Navigating Nanotechnology Patent Thickets

The entire patent system is a delicate balancing act.

By Stephen Maebius(smaebius@foley.com) | December 6, 2004

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The entire patent system is a delicate balancing act. Ideally, it should allow innovative companies to get a product out by granting reasonable rights to a new idea, technique, or compound, without granting patents so broadly that they stifle innovation. However, it inevitably takes time for the US Patent and Trade Office (USPTO) to gear up on issues relevant to a rapidly emerging area of technology. During that lag period, a small number of overly broad patents may be issued, and in other cases, justifiably broad patents will be issued on pioneering inventions.

Companies need to find effective strategies to cope with such patents. With greater patent activity occurring in hot areas of research such as stem cells and nanotechnology, greater instances of overlapping patent claims will occur. Fortunately, some changes are underway at the USPTO that should make overly broad patents less likely and make it easier to challenge patents without going to court. Those individuals willing to invest in building their patent portfolio can also use certain strategies that will help in a counter-attack if a patent is challenged.

FILING FOR PATENTS

When applying for a patent, scientists need to be aware that a large number of potentially related patents already exist. Patents that are related to a material being applied in a new way may already have been granted. For example, in nanotechnology, some researchers are exploring the antimicrobial properties of silver nanocrystals. Even if they have their own methods of producing silver nanocrystals, they would still need to find out if someone has a patent that covers the nanocrystals themselves. People often forget that when a competitor has a patent on a product, that claim excludes anyone from using that product for any purpose without permission. In patent parlance, this is known as a "freedom-to-operate" problem.

Product claims have broad exclusionary powers. They block all uses of the product, even those invented in the future by others. For example, if an individual has invented a method of using silver nanocrystals to kill microbes, they may encounter one or more previous product patents that block the use of certain types of crystals. Situations may also arise in which an individual needs to obtain a license from the owner of the underlying basic product patent. People often refer to these situations as "patent thickets," or patent entanglements, a conflicting snarl of legal issues that can trap entrepreneurs.

The best strategy to deal with patent thickets is to pursue your own broad patents, while being cautious and including as many narrow (and more defensible) claims as possible in an application. In that way, it creates leverage that can be used to deal with competitors. If two competitors each have a patent that blocks the other's product from being launched, the stage is set for a cross-licensing deal. If one of the competitors does not have an applicable patent, that opponent also would have no leverage in the deal. The greater the number of potentially blocking patents, the more leverage an individual has against competitors.

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Such overlapping patents may also be valuable in their own right; they may have longer terms than the previous patent on the product, depending on the date of filing. For example, some basic carbon nanotube patents are close to expiration right now. Scientists are just beginning to tap the end uses of carbon nanotubes, and many of these new uses are now being filed as patent applications. Under our current system, a patent will last 20 years from its filing date (21 years if you file a "provisional" application first). However, entrepreneurs still need to determine if another patent is still in force that may need to licensed.

CHALLENGING A PATENT

If an inventor believes a patent was granted improperly, it is possible to challenge it without resorting to litigation. For most innovative young companies, litigation is not an option because it is too expensive and too much of a drain on resources. In the United States, we have a system for challenging patents that is called reexamination, while in the rest of the world this procedure is known as opposition. The system of reexamination is limited compared with the rest of the world, as it allows a patent to be challenged only on very narrow grounds.

A number of situations exist where reexamination is a useful option. If a competitor has an overly broad patent, reexamination may be successful if a journal article published prior to the filing date clearly discloses every feature contained in the overly broad claim. In this scenario, submitting the journal article to the USPTO would prompt them to take a second look at the patent in light of this "prior art." If the USPTO agrees with the challenger's arguments, they would hold the overly broad claim unpatentable, and it would be removed from the patent. This would make competitors free to sell a product without the need to obtain a license from the patent's owner.

OTHER CHANGES UNDERWAY

Several changes are underway at the USPTO that should help reduce the chances of overly broad patents, at least in the field of nanotechnology. The USPTO recently announced the creation of a nanotechnology classification system called "class 977." The system will facilitate the searching of prior art related to nanotechnology; function as a collection of issued US patents and published pre-grant patent applications relating to nanotechnology available for all examiners to search; and assist in the development of an expanded search where examiners can look at related applications in the nanotechnology class to find relevant patents.

This is a first step toward developing a more sophisticated classification system for nanotechnology, which, in the future, may include various subclasses of related applications. The danger at present is that an inexperienced examiner may not be aware of all the prior art that limits the scope of a nanotechnology application, which could lead to issuance of an overly broad claim. In the future, the USPTO may be able to identify particular groups of nanotechnology patent applications to make sure they are directed to those examiners who have the most experience handling such applications.

This could be achieved by creating a nanotechnology examination group within the USPTO. Such a group exists for biotechnology, but there is not yet a separate group of patent examiners for nanotechnology. Creating a nanotechnology group would be difficult to do, because nanotech is spread across so many different fields of science. However, the USPTO could begin to organize certain areas that receive a large number of applications, such as nanowires, carbon nanotubes, and different types of nanocrystals. This would be one way to ensure that applications are sent to an examiner who has the best background to handle the case.

The USPTO faces other challenges. Every year, Congress diverts the funds collected as user fees to unrelated spending programs. In other words, a large chunk of all the fees generated when patents are filed are not returned to the USPTO. This makes it hard for the USPTO to hire new examiners in critical areas such as nanotechnology or to devote adequate resources to initiatives such as the classification system discussed above.

While improvements have been made in our patent system, it is a challenge to properly calibrate the power of patents and ensure that patents are thoroughly and properly reviewed at the USPTO. In the last year, reports from the Federal Trade Commission and other agencies have called for still more reforms to achieve a better balance between innovation and competition. In the current environment, it is important for aspiring nanotechnology startups to seek broad claims while at the same time include narrower, more defensible claims in every application. This is the best way to make it through the patent thicket.

Stephen B. Maebius is an Intellectual Property Law partner in the Washington, DC, office of Foley & Lardner, where he leads the nanotechnology industry team. He serves on the advisory board of the NanoBusiness Alliance and is an editor-in-chief of the Nanotechnology Law &Business journal. Prior to becoming a lawyer, he was a patent examiner in the US Patent & Trademark Office in the biotechnology group.

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