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RAINBOW EFFECT Quantum dots allow simultaneous
five-color imaging in fixed human epithelial cells for the first
time. The colors allow localization of cellular proteins and substructures:
The nuclei are stained cyan, Ki-67 cell proliferation proteins are
magenta, mitochondria are orange, microtubules are green, and actin
filaments are red.
QUANTUM DOT CORP. |
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Nanotechnology-the study of the unique properties of structures
on the nanometer scale-is living up to its reputation as “the
next big thing” in the scientific realm. Institutions and
companies around the world are pumping billions of dollars into
nanotech research, and investment continues to escalate.
Still a nascent field, nanotechnology promises to revolutionize
manufacturing processes and products in almost any industry, including
medicine, plastics, energy, electronics, and aerospace.
As nanometer-scale materials start making money, intellectual
property issues are heating up
And although nanotechnology has already given birth to products
both exciting and mundane, it promises to deliver countless more.
Estimating the commercial potential for such nanoproducts is
nearly impossible both because many applications have yet to be
conceived and because “nanotechnology is not, and never
will be, an industry. It is a technology and no more an industry
than physics or chemistry,” says Tim E. Harper, chief executive
officer of Científica,
a nanotechnology consulting firm. But nanotechnology is expected
to have a tremendous impact on the global economy.
Eager to get in on the ground floor, companies from start-ups
to multinationals are aggressively locking up critical and basic
nanotechnologies. They are racing to protect their own nanotechnology
intellectual property (IP) or to license or buy it from universities,
companies, or other groups.
Nanotech IP is particularly valuable right now because it is
the foundation for a young and expansive field, notes Edward K.
Moran, director of product innovation for Deloitte
& Touche’s technology consulting practice and leader
of its nanotechnology practice. “Those buying nanotechnology
IP have an opportunity not unlike getting into electricity or
the automobile industry early and locking up patents,” he
explains. In nanotechnology, “there’s going to be
unimaginable innovation [based on] these early discoveries. If
you can claim a piece of that action going forward, that’s
good from an IP standpoint.”
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WORK IN PROGRESS Researchers
at the Institute for Nanotechnology, Northwestern University,
are making significant advances in the field of nanotechnology.
Over the past two-and-a-half years, they have been responsible
for more than 100 patent applications and 20 issued patents.
MATTHEW GILSON, NORTHWESTERN UNIVERSITY |
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Having strong IP is important for companies building a base
in nanotech. For start-ups in particular, “it’s critical
not only for protecting their turf, but also for attracting the
financing they need to exploit their inventions,” says Bryan
Bockhop, a patent attorney with the Atlanta-based law firm Arnall
Golden Gregory and cochair of the American
Intellectual Property Law Association’s nanotechnology
subcommittee. “Without patents, it is very hard for them
to convince a venture capitalist, for example, that there is much
of a future in the company.”
BUT ASSEMBLING a strong IP arsenal has its
pitfalls. To be successful, companies need to develop a thorough
understanding of the patent landscape; monitor patent publications,
issuances, licenses, and litigation; and develop concrete IP strategies
that allow them to increase their chances of future profitability.
“A lot of nanotechnology companies are going out and locking
up these little islands of intellectual property,” Moran
observes. “They grab a couple of promising but limited patents
in a given area, and then they figure that they are ready to take
in financing. Unfortunately, nanotech is so new and evolving so
quickly that it is very difficult to lay bets on whether a little
sliver of technology is ever going to turn into a commercial product.”
Deep-pocketed manufacturing and venture-capital companies seem
to have an affinity for nanotech platform companies—firms
that pull together a broad portfolio of technology that is applicable
across multiple markets, says Douglas W. Jamison, a vice president
at “tiny tech” investment house Harris
& Harris Group. “These platform companies,”
he adds, “are the ones most likely to become the foundation
of the next generation of industries.”
The best example of such a company may be Nanosys:
the quintessential nanotech IP platform company. Through its three
investment rounds, the company has raised more venture capital—$55
million—than any private nanotech company to date, Jamison
observes. “And they’ve done that at a time when investors
are very conservative. That speaks volumes about investors’
confidence in Nanosys’ IP position as well as in its management.”
Since its inception in 2001, Nanosys has amassed an IP war chest
of 200 patents and patent applications in the field of inorganic
semiconductor nanomaterials such as nanowires, nanorods, and quantum
dots—nanocrystals that shine brightly when excited by light.
In addition to developing IP in-house, Nanosys has signed broad
licensing agreements with key nanotechnology centers around the
world, including Columbia University; Harvard University; Lawrence
Berkeley National Laboratory; Massachusetts Institute of Technology;
University of California, Los Angeles; UC Berkeley; and Hebrew
University.
Stephen Empedocles, Nanosys’ director of business development,
declined to contribute to this article, saying, “We are
not able to give interviews at this time.” But company documents
say Nanosys’ business strategy is to commercialize its products
through partnerships with leading companies in a variety of industries.
Through these relationships, one position paper states, “Nanosys
leverages the market expertise and complementary technologies
of our strategic partners, while our partners leverage the unique
technical and market opportunities enabled by nanotechnology without
having to become nanotechnology experts themselves.” Although
products are probably two years away, the company’s first
business partnerships are in photovoltaics, high-performance macroelectronics,
chemical and biological sensors, and nanostructured surfaces.
Nanosys has set up multi-million-dollar deals with companies including
Intel, DuPont,
and Matsushita Electric
Works.
Multinational Degussa
is another company that counts partnerships as a critical element
of its nanotech strategy. “It is essential to set up and
maintain strategic alliances with companies having complementary
IP positions,” says Markus Pridöhl, senior manager
for R&D at Degussa Advanced Nanomaterials, which operates
as an internal start-up company.
Rainer Hahn, senior manager for marketing at the Degussa unit,
notes that, in many cases, the use of a novel nanomaterial is
covered by a patent from a company that possesses application
know-how but doesn’t have access to the best material source.
“The combination of the best material IP with the best application
IP is the key to commercial success for both alliance partners,”
he says.
For the mutual benefits they provide, “we are going to
see a lot of nanotech start-ups entering into these types of arrangements,”
Moran predicts. “You won’t see them coming out and
going public. Instead, a lot more will be working quietly with
big companies providing them with IP and expertise that they need.”
NANOTECH START-UPS will also continue to provide
that IP through licensing agreements. However, when the IP is
going to be applied to an as-yet-unproven or unknown commercial
market, setting the value of the agreement can be tricky, Harper
observes. “It can be harder to convince potential licensees
of the value until it is further developed.”
In addition to partnering and licensing, many companies are
shoring up their nanotech positions by protecting their own internal
IP—a strategy that can be more complex than it is in other
disciplines. In nanotechnology, patents are not always the best
way to protect IP, Bockhop explains.
Patents are an obvious choice for protecting most macroscale
inventions that can be disassembled or reverse-engineered. In
those cases, a company need not be reluctant to reveal the details
of its process to its competitors in the form of a patent or patent
application, because competitors are likely to figure it out on
their own anyway. And a U.S. patent excludes others from using
the process for 20 years from the patent application’s filing
date.
But inventions on the nanoscale are more difficult to “take
apart,” Bockhop points out. In some respects, he says, “they
are like a house of cards; if you pull one critical card out,
the whole thing collapses. In these large, complex molecules,
each atom is influencing the stability of the entire molecule,”
he adds. “So rather than patenting a nanotech invention
and telling the whole world how to make it, it often makes sense
to protect it as a trade secret.”
However, taking the trade secret route makes sense only if a
company has a corporate environment that maintains secrecy. “If
every employee knows how the whole invention works and you don’t
have ways to compartmentalize different steps in the process,
then it would be very hard to maintain secrecy relating to the
invention,” Bockhop says. “And, unfortunately, with
trade secrets, once the cat is out of the bag, it’s hard
to get it back in.”
The selective use of trade secrets notwithstanding, companies
still protect much of their IP the old-fashioned way: with patents.
The number of nanotech patents issued has soared since the 1980s,
when the discipline of nanotechnology was first conceived. In
1985, approximately 250 new nanotechnology patents were filed,
but by 2003, that number had increased to more than 5,500, according
to figures from Thomson Derwent, a scientific information consulting
firm.
That growth has occurred despite a number of significant obstacles
to patenting nanotechnology. For one, the cross-disciplinary nature
of nanotech makes it difficult to write patents that give full
measure of protection to inventions, Bockhop says.
For example, “you might have an invention that involves
bombarding an organic molecule with photons and then applying
an electric current,” he says. “It is hard to tell
whether to characterize the invention as chemical, optical, or
electrical.” The attorney who is writing the patent is challenged
to “overcome his or her own technical bias to see the broader
invention. It’s important to find a way to perceive it across
technical lines and then claim it in such a way that you maximize
protection.”
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REACTOR At Degussa Advanced
Nanomaterials’ Hanau, Germany, site, this hot-wall reactor
is used in the R&D department for process development.
DEGUSSA ADVANCED NANOMATERIALS |
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To deal with this issue, a growing number of IP law firms are
creating cross-disciplinary teams of physicists, materials scientists,
electrical engineers, and chemists who are also attorneys and
patent agents. “We can talk science to inventors, while
we advise management on the best strategies to follow in this
increasingly competitive environment,” says Ronald L. Grudziecki,
a senior partner and member of the nanotechnology team at the
Alexandria, Va.-based law firm Burns, Doane, Swecker & Mathis.
THE CROSS-FUNCTIONAL nature of nanotechnology
is also creating challenges for the U.S.
Patent & Trademark Office. Currently, PTO is organized
into seven different technology centers from biotechnology to
chemistry to materials engineering, but none is specifically dedicated
to nanotechnology. For now at least, PTO is able to successfully
process applications by channeling them into its existing examining
groups, says Bruce Kisliuk, PTO’s director of biotechnology.
But this isn’t the first time PTO has had to deal with
cross-disciplinary patent applications, Kisliuk points out. Back
when applications in bioinformatics started to come in, for example,
the office had to bring together examiners and supervisors from
both the biotech and computer groups.
PTO has no immediate plans to create a nanotechnology examining
group. But as the number of nanotech patent applications continues
to rise, the office may “have to reorganize or restructure
in a way that ensures that the number and organization of examiners
and their supervisors are appropriate to these new technologies,”
predicts Q. Todd Dickinson, former PTO head. Now a partner with
the law firm Howrey Simon Arnold & White, Dickinson will become
vice president and chief intellectual property counsel at General
Electric in May.
For the moment, PTO is responding to the new demands of nanotechnology
in other ways. For example, it has a project under way to establish
a cross-reference art collection, in which it assembles nanometer-scale
prior art (R&D conducted in the area previously) into searchable
categories in the PTO patent classification system. Dickinson
applauds the move, noting that the collection will “eventually
be used for building the main search tools for nanotechnology.”
PTO is also reaching out to industry to better educate its examiners
about the science. Grudziecki observes that patent examiners typically
make up about half of the 80 to 120 people who come to hear prominent
nanotech speakers at the monthly meetings of the Atlantic
Nano Forum, a nonprofit networking and education group set
up to help improve patent quality.
And PTO has launched a series of Nanotechnology Customer Partnership
meetings designed to be a forum to seek individual opinions and
feedback on issues regarding nanotechnology, according to Kisliuk.
The first meeting, held in September, had more than 80 attendees.
The second one will take place on April 20.
Industry players have a vested interest in educating PTO on
nanotechnology. One major challenge will be convincing the office
that nanotech inventions “are not merely known technologies
done on a different scale,” which does not ordinarily justify
patentability, Dickinson says. It’s important to be able
to demonstrate “nonobviousness”—that the more
conventional laws of physics change when you get down to the molecular
and atomic level, for example, he says.
And prospective patentees want to be sure that examiners are
well-equipped to set reasonable boundaries and prevent unwarranted
overreaching at this stage in the nanotechnology game. If PTO
awards too many broad, concept patents, it might allow certain
companies to lock up huge areas, thereby stifling innovation.
The issuance of poorly drafted patents could plague the nanotechnology
field, leading to expensive and time-consuming legal battles.
But for now, companies seem to want to avoid fighting over patent
turf even though they might have grounds to do so. “There’s
not a lot of litigation going on yet in nanotechnology, which
is curious, because it’s not difficult to find examples
of one company’s IP bleeding into another’s,”
Moran says.
It may be that patentees are avoiding litigation in the interest
of expanding the market for nanotechnology. “Maybe taking
legal action that would put some cutting-edge firms out of business
isn’t going to help their own long-term prospects. The last
thing that they may want to do is put a chilling effect”
on the development of market applications, Moran conjectures.
This may explain the lack of litigation going on in the carbon
nanotubes arena, in which companies are just beginning to lay
claim to areas of IP.
Early last month, Japan’s NEC
essentially claimed a monopoly, saying it owns basic patents on
carbon nanotubes that must be licensed by any company wishing
to pursue the graphite material. NEC said one of its senior researchers,
Sumio Iijima, discovered carbon nanotubes in 1991, and that it
holds two essential patents on the technology. NEC announced that
it has signed an agreement with Sumitomo
Corp. granting Sumitomo a nonexclusive license under basic
Japanese patents owned by NEC that cover carbon nanotubes.
Other companies working in the carbon nanotube area, such as
Houston-based Carbon Nanotechnologies
Inc., are not using their resources to challenge patent rights.
Instead, CNI has effectively licensed the technology through Sumitomo,
its agent in Japan, and from IBM, which has claims in the U.S.
comparable to NEC’s. “We have acted as if some claims
are valid because we don’t want to fight about it,”
says Bob Gower, president and chief executive officer of CNI.
“One could argue that single-wall nanotubes were discovered
much earlier than NEC claims, but that really isn’t the
issue we think is important at this stage.”
CNI is focused on developing
its own IP, which is oriented toward production of carbon nanotube
derivatives. In February, the company announced the issuance of
a key patent on technology for linking carbon nanotubes to each
other and to other species and substrates, “greatly enhancing
the potential of carbon nanotubes and broadly expanding their
range of end uses,” Gower says.
Gower anticipates that carbon nanotubes will find commercial
application-on a modest scale-this year. They will likely be products
that take advantage of carbon nanotubes’ electrical conductivity
or their ability to improve strength in applications such as in
sporting goods, he says. In anticipation, CNI is scaling up production
at its plant in Houston, hoping to reach 100 lb per day around
midyear.
Although companies today seem content to avoid litigation in
the interest of market development, that’s not likely to
be the case for long. If nanotechnology tracks other emerging
technologies, patent litigation is in its future, Dickinson predicts.
As new players come in, “they sometimes either focus too
much on obtaining patents or they ignore the patents of others,
expecting to clean up any conflicts later. People need to be forewarned
now. There will be a lot of frustration and gnashing of teeth.”
Jamison reaches the same conclusion, drawing a parallel with
both the biotechnology and semiconductor industries, which experienced
a “huge rise in litigation after producers had established
a market and began to make money.”
Eventually, “people are going to find that they are all
doing the same things. And then the leaders, who made major investments,
are going to be required to protect their technology,” says
Ken Barovsky, vice president and intellectual property counsel
for Quantum Dot
Corp., a company focused on semiconductor nanocrystal technology
and its application in biology. The strength of patent portfolios
will be what separates the winners from the losers, he adds.
“I know that there are companies that are practicing some
of the quantum dot arts without the benefit of having secured
any kind of patent of their own,” Barovsky says, noting
that Quantum Dot now has 137 patents issued or pending. When these
companies commercialize their products, “that’s when
we will see more jockeying going on.”
From entrepreneurs to researchers, everyone involved in the
nanotech arena is focused on IP and how it will affect global
competitiveness.
Surprisingly, Europe, Japan, and the U.S. have invested comparably
in micro- and nanotechnology. “The U.S., I think, is going
to have an interesting time adapting to a world in which it doesn’t
own the cards,” Harvard University chemistry professor George
Whitesides said last month while attending the Kyoto Laureate
Symposium in San Diego. There, he received a prize for his work
in organic molecular self-assembly, which has applications in
nanotechnology. “It has been possible to assume that the
technology that drives business is there on the shelf and that
[the U.S. has] the chance to own it. It’s much more competitive
in the future.”
“A race has started,” Degussa’s Pridöhl
notes. “The U.S. and Japan are expected to have the cars
with the faster engines due to the strongly increased public funding
for nanotechnology research. But in this competition, Europe,
especially Germany, may have a pole position. Therefore, determining
who will ultimately win the race is a matter of timing, IP position,
marketing strategy, and effective partnership.”
To be sure, many companies around the world want to find a way
to cash in on nanotechnology’s future prospects. “Doing
the research and speaking to people in nanotechnology, you can
see the financial and economic importance that it is going to
have for companies, for the economy, and for countries in general,”
Moran says. “It’s really setting the stage for a new
industrial revolution.”
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