Patenting nanotechnology.

• Author: Lemley, Mark A.

1. THE RACE TO PATENT NANOTECHNOLOGY II. WHAT MAKES NANOTECH PATENTS DIFFERENT? A. Patents on Building Blocks B. Cross-Industry Patents C. The Role of Universities III. ARE NANOTECH PATENTS GOOD FOR INNOVATION? A. The Risks of Overpatenting B. Licensing as a Solution to Overpatenting C. Legal Solutions to Overpatenting CONCLUSION I. THE RACE To PATENT NANOTECHNOLOGY

   Nanotechnology is the study and use of the unique characteristics of materials at the nanometer scale, between the classical large-molecule level to which traditional physics and chemistry apply and the atomic level in which the bizarre rules of quantum mechanics take effect. The unique behavior of materials at the nanoscale (1) offers intriguing possibilities for the cheap construction of rare molecules, the production of light and incredibly strong microfibers, and the production of ultrasensitive detectors. (2) Nanotechnology is at a speculative early stage; only a few nanotech (3) invetions have so far actually made it into commercial products. But the expectations surrounding the field are immense, ranging from a utopia of free energy and abundant materials (4) that will be one of the "major drivers of economic growth" in the foreseeable future (5) to fears of environmental catastrophe. (6)

   Whether nanotech is mostly hype or the wave of the future remains to be seen. But universities and companies seem to think there is something quite significant going on here, because they are rushing to the patent office in record numbers to patent nanotechnology inventions. This race to the patent office is so significant that more than a dozen law firms have established nanotechnology practice groups, (7) and the U.S. Patent and Trademark Office (PTO) has created a new technology cross-reference designed to track nanotechnology products. (8)

   Some of those patents cover improvements in existing industries, notably semiconductors, where the continuous effort to shrink transistor size in order to increase the speed and memory of chips has led companies to develop sub-micron (i.e., nanoscale) components. (9) Others cover the commercial products so far enabled by the behavior of materials at the nanoscale, such as a transparent sunblock for windows, stain-resistant coatings for clothing or carpeting, improved drug delivery systems, and nano-level filtration systems that can separate pollutants or bacteria from air or water. (10) Still other patents--arguably the most important ones--cover the basic research and production tools or building blocks of nanotechnology, (11) such as atomic force microscopes that can manipulate individual molecules or carbon nanotubes that can be used to build very light, extremely strong products--anything from bulletproof shirts to space elevators. (12) This last category of technology may or may not have a commercial market itself but is necessary in order to produce downstream commercial products in the other two areas.

   A recent study by Bhaven Sampat estimates that more than 3700 nanotechnology patents were issued in the United States between 2001 and 2003. (13) That's a significant number of patents for a technology that has so far produced few actual products. But, in fact, there are significant reasons to think that Sampat's numbers understate the pace of nanotechnology patenting. (14) First, he is intentionally conservative in his definition, classifying as nanotech inventions only patents whose claims include a restricted set of keywords that properly exclude terms like "nanosecond" that might pick up unrelated inventions. (15) This conservatism makes sense if the goal is to make sure that the patents identified are truly inventions in nanotechnology. But if the development of other new fields is any indication, there may be many issued patents that Sampat's study does not pick up because they use different terminology or employ the language in the specification rather than in the claims. Second, the pace of patenting seems to be accelerating. Replicating Sampat's methodology for 2004 shows that another 1929 patents were issued in 2004. (16) Third, and most important, the nearly three-year average delay between the filing of a patent application and the ultimate issuance of a patent (17) means that the patents Sampat studied were almost all based on inventions from the last century. (18) If the pace of nanotechnology invention is in fact accelerating, the growth of nanotechnology patents can be expected to continue in years to come. And it is clear that that pace is accelerating. The number of published patent applications in the United States that include the relevant terms in their claims has increased dramatically, as the following table demonstrates. (19)

2. WHAT MAKES NANOTECH PATENTS DIFFERENT?

   The importance of nanotechnology patents is not simply a matter of numbers. Three differences between the emerging science of nanotechnology and other inventions make the role of patents more significant here than elsewhere. (22) First, unlike other fields, the building blocks of nanotechnology were patented at the outset. Second, the field has a unique cross-industry structure. And third, nanotech patents are held in surprisingly large proportion by universities. I explore these differences in this Part.

   1. Patents on Building Blocks

      This is nearly the first new field in almost a century in which the basic ideas were patented at the outset. (23) In a surprising range of fields of invention over the past century in what we might think of as "enabling" technologies (24)--computer hardware, software, the Internet, even biotechnology--the basic building blocks of the field were either unpatented, through mistake or because they were created by government or university scientists with no interest in patents, or the patents presented no obstacle because the government compelled licensing of the patents, or they were ultimately invalidated. In still other fields, including the laser, the integrated circuit, and polymer chemistry, basic building-block patents did issue, but they were delayed so long in interference proceedings that the industry developed in the absence of enforceable patents.

      In each of these fields this was largely the result of inadvertence rather than patent policy. (25) Indeed, the history of emergent fields in the last eighty years is a remarkable story in which invention after invention was put into the public domain, freely licensed because of government or university policy, subjected to inventorship disputes for decades, or otherwise avoided patenting during the formative years of the industry. In this Subpart, I discuss some of the more salient examples.

      Computers. The computer was largely the result of military research projects during World War II, and government-sponsored research was not generally patented at that time. Even if it were, the military applications of the early computers meant that secrecy, not public disclosure, was the order of the day. The inventor of the computer, John Atanasoff, and his employer, Iowa State University, thought about seeking patent protection but never did so. (26) AT&T did obtain basic patents on the transistor, an important component of later computers, (27) but licensed them broadly at low royalty rates under an antitrust consent decree that also precluded it from entering the market for transistors itself. (28) Similarly, antitrust consent decrees compelled IBM to grant nonexclusive licenses to all of its computer-equipment patents at reasonable royalties. (29)

      Software and the Internet. Basic software inventions were not patented, because during the 1960s, 1970s, and early 1980s, the courts took the position that software was not patentable at all. (30) The basic protocols of the Internet are in the public domain because they were developed with federal funding and at universities in the late 1960s and early 1970s, and public inventions were not generally patented at that time. (31) Subsequent basic Internet inventions, such as the World Wide Web, generally were not patented either because they were created by individuals at public institutions that did not think patents were necessary or appropriate (32) or because the inventors believed software still wasn't patentable. (33) The Internet story isn't perfectly clear--patentees pop up periodically claiming to own pieces of the Internet (34)--but as a general matter people have been able to use the basic protocols of the Internet free of patent liability. (35)

      Biotechnology. Basic inventions in biotechnology also largely ended up in the public domain, a fact that is somewhat more surprising given the importance of patents today in that industry. (36) A variety of different facts combined to produce this arguably fortuitous result. As a product of nature, human DNA is ineligible subject matter for patenting. Even nonnaturally occurring biological materials were not clearly patentable until the Supreme Court's decision in Diamond v. Chakrabarty. (37) Methods for isolating DNA, however, would presumably have been patentable even before that time. Yet, the earliest patent including a claim that mentions DNA did not issue until 1976, (38) over twenty years after DNA's structure was first described. (39) A more plausible explanation is that the basic research on the structure of DNA occurred quite early, well before universities were involved in patenting. Watson and Crick did their work in the early 1950s. Holley, Khorana, and Nirenberg won a Nobel Prize in 1968 for their work on the genetic code. (40) All were academic scholars. At that time, universities had strong norms against patenting, particularly in medical inventions. (41)

      That norm may also have influenced the United Kingdom's Medical Research Council's and National Research and Development Corporation's decision not to apply for patents on Kohler and Milstein's invention of monoclonal antibodies. (42) Shortsightedness also played a role in that...