Nanotechnology: Intellectual Property Challenges

• Publication year: 2005
• Pages: 59
• Citation: Vol. 34 No. 2 Pg. 59

34 Colo.Law. 59 Colorado Bar Journal 2005.

2005, February, Pg. 59. Nanotechnology: Intellectual Property Challenges

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59

Vol. 34, No. 2, Pg. 59

The Colorado Lawyer
February 2005
Vol. 34, No. 2 [Page 59]

Specialty Law Columns
Intellectual Property and Technology Law
Nanotechnology: Intellectual Property Challenges
by Griffith A. Kundahl, Michael L. Drapkin

This column is prepared by the CBA Technology Law and Policy Section

Column Editors

Nathaniel T. Trelease, WebCredenza, Inc., Denver - (720) 937-9930, ntrelease @webcredenza.com; Jim Brogan, Cooley Godward, LLP, Broomfield - (720) 566-4190

jbrogan@cooley.com

About The Authors:

This month's article was written by Griffith A. Kundahl, an attorney with Socha Perczak Setter & Anderson, P.C. in Denver focusing on issues involving complex scientific and technological issues, and General Counsel to the NanoBusiness Alliance, the national nonprofit nanotechnology trade association - (303) 832-7265, griff@nanobusiness.org; and Michael L. Drapkin, Boulder, a registered patent attorney focusing on Emerging Communications and Technology - (303) 415-0535, drapkin@mldpatent.com.

This article is derived in part, with permission, from sections of Miller, Serrato, Represas-Cardenas, and Kundahl, The Handbook of Nanotechnology: Business, Policy, and Intellectual Property Law (Hoboken, NJ: Wiley & Sons, Inc., 2004).

Nanotechnology, a rapidly emerging technology that involves the manipulation of matter at the atomic and molecular levels, gives rise to complex new intellectual property concerns for a broad spectrum of practitioners. This article focuses on unique patent, licensing, and litigation issues.

Nanotechnology is an enabling technology in its nascent stages of development that involves the manipulation of matter at the atomic and molecular levels. The President's Committee of Advisors on Science and Technology predicted that ". . . nanotechnology will have a profound impact on our economy and society in the early 21st century, perhaps comparable to that of information technology or of cellular, genetic, and molecular biology."1 The breadth of nanotechnology's impact presents significant challenges for Colorado legal practitioners who represent the many individuals, corporations, and other entities affected by this emerging field.

This article provides an introduction to nanotechnology (also referred to as "nanotech"). It then explores related key intellectual property issues, focusing on patent, licensing, and litigation matters unique to this emerging technology.

Emerging Role of
Nanotechnology

One nanometer, which is one-billionth of a meter, spans approximately ten atoms.2 It is not as simple to articulate a precise definition of nanotechnology. The National Nanotechnology Initiative, which is the U.S. government's program coordinating the nanotech research efforts of sixteen federal agencies, has defined nanotechnology as involving all of the following:

1. Research and technology development at the atomic, molecular or macromolecular levels, in the length scale of approximately 1 - 100 nanometer range.

2. Creating and using structures, devices and systems that have novel properties and functions because of their small and/or intermediate size.

3. Ability to control or manipulate on the atomic scale.3

Nanotechnology is fundamentally an enabling technology that enhances many core scientific disciplines. It substantially affects numerous vertical industries, including biotechnology, materials, consumer goods, pharmacology, medical devices, information technology, telecommunications, electronics, energy, space, and transportation.

Nanotechnology has been established as a significant component of the nation's long-term strategy for continued scientific and industrial leadership.4 In the final month of 2003, Congress passed, and the President signed into law, the 21st Century Nanotechnology Research and Development Act,5 which authorizes $3.7 billion in nanoscale science and engineering research and development between fiscal years 2005 and 2008. Federal funding of nanotechnology has been complemented by private investment. Numerous corporations and venture capitalists ("VCs") have targeted nanotechnology, which in turn has prompted the emergence of many start-up companies.6

Nanotechnology potentially will have a significant impact locally, nationally, and internationally. Thus, it is advisable for legal practitioners who counsel technology clients on matters ranging from intellectual property to capitalization and growth and exit strategies to understand this emerging technology and monitor the complex intellectual property issues it presents.

Nanotechnology Patent
Issues Overview

Protecting intellectual property with patents is essential to the commercialization of nanotechnology, particularly for start-ups. VCs and investors put a high value on the perception of a strong patent portfolio. Thus, the issue of whether a company has clear and adequate rights to intellectual property covering its technology is critical. A determination of patent infringement can result in a company being enjoined from commercializing its product.7

The recent explosion of nanotech patents has led to a significant possibility of overlapping patents, with resultant mutual blocking rights. Even if a company can prevail in court, litigation can be extremely costly and distracting. Some companies may be fortunate to avoid litigation if other patent holders are willing to license their technology or enter into cross-licensing or other cooperative agreements. Nevertheless, start-ups still may be strained financially by a range of different patent holders demanding excessive royalties in licensing negotiations.

Further, intellectual property disputes can scare away potential investors or ruin an acquisition or initial public offering. At start-up, the decision to prosecute8 is a key strategic assessment, and such choice directly impacts the direction of the company and its research and development ("R&D") staff. It is prudent for counsel to monitor the progress of technology both at the client company and with competitors at regular intervals. Counsel also should take an active role with executives in assessing the patenting prospects and pitfalls as part of overall company strategy.

Colorado Looks Ahead to Nanotechnology

On May 19, 2003, the presidents of Colorado's major universities sent an open letter to Governor Bill Owens, the Colorado legislature, and Colorado's U.S. Congressional delegation, claiming nanotechnology to be a top development priority for the state of Colorado [copy of letter on file with the authors].

On May 3, 2004, the Colorado General Assembly passed a Senate Joint Resolution "Concerning the Importance of Developing a Comprehensive Nanotechnology Initiative in Colorado" [Senate Joint Resolution 04-025, available at http://www.leg.state.co.us].

Small Times magazine, the leading nanotechnology industry publication, places Colorado on its "states to watch" list, ranking it twelfth in research, industry, venture capital, innovation, work force, and costs related to nanotechnology ["Top 10 Small Tech Hot Spots," Small Times (March 12, 2003), available at http://smalltimes.com/docu ment_display.cfm?document_id=5641].

Patent Prosecution

Obtaining a nanotechnology patent is an expensive and time-consuming process. Attorney fees and filing fees for prosecuting nanotech patents can range anywhere from several thousand dollars to more than $30,000.9 If a company wants to pursue international protection, costs can jump significantly. In addition, the prosecution process may take many years to complete due to a significant nanotechnology backlog at the U.S. Patent and Trademark Office ("PTO"). In making the decision to prosecute, counsel should carefully consider these factors and how publication requirements could adversely affect a company's competitive position.

Once the decision has been made to file for a nanotechnology patent, counsel should work with the companies involved to draft the patent application. The first issue to be determined is the scope of the patent, and weight must be given to the risks associated with a strategy of drafting overly broad claims. There are unique challenges due to the interdisciplinary nature of nanotechnology and its early stage of development. Thus, attorneys must educate themselves in the various applicable disciplines and vertical industries to ensure adequate coverage.

The evolving and uncertain nature of nanotech subjects broad claims to greater risks of being narrowed, giving rise to estoppel problems under Festo.10 Even if broader claims are allowed, this could lead to greater possibilities of litigation. However, claims must be broad enough to adequately cover the wide spectrum of end uses.

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