Chinh H. Pham and Charles Berman
Over the past two decades, the ability to manipulate, control, and measure matter at the atomic scale has led to interesting discovery of novel materials and phenomena, discovery that underlies the multidisciplinary areas of research and development known today as nanotechnology. Nanotechnology, simply put, involves the working and manipulating of matter on a scale that is one billionth of a meter in size.[1] The field spans the spectrum of research and development across many disciplines, including physics, engineering, electronics, materials, molecular biology, and chemistry.
Because the market for nanotechnology-related products and services promises to increase significantly, and with more companies trying to stake out territories while grabbing as much of the intellectual property pie as they can, the value and strategic importance of protecting intellectual property have become crucial in the quest to capture valuable opportunities.
According to the ISI Science Citation Index, in 1987 there were only 237 scientific articles published with the prefix nano- in the title. By 2002, the number had risen to about 10,000. In addition, between 1999 and 2002, according to the Derwent Patents Index, the number of U.S. patents published for nanotechnology almost doubled. A quick search of the U.S. Patent and Trademark database shows that at the end of 2004, there are about 7,780 issued patents and about 9,060 pending applications containing the prefix nano-.
To the extent that many companies are now placing a priority on intellectual property (IP), the building of a strong IP portfolio for strategic and economic purposes will therefore play an important role in whether these companies can create for themselves commercially viable opportunities.
The U.S. Constitution, statutes, and common law provide protection for intellectual property rights through patent, trademark, copyright, and trade secret law. For many early-stage companies, patents and trade secrets will be predominantly used in the protection of their IP assets. However, in many instances, and depending on the circumstance, trademarks and copyrights can also act to enhance the value of the IP assets.
In the United States, patents (that is, utility patents) offer protection for inventions that are directed to an apparatus, a concept, or a method or process that is novel, useful, and nonobvious. It is a contract between the inventor and the government (the U.S. Patent and Trademark Office, or USPTO, also called the Patent Office), whereby the inventor agrees to disclose the invention to the public, and in return, the USPTO grants exclusivity in the invention to the inventor if the invention is deemed new, useful, and not obvious. This exchange is seen as helpful in developing the technological knowledge base that is available to the public, while promoting the sciences and technologies.
In general, a patent does not grant to the owner the right to practice the invention. Rather, a patent provides negative rights, in that it grants to the patent owner the right to exclude others from making, using, selling, offering for sale, or importing the invention. With the recent change in U.S. patent law, the enforceable term of a patent now expires 20 years from the priority date of the patent application from which the patent issues.
Often, after one obtains patents in any technological field, it is essential to then engineer and tune the patents to create a substantially strong and solid portfolio to maximize the return from the patent assets. In other words, the portfolio should minimize the gaps that competitors can design around. The challenge of creating a strong and solid portfolio is equally applicable in the field of nanotechnology.
Protecting a new nanotechnology-related invention can be a difficult process, especially when the resources are simply not available at the early stages to pursue patent protection. Moreover, because nanotechnology is an emerging field, protecting the invention requires a level of knowledge and technical expertise that may be lacking.
Furthermore, some new ideas simply cannot be patented because they do not rise to the level of being novel or being nonobvious. For nanotechnology-related inventions, there can be substantial overlap with existing technology except that the nanotechnology-related inventions involve subject matter on a substantially smaller scale. Other nanotechnology-related ideas may be eligible only for narrow or partial protection from potential competition and imitation. Even if minimal protection can be obtained, such pursuit can often be expensive and time-consuming, with the ultimate result remaining uncertain.
A decision to seek protection for a new nanotechnology-related product or process should therefore be approached with the careful consideration that one brings to other commercial transactions. Just because a new nanotechnologyrelated product or process may be eligible for patent protection does not necessarily mean that the cost of obtaining and preserving such protection is justified from a business viewpoint. Patent protection is viewed as one part of the successful marketing equation. Before pursuing patent protection, one should consider a few statutory requirements and strategic points.
In addition to patents, a nanotechnology company can also use trade secrets to protect its proprietary information and intellectual property. A trade secret, in general, is confidential business, technical, or other information that gives a company a competitive advantage over its rivals. A trade secret need not be novel and requires no formal filing procedure for protection. Its duration can be indefinite, as long as reasonable efforts are made to keep the information secret. If, however, the trade secret is publicly disclosed or is reverse-engineered by a competitor, legal protection of the trade secret is destroyed.
For a nanotechnology-related invention, because of the nature, science, and scale of the technology at issue, it may be difficult to reverse-engineer the nanoscale technology when compared with traditional technology. To ensure maintenance of the trade secret, a company should pay close attention to its activities externally as well as internally. For example, companies should consider using a nondisclosure agreement (NDA) when exploring a potential partnership, collaboration, or investment opportunity.
In addition, because of the potential for high employee movement in this field, a nanotechnology company should consider instituting a companywide protocol for maintaining the confidentiality of proprietary information. For example, a nanotechnology company can educate its employees on the importance of maintaining confidentiality, can mark proprietary or appropriate information “Confidential,” and can inform departing employees of their obligation to keep such information confidential.
Another strategy for protecting intellectual property rights is through the use of trademarks. Generally, trademark rights protect the name or symbol associated with the company in relation to its commercial products or services. The rights afforded to a trademark prevent others from using similar, confusing names or symbols that may take advantage of the goodwill and quality associated with the protected names and symbols. Trademarks can have unlimited duration, as long as the mark is renewed at the appropriate time and is commercially used continuously.
As more companies begin to position themselves to take advantage of the opportunities in the field of nanotechnology, there has been an increasing trend to register, as a trademark, names that include the word nano. A brief check of the trademark database at the U.S. Patent and Trademark Office reveals that, at the end of 2004, there are more than 1,600 such registered and pending marks.
Copyrights protect the original expression of an idea, as opposed to patents, which protect the idea. Protection under copyrights attaches immediately when the idea is fixed in a tangible medium, such as paper, compact disc, or hard drive. Copyrights can offer protection for as long as 75 to 100 years for work made for hire, which is generally the case in the field of nanotechnology.
In the United States, there are several major hurdles that an inventor must overcome before patent protection can be obtained. Specifically, an inventor must be able to demonstrate that the invention is new, useful, and nonobvious. A patent cannot be obtained unless the invention is new. In addition, the invention must not have been known or used by others in the United States, or patented or described in a publication in the United States or any foreign country, before the applicant made the invention. Moreover, if the invention was patented or described in a publication anywhere in the world or in public use or sale in the United States more than one year prior to the date the application is filed, a patent will be denied.
In connection with this last point, it is critical that a patent application be filed with the U.S. Patent Office prior to the one-year anniversary of the public disclosure, use, or sale of the invention. However, unlike the United States, most countries do not allow this one-year grace period. “Absolute novelty” is typically the requirement. Thus, any public disclosure, use, or sale of the invention will foreclose the right of the applicant to pursue patent protection in these countries. Public disclosure includes presentations, printed and online publications, public meetings, offers for sale, and discussions with someone not under a confidentiality agreement. Accordingly, because nanotechnologyrelated inventions have far-reaching benefits beyond the borders of the United States, it is imperative that an application be filed prior to any public disclosure, use, or sale.
To determine whether an invention is novel (i.e., new), an application is examined by a patent examiner skilled in the technology of the invention and is compared against the available prior art. The examiner makes a thorough study of the application and all the available public information pertaining to its claims. Currently, much of this examination is conducted electronically, and the examiner has access to databases of the USPTO, European Patent Office, and Japanese Patent Office. The examiner also has access to other non-patent literature; however, in practice this is more limited.
Given the interdisciplinary nature of nanotechnology-related inventions, as well as the potential for these inventions to have application in multiple industries, examiners may have a difficult time performing adequate searches. For example, an invention directed to the manufacture of nanoparticles might involve materials science, chemistry, and physics. Furthermore, if the invention involves the use of the nanoparticles for drug delivery or imaging purposes, additional consideration must be given to the fields of molecular biology and optoelectronics.
Moreover, there is no specific examination group within the U.S. Patent Office dedicated to nanotechnology. Consequently, the search process currently falls to other existing art units, many of which are overburdened with the number of applications to be examined. As a result, it is important that the application be provided with an adequate and thorough search of the prior art to ensure that the invention at issue is novel.
The invention must also be nonobvious. It is common for the U.S. Patent Office to reject a patent application as being obvious. In certain instances, it may well be that the invention is something that has never before existed. However, if the Patent Office determines that a hypothetical person having access to the available information concerning that particular field of technology would have “known” how to make the invention (or modify a previous invention to make it), it may reject the patent as being obvious.
The claimed invention must also be useful. This utility requirement is seldom a hurdle encountered by the established disciplines. However, it can be an issue for nanotechnology-related inventions. By way of example, as a nanotechnology start-up tries to fortify the landscape around its core technology, it may file additional patents that recite multiple commercial uses for the invention in a variety of industries without clearly knowing whether such uses may work. In doing so, the company may encounter a risk that the invention lacks utility and the patent application may be denied.
Inventions also must be fully described in an enabling manner. The requirements for an enabling disclosure can provide a unique challenge and must be carefully addressed. The nanotechnology-related invention being disclosed might involve not yet clearly understood phenomena or might be addressed by technology that is being disclosed for the first time in the application. Accordingly, for nanotechnology-related patent applications it is imperative to use an interdisciplinary team approach. A team of experts will be much better able to address and provide solutions across various nanotechnology platforms.
Having a team of experts, all of whom understand the various aspects of the invention, can lead to an efficiently generated work product without any compromise in quality.
The USPTO evaluates its patent examiners primarily according to the number of applications they process. Examiners therefore have no incentive to spend very much time on any one application; it is to their benefit to process applications as quickly as possible.
The examiner typically does not take the time to read and study an application at length. An examiner usually does a quick search to discover all the relevant patents and other public information pertaining to the claims in an application. The examiner sends the applicant an “Office Action” explaining the examination. Invariably this includes a rejection of at least some of the claims as being obvious in view of the material the examiner located when conducting the review. The applicant then responds by explaining and distinguishing each cited reference, thereby demonstrating to the examiner that a patent should be issued. This routine saves the examiner time because the applicant has spent his or her own time figuring out why the references cited by the examiner are not particularly relevant. Claims that were originally rejected by an examiner are frequently later allowed after the examiner has had the opportunity to read the applicant’s response distinguishing the invention from the cited references.
The applicant is also obliged essentially to assist the examiner in the examination. That is, the applicant needs to advise the examiner of prior art of which the applicant is aware. This serves at least two purposes. First, the applicant obtains a patent knowing that because the examiner has considered the prior art there will be a presumption of validity of the patent at a later time. This means that the patent can be enforced or licensed with more confidence. A second reason for advising the Patent Office of the prior art is the requirement that if an applicant intentionally withholds prior art from the examiner during examination of the patent, the patent can later be unenforceable.
By bringing a court action against an infringer—namely, a person who intentionally or unintentionally copies the invention—the patent owner may seek both an injunction against the infringer and the recovery of monetary damages. The scope of the injunction, as well as damages, will be determined on a case-by-case basis and should be adequate to compensate the patent owner for the acts of infringement. In no event should the damages be less than a reasonable royalty for the use made of the invention by the infringer.
An alternative is to offer the infringer a license to make the patented invention. Such a license may include an initial base payment, as well as a royalty for each unit of the patented invention that the licensee would make, use, or sell.
The USPTO is responsible for examining and issuing patents to eligible inventors. For all practical purposes the role of the USPTO ceases upon issuance of the patent. The USPTO does not monitor commercial transactions for the presence of potential infringement, nor does it enforce patent rights against potential infringers once their presence is made known. It is the duty of the owners of the patent to protect their patent rights at their own expense. Moreover, the USPTO does not guarantee the validity of a patent. At any time during its lifetime, a patent may be found by a court to be invalid and hence unenforceable.
The financial cost of enforcing a patent against a potential infringer is highly dependent upon the complexity of the case, but legal expenses alone can easily reach several hundred thousand dollars and often reach millions of dollars. A few attorneys are willing to litigate such cases for a fee contingent upon winning the case. It may be possible to recoup some of the legal costs should the patent holder win, but this prospect is never certain in advance of the court action.
The patent owner may gain economic benefit from the patent by selling it, exclusively or nonexclusively licensing it, or by commercially exploiting the patented invention. For an independent inventor to attempt either the sale or licensing of the patent, the inventor must first identify the potential buyers or licensees. Once a potential buyer is located, the inventor must then place a value on the patent. If the product covered by the patent has not yet been commercially produced, it may be quite difficult to determine accurately the value of the patent. Therefore, the patent owner may wish to license the patent and obtain a royalty on the future commercial exploitation of the patent. The specific terms of each individual license would have to be negotiated with the licensee.
For many nanotechnology start-ups, the availability of capital resources is often a critical issue in their pursuit of patent applications. In the course of managing this limited capital resource, there may be a constant battle between the need to use the capital to hit predetermined milestones and the need to spend it to strategically build and protect the intellectual property assets.
Because it can be costly to pursue patent protection through the filing of a regular utility application, many nanotechnology start-ups have opted to pursue an alternative strategy of filing a less costly provisional patent application as a way to initially protect their intellectual property.
Unlike a regular utility application, a provisional application does not have any formal requirements, and thus it can be quickly prepared and filed relatively inexpensively. Once filed with the Patent Office, however, the provisional application does not get examined; instead, it provides an applicant a way to establish an early U.S. filing date. The provisional application will also preserve the right to foreign filings.
Often, the provisional application is a technical disclosure from the inventor. Thus, care needs to be taken when preparing the provisional application. In particular, the more details put into the provisional application, the better, because the benefit of the provisional filing will extend only to subject matter disclosed in the provisional application. This can be particularly important for a nanotechnology-related invention, because the multidisciplinary nature of the invention may require an additional focus on disclosures that may not otherwise have been initially anticipated. A provisional application, by its nature, is often not as robust as a regular utility application. Thus, the provisional filing procedure should be followed only in cases of emergency (for example, when a deadline is fast approaching or public disclosure is imminent), or when there is a financial restriction. Otherwise, a complete and well-prepared regular utility application should be filed.
The life of a provisional application is one year from the date of filing and cannot be extended. During this period, the invention can be referred to as “patent pending.” As indicated earlier, it is not examined. Still, the “pending” status can be advantageously used to deter potential competition. In addition, when a company is seeking an investment or a strategic partnership, the “pending” status can assure the potential investor or partner who is about to take a step toward a risky investment that patent protection has been pursued.
The U.S. patent system is based on a “first to invent” standard, whereas most other countries award patents based on “first to file.” This is a unique characteristic of U.S. patent practice and does not exist in other jurisdictions. The U.S. patent system is concerned with granting the patent to the first inventor and not the applicant that is the first to file. There is therefore periodically an evaluation of which of two or more applicants first conceived and diligently reduced an invention to practice (that is, interference process). This evaluation is extremely complicated, costly, and time-consuming. Nonetheless, interferences may arise in highly competitive emerging technologies.
The pace of technology adoption in nanotechnology will follow patterns similar to that of other fields. If the USPTO were to allow broad patent claims it would restrict innovation by allowing a few major players to control a large share of the field and crowd out small, innovative players. Conversely, patent claims that are not granted or that are too narrow will hinder progress by failing to protect innovation and will also hinder investment in the new innovations. The first scenario is more likely in the nanotechnology field, and in some areas a restriction on innovation may soon be created. This can be especially true for inventions involving carbon nanotubes. There are currently an abundance of issued patents, many of which may be overlapping in scope.
The patent system can provide insight into the landscape of innovation. For example, the number of patents that have been issued or the number of applications that have been filed in a particular area of nanotechnology can provide insight into a particular trend or focus, as well as insight into potential areas that may be commercially exploited by owners of those patents. The number of patents or applications, alternatively, can help determine the risks associated with entering such a market in light of the particular patent landscape. Ownership information of patents can also help to determine whether there will be risks within a particular area or application based on the number of potential competitors and the relative positions of intellectual property.
Citation of patents may also be a useful indicator. When a patent has been repeatedly cited by others, such information can determine the licensing potential of that patent. Accordingly, if a company is looking to establish a dominant position in a particular area of nanotechnology, it may look to enhance its portfolio by acquiring those patents that have been repeatedly cited by others.
Alternatively, repeated citations of certain patents by others can be indicative of potential roadblocks to be overcome when a company is looking to expand its technology outward. In such a scenario, the company may want to determine whether there is an opportunity to create a “picket fence” around the cited patents. In other words, the company may want to file its own patent applications around the cited patents; these new applications would be directed to potentially valuable areas that the cited patents may have missed, so as to create a potential cross-licensing relationship with the owners of the cited patents.
Patent claim scope can also be used as an indicator of available opportunities. To the extent that the patent provides broad scope of protection, the number of competitors entering that market can be minimized.
Nanotechnology companies will need to address patent litigation issues from the perspective of enforcing their own patents against a competing product or from the perspective of answering a claim that their product has infringed a competing patent. There has been little or no activity to date in nanotechnology-related patent litigation. It is expected that within the next few years there may be a significant increase in the amount of patent litigation as more nanotechnology-related products become commercialized and nanotechnology companies begin to assert their patents.
Note that in contrast to the rise of other new technologies, such as biotechnology, it is not expected that a new body of law will be developed specifically for nanotechnology. Rather, it is expected that certain facets of existing law will ultimately develop to take into account the special nature of nanotechnology-related inventions.
Although plentiful funds have been awarded by the federal government through the various governmental agencies that are part of the National Nanotechnology Initiative, a company should consider the impact of pursuing government grants to further its nanotechnology-related research. Under the Bayh-Dole Act, universities and small business entities can retain intellectual property ownership rights in federally funded research. The government retains a royalty-free license to any patented technology that is federally funded, although this has very rarely (if ever) been used. Any transfer or acquisition of these patent rights requires compliance with certain formalities and can impact or interfere with the growth of a company or its exit strategy.
Implementation of at least some of the processes suggested in this chapter can assist in improving business and increasing the value of the intellectual property portfolio. Different industries, including those based on nanotechnology, will have short-, mid-, and long-term technology and business objectives. Accordingly, the patenting objectives for different aspects of nanotechnology can differ for different industry uses. Every business can extract extra revenue from its business knowledge base by strengthening and building on its patentable assets. It is difficult to act on all of these criteria to define a patenting policy, but implementation of at least some of these processes can assist in improving business and increasing the value of your patents.