Nanotechnology Regulation And Policy Worldwide

Nanotechnology Regulation and Policy Worldwide For a list of related Artech House titles, turn to the back of this boo...

Author: Jeffrey H. Matsuura

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Nanotechnology Regulation and Policy Worldwide

For a list of related Artech House titles, turn to the back of this book.

Nanotechnology Regulation and Policy Worldwide Jeffrey H. Matsuura

artechhouse.com

Library of Congress Cataloging-in-Publication Data Matsuura, Jeffrey H., 1957– Nanotechnology regulation and policy worldwide/ Jeffrey H. Matsuura. p. cm. Includes bibliographical references and index. ISBN 1-58053-106-7 (alk. paper) 1. Nanostructured materials industry—Law and legislation. I. Title. K3924.H54M38 2006 343’.0786205–dc22 2006045970

British Library Cataloguing in Publication Data Matsuura, Jeffrey H., 1957– Nanotechnology regulation and policy worldwide 1. Nanotechnology—Law and legislation 2. Nanotechnology—Government policy 3. Nanotechnology—Patents I. Title 343′.07 ISBN 10: 1-58053-106-7 ISBN 13: 978-1-58053-106-1 Cover design by Igor Valdman

© 2006 ARTECH HOUSE, INC. 685 Canton Street Norwood, MA 02062 All rights reserved. Printed and bound in the United States of America. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without permission in writing from the publisher. All terms mentioned in this book that are known to be trademarks or service marks have been appropriately capitalized. Artech House cannot attest to the accuracy of this information. Use of a term in this book should not be regarded as affecting the validity of any trademark or service mark.

Library of Congress Catalog Card Number: 200645970 10 9 8 7 6 5 4 3 2 1

Contents

1

Introduction

1

Regulation: A Definition

2

Who Should Read This Book?

2

Why Read This Book?

3

Some Key Take-away Points

4

Nanotechnology: What Is It?

9

Why All the Fuss About Nanotechnology?

10

Access to the Nanoworld

12

The Challenge of Nanofabrication

13

Nanotechnology Today

15

Nanotubes

16

The Quantum Dot

18

Nanotechnology and Its Invisible Reach

19

The Extraordinarily Broad Reach of Nanotechnology

20

v

vi


2

A Sampling of Today’s Nanotechnology Players

21

Nanotechnology Tomorrow

27

Molecular Motors, Machines, and Manufacturing

28

Nanocomputing and Electronics

29

Medical Nanotechnology

30

The Bridge from Today to Tomorrow

32

Managing the Nanotechnology Hype

33

Selected Bibliography

35

Nanotechnology and Intellectual Property Rights

37

An Intellectual Property Law Primer

38

Patents: Control over Inventions

39

Copyrights: Protecting Authorship

42

Trademarks: Managing Commercial Brands

43

Trade Dress and Design Patents: Protecting Product Design and Packaging

44

Trade Secrets: The Underestimated Form of Intellectual Property

46

Nanotechnology Patents: Contemplating the Gold-Rush Mentality

46

Nanotechnology and the Challenge of Patentability

48

Invalidity: Will Nanotech Patents Be Fully Enforceable?

49

Trade Secrets: Overlooked Opportunities for the Nanotechnology Industry

51

Alternative Legal Theories Applied to Intangible Assets

55

Contents

3

vii

Using Multiple Intellectual Property Forms for Maximum Flexibility

56

Intellectual Property Rights and the Future of Nanotechnology

58

Patent Busters, Generics, Technical Standards, Open Source, and Outsourcing: Potential Complications for Managing Nanotechnology

60

Nanotech Intellectual Property Rights: A Path Forward

68


72

Guide to Regulatory Compliance

75

Nanotechnology and the Environment: Gray Goo or Benign Innovation?

77

Regulated Substances

77

Emission Controls

81

Preserving the Safety of Medical and Food Products

82

Consumer Product Safety

84

Nanotechnology and Workplace Health and Safety

85

Nanotechnology and National Security: Opportunity and Threat

87

Nanotechnology Regulation: The Core Issue

91

Europe and the Precautionary Principle

92

The Challenge of Compliance

94


98

viii


4

Nanotech Legal and Public Policy Initiatives Around the World

99

Nanotechnology Policy Initiatives: A Range of Strategies

100

NNI: Nanotech Promotion, American Style

102

The European Community and Nanotechnology

104

A Nanotechnology Tour of Europe

105

Asian Nanotechnology

108

NanoIndia: The Nanomaterials Science and Technology Initiative

111

Canadian Nanotechnology

112

Nanotechnology “Down Under”

113

South African Nanotech: The SANI

113

The United Kingdom and Nanotechnology

114

Nanotechnology Initiatives in Russia and the Former Soviet Republics 114 Eastern European Nanotechnology Programs

115

Nanotechnology in the Middle East

116

Nanotechnology in the Developing World

117

Nanotechnology Policy Initiatives: What Works Best? 119

5


120

Impact of Nanotechnology Regulation

123

Protecting the Public Interest

125

Influencing the Direction and Scope of Research

126

Incentives for Commercial Applications

129

Affecting the Pace of Commercial Development

131

Contents

6

ix

Shaping the Nanotech Marketplace

133

Altering International Relationships

135

Allocating Costs Associated with Risks

140

Public Perception of Nanotechnology

145

Political Consequences

146

Nanotechnology and the Precautionary Principle

148

The Challenge of Regulatory Uncertainty and Disparities

150

The Critical Impact of Regulation on Nanotechnology

151

Implications for Future Technologies

152


153

Regulatory Roadmap for Nanotech’s Future

155

Encourage Research

156

Integration into Existing Regulations

159

Avoid Regulatory Overreaction

160

Promote Regulatory Certainty

163

Encourage Cooperation Between Jurisdictions

164

Facilitate Information Sharing and Technology Transfer

165

Regulation to Promote Efficient Markets

168

Creative Use of Insurance, Industry Standards, and Informal Government Influence

170

Incentives for Creativity and Innovation

173

Responsible Interaction with the Public

174

Regulation and Emerging Technologies

178

x


Cultivating the Research Infrastructure

180

Some Final Thoughts for Regulators

181


184

About the Author

185

Index

187

Introduction

This book discusses nanotechnology, the science and the technical skill associated with manipulation of individual atoms and molecules. More specifically, this book examines the current status of nanotechnology and the regulation of nanotechnology in different countries around the world. It assesses the technical and commercial impact of that regulation, offers suggestions to nanotechnology users for regulatory compliance, and provides suggestions to regulators and policymakers for an effective future regulatory approach to nanotechnology. This book is not a comprehensive inventory of all regulations applicable to nanotechnology. Instead, it is an overview of the forms of regulation that currently have the greatest impact on nanotechnology development. It offers a snapshot of the state of nanotechnology applications and regulations today and some projections for the future. The book also serves as a regulatory compliance guide and as a strategy roadmap for regulatory authorities. This book is part nanotechnology primer, part guide to regulatory compliance, and part advocate of a specific strategy for effective regulation of nanotechnology and other emerging technologies. 1

2


Regulation: A Definition It may be useful to define the concept of regulation, as it is applied in this book, as that definition may be somewhat more expansive than the definition that is commonly acknowledged. For our purposes, regulation is the total set of legal requirements applicable to nanotechnology research and commercial applications. This includes rules generated and enforced by government regulatory agencies (the U.S. Food and Drug Administration, for example). It also includes statutes enacted by legislatures. The definition also includes the actions and decisions of courts as they interpret statutes and resolve disputes between parties. Also worth noting, the regulations addressed in this book come from all levels of government. We consider national regulations that are imposed by national governments, such as the federal government in the United States. We also consider the regulatory actions of states, provinces, and other regional governments that are subunits operating within individual countries. The book is also concerned with the legal actions taken by local governments (cities, towns, counties, etc.). Finally, the book examines intergovernmental action involving agreements and collaboration between governments, such as international treaties involving multiple national governments. This broad definition of regulation is important because the wide reach of nanotechnology applications carries with it a most diverse set of legal implications. Accordingly, in this book we will, for example, discuss intellectual property rights as a form of regulation of significance to nanotechnology. In addition, we consider in this book legal initiatives and public policies that may limit nanotechnology use and those that support and encourage such use. Such wide-ranging consideration of the legal and public policy actions affecting nanotechnology is essential to appreciation of the full range of legal forces affecting nanotechnology’s future development.

Who Should Read This Book? This book is written to be accessible to, and helpful for, a wide range of readers. One important set of readers consists of scientists, engineers, and

Introduction

3

other technology professionals. Another group of readers is business and financial professionals, including those who are managing organizations that make use of nanotechnology today, and those that will use nanotechnology in the future. Business professionals considering investments in projects, companies, and industries that use or will use nanotechnology should also read this book. Individuals who have responsibility for risk management, insurance, and regulatory compliance can benefit as well. Government officials, including elected officials, judges, regulators, and their staff will find this book to be helpful. Finally, the general reader will find this book to be accessible and can benefit from it.

Why Read This Book? Different readers will derive different benefits from reading this book. Those who are unfamiliar with nanotechnology can read the book and gain a basic understanding of what nanotechnology is, why it is significant, what its general current status is, what its future promise may be, and what regulatory issues confront it. Those who have a substantial understanding of nanotechnology can read this book and gain greater insight into the range of regulatory actions that affect nanotechnology’s future, the overall current status of applicable regulation, strategies for regulatory compliance, and methods through which regulation can be structured more effectively to balance public welfare protection with support for nanotechnology adoption. This book will help all readers to understand more clearly what nanotechnology is, how it is currently being used, and how it may be used in the future. Readers will acquire a sense of the range of regulatory actions affecting nanotechnology. They will learn about the challenges now facing government authorities as they try to balance promotion of the beneficial implications of nanotechnology with minimization of any harmful consequences arising from it. Readers will gain insight into what is required to ensure effective regulatory compliance during nanotechnology development and use. Finally, the book invites the reader to consider a specific suggested strategy for future regulatory action that permits nanotechnology to reach its full beneficial potential, while providing an

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effective regulatory framework to protect society from harmful consequences associated with application of nanotechnology.

Some Key Take-away Points The reader will find that this book emphasizes several points. The importance of those points makes it worthwhile to alert the reader to them here in this introduction, thus enabling the reader to reflect upon them more fully as the body of the book is considered. The following summary gives a sense of the key themes of this book. It is important to recognize that nanotechnology is not a distant technology, but it is instead one that is already widely applied in the commercial marketplace. The reach of nanotechnology is very broad, and its long-term impact for society will be profound. Nanotechnology is not merely a part of a distant future, but is also a significant technology today. Another critical take-away point is that the continuing development of nanotechnology will be substantially affected by a wide range of regulatory decisions made by government authorities around the world today. Regulation will have a profound impact on nanotechnology research and commercial development. Nanotechnology’s ability to reach its full potential will be dramatically influenced by the regulatory actions taken by governments. At present, regulatory authorities simply do not know the full scope of consequences associated with the ever-expanding range of nanotechnology uses. Additional research into the likely impact of nanotechnology on the environment and living organisms is essential. Absent accurate information regarding the impact of nanotechnology, development of new regulations targeted specifically at nanotechnology is a foolish, unproductive course of action. As we do not yet have enough information to assess accurately the full scope of impact of nanotechnology on current regulatory systems, it would be the height of arrogance to assume that we are somehow now in a position to devise new policies and regulations directed specifically toward nanotechnology. Instead, governments should display confidence in their existing regulatory systems by relying on those existing rules and processes to oversee the ongoing introduction of nanotechnology into additional commercial applications. While relying on those existing

Introduction

5

regulatory structures, for the present, governments should seek the information required for truly effective regulatory oversight. To accomplish this, governments should support and encourage continuing research and study in those fields associated with evaluating the impact of nanotechnology. Developers, distributors, and users of nanotechnology already face important regulatory compliance obligations. Well established requirements associated, for example, with environmental protection, workplace safety, medical and food products, consumer health and safety, and intellectual property rights are currently applicable to many different nanotechnology applications. Development, implementation, and management of effective regulatory compliance strategies should be an important goal of all parties involved with nanotechnology applications. Effective regulation establishes a climate of regulatory certainty. Regulatory certainty exists when the rules to be applied are clear and well understood by all parties involved. Certainty requires clarity as to which authorities will be responsible for enforcing the rules. Regulatory certainty also requires a basic level of consistency as to the structure and enforcement of regulations from one jurisdiction to another. Regulatory certainty is critically important to provide incentive for continuing research and for financial investments. In many instances, market participants would prefer a level of rigorous, but certain, regulation to an environment in which there is little regulation but it is enforced in a haphazard and inconsistent manner. Authorities should not be preoccupied with prevention of harm to the detriment of facilitation of access to benefits. Regulators have two critically important duties. One duty is to reduce the risk of harm to the public. A second key duty is to facilitate public access to beneficial goods and services. It is not the role of the regulator to try to create a zero public risk environment. Instead, regulatory authorities should strive to balance effectively risks and benefits. Regulation should be designed and enforced in ways that moderate public risks and expand public access to beneficial goods and services. Both sides of that balance are of vital importance to society. Regulators should make use of their ability to influence conduct based on forces in addition to their legal authority. Government authorities can influence the behavior of the companies that sell goods and

6


services to governments through the contract negotiations associated with those purchases. Governments can also influence industry conduct by collaborating with insurers to structure special insurance arrangements, and by working with industry associations to shape effective industry operational standards. Exercise of influence on conduct through measures beyond the scope of their formal legal mandate enables government authorities to extend the reach of their influence and to supplement the effectiveness of their pure regulatory actions. Government authorities should avoid fixating on nanotechnology or any other specific form of technology. Technology-specific regulation should be avoided. Instead, regulation should focus, as it has traditionally, on conduct, goods, and services. To the extent that new technologies become integrated into already regulated products, services, and activities, those technologies will be subject to the already applicable oversight associated with the products, services, and processes to which they are tied. It is a misconception to suggest that nanotechnology and other new technologies are unregulated. Emerging technologies are regulated as they move into applications that are subject to regulation. Governments should also apply regulation with the goal of cultivating and maintaining a healthy and dynamic infrastructure supporting leading-edge scientific research and innovative technological development. Research and technology are critical driving forces behind economic growth and improvements in the quality of life. Regulatory initiatives to protect the science and technology infrastructure include application of regulations in ways that foster continuing research, facilitate the transborder flow of people and information, promote tax and other financial incentives in support of investment in research, promote reasonable exercise of intellectual property rights, and avoid placing restraints on the freedom of scientific inquiry. Governments at all levels have an important role to play in the development of nanotechnology. That role is not one of directing the content of research or the direction of technology development. Instead, the most important role for government in the evolution of nanotechnology is that of a neutral moderator that probes and challenges overstatements made by both proponents and opponents of the technology. As a neutral moderator, governments should push advocates on all sides of the debate to quantify their claims through research and analysis. As a

Introduction

7

moderator, governments should encourage and participate in education of the public, providing a realistic assessment regarding the possibilities and the perils associated with the technology. Finally, government authorities should recognize that their strategies and actions in response to nanotechnology will have a significant impact on future regulatory treatment of, and public reaction to, emerging technologies of the future. Regulatory response by governments to emerging technologies of the recent past (the Internet and biotechnology, for example) has been far less than ideal. As government authorities consider how to handle the challenges presented by nanotechnology, they should remain mindful of the need to set a foundation for the regulatory response to other emerging technologies. That response should avoid overstatement and overreaction. It should guard against harm to the public welfare, yet also encourage continuing research, invention, and innovation. Most of all, the regulatory response should go to great lengths to avoid fostering public fear of scientific research and technological change.

1 Nanotechnology: What Is It? A strict definition of nanotechnology characterizes it as the manipulation of matter at the scale of one-billionth of a meter or smaller. The measurement of one-billionth of a meter is identified as one nanometer (nm). At such a scale, the activities involve interaction with atoms and molecules. For our purposes, nanotechnology consists of human efforts to understand the structure and characteristics of matter at the atomic and molecular levels, and human efforts to manipulate matter at those very small size levels. Put another way, nanotechnology is our effort to understand and to shape our world, atom by atom and molecule by molecule. In many instances activities that do not qualify under the strict definition of nanoscale work are nonetheless included as nanotechnology because they involve work with matter at a very small scale. One convenient threshold point for discussions of nanoscale is the 50-nm point. At scales larger than 50 nm, we see less of the unusual activity commonly associated with quantum-scale interactions and more of the traditional behavior of matter associated with concepts of classical physics. At scales smaller than 50 nm, the weird, wonderful characteristics that provide much of the potential associated with nanotechnology are more apparent, at scales larger than 50 nm, those characteristics are commonly replaced by conventional behavior. 9

10


The critical aspect of understanding nanotechnology and appreciating its potential impact is recognition that the field is comprised of work involving materials, processes, and devices that are far smaller than those humans have traditionally manipulated. It is that dramatic shift in scale that provides both the opportunity and the risk associated with this class of technology. The world of nanotechnology is a world of individual atoms and molecules. It is a world that, until very recently, humans were aware of, theoretically, but which we did not directly shape or influence. Theoretical and technological advances have brought us to the point where our knowledge of atomic structure and behavior has increased dramatically. Those advances have also empowered us to point where we now have the ability to manipulate individual atoms and molecules. This capability enables humans to enter the age of nanotechnology.

Why All the Fuss About Nanotechnology? Some may ask the perfectly reasonable question: What is so significant about our ability to manipulate molecules and atoms? The basic answer is that, when we operate at that very small scale, the material that we are using sometimes displays characteristics that are different than those that appear when we use the material on a larger scale. For instance, very small particles of silver have some ability to combat microbes. Large particles of silver do not display that ability. Only our ability to create and handle the very small silver particles enabled us to identify their antimicrobial capabilities, and only that ability enables us to apply the silver particles against the microbes. One result of this capability is the use of the silver nanoparticles in bandages, helping the bandages to reduce infections, a capability that is particularly useful for burn victims. There are many other examples of fascinating, and potentially useful, transformations that take place when material is converted from normal scale to nanoscale. For example, some materials exhibit greater reactive properties at the molecular level than they do at large scale. Developers of pharmaceuticals are interested in the fact that many compounds are absorbed more rapidly into the body when they are delivered in very small particles instead of larger ones. Some materials become


11

substantially stronger or more flexible when handled at nanoscale. Other compounds become far more combustible at very small scale. The sometimes dramatically changed properties and characteristics of materials at the nanoscale level offer the greatest incentive for additional research. Nanotechnology attracts substantial attention because it provides us with access to radically different capabilities associated with a wide range of materials, even those we have been using for many years and thought we understood completely. Viewed from this perspective, there is a bit of magic we can tap when we apply nanotechnology. This magic comes in the form of different and sometimes enhanced capabilities for materials when we convert them to nanoscale form. Consider for example, the well known material, rubber. Prized for its flexibility and elasticity, we find that when rubber is modified at the nanoscale, it develops unusual characteristics. The company, NanoSonic, has devised a method to alter rubber at the nanoscale. NanoSonic can modify rubber so that it retains its traditional characteristics, but also adds some unconventional traits. NanoSonic modifies rubber so that it can be flexible while also conducting electricity like a metal. Electrical conductivity is not a natural characteristic of rubber, but the NanoSonic nanomanipulation of the material introduces this additional capability to the material. Consider another example. Ceramic materials are highly prized for their strength. Modern ceramics are also light in weight. This combination of strength and light weight provide ceramics with many diverse commercial applications, ranging from replacement parts for the human body to the external material used on high-performance vehicles such as aircraft. Now, General Electric and other companies are progressing in their efforts to use nanotechnology to make ceramics flexible. Combining flexibility with strength and light weight will make ceramics more useful in their current applications, and it will open many other applications to them, use in high-performance engines, for example. This is another illustration of the potential of nanotechnology to add new capabilities to established materials and products. In addition to the magic of nanotechnology, there are also commercially valuable benefits that come into play simply because of the very small scale at which we are working. For some purposes, the mere fact that materials or processes can be manipulated at the nanoscale introduces new and valuable opportunities. Perhaps the clearest examples of the beneficial

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effects that very small scale fabrication and operational capabilities can provide are presented in the electronics and the medical fields. The electronics industry continues to search for innovative ways to pack more and more circuitry into smaller and smaller space. That industry is rapidly approaching significant limits to its ability to continue its miniaturization process as dramatically as it has in the past. Nanotechnology offers a vital opportunity for the electronics industry to make a transformational leap ahead in miniaturization. Similarly, medical applications stand to benefit from the ultrasmallscale capabilities offered by nanotechnology. Medical science has made enormous advances in understanding the structure and functions of living organisms down to the genetic level. Nanotechnology offers the opportunity to apply that knowledge significantly more effectively to the diagnosis and treatment of illnesses and injuries than has traditionally been possible. Nanoscale capabilities offer significant tools for medical professionals. We see that there are really two critical reasons why nanotechnology is important. At one level, nanotechnology enables us to transform many different fields by providing us with access to a realm where many of the old rules associated with matter no longer apply. At another level, nanotechnology has transformational impact by virtue of the simple fact that it gives us a set of tools that enable us to manipulate our world at a far smaller scale than was ever available to us in the past. Nanotechnology thus has profound potential because it can free us from some traditional limits and offer us useful new capabilities. Nanotechnology can change some of the physical rules that have traditionally confined us. It can also free us from some of the limitations that have long been placed upon us by size.

Access to the Nanoworld Major scientific and technological advances were necessary before humans could enter the nanoworld. One of the most important advances that helped to open the nanoworld was the development of the scanning tunneling microscope (STM) in the early 1980s. Unlike conventional microscopes, the STM does not make use of direct visual observation by humans. Instead, the STM provides a representation of the nanoworld


13

that is somewhat like a contour map. Using a device analogous to the stylus of a phonograph record player, the STM traces the terrain of the material at the nanoscale by detecting and monitoring changes in the very small electrical currents that pass between the stylus and the sample under observation. We then see a visual representation of that contour map, which enables the observer to view clear representations of the individual atoms that comprise the material. In an important sense, the gateway to understanding the nanoworld and to manipulating that world is the STM. In addition to the STM, the other significant tool that helped to grant access to the nanoworld is the atomic force microscope (AFM). The AFM operates in a manner similar to that of the STM. However, with the AFM, the stylus or probe of the instrument is brought into direct contact with the sample that is being examined. The probe is attached to a cantilever, and as the probe moves across the surface of the sample, the cantilever bends in response to changes in the surface terrain. The change in position of the cantilever is measured through use of laser light, and those changes provide the basis for a visual representation of the sample’s surface terrain.

The Challenge of Nanofabrication After gaining insight into the nanoworld, a key challenge was how best to manipulate the contents of that world. Tools and processes to facilitate manipulation of atoms are an essential component of nanotechnology. At present, several different nanofabrication strategies are being applied. One approach to nanofabrication makes use of scanning tunneling probes and atomic force microscopes. This process makes use of devices to move individual atoms and to place them into patterns and formations. The AFM is one device capable of this type of nanofabrication. The probe of the AFM can be placed into direct contact with material, thus it can be used to position individual atoms. The STM can also be used in nanofabrication. Although the STM does not come into direct contact with the sample material, it generates an electron beam that is very useful. For example, the electron beam of the STM can be used to create (to “write” or “draw”) nanoscale patterns. The electron beam can also be used to move individual atoms.

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Use of scanning tunneling probe devices and atomic force microscopes has the advantage of being a fairly well established nanofabrication process. Because this form of nanofabrication was one of the first to be used, many people have developed significant experience and expertise using these methods. A major disadvantage associated with this approach to nanofabrication is that the method is very slow. It is too slow for effective use in mass production of nanostructures. Use of scanning tunneling probes for nanofabrication seems to be most useful for the creation of highly specialized nanostructures. Another approach to nanofabrication makes use of lithography. This manufacturing process is already widely used in the electronics industry to create very small electronic circuits. The desired pattern is generated at a large scale, and then its dimensions are reduced. The pattern, at its reduced size, is then used as the template to guide the carving of the desired nanostructures. This process parallels the lithography process already widely used in the electronics industry to build devices such as microprocessors. Some characterize this approach as a top-down nanofabrication process, as they begin with patterns created at scales larger than nanoscale and then reduce the model in size to create the appropriate template. In photolithography, a laser is used to print a desired pattern on a light-sensitive polymer material that sits upon a layer of chromium and glass substrate. The pattern made by the laser in the polymer and the chromium is removed, thus exposing a “mask,” which is analogous to a photographic negative, containing the desired pattern. Ultraviolet light is passed through the pattern and a lens is used to shrink the pattern as it is directed toward a silicon wafer. The result is a silicon chip that contains a miniature version of the circuit pattern. This lithographic process is used to build small electrical circuits can be used to fabricate nanoscale versions of those circuits. Lithographic processes currently remain expensive and technically difficult to perform accurately. The process does have the advantage, however, of being one that is well established in the electronics industry, although at larger than nanoscale, and is thus familiar to that industry. Another version of lithographic fabrication is described as “soft” lithography. Soft lithography involves creation of a template of the desired pattern on elastic material. Often, that template is created


15

through the use of traditional photolithographic techniques to create a version of the stamp on a silicon wafer. Liquid is poured over the form and is cured to create an elastic stamp containing the desired patter. That elastic material is then used as a “stamp” that transfers the pattern to a variety of surfaces. Another approach to nanofabrication attempts to build the desired structures from the atom up, a process known as the bottom-up approach to nanofabrication. For this approach, chemical reactions are initiated and controlled to aggregate and assemble atoms and molecules into the desired structures. In a sense, the nanostructures fabricated through this process are “grown.” This approach is particularly useful for fabrication of the smallest nanostructures. The process is not appropriate, however, for complex, interconnected structures. Bottom-up nanofabrication processes are in their infancy. Much work remains to be done before this type of nanofabrication can be widely applied.

Nanotechnology Today Much work in nanotechnology is already in extensive commercial use. Work at the nanoscale plays a significant role in development of materials used in a wide range of products. Nanotechnology has many current commercial applications in the medical and health industries. Nanoscale manipulation of chemicals plays an important role in many different industries. The electronics and information technology industries are also active users of nanotechnology. Some hold the view that nanotechnology is a part of the distant future. Although it is true that there is much more for us to understand about nanoscale activities, we should recognize that nanotechnology is already an important part of the commercial marketplace, even if it is not yet widely recognized. Nanotechnology is a current technology. It will evolve and grow a great deal over the years, but we would be mistaken if we took the position that it is more a part of the future than the present. A few examples of current commercial uses of nanotechnology help to illustrate that nanoscale work is already an important part of several highly dynamic commercial industries. Nanocrystals are commonly incorporated into diverse materials to enhance desired characteristics of

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those materials. For instance, ceramics are made stronger when enhanced by nanocrystalline particles. Those ceramic products are in use in products as diverse as aircraft and tennis racquets. Sunscreens are made more effective through the introduction of similar nanoparticles. Carbon nanotubes are used to make a wide range of consumer products, lighter, more durable, and less expensive. Nanoscale manipulation of chemical catalysts makes the gasoline refining process more effective and less costly. Nanoscale layering of materials used in computer disk drives supports greater data-storage capacity and efficiency. Nanotechnology applied to drug delivery (through use of lipospheres, for example) makes drugs more effective with fewer harmful side effects. Nanotechnology is a commercially active technology, at present. Its potential future applications are diverse and amazingly potent. We are only in the earliest stages of nanotechnology commercialization. There remains much room for future growth and development. There is also a great deal we do not yet understand regarding nanoscale theory and function. Perhaps most important, there remains much to learn regarding the impact on the environment and on living organisms resulting from the widespread use of nanotechnology.

Nanotubes One of the most promising forms of nanotechnology today is the carbon nanotube. Electricity or laser light is applied to carbon-rich gas kept under high pressure, sparking the formation of cylinders of carbon atoms. These cylinders are described as carbon nanotubes. Although essentially invisible to the human eye, these structures have the enormous practical advantage of being very strong, approximately ten times stronger than steel. Through use of energy and chemicals, it is now possible to shape and manipulate carbon nanotubes. Different classes of nanotubes have different useful properties. Some nanotubes are exceptionally strong, while others are exceptional conductors of electricity. One of the pioneers in work with carbon nanotubes is the company NEC, in Japan. Beginning in the early 1990s, NEC and other institutions in different parts of the world, directed substantial attention to nanotubes and their potential applications. The work was largely aimed at


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developing materials that are strong and light for use in electronics equipment. The electronics industry is perpetually in pursuit of materials that are stronger yet also lighter, characteristics that enhance the popularity of the industry’s products. That early work has now resulted in a rapidly diversifying number of commercial applications for nanotubes, as nanotubes find their way into an array of commercial products. Nanotubes are now being incorporated into a variety of materials that, in turn, are incorporated into a growing list of products. Nanotubes enhance the performance of textiles, electronic circuits, and plastics. Nanotubes are also being integrated into biological materials for use in medical applications. Carbon nanotubes enhance the performance of a wide range of products, while also making those products smaller, lighter, and less expensive. For example, a new generation of televisions and video monitors that make use of nanotubes in their screens and other components are now ready for the commercial marketplace. Enhancing viewing quality, yet providing thinner screens and lighter equipment, televisions provide one illustration of potential commercial value of nanotubes. The key commercial challenges facing nanotubes are cost of production and purity. Not surprisingly, production costs for carbon nanotubes were initially quite high. As production techniques have improved and production quantities have increased, the cost of producing nanotubes has fallen noticeably. It is likely that those production costs will continue to fall. The challenge of producing high-quality nanotubes that possess the purity necessary for optimal effectiveness remains an important issue. The challenge of product purity is a major factor affecting the nanotube production costs. At present, it is still relatively expensive to produce high-quality carbon nanotubes. For some applications, nanotubes made out of materials other than carbon may prove to be effective and less expensive. It now appears that nanotubes made from materials other than carbon may be effective in lubricants, sensors, and electronic equipment. If this proves true, more options may be available for nanotube producers. Those choices may help to address the production cost and product quality challenges. Opportunities to use other materials may also help to create more potential applications for nanotubes. At present, carbon nanotubes are among the most commercially mature forms of nanotechnology. The nanotubes have been studied for

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many years and are now moving into an expanding array of commercial products. In large measure, when many people point to commercial examples of nanotechnology, they are in reality highlighting carbon nanotube technology. It is important to recognize, however, that commercial nanotechnology involves more than carbon nanotubes, alone. Another factor to consider when discussing the commercial development of carbon nanotube applications is the uncertainty associated with their environmental and health impact. Research now in progress is aimed at evaluating the potential impact of widespread release of carbon nanotubes into the environment. These studies are part of an effort to determine what, if any, impact nanotubes may have on environmental quality and human health. Obviously, the answers to those questions will have a significant impact on the commercial future of nanotubes.

The Quantum Dot A quantum dot is a crystal comprised of only a few hundred atoms. When radiated using light (either visible or infrared light), quantum dots reradiate the light on specific wavelengths. They can be produced from a variety of materials, and because they are approximately the size of a sequence of DNA, they have been applied as biological sensors, to monitor activities taking place in live cells. For example, the company Quantum Dot Corporation, in California, provides a product that can identify the presence of a targeted DNA sequence in living organisms. This product can thus perform a medical diagnostic function, using quantum dots to identify the presence of specific pathogens (e.g., hepatitis or HIV). The test might also be applicable to identify the presence of cancer by indicating when tumor necrosis factor, genetic material produced when a body fights cancer, is present. Quantum dots are thus effective biological sensors. They can attach to targeted biological material, and they can be seen when struck by light. Quantum dots can be created to reradiate light so that they appear to be virtually any color. These characteristics permit quantum dots to be used in durable, easy-to-use diagnostic products. Test samples containing quantum dots can be irradiated with light, and the reradiation properties


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will permit rapid visual identification of the presence of the material bonded to the quantum dots. Research continues in search of other potential applications for quantum dots. One potential future application involves use of quantum dots in electron pumps. Electron pumps could be used as components in nanoscale machines. Quantum dots have been used as tunnels to help control the flow of electrons in those pumps. In the future, quantum dots may have a role to play as components in nanodevices. At present however, such devices remain speculative and part of a more distant nanotechnology future.

Nanotechnology and Its Invisible Reach Today, many of the most important commercial applications for nanotechnology are invisible to consumers. Some of these applications use nanotechnology to improve the performance of materials. They help to create paint that does not peel, clothing fabrics that do not stain, and sports equipment that is stronger and lighter, for example. The nanotechnology revolution has, to date, been a largely invisible, hidden, revolution. Nanotechnology today has largely been applied to enhance the performance of materials, making those materials stronger, more useful, and less expensive. Those materials are then integrated into products, packaging, and production processes. As components within other products, and as elements within production processes, much of nanotechnology today remains unrecognized by consumers. It is fair to suggest that the nanotechnology, as of today, has been an invisible technological and commercial revolution. One example of the hidden reach of nanotechnology today, and its substantial potential value, is provided by the DuPont product, Voltron. Voltron is used as a coating for wires in electric motors. DuPont now uses nanoparticles to pack the molecules that comprise Voltron more tightly than was possible in the past. This tighter packing of molecules leaves less space between the molecules. By reducing that space, the material breaks down less quickly, thus the insulating properties of Voltron remain effective for a longer period of time. By helping Voltron to retain its insulating properties for a much longer period of time, the

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nanoparticles make the coated wires last longer, and the engines in which the wires are integrated more durable. In addition, the greater efficiency of the wire coating makes the insulation more effective and the engines more energy efficient. Engine users may not focus on Voltron, but thanks to its use of nanomaterials, those consumers can purchase a product that is more durable and more energy efficient. Nanomaterials enable those consumers to spend less on replacements and on energy costs. Voltron is an example of nanotechnology’s currently invisible, yet highly valuable impact. A very different example of the broad scope of nanotechnology is the announcement that leading cosmetics company, L’Oreal, is launching a line of makeup that uses nanotechnology to replace pigments. Layers of nanoscale materials and liquid crystals interact with light to give the appearance of color. Instead of using pigments to provide color, these cosmetics seem to be white when in their package, but only when exposed to light does the color appear. The nanoscale materials are custom designed to react with light to produce the desired colors. This process enables the company to provide a wider and richer range of color options for consumers. This nanoscale approach to providing color is also used by other companies to give color to fabrics. Teijin Fibers is one example of a company applying this approach. Although much of nanotechnology’s entry into the commercial marketplace has been, to date, invisible, that condition is changing. Increased attention to nanotechnology has made it, at least in some markets, an attractive selling point. As a result, we now see advertising and promotional material touting the presence of nanomaterials in various products from clothes to sports equipment. As more product marketing efforts attempt to capitalize on the perceived attractiveness of nanotechnology and its capabilities, expect greater public recognition of the range and impact of nanotechnology applications.

The Extraordinarily Broad Reach of Nanotechnology Nanotechnology has the potential to touch virtually very facet of human activity. Although this seems like a very broad and bold claim, it is accurate. Nanotechnology influences the ability of humans to manipulate and


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to interact with all forms of matter. This includes both inorganic and organic matter. Nanotechnology’s influence extends across the varied materials that comprise all of the products we use in daily life. That influence also extends to the organic compounds that constitute our bodies and are contained in our natural environment. Nanotechnology is really a wide-ranging class of scientific inquiry and technologies. It is more than a single discipline or category of activity. Nanotechnology is, by definition, multidisciplinary, spanning virtually every field of inquiry. This extraordinarily broad reach of nanotechnology is both a blessing and a curse. It is a blessing because it gives nanotechnology a wide range of potentially beneficial social and economic impact. Nanotechnology can offer meaningful contributions to health and medicine, materials, computing and electronics, energy, transportation, and virtually every commercial sector. Nanotechnology offers a profoundly transformational technical capability. Its beneficial impact can be global and can span essentially all disciplines. Nanotechnology’s broad reach is also a curse. It is a curse because it is very difficult to discuss nanotechnology as a single class because its range of applications is so broad. The wide reach of its impact makes it difficult to separate individual applications, or classes of applications, for oversight purposes. Nanotechnology’s varieties and uses are so diverse that it is difficult to consider effectively decisions associated with investment in the field and regulatory oversight. When considering nanotechnology, it is essential to try to focus on specific applications and individual fields of use. Although it is difficult to do so, this type of focus is most important. Without such focus, decisions regarding allocation of resources and regulation, for example, are likely to be ineffective. We face a continuing challenge in effectively managing nanotechnology development as a consequence of the expansive scope, and reach, of this particular field of technology.

A Sampling of Today’s Nanotechnology Players The current field of nanotechnology industry players is a crowded one. It includes large, well established companies all over the world, as well as small start-up enterprises betting their future on innovations and creative

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insights. The participants in nanotechnology research and development come from virtually every industry and every region of the world. As noted previously, many of their nanotechnology initiatives have, to date, been invisible to the public. Although often unrecognized, these efforts have profound impact. They also set the stage for future initiatives that will certainly be more widely recognized, and are likely to have even greater impact on the way we live, work, and play. In this section, we will survey some of the more active companies involved in different fields of use associated with nanotechnology. Several companies focus on the design and manufacture of equipment such as STMs, atomic force microscopes, and other devices necessary to study and to manipulate nanoscale materials. Viewed from one perspective, these companies are involved in the creation of an infrastructure for nanoscale research and fabrication. These enterprises develop and manufacture the tools that are needed to explore the nanoworld and to interact with it. Examples of companies active in the field of nanotechnology tools include: Veeco, FEI, MTS Systems Corporation, Zyvex, and Nanolink. Other companies are involved in the development of nanofabrication equipment and systems. Companies such as Molecular Imprints are providing nanolithography systems. Designers and manufacturers of the equipment necessary to permit advances in nanotechnology research and commercial applications are in a particularly strong commercial position. Their products are pacing items affecting the rate of development of nanotechnology in all fields. Both advances in research and proliferation of commercial applications rely on the creativity and the effectiveness of these nanotechnology industry players. The participants in this niche in the nanotechnology marketplace face the least risk and the greatest current commercial opportunity of nearly all of the nanotechnology industry. Another active nanotechnology sector involves application of nanotechnology to electronics products. Nanoelectronics is a field drawing substantial attention from diverse companies. Those companies include: Samsung, Intel, NVE, HP, Zettacore, IBM, Nantero, and NanoProprietary. The electronics industry is particularly active in nanotechnology as it is encountering operational limits that may impede future product enhancements if new technical approaches are not


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identified. The electronics industry faces the challenge of continuing miniaturization of its products and their components to meet consumer demand for ever more portable and user-friendly devices. As the devices become smaller, the industry faces the additional challenge of handling operational issues such as effective heat dissipation that can also limit product performance. Nanoelectronics initiatives are thus motivated not only by anticipation of tremendous new commercial opportunities, but also by fear. The fear is based on the concern that the industry is reaching operational limits imposed by current technologies. If the electronics industry is to meet the continuing demand for noteworthy advances in performance, convenience, and price that it has cultivated in the consumer marketplace, dramatic technological advances will soon be required. Nanotechnology has the potential to provide one such dramatic technological advance. Nanotechnology presents a critically important opportunity for the electronics industry to continue the growth trend it has managed to sustain for several decades. For this reason, nanotechnology may be more important to the future prospects of the electronics industry than it is for any other industry. Work involving application of nanotechnology to materials and coatings now attracts substantial attention and investment. Work in nanomaterials was one of the first fields of commercial nanotechnology development. It is a fundamental category of nanotechnology development, and its impact reaches into essentially every other industry and product set, as all products are affected by advances in materials science. Businesses that are active in nanomaterials include: GE, NanoScale Materials, Dow Chemical, NanoDynamics, DuPont, and 3M. Companies such as Frontier Carbon Corporation and QuinetiQ Nanomaterial are providing specialty nanomaterials. One consequence of the broad reach of work involving nanomaterials is that this class of nanotechnology activity is beginning to draw intense public and government attention regarding the potential impact of widespread environmental release of nanomaterials. Participants in the nanomaterials industry will likely be among the first nanotechnology players to face questions from government authorities and from the public regarding the health and environmental consequences of nanomaterial use and release. Much of the public debate associated with the impact of

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nanotechnology will likely be driven by the organizations involved in the development, manufacture, and commercial use of nanomaterials. Medical and health care applications currently attract significant commercial interest, as well. Nanomedicine applications include use of nanotechnology for medical diagnostic and therapeutic purposes. Also part of nanomedicine is the application of nanotechnology to enhance medical equipment and instrumentation. Companies such as Johnson & Johnson, Nanokinetics, GE, BioPhan, LabNow, and Quantum Dot are active participants in the field of nanomedicine. Companies such as Dendritic NanoTechnologies are working to apply nanotechnology to the drug delivery and release process. American Pharmaceutical Products offers its breast cancer drug, Abraxane, which uses nanoscale content to deliver the treatment more effectively and with reduced side effects. Nanomedicine is likely to provide another flashpoint in the public discussion associated with commercial applications for nanotechnology. Nanotechnology applied to health and medical functions necessarily involves interaction between the technology and people. It will include integration of nanotechnology into drugs and other compounds and material that will be introduced into the human body. It will also include nanodevices that may be introduced directly into people, as well. This intimate level of human technology interaction will generate heightened interest and concern on the part of the public and government authorities. Accordingly, nanotechnology used for health and medical purposes presents another significant flashpoint for debate regarding the consequences of nanotechnology use and the need for regulatory oversight. Participants in the nanomedicine sector will also be among the first to face public questioning and debate regarding the trade-offs between nanotechnology’s potential benefit and harm. Increasing attention is now being focused on applications for nanotechnology in the energy industry. Some of the highly visible businesses involved in this field include: UltraDots, Carbon Nanotechnologies, NanoSolar, mPhase Technologies, and Nanosys. The company, Konarka, applies nanotechnology to photovoltaic products. Much of the current focus for nanotechnology applications in the field of energy is technology and systems to enhance energy-use efficiency. Another area of significant current progress is in the field of energy storage. For example, materials using nanoparticles and applied as light-capture systems can


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now substantially improve the efficiency of photovoltaic systems. Progress is also being made using carbon nanotubes in conventional batteries and in hydrogen fuel cells. Nanotechnology applied to environmental protection and pollution remediation are topics receiving increasing commercial attention. The company, Nanosight, offers a system to detect viruses and other nanoparticles in water. Hydration Technologies provides a nanotech-based water filtration system. The system makes use of membrane that filters out molecular-sized material that constitutes a health threat (e.g., bacteria, spores, viruses, heavy metals). The Israeli Nanotechnology Trust and the company, Cientifica, are involved in a water desalination project in Israel that applies nanotechnology. Taiwan Surfactant provides a gel that makes use of nanospores to absorb heavy metals from wastewater. Nanotechnology applied to the energy industry and to environmental protection and remediation seems to provide a solid opportunity for nanotechnology proponents to promote public support for the technology. Nanotechnology applied to reduce energy consumption, to enhance energy-storage capability, and to facilitate increased use of renewable fuel sources offers an important chance for the nanotechnology industry to develop commercial applications that are likely to generate significant public support. Applications in these fields may encounter less public questioning and resistance. Effective advances in these areas may help to promote more general support for nanotechnology use. One field of use in which nanotechnology has been particularly active is that of sensors. Nanotechnology provides a technical foundation that enables identification of trace amounts of targeted content. It is a technology that is particularly useful for sensors and a variety of monitoring and testing devices. Sensor applications span a wide range of categories, from health and medical contexts to environmental uses. For example, LabNow, Inc. uses nanotechnology as part of its blood-testing microchip products. Nanotechnology enables dramatic miniaturization of the necessary blood-testing process. This miniaturization enables the test equipment to be taken into the field, directly to the patient. This makes the testing process easier to conduct and results are obtained far sooner than with traditional test equipment. LabNow provides this nanotechnology-based blood-testing equipment for use to

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identify HIV/AIDS and other diseases for which prompt and accurate diagnosis is essential. Some sensor applications for nanotechnology make use of the special characteristics of nanomaterials. For instance, nanotubes can be used as chemical detectors because of the ways in which they react to the presence of certain chemicals. When certain chemicals attach to carbon nanotubes, the electrical properties of the nanotubes change. That change can be monitored, and this reaction provides a basis for use of nanotubes as chemical detectors. Nanotechnology can also be applied to detect the presence of infections in living organisms. For example, nanoscale particles of gold can be used to detect the presence of viruses and bacteria. The gold particles can be attached to fragments of DNA that are structured to attach to targeted pathogens. When the gold-enhanced DNA is introduced to a blood sample, it will bind with the pathogens present in the blood. When the blood is passed between two small electrodes, the gold closes the electrical circuit and the presence of the pathogen can be identified. Nanosensor initiatives are particularly attractive because there is substantial demand for sensor technology in a wide range of fields. Including health and medical sensors, environmental monitors, and national security sensor devices, the commercial marketplace for sensors is thriving. There is every expectation that the demand for a growing array of sensors will continue to increase in the future. Nanotechnology’s primary attribute of very small size is of critical value in all sensor contexts. Nanotechnology has attracted substantial interest from the investment community. Venture capital investors have invested approximately $1 billion in nanotechnology-oriented start-up companies. One of the major challenges associated with nanotechnology investment is accurate risk assessment. There is undoubtedly much potential commercial promise associated with nanotechnology. It is very difficult, however, to assess accurately the risks associated with investments in the field. Many technological challenges remain to be resolved. The legal and regulatory climate applicable to nanotechnology applications remains highly uncertain. The uncertainty associated with risk analysis makes it difficult to estimate the economic return associated with nanotechnology investments. Established companies are also making major investments in nanotechnology. One of the most active nanotechnology players is 3M.


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As of 2005, 3M had placed 14 products that make use of nanotechnology in the commercial marketplace. The company was deriving approximately $500 million in revenue from those products. The portfolio of nanotechnology-based products offered by 3M is diverse. It includes dental fillings, cell phone displays, and power cables with superconducting capability. As of 2005, 3M had established itself as the largest nanomaterials manufacturer in the world, supplying approximately one-third of the global market for nanomaterials.

Nanotechnology Tomorrow Projections regarding nanotechnology’s long-term potential vary widely. Some see it as the foundation for a golden age of dramatic economic growth and enhanced quality of life. Others anticipate that the technology will one day threaten human existence. In its early stages of development today, nanotechnology already provides glimpses of both its positive and negative potential. Tomorrow, the range of nanotechnology applications will likely be far beyond our ability to imagine today. Expectations for nanotechnology applications in medicine, for example, are substantial. Some anticipate that carbon nanotubes will have the strength and versatility to be used as a scaffold for the reconstruction of human bones that have been damaged by injury or illness. Others work today to develop our ability to use custom-designed nanoscale molecules to target treatments for diseases such as cancer. There is little doubt that the future of nanomedicine holds great promise, particularly in the fields of diagnostic medicine and targeted delivery of therapeutics. The electronics industry anticipates continued development of the advances in nanotechnology it has already experienced. This evolution from microelectronics to nanoelectronics could take many forms. Nanoscale electronic components (e.g., diodes, transistors, relays) have already been created. Now the goal is to develop the capability to routinely connect these components into nanoscale circuits. As noted previously, no other industry has as much to gain from effective advances in nanotechnology as the electronics industry (including the computer industry).

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Molecular Motors, Machines, and Manufacturing Some in the research community are actively pursuing the possibility of creating and harnessing nanoscale machines that can manipulate individual molecules. Functioning in a manner analogous to the ways in which living cells operate, these tiny machines will efficiently transform chemical energy into mechanical work. Molecular machines will one day make use of chemicals to power organized, deliberate manipulation of molecular structures. We have become accustomed to thinking of motors and machines as devices that generate motion. Molecular motors and machines work from a different perspective. The motors with which we are familiar transform energy into motion. To function effectively, molecular motors will use energy supplied from chemicals to stop motion. Chemical input can thus generate molecular motion, and nanoscale devices can be used to stop preselected motion, while allowing other movement to continue. By properly calculating the motion to be impeded, a “ratcheting” process (i.e., one that functions in much the same manner as does a ratchet wrench) can be created. Use of the planned ratcheting process can transform random molecular motion created by chemical input into organized mechanical action. Many proponents of the potential capabilities of molecular motors believe that some version of the molecular ratcheting process provides the foundation necessary to create organized mechanical processes from random chemical interaction. Nanoscale motors offer the potential to manipulate atoms and molecules far more quickly, efficiently, and accurately than is possible today. Even proponents of nanomachines concede, however, that widespread use of nanomotors is far beyond current scientific and technical capabilities. Nanomotors are a form of nanotechnology that will most likely not be effectively available for many years to come. Some nanotechnology visionaries contend that manufacturing at the nanoscale will be an important part of the future. The process would involve the manufacture of virtually any output using a molecule-bymolecule approach to the construction. An important step in the realization of this nanoscale manufacturing aspiration is the development of nanoscale devices that can execute the manufacturing process. Some have described these devices as “nanoassemblers.” The ability to build


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and operate these nanoassemblers remains substantially beyond current capabilities. Most observers conclude that nanomotors, nanomachines, and self-assembling nanodevices will not be practical until the very distant future, if ever. Some view that potential future with hope and enthusiasm. Others view such a future as one that is full of peril. Supporters of widespread, sophisticated nanofabrication contend that it will open the door to a golden age of human control over matter. Opponents of this form of nanotechnology fear that it can ultimately slip beyond human control, creating a purgatory in which nanoscale, intelligent devices pursue their own plans, creating the devices necessary to carry them out, beyond the control of human beings. Most likely, both extreme views are inaccurate. The most likely future is one in which continuing advances in nanomachinery and nanofabrication enable ongoing advances in nanotechnology capability that fall short of the most glowing projections regarding nanotechnology’s distant future, but also fall short of the most horrible fears of nanodevices running out of control. Nevertheless, it is important to recognize that a portion of the public views the nanotechnology nightmare scenario as a possible future. For that portion of the public, today’s discussions regarding nanotechnology research, commercialization, and regulation will affect the chances that the nightmare scenario may one day be realized.

Nanocomputing and Electronics A major goal of the electronics industry is pursuit of ever-smaller devices and components for electronics equipment. Nanotechnology advances are of great interest to the electronics industry. Those advances also hold substantial potential applicability for electronics equipment. In some ways, the continuing future ability of the electronics industry to grow at rates consistent with those of the recent past will depend on that industry’s ability to cultivate future innovation of the magnitude presented by nanotechnology. The electronics industry is an industry whose future success may be largely influenced by the success of nanotechnology. In addition to significant potential contributions to the electronics hardware associated with computing, nanotechnology offers potentially

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dramatic future contributions to the computational process itself. For example, research now suggests that individual molecules can be manipulated so that they effectively perform the critical functions required of computer components. Thus, individual molecules can be made to function as conductors, diodes, transistors, and each of the critical elements of a functioning computer. To the extent that these individual molecules can be effectively connected and coordinated with each other, molecular computers are possible. Application of nanotechnology to computer equipment is perhaps most advanced with respect to memory chips. In the near future, memory chips will likely be manufactured from carbon nanotubes. Further into the future, industry observers expect that nanoscale devices will likely be applied to replace the current gateways and metal circuits now integrated into computer microprocessors. Carbon nanotubes are also being considered as future material for transistors. In a future beyond even the nanotechnology versions of traditional computer equipment outlined above, some observers and researchers project use of living organisms for molecular computing devices. DNA-based molecular computers are attractive because of the never-ending demand for greater computational power and speed. The continuing challenge is the extent to which computer circuits can be made smaller and capable of functioning effectively when packed ever more densely. Advanced nanotechnology offers the potential to provide a major step in the computer industry’s continuing battle over size. DNA computing makes use of the ability of DNA to store tremendous volumes of information using varied sequencing of the four fundamental bases (adenine, thymine, guanine, and cytosine). Highly preliminary research has indicated that the DNA sequencing can be applied to compute complex calculations. As that research advances, it may be possible in the future to make use of molecular computers applying DNA data storage.

Medical Nanotechnology At present, nanotechnology has made its greatest advance in the field of medicine in the context of medical testing devices and systems. In the future, it is anticipated that medicine and health care will rely to a far


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greater extent on nanotechnology. As we will discuss elsewhere in this book, however, nanotechnology use in medical care will likely attract the highest level of regulatory review, as it will often involve introduction of nanotechnology into humans. In spite of regulatory concerns and attention, medical nanotechnology is a field that holds great promise and will likely be highly dynamic for the foreseeable future. One area of substantial future promise is that of noninvasive diagnostic devices. Many industry observers expect to see nanoscale devices introduced as systems to enable real-time monitoring of body function and associated diagnosis of illnesses. Nanoscale devices can be introduced into the body without serious intrusion, and they this offer the potential for significant improvements in diagnostic services. Effective use of nanotechnology offers the potential for great strides forward in medical monitoring and noninvasive diagnosis. It is also widely expected that nanotechnology will play an important role in the delivery of pharmaceutical products into the body. For example, nanotechnology may be able to facilitate more effective targeting of pharmaceuticals, thus permitting reduced dosage and also reducing the degree of unwanted side effects from medication. Research continues on nanoscale drug and gene delivery mechanisms. For example, nanoscale polymer capsules capable of compressing or swelling when appropriate to release their contents could be applied to deliver pharmaceuticals to targeted sites in the body. Current experimentation with nanoshells (nanoscale glass beads coated with gold) suggests that they may also be useful for targeted drug delivery in the future. It appears that nanoshells can be induced to release their contents through minor heating of the shells using infrared light. Sophisticated ability to create and manipulate materials at the nanoscale may also play an important role in the process of repairing living tissues and organs. Nanoscale engineering of human tissue can substantially advance our ability to repair damage to the body successfully and quickly. The future potential to rebuild tissue and organs through use of nanofabrication techniques and systems is now being actively investigated. In this context, nanotechnology holds notable future promise to improve the quality of human life in a most dramatic way.

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Nanotechnology also holds the promise for improving the quality and enhancing the capabilities of medical equipment. For example, current research suggests that certain nanoparticles (such as iron particles) may be effective at enhancing the quality of MRI images. As nanotechnology improves the quality and capability of computing, imaging, and other equipment used in the medical field, those nanotechnology advances offer substantial promise for notable improvements in health and medical services. Medical diagnosis and therapy both stand to benefit substantially from these nanotechnology-based advances in health and medical equipment. Medical equipment advances driven by nanotechnology are, in some ways, the advances that are likely to cause the fewest concerns regarding a need for regulatory oversight.

The Bridge from Today to Tomorrow We see a substantial gulf between the current state of nanotechnology development and the projections for nanotechnology’s future. Building an effective bridge spanning that gulf will require substantial progress at several levels. Certainly continued advances in scientific research and technology development are part of establishing a successful connection between today and tomorrow for nanotechnology. Another essential component for connecting the work of today with the hopes for tomorrow is the availability of financial investment in support of nanotechnology research and commercialization. The final piece essential to help bridge the present with the future is a regulatory and public policy climate that fosters responsible nanotechnology development. Prospects for continuing scientific research and technological development in the field of nanotechnology look very bright. There is substantial interest in nanotechnology within the global research and technology communities. Many different researchers and research institutions are actively involved in nanotechnology projects. Interest in nanotechnology in the research and technology communities is not surprising, given the challenging and attractive opportunities the field presents for scientists and engineers. There is little reason to doubt the ability of nanotechnology to continue to attract attention from highly qualified researchers. The questions and opportunities posed by nanotechnology, in all its rich


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diversity, are simply too intriguing and too exciting for the research community to ignore. The future of financial support for nanotechnology efforts also appears to be very promising. As noted previously, venture capitalists have been very active in this field. In addition, and perhaps more important, a wide range of large, well established companies in several different sectors are making aggressive investments in nanotechnology. Interest in investing in nanotechnology is to be expected given the potential economic value of nanotechnology applications. One potential threat to nanotechnology investment is substantial uncertainty as to commercial opportunities for the work. If for example, excessively restrictive regulation dramatically limited nanotechnology research or commercial use, available funding for research and commercial investment would likely decrease dramatically. Perhaps the most uncertain of these critical components for the future of nanotechnology is the regulatory and public policy environment. As we will see in subsequent chapters of this book, the regulatory climate affecting nanotechnology research and applications is in a state of flux. We see both strong support and encouragement for nanotechnology at the regulatory level and also growing concern and fear regarding the technology’s potential impact on society and the environment. The ability of regulators to effectively balance protection against actual threats posed to the public by nanotechnology with creation of an environment conducive to innovation in nanotechnology and all other emerging technologies will play a profound role in our ability to bridge successfully nanotechnology’s present with its potential future.

Managing the Nanotechnology Hype An important challenge now raised by the expanded use of nanotechnology and the increased public attention it receives, is effective management of the expectations associated with the technology and its promise. In some ways, nanotechnology has made a stealth entry into the commercial marketplace. It is already more widely applied and more actively pursued in commercial markets than much of the public currently recognizes. That situation is rapidly changing. Increasingly, private

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companies, governments, and public interest organizations are publicizing nanotechnology. With that increased public attention comes more vocal discussion of both the promise and the perils associated with widespread use of nanotechnology. Proponents of nanotechnology have a great incentive to promote the many potential benefits to consumers and society that nanotechnology presents. Part of that incentive is based on a desire to promote sale and use of products that already make use of nanotechnology. Another aspect of the incentive is the desire to solicit additional financial support for nanotechnology research and development. Opponents of nanotechnology have great incentive to emphasize the potential risks to the public carried by nanotechnology. As nanotechnology becomes more visible to the public there is greater awareness of its presence. As proponents of the technology more actively promote it, opponents will feel pressured to respond. There will also likely be a perception that now is the time to challenge nanotechnology initiatives, before market penetration of the technology becomes extensive. Governments have great incentive to be on both sides of the issue of nanotechnology. On the one hand, nanotechnology is a hot, promising, emerging technology. By supporting its development, governments have an opportunity to promote economic development and innovation. On the other hand, public concern about potential harmful impact from nanotechnology can become a potent political force. Politicians who ignore that political force do so at their professional peril. The incentives faced by government and the opposing camps in the nanotechnology debate create a climate conducive to grand overstatement of both the promise and peril associated with nanotechnology. Supporters of nanotechnology are encouraged to overstate its future potential benefits in order to encourage additional funding for research and development. Overstatement of benefits is also encouraged by increasingly aggressive efforts to promote the benefits of nanotechnology to customers. Critics of nanotechnology are encouraged to overstate potential harm in order to respond to the sales pitch made by nanotechnology proponents. Critics also overstate the perils of nanotechnology in order to capture the attention of government authorities.


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Nanotechnology is in an unsettled period, currently placed in its commercial and publicly recognized early midlife phase, but poised to take dramatic steps into a rich but uncertain future. It is a precarious position for the technology and for the individuals and institutions that are investing in it and depending on it. In this uncertain period of transition, exaggerated claims of promise and peril pose serious threats to nanotechnology’s future. Overstatement on both sides of the discussion can impede our ability to manage nanotechnology development in ways that strike an appropriate balance between prudent caution and active support. Uncontrolled hype as to the benefits and costs of this technology can harm the public interest. Nanotechnology is not as beneficial as its most glowing supporters claim, and it is not as threatening as its most vigorous opponents contend. It is a profoundly important set of technologies that carries the potential to improve dramatically the quality of life, but the full implications of its widespread use remain, at present, unknown.

Selected Bibliography Atkinson, W. I., Nanocosm, Amacom, NY, 2005. Baker, S., and A. Aston, “The Business of Nanotech,” Business Week, Feb. 14, 2005, p. 64. Del Re, D., “Pushing Past Post-Its,” Business 2.0, Nov. 2005, p. 54. Fritz, S. (ed.), Understanding Nanotechnology, Warner Books, Boston, 2005. Loder, N., “Small Wonders: A Survey of Nanotechnology,” The Economist, Jan. 1, 2005, p. 41. “Nano’s Liquid Promise,” Red Herring, Aug. 15, 2005, p. 32. “The Nanotech Makeover,” Business 2.0, Nov. 2005, p. 36.

2 Nanotechnology and Intellectual Property Rights Intellectual property rights play an important role in the development of new technologies. Nanotechnology is no exception. If viewed broadly, the field of nanotechnology is currently one of the most active, on an international basis, with respect to number of patent applications. In addition, participants in the nascent nanotechnology industries employ the law of trade secrets to supplement their control over key technology and expertise. Although less directly involved in the nanotechnology industry, copyright law and trademark law also affect participants in nanotechnology markets. For example, computer software plays an important role in nanotechnology research and commercialization, and copyright law is a major factor in the management of such software products. As nanotechnology companies grow, they will become increasingly active in the field of trademark law, as they build and manage the names and other forms of commercial identification that brand their products and services. The legal framework applied to the creation and enforcement of rights of ownership, and use with respect to nanotechnology, provides one of the most significant set of regulations applicable to, and affecting the development of, nanotechnology. Intellectual property law provides 37

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the primary regulatory vehicle through which ownership, control, and use of nanotechnology are managed. In a very real sense, laws governing ownership and rights of use for intellectual property and other intangible assets are the most important legal factors influencing the development and commercialization of nanotechnology, and any other form of technology. This chapter examines the role of intellectual property rights regulation with respect to nanotechnology research and the development of commercial applications for the fruits of that research.

An Intellectual Property Law Primer The law of intellectual property is commonly considered to include the following legal disciplines: patents, copyrights, trademarks, and trade secrets. Traditionally, intellectual property law has two key public policy objectives. The first is to provide a legal framework that enables creators of innovative works to derive economic benefit from their work that is sufficient to establish a continuing incentive for future creation by those innovative creators. The second policy objective is to provide a legal framework that facilitates the prompt integration of the innovative works into commerce, by enabling users to access the innovations and by enabling other creative parties to build upon the work of the original creators. The law of intellectual property is intended to facilitate rewards for creators sufficient to encourage continuing creation and to enable users of the creations to obtain access to the new works subject to terms that facilitate broad use of those works. Intellectual property law plays a particularly influential role in a young and dynamic field of research and development, such as nanotechnology. Intellectual property rights are enforced by both private legal actions and by legal actions initiated by government authorities. Violations of intellectual property rights are commonly characterized as infringement. Penalties associated with infringement can include civil penalties (e.g., mandatory payments as compensation to the intellectual property owner), fines (i.e., mandatory payments made to governments for violations of criminal laws), court ordered remedial action (e.g., destruction of infringing products, orders to cease infringing conduct), and incarceration (e.g., prison terms associated with intentional piracy of copyrighted


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material). The exact combination of available remedies varies from jurisdiction to jurisdiction. Intellectual property rights can be transferred from one party to another. For example, patent rights are often assigned by the inventor to another party (e.g., an employer or an investor). Owners of intellectual property rights can enter into legally binding agreements not to enforce their rights against an authorized party. These contracts are commonly known as licenses (the party agreeing not to enforce its intellectual property rights is the licensor and the other party is the licensee). Assignments and licenses are two of the most commonly used legal mechanisms that transfer rights of use from the creators of intellectual property to other parties. These transfers are essential to the commercialization of inventions and other innovations.

Patents: Control over Inventions Patent law provides legal rights to inventors. These rights come into existence only when a government specifically grants them. They do not become effective with the mere creation of the invention. Patent law rights are rights that enable the inventor to prevent other parties from using the invention without permission from the inventor. Patents are granted to materials, devices, processes, and even living organisms. Patent rights are particularly important to work in nanotechnology. To qualify for patent protection, the invention must be novel, useful, and nonobvious. Once patent rights have been granted, the information regarding the invention, including how it operates and how it is constructed, is publicly disclosed. In exchange for that disclosure, the patent holder is granted the exclusive right to manufacture, distribute, and operate the invention. Anyone seeking to use the invention must obtain permission from the patent holder. Patent law is based on a balance of rights between the inventor and users. Patent holders are given the exclusive right to control use of their patented work, in exchange for public dissemination of the key aspects of that work. This balance is intended to ensure that inventors receive compensation for their work, thus providing continuing incentives for future invention. While at the same time the disclosure of information regarding how the invention is constructed and how it operates is intended to spur

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additional innovation as other people develop applications for the original invention and create other inventions that build upon the knowledge base created by the original work. Of the required patent criteria, novelty is often the most challenging for an inventor to satisfy. Novelty means unique. To obtain a patent, the inventor must demonstrate that the invention differs from all known creations that are in use or have been publicly disclosed. The invention must represent an advance from the prior art. It is not enough for the inventor to show that the creation is the result of his or her original work. Instead, patent law requires that the creation represent a unique advance over “prior art.” Patents are intended only for those inventions that represent an advance over all that went before. Before granting a patent, patent examiners review all patented and disclosed creations in an effort to determine if the applicant is presenting a truly new and unique invention. An invention must also be useful to receive patent protection. It must be capable of performing an identified, and useful, function. Although the invention need not always be successful at accomplishing its stated purpose, it must be capable of performing its function. The utility requirement does not generally pose a difficult hurdle. It is, however, often helpful if the patent applicant can demonstrate in what ways the invention represents some form of improvement over the prior art in the field. Nonobviousness is a somewhat more complicated requirement. To obtain a patent, the inventor must demonstrate that the knowledge that led to creation of the invention was special and not commonly shared by people who are reasonably well schooled in the field of expertise associated with the invention. The applicant must show that the invention represents some form of innovative, creative insight beyond the type that other reasonably skilled practitioners in the relevant field possess. Not only must the invention represent an advance over the prior art, but it must also represent an advance that is not obvious to those who are reasonably experienced in the field of knowledge relevant to the invention. The patent applicant must provide an accurate description of what the invention does and how it accomplishes that function. This requirement is known as “enablement.” It involves the requirement that the patent application disclose information sufficient to enable a reasonably well schooled person to create and make use of the invention. The applicant must also provide enough information describing the invention to enable


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a reasonably skilled person in the field to create the invention or perform the process defined in the patent. Thus the application must provide enough information to the patent examiner for that individual to understand what the invention does and how it works. The information must be sufficient to enable a person who is reasonably well schooled in the relevant field to be able to construct the invention (or perform the process). The application must also identify all relevant prior art, and persuade the patent examiner that the invention is both a novel advance beyond the prior art and that the advance it represents is sufficiently innovative to make the invention a nonobvious extension beyond the prior art. Patent rights also depend on the concept of priority. In many countries, the evaluation of which inventor has priority is based on an assessment of which inventor applied (or filed) for a patent first. In the United States, the priority among competing patent applicants is granted to the first party to invent the creation. Principles of priority are applied by patent examiners to evaluate which applicant, among competing applicants with the same or similar inventions, will receive the patent. In a system where priority is based on the first-to-file approach, the assessment of priority is relatively easy to make, as there is generally documentation at the patent office to support the priority claim. Where priority is granted to the first party to invent, however, outside evidence must usually be considered in order to make the determination as to which party invented first. When a party anticipates filing for a patent application in a first-to-invent jurisdiction, that party must document carefully the invention process, creating a verifiable record of the date and process of invention. Invention documentation procedures such as laboratory notebooks memorializing the invention process and the timeline for that process are of critical importance. It should also be noted that the United States is moving toward adoption of a first-to-file patent process, as part of the global effort to bring greater uniformity to patent laws and procedures around the world. The patent process requires the presence of a knowledgeable and efficient cadre of patent examiners. These examiners must, collectively, be a group of professionals in a wide range of scientific and technological fields, in order to provide meaningful coverage for the great range of inventions to be addressed in patent applications. One of the more interesting patent challenges associated with nanotechnology stems from the

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great scope of work covered in that field. In many instances, patent applications associated with work involving nanotechnology will be multidisciplinary, spanning several fields of expertise. For example, nanomaterials work associated with a single patent application may simultaneously involve chemistry, materials science, biology, medicine, and engineering. Patent applications with that scope of relevant art place substantial demands on patent examiners. This train can have an adverse effect on the patent process. It can cause the patent review process to be a very long and time-consuming process. It can also lead to issuance of patents that should not be granted. It is also important to recognize the limits on patent law protection. One important limit involves restrictions on the patent holder’s ability to make use of the patented invention. The patent gives the patent holder the right to stop other parties from using the invention without permission. The patent does not, however, ensure that the patent holder will have the right to use the invention. If for instance, there is another existing patent that limits the ability to use the second patented invention, the first patent imposes legally binding limits on the freedom to operate associated with the second patent. Patents grant rights to exclude other users, but they do not necessarily grant rights of use. Obtaining patent protection is only part of the story for an inventor. If the inventor wants to make use of the invention, the inventor must be sure that such use does not violate patent rights held by any other party.

Copyrights: Protecting Authorship Copyright law applies to original works of authorship after they are put in tangible form. Copyright law provides protection for original expressions of ideas, but not for the underlying ideas themselves. Essentially, copyright law grants the author of an original work the exclusive legal right to make copies of that work, to distribute the work and copies of the work, to perform or display the work publicly, and to create derivative works (i.e., to create works that are based on the original work, such as a motion picture based on a novel). Copyright protection does not require the author to show that the work is unique. There is no equivalent to the novelty requirement of


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patent law associated with copyright law. Instead, it is adequate if the author can demonstrate that the work is original. Copyright law’s requirement of originality means simply that the author did not copy all, or a substantial portion, of the work from the work of another party. Originality of authorship, not novelty, is the key to copyright. An important exemption to copyright rights is provided by the concept of fair use. Portions of copyrighted material can be used without the express permission of the copyright holder for certain limited purposes that are deemed to be in the overall public interest. For example, portions of copyrighted works can be used for educational purposes or for news reporting or commentary, without permission from the copyright owner. In general, fair use permits such use if the use is noncommercial in nature and does not substantially harm the economic interests of the copyright owner. One form of fair use most likely to arise in the world of nanotechnology is the fair use exemption permitting limited noncommercial use of copyright-protected material for research purposes. Copyright issues are most likely to arise in the context of nanotechnology with regard to computer programs. Computer code is commonly, although not exclusively, protected under copyright law. Both developers and users of computer software should be sensitive to copyright legal issues. Developers have an interest in using copyright law to help them manage their products. Users must be sensitive to compliance with copyright requirements associated with the software products they rely upon.

Trademarks: Managing Commercial Brands Trademark law provides legal protection for words, logos, and any other form of commercial identifier. Trademark law governs rights of use associated with identifiers that are applied to specific goods and services. Identifiers that connect a specific organization with the goods and services it provides are trademarks. These are the marks that help the public to identify the specific provider of a certain product or service and to distinguish those goods or services from similar ones provided by different organizations. Trademark law helps businesses that invest in the development of commercial identifiers to protect their investment in those

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marks. Trademark law also protects consumers from being misled by deceptive use of marks, conduct intended to take advantage of well known commercial brands and deceive consumers into believing that they are buying the established products when, in fact, they are purchasing different products provided by a different source. Businesses are not permitted to use marks that may lead to consumer confusion or reduce the economic value of a trademark claimed by another business. If, for example, a company uses a commercial mark that is identical, or confusingly similar, to that of another company, that conduct is a violation of trademark law and constitutes trademark infringement, also described as trademark misappropriation. In the United States, trademark law also prohibits use of a mark that reduces the economic value of a trademark held by another party. Such conduct is known as trademark dilution. Trademark law most commonly comes into play with respect to the names of companies, products, and services. As many commercial applications for nanotechnology are viewed to be innovative and thus attractive in the marketplace, we already see examples of trademark rights actively asserted for a wide range of nanotechnology-based goods, including materials and processes. We are already beginning to see more active use of commercial branding efforts associated with nanotechnology companies, products, processes, and services. For example, producers of consumer products that make use of nanotechnology now routinely emphasize their connection with nanotechnology. The sports equipment company, Yonex, for instance, advertises its Nanospeed RQ line of tennis racquets. As these efforts to highlight nanotechnology applications to consumers increase, use of trademark rights will play an expanding role in the nanotechnology industry. The commercial value of these marks will increase, and the stakes associated with establishing and protecting trademark rights will increase dramatically.

Trade Dress and Design Patents: Protecting Product Design and Packaging Another valuable form of intellectual property is the design of products or product packaging. The distinctive look of a product or its packaging


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often serves effectively to help consumers identify the product and to distinguish the product from its competitors. Consider the distinctiveness of the shape of the Coca-Cola bottle as a leading example of the potential commercial power of designs. Two aspects of intellectual property law are commonly called upon to establish rights of ownership and control over these designs. Trade dress and design patents provide a foundation in intellectual property law to manage designs. Trade dress rules are part of trademark law. Based on the notion that a distinctive design for products and packaging can help consumers to identify the source of the product and to distinguish the product from others in the marketplace, trade dress law provides the same protection for these commercial designs that trademark law provides for commercial marks. Once a distinctive form of trade dress has been established in the marketplace, other parties are prohibited from using identical or similar designs in ways that may confuse consumers as to the source of origin of the products they purchase. Design patents protect distinctive ornamental designs. Although they are patents, they have a different scope and focus than traditional, utility, patents. Utility patents protect inventions that are novel, useful, and nonobvious. Design patents protect designs that are distinctive. There is no utility requirement for design patents. In fact, if a design has a useful purpose (e.g., makes the product faster, stronger, etc.), it would fall outside of the scope of a design patent. Designs that have a useful purpose should be included within the patents associated with the product itself. For example, the manufacturer of a tennis racquet would seek utility patents for designs and other innovations that make the racquet stronger or more durable. In contrast, the manufacturer could seek a design patent to cover a distinctive form for the racquet, provided that the novel form served only an ornamental function. These protections for designs afforded by intellectual property law could be useful for some nanotechnology applications. It is possible, for example, that use of nanomaterials or nanostructures to create distinctive product forms or product packaging could fall within the scope of trade dress or design patent coverage. Design patents or trade dress concepts could provide legal protection for nanotechnology advances that do not satisfy requirements associated with other forms of intellectual property

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rights, such as the novelty or nonobviousness requirements of utility patents. Patent law provides that merely reducing the size of a material, device or process to nanoscale would not necessarily meet the utility patent requirements for patentability. Simply because an invention has been created at the nanoscale level does not, alone, show novelty or nonobviousness, as is required for a utility patent. Under some circumstances, however, it might be possible to argue that the smaller scale enables creation of a distinctive design, thus qualifying for design patent or trade dress protection. Intellectual property protection for designs should be considered as an additional option available to developers of nanotechnology. That additional option may prove to be particularly useful given some of the patentability challenges likely to be associated with developments in nanotechnology.

Trade Secrets: The Underestimated Form of Intellectual Property Trade secrets consist of information or knowledge that is not widely known and provides competitive advantage to its owner. Law protects trade secrets from unauthorized distribution and use. Virtually any type of information can qualify as a trade secret, provided that it is not disclosed and that the secret provides its owner with a competitive commercial advantage. Trade secrets are established through the action of retaining material as proprietary, confidential information. No application or request for authority is required. Rights of trade secrets are created through self-help, by treating information as confidential material. Trade secrets do not expire. They remain in effect for as long as their owner treats them as secrets and invests in their protection. Although trade secrets do not have set terms, they do not provide protection against independent discovery. If another party independently, discovers the secret, that party is entitled to make full use of the information.

Nanotechnology Patents: Contemplating the Gold-Rush Mentality At present, the race to the patent office in the field of nanotechnology is incredibly active and global in nature. Patents are widely viewed as


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an essential part of the growth of nanotechnology. In the world of nanotechnology, success is sometimes judged based on the size of an organization’s patent portfolio. There is a gold-rush mentality in the field of nanotechnology, as competitors race to stake out their claims of ownership. A gold-rush approach to nanotechnology patenting carries significant potential implications for research and for development of commercial applications. Aggressive patenting can impede research. For example, research institutions emphasizing future patents sometimes delay publication of new research findings. Less willingness to share information or engage in collaborative research is a potential result of emphasis on future patents. Researchers anticipating future patent applications are reluctant to publish or otherwise disclose information associated with their work, rightfully fearing that such disclosures could make it impossible for them to receive patent rights in the future. Active patenting also complicates the commercial landscape for nanotechnology. Vigorous patent enforcement makes it more difficult for companies to integrate research advances into new products and services. Costs, in time and money, associated with product development can increase dramatically if patents are sought for technologies integrated into commercial product offerings. Similar cost increases will also be incurred as companies attempt to develop and commercialize new products while avoiding infringement on patents held by competitors and others. One of the clearest indications of the dramatically increasing interest in patents sweeping nanotechnology is the substantial increase in the number of patent applications and patents granted for nano-related technology. The United States Patent and Trademark Office (USPTO), for example, granted approximately 264 patents referring to “nanotube,” “nanowire,” “nanoparticle,” or “fullerene” in 1998. In 2004, that number increased to approximately 1,577. The increase in demand for nanotechnology-related patents was perceived to be significant enough by the USPTO to justify creation of a separate USPTO classification for nanotechnology (Class 977) to facilitate consideration and processing of this category of inventions. To be included in Class 977, an invention must involve research or technology at approximately the 1- to 100-nm scale in a minimum of one direction. Inclusion in Class 977 also requires

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that the work in question generate some type of fundamental understanding of nanoscale materials or behavior, and that it makes use of some type of device, structure, or system that has novel properties or functions that exist by virtue of the small size. Class 977 was created, in part, to facilitate analysis of the growing number of nanotechnology patents. By establishing this separate class, the USPTO hopes to make it easier for patent examiners and others to search prior art in the field of nanotechnology, as part of the patent application preparation and review process. As of May 2005, 726 issued patents were included in Class 977. It is likely that Class 977 will be subdivided into subclasses in the near future. The interest in patents for nanotechnology continues to increase. In part, this interest is driven by the fact that much prior research has matured to the point where patents are viable options. In another part, the interest has been sparked by growing financial investment in nanotechnology. That expanding financial commitment often caries with it, as a requirement for receipt of the funding, patenting of the underlying intellectual property. Patent examiners in other parts of the world are also encountering growing interest in nanotechnology. In response to the increasing demand for patents in the field of nanotechnology, these other patent offices have also established distinct categories for inventions in the field of nanotechnology. The European Patent Office makes use of B82 nanotechnology classification. The Japanese Patent Office handles nanotechnology in its microstructural technology, nanotechnology classification. The World Intellectual Property Organization uses its IPC Class B82B classification for nanotechnology.

Nanotechnology and the Challenge of Patentability Work in the field of nanotechnology carries some interesting patentability challenges. The most basic is the issue of whether much work in the field is eligible for patent protection. The question is whether the act of making a material, device, or process very small, or nanoscale, satisfies the patent requirements of novelty, utility and nonobviousness. In order to obtain patent rights for a nanoscale invention, the inventor must demonstrate that the invention meets the patentability requirements. The mere fact


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that the invention is smaller than any that came before is not sufficient to support a grant of patent rights. To the extent that a nanoscale invention performs a novel function, patentability is not likely to pose a major problem. If, however, the nanoscale invention performs a function already performed in other ways, the creator of the nanoscale invention must show the invention represents an improvement over the prior art and does not involve modifications over prior art that are obvious to those adept in the relevant field. This can pose a challenge for many nanoscale inventions. Often the nanoscale work accomplishes functions already performed using other methods. It is essential, under such circumstances, for the applicant to demonstrate why the nanoscale invention offers an improvement over the prior art. In the United States, the USPTO has already concluded, in several cases including In re Rose and In re Rinehart, that the process of simply changing the size scale of a device or process already covered in the prior art does not, alone, satisfy patentability requirements. That point was also accepted by the U.S. federal courts in the case, Gardner v. TEC Systems. The European Patent Office has taken a similar position.

Invalidity: Will Nanotech Patents Be Fully Enforceable? Obtaining a patent is only the first step in the process of patent management. Once a patent has been granted, the owner of the patent then faces the challenges of enforcing the patent. When a patent holder encounters conduct it believes to be infringing on the patent, the resulting litigation often includes allegations by the alleged infringer that the patent should be deemed to be invalid. If the court hearing the infringement case agrees, the patent can be declared to be invalid and unenforceable. Thus the owner of a patent may find that, not only is it unable to enforce the patent against the alleged infringer, but also that it no longer has a valid patent to enforce against any other party. Formal litigation to challenge the validity of a patent can also be initiated by any other party, even absent an action by the patent holder to enforce its patent. There are some highly visible examples of situations in which a highly active patent field (i.e., one in which many patents were granted very quickly) leads a few years later to active patent litigation and

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numerous findings of patent invalidity. One example is provided by the field of electronic commerce patents in the United States. The USPTO issued a significant number of patents in response to an upsurge in applications, yet when those patents were enforced, a noticeable number of them were declared to be invalid. Some observers attribute the findings of invalidity for many e-commerce patents to the strain that the large volume of e-commerce patent applications place on the USPTO staff. The observers suggest that the strain on USPTO resources resulted in issuance of many patents that should not have been granted. The observers contend that it is those patents that are now being invalidated. Nanotechnology may provide another field in which patent enforceability may prove to be difficult in the future. Like the e-commerce setting, nanotechnology provides a field that is currently booming in terms of patent applications and patents granted. In such an environment, it is common for a significant number of patents that should not be issued to slip through the review process and become effective. This sets the stage for future enforcement difficulties for the holders of those patents. Some might suggest that the prospects of issuance of a significant number of patents that may not withstand validity challenges are even greater in the nanotechnology commerce than they were in the e-commerce setting as nanotechnology patents, because of their multidisciplinary scope, may place significantly greater demands on patent examiners than did the e-commerce patent applications. The risk of future enforceability problems is made greater by the fact that, as discussed above, there are questions regarding patentability for some nanotechnology applications. In fields where patent activity has been exceptionally active, such as patents associated with nanotubes, there is particularly great concern about future enforceability. Another basis for concern regarding future enforceability is the relatively large number of different patent examiners who have served as primary examiners on different nanotechnology patents at the USPTO. As of 2005, approximately 290 different patent examiners have served as primary patent examiner on a Class 977 nanotechnology patent. That large number of different examiners raises questions regarding possible problems of patent conflicts. Those conflicts set the stage for potential future problems in enforcement. Those questions may come back to haunt patent holders years after the patents have been granted. Patents for inventions granted in the deluge of


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nanotechnology patenting in spite of problems meeting novelty or nonobviousness criteria might prove to be unenforceable in later litigation. Another issue associated with future patent enforceability is the expense associated with maintaining and enforcing patents. After a patent has been granted, the patent holder must incur significant costs to maintain the patent. These costs include periodic filing fees associated with maintenance of the patent. Those maintenance costs can increase substantially when patents have been obtained in several different countries, a common requirement in today’s world, given the global nature of commercial technology development, distribution, and use. It is common today for the costs of obtaining and maintaining a patent for its full term in the major nations of the world to be in the neighborhood of several hundred thousand dollars. In addition, costs associated with legal action to enforce patent rights against an alleged infringer are substantial. There are a growing number of situations in which, although a party possesses an effective patent, the patent holder does not have access to the significant resources necessary to pay the costs associated with litigation to enforce those patent rights. If a party is not likely to have the resources necessary to maintain or to enforce its patents, the actual value of those patents is significantly reduced.

Trade Secrets: Overlooked Opportunities for the Nanotechnology Industry Trade secrets are frequently overlooked by businesses when they consider the options available to them for management of their intellectual property assets. This neglect is caused, in part, by the strong preference many funders (e.g., venture capitalists, lenders) have for patents over other forms of intellectual property protection, such as trade secrets. It is a mistake to ignore trade secrets. Trade secrets carry some important advantages when compared to patents. One significant advantage of trade secrets over patents is their potentially infinite term. Patents ultimately expire. Trade secrets need never be disclosed. Note, for example, the classic example of the recipe for Coca-Cola, which is perhaps the most famous example of a long-standing secret. A trade secret has no set term of effectiveness. As long as the secret

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is kept confidential, and as long as the substance of the secret continues to provide a competitive advantage, the trade secret has legal protection. Another important advantage presented by trade secrets is the ease with which the legal rights are established. As noted previously, patent rights exist only after being granted by a government. Trade secret rights are established simply through the creation and protection of the secret. There is no application process, and no approval from a governmental authority is required. While the process of applying for and obtaining patent protection is often prohibitively expensive, a trade secrets strategy can be far more economical. The cost disparity is particularly significant when, as is often the case with nanotechnology, patent protection must be obtained in several different countries. That cost differential is exacerbated when we consider that it can take several years to obtain a patent. The cost, in both time and money, associated with obtaining patents is substantial. It is also worth noting that the true value of patent protection is often overestimated. Proponents of patents often focus on the scope of the enforceable rights available to patent owners. Although those rights are substantial, there is the problem of the actual cost of enforcement. It can cost hundreds of thousands of dollars to undertake patent infringement litigation, particularly when that litigation is complex and takes place in multiple jurisdictions. When assessing the potential economic value of patents, a party should include both the likely cost of obtaining and enforcing those rights in the calculation. In addition, there is the potential challenge of defending the validity of the patent. Just because an inventor has obtained a patent, there is no assurance that the patent will be enforceable. Before or after the holder of a patent enters into litigation to enforce its patent, other parties can go to court to challenge the validity of the patent, asking the court to conclude that the patent office made a mistake and requesting that the patent be ruled invalid. A party considering pursuit of patent protection must thus assess the potential cost of defending the validity of its patent, and should include that assessment in its consideration of whether the patent option is most appropriate. There are, however, some potential disadvantages associated with trade secrets. For example, they do not provide legal protection against independent discovery. If a party independently discovers your secret, without any breach of the protections you have developed, the original


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developer of the secret has no legal recourse. While patent law provides protection even against an innocent independent discoverer, the law of trade secrets does not. Thus trade secrets law does not protect an inventor from the independent innovation of other parties. Another challenge associated with trade secrets is effective preservation of their secrecy. By definition, if you opt to protect some information asset as a trade secret, you must invest the resources necessary to secure that secret. A trade secret is only as effective as your ability to safeguard its confidentiality. This involves both physical security for the trade secret (e.g., locked rooms, guards) and legal measures (e.g., use of confidentiality or nondisclosure agreements for those who are granted access to the material). Another potential disadvantage is that if one is ever actually required to litigate to enforce trade secrets rights, the secrets might be disclosed during the court proceedings associated with the enforcement action. In order to present an effective case in litigation associated with theft or misuse of a trade secret, it is often necessary to disclose the secret to the court. Although it is possible in many jurisdictions to have that disclosed material protected from full public disclosure (e.g., disclosure to the court “under seal”), it nevertheless involves disclosure of the material to additional people (e.g., judge, court staff, lawyers) and that increases the chance that the material might ultimately be disclosed, either maliciously or inadvertently. In addition, there are some countries in which there is no possibility of disclosure to the court under seal; thus a decision to litigate in those jurisdictions is equivalent to a decision to disclose the material. Different nations treat trade secrets in very different ways. As noted previously, countries around the world are now engaged in serious efforts to make their patent law more uniform and to apply that law more consistently. The law of trade secrets now contains much more variety from country to country than does patent law. This greater disparity, from nation to nation, can pose a problem for enterprises operating in many different parts of the world. Less uniform legal protection for trade secrets from region to region can be seen to be a notable disadvantage for trade secrets when they are compared to patents. Finally, under some circumstances, investors may insist upon patent protection as a condition for their investment. As noted previously, investors and creditors often view patents as assets that can be more readily

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managed and liquidated than other forms of intellectual property. Accordingly, those financial supporters frequently insist on patent protection instead of trade secrets. Under such circumstance, it may be difficult for an enterprise to rely on trade secrets. Effective protective measures are required for trade secrets. Those measures include physical security for the secrets. For example, access to the secrets should be limited. They should be stored in physically secure repositories (e.g., locked file cabinets, encrypted computer files). The physical security measures should be commensurate with the value of the secrets. Failure to secure trade secrets effectively can result in the actual loss of the secrets and can undermine subsequent legal actions taken to recover compensation for that loss. Another important component of trade secrets protection is the use of nondisclosure or confidentiality agreements. These documents are contracts that establish specific limits on access and use of trade secrets and other proprietary material. They define penalties associated with misuse of the secrets. Effective trade secrets management requires use of these legally binding agreements with all parties who may have access to the secrets. Such parties commonly include employees, contractors, investors (and potential investors), suppliers, business partners, and customers. It is a generally helpful strategy to include nondisclosure or confidentiality provisions in all commercial contracts, as a matter of course. The optimal approach is a combination strategy, using both patents and trade secrets. For all potential intellectual property assets, it is worthwhile to consider both patents and trade secrets as management options. For critical technologies that are likely to be discovered independently by others, patents may make the most sense. For technologies in fields that change rapidly, or those that represent dramatic innovations far beyond current state of the art, trade secrets may provide a more effective tool. It is generally wise to treat all innovations as trade secrets, as the steps taken to perfect a trade secret will also preserve the future option of pursuing patent protection. By treating the innovation as confidential, proprietary material, the risk of public disclosures that could undermine future patenting efforts is substantially reduced. The default approach to research and technology development should be an assumption that the work is to be treated as a trade secret, and secured accordingly. From that foundation it will be possible either to continue a trade secrets strategy


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indefinitely, or to move forward with a patent application at some point in the future. Effective use of trade secrets helps to protect intellectual property rights while also preserving maximum flexibility for future intellectual property decisions.

Alternative Legal Theories Applied to Intangible Assets Law also provides theories under which intangible assets can be managed outside of the realm of traditional intellectual property rights. For example commercial law, including the law of contracts and fair competition, can be applied effectively to manage intangible assets. In addition, some jurisdictions have developed rules that specifically protect certain intangible assets that are beyond the reach of traditional intellectual property law. The European directive providing rights to developers of databases and other forms of data collections or aggregations is one important example. It is a mistake to focus exclusively on intellectual property law for protection of important intangible assets. Several other forms of law can provide effective supplements to traditional intellectual property rights. Creators of nanotechnology should be aware of these alternative legal theories, and should be open to use of these approaches to assist them as they manage access and use of their work. Many jurisdictions provide some form of protection for businesses against unfair competition or violation of contractual commitments. These laws can be used to help protect important intangible assets. For example, if clear and effective contacts are widely used to govern relationships with customers, suppliers, business partners, employees, and investors, those contracts can be helpful in protecting important nanotechnology. Those contracts should include specific statements regarding protection and use of intellectual property, proprietary or confidential information, and other commercially sensitive material. Some jurisdictions also provide more specific forms of protection for intangible assets that may be outside of the scope of traditional intellectual property law. The European Community has enacted law that enables parties who create databases and other data aggregations to require compensation for access to, and use of, the content of those data collections by others. The legal theory behind this right is not intellectual

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property law, but is instead a notion of fair competition. It is based on the concept that parties who invest significant resources into the creation and maintenance of data sets should have a legally enforceable right to seek compensation for substantial use of those collections. Participants in nanotechnology fields can make effective use of these nonintellectual-property legal theories to assist in the management of their important intangible assets. For example, incorporation of provisions restricting use of intellectual property and proprietary material into all commercial contracts, along with clear and effective terms defining enforcement and penalties associated with those provisions, are important steps. Nanotechnology enterprises operating in Europe can try to avail themselves of the protections established by the privacy directive with respect to their data collections by structuring those collections, and their associated access and use terms, in compliance with the directive’s terms.

Using Multiple Intellectual Property Forms for Maximum Flexibility As noted above, it is often most effective to use a combination of patents and trade secrets to manage an organization’s intellectual asset portfolio. It should also be noted that all of the other forms of intellectual property rights can, and should, be used in conjunction with patents and trade secrets. Reliance on the full range of applicable forms of intellectual property rights can provide maximum scope and flexibility for creators of new technology, particularly nanotechnology. One reason to apply multiple forms of intellectual property rights is to ensure that a wider range of the intellectual asset portfolio is protected under some form of legal control. Some forms of intellectual assets that have significant commercial value may not be eligible for certain forms of intellectual property rights, and should, therefore, be protected under available intellectual property forms. For example, collections of information may not qualify for copyright protection, but could be guarded as trade secrets. Effective use of contracts and other forms of commercial law to secure information and other valuable intangible assets can provide an enforceable mechanism to control access to, and use of, that material,


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even when the material does not technically qualify as a traditional form of intellectual property. Under other circumstances, a particular intangible asset might be eligible for protection under more than one form of intellectual property law. For example, a manufacturing process could be treated as either a trade secret or protected under patent. The owner of that asset could elect to treat the process, initially, as a trade secret, leaving open the option of a future application for a patent. This type of approach can help the developers of intangible assets to manage those assets with maximum flexibility, supporting effective response to rapidly changing technological and commercial environments. It is also possible to coordinate different forms of intellectual property rights to provide the maximum protection over assets for an extended period of time. For example, if a company has developed an innovative material, it could use a coordinated combination of trade secrets, trademarks, and patents to provide a significant level of commercial advantage for a long period of time. The formula for the material might initially be treated as a trade secret, and the company might simultaneously establish trademark rights associated with the name of the material. Eventually, the company could obtain patent protection, in anticipation that competitors might eventually independently discover the formula for the material. If the material is widely promoted and becomes highly popular with consumers, the value of the trademark associated with the material would increase dramatically. After the patent expires, competitors would have some difficulty offering competitive products, even though they would be free to duplicate the material, as trademark law would prevent them from infringing on the brand associated with the original version of the material. Consider for example a nanotechnology brand such as Nano-Tex. By using patent protection for its underlying technology, the company achieves partial proprietary control over its product. By establishing and enforcing trademark protection associated with its name, and its product names, the company can extend that proprietary control. Patent, or trade secrets, protection combined with trademark and other forms of intellectual property protection can enhance market competitiveness. When Nano-Tex builds trademark protection for its innovative brands, that protection helps to protect the competitive position of its products, even

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if others may eventually make use of similar underlying technology (at the end of the patent term, for instance), or if other parties offer competitive products using noninfringing technologies (e.g., in the case of Nano-Tex, products made stain-resistant through use of technology other than nanotechnology, such as Teflon). Use of multiple intellectual property forms also offers strategic options for developers of nanotechnology. For example, Nano-Tex might choose to make use of trade secrets protection instead of pursuing patents for some of its technologies. This approach is particularly useful when the technology is highly innovative, representing a major advance over current art. This coordinated use of trade secrets, trademarks, and patents offers an example of how planned use of multiple forms of intellectual property rights can extend the scope and period of protection for an intangible asset. It is an approach that has been used, in whole or in part, with a wide range of widely recognized products, including: Gore-Tex, Teflon, and Kevlar. Imagine a new material, Nanoflex, which has many useful properties and applications. Protected initially as a trade secret, then eventually patented and marketed under an effectively enforced trademark, Nanoflex could be an important commercial asset for many years, and even after law permits other companies to create their own versions of the material, the trademark would be enforceable, making it necessary for those competitors to build a separate brand identity for their products. Building such a brand identity would require a substantial investment of resources applied to educating consumers and promoting the new version of the material. Under these circumstances, careful orchestration of multiple legal mechanisms for protecting intangible assets would enable the original developer of the technology to create a competitive advantage, and to preserve that advantage for a period of time that extends well beyond the actual term of the original intellectual property law protection.

Intellectual Property Rights and the Future of Nanotechnology Intellectual property rights will play a critical role in the development of nanotechnology. That influence will likely be exerted in at least two ways. The first is the impact of assertion of intellectual property rights on the direction, scope, and pace of continuing nanotechnology research. The


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second impact is the role intellectual property rights will play in the integration of nanotechnology advances into commercial applications. Research in all fields relies on access to information. Impediments to that exchange of information can slow or block research advances. Research associated with nanoscience and nanotechnology is no different than work in other disciplines with regard to the continuing need for access to technical information. Aggressive assertion of intellectual property rights can restrict that access and thus limit important research. Conflicts over access to important information will arise among researchers and between researchers and commercial companies. Some observers have significant concern that the active pace of patenting at this relatively early stage of nanotechnology development will lead to major legal conflicts that can impede development of nanotechnology applications. Existence of many different patents can make it more difficult for individuals and organizations to build on the prior work of others. Patents can encourage developers to “work around” the patents controlled by other parties, leading to inefficient application of resources as additional time and money are applied to development of noninfringing technology. It is likely that there will be significant legal battles over nanotechnology patents in the future. The key question is what impact those conflicts are likely to have on nanotechnology development. Will these patents form barriers that impede research and delay development of commercial applications? Nanotechnology is not the first new technology to serve as a battleground for major patent conflicts. The telecommunications industry and the information technology industry provide two useful examples of fields in which major patent conflicts arose in the context of rapidly emerging and evolving technologies. We can expect similar conflicts for nanotechnology and virtually all emerging technologies that will develop in the future. Consider, for example, ongoing patent controversies associated with software and business methods that drive electronic commerce applications. E-commerce technologies provide examples of technologies that were actively protected by patents and other forms of intellectual property rights. In the early stages of e-commerce development, active pursuit of patent protection and rapid changes in the technology placed great

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burdens on the USPTO. With time, the USPTO developed a more effective framework for evaluating the e-commerce applications, and the agency directed more resources to that field. As time progressed, efforts were made to enforce some of the first e-commerce patents, and, when the courts became involved, many of those patents were invalidated. There is a natural evolution in the development and enforcement of patents for new technology. There may also be reason to be concerned that the patent enforcement process, in the early stages of a new technology class such as nanotechnology, might lead to undesirable international policy consequences, even if those results are likely to be only temporary. In large measure, the parties who control the first generation of patents in a new technology influence the rate and direction of the development of applications for that technology. Some parties, such as the ETC Group, are concerned that if this process develops with respect to nanotechnology, the countries of the developing world will not reap the benefits that arise as nanotechnology applications emerge. This concern is based on a view that control over intellectual property by interests in the developed world can delay or skew the direction of applications of those intangible assets in the developing world.

Patent Busters, Generics, Technical Standards, Open Source, and Outsourcing: Potential Complications for Managing Nanotechnology The world of intellectual property rights and emerging technologies appears to be more complex today than it was in the past. An increasing number of businesses, governments, individuals, and advocacy groups now view intellectual property as intangible assets that possess substantial commercial, political, and social value. The process of deriving economic benefit from development and use of intellectual property now receives greater attention than it received in the past. In addition, the political and social implications of distribution of intellectual property also receive more attention than they did before. This environment results in participation in intellectual property debates by a wider range of players with a wider range of motivations. Some of these players, as in the past, are interested in


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intellectual property for its economic potential. However, others have far different motivation. Some governments have an interest in intellectual property based on a blend of economic development and political control motivations. Some advocacy groups view intellectual property as the key to entrepreneurship, social justice, or cultural empowerment. These widely varying motives make intellectual property management a more complicated process today than it was in the past. Nanotechnology developers must face this complex environment effectively. We now commonly see the validity of patents challenged for both commercial and philosophical or political reasons. Some characterize this process as patent “busting.” It consists of legal challenges to the validity of issued patents. Such challenges have long been common for commercial reasons. For example, providers of competitive products often engage in patent litigation to contest their patents in order to gain commercial competitive advantage. Clearly, such disputes will be common in the world of nanotechnology, as well. A modern twist on patent busting, however, involves legal action to contest the validity of patents, not for commercial advantage, but instead to advance a philosophical or political belief. This type of patent busting has been practiced in many fields, including computer software and pharmaceutical products. It is reasonable to expect similar efforts directed toward nanotech patents, as well. Another aspect of patent busting consists of expansion of relevant prior art. As noted previously, grant of a patent requires successful demonstration that the invention is novel and nonobvious. The more material present in the prior art, the more difficulty faced by future patent applicants as they try to show novelty. Information technology industries have seen a rise in efforts by various parties to impede future patenting (in software, for example) by donating code to the public domain. Public publication of the technology and principles in a field can bust patents before they are granted. Those publications also set the stage to support a future finding of patent invalidity if patents are issued. Patent busting thus involves both legal challenges to issued patents, and pre-emptive efforts to expand the prior art in ways that will reduce the number of patents granted in a field, and will set the stage for successful patent validity challenges. These efforts are currently underway in

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the world of information technology and are actively discussed in other fields, such as pharmaceutical products. We should expect to see the process put into effect with respect to all future technologies, including nanotechnology. Also note that patent rights, once obtained, can still be negated by government action. For example, if a patent holder wields its patent rights in a discriminatory manner that has an adverse impact on the public interest, governments have the authority to invalidate or suspend the patent. This action has been taken when the patent covers material that is important for national security. This approach has also been applied when suspension of the patent is deemed by government to be necessary to protect public health or safety. Some developing countries, for instance, have suspended patent rights for certain pharmaceutical products to ensure that life-saving products are available to the people at reasonable cost. Even when a patent is not challenged and is not invalidated, its term will eventually end, and the rights it grants will terminate. All patented creations eventually move “off” patent at the end of the patent life. This process has a substantial impact on the economics and competitive climate of industries that rely on patents, such as the pharmaceutical industry. In the pharmaceutical industry, once drugs move off patent, they are part of the public domain, and we traditionally see the development of generic versions of the drugs, which are manufactured and sold by multiple companies (generally companies other than the one that held the original patent). Generic versions of drugs are less expensive than the original patented version. The nanotechnology industry is also likely to be highly patent intensive. In that setting, it is reasonable to assume that it will develop a two-tier, patent/off-patent structure, which is not so very different from the one that evolved in the pharmaceutical industry. Developers of patented nanotechnology should, accordingly, learn from the drug industry model. They should expect the rise of a generic nanotechnology industry that will rely on technology that has moved off patent. This model also suggests that there will likely be sustainable business models open to those enterprises that can operate effectively within the constraints associated with generic product production. Another potential intellectual property rights challenge likely to emerge in the field of nanotechnology is the relationship between private


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proprietary intellectual property rights and industry technical standards. There is often a conflict when technologies that are in a position to become industry standards, from a technical or operational perspective, are also the intellectual property of a private party. Developers of innovative technology have strong economic incentives to try to have their proprietary technology incorporated into technical standards embraced by their industry. However, this situation is not always consistent with the best interests of the industry, consumers, or the society. Many different technical standards-setting initiatives are currently underway in the nanotechnology world. For example, the American National Standards Institute (ANSI) has established a Nanotechnology Standards Panel (NSP) to provide a forum for the development of technical standards associated with materials properties, testing/characterization procedures, and nomenclature/terminology. The IEEE has established its Nanotechnology Council (NTC) to facilitate the development of standards that will assist the movement of nanoelectronics designs and products into the commercial marketplace. The International Organization for Standardization (ISO) has created its Technical Committee 229 (ISO/TC 229) to produce standards, terminology/nomenclature, and certification/metrology/calibration appropriate for nanotechnology production. The Chinese government has also entered the field of nanotechnology standards development. The government tasked the Chinese Academy of Sciences and the National Centre for Nanoscience and Nanotechnology to lead the new National Nanotechnology Standardization Committee. The Committee will develop nanotechnology standards for China, and will attempt to influence the development of international nanotechnology standards. As these standards-setting efforts advance, there will be increasing pressure to integrate proprietary technology into some of those standards. The lure of such an effort can be overwhelming to a company that owns a dominant technology. Yet the owner of the intellectual property should be cautious. Discriminatory use of the intellectual property or action aimed at impeding competition should be avoided, as those practices are unlawful. In addition, owners of dominant technologies should be sure to disclose the existence of their proprietary intellectual property interest when working in standards-setting arenas. Failure to make such disclosures can be illegal if deemed to be a form of unfair competition.

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Efforts to have proprietary intellectual property accepted as an industry standard are not illegal. Care must be exercised, however, during such an effort to disclose fully that the technology in question is proprietary and to act in a manner consistent with fair competition. If the technology is made available in a nondiscriminatory manner, and the standard is established based on rational assessments of operational requirements rather than efforts to create a competitive advantage or disadvantage for specific industry participants, then integration of proprietary technology into an industry technical standard can be fully consistent with law. The primary problem is that temptations to act in anticompetitive ways during the standards-development process are great. The companies best positioned to have their technologies adopted as de facto technology standards and to influence the activities of standards-setting organizations are the first movers, the companies that are the first to develop effective and relatively low-cost products and processes. Note, however, that being the first mover, alone, does not ensure success at establishing standards. It is important to be the first mover with a product that can serve as a foundation or platform for multiple applications and other products. For example, a company that can become dominant in the marketplace for mass manufacture of high-quality carbon nanotubes by building the tools and processes that drive that process economically, conveniently, inexpensively, and safely, would be a company in a good position to drive industry standards for a key component of the nanotechnology marketplace. Another example of potential nanotechnology, standards shaping, is presented by the nanoelectronics industry. A company, or companies, that develops effective and inexpensive equipment and processes to support the design and manufacture of nanoscale electronic circuits and to support the integration of those nanoscale products into microprocessor and other electronics equipment can be well positioned to move toward creating and influencing industry standards. It is also worth noting that standards include more than just operational performance and product design. For example, industry standards can also include less obvious product and process attributes such as environmental impact. For those portions of the nanotechnology marketplace that are beginning to encounter environmental impact questions (e.g., products and processes involving nanotubes), there may be opportunities


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for participants in those markets to shape industry standards regarding environmental release of nanomaterials. For example, an organization that develops a carbon nanotube manufacturing process that meets the commercial requirements of high-quality and reasonable-cost output, but also minimizes and effectively manages nanomaterial release, could have an advantage in positioning its products and processes for acceptance as an industry standard. Government actions can also influence industry standards. For example, in the field of nanotechnology, governments are involved in funding research and in purchasing nano-based products. Defense ministries around the world, for example, are active in the growing nanotechnology marketplace. Often, government action as research funder and as product purchaser moves industries toward greater levels of interoperability and more open standards. This trend seems to be present in the nanotechnology marketplace, as well. Government authorities in many jurisdictions are increasingly supportive of open standards that promote interoperability among products and technologies provided by diverse companies. This open-systems approach has been made popular in the information technology context and is likely to be applied with regard to other technologies, including nanotechnology, as well. A growing number of regulatory authorities police industry technical standards, initially through an assessment of whether or not the standards are applied equally to all industry participants. The principle behind this approach is that open standards provide the best opportunity to foster innovation and competition. As the nanotechnology industry moves ahead with its efforts to develop technical standards in various contexts, the common goal for all such efforts should be the development of standards that are accessible to all players in the industry. The computer software marketplace pushed the concept of “open source” intellectual property into the consciousness of information technology consumers and businesses. In essence, the open source movement involves a specific intellectual licensing strategy. In an open source world, licensees are granted greater access to intellectual property than licensees traditionally receive. Open source licensees are given access to the computer source code and are permitted to make modifications to that code. In exchange for this broader permission, the licensees agree to

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acknowledge the rights of the original developer and to make the modified source code available to others on an open source basis. The open source–licensing model has had a substantial impact on the information technology industry. An open source strategy can be applied outside of the world of information technology. It can be applied to nanotechnology. The open source influence on nanotechnology can occur at several levels. The most obvious involves the use of open source computer software for nanotechnology applications. This form of open source involvement in nanotechnology is certain to occur. Another form of open source influence can involve development of nanotechnology platforms, made available for modification and refinement by users. The open source model involves licensing of intellectual property with a broader grant of rights to the licensee, enabling the licensee to create derivative works. It is possible that such a model can contribute to nanotechnology development. One of the most interesting implications of the open source strategy is that it can have a profound impact on industry participants who do not choose to adopt the strategy. In the computer software industry, for example, the dramatic rise in popularity of open source software (Linux, for example) has had a substantial impact on industry participants who declined to offer their products under an open source license (Microsoft, for instances). Open source licensing is a disruptive force, even if the majority of product providers do not choose to use it. If applied in the nanotechnology industry, one can expect similar market disruption affecting even those participants who elect not to make direct use of the model. The open source experience in the software world also offers some insights regarding the ability of governments to influence intellectual property development through government’s role as a user of technology. As noted above, some national governments (Brazil, South Korea, for example) publicly and actively promote open source use. One of the first steps in such promotional efforts often consists of a decision by the government to mandate that government will only use open source products. Another approach is a requirement that all government funded projects will generate open source products (even when those projects involve participation and funding by private companies). The nanotechnology community should take note of these experiences. Expect similar government efforts with a range of future technologies, including nanotechnology.


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Governments can, and will, influence decisions regarding ownership and use of intangible assets through their role as large consumers and important investors for those assets. Another important trend in a variety of industries is the popularity of outsourcing important business functions. Virtually all business activities can be transferred out of a company, to be performed by another enterprise. This process of outsourcing business functions now affects virtually every industry and every business activity, including research, product testing and development, and regulatory compliance. As important business functions are moved outside of the company, important legal and regulatory issues associated with intellectual property are raised. One critical intellectual property issue raised by outsourcing involves ownership and rights of use of intellectual property and proprietary intangible assets. The outsourcing party will want to make sure that its intellectual property rights are not compromised by the relationship with the provider of the outsourced services. The provider of the outsourced services will want to understand what rights it has with regard to future use, for other clients, of expertise developed in service of the current client. The rights and obligations of each party with respect to intellectual property and other proprietary technical information should be clearly established before the arrangement is made final. Those terms should also be clearly expressed in written contracts memorializing the outsourcing relationship. These terms should also define reasonable and effective enforcement processes to be applied in the event of disputes. Those processes should indicate which courts or arbitrators will be used, and which jurisdiction’s laws will be applied. The challenge of managing intangible assets effectively during the process of outsourcing becomes greater when the outsourcing effort involves offshore organizations, those located outside of the home country of the company retaining the outsourcing services. International outsourcing that involves sharing or transfer of intellectual property and proprietary intangible assets requires compliance with, and reliance on, intellectual property law in both the home country and that of the outsource service provider. These international outsourcing relationships involving intellectual property also raise legal issues involving compliance with regulations applied to the international movement of technology and information.

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Before entering into an outsourcing arrangement, the parties must understand the legal rights and obligations imposed by both nations regarding intellectual property ownership and use, as well as the rules governing international movement of technology. The trend toward outsourcing has become an active and important aspect of many industries based on technology and science. There is reason to believe that outsourcing will also play an important role in the development of nanotechnology. As active players in the outsourcing marketplace, nanotechnology enterprises should become acutely aware of the intellectual property rights challenges associated with outsourcing. The outsourcing relationships they develop should be carefully researched, clearly defined, and memorialized through formal legal agreements.

Nanotech Intellectual Property Rights: A Path Forward Patent and other intellectual property rights have a dual function: providing incentives for continuing invention and facilitating prompt productive use of new inventions. When applied to a new, dynamic, and promising field such as nanotechnology, it is important to remember that both of those objectives must be pursued. Overemphasis on only one of those policy objectives can have significant adverse consequences for continuing research and for development of commercial applications for the fruits of that research. A valuable tool to balance intellectual property rights with continuing growth of nanotechnology applications is the process of licensing. At its heart, intellectual property licenses are legally binding agreements in which the owner of a piece of intellectual property promises not to enforce its intellectual property rights in exchange for some type of valuable compensation and provided that the licensee abides by the limits place on the use of the intellectual property by the owner of that property. Licenses are, in effect, the vehicles through which the rights of developers are balanced with the important needs of users of intangible assets. Even in a world where many parties establish and assert patent and other intellectual property rights aggressively, gridlock can be avoided if licenses containing reasonable terms are liberally granted. Thus, for example, the fact that many parties choose to obtain patents does not


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necessarily mean that the existence of those rates will inevitably impede continuing development of the underlying technology. If licenses are commonly and fairly granted, active assertion of intellectual property claims can be compatible with continued development and use of the new technology. Ideally, the owners of the intellectual property would be willing to enter into reasonable licenses of their own volition. In many instances, a liberal licensing strategy is, in fact, in the long-term best interest of the intellectual property owner. At times, the developer of one technology may have need for access to technology controlled by another party. This type of situation is ideal for use of a process known as “cross-licensing.” In a cross-license, each party grants a license to the other, and under some conditions, the terms of the licenses do not require payment, thus the parties simply exchange rights of use for their respective technologies. With cross-licenses, each owner essentially trades rights of use for its technology for similar rights granted by its counterpart. Cross-licenses can provide a highly efficient mechanism for protecting intellectual property rights while simultaneously facilitating continued development. Cross-licenses are very useful in complex patent environments, and can thus provide a productive method to deal with the growing clutter in the nanotechnology patent field. Cross-licensing is already in use in the nanotechnology marketplace, and there are signs that it will be a very important aspect of future research and commercialization. Under some circumstances, collective action by the owners of intellectual property can provide for more efficient development and use of the underlying technology. For example, “patent pools” have long been used by developers of technologies that complement each other. Patent pools involve, in effect, cross-licenses. Multiple parties contribute their patented technology to the pool of technology that is to be licensed. Each party that contributed technology to the pool is entitled to a license permitting use of all the technology in the pool. In some cases, all or part of the pooled technology may be used by the participants in the pool for additional research or development of new technologies. It is not uncommon for the arrangements associated with the pool to include future licenses for all the pool participants, granting rights of use as to the new technology developed from the contributed technology in the pool.

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A liberal licensing strategy also makes sense in an environment in which the enforceability of the underlying patents is in question. That uncertainty may result simply from a potential lack of resources adequate to sustain the expensive litigation necessary to enforce patent rights. Uncertainty could also result from questions regarding the validity of the patents. It appears that both forms of uncertainty exist for many of the participants in the nanotechnology field. Accordingly, willingness to entertain the notion of a more liberal intellectual property licensing framework seems to be a sensible approach for many of the players involved in nanotechnology. Even if an intellectual property owner chooses to act unreasonably with regard to licensing, intellectual property gridlock can be avoided through government action. For example, government authorities can enforce antitrust or competition laws to require the owner of the property to license it, subject to reasonable terms. Government can also exercise its role as a significant investor in research and as a major consumer of the technology that develops from that research to influence the conduct of the research community and private companies. Government can also encourage more productive cooperation over access to nanotechnology by facilitating collective action by nanotechnology industry participants. This might, for example, involve government willingness to enforce antitrust and competition laws in ways that facilitate patent pooling and active cross-licensing of nanotechnology. The most critical components, from a public policy perspective, associated with rights of ownership and use for nanotechnology are access and compatibility. Government policies should strive to make sure that different nanoscale technologies are compatible with each other and are widely available. The potential scope of nanotechnology and its applications is tremendously broad. Access to that technology, subject to reasonable terms and conditions, is essential if the full benefits of nanotechnology are to be achieved. In addition, once access is ensured, it is also of critical importance that nanotechnology standards, designs, and processes developed and controlled by different parties are compatible with each other to promote interoperability. Goals of open access and interoperability for nanotechnology developed and used by diverse parties are not inconsistent with principles of intellectual property rights. Open access does not equate to free access.


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Instead, it means nondiscriminatory access. All similarly situated parties interested in obtaining access to the technology should be offered the opportunity to access the technology subject to the same reasonable rates and conditions. A framework based upon this type of open access to nanotechnology presents the opportunity for profit while avoiding harm to competition and market development. Through facilitation of the development of an open-access approach to nanotechnology, we reduce the risk of the creation of bottleneck technologies, those technologies essential to many different users but controlled by a single technology provider. Although the nanotechnology marketplace has not yet reached a level of maturity where standards have yet developed, as that marketplace matures, interoperability will become an important issue. As a result of the industry’s youth, there is still an opportunity for the nanotechnology industry to avoid some of the problems encountered by other industries (e.g., the information technology industry) when issues of open access and interoperability were not seriously examined during the rapid growth phases of those industries. Interoperability in the context of nanotechnology involves acceptance of common standards for the technology by the developers and users of the technology. It involves avoiding the development of separate “islands” of nanotechnology, each operating under different technical and process standards. Interoperability ensures that consumers will have greater choice in their selection of products and services. Interoperability also facilitates more efficient markets for the various products and services associated with the technology. It is also important to consider the complex relationship between proprietary intellectual property rights and technical standards. The development of industry-wide technical and operational standards is common phase in the commercialization of new technology. Standardization can enhance efficiency and competition, but it can also impede innovation and competition. Great attention, by both the private and public sector, should be devoted to the development of technical standards. That attention should be directed toward ensuring that the technical standards that emerge promote interoperability and access, and do not serve as a means to thwart technical advances or market competition. The most effective way forward in the confusing intellectual property rights environment developing around nanotechnology is a

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combined approach. One step in that approach is greater willingness by participants in the nanotechnology world to make greater use of trade secrets as a supplement to patent protection. A second step is application of more resources to assist the world’s patent offices to process patents applications in the field of nanotechnology more effectively and more efficiently. A third step is greater willingness on the part of nanotech intellectual property owners to license their property more liberally. Finally, there is need for government authorities to be willing to apply legal principles other than intellectual property law (e.g., antitrust and competition law) as necessary to create licensing opportunities that provide for reasonable enforcement of intellectual property rights, while also facilitating opportunities for access to, and use of, new technology for additional uses and applications. Participants in the nanotechnology industry should anticipate increasingly active use of the disruptive forces in intellectual property rights management discussed previously. Patent busting, generics, technical standards, and open source are a few of the leading examples of complex intellectual property challenges all technologies, including nanotechnology, will face in growing measure in the future. Nanotechnology industry participants should anticipate these trends and prepare to deal with them. The critical challenge in intellectual property rights management for the nanotechnology industry is not ownership of the underlying intellectual property, but is instead, effective derivation of sufficient economic value from that property.

Selected Bibliography Brahic, C., “China to Create Nanotechnology Standards,” June 23, 2005, at http://www.scidev.net. Case No. T 70/99, Technical Board of Appeal, European Patent Office, 1999. Choi, C. Q., “Nano World: The Rise of Nanotech Secrets,” Nov. 26, 2004, at http://www.upi.com. ETC Group, “Nanotech’s ‘Second Nature’ Patents: Implications for the Global South,” 2005, at http://www.etcgroup.org. Gardner v. TEC Systems, Inc., 725 F.2d 1338 (Fed. Cir. 1984). Gillard, R., “Patenting in the Field of Nanotechnology,” Oct. 2004, at http://www. elkfife.com/content/anmviewer.asp?a=9&z=2.


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IEEE, “Nanotechnology Standards Initiatives at the IEEE,” Feb. 18, 2005, at http://standards.ieee.org/announcements/bkgnd_nanostdsinit.html. “IEST Joins ISO Committee for Nanotechnology Standards,” July 12, 2005, at http:// nanotechwire.com/news.asp?/nid=2133. In re Rinehart, 531 F.2d 1048 (C.C.P.A. 1976). In re Rose, 220 F.2d 459 (C.C.P.A. 1955). Kaiser, I., “Nanotechnology Patents—Will Small-Scale Science Pose Big Challenges for Applicants and Patent Office?” Apr. 6, 2004, at http://www.imakenews.com. Kintisch, E., “A ‘Robin Hood’ Declares War on Lucrative U.S. Patents,” Science, Aug. 26, 2005, p. 1319. Lux Research, “Nanotechnology Patents and Players Suffering from Gold Rush Mentality,” Apr. 22, 2005, at http://www.tekrati.com. Marinova, D., and M. McAleer, “Nanotechnology Strength Indicators: International Rankings Based on U.S. Patents,” 2002, at http://www.e.u-tokyo.ac.jp/cirje/research/ papers/mcaleer/mcaleer2.pdf. Scheu, M., “Nanotechnology Patents at the EPO,” 2004. Sheng, E., “Nanotechnology Hits the Tennis Court,” Wall Street Journal, Aug. 25, 2005, p. D1. Swiatek, M. S., and R. F. Trecartin, “Nanotechnology Patents—Trends in the United States Patent Office,” May 9, 2005, at http://www.dorsey.com. Tullis, T. K., “Current Intellectual Property Issues in Nanotechnology,” UCLA Journal of Law and Technology, 2004, at http://www.lawtechjournal.com. USPTO, “Classification Definitions,” Aug. 2004, at http://www.uspto.gov/web/ patents/classification.

3 Guide to Regulatory Compliance This chapter provides an overview of the critical regulatory topics now facing the early generations of nanotechnology applications and products. The chapter also offers some suggestions for compliance strategies associated with those active regulatory areas. For the present and the foreseeable future, the following regulatory topics are the most significant. Environmental regulations have the potential to play a significant role in the development and use of nanotechnology and its applications. The key aspects of environmental regulation that nanotechnology calls into play are the issues of whether the nanotech-based material or product is a regulated substance and whether it is an environmentally hazardous substance. Environmental regulation also focuses on monitoring and control over environmental emissions. In addition to environmental regulations, the regulatory framework governing health and safety also has an enormous influence on nanotechnology development. There are several important aspects of the application of health and safety regulations to nanotechnology. One is the regulation of medical and food products for consumer safety. To the extent that nanotechnology is involved in the content or the manufacture of medicinal products, it will be covered by the existing medical and food safety regulation requirements. Another important component of health and safety regulation of nanotechnology is the safety regulation of consumer 75

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products. As nanotechnology extends more broadly into the content and manufacture of consumer products, the regulatory framework established to protect consumer product safety will apply. Finally, the safety regulation associated with workers and the workplace has a substantial potential impact on the use of nanotechnology. With nanotechnology used ever more widely in the workplace, those applications of the new technology fall within the scope of the existing worker-safety rules. Another important and interesting set of regulations affecting nanotechnology development and use are the rules associated with national security. Nanotechnology is a classic example of so-called dual-use technology. Dual-use technology is technology that has both civilian and military applications. As such, some forms of nanotechnology will fall within the scope of current controls on export, sharing, and use of controlled technologies. In addition, regulations applicable to the manufacture, distribution, and use of specific technologies that pose a potential security threat (weapons, for example), will also apply to certain forms of nanotechnology. Nanotechnology use has already matured to the point where the regulations we address in this chapter are currently being applied. There remain, however, critically important issues not yet resolved. For example, regulators do not yet know precisely how nanotechnology is currently affecting the environment and living organisms. The extent of current environmental release of nanomaterials is unknown. The long-term effects on the environment, and on humans, of nanotechnology use are unknown. Regulators, such as the Environmental Protection Agency in the United States, are only now beginning to investigate these issues, funding and encouraging relevant research and analysis, for example. Clearly, substantially more research and analysis are required before effective regulatory oversight can be provided. Yet, although regulators do not have all the information they require, nanotechnology use is already present in the products and activities those authorities oversee. This chapter provides an overview of how environmental, health and safety, and national security regulations apply to the emerging early generations of nanotechnology applications and products. The chapter also discusses compliance strategies for those regulations. It discusses the ways in which emerging nanotechnology will fall within the scope of existing regulations. The chapter also examines situations in which


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nanotechnology may lead to modifications in the existing regulatory structures.

Nanotechnology and the Environment: Gray Goo or Benign Innovation? Emerging nanotechnology applications draw conflicting responses in reference to environmental regulation. Nanotechnology proponents contend that these new applications are already bound to comply with existing environmental regulations and that those regulations are adequate to meet the environmental policy objectives. For this reason, no nano-specific environmental regulations are required. Opponents express the concern that we simply do not know for sure whether the existing environmental protection rules are adequate to manage the challenge posed by a growing array of nanotechnology applications. In response to this debate, environmental regulators in different parts of the world are in the process of examining the question: Does size matter? They are conducting and supporting studies aimed at determining those circumstances, if any, in which the currently accessible small-scale size of materials, particles, and other content require modifications or additions to the well established environmental regulation framework. These assessments are intended to evaluate whether there is need for specific regulation of nanotechnology applications based on potential adverse environmental impact stemming directly from the size of the materials and particles involved. Even if no specific environmental threats are attributed directly to the size of the nanoscale applications, current environmental regulations apply. Manufacture, distribution, and use of nanoparticles and nanomaterials fall within the scope of existing environmental regulations. Two of the leading applicable categories of environmental regulation are controls on chemical substances and restrictions on emissions of pollutants.

Regulated Substances The existing framework of environmental regulation places major emphasis on identification and oversight of regulated substances.

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Identification of the full range of chemicals in commercial use and an associated assessment of their potential adverse impact on humans and the environment, in general, is a cornerstone of environmental regulation. The development of nanoparticles and manipulation of chemicals at the molecular and atomic levels fall within the scope of environmental regulations applicable to chemicals. Nanotechnology applications must develop in compliance with the existing framework of regulation of chemical substances. In the United States, a critical basis for environmental regulation is the Toxic Substances Control Act (TSCA). Enacted in 1976, the TSCA authorized the Environmental Protection Agency (EPA) to regulate chemicals in commercial use to the extent that those chemicals carry a risk or potential risk of harm to the environment. Under the TSCA, the EPA maintains a list of all commercial chemical substances that are manufactured in the United States (or are imported into, or exported out of, the United States). This list is known as the TSCA Chemical Substance Inventory, and it can be found at http://msds.pdc.cornell.edu/ tscasrch.asp. The chemical substances regulated by the EPA under the TSCA include existing chemical substances, new chemical substances, and significant new uses of existing chemical substances. When a new chemical substance has been created, the developer must provide a premanufacture notice (PMN) to the EPA. The developer must then conduct safety tests for the new chemical substance following test rules already established by the EPA. Depending on those test results, the EPA has the authority to prohibit the manufacture of new chemicals. Notification requirements and associated testing obligations also apply when there is a proposed significant new use of an existing chemical substance. The EPA has the authority to prohibit the new use, based on test results. Strong arguments can be made that manipulation of known chemicals on the nanoscale does not create new chemical substances, but instead offers a new method to work with existing chemical substances. Viewed from this perspective, nanoparticles and nanoscale manipulation of existing chemicals would not create a new chemical substance, and would not trigger the new substance notification requirement established by TSCA.


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More likely to be relevant to nanotechnology applications, however, is the provision regulating significant new applications for existing chemical substances. Known chemical substances combined or used in new ways fall within the scope of TSCA regulation. It is likely that the EPA and other environmental regulators will consider materials that make use of nanoparticles significant new uses of existing chemical substances, particularly in the early days of nanotechnology development. The nanoscale substances and manipulation of materials will seldom create new chemical substances, but will often likely be considered to be significant new uses, and thus subject to TSCA notification and testing requirements. Organizations developing such nanomaterials should be prepared to comply with the notification and testing requirements of the EPA. There are several key factors to be considered by the EPA when it evaluates proposed significant new uses of chemical substances. The EPA will examine the anticipated methods of manufacturing, distributing, and disposing of the chemicals. It will consider the volume of the substance to be manufactured and the extent to which the proposed new uses increase environmental and human exposure to the substance. The EPA will also assess ways in which the new uses alter the form of exposure to the substance received by the environment and by humans. Based on consideration of these factors, the EPA will determine whether or not to permit the new uses for the substance. When working with substantial nanoparticle or nanomaterial applications in the United States and elsewhere, parties should be prepared to comply with environmental regulations applicable to significant new uses of chemical substances. In the United States, such compliance involves filing with the EPA a notice of significant new use for the substance. The EPA requires that such notification include test data in the possession and control of the party, and a description of the test data known to the party. The test data and description help the EPA to begin to assess the key factors identified above. Under some circumstances, the EPA will provide exemptions for significant new uses. One form of EPA exemption likely to be useful in the nanotechnology context is the research and development exemption. When the new substance or significant new use is in the research stage, premanufacture notices and significant new use notices need not be filed if the developers comply with the procedural obligations established by

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the EPA for this exemption. The most critical procedural obligations are the duty to retain records associated with the material or use for five years after it has been developed and a duty to provide written notification of the claimed exemption to all parties to whom the substance is distributed. There is no EPA requirement of an application to qualify for the research and development exemption. Parties claiming that exemption must, however, comply with the terms of the exemption. There are several other exemptions that permit the party to avoid filing an official notification to the EPA. These other exemptions require filing of an application at the EPA. One exemption is the low volume exemption (LVE). Under this exemption, manufacture of less than 10,000 kg per year of a substance qualifies for the LVE. This exemption can be useful for nanomaterial developers during the early stages of commercial development. Another available exemption is the low release and exposure exemption (LoREx). To qualify for this exemption to a formal notification filing, the applicant must show that humans will have no exposure to the substance through inhalation or skin exposure, that it will not be released into landfills and groundwater, and that the release will qualify as an LVE. Another available exemption is the test-marketing exemption (TME). To qualify for the TME, the applicant must show that an extremely limited amount of the substance will be distributed to only a predetermined, limited number of users for the purpose of testing market acceptability. If any of these exemptions are requested and denied by the EPA, the applicant must then file the formal PNU or SNU notice. The issue of prior notice and testing associated with nanoparticulates exists outside of the United States, as well. Under current regulation in the United Kingdom, for example, nanoscale versions of known chemical substances do not constitute new chemical substances and thus do not require prior regulator notification or testing. The rules under development for the European Community, as a whole, adopt a similar approach. Some significant parties, however, advocate a different regulatory approach to nanoparticles. For example, the British Royal Society, in its study, “Nanoscience and Nanotechnologies: Opportunities and Uncertainties,” takes the position that even known chemicals, when produced at nanoscale, should be treated as new chemical substances for regulatory purposes. If adopted, such an approach would require developers of all nanoscale materials to comply with the full notification and


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premanufacture testing requirements imposed on new chemical substances. The European Community is moving toward the adoption of a comprehensive approach to the regulation of chemical substances. Called REACH, the system is based on registration, evaluation, and authorization of chemicals. This new regulatory framework for regulation of chemical substances in Europe will establish a central database identifying all known chemical substances used commercially. It will require companies to assess and manage risks to the public and to the environment of chemical use. REACH will also require European Commission approval of substances deemed to be of high concern. As the European Community moves toward adoption of some form of chemical review and approval regulatory process, substances containing and making use of nanoparticles and other nanoscale materials will be expected to comply. If the chemical review regulations ultimately adopted in Europe match those of REACH, the regulations could have a significant impact on development of commercial applications for nanotechnology. Those regulations would likely complicate and delay commercial development of many nanotechnology applications.

Emission Controls Another important aspect of traditional environmental regulation is the monitoring and control of materials emitted into the environment. The United States and other jurisdictions have developed environmentalprotection regulations that limit the release of pollutants into the air and water. If nanotechnology-based materials or particles are characterized as pollutants, their release into the environment will be strictly controlled. Environmental regulation of pollutants is based on identification of those materials, establishment of emission standards to limit release of the materials into the environment, monitoring obligations to provide information regarding current status, reporting obligations, and requirements for remedial action when limits are exceeded. Examples of this type of regulatory control on emission of pollutants are provided by the U.S. Clean Air and Clean Water Acts, administered by the U.S. Environmental Protection Agency (EPA).

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To date, nanoparticles and other nanomaterials have not been identified as controlled pollutants. Absent such a classification, the emission control requirements associated with environmental pollutants do not directly apply to those nanoscale materials. It is important, however, for developers and users of nanomaterials to monitor changes that may be proposed in emission controls that could place certain nanomaterials into regulated classifications. Environmental regulators are in the process of evaluating the potential impact of nanomaterials on the environment. The EPA, for example, is funding substantial research in this field. The results of these studies conducted and sponsored by environmental regulators could result in classification of some nanomaterials as regulated pollutants. The British Royal Society expressed concern as to end-of-productlife disposal of products containing nanoscale materials. The Society recommends that British environmental regulations be modified for manufacturers of products for which regulations require extended producer obligations associated with product disposal at the end of product life. The manufacturers will be required to publish procedures indicating how nanomaterials incorporated into those products can best be managed at disposal to reduce the risk that nanoparticulates may be released into the environment. End-of-product-life disposal requirements for products containing nanotechnology applications are likely to be an area of increasing regulatory focus in various jurisdictions. In addition to national regulatory standards, regions (e.g., individual states in the United States) often establish regulations for dispersal of pollutants into the environment. These regional or local regulations have much more limited scope of impact than do national regulations; however, when they are established by large states or regions, they can have notable commercial impact. It is likely that some regional or local authorities will establish their own regulatory standards for emission of nanoscale materials into the environment, supplementing national regulations.

Preserving the Safety of Medical and Food Products Regulators in many different parts of the world place great emphasis on preserving the safety of medical and food products. Regulatory agencies


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including the Ministry of Health, Labor, and Welfare in Japan, the European Health and Consumer Protection Directorate General and the European Enterprise and Industry Directorate General in the European Community, and the U.S. Food and Drug Administration enforce regulatory standards for the safety of medical products (including drugs and medical devices) and food. These regulatory regimes are significant to the nanotechnology industry, as some of the more active first-generation nanotechnology applications are associated with medical products. For the present, medical and food regulators focus on the products within their jurisdiction, not the technology used to create the product or the technology integrated into the products. Nanotechnology is not a specific target of food and drug regulators, except to the extent that nanotechnology, as a component of food or medical products, can affect the safety or efficacy of a regulated product. Food and medical product regulators thus do not generally anticipate examining the impact of nanotechnology, in general, but instead expect to review specific nanotechnology applications as part of their review of individual products that may incorporate specific nanotechnology applications. Parties who apply nanotechnology to medical or food products do not face any special regulatory obligations as a result of their use of nanotechnology. They should, however, be prepared with data to demonstrate that such use of nanotechnology does not undermine the overall efficacy or safety of the product. Nanotechnology use in this context is not subject to special regulation, but is instead integrated into the existing applicable regulatory framework. This means that the focus of the regulation is not changed by use of nanotechnology in the product. Regardless of whether or not the creator of the product uses nanotechnology, the creator must be able to verify the safety and effectiveness of the product. Regulators overseeing food and medicine are at present inadequately informed regarding the scope of current and future nanotechnology use in their fields, and the potential impact of such use. Clearly, additional research and fact finding are required. Agencies such as the U.S. Food and Drug Administration have recently begun to support necessary research and to investigate these critical issues. One of their preliminary determinations is that new analytical tools may be required to assess the efficacy and safety of nanomaterials in the context of food and drugs.

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Consumer Product Safety Regulation of the safety of consumer products has become one of the most active fields of regulation in many different parts of the world. As nanotechnology continues to expand its reach into the content and manufacture of an expanding range of products, including consumer products, the terms of consumer product safety regulations have growing impact on nanotechnology development. Many nations regulate the content and operations of products sold to consumers to ensure that those products are safe, and do not place consumers at unreasonable risk of injury or illness. In the United States, consumer product safety is managed by the federal Consumer Product Safety Commission (CPSC), authorized by the Consumer Product Safety Act. In Europe, the European Health and Consumer Protection Directorate General plays the lead role in consumer product safety. The regulations enforced by these consumer protection agencies apply to all products offered to consumers, including those containing nanoscale contents. In the United Kingdom, consumer products can be sold and used for most purposes provided that they do not contain restricted or banned substances and provided that the manufacturer warrants the product’s safety. Consumer product safety in the United Kingdom is governed in large measure by the General Product Safety Regulations. The Royal Society, however, has recommended that consumer products containing nanoparticles that may be ingested or absorbed through the skin should require a prior ruling of safety from the appropriate European Commission scientific safety advisory committee. In the United States, consumer product safety regulation is largely governed by the Federal Hazardous Substances Act and the Consumer Product Safety Act. Substances, made available to consumers, that are toxic and have the potential to cause substantial personal injury or substantial illness to consumers during customary, or reasonably foreseeable, use or handling are characterized as hazardous substances. As such, they are regulated by the CPSC. The Consumer Product Safety Act requires that all products offered to consumers meet general expectations of safety when used for their commercially identified purposes. Consumer product safety regulation, in most jurisdictions, focuses on the safety of the product, and its components, as presented to the


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consumer. Consumer safety regulation does not traditionally focus on specific forms of technology used to create, or incorporated into, consumer products. Accordingly, consumer safety regulators are not directing their attention to nanotechnology, in general, but are instead monitoring the nanoscale contents incorporated into consumer products and attempting to consider their impact on the overall safety of the products. As to consumer product safety, nanotechnology is not receiving special regulatory attention, but is instead being incorporated into the already existing framework of consumer product safety review. This course of action is both reasonable and appropriate.

Nanotechnology and Workplace Health and Safety Worker safety and the safety of the work environment are important points of emphasis in many jurisdictions. As nanotechnology extends its reach into more products and processes, the rules governing the safety of the workplace will affect that development at least as substantially as will the rules governing consumer protection. Indeed, workplace safety regulation encountered nanotechnology well before the consumer protection regulators did, as nanotechnology made many of its first commercial inroads in manufacturing and industrial applications, uses where nanotechnology appeared in the workplace well in advance of its first contact with individual consumers. Many different jurisdictions have established workplace safety regulations. In the United States, for example, the key legal foundation for protection of workers is the federal Occupational Safety and Health Act (OSHA). Several different aspects of OSHA requirements are potentially relevant to nanotechnology applications in the workplace. For example, nanoparticles in the work environment can trigger the respiratory protection requirements of OSHA (29 CFR 1910.134). Employers are obligated, under OSHA, to provide protective measures (including engineering solutions and protective equipment, such as respirators) to guard against harmful airborne health threats to employees in the work environment. OSHA also imposes planning and operational requirements on parties who manufacture and transport hazardous materials (OSHA’s hazard

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communications standard (HCS), 29 CFR 1910.1200). This provision requires those manufacturers to identify the safety hazards associated with those materials and to establish and communicate safe handling practices for the materials. If nanomaterials are ever deemed to be hazardous materials, all who manufacture and transport those materials (or products containing the materials) will be subject to the hazard communication standard. OSHA also places a general obligation on employers to keep the workplace “free from recognized hazards” (29 USC 654(a)(1)). This type of general workplace safety obligation is not unique to OSHA and is likely to play an important role in the development of workplace standards for nanotechnology and other new technologies. Compliance obligations under this type of general workplace safety standard require continuous monitoring of industry and technology developments by employers, along with timely integration of those developments into operational policies and procedures. To the extent that certain nanotechnology applications are ever judged to pose health or safety risks, the general workplace safety obligation of OSHA will obligate businesses to manage the use of those applications in the workplace. Note that this obligation can arise even when the safety risk identified does not involve a formal finding that a particular material or substance is a hazardous substance under EPA or other specific environmental legal definitions. In additional to national regulations, workplace safety controls are also significantly affected by other enforceable standards. For example, the legal agreements businesses and industries have with labor unions often establish workplace health and safety obligations for the employers. Those standards are not national regulations, but are legally enforceable. As legally enforceable obligations, commitments made to labor unions for workplace safety and health are also likely to be relevant as new nanotechnology applications develop. Questions about nanotechnology’s impact on worker health and safety are likely to be raised by labor unions. Some unions may take the position that safety and exposure standards should be part of collective bargaining agreements with employers. They may also take the position that such standards are already required as part of the established commitments accepted by employers for worker health and safety. An example of this form of labor activism is provided by the


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concern the Australian Council of Trade Unions and the Australian Manufacturing Workers Union have reportedly expressed regarding nanomaterial exposure in the workplace. Another source of workplace health and safety obligations is regional and local legal requirements imposed independent of national regulatory standards. Individual states in the United States, for example, often implement their own workplace safety rules that supplement national regulations. These regional and local obligations do not have the broad scope of enforceability that national standards possess; however, when they are imposed by major regions (states such as California or New York, for example), they can have a noticeable impact on commercial activity.

Nanotechnology and National Security: Opportunity and Threat Nanotechnology offers many opportunities for both civilian and military applications. Among the most active investors in nanotechnology development are participants in the military and security industries. Nanotechnology is thus a classic example of a dual-use technology. As such, distribution of, and access to, certain nanotechnology products and applications will be controlled by national security rules, including international export controls. In the United States, international export of technology and technical information with potential military applications generally requires prior approval by federal government authorities. At present, the U.S. government is considering the extent to which those export controls should apply to nanotechnology. It is important to recognize, however, that under the current export control rules, a substantial amount of nanotechnology and associated nanotechnology know-how are subject to the export control limits on exports. Indeed, a great deal of the information and technology associated with nanoscience that has already been transferred to individuals outside of the United States has most likely been transferred in violation of U.S. technology export control laws. Technology export licenses from the United States government were likely required before such transfers. Although the U.S. government may ultimately modify those rules with regard to nanotechnology, for the present, those who would move nanotechnology and its associated

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expertise from the United States to other countries should be careful to ensure U.S. export control compliance. It is important to recognize that the export control restrictions on the international transfer of technology with potential military applications applies to products that contain the technology in question and to information regarding the technology. Thus, for example, export of a product incorporating a form of nanotechnology with potential military applications would require prior government approval, as would transfer of knowledge regarding that technology to a non-U.S. citizen. Transfer of the technology and transfer of knowledge regarding the technology are both restricted. Export controls thus apply both to export of products and to transfer of knowledge, through publications, verbal communication, and educational or training sessions. The export control restrictions on the international dissemination of technical knowledge that has potential military use has significant impact on publications and education. As was seen in the context of encryption technology, those controls can limit the publication of material in books or online to the extent that the published material will be accessible outside of the United States. The controls also limit the distribution of the controlled information in legitimate educational courses, even those that are presented in the United States, to the extent that some of the participants in those courses or presentations are foreign nationals. One of the challenges associated with national security regulation, as applied to nanotechnology, is the extent to which the security threat arises from the nanoscale capability, regardless how benign the initial application for that technology may be. National security controls on international transfer of technology and technical knowledge are structured around the goal of limiting military capabilities. One can readily argue that even general knowledge and expertise regarding manipulation of materials, devices, and processes at the nanoscale can be easily directed toward a wide range of military applications. For example, knowledge associated with the manipulation of biological material at the nano scale for pharmaceutical product development could also be applied to the creation of biological weapons. Nanoscale expertise in the development and manipulation of nanoparticles can be used to enhance the capabilities of weapons.


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To illustrate the potentially broad scope of export control rules, consider a few hypothetical examples. Imagine a researcher involved in nanotechnology development associated with the manipulation of nanoscale materials. The process she is involved with is not directed toward any single type of material or any specific purpose. It is, instead, research that can expand the capabilities of all who work with nanoscale material. If she wants to present her findings in a paper to be presented at a conference where foreign nationals will be present, prior approval by U.S. government authorities may well be required. Similar approval would likely be required before disclosure in an educational course where foreign nationals will participate, and prior to disclosure to potential foreign investors or customers. All of these requirements would be triggered, based on the fact that the knowledge she would be disclosing could have military applications, even though she is not focusing on those applications and may not have even identified any such applications. Also worth noting is the fact that export controls apply to anyone who makes an illegal international distribution of controlled technology or know-how, not only the creator, developer, or manufacturer of the controlled material. For example, a product distributor who manages international sales of a product that contains a controlled component could be legally liable for an unlawful distribution of the technology, even if that distributor did not manufacture the technology or the product, and the distributor was not aware of the potential military applications for the controlled component. In addition, a party who makes an international distribution of controlled technology or technical information is held legally accountable for the actions of the foreign party to whom it transferred the material. Even if the originator of the technology or know-how were properly authorized by the government to share the material, if the foreign recipient makes improper use of the material (e.g., uses it for military purposes or makes an unauthorized distribution of the material to another party), the party that originated the transaction will be liable for the violation made by the foreign party. Note that the examples discussed above are the type of transfers of information and technology that happen every day. Researchers, educators, and commercial companies involved with nanotechnology make these disclosures and transfers on a daily basis. The critical point to recognize is that, under current regulations, those transfers are subject to export

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control limitations. By conducting those transfers and disclosures without prior government authorization, the parties involved are in violation of the law. Compliance is a major current issue, and will become a greater challenge as nanotechnology activity expands in the future. Also note that U.S. export control regulations carry severe penalties for violations. Individual people involved in the illegal transfers can be sent to prison for significant periods of time. Those individuals may also be personally liable for substantial fines. The companies involved may also be assessed major fines. Those companies can also be banned from receiving future U.S. government contracts. Penalties associated with violations of export control rules are harsh. At its broadest reach, export controls on dual-use technology could restrict international distribution of products and know-how involving virtually any nanotechnology application. The rationale being that basic knowledge of working at the nano scale can be applied in such a wide array of applications that the scope of those potential applications inevitably includes potential military applications. Such broad application of the national security controls would be unreasonable and commercially devastating. In addition to general controls on international transfer of military use technology, there is an increasing trend toward restrictions on transfer of specific technology that has potential use in terrorist activities. For example, in the United States a topic of significant regulatory attention is the potential threat of bioterrorism. In response to that concern, rules applicable to the development, distribution, possession, and use of materials that can be part of terrorist actions are now carefully monitored in the United States and other countries. Certain nanotechnology applications, particularly those associated with creation and distribution of biological agents, are likely to come under increasing regulatory scrutiny through enforcement of these antiterrorism regulations. This scrutiny can impede development of new applications in this field. Participants in the nanotechnology industry should be particularly conscious of laws that restrict international distribution of technology and technical information. National security restrictions on nanotechnology are particularly difficult to manage as many of the emerging applications for nanotechnology are in the national security context. The nanotechnology field is exceptionally open to potential technology transfer


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violations largely because of its diverse range of applications and the global interest in the field. Compliance with these regulations presents a significant challenge for the nanotechnology industry, and the national security controls in the United States and other nations pose a serious potential threat to nanotechnology commercial development.

Nanotechnology Regulation: The Core Issue There are two key issues at the heart of regulation of nanotechnology applications and products. Does the nanotechnology create something new and currently unknown to the applicable regulatory regime? Does the unprecedented small scale of the nanotechnology application or product make a currently known material, process, or product significantly different, from the perspective of regulatory goals? If the answer to one or both of these questions is yes for a given nanotechnology application, then regulatory changes are likely to be required. If neither of those two conditions exist for a given nanotechnology application, then the existing regulatory framework can effectively handle the application. If nanotechnology creates a new chemical substance or a new hazardous material, then some regulatory modifications may be required. If nanotechnology is simply introduced into a product, the regulations applicable to the manufacture, sale, and use of that product continue to apply to the product and no additional regulations directed specifically toward the nanotechnology are required. Nanotechnology is already subject to regulation to the extent that it is part of products and processes that are subject to regulation. Additional regulation, targeted toward nanotechnology, is appropriate only to the extent that nanotechnology creates threats that have not yet been encountered by the regulatory framework. It is important to recognize the distinction between indirect and direct regulation of nanotechnology and its applications. Indirect regulation involves regulation of products or processes in which nanotechnology and its applications are incorporated. The target of such regulation is the overall product or process, not the nanotechnology component. Direct regulation of nanotechnology involves regulations that are specifically aimed at nanotechnology and its use. At present there are several contexts in which indirect regulation of nanotechnology exists. So

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far, however, there are no clear examples of direct regulation of nanotechnology. From this perspective, to argue that nanotechnology is currently not regulated, as some critics of nanotechnology contend, or that it should not be regulated, as some proponents of nanotechnology suggest, is inappropriate. Nanotechnology is presently regulated in many different contexts, but that regulation is indirect, aimed not at the nanotechnology itself but instead at a product or process that includes some form of nanotechnology. Another form of indirect regulation of nanotechnology exists when nanotechnology falls into a class of regulated technology. An example of this situation is the classification of nanotechnology as a potential military use technology and its subsequent regulation under U.S. export controls. In this context, nanotechnology is regulated because it qualifies as a certain class of regulated technology, not simply because it is nanotechnology. This type of indirect regulation of nanotechnology and its applications seems to be entirely appropriate. The open issue is the extent, if any, to which nanotechnology and its applications should be the target of direct regulation. Based on currently available information, it does not seem that a case can yet be made for direct regulation of nanotechnology or any of its applications. Developers and users of nanotechnology will not be able to avoid all regulation. They may, however, be successful in efforts to avoid the development of direct regulation specifically targeting nanotechnology and its applications.

Europe and the Precautionary Principle Much of the European regulatory response to nanotechnology and other emerging technologies is influenced by the precautionary principle. The precautionary principle is, in large measure, a regulatory strategy to address situations in which insufficient data exists to evaluate accurately the potential risk to society posed by a new factor. In essence, the precautionary principle calls for application of guidelines that ensure a high level of protection for the public, even when the scope of the threat is highly uncertain. Proponents of the precautionary principle claim that it offers a prudent, conservative approach to regulation in highly uncertain environments where the potential harm is substantial and the accuracy of


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decision-making data is highly suspect. Critics of the precautionary principle contend that it is a regulatory strategy that is too risk averse and one that will unnecessarily thwart the development of new technologies, and thus deny the public access to the future benefits of those advances. Application of the precautionary principle by regulators in Europe, and potentially in other parts of the world, has significant potential implications for the development of nanotechnology and other new technologies. Under this approach, if identified potential threats to society posed by nanotechnology are great, even if the chance that those threats will be realized is very small or impossible to assess accurately, regulators may limit or prohibit use of the technology. Traditional regulation has generally relied on deferral of regulatory action until a specific threat has been identified and the risk of the threat being realized has been reasonably well quantified. Application of the precautionary principle supports regulatory action well before the precise nature of the threat and the likelihood that it will be realized can be accurately quantified. The precautionary principle represents a significantly different regulatory strategy than the one that is currently most commonly relied upon. By essentially permitting the potential for great harm to eliminate the need for an accurate assessment of likelihood of harm, the precautionary principle dramatically extends the reach of regulation. This approach seems to be based, in part, on an assumption that there is no middle regulatory ground. The assumption appears to be that if regulation is deferred until data sufficient to support an accurate assessment of risk are available, it will be too late for regulation to prevent the harm to society. It is not at all clear that such an assumption is accurate. As we have noted in this chapter, several existing regulatory regimes in many different jurisdictions appear to have authority over a wide variety of different current and potential nanotechnology applications. Advocates of the precautionary principle have not demonstrated that the existing regulatory framework applicable to many of the emerging nanotechnology applications is inadequate to protect the public interest. Application of the precautionary principle as a basis for regulation with regard to nanotechnology or other emerging technologies seems to be an unnecessary overreaction by authorities. It is an overreaction that comes at a significant price to society. That price is the potential loss of

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access by society to important beneficial applications for the new technologies. Regulation based on the precautionary principle could dramatically impede the development of new technologies, including nanotechnology. Developers of applications for new technologies should move to limit the use of the precautionary principle in regulation. Those efforts may prove to be difficult, as the precautionary principle is already at the heart of regulatory initiatives in Europe, such as the REACH proposal applicable to regulation of chemical substances. Regulation based on the precautionary principle seems to pose a significant threat to the development of nanotechnology, emerging technologies in general, and overall innovation. It presents a legal roadblock to innovation that is not necessary for protection of the public interest. Existing regulatory frameworks are adequate to deal with emerging technologies, including nanotechnology. To the extent that actual practice ultimately yields data demonstrating need for new regulation for a new technology, then that process can be conducted when the nature of the threat and the probability of the harm are more clearly quantifiable. The precautionary principle seems to invoke a desperate regulatory strategy that is willing to forego, or significantly delay, social benefits of innovation for the sake of implementing a more conservative response to a substantial, but uncertain, social threat. The social cost of that extremely conservative response to potential risk seems far too high to pay. Regulatory reliance on the precautionary Principle appears to pose a significant threat to the future development of nanotechnology and all other emerging technologies.

The Challenge of Compliance Participants in the nanotechnology industry today face a challenging regulatory compliance environment. As we have seen in this chapter, there are several fields of regulation that are already involved in oversight of some of the first commercial applications of nanotechnology. At present, however, the scope of that regulatory oversight remains uncertain. There are some basic principles that can be useful for industry participants as they attempt to meet current regulatory compliance obligations while also anticipating and influencing the scope of future regulatory requirements.


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One useful principle is to treat nanotechnology that is integrated into regulated products in the same manner as all other components of those products, for regulatory purposes. To the extent that nanotechnology applications are made part of regulated products, the developers of those products must effectively integrate the nanotechnology into the already existing product testing and review processes. In this regulatory context, the relevant nanotechnology applications are not subject to separate regulatory oversight. Instead, those applications will be considered as part of the overall product review. If the products that contain or make use of the nanotechnology continue to meet the regulatory standards that are applicable to them, there is no additional regulatory exposure for the product developers. Another important regulatory compliance principle is the critical need to pay particular attention to regulatory standards directed toward new substances, materials, and applications. The environmental rules applicable to new chemical substances, for example, provide one example of this type of regulation. It is possible that some nanotechnology applications will yield substances, materials, or consequences not presently recognized by regulators. If that occurs, modifications to existing regulations may be justified, and nanotechnology developers and users should be prepared to assist as those modifications are developed and to comply with the resulting rules. Also of particular significance for regulatory compliance purposes are the general regulatory standards that establish broad compliance obligations. One example of this type of standard is the obligation under U.S. workplace safety law for employers to create and maintain a work environment free from unreasonable threats to the health and safety of employees. These broad regulatory obligations are likely to come into play in the early stages of use of new technologies, such as nanotechnology. These general regulatory requirements are intended to provide some flexibility for the regulatory process to accommodate unanticipated changes. Participants in the nanotechnology industry should be prepared to comply with these general obligations as they expand their use and understanding of nanotechnology. Responsible compliance with these broad regulatory requirements as nanotechnology and its applications evolve and mature will create a more sympathetic future regulatory environment for nanotechnology development.

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The compliance challenges associated with commercial use of nanotechnology also include the complexity associated with complying with many different levels of legally enforceable obligations. Compliance with national regulatory standards in many different countries poses one important challenge. That challenge is made more difficult by the simultaneous need to comply with even more regulatory obligations imposed by different regional and local governmental authorities. The legal compliance challenge is increased when we consider the need to comply with commitments made to major groups (such as labor unions) that may involve management of nanotechnology applications. Developers and users of commercial nanotechnology applications must recognize these additional legal commitments that can be affected by nanotechnology applications. Regulatory compliance requires several important actions. The first step involves an accurate audit and updated inventory of all business activities that may trigger regulatory oversight. With regard to nanotechnology, this involves recognition of all current nanotechnology applications undertaken by an enterprise. It also involves a commitment to ongoing updating of the nanotechnology application inventory as time goes by. After the nanotechnology applications are identified, they should be effectively integrated into the existing regulatory compliance processes of the organization. Special care should be exercised to distinguish between the nanotechnology applications that fall within the scope of already existing regulations and those that may trigger new regulatory oversight. Effective regulatory compliance also involves cultivation and maintenance of healthy working relationships with key participants in the regulatory process. Those stakeholders include the regulators, both the senior government officials appointed to lead the regulatory process and the civil service staff who manage the daily operations associated with the regulatory process. Other important stakeholders in the regulatory process are the public interest and public advocacy groups that represent the public in regulatory matters. Another key regulatory stakeholder group is the media, which plays an important role in influencing public opinion. Of course, the public itself is a critically important stakeholder group with regard to regulation.


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Development and preservation of healthy working relationships with these major stakeholder groups involves several actions. Effective communications with all of these groups is vital. Significant effort should be invested in building strong and active communication links with each of the stakeholder groups. That communication should involve both advocacy and objective education. Protection of the integrity of the relationships with these groups is essential. Although disagreements are inevitable, it is critically important that organizations subject to regulatory oversight develop and maintain an image of integrity and honesty in the eyes of the key regulatory stakeholder groups. Effective regulatory compliance also requires investment of resources to anticipate the direction of future regulation and to influence the direction of that regulation. Regulatory compliance is not only a response to prior actions taken by regulatory authorities. There is substantial room to influence the direction of regulation if an enterprise effectively anticipates future issues and concerns of regulators and participates in the discussions and analyses that lead to future regulatory decisions. Those organizations that have good records of past compliance and have developed healthy working relationships with key regulatory stakeholder groups will likely be the best positioned to influence future regulatory direction. Effective regulatory compliance for the nanotechnology industry will thus involve both looking backward and looking forward in time. Enterprises must understand what they have done in the field of nanotechnology and what they plan to do in the future. They must also recognize those portions of the existing regulatory structure that are affected by their nanotechnology initiatives and anticipate future relevant regulatory directions with the goal of successfully influencing those future directions. Regulatory compliance presents a major challenge for the nanotechnology industry. It is a dynamic environment in which the technology, its applications, and the regulations are all evolving. The commercial stakes associated with compliance are substantial. They can make the difference between success or failure for individual nanotechnology applications, for specific businesses, and for the overall industry. Compliance also plays a vital role in protection of the general public interest. Investment of substantial attention and resources by all stakeholders in the regulatory process is justified to attempt to ensure that an appropriate

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balance is struck between protection of the public welfare and promotion of rapid development of nanotechnology applications that contribute to economic development and social benefits.

Selected Bibliography Allianz Group and OECD, “Opportunities and Risks of Nanotechnologies,” June 2005, at http://www.allianz.com/azcom/dp/cda/0,,796454-44,00.html. Bailey, M. A., and R. G. Lattimore, “Nanotechnology: Now is the Time to Assess Risks,” 2004 at http://www.occupationalhazards.com. Consumer Product Safety Commission Nanomaterial Statement, 2004, at http://www. cpsc.gov/library/cpscnanostatement.pdf. Durrenberger, F., et al., “Safety and Risks of Nanotechnology,” 2004, at http://www.temas.ch. European Commission Enterprise and Industry Directorate General, Overview of Pharmaceutical and Cosmetics Regulation, 2005, at http://pharmacos.eudra.org. European Health and Consumer Protection Directorate General Overview, 2005, at http://europa.eu.int/comm/dgs/health_consumer/index_en.htm. Federal Hazardous Substances Act, 15 USC Sect. 1261. Japanese Ministry of Health, Labor, and Welfare, Pharmaceutical and Medical Safety Bureau, 2005, at http://www.mhlw.go.jp/english/org/policy/p13-14.html. “Keeping Nanotech at Home,” Red Herring, 2005, at http://www.redherring.com. “No Thanks, We’re European,” The Economist, Nov. 26, 2005, p. 77. Royal Society, “Nanoscience and Nanotechnologies: Opportunities and Uncertainties,” July 2004, at http://www.royalsoc.ac.uk. Stuart, C., “President’s Advisers to Considered Export Controls on Nanotech,” 2005, at http://www.smalltimes.com/document_display.cfm?document_id=8727. U.K. General Product Safety Regulations, 2005, at http://www.opsi.gov.uk/si/si2005/ 20051803.htm. U.S. Export Control Regulations, 2000, at http://www.bxa.doc.gov/ EncryptionRuleOct2K.pdf. U.S. Food and Drug Administration Commentary on Nanotechnology Products, 2003, at http://www.fda.gov/nanotechnology/faqs.html. U.S. National Nanotechnology Initiative at Five Years, May 2005, at http://www. ostp.gov/PCAST/PCASTreportFINAL/ores.pdf. Wardak, A., “Nanotechnology & Regulation,” 2003, at http://www.wwic.si.edu.

4 Nanotech Legal and Public Policy Initiatives Around the World In this chapter, we examine some of the legal and public policy initiatives adopted by governments and national organizations, aimed specifically at fostering more rapid development of nanotechnology research and commercial applications. These efforts take a variety of forms. Some involve comprehensive efforts to provide funding for nanotechnology research and commercialization, along with efforts to address the public policy and social challenges presented by nanotechnology. Other initiatives are primarily funding programs designed to spur continuing research in the field. Another approach to nanotechnology promotion is, in effect, a statement of support and encouragement that provides little financial support and no comprehensive policy framework, but clearly expresses intent and desire to participate in the nanotech future. This chapter briefly describes some of these international nanotechnology policy initiatives and assesses the potential for success of these efforts. Total global government spending in support of nanotechnology efforts has grown from approximately $500 million in 1997 to approximately $4.5 billion in 2004. Of that total government investment in 2004, approximately $1.25 billion was made available by European Community nations, approximately $1 billion by Japan, and approximately 99

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$1.75 by the United States. Clearly, although these government investment levels represent a notable degree of participation, the total volume of government investment in nanotechnology research and development remain a miniscule portion of the total government budgets for research and technology. The bulk of the government support for nanotechnology has to date been expressed in the form of promotional, public relations initiatives. Governments have been far more active extolling the potential benefits of nanotechnology and presenting themselves as supporters of nanotechnology as part of a broader suite of attractive emerging technologies, than they have been investing in ongoing nanotechnology work.

Nanotechnology Policy Initiatives: A Range of Strategies As nanotechnology research has expanded and its commercial potential has been widely recognized, many different governments around the world moved to develop legal and public policy initiatives directed toward supporting work in the nanotech field. Those policy initiatives take a variety of forms. Some more comprehensive, some less so, all are intended to facilitate greater understanding of nanotechnology and to promote more effective commercialization of nanotech. Some of those national initiatives are also driven, in part, by a desire to foster economic growth and pursuit of national or regional political agendas. At a most basic level, government nanotechnology policy programs publicize and promote the field of work. Some of these national efforts are little more than highly visible statements of public support for work in this area. They may carry little government funding and may not actually address significant public policy issues generated by nanotechnology. Although these initiatives will not have significant direct impact on nanotechnology development, they represent important governmental endorsement of the field, adding a noticeable level of credibility to the topic in the eyes of the public and other important groups, such as financial investors. Other national nanotechnology policy programs establish, in effect, a government clearinghouse of information on nanotechnology research and development. These efforts place the government at the center of a national nanotechnology network, facilitating information exchange between public and private organizations and communication among


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researchers. This strategy casts government as a facilitator and a catalyst for nanotech work. It represents a more activist role for government than that of cheerleader and promoter; however, it does not generally involve a major level of government resource commitment in support of nanotechnology research or commercialization. Another government approach to nanotechnology policy involves significant investment of public resources into nanotechnology research and development. Under this strategy, the government promotes and facilitates work in nanotechnology, but it also allocates substantial public resources to that work. Those resources are commonly applied to direct funding of both public and private sector research in nanotechnology. Public resources are also often directed toward a range of efforts to develop commercial applications for the nanotechnology. Although the actual financial commitment made by government varies substantially from country to country, when the level of that commitment represents a major investment relative to the levels invested by that government in other fields of research, it is fair to characterize the strategy as a major nanotech policy initiative. A few nations extend their nanotechnology policy to attempt to address a wider range of public issues associated with nanotechnology research and broad application of that research. This strategy involves a government effort to promote responsible nanotechnology research and development. Government resources are applied in support of research and commercialization, and in support of evaluation of topics including societal impact of nanotechnology. These programs attempt to encourage nanotechnology work and a better understanding of the social and ethical implications of nanotechnology use. Some of these national nanotechnology policy strategies are largely motivated by a desire to encourage economic growth. Many governments view nanotechnology as a significant potential future foundation for commercial products. They thus see nanotechnology as a basis for economic development. In those jurisdictions, nanotechnology policy is partially integrated into broader national economic policy. This view is shared by both economically advanced and developing countries. Some governments view nanotechnology policy as an important component of broader political objectives. For example, countries seeking to position themselves as global or regional leaders often see a need to

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enhance their science and technology profile. The high visibility of nanotechnology makes it an attractive vehicle for nations to establish their technology leadership credentials. By developing national nanotechnology policies, countries believe that they can boost themselves into greater international political prominence as science and technology leaders. It is not clear that the level of scope of a nation’s nanotechnology policy strategy will affect its future success in the field of nanotechnology. We do not know if a comprehensive national nanotechnology policy is more likely to result in nanotechnology leadership than a strategy based on encouragement of private work in the field but minimal public activity. At present, there is no certain prescription for nanotechnology leadership. Perhaps the most that can currently be asserted is that any national policy that helps to encourage nanotechnology research and development, and that applies some government resources to help facilitate development and maintenance of nanotechnology communities, provides a sound first step toward a successful nanotechnology future.

NNI: Nanotech Promotion, American Style The approach to nanotechnology policy in the United States revolves around the National Nanotechnology Initiative (NNI). Codified through the 21st Century Nanotechnology Research and Development Act, the U.S. initiative operates at several levels. The U.S. initiative authorizes the president to create a national nanotechnology program. The program has the following functions: (1) set priorities and means of evaluation for research and development activities in nanotechnology; (2) facilitate coordination among federal nanotechnology research and development efforts; and (3) fund nanotechnology research and development. Management of the program was delegated to the National Science and Technology Council, and it is supported by the National Nanotechnology Coordination Office and the National Nanotechnology Advisory Panel. The act also authorized federal funding for government agencies playing a key role in support of nanotechnology work. In 2005, the President’s Council on Science and Technology offered an assessment of progress under the NNI in its report, “The National Nanotechnology Initiative at Five Years.” That assessment determined


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that the United States had established a position of global leadership in nanotechnology research and development, but that its leadership position was under increasing pressure from significant advances made in other countries. The study also concluded that the funding the United States was investing in nanotechnology and nanoscience was productive and well spent. The assessment also identified several areas for improvement in the U.S. nanotechnology policy. One such area is that of technology transfer. The Council determined that the NNI should provide more effective connections between research institutions and commercial companies. The study recommended two methods to promote more effective commercialization of nanotechnology research. One method is through more efficient sharing of information regarding nanotechnology research and associated intellectual property. The second method involves more effective coordination between federal and state nanotechnology development initiatives. At its heart, U.S. nanotechnology policy is directed toward expanding the scope of nanotechnology research in the United States and fostering more effective development of commercial applications for that research. The public policy vehicle adopted by the United States to advance those goals is based on a comprehensive strategy. That strategy makes use of government research funding, development of a research and commercialization infrastructure, and formal legislative and regulatory action to promote and to respond to nanotechnology advances. U.S. nanotechnology policy also addresses the implications of nanotechnology on a broader range of public policy issues. For example, the U.S. strategy attempts to promote economic development associated with nanotechnology advances. The strategy also provides support for efforts to examine social and ethical implications of widespread nanotechnology use. The NNI in the United States is an example of a comprehensive national nanotechnology policy strategy. Clearly the strategy does not provide all of the answers the United States needs in order to ensure effective research and commercialization. It does, however, represent a firm national commitment to promote and encourage nanotechnology work. The strategy has played a positive role positioning the United States among international nanotechnology leaders.

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The European Community and Nanotechnology The European Community is moving toward a coordinated strategy for nanotechnology research and development. In its report, “Towards a European Strategy for Nanotechnology,” the European Commission described political and public policy actions needed for effective development of a European nanotechnology community. That strategy involves creation of a research program, participation by industry, investment in infrastructure and human resources, and oversight of social implications. The strategy does not yet involve formal legislation or regulation. Instead, it identifies issues and activities to be addressed in the future by the European Community, as nanoscience matures. The European Community has not yet established a comprehensive public policy for nanotechnology. It has, however, made a commitment for allocation of significant resources in support of nanotechnology research. Substantial resources are also being directed toward effective commercialization of nanotechnology research. The European Community has, to date, placed greater emphasis on examination of the potential societal impact of nanotechnology than any other country or region. It has established the goal of socially responsible development of nanotechnology. The European Community seeks to apply basic ethical values reflected in core European agreements (e.g., the European Charter of Fundamental Rights) to oversight of nanotechnology research and applications. For example, the European Group of Ethics has included examination of nanotechnology, as applied to medicine and health care, into its review of ethical elements of medicine. The European Community’s effort to devise and implement a comprehensive strategy for nanotechnology is important, largely because of the considerable nanotechnology and nanoscience resources already in place in Europe. One of the major challenges to the success of this effort will be its ability to coordinate with the national nanotechnology efforts underway in many of the European Community’s member states. The interplay between collective action in support of nanotechnology at the EC level and the nanotechnology strategies of the individual EC member nations presents an interesting and important public policy dynamic. At one level, the dual-jurisdictional structure creates more opportunities for nanotechnology work in the region by, for example, providing more


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funding sources for research and development. The presence of multiple jurisdictions also makes development and implementation of effective nanotechnology policy strategies more complex, however, as those efforts must be coordinated between national governments and the EC level.

A Nanotechnology Tour of Europe In addition to the coordinated nanotechnology strategy discussed above, many individual European nations have embarked upon their own policy initiatives in support of nanoscience and nanotechnology. These individual national efforts are in part complements and in part supplements to the broader European Community nanotech initiative. Nanotechnology is a topic of great attention in many different European nations. Germany is actively pursuing a leadership role in nanotechnology. Although the German government has been funding nanoscience research since the 1980s, a focused nanotechnology strategy was not implemented until 2002. The initiative, known as Nanotechnology Conquers Markets, emphasizes advances in nanoelectronics, nanomaterials, optical science, and microsystems engineering. The effort is directed by the Federal Ministry of Education and Research, and it includes government funding of approximately 298 million euros in 2005. The German strategy involves significant research funding. It also places the government in the role of facilitator and coordinator of nanotechnology activities in Germany. Commercialization of nanotechnology research is an important goal of the German nanotechnology program. France is also active in the field of nanotechnology. Nanoscience strategy in France is driven by the R3N (National Nanosciences and Nanotechnology Network). Established in 2005 with funding of 70 million euros from the French government, R3N integrates three pre-existing French nanotechnology programs: the National Nanosciences Programme, the National Nanotechnology Infrastructure Programme, and the RMNT Micro and Nanotechnology Network. R3N represents an integrated approach to national nanotechnology policy, addressing research priorities and funding, commercialization and development of applications for research, and coordination of legal and regulatory implications of nanotechnology. Nanotechnology strategy in France involves

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promotion of the field, funding for research and commercialization, and an overall active role for government as a nanotechnology catalyst. In addition, the French government emphasizes the importance of understanding the broader implications of nanotechnology for French society, and that interest is reflected in France’s nanotechnology program. The National Technology Agency of Finland launched that country’s nanotechnology program in 2005. Called FinNano, it consists of 45 million euros of government funding and 25 million euros from private companies, directed toward nanotechnology research and commercialization. The first point of emphasis for the initiative is nanoparticles and nanostructures. Also of interest to the FinNano program is work involving sensors and nanoelectronics. In addition to the FinNano effort, the National Technology Agency and the Academy of Finland plan to invest an additional 55 million euros over the five-year period into nanotechnology commercialization activities. These initiatives in Finland represent a significant commitment by the government to fund research and to create a nanotechnology community in the nation. Finland’s nanotechnology strategy is part of that country’s broader effort to retain a leading international role in science and technology. Nanotechnology in Norway is largely shaped by the Norwegian government’s Nanotechnology and Materials Technology Initiative (NANOMAT), which was launched in 2002. Funded at a level of approximately 13.2 million euros, NANOMAT, is focused on work involving nanomaterials. The Norwegian strategy is currently focused on funding for research. It is not currently as broad in scope as the nanotechnology programs of some other European countries. Although Sweden has long participated in active research in a variety of nanoscience fields, the country has not yet enacted a national nanotechnology program. A recent report, entitled “Policy for a New Industrial Revolution,” recommended that Sweden establish a national nanotechnology program. The report suggested that such a Swedish nanotechnology initiative might most successfully concentrate on work associated with software-based nanotools (useful, for example, for simulation and visualization applications) and nanotechnology-based medicalcare diagnostic devices. The report suggests that a Swedish nanotechnology policy should have broad scope, addressing research subjects and priorities along with commercialization activities, and legal/regulatory


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considerations. Sweden presents an example of a country with a research community that is active in the field of nanotechnology, but which has not yet developed a broad nanotechnology policy. Sweden illustrates that development of a specific national policy on nanotechnology is most definitely not a prerequisite for success in the nanotechnology field. Switzerland identified nanotechnology as one of its highest technology objectives. The country established its TopNano21 program in 2000, to supplement a range of nanoscience research projects that were already in progress at that time. The program focused on supporting research and commercialization efforts in various aspects of nanotechnology, including materials, electronics, and medical applications. TopNano21 was managed by the Swiss Innovation Promotion Agency. The Swiss nanotechnology program emphasizes support for research and efforts by the government to encourage commercial development. It is not a broad strategy, but has effectively facilitated the development of a nanotechnology community in Switzerland. The Austrian government established its NANO Initiative. This program provides public funding of approximately 15 million euros per year for work in nanotechnology. The initiative facilitates development of collaborative research and development networks in Austria. The initiative also attempts to promote Austrian nanotechnology research and commercialization efforts in the country and abroad. The NANO Initiative offers an example of a national strategy that emphasizes a role for government as a research funding source and catalyst for development of a public/private nanotechnology community. In Italy, the national government established a nanotechnology and microtechnology program, with emphasis on work in the materials sciences, as a research focus area. The Italian National Research Council plays the leading role in supporting and directing this strategic research program. The fields of particular concentration include nanostructures, nanodevices for electronics, and nanotechnology directed toward biomedical applications. This initiative is primarily a concentrated research program instead of an overall policy program. The initiative has effectively helped to coordinate nanotechnology research in Italy. The National Research Fund of Luxembourg now identifies nanotechnology research as a priority subject. The Fund includes a program for new materials and nanotechnology. The Fund’s programs provide

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financial support for research. The programs also serve to guide research topics and facilitate collaboration among compatible research groups. Luxembourg’s strategy for nanotechnology is a research coordination and support program instead of a broad national policy for nanotechnology. The Netherlands highlights nanotechnology research through its NanoNed program. NanoNed is a public and private research initiative focusing on nanotechnology research, knowledge dissemination, and commercialization. With total funding of approximately 235 million euros, the NanoNed program supports work at several nanotechnology centers of excellence in the Netherlands. NanoNed is administered by the Dutch government’s funding council for applied research, STW. The NanoNed initiative is particularly interesting as it consists of significant private funding from business enterprises to supplement the public funds made available by the government. This represents a more complex approach to national nanotechnology policy. A range of different strategy approaches is applied to nanotechnology in Europe. Most nations there focus on strategies that emphasize research funding and a clearinghouse/catalyst role for the national government in the developing national nanotechnology communities. Only a few apply broad, comprehensive programs in support of nanotechnology research, commercialization, and social integration. The nanotechnology research community in Europe is active and dynamic. The European experience suggests that national policies in support of nanotechnology are not necessary for the development and growth of healthy nanotechnology research and development communities; however, that experience also suggests that supportive national policies, of any scope, can help to foster conditions that effectively facilitate quality nanotechnology work.

Asian Nanotechnology Several Asian nations are among the most active countries in the world in nanotechnology efforts. China, Taiwan, Japan, and Korea have moved to establish nanotechnology initiatives. Thailand and Malaysia are also emphasizing national nanotechnology efforts. These regional nanotechnology initiatives are progressing in both mature economies and in


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developing ones. Nanotechnology is a major topic of focus across the Asian continent. China has launched several different nanotechnology programs. These government policy initiatives take place at both the national and regional levels. One of the more visible examples is the Institute for NanoMaterials and Nanotechnology (INMT) in Hong Kong. INMT is designed to serve as a focal point for Chinese nanotechnology programs. The Institute is directed toward both research and commercialization functions. This initiative is limited to research and commercial concentrations. It emphasizes research and development funding but does not involve legislative or regulatory actions. In 1999, the Chinese government established a basic research program emphasizing work involving nanomaterials and nanostructures. One of the most active fields of research in that program works with nanotubes. This national-level research focus area involved research funding and efforts by the national government to facilitate creation of a community of Chinese researchers addressing nanotechnology topics. That effort has been largely successful. China has also integrated nanotechnology into its broader technology development strategy. China’s High Technology Plan established critical technology development goals for the country over a time horizon of many years. Among the nanotechnology topics included in that plan are nanobiology, nanomaterials, and nanodevices. This national initiative makes nanotechnology a field of research that receives significant resource support as part of China’s efforts to develop and maintain a position of global leadership in high-impact fields of science and technology. China’s nanotechnology initiatives also include several regional programs, such as the Shanghai Nanotechnology Promotion Center (SNPC). Led by the Science and Technology Commission of the Municipality of Shanghai, SNPC promotes nanotechnology research and applications in the Shanghai region. SNPC also plays an active role in coordinating resources to support research and the general direction of nanoscience research in the region. Beijing has also launched a major nanotechnology effort. The Center for Nanotechnologies is based at the Chinese Academy of Science in Beijing. This effort connects several major academic institutions in the area (e.g., Tsinghua University) and private companies. Nanotechnology

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networks have also been initiated in Xian and Shenzhen. Regional government plays the role of nanotech community developer in this policy program. China has made active use of both national and local/regional nanotechnology development programs. This multijurisdictional approach opens additional opportunities for funding and networking on the part of researchers. The approach also creates management and coordination challenges. For example, efforts to connect Chinese nanotechnology research and development activities with those in other countries involve connections between Chinese local and national nanotech networks. Those connections require coordination to ensure efficiency and productivity for the international collaborations. Taiwan has established its National Science and Technology Program for Nanoscience and Nanotechnology. The program is aimed at facilitating commercial development of nanotechnology applications. It includes a government investment of approximately $634 million dollars over six years. The substantive focus of the research supported by the program is directed in the following fields: nanobiotechnology, basic research into the characteristics of nanostructures, development of MEMS/NEMS technology, nanomaterials, development of nanodevices and nanoprobes and their applications. The initiative in Taiwan is largely a funding and research coordination program. It has also been highly active in commercialization efforts for the nanotechnology that develops from the research. South Korea has made a major commitment to nanotechnology. In 2003, it launched the NanoTechnology Development Program with an investment of approximately $2 billion. The key components of the program include support for research, infrastructure development, and integration of the Korean effort with other nanotechnology initiatives around the world. This commitment of financial and human resources is substantial by all standards. It is a program consistent with the stated goal of the South Korean government of making that country a global leader in several areas of science and technology likely to have profound economic impact in the future. This Korean initiative consists of both funding and formal legislation. Legislation enacted in 2003 provides a formal framework for government involvement in the nanotechnology initiative. Korea’s


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nanotechnology program is thus one of the few that combines research, commercialization, and legislative components. It represents one of the most comprehensive nanotechnology policy programs in the world. Japan identified nanotechnology as one of the three key fields of research for the twentieth century (along with information technology and biotechnology). Japan’s nanotechnology efforts are substantially contained in the work of the Nanotechnology Research Institute (NRI). The focus of the NRI is predominantly substantive research. The initiative does not include significant legal or regulatory components. For the Japanese government, the nanotechnology focus is part of that country’s efforts to retain its international leadership role in science and technology. Singapore launched its Nanoscience and Nanotechnology Initiative in 1995. The effort is centered at the National University of Singapore. Its focus is on research and development regarding novel nanotechnology processes and tools. This effort is intended to establish priorities and direction for nanotechnology work in Singapore, to promote and coordinate nanoscience in diverse fields, and to develop the infrastructure and human resources to be an international leader in the field of nanotechnology. It does not actively address broader policy implications associated with nanotechnology. Singapore offers another example of a country that is developing a global leadership role in nanotechnology without a broad national nanotechnology policy. The government of Thailand launched the National Nanotechnology Center (NANOTEC) in 2003. NANOTEC has the dual functions of establishing a nanoscience research agenda for the research community in Thailand and of facilitating commercialization of nanotechnology innovations that arise from the research. The initiative is currently focused on research and commercial development. The nanotechnology initiative is part of Thailand’s effort to move into a position of international prominence in key fields of science and technology.

NanoIndia: The Nanomaterials Science and Technology Initiative The government of India, through its department of Science and Technology, has launched its Nanomaterials Science and Technology

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Initiative (NSTI). The centerpiece of the NSTI is a commitment by the Indian government to invest $20 million into nanomaterials research and commercial development over the period of 2004 to 2009. NSTI directs its attention to creation and support of a research network housed in several Indian universities. NSTI does not create a comprehensive network of research and public policy, but focuses instead on creation of a nanotechnology research infrastructure. This effort is part of India’s broader policy programs aimed at increasing its global economic power through effective participation in critical science and technology fields. With its base of highly skilled science and technology professionals, India is well positioned to integrate nanotechnology into its growing portfolio of high-impact science and technology work.

Canadian Nanotechnology The focal point for Canadian nanotechnology initiatives is the National Research Council (NRC). Canadian nanoscience policy emphasizes research. In particular, the Canadian initiative supports work nanomeasurement (nanometrology), thin-films, sensors, materials, catalysts, and devices. The research is supported by the following NRC institutes: the National Institute for Nanotechnology, the Institute for National Measurement Standards, the Institute for Aerospace Research, the Biotechnology Research Institute, the Industrial Materials Institute, the Institute for Chemical Processes and Environmental Technology, the Institute for Microstructural Sciences, and the Steacie Institute for Molecular Sciences. The primary NRC nanotechnology research organization is the National Institute for Nanotechnology, which was established by the NRC and the province of Alberta in 2001, with initial national government funding of $120 million. These Canadian efforts concentrate on research funding and coordination. Increasingly, they are also emphasizing efforts to facilitate development of commercial applications for nanotechnology. Like China, Canada makes use of significant involvement from both national and regional governments to expand the scope of nanotechnology policy impact.


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Nanotechnology “Down Under” Australia has launched a nanotechnology initiative. The Australian Research Council’s Nanotechnology Network, is intended to become a resource for all sectors with regard to nanotechnology and nanoscience research. The network connects key groups involved in research and commercialization. It promotes education and training, while also identifying areas where improvement and additional investment are appropriate. The network is also directed toward optimizing efficient use of research facilities and resources applied to nanotechnology. The Australian nanotechnology network is not currently as formal as those in some other nations; however, Australian nanotechnology research continues to thrive.

South African Nanotech: The SANI South Africa offers another example of a nation attempting to develop a coordinated policy approach to nanotechnology work. Called the South African Nanotechnology Initiative (SANI), this effort involves support for creation of a network of research institutions focusing its attention on specific fields of nanoscience. SANI supports concentration of nanoscience research in South Africa in the fields of quantum dots, nanofiltration, nanotubes, nanowires, and naniophase catalysts. Like the Indian nanotechnology initiative, SANI involves development of a research infrastructure, not a full-policy framework to govern nanotechnology. SANI does, however, provide a basis for future nanotechnology policy expansion, as required. SANI is intended to establish a network to support continuing nanoscience research and associated commercialization in South Africa. To this end the initiative is designed to encourage greater public and private investment in nanotechnology research. SANI is also designed to integrate South African nanotechnology efforts more effectively into the global network of research in the field. Finally, SANI is intended to facilitate more rapid application of nanotechnology to benefit the people of South Africa. The SANI effort is part of the South African government’s broader efforts to promote economic development through technology, with the goal of clarifying its role as a regional leader.

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The United Kingdom and Nanotechnology In the United Kingdom, the Royal Society and the Royal Academy of Engineering examined the current and potential status of nanotechnology in their July 2004 report, “Nanoscience and Nanotechnologies: Opportunities and Uncertainties.” The report provides both an assessment of nanoscience and nanotechnology in the United Kingdom and a foundation for public policy development in response to work in those fields. Although the report does not constitute legislative action, it provides a framework for consideration of existing laws and future development of legal actions in response to nanotechnology developments. The United Kingdom has not yet developed a formal, comprehensive approach to nanotechnology policy. The 2004 Report provides an effective outline for future development of a comprehensive national nanotechnology policy for the United Kingdom. In 1999, Ireland established its Nanoscale Science and Technology Initiative. This research effort emphasized nanotechnology applications in electronics. The initiative is led by the Irish Council for Science, Technology and Innovation. Currently, much of the most active work under the initiative involves nanomaterials and nanotools. The Irish nanotechnology effort led to the creation of several nanoscience research centers, including the Nanotechnology Centre for Research on Adaptive Nanostructures and Nanodevices and the Tyndall Institute, with its focus on microelectronics.

Nanotechnology Initiatives in Russia and the Former Soviet Republics The Russian research community is highly active in various fields of nanotechnology work. There is substantial interest in nanotechnology at the academic and commercial levels in Russia. The country has not, however, developed a formal national policy program to foster nanotech work. Russia presents another example of the way in which nations, based on the strength of their research communities, can play an active role in the field of nanotechnology without formal policy initiatives. Several of the former Soviet republics are also active in nanotechnology efforts. Estonia is engaged in a national program to expand its science


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and technology activities as part of its Knowledge-based Estonia program. Explicitly identified as part of that program are research and commercialization activities associated with nanotechnology for biomedical and materials science applications. In Estonia, the nanotechnology policy is part of a broader national technology development initiative. Latvia established a major national research initiative to last for more than a decade, emphasizing four key research themes. One of those key themes is nanotechnology. Topics of particular attention for the nanotechnology work in Latvia include development of nanodevices for electronics and photonics applications, work associated with nanomaterials applied to polymers and composites, and synthesis and treatment of nanoparticulates. This program involves primarily government funding for research and government efforts to help coordinate Latvian nanotechnology research direction. Lithuania has not developed a specific nanotechnology initiative. The national government has, however, identified support for nanotechnology research as one of its leading priority research areas. Government funding for research provided by national research funding sources including the Science Council of Lithuania and the Ministry of Education and Science is now directed specifically toward nanoscience work. The current focus of these efforts in Latvia is the creation of a strong Latvian nanotechnology research community.

Eastern European Nanotechnology Programs The government of Bulgaria has identified nanotechnology as a research funding priority. Led by the Bulgarian Academy of Science, the nation established the National Centre on Nanotechnology, in the city of Sofia in the late 1990s. The focus of the Bulgarian nanotechnology research effort is on nanotechnology for materials and electronic applications. To date the program has involved targeted research funding. More recently, efforts to promote commercial applications for the nanotechnology research are receiving additional attention. The Czech Republic created a National Research and Development Policy in 2000. That policy includes support for nanotechnology research as part of its program, Competitiveness and Sustainable Development.

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Czech interest in nanotechnology is currently part of its broader effort to develop a more prominent international profile in science and technology. As nanotechnology is one of the most highly visible new fields of scientific interest, attention to the topic by the Czech Republic is consistent with their more expansive leadership aspiration. The Hungarian government emphasizes nanotechnology research as part of its focus on environmental and materials research, one of the five key research themes adopted by the Hungarian government in its National Research and Development Programmes. The Hungarian approach illustrates one being applied by many other countries. The approach involves making nanotechnology work a component of existing fields of research emphasis. In Hungary, the national science program has long emphasized materials and environmental research work. Creation of a nanotechnology field of concentration within those existing topics of emphasis provides an efficient and effective way for the nation to move more quickly into the international nanotechnology community. In 2000, the Polish government established a Targeted Research project as an initiative in the field of nanotechnology. The project was aimed at encouraging research in the field of nanomaterials, and it was supported by approximately $3.1 million of government research funding. Since that time, Poland’s nanotechnology research efforts have emphasized nanomaterials work associated with magnetic nanostructures and polymer nanocomposites. Poland’s effort illustrates how some countries now attempt to refine their nanotechnology efforts into concentrated fields within the broad scope of nanotechnology work. By emphasizing work in a highly concentrated area, the chances of moving into a prominent role in that area more quickly are increased.

Nanotechnology in the Middle East In 1999, the government of Israel made a major commitment to nanoscience, identifying the field as one of the country’s top science priorities. Israel launched the Israeli National Nanotechnology Initiative (INNI), along with its funding source, the Israeli Nanotechnology Trust (INT). The INNI included a five-year plan emphasizing research associated with nanosystems, nanodevices and tools, and nanostructures. The


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INT was created as a funding source to support both research and development of a dynamic nanotechnology industry in Israel. The use of a trust as a funding mechanism for a national nanotechnology program is not common, and the Israeli experience offers an example that might be useful for other countries.

Nanotechnology in the Developing World Additional attention is now directed toward current and potential nanotechnology efforts in the developing economies and the impact of nanotechnology on the developing world. Previously, discussions of nanotechnology were confined to work and issues arising from more economically advanced nations of the world. Increasingly, opportunities and challenges associated with nanotechnology for developing countries are being considered. One context in which conversations regarding nanotechnology and economic development now take place is that presented by the United Nations’ Millennium Development Goals (MDGs). The MDGs are objectives identified by the United Nations as the most critical to address as part of a global effort to foster economic and social stability and to encourage human development. Members of the United Nations are committed to meeting the MDGs by 2015. The UN MDGs are to develop a global development partnership, ensure environmental stability, combat critical diseases (e.g., HIV/AIDS), improve maternal health, reduce child mortality, empower women, establish universal primary education, and eliminate extreme hunger and poverty. A growing number of policymakers in both the developed and developing world are now considering ways in which science and technology, including nanotechnology, can more effectively assist pursuit of the MDGs. Nanomaterials might be applied to facilitate energy production and storage, as well as construction. Nanotechnology advances in medicine and health care can assist in improving health and combating disease. Some developing countries view work in nanotechnology as an opportunity to make important inroads in the basic MDGs, while simultaneously helping them to begin to build their own research capability in a scientific field that holds significant future promise. Nanotechnology is thus seen

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by governments of some developing countries as a significant technology because it can help them deal with immediate and pressing needs of their people, while also helping them to begin to develop a science and technology infrastructure that could enhance their future international political stature and economic strength. An increasing number of countries in the developing world are launching their own nanotechnology efforts. For example, Brazil has committed to invest approximately $30 million in 2005 and 2006 toward launch of its National Programme for the Development of Nanoscience and Nanotechnology. This effort to link academic institutions and private companies into a research and commercialization network is intended to move nanotechnology more quickly into applications of greatest relevance to the people of Brazil. Brazil’s neighbor, Argentina, also made a significant commitment to nanotechnology. The government of Argentina announced plans to invest $10 million in nanoscience research over a period of five years. Elsewhere in Latin America, Mexico and Chile have also invested in directed nanotechnology research programs. Many of these research initiatives are directed primarily toward nanotechnology applications affecting fundamental developing country needs. Developing countries tend to focus on two key aspects of nanotechnology development. One is the rapid application of nanotechnology advances to fields such as health care, agriculture, and communication that have the most immediate and most significant relevance to their population. The second area of focus is the development of research and development infrastructures that can be used to facilitate education and economic development in the future, for other applications. A condition that is complicating the discussion associated with nanotechnology and the developing world is the segmentation that now exists between groups of developing countries. Some of the more rapidly developing nations that have traditionally been part of the developing world (e.g., Thailand, Brazil, South Africa) are making more rapid advances than their peers in the realm of science and technology, including nanoscience and nanotechnology. This dynamic nearly results in the creation of three categories of participants when issues associated with nanotechnology development and management are discussed in global arenas.


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Nanotechnology Policy Initiatives: What Works Best? We see three focus areas for national and regional policy efforts to spur nanotech research and development. One is based on government funding for research and commercialization efforts in the field of nanotechnology, along with an active role by government as a catalyst for the development of nanotechnology communities. Another approach involves more comprehensive policy efforts to create a commercial and legal environment conducive to safe research and effective integration of that research into commercial use. A third approach offers little tangible support for nanotechnology work, but instead offers public statements of support for the field as part of an effort to enhance the visibility of the subject and to encourage work in the field by academic institutions and private enterprises. All three of these approaches are helpful to expansion of nanotechnology research and effective commercial application of that research. Clearly policy initiatives that involve more active government participation in the conduct of nanotechnology research and the development of public/private nanotechnology communities are helpful, as they offer tangible support for nanotechnology. However, even government policy initiatives that seem to be more public promotion than tangible support perform a useful function by enhancing the profile of nanotechnology and encouraging work in the field by researchers and private enterprise. Government policies directed at nanotechnology should, however, always be based on a realistic set of expectations regarding the impact that government acting alone can have and regarding the ultimate potential value of nanotechnology applications. Government must avoid overestimating its importance in the development of any new technology, including nanotechnology. Government must also avoid overpromoting the potential benefits of the new technology. National nanotechnology policies intended by governments to promote work in the range of nanotechnology fields are helpful to those efforts. They are not, however, essential to those efforts. In addition, if the promises of economic growth and quality of life improvements that governments make to the public in support of nanotechnology are exaggerated, there is a significant risk of a public backlash against both the

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government and nanotechnology. There is no single government policy strategy that offers the greatest benefit for effective nanotechnology advances. Clear expressions of government support for nanotech work are helpful, but perhaps the most effective government strategy in support of nanotechnology is one that creates a general climate conducive to research, education, and commercialization of innovations. Laws and public policy initiatives directed specifically in support of nanotechnology are of value, but they are not as valuable as broader national policies on science, education, and economics that create an overall economic, intellectual, political, and social climate in which good science can flourish and useful applications for that science can develop quickly and efficiently. There is no single best national strategy to promote nanotechnology development. Instead, a suite of national policies conducive to research, education, and innovation offer the greatest potential for success in support of all new technologies, including nanotechnology.

Selected Bibliography Ahlgren, M., and H. J. Franchi, “Policy for a New Industrial Revolution,” June 2005, at http://www.itps.se/pdf/A2005_007.pdf. “Argentina Invests US $10 Million in Nanotechnology,” sci.dev.net, May 12, 2005, at http://www.scidev.net/content/news/eng/argentina-invests-us10-million-innano technology.cfm. “Australian Research Council Nanotechnology Network,” Sept. 2005, at http://www. aus nano.net. Bai, C., “Ascent of Nanoscience in China,” Science, July 1, 2005, p. 61. British Embassy, “Nanotechnology in France,” Feb. 2005, at http://www. britishembassy.gov.uk. Canadian National Research Council, “Nanotechnology,” 2004, at http://nrc-cnrc. gc.ca/randd/areas/nanotechnology_e.html. Cho, S. A., “Korea Invests $2 Billion in Nanotechnology,” PC Magazine, May 7, 2003, at http://www.eweek.com. European Commission, “Towards a European Strategy for Nanotechnology,” 2004, at http://www.cordis.lu/nanotechnology. German Federal Ministry of Education and Research, “Nanotechnology—A Future Technology with Visions,” 2005, at http://www.bmbf.de/en/nanotechnologie.php.


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Hanjo, L., “Nanotechnology in Korea—Policy & Technical Overview and Assessment,” Aug. 12, 2004, at https://www.ksea.org/ukc2004/en/Proceedings/04NST/ NSTOP1_ Hanjo_Lim/pdf. Hassan, M. H. A., “Small Things and Big Changes in the Developing World,” Science, July 1, 2005, p. 65. Hauptman, A., and Y. Sharan, “Evolution of Nanoscience and Nanotechnology Activities in Israel,” 2001, at http://www.ictaf.tau.ac.il/evolution.pdf. “Institute of NanoMaterials and NanoTechnology,” Sept. 2005, at http://www.ust.hk. Institute of Nanotechnology, “Latest on Nanotechnology in Israel,” June 2002, at http://www.nano.org.uk/is3.htm. Invest in France Agency, “Nanotechnology in France,” 2004, at http://www. invest infrance.org/Japan/Newsroom/Newsletter/nl_japan_107_nanotech_en.pdf. Malsch, I., “Nanotechnology in Switzerland,” 2003, at http://www.swissworld.org/ dvd_rom/eng/innovation_2003/content/clusters/dccs/malsch.pdf. Meridian Institute, “Nanotechnology and the Poor: Opportunities and Risks,” Jan. 2005, at http://www.nanoandthepoor.org. Mou, C. Y., “Nanotechnology Program in Taiwan,” Federation of Asian Chemical Societies Newsletter, Nov. 2003, at http://www.facs-as.org/newsletter-2003-2/ Nanotechnology.htm. Nanoforum.org, “Sixth Nanoforum Report: European Nanotechnology Infrastructure and Networks,” July 2005, at http://www.nanoforum.org. Nanotechnology Research Institute, “Building the Asia Nanoscience and Technology Initiative,” May 2004, at http://www.nanoworld.jp/apnw/articles/2-19.php. National Institute of Advanced Industrial Science and Technology, “Nanotechnology Research Institute,” 2001, at http://unit.aist.go.jp/nanotech. National Science and Technology Council, “National Nanotechnology Initiative,” July 2000, at http://www.nano.giv/html/res/nni2.pdf. “National Science and Technology Program for Nanoscience and Nanotechnology,” Sept. 2005, at http://nano-taiwan.sinica.edu.tw. National University of Singapore, “Nanoscience and Nanotechnology Initiative,” March 2005, at http://www.nusnni.nus.edu.sg. Nemets, A., “China’s Nanotech Revolution,” Aug. 23, 2004, at http://www. asian research.org/articles/2260.html. President’s Council of Advisors on Science and Technology, “The National Nanotechnology Initiative at Five Years,” May 2005, at http://www.ostp.gov/ PCAST reportFINAL/ores.pdf. Roos, U., “Germany’s Nanotechnology Strategy,” Apr. 1, 2004, at http://www. britischebotschaft.de/en/embassy/r&t/notes. Royal Society and Royal Academy of Engineering, “Nanoscience and Nanotechnologies: Opportunities and Uncertainties,” July 2004, at http://www. royalsoc.ac.uk.

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Shanghai Nanotechnology Promotion Center, 2003, at http://www.snpc.org.cn/ english/introduction.asp. “South African Nanotechnology Initiative,” Aug. 2005, at http://www.sani.org.za. “Tekes Launches FinNano,” MRS Bulletin, Jan. 2005, at http://www.mrs.org/ publications/bulletin/2005/jan/jan05_sciencepolicy.pdf. Thailand National Science and Technology Development Agency, 2005, at http://www. nstda.or.th/english/aboutus.php. “Twenty-First Century Nanotechnology Research and Development Act,” Public Law 108–153.

5 Impact of Nanotechnology Regulation We have discussed the key emerging forms of regulation affecting nanotechnology research and applications. In this chapter, we will address the potential impact of regulation on nanotechnology research and associated commercial development. Regulation will have a profound impact on nanotechnology research and commercialization. Regulatory oversight is essential to protect the public interest, but regulation can also slow or block nanotechnology development. To meet successfully the challenge of applying regulatory oversight in a manner that effectively balances protection of the public interest with promotion of useful technological innovation, we must first understand the potential impact of regulation on research and commercial development in the field of nanotechnology. Regulations can affect the direction and scope of research through the prohibitions, incentives, and disincentives they establish. Regulations also have a profound impact on the incentives and disincentives for development of commercial applications, and those incentives and disincentives affect the pace and scope of commercial development of nanotechnology. Through their impact on commercial development, regulations have a substantial impact on the structure and functions of the developing nanotechnology marketplace. As a result of the extremely broad potential reach of nanotechnology and the worldwide interest in this field, nanotechnology regulations will 123

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have significant effects on international relationships. Those regulations will play a major role in the allocation of costs associated with any risks that nanotechnology may carry. Regulatory action will also play a key part in the development of public perceptions regarding nanotechnology, and those public perceptions will have a significant impact on political activities affecting the climate for nanotechnology. Regulatory strategies, particularly some of the more activist approaches such as the precautionary principle, dramatically affect the assessment of certainty associated with regulatory scope. Those strategies will have a major impact on development of nanotechnology and on all emerging technologies of the future. An important aspect of regulation that is sometimes overlooked is the obligation to balance protection against potential public harm, with the goal of facilitating beneficial use. We sometimes focus regulatory attention on prevention of harm. Although that is one of the key objectives, it is not the sole goal of regulation. Regulation is also intended to facilitate public access to useful products and services. Part of the mandate under which regulators operate is the duty to try to facilitate prompt, safe, and economical public access to helpful goods and services. Regulators must do more than protect the public from harm. They must also try to enhance the quality of life by fostering public availability of useful goods and services. Protection from harm and access to benefits are both fundamental goals of regulation. Thus, for example, pharmaceutical regulators clearly have an obligation to ensure the safety and efficacy of drugs made available to the public. Those regulators must also, however, work to make drugs that are effective available to the public as quickly and as broadly as possible. In the context of nanotechnology, regulation should both protect the public from potential negative consequences of nanotechnology use and promote publicly beneficial use of that technology. This chapter examines the impact of regulation on research and commercial applications associated with nanotechnology. The chapter also discusses the ways in which regulation affects the marketplace for nanotechnology. As governments consider and implement regulations applicable to nanotechnology, these key effects on researchers, businesses, consumers, and the public merit considerable attention. The scope, form, and content of regulation will have a profound influence on the effectiveness and the public benefits of nanotechnology. Efforts to assess and monitor that regulatory impact are thus of critical importance for society.


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Protecting the Public Interest The framework of national, regional, and local regulation exists to protect the public interest in a wide range of fields. The fundamental goal of all regulation is effective public interest protection. Regulation applied to nanotechnology research and commercialization also has this basic objective. The key challenge for regulators is to apply their framework of rules in a manner such that critical public interests are effectively protected while potential benefits from nanotechnology are promoted and allowed to develop. Regulation serves as both guardian and promoter with respect to nanotechnology. A key component of regulation to protect the public interest is effective risk assessment and risk management. Risk assessment and management are particularly difficult when emerging technologies are involved. Risks are difficult to evaluate when technology is rapidly evolving and when its uses remain highly speculative and uncertain. The risk assessments conducted by regulators around the world will have a major impact on the development of nanotechnology. Those assessments will affect the scope and form of regulation. The assessments will also substantially influence public perception of the relative risks and rewards associated with nanotechnology. As we have previously discussed, nanotechnology and its emerging applications are already being integrated into the existing framework of regulatory oversight in a variety of fields, including environmental protection, health and safety, and national security. The initial assessments of nanotechnology and the public interest now underway in those regulatory disciplines will have an important impact on both the public welfare and the rate of nanotechnology development. Nanotechnology applications are presently being evaluated within the scope of the current regulatory requirements, thus to the extent that nanotechnology use poses threats recognized by current regulations, the existing regulatory regime is well positioned to manage that threat. Regulation of nanotechnology can have a negative impact on the public welfare to the extent that the regulation blocks or delays public access to products that apply nanotechnology for the benefit of the public. As the regulatory infrastructure monitors development and use of nanotechnology with an eye toward limiting harmful consequences,

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regulators should also take note of the potential benefits of nanotechnology use, and manage regulatory oversight to facilitate more rapid application of nanotechnology for beneficial purposes. Just as regulation can help reduce harmful consequences of nanotechnology, so too can regulation expedite nanotechnology applications that benefit the public. Effectively achieving this balance should be the primary objective of all regulators involved with nanotechnology and its applications. Regulation can also have an adverse impact on future scientific research and exploration of new technologies. By imposing barriers to future research and development, and by instilling fear in the general public regarding emerging technologies, regulation can cultivate social anxiety directed toward science and technology. The consequences of this condition could be long term and significant. Promotion of caution toward emerging technologies is appropriate. Encouragement for fear of those technologies is a disservice and is contrary to the public welfare.

Influencing the Direction and Scope of Research Regulation can both directly and indirectly influence the direction and scope of research in the field of nanotechnology. Regulation asserts direct influence over the direction and scope of research when, for example, it prohibits or severely restricts research in certain fields. An example of this type of direct regulatory impact on research is presented by U.S. government limitations on stem cell research funding. Indirect impact on research can exist when regulatory oversight as to certain forms of research or certain research practices becomes substantial enough to make work in those fields notably cumbersome, thus providing disincentive for research on those topics. Another example of an indirect regulatory impact on nanotechnology research occurs when regulators require additional information regarding the effects of nanotechnology on the environment, humans, and society. That need for accurate, timely information on nanotechnology effects creates a demand for research in certain fields. That demand provides an example of indirect support for research. Another example of indirect influence on research involves research that aims to work around government restrictions. For instance, when the U.S. government placed restrictions on funding for stem cell research, many


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researchers took an interest in developing lines of research that could be scientifically productive, while also avoiding some of the ethical concerns that led the U.S. government to impose the research limitations. One method through which regulation affects research involves incentives or barriers to research associated with specific topics. If government prohibits or denies government research funding for particular fields of work, clearly those fields will not be explored as fully or as quickly as they could be with government support. In contrast, if government establishes research priorities, those topics will thrive, as they attract significant research attention. Government funding and encouragement play a critical role in the direction of nanotechnology research. Even without government funding or support for certain fields of research, private funding sources may step in to facilitate research; however, research advances will likely be delayed by government restrictions on research. Government policies, laws, and regulations create incentives and barriers for research at many different levels. Note that government incentives and disincentives can be expressed in forms other than funding and direct prohibitions. For example, if national, local, state, or regional governments provide tax law incentives for research, those tax benefits provide encouragement for research. If a local government imposes real estate zoning ordinances that prohibit or restrict certain forms of research, those real estate laws create a barrier to research. In the United States, the public in the state of California voted to enact a legal plan that allocated substantial public resources to support and facilitate stem cell research in the state, even though that initiative ran generally counter to national policy in the United States. Expect a similar range of legal and public policy actions by national, regional, and local governments aimed at facilitating, and limiting, work involving nanotechnology. Regulation can also create opportunities for nanotechnology research. To the extent that some regulatory requirements in fields such as environmental protection require specific technical capabilities that may be satisfied through use of nanotechnology, regulatory requirements could provide incentives for research into nanotechnology applications that facilitate compliance. The traditional regulatory framework in the fields of environmental protection, health and safety, and other categories now

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focuses on those instances, if any, in which the movement to nanoscale materials and processes requires new regulatory requirements. The assessment of the extent to which such nano-specific rules are necessary requires a broad foundation of research. Regulators around the world are now conducting and supporting research to determine what additional forms of regulation may be needed in order to protect the public interest from any special threats posed by nanoscale activities. This research presents a significant opportunity for nanotechnology researchers. For example, substantial attention is now directed toward potential toxic threats posed by nanotechnology applications. A wide range of parties, including governments, private industry, and public interest groups now urge substantially more research in the field of nanotoxicology. They contend that such research is necessary to provide an effective foundation for future regulation. Without the research, effective regulation will not be possible. This situation presents a significant opportunity for research, encouraging research into both potential applications for nanotechnology and potential consequences of nanotechnology use. Nanotechnology and its applications are in their early stages of development; accordingly, the impact of the technology remains unclear. Continuing research into nanotechnology impact will likely remain an important field of research for many years. To date, the global trend has been to encourage diverse nanotechnology research and commercialization. The United States and other nations implemented legislative and regulatory provisions actively encouraging and promoting basic nanotechnology research and exploration of potential commercial development. The current international environment is highly supportive of nanotechnology research, and it generally provides effective incentives for research in those fields. As nanotechnology research advances, we are likely to see additional emphasis by governments on supporting and encouraging research into specific fields, such as the environmental, health, and safety implications of widespread nanotechnology use in diverse applications. Regulators, nanotechnology proponents, and the public should all remain mindful that regulation and policies at all levels of government have a significant impact on research. They should also recognize that the impact on nanotechnology and other forms of research is caused by both direct and indirect regulatory action. Rules, laws, and policies, in fields as


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diverse and as seemingly distantly removed from research, such as taxation and real estate, significantly affect research. All those involved in nanotechnology development and regulation should pay particular attention to this wide range of influences on nanotechnology research.

Incentives for Commercial Applications Regulatory action has a significant impact on the creation of incentives and disincentives for development of commercial applications based on nanotechnology research. Regulatory actions affect the extent and the timing of the availability of nanotechnology for the commercial marketplace. It also affects the costs associated with bringing nanotechnology to commercial use. By affecting these factors, regulation presents both incentives and disincentives for nanotechnology development and use. Those incentives and disincentives come in several forms. Development of commercial applications is largely driven by the anticipated economic return associated with the commercialization effort. Regulation affects that return in several ways. At one level, regulation (particularly through intellectual property rights) significantly affects rights of ownership and control associated with nanotechnology and the information associated with it. The ability to establish, maintain, and enforce proprietary rights to the technology and associated know-how play a critical role in the assessment of whether or not to take nanotechnology to commercial applications. In a sense, intellectual property rights create the economic value associated with any innovation, including those associated with nanotechnology. Broad and readily enforceable intellectual property rights for nanotechnology provide a substantial incentive for the investment of resources necessary to facilitate development of commercial applications. Note, however, that broad intellectual property rights can also chill or impede commercial development of nanotechnology. For example, extensive patenting and patent enforcement for nanotechnology can slow the development of new technology and new applications that build upon the prior work. Aggressive assertion of patent rights can restrict access to nanotechnology research and innovation. Restricted access to prior work can limit future research and impede commercial development based on

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research. Establishment and enforcement of intellectual property rights thus works in two directions with respect to development of new technologies, such as nanotechnology. In part, regulation of intellectual property rights provides incentives for research, investment, and commercial development. At the same time intellectual property rights can impede research and limit commercial development by restricting access to innovative work. This dual nature of intellectual property rights poses a significant challenge for governments and commercial enterprises. Compliance with regulatory obligations (as to environmental protection, for example) often provides incentives for businesses to turn to new technologies. Under some circumstances, efforts to comply with regulations lead to technological advances. In those instances in which existing regulatory compliance obligations could be met through new uses for nanotechnology, regulation provides a commercial opportunity for nanotechnology. For example, nanotechnology holds promise in certain applications that can facilitate compliance with environmental pollution limits. The existence of those environmental regulations provides a potential commercial opportunity for some forms of nanotechnology, and thus presents an incentive for commercial use. In this way, new technologies, such as nanotechnology, sometimes provide new solutions to regulatory challenges and thus create new commercial applications and new product markets. Regulation has a significant impact on the perception of investors regarding the extent to which nanotechnology provides a promising potential economic return. Significant regulatory oversight is often viewed by investors as an element that adds substantial risk to their investment. That increased risk can make the investment in nanotechnology ventures a less attractive investment option. Regulation is often viewed as a disincentive for investment if the regulatory oversight is viewed to be onerous or if the regulatory framework is unclear and uncertain. If a clear regulatory framework applicable to nanotechnology develops, however, it is possible that regulation can encourage investment in nanotechnology. Regulatory certainty and clarity can provide investors and other industry participants with greater confidence that they can effectively estimate the costs and risks associated with nanotechnology development and use. That clarity and certainty can help to encourage nanotechnology development by enabling industry participants to


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evaluate more accurately the opportunities, risks, and rewards associated with nanotechnology. Although extensive regulatory oversight can sometimes act as a disincentive for investment, regulation itself is generally not the greatest disincentive for investment in an industry or company. Instead, uncertainty is the greatest distinctive. When the constraints, costs, and risks associated with a potential investment are clearly identifiable, investors have the ability to make informed decisions. In such a setting, they will assess the merits of each potential investment individually, and they will allocate their resources accordingly. When there is substantial uncertainty as to any key factor, including regulatory impact, investors commonly avoid the investment. If regulatory uncertainty applies to an entire class of potential investments, such as nanotechnology, many investors will avoid the entire sector. Individual enterprises will not have the opportunity to be judged as potential investment opportunities based on their merits, as many investors will avoid the entire sector. This condition can have a devastating impact on nanotechnology ventures. Regulation can create and destroy commercial opportunities for nanotechnology and other new technologies. This potential impact has serious consequences for businesses and consumers. Governments and nanotechnology industry participants must be sensitive to this relationship between regulation and commercial opportunities. They must recognize that regulation profoundly influences commercial incentives.

Affecting the Pace of Commercial Development The scope and activism associated with nanotechnology regulation can profoundly affect the rate at which commercial applications for nanotechnology develop. More intrusive and less flexible regulation can slow the commercial development of nanotechnology. In contrast, flexible, practical regulation can encourage more rapid commercialization of nanotechnology work. In addition, rapid deployment of a clear and certain regulatory framework can also play a helpful role facilitating commercial development of nanotechnology. There is a direct connection between regulation and the rate at which commercial applications for emerging technologies such as nanotechnology develop. Nanotechnology is in its

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early stages of commercial development and regulatory impact on nanotechnology use remains uncertain; thus we have not yet seen substantial redirection of private investment capital in the field flowing away from areas of strict regulation. If we look in other fields, however, we see how development of strict regulatory oversight can partially discourage commercial investment. For example, commercial investment in ventures involved with human cloning has been partially chilled in response to regulatory concerns raised by governments. The pace of commercial adoption of nanotechnology can be dramatically slowed by onerous regulatory oversight. Extensive regulatory oversight increases the cost of compliance. As regulatory compliance costs increase, incentives for commercial development in the field of nanotechnology decrease. The reduced incentives for commercial development are likely to slow the pace of development. In this way, regulation has a notable influence on costs of production and use, and it thus significantly affects the development and operation of markets. Commercial adoption of nanotechnology can also be delayed by regulatory uncertainty. Uncertainty as to the regulations applicable to nanotechnology provides one level of uncertainty that can slow nanotechnology development. In an uncertain regulatory environment, industry participants have serious questions as to which, if any, regulations will apply to their products and conduct. In addition, uncertainty as to decisions to be made by regulators can substantially impede nanotechnology acceptance. Questions regarding regulatory enforcement provide another important form of regulatory uncertainty. Both forms of regulatory uncertainty will slow the rate of commercial adoption of nanotechnology. Uncertainty as to applicable regulatory requirements places a significant element of risk on decisions as to investment into research and commercial development. Regulatory uncertainty makes costs associated with nanotechnology research, production, distribution, and use unclear and very difficult to assess. Uncertainty also makes market projections and product development extremely difficult. In such a climate, the pace of commercial development will likely be far slower than it would be in a setting where the regulatory obligations are clearly defined and expressed. Regulators thus play a critical role influencing the rate of commercial development for nanotechnology and other novel technologies. Their


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decisions regarding content, scope, and enforcement of regulations directly affect costs and assessment of investment risk. By affecting those key commercial decision-making factors, the regulatory framework presents a major source of uncertainty that alters the pace of commercial development for nanotechnology.

Shaping the Nanotech Marketplace Regulation affects the supply and demand for an emerging technology, such as nanotechnology. This impact drives the pricing for nanotechnology and the products into which it is integrated. Regulation of nanotechnology will substantially affect the availability, price, and terms of nanotechnology products in the marketplace. In this way regulation affects the commercial viability of nanotechnology. Regulation affects the nanotechnology marketplace by affecting the decisions of producers and users of the new technology. Regulation can skew the competition between large established businesses and young, entrepreneurial ones. For instance, an environment in which regulatory compliance demands are extensive and costly can place large established companies at a competitive advantage relative to their smaller competitors. The large enterprises commonly have already established regulatory compliance mechanisms in many different jurisdictions, and they are already investing significant resources in compliance. In contrast, small companies seldom have such regulatory compliance mechanisms in place, and very few have access to the resources necessary to establish them. In such a setting, the nanotechnology marketplace would likely favor established companies over entrepreneurial ones. An example of this dynamic is offered in the electronic commerce setting. The Internet and associated information technology make it relatively easy for even very small business to be global in reach. Yet once those businesses move into the global marketplace, they must comply with the regulations applicable in all jurisdictions in which they do business. The evolution of e-commerce suggests that the large, established businesses with already existing multijurisdictional regulatory compliance infrastructures have a notable competitive advantage over the small, new enterprises attempting to compete with them in the global marketplace.

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As more jurisdictions enforce regulations applicable to nanotechnology development and use, the challenge of multijurisdictional compliance will likely create similar competitive advantages for the largest companies involved in the nanotechnology marketplace. Regulatory treatment of nanotechnology and its applications can also significantly affect the availability of capital for new and established businesses involved with nanotechnology. Highly regulated industries and markets can have greater difficulty attracting financing. Financial support is particularly difficult to attract when the regulatory environment is active and uncertain. In this setting, it is likely that nanotechnology will first be embraced in the commercial context by large, established companies rather than small, young ones. Those established companies are better positioned to evaluate, and to bear, the risks and costs associated with regulatory compliance than are there smaller competitors. The larger enterprises have the more substantial resources and the more extensive expertise necessary to enter into more highly regulated markets. In general, highly regulated markets favor larger, well established players, at the expense of would-be new entrants. Regulation substantially affects the prices associated with nanotechnology products. Stringent regulation or regulatory uncertainty can drive prices higher by increasing costs of production, distribution, and maintenance of the nanotechnology products. Higher prices make the nanotechnology products less attractive in the marketplace when compared with competitive products that do not make use of nanotechnology and are thus not subject to the costs of nanotechnology regulatory compliance. This adversely affects their sales and associated market share. Substantial regulatory compliance costs can noticeably damage the competitive position of nanotechnology products in the marketplace. The competitive position of nanotechnology products in the marketplace can also be harmed to the extent that regulation places costs and burdens on consumers of nanotechnology products. For example, if nanotechnology products are placed under special regulatory restrictions associated with storage, use, and disposal, the cost to the consumer of using the products is increased. This places the nanotechnology products at a competitive disadvantage relative to similar, nonnanotechnologybased products. The costs to consumers are greater for nanoproducts than for nonnanoproducts as a result of the compliance costs absorbed by


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consumers. This condition places nano-based products at a significant disadvantage in the marketplace. Nanotechnology regulation affects the availability of nanotechnology products in the commercial marketplace. It also affects the pricing and costs of use associated with those products. Accordingly, regulation affects the nanotechnology marketplace by substantially influencing transaction terms, market access, and relative competitive positions. It is important for government authorities to recognize this direct connection between regulation and commercial markets. Those governments that anticipate nanotechnology will play a significant role in economic development should be particularly mindful of, and attentive to, this link between nanotechnology regulation and the structure of the nanotechnology commercial marketplace. The regulatory decisions made by governments are a significant force in the nanotechnology marketplace. It can be a force with the power to determine whether a viable market will exist, and which of the participants in that market will survive.

Altering International Relationships Regulatory decisions associated with nanotechnology can have a major impact on relationships between nations. Interest and concern regarding nanotechnology are global in scope. As discussed in Chapter 4, governments in virtually every part of the world are attempting to promote the benefits of nanotechnology while responding to the challenges it presents. Those efforts carry significant international implications. Nanotechnology regulation significantly influences the political, economic, and social relationships between the countries of the world. Some nations view nanotechnology, and other emerging technologies, as opportunities to move to the next higher level of international economic size or political strength. Other nations view nanotechnology as an opportunity to develop an international, commercial, competitive advantage. Many countries see nanotechnology as an important potential vehicle to drive economic growth and quality-of-life enhancement. All of these nations recognize that the regulatory treatment they afford to nanotechnology will have important international consequences. In such a setting, regulatory actions taken by

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one nation will influence, and be influenced by, the actions of many other countries. Dramatically different regulatory regimes directed toward nanotechnology in different countries can lead to international tension. An illustration of this process is provided by the different approaches to regulation of genetically modified foods in the in the United States and in Europe. Regulatory action in one country can have important consequences for businesses and consumers in other nations. Regulation affects the availability, the price, and the effectiveness of products and services that make use of nanotechnology. Regulation also affects the accessibility of markets in different countries for goods and services that incorporate nanotechnology. These effects have major international significance. Regulation can be used as a barrier to international trade. Significantly different standards in different countries applicable to products containing nanotechnology components can create impediments to the efficient international flow of goods. Nanotechnology regulations can be used to keep products that make use of nanotechnology out of certain national or regional markets. This type of regulatory disparity can slow the development of nanotechnology applications, and it can make the nanotechnology marketplace inefficient. If, for example, one country prohibits the use of certain nanomaterials in consumer products, but its neighbor does not, the transborder flow of products containing nanomaterials will be disrupted. A company that chooses to integrate nanomaterials into its product faces a choice, ceasing exports of the product to the country barring nanomaterials or bearing the cost of creating a nanomaterial-free version of the product for sale in the country in question. Although the disparities in regulatory treatment for nanotechnology may be motivated by entirely legitimate public interest determinations, the impact of those disparities can be every bit as economically inefficient and politically volatile as the impact associated with maliciously motivated trade barriers. Another international consequence of nanotechnology regulation involves relationships between economically mature nations and developing countries. Already there is an emerging sense in the developing world that intellectual property laws largely favor mature economies at the expense of developing nations. Mature economies tend to focus on the proprietary control aspects of intellectual property rights, while emerging economies emphasize the need to build their own


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intellectual-property-creating infrastructure, and the importance of moving new technology into commercial use quickly. Mature economies emphasize the ownership concepts of intellectual property, while developing economies stress the access aspects; this difference in focus is the basis for significant conflicts associated with intellectual property rights enforcement. Nanotechnology and other emerging technologies provide convenient flashpoints for the different intellectual property rights perspectives of mature and developing economies. Mature economies have advantages in the development and use of new technologies relative to developing economies. This first-mover status generally results in control over ownership and access to emerging technologies. Having seen this process on many occasions in the past, developing economies now make greater effort to anticipate emerging technologies and to position themselves so that mature economies will not have total control over the new technologies. This competition and conflict is developing in the world of nanotechnology and will likely be seen with virtually all new technologies in the future. Nanotechnology regulation can also lead to a rift within the group of developing economies around the world. For example, the more dynamic developing economies, such as China, are aggressively promoting development of nanotechnology and other emerging technologies, while other less mature developing economies, such as many in Africa, have been far less focused on the potential of emerging technologies, such as nanotechnology. As a result, a gap is developing within the roster of developing economies, with some moving toward a leadership position that places them between the mature economies and the least developed economies. Some developing countries are attempting to use strategic regulation of emerging technologies, including nanotechnology, to help position themselves as new regional economic leaders. South Africa offers one example of this strategy. Nanotechnology research and development can play an important role in overall national economic development. Nations seeking a leadership role in nanotechnology’s future often believe that creation of a supportive regulatory environment can encourage and facilitate cultivation of a nanotechnology industry, with the potential economic benefits that industry can bring in the future.

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The rise of emerging technologies, including nanotechnology, encourages the development of a third category of nations, located on the economic development scale between the mature economies and the truly developing economies. These rapidly maturing economies, including China, India, Brazil, and South Africa, are developing capabilities and interests distinct from both the mature economies and the developing economies of the world. They will likely play an important role in the development of nanotechnology and other new technologies on the international scene. They are likely to be active proponents of nanotechnology and other innovations, yet they may share the concerns of the traditional developing nations with respect to issues such as intellectual property rights. Supportive regulation governing nanotechnology can facilitate the development of nanotechnology havens. Specific countries or regions with regulatory climates conducive to nanotechnology work can attract nanotechnology research and companies that make use of nanotechnology in their products and operations. Supportive regulation can encourage development of nanotechnology clusters, regions where there is a high concentration of work in the nanotechnology field. Some governments, those in Singapore and South Korea for example, recognizing this potential, are attempting to create legal and public policy environments that will make their jurisdictions promising candidates to serve as centers, hubs, or havens for emerging technologies, including nanotechnology. Note that there are limits to the ability of a single jurisdiction to reap the full benefits of nanotechnology based on unilateral action. No matter how effective a nation or region may be at establishing itself as a center of nanotechnology work, regulatory action by other jurisdictions can limit the benefits reaped by the pronanotechnology jurisdiction. For example, if many other nations bar, or severely limit, nanotechnology development and use, the ability of the nanotechnology hubs to commercialize the work they have fostered will be restricted. In the truly interconnected world of today, no single nation can realize the full potential of nanotechnology and other novel technologies without effective coordination with other governments regarding the regulatory and public policy requirements applicable to those technologies. Some regulatory provisions affect the international transfer of nanotechnology. For example, technology export control regulations in


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the United States are motivated by national security concerns, and they attempt to restrict the international transfer of technology and expertise that have military applications. Regulation aimed at controlling the international flow of nanotechnology and associated knowledge is doomed to failure. National regulation of nanotechnology must be based on an assumption that interest in nanotechnology and expertise in that field will be truly global. No single nation or region will have the ability to control the technology and related know-how. Efforts to enforce regulations that restrict the flow of information and knowledge are likely to create tension between governments. They may also provide incentives for companies involved in the export of the controlled technologies to locate in those countries in which international flow of the technologies is not controlled. An example of this situation developed when the United States government actively enforced technology export controls over computer software and hardware that provided cryptographic encryption capability. Application of those regulations to encryption products meant that many U.S. companies were required to obtain government permission prior to distributing a wide range of computer products, including Internet browser and e-mail software, outside of the United States. Some of those companies found the government authorization process to be too confining in the highly competitive global software market. Accordingly, some U.S. companies created or acquired software companies outside of the United States (in Australia, Japan, and Russia, for example) and used those companies to develop, manufacture, and export the controlled software. The actions of those affiliated companies outside of the United States were beyond the jurisdiction of the U.S. export control rules. If export controls are applied vigorously by the U.S. government against nanotechnology, expect a similar off-shore migration by at least some of those companies, for commercial competitive reasons. Expanded international use of nanotechnology, and associated regulatory action at the national level in different jurisdictions, can also lead to multinational regulatory action. Existing international treaties may be modified to account for global nanotechnology activity. Also possible are new treaty initiatives directed specifically toward nanotechnology development and use. Multinational attention to nanotechnology is likely to focus initially on environmental, health, safety, and national security regulations. Part of the appeal of coordinated multinational regulatory

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action is that it will facilitate relative ease of compliance, as parties subject to regulation will have fewer different regulatory regimes with which they must comply. Coordinated regulation across multiple jurisdictions can also develop informally through cooperation among regulators, even without formal treaty action. Regulatory action by multiple governments need not always be the source of international tension. By collaborating and coordinating with each other as they consider nanotechnology and its implications, nanotechnology regulation can become, at least in part, a foundation for international cooperation. By sharing information and communicating on objectives, governments can face the regulatory challenges posed by nanotechnology in a collaborative way. That collaboration may result in more effective regulation and may help to improve international relationships. In this way, nanotechnology oversight holds the potential to promote more comprehensive and effective cooperation between nations. We are seeing examples of such collaboration among governments on nanotechnology regulation in the European Community, for example.

Allocating Costs Associated with Risks Another notable impact of regulation is allocation of the costs of risks. Regulations establish legally enforceable performance obligations. The parties legally obligated to comply with the regulatory requirements bear the costs associated with risk avoidance. Of course, all or part of those costs may, in turn, be passed along to consumers, if the market can sustain that pass-through of costs. For legal purposes, however, regulation effectively places costs of risk avoidance on the parties who bear the responsibility for compliance with the regulations. Those parties commonly include the manufacturers, distributors, and users of nanotechnology. The enterprises that bear the legal obligation to comply with regulatory requirements bear the cost of protecting the public from the potential threats that the regulations are designed to prevent. In a very real sense, regulations represent the government’s choice as to which parties should bear the costs associated with protection of public welfare. To the extent that the current trend toward integrating nanotechnology applications into the already existing regulatory


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requirements applicable to the products into which nanotechnology is incorporated continues, the costs associated with risks posed by nanotechnology are borne by the early commercial adopters of nanotechnology. If this regulatory trend is modified to create new regulations specifically directed toward nanotechnology, the costs associated with risks will be borne by all nanotechnology developers and users. Regulators will thus significantly influence allocation of the cost-of-risk burden by their decisions on scope of regulation. That allocation of risk costs is particularly significant in the early stages of nanotechnology commercial development. Regulation also affects cost-of-risk allocation by helping to establish definitions of reasonable conduct with regard to nanotechnology use. Regulatory requirements set a legal standard that must be met. As that standard evolves and as regulators comment on risks and means of reducing risk in the field, guidelines for conduct in addition to the regulatory standards will emerge. Those guidelines, although not legally binding, are likely to evolve into future regulatory standards. Before they become legal standards fully embraced by regulators, those guidelines are likely to be accepted as guidelines for conduct that may be adopted by insurers, for example, as requirements for insurance coverage. Those nonbinding guidelines are likely to affect court determinations of liability in the context of tort law, by establishing generally accepted standards of conduct deemed to constitute reasonable care. Establishment of standards of reasonable conduct for use of nanotechnology will likely have a significant impact on allocation of legal liability. Those nonregulatory practical standards will commonly be adopted by courts and insurers. Courts will apply those guidelines as standards of reasonable care when evaluating tort law liability. Insurance companies will adopt these operational standards as requirements for liability insurance coverage. We see in many different industries that compliance with the letter of regulatory obligations is not the limit of government and social expectations regarding conduct by businesses. Enterprises are commonly expected to comply with regulations and to operate consistent with a framework of guidelines and widely accepted practices. This compliance framework is almost certain to evolve for those businesses that make use of nanotechnology, as well. In addition to regulatory enforcement of legal requirements relevant to nanotechnology development and use, we will see private enforcement

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of laws, in jurisdictions such as the United States, through tort law claims. In those legal actions, both companies and the individual officers and directors of those companies will be the target of claims that they are responsible for private damages as a result of their use of nanotechnology. One of the key factors in resolving those legal claims will be court assessments of the reasonableness of the actions of the defendants. That assessment will be largely governed by application of both regulatory standards and industry guidelines that emerge through operational standards. Companies that meet both regulatory standards and industry operational guidelines that develop informally will be more likely to defend successfully against tort claims, by persuading courts that their conduct was reasonable, thus not the sort of negligent conduct for which legal liability would apply. Avoidance of legal liability will thus lead nanotechnology companies to meet both formal regulatory standards and informal industry operational guidelines. Insurance companies will also provide incentives for nanotechnology industry participants to meet both formal legal standards and informal industry guidelines for operations. Businesses generally look to insurers for coverage against legal liability through protection such as errors and omissions insurance. Individual officers and directors of private companies also look to insurers for protection against personal liability, through officers’ and directors’ insurance coverage, for example. Businesses also seek insurance coverage to protect against business interruption. Such coverage could be relevant in the nanotechnology context for companies that manufacture or use nanotechnology, if, for instance, regulatory action makes certain forms of nanotechnology unavailable in the marketplace, or if such action bars the commercial manufacture of certain nanotechnology. Availability of insurance coverage for participants in the nanotechnology industry will be largely affected by the insurance industry’s assessment of risk in that industry. Often, highly regulated industries are deemed to involve greater risk than other industries, thus if nanotechnology is highly regulated, insurance coverage may be unavailable or less extensively available for nanotechnology industry participants than for enterprises in other industries. Even if insurance coverage is available for the nanotechnology industry, the premiums they pay may be higher, to reflect the insurance industry’s assessment of greater risk.


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Insurers will likely favor those nanotechnology industry participants that effectively meet both regulatory requirements and industry guidelines. Those favored enterprises will have access to coverage when others do not. They will have access to a wider range of insurance coverage. They will also be able to obtain that coverage subject to lower rates and more favorable terms than will noncompliant companies. The insurance industry will thus play an important role in providing a significant incentive for nanotechnology participants to meet both regulatory obligations and industry operational standards. As a result of potential exposure to legal liability based on tort and other nonregulatory claims, nanotechnology industry participants may often favor formal regulation. Clearly established regulations require compliance; however, they also provide a measure of protection against other legal claims. If a party complies fully with regulatory obligations, there is less basis for a successful legal claim of tort negligence. Thus, if there is a comprehensive and effective regulatory framework in place, regulatory compliance will likely substantially reduce overall risk of legal liability. If, however, the regulatory environment is incomplete, ineffective or inconsistent with established industry and operational practices, mere regulatory compliance provides less protection against tort and other legal claims of liability. Although regulatory compliance can provide a notable shield against legal liability, that protection is far from complete. Regulatory compliance alone will not protect a business against all other potential legal claims. An example of this potential liability has been provided by the pharmaceutical industry. Pharmaceutical products reach the commercial marketplace only after extensive research, testing, and clinical trials. Yet even with that substantial regulatory oversight, pharmaceutical companies periodically face substantial legal liability for injuries caused by their products. The basis for that liability is generally not regulatory noncompliance, but is some other legal claim. The claims include tort law claims of negligence, but they also include claims of fraud involving deception of consumers and regulators as to product safety and efficacy. Those legal claims sometimes also include claims of conspiracy among employees, officers, and directors of the company. Legal claims can also include lawsuits brought by shareholders against the company or its officers and directors. Such claims may include

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contentions that the liability was incurred by the company as a result of failure by officers and directors to meet their fiduciary duty to act in the best interest of the company. These legal claims can result in liability for the company as an entity and for the individuals who are the officers and directors of the company. Potential targets for legal liability claims thus include the company, officers, directors, and employees in general. Companies that develop, manufacture, distribute, or use nanotechnology face both regulatory and general legal liability risks. For example, consider a company that incorporates nanomaterials in its products. In addition to complying with regulations associated with environmental protection, health and safety, and national security, the company must act to protect itself from general liability. If a customer, employee, or general-public member is injured in some way associated with the nanomaterials, that injured party has the option to take legal action against the company and its officers and directors. Those claims could include a variety of claims, including tort and fraud claims. In addition, the company and its officers and directors could be sued by the owners, the shareholders, of the company. Claims raised by the shareholders could include the contention that the use of the nanomaterials without shareholder consent constituted a breach of the fiduciary duties of the officers and directors; thus the individual company representatives bear personal liability to the owners of the company for the harm to the company caused by the nanomaterial litigation. Another aspect of liability risk allocation is the role of contract law in apportioning risk. Commercial contracts between businesses commonly address the issue of risk of loss or other liability. Participants in the nanotechnology industry, like participants in every other industry, will negotiate on the issue of which party will bear costs associated with legal liability arising from the transaction. In this way, commercial law and contract law will play an important role in liability cost allocation. For example, companies that incorporate nanomaterials into their products will negotiate with the suppliers of those materials attempting to persuade those suppliers to accept contract responsibility for legal liability associated with the materials. Regulations, laws, industry practices, and commercial negotiations have a profound impact on the issue of which parties bear the costs associated with harm that may be caused by nanotechnology. Governments


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and all parties associated with the nanotechnology industry should note this connection. Decisions regarding form and enforcement of regulation are, in part, decisions as to which parties will bear costs associated with nanotechnology risks. That allocation decision is part legal decision, part economic decision, and part social decision. The decision should thus be treated with substantial care.

Public Perception of Nanotechnology Another consequence of regulation of nanotechnology is an impact on public perception of nanotechnology and its potential. Regulatory action and the public pronouncements of regulators can have a substantial impact on public perceptions regarding the promise and the threat posed by nanotechnology. The activities of regulators can significantly shape the expectations of the public regarding nanotechnology’s future potential. Regulation significantly influences the general impression held by the public regarding nanotechnology and its uses. Public perception is largely influenced by media coverage of nanotechnology research and applications. The context of that media coverage can be influenced by regulation of nanotechnology. Debates associated with the application of regulations to nanotechnology, and those related to the development of new regulations for nanotechnology, will be widely reflected in the media. Those media reports are likely to have a noticeable impact on public perceptions of nanotechnology and nanotechnology use. Regulatory actions are sometimes interpreted by the media and the public to be an indication that the regulated product or conduct is unsafe. In the context of nanotechnology, application of regulatory oversight to nanotechnology and its use will likely suggest to some members of the public that nanotechnology is a threat that should be opposed and limited. This can lead to public resistance to nanotechnology, which can have an adverse impact on nanotechnology development. Regulatory focus on nanotechnology is likely to heighten the public’s sense of risk associated with nanotechnology research and commercial applications. Regulatory oversight can also have the opposite effect for some members of the public. Recognition that a product or activity is within the oversight of regulatory authorities can make the public more

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confident that the public interest is adequately protected. For some people, the existence of regulatory review over nanotechnology and its applications will give them greater faith in the technology and more willingness to support its widespread use. The connection between regulatory strategies and public perception is of significant importance to nanotechnology’s future. It is thus important for government authorities to recognize that their statements and actions regarding nanotechnology will influence public opinion regarding the technology and its potential uses. Regulators will make their decisions based on their obligation to protect the public interest, but as they take those steps, it is essential that they strive to avoid extreme actions that either unreasonably inflate public expectations regarding the technology and its promise or inappropriately frighten the public as to nanotechnology and its prospects.

Political Consequences Regulatory treatment afforded to nanotechnology can carry significant political consequences. As business and public interest in nanotechnology grows, political leaders will take a more active role in the discussion associated with nanotechnology policy. Politicians will respond to public interest in the topic. That political interest will affect the development and implementation of regulation as political leaders act to influence the regulatory institutions. Debate and discussion over the scope of regulations applicable to nanotechnology research and commercial use will likely have a significant political impact. That political response will be initiated, in part, by members of the public and organizations that have specific concerns about the safety and impact of nanotechnology use. Those who are concerned by nanotechnology have already made their concerns highly visible in political arenas in some jurisdictions, and that activism will continue in the future. Part of the political impact will be initiated by another portion of the public. That group consists of people and organizations with social, economic, and political concerns that extend far beyond the specific impact of nanotechnology. For these people and organizations, nanotechnology


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provides a convenient target for debate and advocacy. The core of their concerns is not the consequences of widespread nanotechnology use, but is instead a broader issue, such as the social impact of rapid technological change, or the impact of technology on economic fairness and social justice. These members of the public are motivated by broad policy concerns, yet their advocacy and opposition will be directed toward nanotechnology. It is important to recognize that public concern associated with nanotechnology research and development will be expressed by both of the groups mentioned above. In general, it is easier to deal with the members of the public who have concerns that are truly based on nanotechnology and its impact. Discussions with that faction can focus on nanotechnology and its potential. Legitimate concerns about consequences associated with nanotechnology applications can be incorporated into the regulatory landscape to facilitate an effective balance between public interest protection and support for beneficial nanotechnology applications. Responding effectively to concerns expressed by the other faction is a much more difficult task. As their primary concern extends far beyond the actual impact of nanotechnology, discussions that focus on nanotechnology alone will never fully appease this other group. No amount of regulatory oversight of nanotechnology will fully address concern that the rapid pace of technological change is causing severe social dislocations. Similarly, no amount of effort by nanotechnology proponents and regulatory authorities will comfort opponents of nanotechnology who are fundamentally motivated by deep concerns that technology is not effectively addressing problems of economic and social justice. If the discussion regarding appropriate regulatory strategies for nanotechnology evolves into a broader debate regarding the impact of new technologies on society and humanity, the nanotechnology industry will likely face significant roadblocks and delays. Although this broader issue is an important one, it is of vital importance that it be addressed as an issue separate from immediate decisions associated with nanotechnology development. Both those who have specific concerns about nanotechnology’s social impact and those who are using nanotechnology as a symbol for their broader concerns about technology, in general, and the social order will be highly visible in the political arena. They will express themselves politically by lobbying politicians and government officials. They will also

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express their concerns through their votes in elections. Regulation applicable to nanotechnology will thus provide a key forum in which public opinion will surface and be shaped. Public opinion will then be expressed in political arenas in many different jurisdictions. The political consequences of nanotechnology regulation and its subsequent impact on public sentiment will flow in two directions. As noted above, opponents of nanotechnology will be moved to adopt political activism, but so too will proponents of nanotechnology. Those proponents will also likely fall into two camps. One camp will consist of those individuals and organizations that have a direct commercial or personal interest in access to nanotechnology. The other camp will consist of those who view nanotechnology as a symbol for all potential innovations and emerging technologies. It is important that the proponents of nanotechnology avoid overselling the potential of the technology and the industry. Just as unreasonably heightened fears of nanotechnology will likely lead to unnecessary and inappropriate constraints on the technology, so too will unreasonably high expectations as to the potential benefits of nanotechnology result in inappropriate expectations by society. If expectations associated with the future benefits of nanotechnology are excessively raised by nanotechnology proponents, any failure to meet those expectations will likely result in a negative backlash against nanotechnology. Such a political backlash could seriously harm future support and opportunities for nanotechnology development. Government authorities and the nanotechnology industry should be aware of the potential for highly volatile political action that decisions regarding nanotechnology regulation can carry. In such a political environment, responsible action by both opponents and proponents of nanotechnology is of critical importance. Unreasonable extremism on either side of the nanotechnology development issue would be politically irresponsible and would likely bring consequences harmful to the overall public interest.

Nanotechnology and the Precautionary Principle A significant regulatory threat to the development of nanotechnology and other emerging technologies is widespread application of the


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precautionary principle by regulators. As discussed in Chapter 3, the precautionary principle is a regulatory strategy that applies strict regulatory controls in circumstances when a public risk is potentially very great but there is substantial uncertainty as to the actual likelihood that the threat will be realized. It has been embraced by authorities in the European Community. Widespread use of the precautionary principle can serve as a major impediment to nanotechnology research and to the development of useful applications based on that research. The precautionary principle also poses a potentially wider public policy threat as it can delay exploration and adoption of a great many new technologies. The precautionary principle represents a very conservative approach to regulation. It assesses the potential threat to the public interest associated with an activity, and if that threat is deemed to be substantial, the precautionary principle permits strong regulation, even when the likelihood that the threat will be realized is uncertain. This regulatory strategy permits regulatory action that can have a dramatic, adverse impact on development of new technologies, such as nanotechnology. One of the major difficulties associated with strict application of the precautionary principle is that it can disrupt the process of innovation and commercial development before there has been a clear demonstration of harm. The legal and regulatory process traditionally responds to demonstrated harm, attempting to remedy the damage and to reduce the risk of such harm in the future. The precautionary principle represents an effort to prevent harm through prior regulatory action. This is a noble goal, but one for which the legal system is not adequately positioned to pursue successfully. Only after a threat can be fully and accurately assessed can regulators effectively act to prevent it. Regulatory action prior to accurate definition of the threat will be ineffective and costly. Those costs include compliance costs associated with efforts to satisfy continuously changing regulatory requirements as well as the opportunity costs arising from denial of public access to the benefits of nanotechnology use. Application of the precautionary principle will leave a significant and harmful legacy for emerging technologies of the future. Virtually all new technologies have the potential for substantial harmful effects, if improperly used. This suggests that application of the precautionary principle as a basis for regulation can set the stage for prohibition or delay of

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commercial use of essentially all emerging technologies. Such a situation is unacceptable. Application of the precautionary principle represents an overreaction by regulatory authorities, and as such, it does not serve the long-term interests of the public.

The Challenge of Regulatory Uncertainty and Disparities Significantly different regulatory strategies adopted by different governments can have a profound impact on nanotechnology. At one level, those differences create substantial uncertainty for nanotechnology developers and users with respect to regulatory compliance. At another level, those differences create regulatory imbalance that makes compliance difficult and can impede continuing development of nanotechnology applications. Yet it is also true that different approaches to nanotechnology regulation in different jurisdictions can ultimately yield more successful and appropriate regulatory strategies as each different jurisdiction acts, in effect, as a laboratory testing a different regulatory approach. Regulatory uncertainty exists in two forms. One is the uncertainty as to whether a particular activity falls within the scope of regulation. The second is the uncertainty as to the exact regulatory requirements to be applied. Both forms of uncertainty have serious adverse consequences. Regulatory uncertainty provides a significant disincentive for additional investment of resources into the work in question. That uncertainty also makes business planning and development of operational strategies difficult, if not impossible. Efficient business planning and operations are impossible in a high-uncertainty regulatory climate. Regulatory uncertainty increases substantially the costs associated with participation in the industry. Diverse regulatory strategies applied in different jurisdictions can also create a significant barrier to nanotechnology development. Compliance with regulations in multiple jurisdictions becomes a major challenge, and significant source of additional costs of doing business when the regulations differ in the various jurisdictions. This is a particularly significant issue in situations such as those associated with nanotechnology, where there is global participation as to development, manufacture, distribution, and use of the technology. Different regulations in different


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jurisdictions can serve as barriers to entry. Those barriers make the global market less efficient, thus increasing costs. Yet different regulatory schemes in different jurisdictions can also have a positive effect. Each of those different jurisdictions can serve, in effect, as a regulatory laboratory or test bed. The many different regulatory approaches can be tested in practice. Ideally, the most effective and appropriate of those diverse strategies will prevail and will ultimately be embraced by the majority of jurisdictions. The difficulty with this approach is the confusion and inefficiency it permits during the early stages, as the many different strategies are first employed. In such an environment, some measure of advantage will fall to the jurisdictions that move slower in adopting regulations. The delay in action will provide those jurisdictions the opportunity to observe the impact of the different strategies applied by the early adopters. Armed with that information, the late adopters could implement the regulatory strategies that proved to be more effective in other places. Regulatory disparities can also facilitate the development of nanotechnology enclaves or havens in certain jurisdictions. Businesses often locate in the places deemed to be the most favorable for their work. Jurisdictions that create regulatory environments most favorable to nanotechnology development and use are likely to attract companies involved with nanotechnology as developers, distributors, and users. These most attractive locations can develop as nanotechnology centers or havens. Regulatory strategy can thus be part of an overall government policy to develop as a center of nanotechnology. Of course, as we have previously noted, unilateral regulatory action by one nation in support of nanotechnology will not be adequate to result in realization of the full future promise of nanotechnology. The global nature and reach of nanotechnology makes unilateral action by a jurisdiction inadequate. Such independent action can, however, enable a country to realize some level of competitive advantage, if only temporarily, over slower moving nations.

The Critical Impact of Regulation on Nanotechnology Regulation has a critical impact on nanotechnology development. It affects the direction and scope of research. It also has a significant impact

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on incentives and opportunities for development of commercial applications. Regulation also affects the availability of funding for research and commercialization. In addition, regulation substantially affects the public perception of, and attitudes toward, nanotechnology and its applications. Regulation substantially affects the development and use of nanotechnology, as well as the environment in which nanotechnology evolves. By affecting research, commercial development, the marketplace, and public acceptance, regulation directly influences the success of nanotechnology. In a real sense nanotechnology’s future will be driven by the decisions made by governments at all levels in all parts of the world. Those decisions largely control the future of nanotechnology and the extent to which its promise will be realized.

Implications for Future Technologies Regulatory treatment ultimately afforded to emerging nanotechnology applications will likely have an important impact on development and adoption of other emerging technologies in the future. Just as lessons learned by opportunities and challenges posed by past technologies, including information technology and biotechnology, are affecting the views of the public, special interest groups, and regulators as nanotechnology emerges, so too will the regulatory reaction to future technologies be affected by the nanotechnology experience. Regulatory response to nanotechnology will likely provide the model for the regulatory response to future emerging technologies. This role as precedent for future regulatory policies affecting the introduction of new technology is significant and should be noted as regulatory treatment for nanotechnology is considered. Regulatory strategies and actions developed in the context of nanotechnology will likely be applied in the future for other new technologies. This role as regulatory precedent is profound. If, for example, regulatory strategies such as the precautionary principle are widely embraced for nanotechnology those strategies will also be used for future technologies. The precautionary principle and other excessively conservative regulatory strategies can significantly delay the development and application of future innovations. This type of regulatory overreaction does not


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ultimately serve the public interest. As regulators, businesses, and the public consider the regulatory future for nanotechnology, they should remain acutely aware of the potential future impact of their current decisions on tomorrow’s new technologies and innovations. They should work diligently to craft and implement a regulatory regime for nanotechnology that provides a responsible and effective model for emerging technologies of the future. That regulatory model should balance constraints to prevent quantifiable threats with encouragement to facilitate full realization of technology’s beneficial promise.

Selected Bibliography Allianz Center for Technology and OECD, “Opportunities and Risks of Nanotechnologies,” 2004, at http://www.allianz.com/azcom/dp/cda/0,79645444,00.html. Durrenberger, F., J. Hock, and K. Hohener, “Overview of Completed and Ongoing Activities in the Field: Safety and Risks of Nanotechnology,” 2004, at http://www.temas.ch. Meridian Institute, “Nanotechnology and the Poor: Opportunities and Risks,” 2005, at http://www.nanoandthepoor.org. OECD, “Nanotechnology: Emerging Safety Issues?” ENV/JM (2004)32. OECD, “Towards a European Strategy for Nanotechnology,” 2004. Service, Robert F., “Calls Rise for More Research on Toxicology of Nanomaterials,” Science, Dec. 9, 2005, p. 1609. The Royal Society, “Nanoscience and Nanotechnologies: Opportunities and Uncertainties,” 2004, at http://www.nanotec.org.uk/finalReport.htm. U.S. National Science and Technology Council, “National Nanotechnology Initiative,” 2000, at http://www.nano.gov/html/res/nni2.pdf.

6 Regulatory Roadmap for Nanotech’s Future We have seen that regulation has a substantial potential impact on nanotechnology research and commercialization. The scope, structure, intensity, and effectiveness of regulation will substantially influence the extent to which nanotechnology develops and affects global society. In this chapter we consider suggestions as to how governments can most effectively balance their obligation to protect the public interest with a general desire to facilitate and promote beneficial applications for nanotechnology. We chart a regulatory course for governments to follow as they apply regulation and public policy to protect public welfare, while fostering realization of the substantial potential social benefits associated with active nanotechnology use. We find that government can regulate nanotechnology and other new technologies most effectively if it focuses on indirect influence. Regulation that helps to create a climate conducive to research, innovation, and compliance is most likely to be productive. Regulatory oversight that seeks minimal intervention in private decision making and negotiations, while allowing markets to develop and evolve with as little intervention as possible, has the best prospects of successfully advancing the overall long-term interests of the public. And perhaps most important of all, 155

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regulatory strategies based not on overreaction to special interests or public outcry, but instead relying on active efforts to base judgments on the best available foundation of factual evidence, will most effectively balance protection of the public with promotion of technological innovation and associated economic growth. Regulation should set the stage for free scientific inquiry and continuing technological innovation, but it should not attempt to direct those activities.

Encourage Research There are many unknowns with respect to nanotechnology’s potential and its implications. Effective regulation is very difficult in an environment characterized by incomplete information. In the interest of setting a foundation conducive to effective regulatory oversight, governments should promote and support continuing research into the likely impact of nanotechnology on the environment, including human beings. That support should take the form of research funding and topical guidance. The aim of regulators should be to encourage the creation of an accurate and comprehensive collection of information on nanotechnology impact and potential. In a field as dynamic and diverse as nanotechnology, research must be extensive and continuing if an accurate factual foundation to support effective regulatory oversight is to be developed and maintained over time. Active regulation based on incomplete or inaccurate information is a prescription for disaster. Incomplete knowledge undermines attempts at effective regulation. Without accurate information, there is no way to identify opportunities and threats, and there is no way to develop reasoned assessments of risks and probabilities. The solution to this problem is rapid development of an accurate knowledge base with respect to the potential and likely impact of nanotechnology applications on the environment, including humans. From the perspective of government authorities, there is no more important goal than the development of an effective knowledge base to serve as the foundation for regulatory decisions. Encouragement by governments for research in nanotechnology fields should also take the form of establishing and protecting an environment conducive to scientific research. In addition to funding and guidance as to topic selection, governments should cultivate a climate in


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which high-quality research is possible. For example, governments should promote the free flow of scientific personnel and students between countries. There are now many different high-quality research centers in many parts of the world. In addition, there are many different students, faculty members, and institutions interested in nanotechnology and other emerging fields of technology in every region. In such a setting, effective, productive research requires that ideas and people move freely from country to country. Governments can facilitate this exchange of people and knowledge by structuring and enforcing their immigration regulations in ways that promote and facilitate transborder movement of scientists and research personnel. Government authorities can also provide incentives for research. Government-provided incentives include tax benefits, such as deductions, offered for investment in scientific research, including research in nanotechnology fields. Tax regulations can also be used to encourage nanotechnology commercialization efforts. For example, tax credits for investment in nanotechnology commercial development can provide effective incentives for commercial nanotechnology applications. Development of economic incentives to encourage research in specific fields is an important component of a regulatory strategy for research. To date, those governments that have focused attention on nanotechnology have generally done so through grand statements of support and encouragement for work in that field. These policy initiatives sometimes appear to be more directly targeted toward public relations impact than toward practical support for nanotechnology research. Some governments have supported the sweeping policy statements with direct research funding, but many have not. Government can, and should, do more to promote and facilitate nanotechnology research than merely present broad policy initiatives favoring work in nanotechnology. Tangible financial support is critically important. Also important is creation of a research climate that encourages and facilitates nanotechnology work. Government authorities can, and should, help guide nanotechnology research, not by establishing a comprehensive agenda for such research, but instead by highlighting those topics and questions that must be investigated more fully to support and enable effective regulatory oversight of nanotechnology applications. In many ways, governments should be consumers of nanotechnology research. They are consumers

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who need access to the most current nanotechnology information if they are to perform their regulatory duties effectively. If governments actively solicit research in fields associated with nanotechnology that are important to the development and exercise of effective governmental oversight, governments will both promote additional research and increase the prospects that they will be in a position to exercise their regulatory authority effectively. In new fields of science and technology, it is natural that research first focuses on basic science. Basic research to understand fundamental principles and concepts is the first stage in the evolution of research. Soon thereafter, research activities extend into investigations regarding potential applications for the basic knowledge derived in the first level of research. This makes sense, as a body of fundamental knowledge is required before one has the tools to consider possible applications. As research expands to explore potential uses for the newly derived fundamental knowledge, research topics and lines of inquiry proliferate dramatically. As the potential applications for the new knowledge and technology crystallize, questions arise regarding the impact and implications of the use of the new technology. Only after there is some sense as to how the new knowledge might be applied in practice can one begin to consider the consequences of such use. In the field of nanotechnology, basic research has been underway for an extended period of time, and exploration of potential applications is also quite mature. Research into the impact and implications of nanotechnology use is, at present, quite immature. Government authorities can play a most productive role nurturing and supporting that category of research. Authorities should be mindful of the long time frame associated with scientific research. Research initiatives can take decades to bring results. For example, studies on health impact of certain nanomaterials have been underway for many years, but the results are not yet available as the time duration required to complete the studies is substantial. Immediate answers are seldom available when meaningful research is involved; and the substantial investment of time required for useful research must be recognized by regulators. They must plan their efforts and timetables to allow for this significant research lag time. Also of significance is the challenge of accurately interpreting research results and integrating those interpretations into regulatory and


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public policy decisions. Note that in fields such as medicine there is an often bewildering array of test results that are commonly subject to a very wide range of interpretations. On a seemingly daily basis media coverage informs us of the most recent medical research results that sometimes offer striking new insights, but also often call into question yesterday’s research results. The public and regulators must recognize that even the highest quality research seldom leads to definite answers regarding opportunities, threats, and probabilities. Government authorities should promote research, not because it will yield precise, definite answers to guide regulatory oversight, but instead because it will, over time, enable regulators to refine their rules and procedures incrementally, helping to improve continuously the effectiveness of the regulatory system. Appreciation for research as a critical and continuously evolving component of regulatory oversight is particularly important in today’s media environment, which enables and promotes widespread, immediate access to a wide range of research results. The Internet and all other forms of media make it possible for the public to have virtually immediate access to the most recent research results. Unfortunately, immediate access to results does not ensure responsible interpretation of those results. There is a useful role for government regulators to play helping the public to understand more fully the value and the limitations associated with the many different research results that are widely accessible. Without assistance to interpret research results responsibly, public opinion can be driven by inaccurate and unwarranted conclusions drawn from the research. Regulatory authorities must review, interpret, and analyze these research results as they develop and implement their regulatory strategies. If provided additional resources, our regulators would be in an ideal position to educate the public, helping the public to develop the interpretive skills necessary to understand more thoroughly the meaning of the diverse research results they encounter each day.

Integration into Existing Regulations Existing regulatory regimes have already been called upon to address integration of nanotechnology into existing products and processes. As we have discussed, intellectual property, environmental health and safety,

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and national security regulations now routinely address nanotechnology incorporated into the products and services they oversee. To the greatest extent possible, use of existing regulations and regulatory institutions to oversee the development of nanotechnology applications, instead of creation of new regulatory frameworks specifically directed toward nanotechnology, offers the best prospects for effective and efficient balancing of public interests with expansion of nanotechnology. Much of traditional regulation is directed toward specific products and activities, not toward individual technologies. As those products and activities make use of nanotechnology, nanotechnology will be incorporated into the already existing regulatory structures. We see this process already actively underway in fields such as environmental protection, consumer product safety, and occupational health and safety. This process of integrating nanotechnology into the existing regulatory framework by incorporating it into the oversight of existing products and processes is the most efficient and effective way to manage oversight of nanotechnology. Regulation should not focus on any specific technology. Instead, regulatory oversight should continue to be applied to the products and conduct they already examine. To the extent that new technology, such as nanotechnology, becomes integrated into products, processes, or services that are already the subject of regulation, the new technology should be integrated into the existing oversight mechanism. Instead of attempting to devise regulations aimed directly at nanotechnology, authorities should act diligently to ensure that the existing regulatory structures effectively examine any impact that the use of nanotechnology may present. Technologyspecific regulation is not an efficient or effective strategy.

Avoid Regulatory Overreaction Governments should place confidence in their existing regulatory structures. This confidence can be demonstrated by relying on existing regulations and regulators to handle effectively the developing set of nanotechnology applications. Rapid development of new regulations and new regulatory processes directed specifically toward nanotechnology and its uses would be a dramatic overreaction by authorities. Such an overreaction


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is unnecessary and would have devastating consequences for the potential benefits of nanotechnology. Another troubling form of regulatory overreaction involves application of regulatory controls before risks associated with nanotechnology are meaningfully understood. Premature regulation can often be more harmful to the long-term interests of society than is regulatory patience. An example of regulatory overreaction is application of the precautionary principle. Reliance on the precautionary principle as a guiding regulatory strategy will likely carry profound negative consequences for the development of nanotechnology and other emerging technologies. The precautionary principle encourages too much regulatory action too early in the evolution of new technologies and applications. It regulates based on an assumption of the worst-case scenario and is thus a form of overreaction. This approach to regulation encourages aggressive regulatory oversight before the nature and likelihood of specific threats can be fully understood and quantified. There is a common tendency for people to underestimate familiar risks and overestimate unfamiliar risks. We often grossly underestimate the chances that we will be injured in a household or traffic accident, but overestimate our chances of succumbing to an exotic disease. That natural human tendency to misperceive risks can have devastating consequences when it is translated into public policy decisions. Regulatory initiatives taken without adequate information to support them may well result in overregulation of unfamiliar risks, such as those associated with nanotechnology. Such a situation would not serve the best interests of society. If truly new and unprecedented threats arise from some nanotechnology applications, new regulatory requirements and processes can be implemented. Such a step is significant and should be undertaken only when the scope, impact, and likelihood of those novel threats are adequately understood by authorities. Dramatic expansion of regulatory oversight is not an action to be taken lightly. It is justified only when there is a solid factual foundation demonstrating the necessity of such action. Existing regulatory systems are designed to accommodate new threats and corresponding modifications in regulations. Note, for example, how environmental regulations provide for integration of new toxins

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and pollutants. Existing regulatory regimes are designed to accommodate new challenges; however, the expectation is that modifications to the system will be based on quantifiable assessments of threat and risk arising from the new sources. In the context of nanotechnology, at present, the issue is not inadequacy of existing regulatory frameworks, but is instead inadequacy of knowledge and data regarding the scope of impact of nanotechnology applications. Some nanotechnology industry observers contend that current regulations applicable to nanotechnology are insufficient to protect the public welfare. The available data is simply not sufficient to support such a blanket generalization. We do not yet know enough to determine with any degree of accuracy the extent to which existing regulatory coverage is inadequate for nanotechnology. In this setting, the responsible course of action for regulators is to work to enhance the available data set regarding the impact of nanotechnology. Regulation before knowledge is a prescription for disaster and will not enable government authorities to successfully complete their obligations to the public. Regulatory overreaction may be perceived by the public as an expression of institutional panic. Actions such as widespread adoption of the precautionary principle send an unnecessarily negative message to the public. Viewed as regulatory panic, these actions suggest to the public that the emerging technology is something to be feared, in a general and all-encompassing way. Regulatory overreaction also leads the public to question the underlying integrity and effectiveness of all existing regulatory processes and rules. When dramatic regulatory overstatements such as the precautionary principle are commonly invoked, they will surely make some portion of the public question the ability of the existing regulatory regime to protect the public at all. Regulatory overreaction thus impedes beneficial innovation and undermines the future effectiveness of the entire regulatory system by eroding public confidence in that system. Regulatory overreaction also skews the public’s expectations regarding regulatory oversight. At least in part, regulatory overreaction such as the precautionary principle will likely suggest to part of the public that the goal of regulation is elimination of risk of harm to the public. Elimination of risk to the public should not be the goal of regulations, and it is a mistake to suggest to the public that it is an appropriate goal. Total elimination of risk of harm is impossible to accomplish. Even if it were


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possible to achieve, it would not be desirable to the extent that elimination of all risks of harm would require a nonoptimal allocation of resources. To the extent that actions by regulatory authorities lead the public to believe that total elimination of risk of harm is an actual or appropriate goal of government, those actions are not reasonable.

Promote Regulatory Certainty As we have previously discussed, regulatory uncertainty can dramatically impede nanotechnology research and commercialization. Uncertainty as to the scope and form of regulations applicable to nanotechnology can deter investment in the field, delay development of commercial applications, and skew the development of the nanotechnology marketplace. All parties involved in research, development, and commercial applications of nanotechnology must clearly understand what forms and applications of nanotechnology are subject to regulation, and they must understand the specific terms of that regulation. One method to facilitate regulatory certainty is to rely as much as possible on existing regulatory regimes (e.g., current environmental, health, safety regulations) to handle developing nanotechnology applications. Avoiding as much as possible creation of new regulations and new regulatory authorities directed specifically toward nanotechnology will help to facilitate regulatory certainty. The content, form, and procedures of existing regulatory systems are known to businesses and the public. This knowledge and familiarity makes regulatory compliance easier and less costly to accomplish. Regulatory certainty can also be promoted by delaying, as much as possible, regulatory oversight until an effective database on nanotechnology impact can be developed. Uncertainty is more likely in an environment in which information is incomplete. In such a setting, as more information becomes available regulations may change substantially. If regulation can be minimized until an adequate foundation of information can be established, it is more likely that the regulations ultimately applied will remain in effective for a longer period of time. This promotes regulatory certainty.

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In many cases, regulatory uncertainty is a greater problem for participants in an industry than is substantial regulatory oversight. Although substantial regulatory oversight commonly leads to substantial compliance costs, investment of resources into compliance is less of a problem if the scope of that required investment is clear. Regulatory certainty makes compliance costs easier to estimate accurately. Regulatory uncertainty makes it much more difficult for industry participants to anticipate accurately their regulatory compliance costs. That uncertainty in planning and resource allocation makes participation in the regulatory industry more risky and less commercially attractive.

Encourage Cooperation Between Jurisdictions Cooperation among different nations, regions, and localities with regard to regulation of nanotechnology is extremely important to the development of an efficient nanotechnology marketplace. That cooperation involves coordination of regulatory content to help balance public interest protection with support for beneficial nanotechnology development. Coordination among jurisdictions also involves sharing information on regulatory strategies, identifying those that are more effective, and eliminating those that are not. Coordination as to the content of regulations is important to help facilitate efficient development of a nanotechnology marketplace that spans diverse nations, regions, and communities. As discussed previously, dramatic disparities between regulations in different jurisdictions can prevent or impede commercial development of nanotechnology. The range of potential applications for nanotechnology is substantively and geographically diverse, thus the regulations of many different jurisdictions are likely to be applicable to each nanotechnology application and initiative. Regulatory compliance costs will be notably lower if there is consistence in regulation from jurisdiction to jurisdiction. Coordination among regulatory authorities should take place at several different levels. One form of cooperation involves sharing of information regarding both the scope of nanotechnology development and the potential consequences of that development. This type of governmentto-government cooperation is particularly important and helpful in an


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environment, such as that currently associated with nanotechnology, in which the technology continues to advance rapidly and there is a high degree of uncertainty regarding impact and consequences of use of the technology. Another form of beneficial cooperation among governments involves sharing of information regarding regulatory strategy. If authorities share information on their experiences integrating nanotechnology applications into existing regulatory oversight, different countries, regions, and localities will benefit from the lessons learned by their colleagues. This process will help to make the overall regulatory evolution far more efficient than it would be if each jurisdiction acted in isolation. In this way, each regulatory authority serves as a laboratory for itself and others, and, collectively, the knowledge base as to which regulations are necessary and which are most effective develops more quickly. Coordination among regulatory authorities is also essential to magnify the impact of regulation. One community, region, or nation taking regulatory action in isolation will have limited impact in our world of global commerce and information flow. By coordinating their efforts, regulatory authorities will increase the range of their actions. Note that this impact can be beneficial or harmful to nanotechnology development and to the general public interest. If prudent, fact-based regulatory strategies develop and are rapidly shared by different jurisdictions, the overall result is likely to be a positive one. If information is not shared and a confused, inconsistent framework of regulation develops, or if ill-advised regulatory schemes proliferate, serious harm to nanotechnology can result, leading to delay in the realization of nanotechnology’s potential benefits to society.

Facilitate Information Sharing and Technology Transfer Government authorities should apply regulatory oversight in ways that encourage sharing of nanotechnology information among industry participants, governments, and the public. Regulations should also be applied to promote transfer of technology for nanotechnology applications. Free flow of information is essential to the rapid development of a global nanotechnology marketplace. Effective transfer of technology is a

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critically important element of effective commercialization of nanotechnology advances. Regulations that limit nanotechnology information transfer and sharing will impede nanotechnology development. In today’s highly interconnected world, such limitations are likely to be unsuccessful in the long run. Thanks to substantial advances in telecommunications, computer, and digital media technologies, it is now virtually impossible to block international transfer of information completely. Authorities should assume, for practical purposes, that knowledge and expertise, once developed, would eventually be accessible around the world. While it may be possible to delay that spread of information, efforts to prevent it entirely would be a waste of resources. Promotion of information sharing and technology transfer requires particular caution with respect to enforcement of intellectual property rights. As noted previously, intellectual property rights establish an important legal foundation to facilitate sharing of information, through patent disclosures for instance. Those rights can also, however, impede sharing of knowledge and information through aggressive assertion of proprietary controls over intellectual property. Intellectual property rights protection should be actively enforced by authorities; however, those authorities should also promote effective access to the innovations represented by the intellectual property through all mechanisms provided by intellectual property law, particularly licensing and concepts of fair use. Government authorities should also be supportive of open source and open platform strategies applied in the context of nanotechnology and other emerging technologies. As we noted in our discussion of intellectual property rights, the open source strategy makes use of traditional intellectual property rights but offers a nontraditional licensing framework. The open-source licensing framework permits licensees to use and modify the underlying intellectual property, provided that they agree to make their modified versions of the intellectual property available to other licensees subject to the same open source terms. This process promotes rapid evolution of the intellectual property. It also facilitates effective customization of the property, through prompt development of versions of the intellectual property that are most suitable for specific applications of specific users.


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Open platform strategies involve the development of systems that function effectively and efficiently with a wide range of proprietary technologies. Through use of open platforms, different parties may assert proprietary control over their intellectual property, yet all of those diverse proprietary products can operate with the basic platform technology. In this way, all of the proprietary technologies have an opportunity to compete in the marketplace, and none of the users of those technologies are penalized for their choice of products. Use of open platforms reduces the risk that proprietary technologies will serve anticompetitive purposes or will cause severe market inefficiencies. It is not government’s place to mandate or require open source or open platform strategies. It does make sense, however, for authorities to be supportive of open source and open platform initiatives that develop in the marketplace. That support can take the form of encouraging use of those open systems. Government encouragement can also take the form of government use of open systems, whenever possible. In the information technology marketplace, for example, several governments in different parts of the world have made the decision to purchase open source software whenever those products are available and meet the established performance requirements. Efforts to facilitate information sharing and technology transfer also require realistic expectations regarding national security. As we discussed previously, some regulations such as technology export controls are largely motivated by national security goals. In part, those goals involve restrictions on access to technology and technological expertise. In large measure, those rules are based on an assumption that international movement of technology and technical expertise can be effectively restricted. Perhaps that assumption was valid in the past; however, in today’s world, and certainly in that of tomorrow, controls on the global flow of technical knowledge will have severely limited effectiveness. As currently structured, technology export control regulations in the United States could apply to many different nanotechnology applications and a wide range of nanotechnology expertise. Emerging regulations, in the United States, the United Kingdom, and elsewhere, aimed at preventing terrorist activities, could also apply to domestic and international transfer of nanotechnology and associated knowledge. Although these regulations are well intentioned and serve a useful purpose, they should

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not be permitted to impede the sharing of information and the transfer of technology necessary to support the development of a thriving global marketplace for nanotechnology. Innovations in technology now emerge in many different places around the globe. No single nation serves as the sole source for developing technologies. Instead, many different countries and regions are highly active in technology advances, with different nations leading the way for different technical advances. In addition, information regarding technology advances now moves virtually instantaneously around the world; thus interest in, and demand for, new technology arises extraordinarily rapidly. In this setting it is foolish to assume that any single nation can, through its own regulatory action, block the transborder movement of new technology. In addition, successful barriers to international technology flow would be harmful to international economic development. Efficient introduction of new technology into existing products and processes helps to reduce production costs and to enhance product performance and quality. New technology also supports introduction of new products and processes that perform functions not previously possible. International transfer of technology is an important element behind economic growth. Regulatory efforts to impede technology transfer are ill advised. Such efforts are likely to fail, and they work counter to important policy goals associated with support for sustainable international economic development.

Regulation to Promote Efficient Markets Regulation is necessary because markets do not always operate efficiently. There are many instances when the conduct of suppliers and consumers results in conditions that are not beneficial for the public good. One example of market inefficiencies is the classic condition of market externalities, where one market participant has incentives to act in ways that unreasonably transfer costs to other parties or the society as a whole. (Environmental pollution is an example of such an externality.) Regulation is an important public policy tool to highlight, minimize, and remedy


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inefficiencies in economic markets. Regulation should not be used, however, to build or shape economic markets, or to replace market forces. Regulation applied to emerging technologies, such as nanotechnology, should focus on market inefficiencies that result from the rapidly evolving nature of the technologies. Regulators should, however, resist the temptation to influence more broadly the markets for the new technologies. Regulatory strategy should focus on actual market inefficiencies. Regulators should identify those circumstances when the natural forces of the marketplace do not effectively serve the overall public interest. Under those conditions, action by regulatory authorities is necessary to remedy the market failure. Circumstances when such action is merited are very limited. Authorities should not use regulation to build or to shape young markets. To the greatest extent possible, authorities should refrain from market intrusion, and should instead let markets evolve on their own. However, when there are instances of market failure, government regulation to correct the failure and protect the public interest is appropriate. Use of commercial market principles and concepts (e.g., strategic use of incentives and disincentives) by regulatory authorities can be highly productive. In this way, market principles can help to refine regulations, and markets themselves can sometimes supplement, or even replace, direct regulatory action. Regulatory authorities should be willing to adopt market principles of incentives and disincentives as part of their regulatory strategies. For example, U.S. regulatory authorities make use of public auctions to allocate rights of use in wireless communications frequencies. An increasing number of nations are establishing markets for the transfer of environmental pollution abatement credits, enabling parties that reduce their pollutants below their allocated share to sell those credits to other parties, thus realizing financial gain as a result of their environmental efficiency. These and other examples illustrate ways in which principles associated with operation and management of economic markets can be applied to advance regulatory objectives. Effective use of market incentives and disincentives to supplement formal regulation provides an environment in which regulatory objectives can be more successfully pursued, and a setting in which regulatory intrusion can be minimized.

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Creative Use of Insurance, Industry Standards, and Informal Government Influence Government regulation does not provide the only method to influence conduct. As noted previously, networks of industry standards and operational guidelines develop in virtually every industry. Although they do not bear the force of law, those industry standards have significant impact on conduct. Creative use of industry standards and other forms of informal conduct control can be exceptionally helpful to supplement, or to replace, formal legal regulation in dynamic and rapidly evolving industries, such as nanotechnology. Insurance coverage now plays an active role in the commercial marketplace. That coverage is an important force in apportioning the costs associated with risk. The availability and price associated with insurance is driven by the likelihood and extent of potential liability. Insurers are presently evaluating the economics of coverage associated with nanotechnology use. Government authorities can facilitate the development of reasonable insurance coverage for nanotechnology applications by promoting and supporting research to develop greater understanding of the impact of use of this technology on people and the environment. Private insurance systems provide market participants with the opportunity to invest in safeguards against a variety of risks. The insurance is made available in response to market forces that identify demand and quantify risk assessments made by insurers and clients. Private insurance systems help to quantify and to place an economic value on risk. Those insurance systems also enable participants in the market to make their own individual choices regarding levels of risk they are willing to assume and amount of resources to be allocated to management of those risks. There are also examples of government collaboration with insurers. These collaborations are particularly effective under circumstances in which risk assessment is particularly difficult, and the government wants to encourage continuing development of a particular industry or market. For example, governments acted in conjunction with insurers in the markets for airline services and spacecraft launch and operations. In these contexts, governments have established operational requirements and liability limitations that facilitated the development of private insurance


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markets and offering. That government action made it possible for effective private insurance systems to develop, and the availability of such coverage helped to foster growth of the airline and space-operations industries. Similar cooperation with insurers in the context of coverage associated with nanotechnology use could be highly productive to provide coverage for private parties and to create a commercial climate conducive to commercialization of nanotechnology. As we discussed in previous chapters, virtually all industries eventually develop generally accepted standards of operational conduct. These informal but widely acknowledged guidelines for operations have a significant impact on industry conduct. This influence should be recognized and cultivated by governments. Governments can play an active and productive role in encouraging industries to develop and promote operational guidelines. Those efforts by government can provide a useful process through which commercial conduct can be influenced in a socially desirable direction without the use of formal legal action. Creative use of industry standards can thus provide a valuable supplement to formal regulatory action. Also recognize that governments are important consumers of goods and services in the global marketplace. In their capacity as major buyers of goods and services, governments have notable influence on products and markets, as do other large-volume customers. Governments should be cognizant of their impact as significant customers of private enterprises. Governments have the ability to influence pricing, product content, and terms of sale when they purchase goods and services. The impact of that influence by government will affect the products and the terms of sale available to private consumers, as well. For example, if government authorities would like to experiment with some specific form of regulation of nanotechnology use, prior to adopting formal regulations, the authorities could insist on the conduct as part of its acquisition of the products for government use. Thus, for instance, if government authorities were considering some type of labeling and public notice requirement for nanomaterial content in products, they might first insist on such disclosure as to all products they purchase from private vendors. The private suppliers may well be willing to accept such a provision as a result of their desire to sell to the government market. Government regulators would then have some actual practice

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experience to consider when assessing whether a formal requirement of labeling should be adopted. There are many other possibilities for government to exercise its power as a substantial consumer to bargain for specific industry conduct regarding nanotechnology and thus provide data to assess the potential value of regulation. For example, government as a consumer could insist that certain health and safety measures be implemented in the workplace for all products to be sold to the government that contain nanomaterials. Governments as major customers could also negotiate specific provisions regarding transport of nanomaterials or environmental release of those materials as part of their agreements to purchase products containing those materials. Using this process, government would exercise its commercial bargaining power to influence the conduct of private companies with which it conducts business. The government position would be similar to that of any other large customer. Government would try to bargain for these specific provisions affecting nanotechnology use as part of the negotiation of terms of sale. If the private seller is eager enough to make the substantial sale to the government, it will make the concessions. If the seller is unwilling to make the concessions to the government, the government can turn to a supplier that is willing to make the concessions, or the government can insist on purchasing only versions of the product in question that do not make use of the nanotechnology content. By applying this form of strategic purchasing, government authorities may also be able to influence supplier behavior with respect to private customers. For example, if a supplier accepts a government customer’s request for labeling and disclosure of nanotechnology content, that supplier may ultimately decide it is more economical or more promotionally valuable to implement the labeling for products sold to private customers, as well. In this way, government has influenced private business conduct without resorting to formal regulation, through the exercise of its market influence as a very large consumer. When considering the potential impact of strategic purchasing by government to establish operational data to guide future regulation and to influence private sector conduct with regard to commercial use of nanotechnology, it is important to recognize the significance of governments as consumers. If one considers the purchasing power represented


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by the total aggregation of all national governments, all state, provincial, and regional governments, and all local governments, the total value of those government purchases is enormous. Governments acting individually as purchasers can exert significant influence on any industry, including the nanotechnology industry. Multiple governments acting collectively as purchasers can dramatically influence industry conduct. Strategic purchasing by governments can thus make future regulation more effective by helping to develop actual operational experience that provides knowledge regarding the potential future effectiveness of various forms of regulation. It can also notably influence private sector conduct, thus making some forms of formal regulation unnecessary. Strategic purchasing by governments provides a tremendously potent tool for those governments, and it is one that should be more widely applied in the future. It is an important example of the ways in which government can effectively shape and influence private conduct without resorting to formal regulatory action.

Incentives for Creativity and Innovation Creative and innovative conduct by industry participants can help enhance regulatory compliance and can result in solutions that obviate the need for formal regulatory action. For example, effective use of economic incentives (e.g., tax benefits) can substantially influence behavior in directions sought by authorities, without need for formal regulation to require the desired behavior. Whenever possible, if regulators seek and present incentives for parties to exercise creativity to resolve problems, the regulators have a better chance to influence conduct more quickly and effectively than they would by relying exclusively on formal legal action. Use of these incentives and disincentives can enable regulators to reach conduct they could not influence before, and that use can also assist the authorities to realize greater impact on behavior than they could achieve through pure legal action, alone. An important component of effective use of incentives for creative solutions is to ensure that those who follow the incentives and offer innovative solutions are not penalized for their efforts. There have, for example, been instances when parties anticipating implementation of more

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stringent restrictions on release of pollutants chose to absorb the costs associated with compliance with the more rigorous anticipated standards prior to the effective date of the new requirements. On some occasions, subsequent delays in the ultimate effective dates for the new standards served, in effect, as penalties against those parties who willingly absorbed the costs of compliance before they were required to do so. This is a result that does not serve the public interest. Regulatory authorities should be careful to ensure that parties that move more quickly or more creatively toward compliance with regulatory goals are never penalized and are, whenever possible, rewarded for those efforts.

Responsible Interaction with the Public Government regulation accomplishes more than simply controlling and influencing public conduct. Regulation is an important tool for responding to, and shaping, public opinion. Regulatory oversight is one mechanism through which governments react to public expectations. Regulations also provide a vehicle through which governments can lead and influence public perceptions. Governments should recognize both of these roles for regulation and should be sure to make their regulatory decisions with an eye toward both forms of public interaction. Public expectations of government action can apply substantial pressure on regulatory authorities. There is significant pressure on government officials to take regulatory action when public opinion expresses substantial demand for government to make some sort of statement. In this way, public opinion, at least in part, can drive regulatory action. Government authorities should recognize this dynamic and should be mindful of the risks it presents. There are times when public opinion is not based on facts, and times when it is based on inaccurate information. Under those circumstances, regulatory initiatives that are influenced by public opinion are likely to have harmful consequences. Regulatory authorities should be mindful of public opinion, but they must not be directed by it. Regulatory oversight offers a valuable forum to facilitate education of the public and ultimately to influence public opinion. Regulatory oversight can provide an instructional setting for the public. The process of


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regulatory consideration of the potential impact of nanotechnology, or any other emerging technology, can serve a public educational purpose. Regulatory evaluation of nanotechnology and its applications can teach both regulators and the general public about the technology, its potential applications, its benefits, and its harmful consequences. Regulatory authorities should be acutely aware of this opportunity for education of the public, and they should be willing to make use of it. Consideration of regulation and implementation of regulatory oversight can help to make the public better informed regarding potential opportunities and possible threats. The possibility that regulatory authorities could serve as educators for the public with regard to emerging technologies, including nanotechnology, presents an important public policy opportunity. Instead of being led by public opinion, regulators can, and should, play the highly productive role of educators for the public. This role does not require that the authorities possess all of the answers regarding opportunities and threats. Instead, it requires that they apply diligent and transparent processes to identify the appropriate questions and to find the relevant facts necessary to derive accurate and reasonable answers to those policy questions. If this approach is applied by regulatory authorities, the process of considering and implementing regulatory oversight for nanotechnology and other new technologies can become, in part, a primer for the public on the new technologies and their implications. By performing their regulatory obligations in ways that also help to educate the public, government regulatory authorities can transform their relationship with the public. Instead of being driven to action by public opinion, regulators as educators can help put the public in a better position to understand their changing world and to undertake their duties as responsible citizens. This approach offers the opportunity for regulatory authorities to cultivate and maintain a responsible relationship with the public, while executing more effectively their duties of regulatory oversight. Using this strategy government authorities serve the public interest by regulating conduct and by helping to develop a better informed citizenry. There have been several examples of situations associated with scientific research and new technologies where government authorities have, at times, acted irresponsibly in their capacity as an important interface

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between the science and technology community and the public at large. Governments in the European Community and elsewhere have, at times, inflamed public concerns regarding genetically modified organisms instead of effectively working to promote knowledge and education to address the public concerns. The federal government in the United States has also played an inflammatory role with respect to stem cell research in the United States, using its research funding and oversight roles to restrict inquiry into human stem cell research. Some state and local governmental authorities in the United States have encouraged substantial controversy over teaching the scientific concept of evolution in the public schools. There have been troubling examples of inappropriate recommendations by significant nanotechnology industry observers, as well. For example, some nanotechnology industry observers publicly proclaim that current laws and regulations do not provide adequate protection for the public with respect to nanotechnology. There is not yet enough firm data available to support such a broad assessment, yet this position is increasingly offered to the public. Public assertions of this sort without adequate supporting data undermine public confidence in nanotechnology and in the overall regulatory system. It is entirely appropriate, at present, to highlight the insufficiency of current data and to work to support and conduct the research necessary to enhance the available knowledge pool. It is inappropriate, at present, to make any assessments regarding inadequacy of existing laws and regulations. It is even more inappropriate, at present, to consider specific new laws and regulations directed toward nanotechnology. We do not yet know enough to evaluate current regulatory inadequacies or to develop nano-specific regulations. Each of these instances offers insight into the potential for authorities to block, restrict, or otherwise harm educational or research initiatives when those regulators emphasize a particular philosophy or political agenda instead of encouraging fact-based regulatory actions. Authorities should work to ensure that nanotechnology and future emerging technologies do not become embroiled in legal and regulatory oversight that is driven by religious, political, or philosophical agendas, to the detriment of informed regulatory judgments that are based on facts and reasoned decision making. Regulation should be the product of careful analysis of the best available relevant information. It should not be a forum that plays to the unreasonable fears of the public.


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Some observers of the scientific governance process suggest that there are important lessons for government authorities to be derived from public opinion regarding nanotechnology and other emerging technologies. Some of those observers suggest that the past experience with public reaction to biotechnology and information technology underscores the critical importance of developing public consensus in support of the emerging applications for new technologies. Other observers note that there continues to be general public support for the notion that new technology carries more benefits than harmful effects for society, but that there is an apparently growing minority within the public that has generally less favorable views of science, technology, and their potential. That growing minority is apparently particularly concerned about the need for greater public involvement in science and technology policy decision making and the need for greater consideration of ethical factors in decisions regarding science and technology. Those observers suggest that the growing minority of the public that is concerned about science and technology policy could, if alienated, become increasingly active in the policy-making process. An appropriate response to public concerns regarding the science and technology policy-development process is a more active role for government authorities as educators for the public regarding potential benefits and risks associated with advances in science and technology. Additional public participation in the establishment of goals and directions for science and technology, as well as participation in decisions regarding balancing of risks and benefits associated with science and technology, will be beneficial, provided that the involved public is an informed and knowledgeable public. Government regulators can play a leading role in helping to engage the public in science and technology policy decisions, but to perform that role effectively, the government authorities must be active and successful educators. The regulators must continuously strive to promote additional research on the implications of new technology and to remain current regarding the results of that research. They must also continuously communicate that information to the public. More active public participation in the development of science and technology policy can be highly productive or a public policy disaster. The key to the success of efforts to involve the public more directly in science and technology policy development will be the effectiveness of public education. It appears that at current levels of public understanding of

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basic principles of science and technology, as well as current levels of public awareness of risk analysis processes and techniques, additional public participation in science and technology policy development will be a disaster for all involved. If additional public participation is to be encouraged, substantial additional public education is essential. Government authorities must play an active role in that educational process. While interacting with the public, government authorities should also recognize that some of the opposition to nanotechnology and some of the concern about the need for greater public influence on science and technology may be motivated by fears and goals that extend beyond the specific pros and cons of nanotechnology or any single emerging technology. A portion of the public opposition is likely to be motivated by broader social and political concerns. For example, it is not unreasonable to assume that some of the opponents of science and technology developments are concerned about the visible increase in influence exerted by large, impersonal organizations, including governments and private commercial companies. Others may be troubled by the apparent erosion of the ability of individual people to control their own destiny. These and other broader political and social concerns may sometimes be expressed as opposition to science and technology. To the extent that opposition to advances in science and technology are driven by concerns other than those directly linked to science and technology, the ability of authorities to assuage those concerns will be extremely limited. No amount of attention and education will resolve the concerns of that portion of the public if their underlying objections are actually associated with more sweeping social and political forces, and not the technology that is being addressed. Governments should, accordingly, apply best efforts to inform and educate the public, while recognizing that a portion of the public may remain unreachable, even after substantial efforts to include them in a constructive discussion of science and technology policy.

Regulation and Emerging Technologies Government authorities, businesses, the media, the public, and everyone involved in the regulation of nanotechnology and its applications should


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remain mindful of the fact that their decisions and actions regarding treatment to be afforded to nanotechnology will substantially affect regulation and development of other new technologies. As other emerging technologies moved into the mainstream of commerce and society (e.g., telephone, television, Internet, biotechnology), each encountered substantial regulatory attention. The regulatory attention focused on a previous emerging technology influences the regulatory attention directed toward the most recent emerging technology. For example, in the nanotechnology context we already see government authorities and advocates pointing to past regulatory experience associated with biotechnology regulation. In this way regulatory treatment for emerging technology has dual impact. First, it affects the development of the emerging technology in question. Second, it sets a precedent for regulatory treatment of future emerging technologies. Government authorities should consider both of those effects as they evaluate and regulate nanotechnology. Mindful of its value as precedent, regulators should be particularly careful to apply regulations to nanotechnology in ways that effectively balance minimization of threat to the public with efforts to promote expeditious realization of the potential benefits of nanotechnology. For example, regulations that block or dramatically impede ongoing research, before an accurate and effective assessment of threat and level of probability can be completed, will harm nanotechnology and set a most damaging precedent for future regulation of other emerging technologies. Premature and overreaching regulations are particularly harmful for emerging technologies, and government authorities should work diligently to avoid taking that type of action with respect to nanotechnology and future innovative technologies. As government authorities consider and implement regulations applied toward nanotechnology, they should realize that they are setting the stage for the regulatory treatment of future emerging technologies. Accordingly, they should adopt goals, strategies, and processes that will be appropriate for all future emerging technologies, not only nanotechnology. If regulators effectively manage nanotechnology with an eye toward all future emerging technologies, they will focus on a few key principles. First they will do all that they can to encourage, support, and facilitate continuing research and investigation necessary to develop

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accurate information and knowledge that can effectively support realistic assessments of opportunities and threats. Regulators will also try to delay, and if possible avoid, development of extensive new regulations and regulatory processes directed specifically toward the new technology. They will choose instead to rely as much as possible on integration of the new technology into existing, well established regulatory procedures and regulations. Finally, they will develop and apply regulations with the intention of both protecting and educating the public, and they will regulate in a manner that both minimizes intrusion into marketplace dynamics and supports ongoing research and free inquiry.

Cultivating the Research Infrastructure As we have seen, there is a great deal of attention now focused on nanotechnology by governments, businesses, and the public. By focusing on nanotechnology, our discussion in this book has emphasized only one category of research and development. Although nanotechnology is a very broad field, touching upon a wide range of scientific disciplines and technological activities, it remains but one of many highly active and promising emerging fields in science and technology. Many of the regulatory and public policy issues we have considered in the context of nanotechnology are also of substantial importance to these other fields of science and technology. They are of importance to the full range of scientific disciplines and emerging technologies because they affect the structure and activities of the individual people and the institutions that participate in scientific research and technology development. The key issue for nanotechnology and other subjects of research is creation and protection of an environment that is conducive to highquality scientific research in all fields. Attraction to the potential promise of nanotechnology and other individual fields of work should not be permitted to lead to government neglect of the scientific infrastructure in general. Directed government support and attention to particular fields of work can be helpful and important at times. Authorities should avoid, however, the apparent tendency to highlight specific fields of research whenever possible. Instead, there should be continuing emphasis placed on cultivation of the entire scientific research infrastructure. That


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infrastructure includes academic research institutions, government laboratories, and private for-profit and not-for-profit research groups. Creation and maintenance of a regulatory climate that encourages the full range of scientific research should be a critical objective of regulatory authorities. Key focus areas for this effort in support of the overall scientific research infrastructure should include attention to education, immigration, financial incentives, intellectual property rights, and information transfer. To the greatest extent practicable, government authorities should regulate in ways that promote the unimpeded flow of information, people, and other resources, across all borders, in support of scientific inquiry in all fields. Authorities should endeavor to minimize their intrusion into choices regarding fields of scientific inquiry and the conduct of scientific research as much as the public interest will allow. These efforts will be most helpful as regulators attempt to cultivate and maintain an environment in which scientific inquiry can flourish and in which technological innovation can thrive.

Some Final Thoughts for Regulators The issues that are at stake when as we consider the regulatory future for nanotechnology are far greater than the future prospects for this one class of science and technology. Decisions made regarding limitations and oversight, applied to nanotechnology research and commercial development, will have profound future implications. They will dramatically affect the ability of nanotechnology to reach its full potential. They will also set regulatory precedents that will be applied to the emerging technologies of the future. In addition, those decisions will substantially affect the vitality of the world’s scientific and technology development infrastructure. The stakes associated with nanotechnology regulation are very high; accordingly, regulators should exercise great caution as they perform their duties with regard to nanotechnology. Regulators must develop a strategy, a regulatory roadmap, to enable them to navigate this complicated path. Government authorities around the world must create a roadmap that enables them to protect the public welfare, facilitate development of beneficial applications for scientific and technological innovations, and protect the

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science infrastructure. If we distill the regulatory roadmap for nanotechnology’s future to a few key points, we are left with these basic principles. Government authorities should have confidence in existing regulatory structures. They should express that confidence by avoiding the temptation to move too quickly to make dramatic modifications in those structures in response to nanotechnology, and they should certainly avoid premature creation of new regulatory systems aimed directly and specifically at nanotechnology. They should also diligently avoid undermining public confidence in the regulatory system through regulatory overreaction that may be viewed by the public as a governmental failure of confidence in the regulatory system. Government regulators should recognize that they have a more expansive set of tools with which to shape behavior available to them than merely the traditional laws and regulations one generally associates with government oversight. As we have discussed, government authorities can apply commercial market principles such as economic incentives and disincentives to influence behavior. Authorities can cultivate development of more active and extensive industry standards to help shape conduct. Governments can collaborate with private insurers to foster the development and expansion of coverage that will affect behavior. Additionally, governments can make use of their position as very large customers for private businesses, and, during the negotiations associated with their purchase of goods and services, governments can attempt to extract commitments regarding conduct and behavior consistent with public policy goals. Regulators should accept the concept that international information sharing and transborder technology flow are inevitable facts of modern life. Accordingly, authorities should not engage in futile and harmful efforts to block such sharing, and they should instead make use of those techniques to enhance the quality and effectiveness of their regulatory actions. Rapid and widespread distribution of information and new technology are modern facts of life, and regulatory authorities should not engage in futile efforts to impede those flows, but should instead find ways to make use of those processes as part of their efforts to develop, implement, and enforce regulations. Regulatory authorities should avoid their apparent tendency to focus on specific emerging technologies and should instead direct their attention to cultivation and protection of a regulatory climate that


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promotes research, technological innovation, and rapid diffusion of innovation in general. Regulatory action directed toward a specific technology or field of work has profound consequences not only for the target, but also for all future emerging technologies. Technology-specific regulation is likely to be ineffective and will establish precedents for regulatory strategy that will encumber future research and technology development. Finally, regulators should recognize that they have a substantial impact on public perception of emerging technologies and innovation in general, and they should take that impact into account as they execute their duties. Regulatory authorities should be moderating voices in the discussion surrounding technological innovations. They should temper the most positive claims of proponents of those innovations, while at the same time challenging the direst predictions made by opponents. Regulators should press both advocates and opponents to substantiate their claims with data. Government authorities responsible for regulatory oversight should always be in pursuit of the most accurate and most comprehensive relevant data available. Their role is neither that of cheerleader nor obstructionist. Instead, their role is that of responsible guardian of the long-term public interest and educator in the unique position of assisting the public to understand the opportunities and challenges presented by technological innovation, while also acting to manage conduct in ways that protect the public interest. Government authorities engaged in regulatory oversight, at all levels, can make an enormous contribution to development of nanotechnology and all other emerging technologies. That contribution consists of being the authority that drives continuing accumulation of knowledge and information as to the capabilities of those technologies and their impact. By serving as the neutral moderator, challenging both proponents and opponents to substantiate their claims with facts, government authorities serve the public interest. By acting to ensure that there is, and always continues to be, a healthy environment in which scientific research and responsible pursuit of applications for the fruits of that research can flourish, regulatory authorities play a most productive role in our continuing efforts to improve the quality of life, and to promote sustainable economic growth around the world. However, failure to perform this role effectively can have dire consequences for the public with regard to nanotechnology and future

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emerging technologies. If government authorities fail to recognize and execute this broad set of responsibilities, we are likely to see erosion of public support for advances in science and technology. Regulatory authorities in governments around the world will play a critical role in determining whether the social infrastructure, which has supported the scientific endeavors that have made modern life possible, will be sustained in the future. This is a profoundly important responsibility to be placed on regulators in all jurisdictions. It is a responsibility most have not been required to deal with in the past. The ability of these authorities to act promptly, intelligently, and decisively as guardians for the world’s scientific and technological infrastructure will largely determine our ability to enhance the quality of life on a global basis.

Selected Bibliography Bridges, A., “Report: Laws Don’t Protect Public Safety Regarding Nanotechnology,” Washington Examiner, Jan. 11, 2006, p. 12. Gaskell, G., et al., “Social Values and the Governance of Science,” Science, Dec. 23, 2005, p. 1908. “Going public,” Nature, 2004, Vol. 431, p. 883. Woodrow Wilson International Center for Scholars, “Project on Emerging Nanotechnologies,” 2006, at http://www.nanotechproject.org.

About the Author Jeffrey H. Matsuura is an attorney with the Alliance Law Group (www.alliancelawgroup.com) where he specializes in legal and public policy issues associated with technology and science. He is the author of the following three books published by Artech House (www.artechhouse. com): Managing Intellectual Assets in the Digital Age; Security, Rights, and Liabilities in E-Commerce; and A Manager’s Guide to the Law and Economics of Data Networks. He is also coauthor of the book, Law of the Internet. Mr. Matsuura has worked as counsel for several technology-based companies, including Satellite Business Systems, MCI Communications Corporation, Discovery Communications, COMSAT Corporation, and TELE-TV. He has also served as a member of the faculty at the University of Dayton School of Law, where he taught intellectual property law and directed the Program in Law and Technology. He has served as a visiting professor, teaching technology law and policy topics in China, South Africa, and Scotland. Mr. Matsuura was an advisor to the Virginia legislature’s Joint Commission on Technology and Science, to the Ohio Small Business Development Centers, and to the National Task Force on Knowledge and Intellectual Property Management. Mr. Matsuura earned degrees from Duke University, the University of Virginia, and the Wharton School at the University of Pennsylvania. He can be reached at [email protected]. 185

Index Australian nanotechnology, 113 Austrian nanotechnology, 107

Active patenting, 47 American National Standards Institute (ANSI), 63 Applications commercial, 129–31 energy, 24–25 environmental protection, 25 expectations, 27 incentives for, 129–31 medical/health care, 12, 17, 24 nanotechnology to materials, 23 sensor, 25–26 Argentina, nanotechnology, 118 Asian nanotechnology, 108–12 China, 109–10 Japan, 111 Singapore, 111 South Korea, 110–11 Taiwan, 110 Thailand, 111 See also Nanotechnology Atomic force microscope (AFM), 13 defined, 13 design/manufacturing, 22 use advantage, 14 Audience, this book, 2–3

Biological sensors, quantum dots as, 18–19 Bottom-up approach, 15 Brazil, nanotechnology, 118 Bulgaria, nanotechnology, 115 Canadian nanotechnology, 112 Capital. See Funding Carbon nanotubes, 16–17, 18 Ceramic materials, 11 Chemical catalysts, 16 China, nanotechnology, 109–10, 137 Commercial applications development, 129 development pace, 131–33 incentives, 129–31 regulation and, 131 regulatory requirements uncertainty, 132 See also Applications Concerns, public, 147 Consumer product safety, 84–85 Consumer Product Safety Commission (CPSC), 84

187

188


Cooperation among governments, 165 between jurisdictions, 164–65 regulatory authority, 165 Copyrights, 42–43 computer program issues, 43 defined, 42 protection, 42–43 rights exemption, 43 See also Intellectual property rights Costs, risk-associated, 140–45 Czech Republic nanotechnology, 115–16 De facto technology standards, 64 Design patents, 45–46 in nanotechnology applications, 45–46 protection, 45 See also Intellectual property rights; patents Development, 4, 6 commercial application, 131–33 regulation and, 152 Direct regulation, 91–92 Disincentives, 127 DNA computing, 30 Dutch nanotechnology, 108 Efficient markets, 168–69 Emerging technologies, 138 regulation and, 178–80 rise of, 138 Emission controls, 81–82 Energy applications, 24–25 Enforceability, patent, 49–51 Environmental Protection Agency (EPA), 78 assessments, 79 exemptions, 79 low release and exposure exemption (LoREx), 80 low volume exemption (LVE), 80 premanufacture notice (PMN), 78 test-marketing exemption (TME), 80 U.S. Clean Air and Clean Water Acts, 81 Environmental protection applications, 25 Environmental regulation, 75, 77–82

emission controls, 81–82 EPA and, 79–80 REACH, 81 regional, 82 regulated substances, 77–82 See also Regulation Estonia nanotechnology, 114–15 Europe Austria, 107 Finland, 106 France, 105–6 Germany, 105 Italy, 107 Luxembourg, 107–8 nanotechnology tour, 105–8 Netherlands, 108 Norway, 106 precautionary principle and, 92–94 Sweden, 106–7 Switzerland, 107 European Community, 104–5 Export control application, 167 on dual-use technology, 90 regulation penalties, 90 restrictions, 88–89 See also National security Federal Hazardous Substances Act, 84 FinNano program, 106 Finnish nanotechnology, 106 French nanotechnology, 105–6 Funding availability, 152 regulation effect and, 134 tangible support, 157 German nanotechnology, 105 Governments authority perspective, 156 as consumers of goods, 171–72 cooperation among, 165 disincentives, 127 encouragement, 156–57 global nanotechnology spending, 99–100

Index incentives, 34, 127 nanotechnology actions/strategies, 7 in nanotechnology development, 6 regulation application, 6 strategic purchasing, 172–73, 173 Health and safety regulation, 75–76, 82–87 consumer product safety, 84–85 legal requirements, 87 nanotechnology and, 85–87 OSHA, 85–86 regulatory agencies, 82–83 workplace, 85–87 See also Regulation Hungarian nanotechnology, 116 Incentives, 34, 127 for commercial applications, 129–31 for creativity and innovation, 173–74 effective use, 173–74 government, 34, 127 insurance, 142 regulatory compliance and, 130 research, 157 India, nanotechnology, 111–12 Indirect regulation, 91 Information sharing facilitation, 165–68 promotion, 166 regulators and, 182 Innovation incentives, 173–74 technology, 168 treatment as trade secrets, 54–55 Institute for NanoMaterials and Nanotechnology (INMT), 109 Insurance coverage availability, 142 creative use, 170–73 government collaboration, 170–71 incentives, 142 private systems, 170 Intangible assets alternative legal theories, 55–56 management challenge, 67 multiple protection forms, 56–58

189

Intellectual property owners, 69, 70 Intellectual property rights, 37–72 broad, 129 copyrights, 42–43 design patents, 45–46 discriminatory use, 63 enforcement, 38, 130 establishment, 130 growth balance, 68 industry technical standards and, 63 law primer, 38–39 legal disciplines, 38 legal theories, 55–56 multiple forms, 56–58 nanotech, 68–72 in nanotechnology development, 58–60 open source, 65–66 patent busting, 61–62 patents, 39–42, 46–48, 49–51 perspective flashpoints, 137 proprietary, 62–63, 64 public policy perspective, 70 technical standards and, 71 trade dress, 44–45 trademarks, 43–44 trade secrets, 46, 51–55 transfer, 39 International Organization for Standardization Technical Committee 229 (ISO/TC 229), 63 International relationships, 135–40 International trade, regulation as barrier, 136 Investor perception, 130 Israeli National Nanotechnology Initiative (INNI), 116–17 Italian nanotechnology, 107 Japanese nanotechnology, 111 Korean nanotechnology, 110–11 LabNow, 25–26 Latvia, nanotechnology, 115 Legal liability exposure, 143

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Legal liability (continued) risk allocation, 144 shield, 143 Licensing strategy, 70 Lithography, 14 Lithuania, nanotechnology, 115 L’Oreal, 20 Low release and exposure exemption (LoREx), 80 Low volume exemption (LVE), 80 Luxembourg, nanotechnology, 107–8 Manufacturing, 28–29 Markets, efficient, 168–69 Materials, 23–24 ceramic, 11 nanotechnology application to, 23 sensor applications, 26 Medical applications, 12, 30–32 medical equipment, 32 nanomedicine, 24 nanotubes in, 17 noninvasive diagnostic devices, 31 pharmaceutical delivery, 31 Middle East, nanotechnology, 116–17 Millennium Development Goals (MDGs), 117 Miniaturization limits, 12 Molecular motors, 28 Nanocomputing, 29–30 Nanocrystals, 15–16 Nanoelectronics companies, 22 initiatives, 23 Nanofabrication bottom-up approach, 15 challenge, 13–15 lithographic, 14–15 NanoIndia, 111–12 Nanomachines, 29 NANOMAT, 106 Nanomaterials, 23–24 Nanomaterials Science and Technology Initiative (NSTI), 112 Nanomedicine, 24, 30–32

Nanomotors, 29 NanoNed program, 108 Nanoscale expertise, 88 Nanoscale Science and Technology Initiative, 114 NANOTECH, 111 Nanotech marketplace regulation and, 133 shaping, 133–35 Nanotechnology application to materials, 23 Asian, 108–11 Australian, 113 bridge from today to tomorrow, 32–33 broad reach, 20–21 Canadian, 112 commercial adoption, 132 defined, 1, 9–10 in developing world, 117–18 development, 4, 6, 152 diverse, encouragement, 128 Eastern European, 115–16 elements, 10 European Community and, 104–5 financial investments in, 26–27 global government spending, 99–100 government role, 6 importance, 12 Indian, 111–12 intellectual property rights and, 37–72 interest in, 10–12, 32 international transfer, 138–39 invisible reach, 19–20 management complications, 60–68 Middle East, 116–17 patentability challenge, 48–49 players, 21–27 policy initiatives, 100–102 potential, 20–21 precautionary principle and, 148–50 promise, 180 public perception, 145–46 regulation impact, 4 Russia, 114–15 South African, 113

Index today, 15–16 tomorrow, 27 type management, 33–35 United Kingdom, 114 unsettled period, 35 Nanotechnology Council (NTC), 63 Nanotechnology Standards Panel (NSP), 63 Nano-Tex, 57–58 Nanotubes, 16–18 carbon, 16–17, 18 commercial challenges, 17 incorporation, 17 in medical applications, 17 National Nanotechnology Center (NANOTEC), 111 National Nanotechnology Initiative (NNI), 102–3 assessment, 102–3 as comprehensive policy strategy, 103 National Programme for the Development of Nanoscience and Nanotechnology (Brazil), 118 National security, 76, 87–91 export control restrictions, 88 nanoscale capability and, 88 nanotechnology and, 87–91 restrictions on nanotechnology, 90 See also Regulation Norwegian nanotechnology, 106 Occupational Safety and Health Act (OSHA), 85 employer workplace obligations, 86 planning/operational requirements, 85–86 Open standards, 65–66 government support, 166 licensing framework, 166 strategies, 167 Outsourcing, 67–68 international relationships, 67–68 issues, 67 trend towards, 68 Patentability, 48–49

Patent law, 39 Patents, 39–42 aggressive, 47 boom, 50 busting, 61–62 challenges, 62 enforceability, 49–51 expense, 51 granting of, 39 invention usefulness, 40 nanotechnology, 46–48 nanotechnology as battleground, 59 nonobviousness requirement, 40 novelty criteria, 40 offices, 48–49 process, 41–42 protection limits, 42 protection overestimation, 52 rights, 41 trade dress and design, 44–46 See also Intellectual property rights Perceptions investor, 130 public, 145–46, 183 Photolithography, 14 Policy initiatives, 100–102 focus areas, 119 government approach, 101 government clearinghouse, 100–101 motivation, 101 national, 119–20 strategy scope, 102 Polish nanotechnology, 116 Political consequences, 146–48 Precautionary principle, 92–94 application, 93 application difficulties, 149–50 as conservative approach, 149 defined, 92 implications for future technologies, 152–53 nanotechnology and, 148–50 proponents, 92–93 regulation based on, 94 Premanufacture notice (PMN), 78

191

192


Products competitive disadvantage, 134–35 competitive position, 134 prices, regulation and, 134 Public access, regulation and, 125 concerns, 147, 177 education, 174–75 expectations, 174 interaction with, 174–78 opinion, 148 participation, 177–78 perception, 145–46, 183 protecting, 125–26 regulatory overreaction and, 162 Quantum dots, 18–19 as biological sensors, 18–19 defined, 18 as tunnels, 19 REACH, 81 Regulation(s) adverse impact, 126 balance aspect, 124 based on precautionary principle, 94 commercial applications and, 131 core issue, 91–92 cost-of-risk allocation, 141 critical impact, 151–52 defined, 2 development and, 152 direct, 91–92 disparities, 151 effective, 5 emerging technologies and, 178–80 enforcement, 139 environmental, 75, 77–82 existing, integration into, 159–60 funding availability and, 152 government application, 6 health and safety, 75–76, 82–87 impact, 4, 123–53 implementation, 179–80 implications for future technologies, 152–53

indirect, 91 international relationships and, 135–40 investor perception and, 130 multinational, 139–40 nanotech marketplace and, 133 national security, 76 opportunities, 127–28 political consequences, 146–48 to promote efficient markets, 168–69 public access facilitation, 124 public perception and, 145–46 research direction/scope and, 123, 127 scope, 146 supportive, 138 technology-specific, 6 traditional, 160 Regulators duties, 5 final thoughts for, 181–84 impact on public perception, 183 international information sharing and, 182 regulation application, 179 role in commercial development rate, 132–33 strategy development, 181–82 tool set, 182 Regulatory certainty, 163–64 facilitation, 163 promotion, 163 Regulatory compliance, 75–98 actions, 96 challenges, 94–98 commercial use of nanotechnology, 96 effective, 96, 97 incentives and, 130 legal liability shield, 143 obligations, 95 principles, 95 Regulatory overreaction avoiding, 160–63 example, 161 forms, 160–61 public perception, 162 Regulatory oversight

Index government authorities engaged in, 183 for public education, 174–75 public expectations, 162 Regulatory regimes, 136 Regulatory roadmap, 155–84 Regulatory strategies, 150–51 implication for future technologies, 152–53 See also Precautionary principle Regulatory uncertainty challenge, 150–51 forms, 150 problem, 164 Research appreciation for, 159 direction and scope, 126–29 encouragement, 156–59 incentives, 157 indirect regulatory impact, 126 infrastructure, cultivating, 180–81 initiatives, 158 regulation and, 123, 127 result interpretation, 158–59 time frame, 158 Risk(s) assessment, 125 cost allocation, 140–45 familiar, 161 legal liability allocation, 144 management, 125 reduction, 5 Russia, nanotechnology, 114–15 Safety consumer product, 84–85 workplace, 85–87 See also Health and safety regulation Scanning tunneling microscope (STM), 12–13 defined, 12 design/manufacturing, 22 use advantage, 14 Security. See National Security Self-assembling nanodevices, 29 Sensors applications, 25–26

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biological, 18–19 initiatives, 26 nanomaterials, 26 Social infrastructure, 184 South African nanotechnology, 113, 137 South African Nanotechnology Initiative (SANI), 113 South Korea, nanotechnology, 110–11 Standards de facto, 64 open, 65 technical, 63, 71 Strategic purchasing, 172–73 Substances, regulated, 77–81 Swedish nanotechnology, 106–7 Swiss nanotechnology, 107 Taiwan, nanotechnology, 110 Take-away points, this book, 4–7 Technology emerging, 138, 178–80 innovations, 168 transfer, 165–68 Teijin Fibers, 20 Test-marketing exemption (TME), 80 TopNano, 21, 107 “Towards a European Strategy for Nanotechnology,” 104 Toxic Substances Control Act (TSCA), 78 notification/testing requirements, 79 scope, 79 Toxic threats, 128 Trade dress, 44–45 Trademarks, 43–44 defined, 43 mark use prohibition, 44 names, 44 protection, 43–44 See also Intellectual property rights Trade secrets, 51–55 advantage, 51–52 defined, 46 disadvantages, 52–53 effective preservation, 53, 54 innovation treatment as, 54–55

194


Trade secrets (continued) neglect, 51 nondisclosure/confidentiality agreements, 54 treatments, 53 Tunnels, quantum dots as, 19

United Kingdom, nanotechnology, 114 United States Patent and Trademark Office (USPTO), 47–48, 49, 50, 60 U.S. Clean Air and Clean Water Acts, 81 Voltron, 20

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