Is the U.S. Nanotechnology Investment Paying Off?

Since at least World War II, the United States consistently has been the clear leader in emerging technologies. This is not the case with nanotechnology. The U.S. government, concerned about more jobs moving overseas and a future when other economies dominate, has funded a number of programs, only to be matched or beaten by the European Union and Japan.

The United States has increased levels of government funding in nanotechnology since President Bill Clinton began the National Nanotechnology Initiative in 2000.

There are at least seven times more U.S. companies devoted to nanotechnology than any other country. This is likely because the U.S. government is encouraging — through university funding and funding of small startup companies — research into prototypes and products with the hope that smaller companies will either grow or be acquired by larger companies. Elsewhere in the world, large companies and governments or government- sponsored and government-coordinated efforts result in fewer companies, but that does not mean that the same or greater R&D efforts are not being made overseas.

The nanotechnology patent trend is striking. There are eight times as many nanotechnology patents assigned to U.S. companies as are assigned to companies in any other country. This is based on counting the number of issued patents in which the applicants claim some aspect of nanotechnology is part of the invention. These patent counts are then plotted against the country of the assignees as identified on the face of the patent or through other public records.

There are likely more than 200 terms unique to nanotechnology, and some patentees have deliberately avoided using buzz words in order to keep programs under wraps. But the ratio of the numbers indicates U.S. companies are getting more nanotechnology patents than companies outside the United States by a wide margin.

What is the significance of this imbalance in patent counts?

There is a saying in patent law, "you fight patents with patents." By the numbers, the United States has armed itself very well. But a note of caution. The strength and value of patents has to be measured on a case-by-case basis. Some patents are broad and commercially significant, which are often referred to as "pioneer" patents because they usually come out of the initial efforts that later become a new industry. In theory, everyone in the affected industry needs to secure rights to these types of basic patents. But the vast majority of patents represent small steps in the technology, and these patents are often referred to as "improvement" patents.

If one assumes the most significant pioneer patents are owned by non-U.S. companies, royalties would in theory flow out of the United States, or U.S. companies might not get to use the basic technology(although undue restriction on access to new technologies can raise antitrust concerns). Even if this is the case, a large number of improvement patents can balance the royalty flow. Improvement patents can represent significant commercialization advantages and if there are enough of them at key bottlenecks they can act to create a "picket fence" around the pioneer patent. In other words, the pioneer patentee could end up owning the basic technology while unable to put a commercially viable product on the market without licensing patents, thereby creating a cross-licensing opportunity or a greater balance in the flow of royalties.

The bottom line: The sheer number of patents issuing to U.S. companies implies IP dominance by the United States in the emerging field of nanotechnology.

The trend is continuing. The decline in numbers in 2001-2002 is related in part to delays in the examination process, which takes an average of 26 months.