From Churchill to Scarlett O’Hara, five strategic patenting options


John Caldwell & Jeffrey Rosedale

Contrary to what most people think, a patent does not confer the right to actually do anything; only the right to stop others from exploiting an invention. Infringement carries the risk of large damage awards and the possibility of a permanent injunction. Given the risks and level of investment necessary to enable a new market entry, scrutiny of a company’s patent position and assessment of its “freedom to operate” is usually an essential part of any nanobusiness decision.

For example, NEC has stated that it owns essential patents on carbon nanotubes and, in its view, all companies seeking to make or sell carbon nanotube materials must obtain licenses from NEC. Similarly, in trumpeting its 30th carbon nanotube U.S. patent last year, Carbon Nanotechnologies Inc. proclaimed that its patent portfolio comprises 1,200 issued claims as well as 4,000 pending claims in 70 more patent applications. Many other entities have issued patents and pending applications in this field as well.

Consider the plight of a businessperson who is faced with multiple pending or issued patents having claims surrounding and even overlapping the technical space needed for a product introduction. What can be done? A number of strategies should be considered:

Do Nothing: Scarlett O’Hara was fond of saying “I’ll worry about that tomorrow.” Sometimes this actually works. If the investment is not too great and the patent rights are heavily intertwined, it may be that no party wishes to begin a conflict. However, most prefer to be guided by Winston Churchill, who urged that we remember which end of the ostrich sticks out when its head is in the sand.

Prepare for Patent Interference: Only in the U.S. is the first to invent an invention considered to be more important than the person who is the first to file a patent application. An interference proceeding determines which of two or more persons was the first to invent a contested claim. The rules are arcane, the timing is difficult and the proceeding demands specialized legal assistance. However, an interference can award patent rights to an applicant, even after a patent has issued to another. Having mastery of one’s own patent portfolio as well as knowing about the portfolios of others in the field is essential to this strategy.

Prepare for Litigation: Good sense suggests that one “prepare for the worst but hope for the best.” For example, one might consider securing bargaining chips that would enable one to threaten or launch a counterattack if sued. This can be done by filing patent applications which threaten likely opponents or by finding in-licensing possibilities. Additionally, having a financial war chest is wise as some patentees tend to sue weaker competitors first. Likewise, obtaining opinions of outside patent counsel regarding intended product lines is prudent. If truly independent, such opinions may defeat a patentee’s assertion of willful infringement and reduce damages. This has the practical effect of making one a smaller target.

Play nice: Churchill again comes to mind: “To jaw-jaw is always better than to war-war.” In most fields, licensing is commonplace. Indeed, much licensing, especially from academic and other non-manufacturing licensors, is already present in many nanotechnologies. Activity in this area seems appealing, especially to new entrants, even though the price may be substantial. But the existence of overlapping apparent rights confuses the issue. It is tough for a CEO to sign a single license from among a group of possible patent holders in an overlapping field. What if the licensed technology turns out not to be the winner? Multiply the concern when access to three, four or more technologies must be acquired.

Patent Pools: One possible approach involves patent pools. Two or more companies may be able to form a consortium for cross-licensing (i.e., “pooling”) their rights relating to a particular technology. Such pools can help facilitate the transaction as well as minimize the costs involved in licensing many patents among multiple players. Recent examples of patent pools include MPEG video coding standards and the Radio Frequency Identification Domain (RFID).

Due to the potential anti-competitive effects of pooled rights, they are scrutinized by the U.S. government. Also, problems can arise when competing patent pools are formed that hold patents on the same technology, or when an important patent holder refuses to join. It may be, however that the developing overlap in some of the nanotechnologies will, in practical terms, mandate the establishment of pooling.

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John Caldwell is a partner at Woodcock Washburn. He can be reached at

Click here to enlarge image

Jeffrey Rosedale is an associate at Woodcock Washburn. He can be reached at