Nanotechnology is one of the fastest growing segments of emerging tech. But, like many cutting-edge sectors, the legal guidelines for doing business in nanotech are still being sorted out.

Brad Limpert, a partner with Gowlings LLP, talked to Red Canary about the legal pitfalls and potential of playing in the nanotech business.

Red Canary What are some of the common challenges that companies in the nanotech sector face today?

Brad Limpert “The most common legal issues are around intellectual property and regulatory requirements.”
“Often, developments in nanotech are about creating a smaller version of pre-existing products, so there is a higher than average chance to infringe on patent rights. The way companies use new science and engineering in nanotech often results in the discovery of new characteristics of materials, but the original patent on the parent material may remain intact.”

“The nature of the industry is such that a lot of joint creation and collaboration goes on. That can create issues around IP and who owns what. It can be cumbersome from a legal perspective and suck value from your company if these issues aren’t properly addressed.”

“On the regulatory side, the legal challenge has to do with the potential hazards that nanotech introduces to the commercial market. There’s a real balancing act required by both the regulators, who want to make sure products are safe for public use, and companies that are trying to balance that requirement against the development of commercially viable technologies.”

“I think both sides are doing a pretty good job at enabling the development of safe and market-ready solutions.”

RC Is there a ‘rush to patent’ mentality in nanotech, and how might that affect future development and commercialization efforts?

“The basis of creating commercial value in nanotech has to do with exploiting the technology’s wide range of qualities and obtaining adequate intellectual property for these technologies. That drives a need to look closely at existing patents for both for their reliability and market opportunity.”

BL “In Canada, it isn’t necessary to have a prototype for your nanotech in order to file a patent. But companies often learn more about their developments once they get through the design stage. So, if you rush too soon to patent an invention, the patent can end up flimsy.”

“There is also the risk that public disclosure or an offer to sell can destroy patent rights or start the clock on a one-year countdown to losing patent rights.”

RC Most environmental regulations assume that a materials’ mass or volume drive its potential toxicity . . . not so with nanomaterials. What’s the legal landscape in nanotech for balancing safety vs. technological advancement?

BL “I’m not a scientist, but I think part of the knowledge that nanotech is built upon is that small things interact in different ways than larger ones. For example, we know that things like the properties of cell membranes, and biochemical pathways can be altered through nanotechnology. “

“Considering that, it’s necessary to factor regulatory restrictions and their potential impact into things like cost of operations and market acceptance on your path to commercialization. My sense is that there is a cautious optimism amongst people in the industry right now. The problems of producing products that are safe for consumers are often well-known and the regulatory requirements seem pretty sensible.”

RC What are your thoughts on the volume of venture capital that has flowed in to nanotech thus far?

BL “Every area of future product delivery across a broad range of industry is potentially touched by nanotech. But right now it’s mostly established companies – often those developing industrial processes in-house – that are actively developing nanotech. That’s because the industrial sector understands the importance and opportunity of nanotech. “

“As well, sometimes investments in nanotech are reported as investment in other areas such as semiconductors, materials or advanced manufacturing. Having said that, I think VC numbers in nanotech are probably a bit under-reported.”

RC What kind of a legal toolkit does a company going to market with a nanotech-dependent product need?

BL “To start off you need the basics: things like good employee and contractor agreements with clear rights assignment, and a crystal clear options plan. Both of those go towards understanding true valuation of your company and its patents.”

“It’s also wise to be precise in protecting your trade secrets down to the level of copyrights and research data. The most important thing is probably having detailed patents and routinely re-visiting them as time goes on to make sure you have protected the value of the IP that is continually developing in nanotech.”

Brad Limpert is a partner with Gowlings LLP in Toronto, Ontario.