Nanotech and IP
A Foresight Nanotech Institute Policy Issues Brief
by Jacob Heller and Christine Peterson
The leading innovative industries of the late 20th century — computer hardware, software, the internet, and biotechnology — began with very little patenting. By contrast, although nanotech-based industry is in its infancy, nanotechnology patenting has exploded, with over 3,700 nanotech patents filed between 2001 and 2003, a large number for a set of technologies that have relatively few marketed products.1 The consequences of this boom in nanotech patenting are yet to be seen, but they could impact the level of innovation in nanotech for years to come.
Patents are traditionally thought to promote innovation. By granting a limited monopoly to the patent holder, patents allow innovators to profit from their inventions, increasing the incentive to innovate and helping the innovator recoup research costs. Furthermore, a patent signals to potential investors and venture capitalists that the innovator is producing unique, tangible results.
On the other hand, patents restrict access to processes, which can slow down the pace of innovation in nanotech industries. Patent holders can choose to charge licensing fees, or not license patented subject matter at all. A "patent thicket" can arise, making it difficult to understand or operate in a complex, unclear patent landscape.2 Since nanotech industries are just beginning, today's major innovations are the basic building-blocks that will provide the foundation for future nanotech growth. Most of these building-block nanotechnology innovations have so far been patented, including semiconducting nanocrystals, light-emitting nanocrystals, carbon nanotubes, oxide nanorods, a method for self-assembling nanolayers, and atomic force microscopes.3 It is likely that many nanotech innovations on the horizon will require licensing one or more of these patents. This will mean that nanotechnology research and development efforts may be required to pay hefty licensing fees, may be forced to "work around the patent", or worse, may not be able to operate because a patent holder refuses to license. This would retard growth in nanotechnology-based industries.
There is some reason to believe that today's early nanotech patents may be relatively benign in their practical effects, however. At the very early stages of an industry, when most of the activity is in labs and there are few marketed products, enforcing patent violations is not easy. It is nearly impossible to tell from outside a lab whether or not a patented technique or technology is being used, making detection of patent infringements difficult. Labs may simply violate patent rights without detection or consequence, which would allow them to operate as if patents never existed in the first place.4 This is essentially what happened in the biotechnology industry: although patents did exist, many were outright ignored. However, most research and development efforts will not knowingly violate patents in an effort to avoid costly legal battles, regardless of how difficult the detection of patent violations might be.
There are policy responses a government can employ to prevent nanotechnology patents from hampering innovation. It can impose a "strict utility" requirement on all nanotechnology patents, requiring that all patents filed are for a usable product, not a basic idea. This would prevent the patenting of building-block innovations, and only allow later downstream inventions to be patented. However, some argue that nanotechnology’s unique technology and industry structure make it a bad candidate for implementing a strict utility requirement.5
Another option is for government to mandate that all publicly funded research must be licensed non-exclusively (not just to one or a few parties). The U.S. government does have authority to take this action under the Bayh-Dole Act of 1980 (which originally granted the right to organizations to hold patents for publicly funded innovations), but this authority has not yet been put to use. Since most U.S. basic research happening today is being publicly funded through universities, this would help open up a lot of the basic building-block discoveries for further research and improvement.
Governments, foundations, and possibly even some private firms funding nanotechnology research may wish to examine whether nanotech can learn from the BiOS (Biological Open Source) Initiative now gaining attention in biotech. BiOS licenses are open source-style collaborative agreements suitable for patented technology, inspired by open source software.6
Governments should wait before taking any significant action, however, since the effects of patents on the nanotech industry are not yet known. If, however, it is found that patents present a significant barrier to nanotech innovation, governments and their patent offices should consider taking action.
1Sampat, Bhaven. "Examining Patent Examination: An Analysis of Examiner and Applicant Generated Prior Art". Working Paper. Spring, 2005. http://faculty.haas.berkeley.edu/wakeman/ba297tspring05/Sampat.pdf
6BiOS (Biological Open Source) Initiative, http://www.cambia.org.
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