While nanotechnology is not usually associated with musical devices or cars, Rachael Simonoff Wexler, a partner in Alschuler Grossman Stein & Kahan LLP’s Transactional Department, points out that its applications are far reaching. “Nanotechnology is not a science that affects one industry or one field, it’s a science that affects many different products and industries,” she says.
Smart Business spoke with Wexler about nanotechnology’s exiting growth prospects and its market fundamentals.
What is nanotechnology?
Nanotechnology refers to the science of precisely manipulating particles on the atomic level and scaling those particles to three-dimensional products that are applied to things that we use in our everyday life.
Why does this young field have such exciting prospects?
The technologies and products we are beginning to see as a result of advancements in nanotechnology promise a new frontier with respect to a host of industries and products. These technologies promise to be more sensitive, more selective, more energy efficient and, of course, very small.
It’s interesting because we all think that it’s new and it’s young, but people have been looking at things on a very small scale for a long time. Nanotechnology, as it is thought about today, probably began in the early 1990s, when IBM scientists in Switzerland wrote out the letters “IBM” using single atoms. This was the first demonstration of our ability to manipulate and specifically control atoms.
Nanotech innovations and nanotechnology research and development efforts have become front page news only within the last few years because it is only recently that some of these inquires and discoveries have been able to be captured and commercialized into products and applications that we use in the everyday world. A whole new generation of technologies and products are the focus of research and development efforts around the U.S., dealing with, among many other things, pharmaceuticals, electronic circuits, integrated circuits, lasers and sensors.
What types of market fundamentals have emerged in the nanotechnology arena?
The investment community favors ventures with experienced management, sufficient cash reserves and which show scientific diligence. Many of the scientific efforts central to the next generation of innovations will take years and tens of millions of dollars to commercialize.
Accordingly, in the high stakes of emerging nanotech companies, it’s become extraordinarily clear that those companies with significant cash reserves are highly favored in the market versus those that are in need of cash on a very short-term basis.
As far as legal issues go, what should nanotechnology companies be prepared for?
Nanotech companies can’t really be aggregated into a single group. Industry participants range from mature biotech and electronic companies to start-ups. However, both established and nascent nanotech companies will continue to face legal challenges as they structure their individual long-term financing plans.
Recent SEC interpretations and accounting rules make navigation and disclosure a complicated process. Getting things wrong can mean defending a shareholder suit or an enforcement action which is something everyone should try to avoid.
In addition, if industry players become even more acquisitive, then many additional legal considerations will be of paramount importance, such as valuation, fairness, transaction approval and dissenters’ rights.
What are some intellectual property issues that are of specific concern to the field of nanotechnology?
Today’s nanotech companies appear to be in a race to the patent office. This is true too for universities, where much of the research and development of nanotechnology is currently conducted. I do not focus on intellectual property law, and I am not a patent lawyer, but it is abundantly clear that all technology companies, nanotechnology companies included, must secure protection for their work product, technologies and innovations.
These assets are often developed in collaboration, which means most nanotechnology companies have several license agreements, each differing in duration, pricing and other terms. The most successful companies recognize the importance of the details of these licenses.
If there is a public concern about the environmental effects of a product, what advice would you give to a business about being proactive to curtail future litigation?
This question hints at the larger academic debate called “nanoethics.” There has been a decent amount of academic discussion related to what people call nanoethics, but the idea of nanoethics is only beginning as a true dialogue in the business marketplace. It’s my personal view that all companies should act in a way that is consistent with public policy and limits damage to our environment.
Rachael Simonoff Wexler is a partner in Alschuler Grossman Stein & Kahan LLP’s Transactional Department. Reach her at firstname.lastname@example.org.