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NANOTECHNOLOGY PATENTS SURGE

22 Jun 04. Antonio Regaldo of the Wall Street Journal reported that the new-frontier buzz around nanotechnology — the effort to develop infinitesimally small structures into futuristic products — has companies, universities and investors hustling for patents, the key to markets that the government estimates at $1 trillion by 2015.

But the intensifying race to file patent applications has sparked concern that a proliferation of patents, especially broadly defined ones, could hobble innovation and produce a thicket of conflicting legal claims that could eventually drive up costs for consumers. In addition, the combination of scant products to date and surging investor interest raises fears of another high-tech bubble.

At stake is control over innovations that could have wide-ranging applications in the computing, defense and energy sectors. “It’s the culmination of the historical miniaturization of many technologies,” says Thomas Theis, director of physical science research at International Business Machines Corp., Armonk, N.Y. “This will only happen once.”

Nanotechnology in general refers to man-made structures less than 100 nanometers in size. One nanometer is one-billionth of a meter; one human hair is about 80,000 nanometers thick. Nano-scale materials exhibit unusual properties — such as exceptional strength — which scientists are trying to exploit to manufacture new products, such as inexpensive ultrathin televisions or futuristic computers.

Patents awarded annually for nanotechnology inventions have tripled since 1996, with 10-fold or greater increases in some areas during the past three years. Corporate intellectual-property departments, which have increasingly sought to turn patents into major revenue streams, are stoking the trend.

According to data compiled by the National Science Foundation, IBM won the most nanotech-related patents in 2003. Also among the top 10: computer-memory giant Micron Technology Inc. of Boise, Idaho; manufacturer 3M Corp. of St. Paul, Minn.; the University of California; and Japan’s Canon Inc.

Among the small but growing number of developments so far, General Motors Corp. says it will use 540,000 pounds of nanocomposite resins this year in the body of autos like the Chevy Impala. Levi Strauss & Co. sells stain-proof “nano-pants” in its Dockers khaki line impregnated with water-resistant molecules. Intel Corp.’s computer chips recently crossed into the nano-realm: Individual transistors now measure just 90 nanometers across.

Smaller companies are buying patents from universities, which have been the beneficiaries of increasing government funding in nanotechnology. The federal government spends about $800 million a year on related research, and that sum is expected to increase with President Bush’s signing of the 21st Century Nanotechnology Research and Development Act last December. Japan and the European Union are spending similar sums in what is a growing international rivalry.

Nanotechnology isn’t a term with any clear definition, which also leaves patent statistics open to interpretation. While patenting is showing a “very strong increase,” according to Stephen Maebius, a patent attorney with the law firm of Foley & Lardener, surveys of these patents depend heavily on keywords used to query databases. Analyses by several U.S. law firms and consulting groups all show substantial growth in patenting, but estimates on total patents differed widely.

Driving the patenting boom is the potential for licensing revenue and power to control emerging technologies. IBM already takes in more than $1 billion a year in licensing revenue from its vast portfolio of patents, to which it is quickly adding those related to nanotechnology.

Companies that hold pioneering patents could potentially put up tolls on entire industries. This March, Tokyo-based NEC Corp. announced a licensing campaign for its patents on carbon nanotubes. The telecommunications and electronics giant wa

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