Farewell to SCiFi Foods: IP, insolvency, and opportunity

Cultivated meat – growing animal cells in culture and harvesting the results as food – has exploded over the last 10 years. However, between technical hurdles and a challenging funding landscape, many commentators have suggested that the fragmented sector will see a string of companies going bust, or consolidating, soon. The first signs that this may be coming emerged recently with US-based SCiFi Foods announcing its closure earlier this June, citing capital markets and regulatory challenges, with a company press release noting that “we [have] shut down SCiFi operations and handed off to an advisory firm to run a sale process of our IP and assets.”

As a patent attorney, my interest was piqued by the mention of IP rights, and their focus within the liquidation process. This is with good reason too – cultivated meat is still a “deep tech” sector, and while profitability remains a way off, company value lies primarily in IP. It is therefore natural that this forms a focus of the liquidation process.

Seeing tech-heavy companies sell off assets is not unique to this sector. Across biotech and pharma, companies that fail to attract needed investment routinely call in the liquidators. When this is not the result of technical failure (as, indeed, it does not appear to be here), the question of what happens to the valuable IP is an intriguing one, and something rarely on the radar of companies and attorneys as they build patent strategies.

In the case of SCiFi, its IP offering centers around patent filings directed at “hybrid” meats (blending cultured cells with more familiar plant-based foods) and its proprietary cell lines. Of these, interest seems focused on the latter: developing efficient cell lines, which combine immortality with rapid doubling and is a major hurdle in the sector to which – if patent filings are anything to go by – each big player has taken a different approach.

This highlights several opportunities when winding up a company. The purchase of an “off the shelf” platform at bargain rates can allow a new but well-funded player to rapidly catch up in the market, and focus R&D spend on other areas of their business. Alternatively, established competitors may snatch up the opportunity to add an alternative approach to their toolkit, either as a fallback or to prevent competitors from adopting it themselves. In this way, IP assets may be able to realize new value when placed in the hands of competitors.

Of course, if a buyer cannot be found, the rights will eventually lapse and enter the public domain. This also offers opportunities, but caution should be exercised as, even if the platform patent has expired, there is no guarantee that the claims have the freedom to operate. Third parties will still need to do their diligence, but the prospect of a clear platform is an enticing one.

This is to say nothing of the IP held by a company that is not part of patent filings. Standing at the intersection of cell biology and food technology, cultivated meat is rich with know-how, optimized culture protocols, and “secret recipes.” Furthermore, projects in the pipeline are doomed to languish regardless of their potential value on completion. It is not uncommon for valuable patentable ideas to exist years before they are sufficiently developed, backed with enough technical data, or enough of a business priority to merit filing. Without a conscious attempt to capture this IP, much will simply be lost. Here, robust trade secret policies can help add value not only during the life of the company but even in the unfortunate event that they are wound up.

At the time of writing, it is unclear who (if anyone) will acquire the rights to SCiFi’s platform, and the future of this technology remains uncertain, yet hopeful. Despite the company’s decision to close, their wish to have their work live on is clear, noting that they would be “honored” if “other cultivated companies can purchase our IP and cell lines to accelerate their development and finish the work we started.” This is not only admirable but a testament to their commitment to the mission of revolutionizing food production. This gesture underscores the collaborative spirit that is often at the heart of groundbreaking innovation.

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