Joshua Pearce, a professor at Michigan Technological University, has written a commentary on patents and nanotechnology for Nature magazine which claims the current patent regimes strangle rather than encourage innovation. From the free article, Physics: Make nanotechnology research open-source by Joshua Pearce in Nature 491, 519–521 (22 November 2012) doi:10.1038/491519a (Note: I have removed footnotes),
Any innovator wishing to work on or sell products based on single-walled carbon nanotubes in the United States must wade through more than 1,600 US patents that mention them. He or she must obtain a fistful of licences just to use this tubular form of naturally occurring graphite rolled from a one-atom-thick sheet. This is because many patents lay broad claims: one nanotube example covers “a composition of matter comprising at least about 99% by weight of single-wall carbon molecules”. Tens of others make overlapping claims.
Patent thickets occur in other high-tech fields, but the consequences for nanotechnology are dire because of the potential power and immaturity of the field. Advances are being stifled at birth because downstream innovation almost always infringes some early broad patents. By contrast, computing, lasers and software grew up without overzealous patenting at the outset.
Nanotechnology is big business. According to a 2011 report by technology consultants Cientifica, governments around the world have invested more than US$65 billion in nanotechnology in the past 11 years [my July 15, 2011 posting features an interview with Tim Harper, Cientfica CEO and founder, about the then newly released report]. The sector contributed more than $250 billion to the global economy in 2009 and is expected to reach $2.4 trillion a year by 2015, according to business analysts Lux Research. Since 2001, the United States has invested $18 billion in the National Nanotechnology Initiative; the 2013 US federal budget will add $1.8 billion more.
This investment is spurring intense patent filing by industry and academia. The number of nanotechnology patent applications to the US Patent and Trademark Office (USPTO) is rising each year and is projected to exceed 4,000 in 2012. Anyone who discovers a new and useful process, machine, manufacture or composition of matter, or any new and useful improvement thereof, may obtain a patent that prevents others from using that development unless they have the patent owner’s permission.
Pearce makes some convincing points (Note: I have removed a footnote),
Examples of patents that cover basic components include one owned by the multinational chip manufacturer Intel, which covers a method for making almost any nanostructure with a diameter less than 50 nm; another, held by nanotechnology company NanoSys of Palo Alto, California, covers composites consisting of a matrix and any form of nanostructure. And Rice University in Houston, Texas, has a patent covering “composition of matter comprising at least about 99% by weight of fullerene nanotubes”.
The vast majority of publicly announced IP licence agreements are now exclusive, meaning that only a single person or entity may use the technology or any other technology dependent on it. This cripples competition and technological development, because all other would-be innovators are shut out of the market. Exclusive licence agreements for building-block patents can restrict entire swathes of future innovation.
Pearce’s argument for open source,
This IP rush assumes that a financial incentive is necessary to innovate, and that without the market exclusivity (monopoly) offered by a patent, development of commercially viable products will be hampered. But there is another way, as decades of innovation for free and open-source software show. Large Internet-based companies such as Google and Facebook use this type of software. Others, such as Red Hat, make more than $1 billion a year from selling services for products that they give away for free, like Red Hat’s version of the computer operating system Linux.
An open-source model would leave nanotechnology companies free to use the best tools, materials and devices available. Costs would be cut because most licence fees would no longer be necessary. Without the shelter of an IP monopoly, innovation would be a necessity for a company to survive. Openness reduces the barrier for small, nimble entities entering the market.
John Timmer in his Nov. 23, 2012 article for Wired.co.uk expresses both support and criticism,
Some of Pearce’s solutions are perfectly reasonable. He argues that the National Science Foundation adopt the NIH model of making all research it funds open access after a one-year time limit. But he also calls for an end of patents derived from any publicly funded research: “Congress should alter the Bayh-Dole Act to exclude private IP lockdown of publicly funded innovations.” There are certainly some indications that Bayh-Dole hasn’t fostered as much innovation as it might (Pearce notes that his own institution brings in 100 times more money as grants than it does from licensing patents derived from past grants), but what he’s calling for is not so much a reform of Bayh-Dole as its elimination.
Pearce wants changes in patenting to extend well beyond the academic world, too. He argues that the USPTO should put a moratorium on patents for “nanotechnology-related fundamental science, materials, and concepts.” As we described above, the difference between a process innovation and the fundamental properties resulting in nanomaterial is a very difficult thing to define. The USPTO has struggled to manage far simpler distinctions; it’s unrealistic to expect it to manage a moratorium effectively.
While Pearce points to the 3-D printing sector admiringly, there are some issues even there, as per Mike Masnick’s Nov. 21, 2012 posting on Techdirt.com (Note: I have removed links),
We’ve been pointing out for a while that one of the reasons why advancements in 3D printing have been relatively slow is because of patents holding back the market. However, a bunch of key patents have started expiring, leading to new opportunities. One, in particular, that has received a fair bit of attention was the Formlabs 3D printer, which raised nearly $3 million on Kickstarter earlier this year. It got a ton of well-deserved attention for being one of the first “low end” (sub ~$3,000) 3D printers with very impressive quality levels.
Part of the reason the company said it could offer such a high quality printer at a such a low price, relative to competitors, was because some of the key patents had expired, allowing it to build key components without having to pay astronomical licensing fees. A company called 3D Systems, however, claims that Formlabs missed one patent. It holds US Patent 5,597,520 on a “Simultaneous multiple layer curing in stereolithography.” While I find it ridiculous that 3D Systems is going legal, rather than competing in the marketplace, it’s entirely possible that the patent is valid. It just highlights how the system holds back competition that drives important innovation, though.
3D Systems claims that Formlabs “took deliberate acts to avoid learning” about 3D Systems’ live patents. The lawsuit claims that Formlabs looked only for expired patents — which seems like a very odd claim. Why would they only seek expired patents? …
I strongly suggest reading both Pearce’s and Timmer’s articles as they both provide some very interesting perspectives about nanotechnology IP (intellectual property) open access issues. I also recommend Mike Masnick’s piece for exposure to a rather odd but unfortunately not uncommon legal suit designed to limit competition in a relatively new technology (3-D printers).