. Get familiar with IP that applies to your business
Pleune says that “there are many different types of IP, and OEMs and resellers need to understand the landscape in their industry. Patents may cover a product itself, its manufacture or its use. A company involved in any part of a product’s value chain from manufacturing to sales should ensure they understand the full scope of IP in each country in which they operate that may impact their business.”
2. Conduct thorough due diligence
Ask detailed questions to understand the supplier’s end-to-end value chain. Ensure that their product, the use for which you intend to promote that product, and the actual use of that product are not covered by any IP of Solstice or others. Ask what due diligence they conducted – how extensive was their searching and how sophisticated was the team that reviewed the results? Secure robust representations, warranties and indemnification clauses in contracts and verify that the supplier has the financial strength to stand behind these provisions. “Ask whether the company has ever been accused of IP infringement or any other crime,” suggests Pleune. “And remember that lack of knowledge is rarely a defence to IP infringement."
3. Be vigilant when it comes to Asia
Manufacturing in Asia is relatively inexpensive compared with the US or Europe, which Pleune says makes it equally inexpensive to produce knock-otf or infringing products. “IP enforcement in Asian countries can sometimes be ineffective, which can complicate a supplier’s ability to deter infringement at the source,” he explains. This situation creates significant risk for potential US or European buyers. Even in those circumstances where enforcement does not occur at the source, a buyer’s downstream purchases will still be subject to the more stringent IP regimes of the US or Europe with the potential for severe penalties regardless of any supplier indemnities.
4. Stay informed
Understand the technologies you’re using and be aware of key patent holders and ongoing legal disputes. Stay informed of patent infringement actions and regulatory and criminal complaints filed by legitimate rights holders.
Protecting your business and your future
Although Pleune notes that IP regimes around the world are strengthening protections and providing rights holders with diverse tools to stop infringers, companies still need to take precautions to source from an HFO supplier with the right technical experience, supply chains and legal rights to produce and sell their materials.
“The best mechanism for deterring IP infringement is understanding the scope of your industry and the relevant intellectual property held by market participants,” Pleune says. “That way companies can negotiate licenses or purchase licensed goods, avoiding costly enforcement proceedings altogether.”
Don’t let IP infringement disrupt your business or damage your reputation. With decades of innovation behind it, protection of over 2,000 pending applications and issued patents and a diverse, reliable supply chain, Solstice Advanced Materials is the natural choice to support your transition to sustainable propellants.
About the author
Before joining Solstice Advanced Materials, Brian Houston spent 25 years at BASF where he most recently served as business director, FCC Catalysts, Americas. He holds an M. Eng. and B.E. from Stevens Institute of Technology in New Jersey.
For more information
Visit: www.solstice.com
How to choose a reputable HFO supplier and avoid IP-related risks
