This issue of NanoNews-Now covers Nanotechnology Patents via an article on Intellectual Property by Jack Uldrich, President of The NanoVeritas Group, and author of the award-winning bestseller The Next Big Thing is Really Small: How Nanotechnology Will Change the Future of Your Business. In a second piece, Editor Rocky Rawstern interviews Bruce Kisliuk of the USPTO. And in a third piece, Rocky Rawstern interviews Al AuYeung of Schwabe, Williamson & Wyatt. Join us as we present "Nanotechnology Patents" If you are a Nanotechnology investor, click here for important information that could change the way you invest. Find the nanotech patent information you are looking for faster, easier, and in greater detail than any other publication - GUARANTEED. "The NanoTech Transfer Report provides me with the information I need to stay in touch with the leaders in the field. Great product!" — Douglas W. Jamison, Vice President Harris & Harris Group Inc. www.hhgp.com Try it FREE for 60 days! There is NO RISK.

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Assessing a company's technology - and the intellectual property behind it - is among the most difficult and time consuming tasks an individual investor can endeavor to undertake. In a field like nanotechnology, it is extremely difficult.

Nanotechnology, by its very nature, is incredibly complex and requires a broad base of scientific knowledge. Specifically, it requires a deep understanding of many different fields of science-biology, physics, chemistry, material sciences, and the computational sciences. For the average investor (and even most professional investment advisors), assessing nanotechnology-related intellectual property is beyond their skill set.

There are, however, a few things individual investors should do.

The most important is to understand what other technologies (and companies) are out there trying to address the same problem. For instance, in the area nanolithography at least three companies -- NanoNex, Molecular Imprints and Obducat -- are pursuing different approaches; and in the field of flexible solar cells Nanosys, Konarka and Nanosolar are working on similar technologies. In short, there are a number of ways to "skin a cat" using nanotechnology, and investors need to familiarize themselves with all those different ways.

Next, when considering a company's IP portfolio, the one thing investors should not do is be overly impressed with the number of patents a company has. All patents do is exclude others from practicing the invention. It does not stop someone from creating a different way to address or solve the same problem. One company can hold 250 worthless patents, while another can possess just one very valuable patent.

The rub, of course, lies in distinguishing a worthless patent from a valuable one. Recognizing that this skill is also beyond the capability of most people-at least in a field like nanotechnology-investors are encouraged to look at the scientific credentials of the founder's of the company and its scientific advisory board.

This is by no means a perfect measure, but to the extent that the individuals associated with the company have published papers in credible, peer-reviewed scientific journals or have established relationships with credible academic institutions, government laboratories or corporations, it is a positive sign.

For instance, the fact that Richard Smalley -- the founder of Carbon Nanotechnologies -- is also the 1996 Nobel Prize winner in chemistry doesn't guarantee his patents or related technology relating to carbon nanotubes are superior to others; it does though improve the odds the company's technology is on solid ground. Similarly, the fact that Charles Lieber and Paul Alivatos -- both of whom are involved with Nanosys, Inc. -- have had a number of articles published on their nanotechnology research and are widely recognized as world-class researchers in their respective fields suggests that Nanosys's technology and intellectual property is also on solid ground.

The third thing investors will want to take into consideration - at least when assessing the IP of smaller nanotechnology companies - is whether they are partnering with large corporate companies or have received investments from leading venture capital firms. The reason is because both VC's and big companies typically have scientists and trained technical advisors with the requisite skills to more thoroughly evaluate a company's technology and its intellectual property. All things being equal, if established companies and venture capital firms have assessed the technology and decided to invest in the company, it is a positive sign.

The tactic essentially amounts to letting others do your due diligence for you but unless one has the technical skills and the time, it is often the best that can be done.

Obviously, such a strategy may be unsatisfying to someone wishing to invest a substantial amount of their own money into a nanotechnology. Therefore, the final thing I would encourage individual investors to do is determine if the company itself has done its own due diligence on its intellectual property. Many companies, even private companies, often have a staff person devoted to investor relations and investors are encouraged to contact these individuals and seek answers to the below questions.

• Has the company thoroughly analyzed its own IP claims?
• Has it analyzed the patents held by their competitors?
• Does it have international patent protection?
• And does it have systems in place to protect their IP?

And, if a company has licensed its intellectual property to others, investors should understand:

• The terms and conditions of the license. Is it an exclusive, non-exclusive or field-of-use exclusive license?
• What is the duration of the license?
• How is the patent holder compensated--in cash, equity, royalties, or some combination thereof?
• And finally, if there is a challenge who is responsible for paying the patent prosecution costs?

The answers to these questions cannot guarantee a company's IP is fail-safe, but they should provide a solid basis for assessing the relative strength of a company's IP position. And in a field as fast-moving and complex as nanotechnology, that may be about the best an individual investor can do.

Fact-check

During the past couple years I have been keenly aware of nanotech patents, in part due to my daily search and posting of nanotech news, articles, and press releases, and in part due to our NanoTech-Transfer product. During that time I have seen various claims as to the number of nanotech patents and patents pending; claims for "many thousand" nanotech patents issued, and "thousands" pending. So my first question to Bruce was "how many patents and patents pending have been placed in the newly created Class 977 Nanotechnology art-collection?

Bruce: We are still in the process of placing existing patents into the new Class 977 Nanotechnology art-collection. To-date, we have placed about 1,500 US patents and about 200 published applications. Based on the number of patents remaining to be reviewed, expect about 2,500 patents to be initially placed in cl. 977, with newly issued patents being continually added.

And now to the rest of our interview.

NN: If you could stress three points with anyone wanting to apply for a patent, what would they be?

The answer will differ depending on whether they are an experienced patent practitioner or not. For independent inventors, the best place to start is the USPTO website and the Inventor Resources link.

There are many aspects of applying for a patent, so I'm not sure it's safe to limit it to any three. But here are a few key aspects. In regards to before applying for a patent, it's important to be aware of certain statutory "bars" that can prevent one from getting a patent. In general these relate to activity more than one-year before you file, which includes publishing, selling or offering for sale, or public use of your invention.

In regard to preparing an application, it should be prepared to give you the best chance of obtaining a patent of sufficient scope to be of value. Make sure that the specification and disclosure fully supports how to make and use the invention. And the claims should be drafted to correspond to the support in the specification.

NN: What issues do companies need to be most aware of as they contemplate applying for a nanotech-related patent? Are these issues any different from those that need to be considered when applying for non-nano patents?

Most issues are the same from the stand-point of prosecution. The patent statutes are "technology neutral," so the laws and rules apply the same regardless of the technology.

In nanotechnology, and in other newly emerging technologies, finding prior art can be more challenging than in well-established technologies. Also in emerging technologies, issues can arise in terms of enablement when the state-of-the-art is still theoretical and hasn't been put into practice.

Terminology can also be an issue, since there are no standards yet on nanotechnology terms.

NN: What issues do you deal with the most that could be proactively dealt with by educating the business and university patent departments?

Similar issues as above in regard to nanotechnology. For example, using consistent terminology that is well defined in the specification. Submitting relevant prior art that is known to the inventor and pointing out the relevance of that prior art as well as how it is different from the claimed invention. And providing a well-written and enabling disclosure to support the scope of the claims as drafted.

In nanotechnology, it is important to distinguish what may be an inherent property of a known material versus a unique or novel property that is due to it's nanoscale. In regard to obviousness, while it may generally be obvious to make something smaller, new properties that result from the nanoscale may not be obvious.

NN: What substantial differences exist between the U.S. patenting process and that of other countries?

The most frequently cited is the U.S. first to invent system contrasted with general first inventor to file systems elsewhere, which gives rise to the interference system for settling disputes regarding who was the first to invent in the U.S.

Other substantial differences include the demand system of examination in the EPO (European Patent Office) and JPO (Japan Patent Office) which defers examination until specifically requested by the applicant, contrasted with the U.S. system in which examination occurs unless the application is abandoned prior to taking the application up for examination.

The U.S. system requires applicants to provide citations of prior art known to be material to patentability, and this is a continuing duty of disclosure. The JPO has a similar duty, but only as of the date of filing. The EPO presents no such duty.

The U.S. requires that all claims be to a single invention. The EPO and JPO use Unity of Invention practice that requires that all claims have the same special technical features.

The U.S. requires 3 maintenance fees at 3-4 year intervals to keep a patent in force, whereas the EPO and JPO require annual maintenance fees. More importantly, EPO/JPO maintenance fees begin at 1-2 years after filing, whereas USPTO maintenance fees begin 3-4 years after allowance.

The range of computer software inventions that may be patented in the EPO/JPO is substantially more narrow than in the USPTO.

Al AuYeung is an attorney and shareholder with Schwabe, Williamson & Wyatt's Portland and Seattle offices. AuYeung co-chairs the firm's intellectual property practice group. He can be reached at 503-796-2437 or aauyeung@schwabe.com

Rocky Rawstern, Editor Nanotechnology Now

The industries that nanotechnology will likely have a disruptive effect on in the near term include the following: (Amounts are Billions of US Dollars) $1,700 Healthcare $600 Long Term Care $550 Electronics $550 Telecom $480 Packaging $450 U.S. Chemical $460 Plastics $182 Apparel $180 Pharmaceutical $165 Tobacco $100 Semiconductor $92 Hospitality / Restaurant $90 US Insurance $83 Printing $80 Corrosion Removal $57 US Steel $43 Newspaper $42 Diet Supplement $40 Diet $32 Publishing $30 Catalysts $27 Glass $24 Advertising $18 Cosmetics $13 Chocolate $10 Battery $5 Blue Jeans $4 Khakis $2.8 Fluorescent Tagging Figures are from: The Next Big Thing Is Really Small: How Nanotechnology Will Change the Future of Your Business. J Uldrich & D Newberry. March 2003 Read our review Our Review The Superswarm Interview The Superswarm Option Nanoveau - This column will cover the science, the speculation, and (occasionally) the politics of nanotechnology and related topics. If you want to know what nanotech is about, and how and why it will change everything we know-Nanoveau is for you. Got Nanotechnology? If not, read this: Our Molecular Future: How Nanotechnology, Robotics, Genetics, and Artificial Intelligence Will Transform Our World. Douglas Mulhall, March 2002 Read our review Nanotechnology Now Recommends: Research Applications and Markets in Nanotechnology in the UK 2005

The following represents the views of the individual and not necessarily those of Schwabe, Williamson & Wyatt.

NN: What issues do companies need to be most aware of as they contemplate applying for a nanotech-related patent in the US? Are these issues any different from those that need to be considered when applying for non-nano patents?

At the most fundamental level, seeking and applying for a nanotech-related patent is no different from seeking and applying for patent protection for other technology. In selecting potential technologies for patenting, the same fundamental issues remain, such as patentability, ability to detect infringement and commercial applicability.

The difference is that some of these issues are harder to answer for nanotech-related technologies because of the relative infancy of the industry, so decisions are often based on imperfect and incomplete information.

At the beginning of virtually any new wave of technology, the earlier patent applications have always had to have more effort in defining the terminology and explaining how certain processes are practiced. Such is the current state of preparing and filing for nanotech-related technology patent applications. The reality is that it does translate into more effort and, as a result, more cost, when compared to a more mature industry.

NN: Has the addition of Class 977 changed anything about the application process? Has it changed anything in the way you work with clients?

Only time will tell whether Class 977 was a positive or negative development for patent seekers. On one hand, it is always hopeful to have more examiners specialized in certain subject matters. However, many nanotech-related patent applications are expected to be cross-disciplinary. Only time will tell whether having such an interdisciplinary class will actually help in the quality and efficiency of the examination process.

On a more cynical note, it gives the patent office one more classification to impose restriction requirements that force a patent applicant to elect only a subset of claims for examination. This results in more costs associated with prosecution and claims directed to the various applications through divisional applications.

NN: What issues do you deal with the most that could be proactively dealt with by educating the business and university patent departments?

There are a wide variety of issues that can come up in the preparation and filing for patent applications. They will vary from invention to invention, from client to client and even from examiner to examiner. It can vary from uncooperative inventors in some applications to overzealous and overreaching inventors in other applications. The result is not enough information versus drowning in excessive information in the preparation of an application. Similarly, patent seekers vary from excessively hands off to overly micro-managing. The result is a lack of sufficient information on products, competitors, and the vital information versus wording that can actually narrow, or otherwise harm, the scope of the claims.

It is helpful to have clients or inventors who understand the process and appreciate the challenges faced by patent practitioners in their efforts to secure the broadest, most effective patent protection for their clients. An open door, balanced partnership leads to the most effective and highest quality patents.

NN: What substantial differences exist between the U.S. patenting process and that of other countries?

The biggest difference has always been that much of the world is on a first-to-file and absolute novelty system, whereas the U.S. has a first-to-invent system and one year grace period for publication. The former refers to the fact that in most of the world, whoever gets to the patent office first, assuming the item is patentable, will be awarded the patent, even if someone else invented it first. That is not the case in the U.S., which has an interference practice that allows later filers, but first inventors, the opportunity to challenge the first filer.

In most of the world, once the invention has been disclosed to the public, the inventor can no longer file for patent protection for the invention. Whereas in the U.S., the inventor has a one-year grace period for filing an application.

The first-to-file system is a much more streamlined process, and arguably motivates inventors to file early, but it ignores the economic reality that many small inventors are handicapped in such a race to file.

The global community is pressuring the U.S. to change its patent law to harmonize with other countries on this issue. A bill was recently introduced in Congress to do just that, namely, changing the U.S. system to a first-to-file system. The proponents argue that of all the thousands of patents issued each year, less than one-tenth of one percent are involved in interference proceedings. Thus, proponents argue that the benefits far outweigh the cost. Soon, we will know the outcome.

NN: Do U.S. companies and universities generally apply for patents in the U.S. and other countries? If so why? If not, why? (are there good reasons to apply for patents in many countries?)

Most companies and universities would like to apply for patent protection worldwide, however, hampered by the high cost of foreign patent filing and the general perception of lack of reliable enforcement, most companies and universities do not. For those who do apply for worldwide patent protection, they often do not do enough to ensure the outcome.

Foreign filing of a patent depends on the technology, its application, where the technology is likely to be used, and where the product incorporating the technology is likely to be made and sold.

A patent allows its owner to prevent someone from making, using or selling products with the invention. It is increasingly a global marketplace, where products may be manufactured, marketed, and used anywhere in the world, and patents are jurisdictional. That is, without a patent in a particular jurisdiction, there is simply no protection in that jurisdiction.

However, understanding where the technology may be used - in terms of manufacturing, distribution, and sales - allows someone to tailor their global IP strategy. For certain products, such as semiconductors, there is a certain economy of scale, for example, loss of sufficient major markets will render the making and selling of certain products impractical.

NN: Over the past year, I have interviewed many university technology transfer personnel. One question that I ask is "If you could, would you change anything about the US patent process? If so, what? Do you feel that the US patenting process would benefit from changes? If so, what would they be?"

Yes, there is no question in my mind that the U.S. patent process has become more difficult for the small inventors to obtain proper patent protection.

The high filing cost, the overly strict interpretation of unity of invention to force multiple divisional applications requiring multiple filing fees, and the decrease in the quality of examination results in multiple unnecessary rounds of response to office actions. And, at times, lengthy and costly appeals have disadvantaged the small inventor.

Historically the small inventors have provided us with the most significant breakthrough in technology. There needs to be steeper discount of fees for small entity inventors and easier to challenge restriction requirements for small inventors, and providing for higher quality examinations.

NN: At what stage in a product's life cycle does a business or university need to consider applying for a patent, and why?

One cannot really talk of a product's life cycle in this context anymore. The economy is practically global, and most of the world is working on first-to-file basis. As a result, there is really no appropriate waiting period to speak of.

It's true that new inventions may not yet be fully understood, but, in business, we are often called upon to make decision with imperfect or incomplete information. Likewise, there is no difference in patent application preparation and filing. We just have to exercise our best judgment as early in the cycle as possible in order to capture the earliest priority date. This cuts off competing invention claims.

Nanotechnology has attracted a significant amount of patenting activity in the past several years. Many commentators fear that a "patent thicket" has formed that will impede innovation and commercialization of nanotechnology — thereby defeating the goal of replicating the rapid economic growth of the information technology industry. In this article, patent lawyer Ted Sabety compares nanotechnology's current intellectual property and funding policy context with that of early information technology and radio. He argues that nanotechnology now occupies a situation more like that of radio than early information technology — possibly resulting in expensive patent litigation battles similar to those that occurred in the radio industry during the early 20th century. In comparison, early information technology patents were widely licensed non-exclusively under anti-trust decrees or the technology itself was not considered patentable or copyrightable subject matter. Sabety concludes with policy suggestions for public nanotechnology funding agencies that can position publicly funded patents in nanotechnology that are foundational in a position similar to the position of seminal information technology innovations.

(to read the article, click here )

"It's clear that there is a danger," says James Boyle of Duke University Law School, emphatically. The problem, he says, is that so much innovation is being put under patent protection that inventors, to stave off the threat of costly patent-infringement litigation, often end up entangling themselves in an expensive web of licensing arrangements to protect themselves as they work on new products.

What ticks off tinkerers like Duane are patents that, as he sees it, prevent him from taking things apart and experimenting. "It's as if the hood of your car were welded shut, and if you opened it up, you could go to jail." Whose idea is it, anyway?

Christine Peterson, director of the Foresight Institute, a technology think tank in Palo Alto, Calif., and a member of the "Open Source" school of thought, thinks the patent system has been overextended - not just in volume but in kinds of patents.

The US economy has prospered, she says, in part because of the strength of its property rights, including patent rights. "We have deeply learned the lesson of private property ... but we've gone too far. As far as I can see, the property rights model works with physical things, but not ideas. We're pretending they can't be shared." Whose idea is it, anyway?

Intellectual property (IP) is critical to the survival of many companies, particularly young nanotechnology companies, which seek to develop valuable patent portfolios as a basis for corporate value. The Patent Office increasingly must examine nanotechnology patent applications and, recently, has been willing to provide the public with its views on nanotechnology patent policies. The Patent Office wants to listen to the public. In the dot com era, the Patent Office was criticized for some of its patenting decisions, and there is a general hope that nanotechnology patents will be a boom to nanotechnology, not a basis for criticism. 11th Foresight Conference on Molecular Nanotechnology

As the nanotech devices known as quantum dots grow ever more popular with the electronics and life-sciences industries, analysts fear the complicated patents underlying the field will trigger an expensive set of legal battles that benefit no one.

"The likelihood there will be a legal battle over quantum dots to me approaches certainty over a three-year timeframe," Matthew Nordan, vice president of Lux Research in New York City, told UPI's Nano World. From Nano World: Quantum dot battle inevitable.

Entrepreneurs are striving to claim patents over as many key nanotechnologies as possible. This gold-rush mentality could lead to a frenzy of lawsuits involving overlapping claims, but a new report reveals unexpected opportunities exist, too.

"The conventional wisdom, for instance, is that everything is patented when it comes to carbon nanotubes, and that's actually incorrect," Matthew Nordan, vice president of research for Lux Research in New York City, told UPI's Nano World. Nano World: Nano patents in conflict

Patents are valuable business assets. In fact, many experts agree that intellectual capital has surpassed tangible assets when valuing American business. In the field of nanotechnology, patents can provide considerable valuation, if prepared and prosecuted carefully. Nanotech patents present some unique challenges. Here is a list of top issues to consider when drafting and obtaining nanotechnology patents (see link). Nanotechnology Patents: Issues for Nanotech Inventions

In patenting nanotechnology inventions, applicants should look for a new and unexpected function arising from the nanoscale component, and/or a prejudice in the art or technical difficulty which has been overcome. This highlights the importance of the “critical role” given in the definition given at the beginning of this paper.

It is also important that the patent application explain how the nanoscale dimensions are reached over the whole range of the invention and provide some evidence of the improved properties associated with the nanoscale component. —Richard Gillard, Elkington and Fife LLP, Patenting in the Field of Nanotechnology

We are at a time of uncertainty and flux in the regulation of nanotech products, particularly in the regulation of nanobio products. Nanotechnology involves a new set of technologies, and adjustments in current legal and regulatory frameworks will be required to handle the unique technical, safety, and toxicological characteristics of nanotech products. Regulators and law-makers are carefully monitoring the development of this new industry, reviewing existing laws and regulations to determine how well they cover the new nanotech developments, and attempting to craft new laws and regulations when necessary. Until these regulators and law-makers complete their task, the laws and regulations covering nanotech products will continue to change and evolve. —Philip D. Reilly, Commercializing Nanobio Products: An Overview of Legal Issues and Regulations

Almost 3,000 patents were issued between 1996 and 2002 with the term “nano” in the patent. Today, the rapid pace of research and development continues, and valid enforceable patents are likely to be the only thing between success and failure for start-up nanotech companies. Just as nanotechnology is proving an exciting area for scientists and industrialists, it is also likely to be an exciting area for patent prosecutors and patent litigators, since intellectual property rights are the key to obtaining investment and commercial success in nanotechnology. —M. Veronica Mullally and David R. Winn, Patenting Nanotechnology: A Unique Challenge to IP Bar (PDF)

Ironically, because of nanotechnology's broad reach and its emerging technology status, the ability of governmental agencies to classify and properly address this technology may hinder an entrepreneur's ability to obtain and/or properly enforce the intellectual property rights critical to the success of any commercial technological venture. —Albert P. Halluin, J.D., and Lorelei P. Westin, PH.D.Nanotechnology: The importance of Intellectual Property rights in an emerging technology (PDF)

From Our Molecular Future: How Nanotechnology, Robotics, Genetics, and Artificial Intelligence Will Transform Our World, by Douglas Mulhall:

• What happens to the monetary system when everyone is able to satisfy his own basic material needs at very low cost?
• How would we use cash when digital manufacturing makes it impossible to differentiate a counterfeit bill or coin from the real thing?
• What happens to fiscal policy when digital information, moving at light speed, is the major commodity?
• How fast will monetary cycles move compared to, say, the ten- or twenty-year cycles of the late twentieth century, when products and patents go out of date in a matter of months instead of years?
• What happens when we don't have to worry about trade or social services for our basic needs, because most of what we need is provided locally with digital manufacturing, and the biggest trade is in information?
• How do we control the excesses of the ultrarich, the overabundance of the molecular assembler economy, and the challenge to intellectual property laws created by intelligent, inventive machines?
• What happens if half of all jobs are made redundant every decade?
• What happens to the War on Drugs when there's no import, export, or transport of contraband because drugs can be manufactured in a desktop machine using pirated software downloaded from the Internet?
• What happens to democratic controls when individuals can get as rich as small governments in a year or so?
• What's the relevance of insurance if many things are replaceable at very low capital cost, but liabilities from software are potentially unlimited?
• How should organized labor react when molecular assemblers and intelligent robots eliminate most manufacturing jobs?
• What is the nature of work going to be?
• What happens to land prices when an individual can build a tropical farm under a bubble in North Dakota, and get there from New York in an hour?
• What happens when everyone can go everywhere, whenever they want, and work from wherever they want?

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Issue #26 will cover Life Extension & Medicine. It will land in your mailbox August 1st, 2005.

Infamous Quotes:

"This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us." Western Union internal memo, 1876
"Heavier-than-air flying machines are impossible." - Physicist and mathematician Lord Kelvin, President of the British Royal Society, 1895
"Everything that can be invented has been invented." - Charles H. Duell, Director of U.S. Patent Office, 1899
"There is no likelihood man can ever tap the power of the atom." - Robert Milikan, Nobel Laureate in Physics, 1923
"Theoretically, television may be feasible, but I consider it an impossibility-a development which we should waste little time dreaming about." - Lee de Forest, inventor of the cathode ray tube, 1926
"I think there is a world market for maybe five computers." IBM's Thomas Watson, 1943
"Landing and moving around on the moon offer so many serious problems for human beings that it may take science another 200 years to lick them." - Science Digest, August 1948
"Computers in the future may weigh no more than 1.5 tons." Popular Mechanics, 1949
"There is no reason anyone would want a computer in their home." Ken Olsen, Digital Equipment Corp, 1977

And the lesson is? It's a tough game to call.

Need advice? Check out NanoStrategies

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