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While many law firms are poised for a surge in nanotechnology business, some say the real dollars will come only when people figure out what it is. A blending of chemistry, physics and biology, the science involves creating new configurations, atom by atom, to make materials that are, for example, super strong, lightweight or soft. It is the re-engineering of matter on a scale equal to one-billionth of a meter — a length known as a nanometer — which can turn something as thin as a human hair into a substance stronger than a steel bridge. Although nanotechnology is utilized in an array of products, from sunglasses to cosmetics, from pharmaceuticals to sport utility vehicles, the technology has yet to make a big splash on Wall Street, and remains largely unknown to mainstream investors. But nanotechnology is on the cusp of a potentially large-scale debut, and with it could come big business for law firms. Pillsbury Winthrop partner Tom Thomas said the pending initial public offering of a company called Nanosys Inc. will serve as a bellwether for law firms eyeing potential work. His firm does not represent Nanosys, a Palo Alto, Calif.-based company that develops semiconductor nanostructures used in energy, defense, electronics, health care and information technology. “If the company does well or reasonably well, it’ll go a long way toward showing that this industry is here,” said Thomas, head of Pillsbury Winthrop’s technology department, where about 30 attorneys practice some nanotechnology work. “It could really help jump-start interest in terms of venture funding.” Nanosys declined an interview for this story, citing the “quiet period” imposed by the Securities and Exchange Commission while an IPO is pending. CONCERN OVER VIABILITY More venture funding in private nanotechnology research and development could result in more lucrative transactional work for law firms. Up to now, they have focused mainly on patent prosecutions, opinion writing and licensing work for universities. A successful IPO by Nanosys would help bring other startups into public investing, Thomas said, and would alleviate some of the mystery about the technology’s purpose and function. But there is concern about whether nanotechnology, as a separate investment sector, is viable. Some observers, taking a cue from the dot-com flop, have described the nanotechnology market as hyped-up and risky, especially for public investors who may not understand what it is. Earlier this month, Silicon Valley venture capitalist Vinod Khosla reportedly told attendees at an International Business Forum conference in San Francisco that nanotechnology’s potential is exaggerated and that unsubstantiated enthusiasm could dash investors’ hopes later. Apparently, however, the Bush administration is convinced of nanotechnology’s potential. Earlier this month, George W. Bush requested $982 million for the National Nanotechnology Initiative, which was created during the Clinton administration. The initiative originally was funded with $464 million and has received increasing appropriations. This year, it will get an estimated $961 million. “There could be major new products that have huge effects,” said Matthew Rainey, a partner at Washington-based Howrey Simon Arnold & White. About 20 attorneys there handle nanotechnology matters, Rainey said. He conceded that the number of private nanotechnology companies is small, and even fewer are making a profit. Nanosys, for example, is not expected to market any of its products until 2006. But the ability of these companies to demonstrate that they can succeed in the future is what’s important right now, he said. Despite law firms’ expectations of a burgeoning market, it is unlikely that they will look to hire lawyers who handle only nanotech work, said Kimberly Fulton, a partner with Major, Hagen & Africa, an attorney recruiting firm. “I don’t think the industry is that developed,” said Fulton, who manages the recruiter’s San Francisco and Palo Alto offices. Indeed, most law firms touting nanotech practice groups appear to create them from lawyers already working in their intellectual property or patent law departments. “What they might say is ‘find me a materials lawyer,’” Fulton explained, referring to attorneys who practice patent law pertaining to materials developed with or without nanotechnology. She said that as nanotech firms themselves grow, they are apt to hire their own in-house counsel. Nanotech or not, lawyers with technology skills are not easy to come by and could become increasingly scarce as the field develops. “Those people are pretty rare,” said William Prendergast, the head of a 25-attorney department at Chicago-based Brinks Hofer Gilson & Leone that does some nanotechnology work. If he has a spot to fill, he looks for attorneys who have a master’s degree or a doctorate in a science field, since nanotechnology’s reach is expansive. People with such backgrounds are highly recruited — and expensive, he said. Part of what those lawyers performing nanotech work will need to know is how to navigate the U.S. Patent and Trademark Office, which does not have a separate nanotechnology unit. Some attorneys assert that without such a unit, the patent office is limited in its ability to research thoroughly the history of the proposed patent. The history, or “prior art,” is a critical part of the process to ensure that one patent does not overlap with another, which could invalidate the protection. “It means that our clients have to be especially careful,” Prendergast said. The patent office is aware of those concerns, said Bruce Kisliuk, group director for technology patent examiners within the office. His examiners, whose job it is to determine whether prior art exists on a proposed patent, are undergoing monthly nanotechnology training, he said. The patent office is also implementing a cross-referencing system that will allow one group working on a proposed patent that includes nanotechnology to research another group’s work, so that proposals don’t slip through research gaps. Although his office is in the process of pinning down exact numbers of nanotech-related patents, he said preliminary research shows that in 2001 some 5,000 patents involving nanotechnology existed. Eighteen months later, that number had jumped to 7,000. The emergence of nanotechnology is one reason New York solo practitioner Sonia E. Miller this year founded the Converging Technologies Bar Association, what she calls an “issue-driven” group. Apparently the only bar association of its kind in the country, it was formed in February to focus on the ethical and public policy implications of converging technologies.

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