125 nanotechnology patent applications were filed in 1985; in 2005, nearly 5,000. But the rate of patent issuances has stalled, at 4%. There over 2,700 outstanding nanotech applications, according to a report by private research firm Lux Research, in conjunction with attorneys at Foley & Larder.

In short, nanotech novelty is getting mighty crowded. Because of the bottleneck in the USPTO, overlapping claims pile up in increasingly crowded domains. Average pendency is nearly four years, up from two-and-a-half in 1993.

It is likely that part of the problem relates to the overall, and growing, complexity of nanotech patent applications. The number of scientific references in applications has grown threefold in the past 20 years. Though some seasoned examiners have a good grasp and are quick studies, its no overstatement to say that many are technically green for such sophisticated technology, and struggle under a treadmill agency regimen that does not afford coming up to speed with the claimed minutia. Not to mention the shortage of manpower owing to the agency having an abysmal work environment.

With pending applications outnumbering grants three to one, a wave of innovation is held back by examination backlog. Lux Research analyst Vahe Mamikunian reflects, "When the dust settles from this influx of inventions, many patent holders will be wondering just how valuable their innovations are in densely crowded and overlapping areas."

Nanotechnology is generally defined as related to structures only a few nanometers in size, and embraces several technical art areas, include chemicals, biotechnology, semiconductors, electronics (many computer related), as well as mechanical devices. Nanotechnology is discernible by materials and implementation, including nanomaterials, carbon nanotubes, aerogels, metal nanoparticles, ceramic nanoparticles, dendrimers, quantom dots, fullerences and nanowires.

The problem with such pendency is further funding when patentable invention is increasingly uncertain - if company A has already staked a claim in the vector being explored by company B, B's freedom to operate depends on having counterclaim to A without suffering withering potential for licensing and infringement damages fees down the road. With pendency, there are some seriously expensive imponderables. More than anything else, business despises uncertainty, especially avoidable uncertainty.

Other countries are also struggling to keep up with nanotech patent applications. In June 2005, the European Commission moved to harmonize nanotech patent examination internationally as means to address the pendency problem.

Carbon nanotubes and quantum dot patents, with application in electronics, appear to be the most crowded area. In its report, Lux states, "The large addressable markets relevant to these nanomaterials justify the cost of navigating the unfavorable patent outlook." Dendrimers, and nanoparticles of ceramic and metal, with broad application potential in health care and cosmetics, seem worth the potential IP rights squabble.

Half of the 1,180 nanotech patents are held by just 95 entities, such as MIT and IBM. This isolates the repercussive effect of patent pendency in nanotech. Still, a lot of money is going to be on the table, and the patent office snafu isn't helping. The National Science Foundation estimates that the worldwide market for nanotechnology products will reach $1 trillion dollars by 2020. In 2004, U.S. government spent $604 million on nanotech research, part of the $2 billion spent by governments worldwide.