Preparing a Nanotech Strategy

NAPP® 2007 Annual Meeting
“2007 Patent Practice Update”
July 17, 2007

Preparing a Nanotech
Strategy

© 2007 Stanislav Antolin
Used by NAPP with permission.

www.smithmoorelaw.com

• A patent is a legally-recognized temporary
monopoly which the government grants in
exchange for complete disclosure by the inventor
of how to make and use the invention.


Basic requirements for patentability:

• Statutory subject matter
• Useful
• New (novel)
• Non-Obvious


• A trade secret is something which confers a
business advantage, is not generally known, and
that the owner takes steps to maintain as a secret.


Basic requirements for trade secret
protection (under UTSA)

• Information must not be generally known or readily
ascertainable by proper means
• Must have “independent economic value” due to
its secrecy
• Trade secret holder must use “reasonable
measures under the circumstances” to protect the
secrecy of the information


Examples of trade secrets:

• Customer lists
• Formulas
• Manufacturing processes
• Marketing/business strategies


Advantages of Patents:

• Patents deter competitors who might be tempted to copy
• Potential revenue stream from licensing
• Patenting avoids the need to maintain complete security for
inventions
• Potential large damage awards for infringement
• Provide an asset to attract investment and measure value
of company
• May be used to exclude imports
• Injunction—to keep competitors out of a particular market or
technology


Disadvantages of Patents

• Nanotechnology is a new technology
• Expensive
• All information in a patent application becomes public
knowledge once the patent application is published (as
early as 18 months)
• Limited duration
• Not self-enforcing
• Limited coverage (technical information)
• No right to exclude for at least two (and possibly more)
years
• Only grants the right to exclude others


Advantages of Trade Secrets

• Usually cheaper (no initial cost)
• Potentially unlimited duration provided secrecy is
maintained
• Information is not revealed to the public
• Broader coverage (non-technical information)
• Effective immediately


Disadvantages of Trade Secrets

• Generally considered less valuable than patents—difficult to
value/license
• Potentially expensive to maintain—requires constant vigilance
• Protection is easily lost
• Competitors may develop information independently
• No exclusionary rights
• Difficult to discover loss
• Difficult to recover damages for misappropriation
• Based on state law
• May be blocked by patents from practicing your own trade secret


Patent protection usually better choice
when:

• The technology of the invention is new
• The invention can be reverse-engineered easily
• The invention is likely to be developed by another
• There is a need to disseminate information about
the invention
• Potential to get broad claims and “pioneer” status
in a new technology


Trade secret protection usually better
choice when:

• Invention has a short “shelf-life”
• The invention can easily be kept secret and
cannot be easily reverse-engineered
• Scope of claims would be unduly narrow


Trade secret protection is the only
option when:

• The invention is not patentable
• The inventor does not have the money to seek
patent protection


The Five Biggest Mistakes:

• Ignorance of statutory bars
• Withholding information from the patent/USPTO
• Cutting corners/doing things cheaply
• Emphasizing quantity over quality
• Failing to get assignments/agreements


Whether patent or trade secret—

• Make privacy your TOP priority
• Monitor your competitors’ patents
• Make sensible decisions with respect to
intellectual property


Other Considerations

• Regulatory Arena

• Product Liability

• Entity structure

• IP Exploitation


Regulatory Arena


Regulatory Arena

• Environment => EPA (Environmental Protection Agency)

• Health => NIOSH (National Institute for Occupational Safety and Health)

• Safe Workplace => OSHA (Occupational Safety and Health Administration)

• Foods and Drugs => FDA (Food and Drug Administration)

• Consumer Product => CPSC (Consumer Product Safety Commission)

• Export => DOS, DOC, DHS, . . . Etc.
(State, Commerce, Homeland Security, . . . Etc. )


Environment => EPA

Source: U.S. Environmental Protection Agency
Nanotechnology White Paper


Health => NIOSH

Source: Progress Toward Safe Nanotechnology
in the Workplace, A Report from the NIOSH
Nanotechnology Research Center


EHS Regulatory Arena
Environment => EPA
Health => NIOSH
Safe Workplace => OSHA

• Focus is “engineered, unbound nano particles”

• Worker safety and emissions are key areas of focus

• Positive potential impact of nanotech via environmental remediation (surface area
and unique absorption properties of nano materials

• General consumer not well versed in nanotech

• Depending on study, public perception of nanotech is very high in Asia, neutral
in the U.S. and in danger or already negative in Europe

• Governments, environmental organizations and industry working together on nano
EHS issues

• Regulation is not the biggest risk facing nanotech, a loss of public acceptance
is.” – Woodrow Wilson Center


Foods and Drugs => FDA
regulated products
• Foods • Animal Feeds
• Pharmaceuticals
– All interstate domestic and
imported, including – Human
produce, fish, shellfish, – Animal
shell eggs, milk (not meat
– Tamper resistant packaging
or poultry)
• Medical devices
– Bottled water • Radiation emitting electronic
– Wine (<7% alcohol) products
• Vaccines
– Infant formula
• Blood products
• Food additives
• Tissues
– Colors
• Sterilants
– Food containers • Counter-terrorism products
• Cosmetics
• Dietary Supplements


regulates products on a product-by-
product basis
• Pre-market approval
– For products that require an FDA approval prior to introduction
to the market.
• Market clearance
– For products that are similar to products that were cleared to
market previously, or are prepared to approved specifications.
FDA review process for these products is more rapid than for
pre-market approval.
• Post-market review
– For these products, market entry and distribution are at the
discretion of the manufacturer and FDA monitors the behavior
of these products. Regulatory action is taken if adverse
events occur.


regulated products expected to be
impacted by nanotechnology
• Drugs (new molecular entities (NMEs) or delivery
systems)
• Medical devices
• Biotechnology products
• Tissue engineering products
• Vaccines
• Cosmetics
• Combination products


currently approved
“nano-scale” therapeutics
• Gadolinium chelate for MRI imaging (Gd-DTPA
Dimeglumine)
• Iron oxide particles for MRI imaging (Feridex)
• Products using NanoCrystal technology (Rapamune,
Emend)
• Liposomes (Doxil, DaunoXome)
• Microemulsions (Cyclosporine)
• Albumin-bound nanoparticles (Abraxane)


currently approved
“nano-scale” devices
• Silver nanoparticles (anti-bacterial wound
dressing)

• Engineered Calcium Phospahate (NanOss TM,
duplicates microstructure, composition and
performance of human bone)

• Nanoparticle dental restorative (3M ESPE Filtek)


other currently approved
nanoparticle-containing products
• Cosmetics (containing lipid nanoparticles or
“nanosomes” used as delivery systems, for
controlled release of active ingredients; L’Oreal,
Estee Lauder)
• Sunscreens (containing titanium dioxide and zinc
oxide nanoparticles which make the product
appear transparent)


review Process for
Nanotechnology Drugs
• Existing pharmtox tests are probably adequate for
most nano-products

• For new nano-materials, new “tools” may be
needed


Product Liability => Nano as Toxic Torts
• Asbestos, DDT, PCBs

• Some possible issues:
– Potential plaintiffs and defendants?
– Exposure to harmful substances or products?
– Causation/uncertainty questions?
– Latency between exposure to the substance and
manifestation of adverse impacts?
– Strict liability: design defect or failure to warn?
– Some possible indications from potential

• Defendants:
– A lack of transparency/CBI on safety evidence?
– Internal/public statement inconsistencies?
– Responsive to agency and public?


Export => DOS, DOC, . . . etc.

• Department of State (DOS)
– 22 CFR 121.1
(a.k.a. ITAR: US Munitions List => “inherently military properties”)

• Department of Commerce (DOC)
– 15 CFR 774 Categories 0-9
(a.k.a. EAR: Commerce Control List => “dual use”)

• Violation => civil sanctions, criminal sanctions
(e.g., fines, jail time) can apply to the
individual


Entity structure

• Sole proprietorship . . . and another thing!

• Partnership Which state(s)?

• Corporation
– Limited Liability
Company
– C corporation
– S corporation


IP Exploitation => Patents


• Patent Cross-License
You
Claim A + B
C

Competitor
A Claims A + B + C

+C
+B
A
B
+
A

• Design Around
• Investigate Flaw
Customer wants B
A+B+C

2005 Nanotech Landscape

- Cross-citation
- Number of claims
to application areas
- White space
=> patenting room
- Entanglement
=> likely overlap

Source: Lux Research Inc.
Foley & Lardner LLP


IP Exploitation => Patents

• Disruptive Technology vs.
Complementary Technology

• Commercialize
– Licensing
– Mergers & Acquisitions
– Sales
– Litigation


Protection of know-how

• Parties involved:
– Employees
– R&D-partners
– Subcontractors
– Clients
• Non Disclosure Agreements
• Implementation of efficient security measures


Licensing

• Is it an option? Can you find a partner?
• Alternatives use it yourself or sell the invention &
patent
• Exclusive, sole or non-exclusive license
• Territory
• Proprietary vs. open licensing
• Licensing is the biggest business in the world!!!


NAPP® 2007
Preparing a Nanotech Strategy
July 17, 2007

THANK YOU
Stan Antolin
Smith Moore LLP
300 North Greene Street
Suite 1400
Greensboro, NC 27401
336.378.5516 (voice)
336.433.7591 (direct fax)

© 2007 Stanislav Antolin
Used by NAPP with permission.


Smith Moore LLP
Office Locations
Charlotte, North Carolina Wilmington, North Carolina
Charlotte Plaza, Suite 110 300 N. 3rd, Suite 301
201 S. College Street Wilmington NC 28401
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Greensboro, North Carolina One Atlantic Center, Suite 3700
300 N. Greene Street, Suite 1400 1201 West Peachtree Street
Greensboro NC 27401 Atlanta GA 30309
336.378.5200 404.962.1000

Raleigh, North Carolina www.smithmoorelaw.com
2800 Two Hannover Square
Raleigh NC 27601
919.755.8700


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