Intellectual Property Strategy for Nanotechnology SMEs

This blog discusses early-stage intellectual property strategy in an advanced materials startup

Global nanotechnology patent filings are on the rise. While most filings come from universities and Fortune 100 companies, there is an increasing percentage of patent filings from small and medium enterprises (SMEs).

SMEs approach patent filings differently from larger institutions. Institutions with a stable revenue base approach patent filings as a fixed cost and long term investment. It is portfolio level discussion focused on long-term strategy and bragging rights. Unlike large institutions, most advanced materials SMEs have limited funding and resources. SMEs are thinking about a very focused technology and application space. Decision making is more focused and balanced with the resulting cash burn

In my experience, it takes about 3 years and at least $150k to get a granted patent. Maintenance fees are usually small, around $5,000 per year. I have never found a single patent as being adequate to establish a defensible patent wall. Usually 3-5 patents are a minimum to cover the technology and breadth of use cases. So, SME leadership is looking at over $500k in spend just to start out. That is half a million dollars that does not actually produce revenue or advanced the technology. That is a lot.

The historic returns from patent litigation are also troubling. Most patents do not return on the investment. Only two per cent of all issued patents generate more revenue than the cost of obtaining the patent. Furthermore, only a few subset will end up being worth the price of litigation. There is also the possibility that you never see the value of your patent because of financial troubles. Like what happened to Evident Technologies, a small nanotechnology firm that filed for bankruptcy due to patent litigation fees.

At the same time, we know the risk of not filing. No intellectual property rights allow for someone else to file over you. We have all seen the recent settlement between Dow and Nova Chemicals. A $1B payout is an appealing reason to justify spending another $1M to build your patent wall. The big dollar pay outs and fear of keeping the door open drive SME leadership to pay lawyers hundreds of thousands of dollars to help protect their company. And for good reason. Personally, I agree with experts that way we will soon see an increase in nanotechnology patent litigation. Many nanotechnology patent claims overlap, or have ambiguity with respect to bulk-material patents. So many overlapping filings mean with trillions of dollars at stack mean that litigation is inevitable.

Patent filing spend for advanced materials SMEs needs to be balanced with the other business objectives. Balancing patent expenditures with long term company initiatives is difficult. Restricting patent spend forces smart decisions around specific claims, patents structure, and country filings. All of which can be critical in protecting your interest. Below are a few ideas around how to structure your patent strategy.


Building an Patent Strategy Pyramid

Nothing can replace foresight. For a SME entering a new market, that means having an overarching strategy for protecting a technology. Too many companies rush to patent a technology without thinking about what they are protecting. This results in a series of patents that cover parts of a technology, but leave holes that allow for competition or ambiguity. In my experience, the best way to formulate a patent strategy is to create a pyramid of filings that cover your technology. Building a claims pyramid helps to organize the thoughts around what claims need to be included and how best to protect other from gaining a foothold in your market. This pyramid is built around key claims about the material, manufacturing process, and market application.

Nanotechnology Patent Pyramid Strategy


The first layer of the pyramid establishes key claims around what material you are patenting. Here you want a broad base of material options as possible. Think about the different variations or combinations that can be used to accomplish the same result. Keep in mind what is reasonable; the USPTO has limits on nanotechnology claim structure. Most notably is that the USPTO requires that any nanotechnology innovation is describes as having a feature size less than 100nm. This is to delineate this material discovery from bulk material patent claims. Organize the claims list around how to protect your technology from competition. Including options give you breadth of coverage to refine your technology or keep competition away.

Establishing patent claims around the process of manufacturing is equally important, but slightly more complicated. Process patents are notoriously easy to work around. A slight change in the synthesis method, that is not described by the patents, may be enough for a competitor foothold. But this layer can be also extremely important to your competitive advantage. Material property and synthesis process are directly linked. If you have a unique way of producing your material, it is worth protecting. One alternative option is keeping the process a trade secret. Not filing a key process step and actively keeping it a trade secret is an equally valuable IP strategy.

The final IP strategy layer is the application specific uses of the technology. Here you protect system level solutions to your technology. Far too many SMEs lack the focus to clearly define this level of benefit. Putting it at the top of the pyramid means that you need enough focus to write clear claims. Application specific use cases is usually the most difficult for inventors because many technologies apply to multiple industries. The SME pitfall is to try to patent all of them. You cannot and should not try to patent them all. Instead, this layer forces delineation of benefits with a clear business focus. I have found that writing application specific claims really focuses the business. Take the time to focus your claims list to the applications and space that you need to carve out for your business. Leave the rest for when you want to diversify.

One example I have of poorly executed application level patent claims comes from my work with an additive company. One patent our inventors added had a set of claims around nail polish. At the time I came into the company, we were in the advanced composites market and driving change in aerospace, consumer goods, and construction. Nowhere in our business strategy were we going into the nail polish business. For some reason, the inventor had an idea about our technology applying to nail polish. And so, he wrote a series of claims into our patents. The company had spent time and money litigating those claims. While approved, they have nothing to do without core business. If there was clear communication between the inventor and business side around the direction of the business, we would have saved time and money.


Managing Cost

SMEs don’t have unlimited money and so we need to be smart with how we spend it. Patent costs increase with the number of claims included in them. With too many claims, you end up are paying lawyers to argue with patent officers about sub-claims that are not critical to you invention. Being smart with the claim list means that you keep a check on the lawyers and a focus on what you are trying to protect. Remember, lawyers get paid on time and the good ones are part salesman. You need them because they have a key skill and the good ones are worth their weight in gold. But that doesn’t mean you give them free reign. I have seen patent with over 100 claims where 50% of them were non-substantial minute differences. Now, I’m not a lawyer but I know we could have gotten away with 50 claims, saved over $30k in lawyer fees, and probably be just as well positioned.

The other thing to remember is that the point of a patent is to protect you from competition. Usually, inventors write claims around their technology. The claims list is basically a description of what they have invented. This is a lost opportunity. Instead, think about the other ways you can solve the same problem with a slightly different technology. Then, broaden your claims to include these alternatives. This will better position you against your current and future competition.

Finally, take the time to think about what countries you want to file in. Usually, I like to map out locations with major competitors, potential future acquirers, and largest markets. Filing in all these locations will cover your bases. Thinking strategically about your filings is smart with your money. There are large economies out there that may have nothing to do with your application space. Don’t waste money filing in those countries, you will never see a pay-off in revenue or litigation. Focus keeps your filing costs down also. Translation fees usually cost $20k per language and the country lawyers get paid in kind. Keeping track of all that because both a time and financial burden quickly. Be smart about where you go with your technology.

Filing patents is a critical part of a business strategy. Treating it as such helps you balance protecting your technology with your other business goals. Long term, your strongest assets are customer relationships and long-term revenue generation. It establishes a foundation for long-term value realization. Think critically about how patent play a role in that will help you balance near term expenses.

That’s all for now, thanks for reading!

Thoughts on this article? Please post comments and questions below!




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