Texas is Climbing the Nanotech Charts

By Carey C. Jordan, Iona N. Kaiser and Valerie C. Moore,
Special Contributors to The Texas Lawbook

For over a century, the United States has maintained a reputation for being at the head of the innovation line. In the U.S., California, New York and Massachusetts are traditionally considered to be at the forefront of the most recent computer-based revolution.

However, as we enter into a fifth technology revolution, one based on nanotechnology and molecular manufacturing, the second most populous and second most expansive of the 50 states, Texas, has the potential to emerge as a leading epicenter for the U.S., and perhaps the world.

Technology tends to develop in cycles, which are often termed “revolutions.” As one revolution nears its peak another begins to develop and then as the previous revolution is slowing, the new revolution grows exponentially. Examples can be seen starting with the Industrial Revolution.

Modern history can be divided into several periods of technological revolutions that developed in different regions throughout the world and which, interestingly, correspond to the regions of global power for the given time period.

• Steam engines, textiles industry and mechanical engineering were primarily centered in the United Kingdom from about 1780 to 1840.
• Railways, electricity and the steel industry were matured in England, Germany and the United States from about 1840 to 1900.
• Electrical engine, heavy chemical, the mass production of consumer durables and automobile innovation was largely based in the United States spanning from about 1900 to 1950.
• Computers, electronics synthetic materials, and organic chemicals development has been epicentered in the Pacific Basin Japan and the United States and span from about 1950 to present times.

Similar to computers, nanotechnology is both an enabling technology and a technology sector in its own right. Nanotechnology is used prolifically in the research and development efforts of almost every economic sector, from aerospace to medicine to energy. Further, the applicability of a nanotechnology invention often spans several economic sectors.

For example, the unique interactions nanoparticles have with light are being exploited in paints, cancer treatments and aerospace materials. Additionally, the electronic properties and chemical robustness of carbon nanostructures are being utilized in long distance energy transmission, invisible barcodes, and nano-sized electronics. Accordingly, intellectual property issues relating to nanotechnology, not only in patent prosecution but also, for example, licensing and mergers and acquisitions, bring unique challenges that may require a diverse team to adequately evaluate.

Within the U.S., Texas is climbing the nanotech charts, especially in the areas of energy, specialty chemicals and medicine. A recent study by the Nanotechnology Group at McDermott Will & Emery investigating intellectual property trends found that within Texas, Houston continues to be the dominant market for nanotechnology innovation, followed by Austin, Dallas and San Antonio.

The study also found that the University of Texas was the top assignee for nanotech patents in Texas in 2011, followed by Hewlett Packard, Baker Hughes and Molecular Imprints, Inc., and Rice University home of the only Historic Chemical Landmark in Texas for the discovery of the Buckminsterfullerene, a.k.a., the “buckyball.”

Texas has a great technology foundation and diversity that, if continued, could place Texas as a U.S.-leader in nanotechnology for several economic sectors. For example, in 1985, a team at Rice University discovered the buckyball and later were awarded the 1996 Nobel Prize in Chemistry. Rice University has continued this innovation legacy with The Richard E. Smalley Institute for Nanoscale Science and Technology, whose vision is “leading the world in solving humanity’s most pressing problems through the application of nanotechnology,” according to its mission statement.

The Smalley Institute has achieved a great deal and reached many milestones over its 19-year maturation. For example, Rice along with the University of Texas established the Advanced Energy Consortia, a research endeavor with now 8 energy companies, including Halliburton a top-ten Texas nanotechnology innovator in 2011.

Houston is also home to The Texas Medical Center and a vibrant chemical manufacturing economy, both of which are up-and-coming nanotechnology innovation sectors. Further, as green technologies, like solar and wind energy, are being developed in Austin, nanotechnology may be instrumental in making these technologies economically viable in a reasonable timeframe. For example, integration into the grid may require efficient energy transmission over long distances.

The electronic properties and chemical robustness of carbon nanotubes is being used by Rice University and others to develop power transmission cables that are more corrosion-resistant than copper wires with lower electrical resistance, which translates long-distance transmission with cost savings.

A look at the top 25 assignees in nanotechnology patent literature in 2011 in the McDermott study shows that over half are U.S.-based assignees, followed by Asian-based and European-based assignees, respectively, and that two of those, Baker Hughes and the University of Texas, are Texas-based.

Overall, nanotechnology patent literature has increased by about 150% from 2006 to 2011. More specifically, the number of U.S. Granted Patents, a subclass of nanotechnology patent literature, almost doubled in this time frame. These general trends indicate that nanotechnology innovation is on the rise not only within the United States, but around the world.

As the world transitions into the fifth technology revolution of nanotechnology and molecular assembly, it may therefore still be too early to identify the associated global epicenters. Nevertheless, Texas is poised to be a nanotechnology innovative epicenter in the U.S. and potentially the world given its high levels of diverse research and development, especially in energy, chemicals, and healthcare. Texas’ leadership position is further strengthened with the recent announcement of Dallas as one of four satellite offices, the only southern office, for the U.S. Patent and Trademark Office.

The evolution, development and prevalence of nanotechnology as indicated in the patent literature may not only affect and perhaps alter the structure and mindset of the various technology sectors, but it may have legal implications relating to potential patent infringement issues, environmental and healthcare regulations, and import-export control policies and regulations.

Many of these legal issues may be more prevalent than anticipated given the diversity of the nanotechnology revolution. Therefore, any company engaging in nanotechnology research and commercialization should consult with a competent legal advisor with appropriate experience to help navigate the potential legal minefield of issues presented.

(Carey C. Jordan and Iona N. Kaiser are Partners in the Intellectual Property Section of McDermott Will & Emery in Houston. Both are graduates of the University of Houston Law Center. Valerie C. Moore is a Patent Agent at McDermott.)

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