308 Int. J. Nanomanufacturing, Vol. 4, Nos. 1/2/3/4, 2009

Copyright © 2009 Inderscience Enterprises Ltd.

Commercialisation of nanotechnologies: technology transfer from university research laboratories

Mark J. Jackson* MET, College of Technology, Purdue University, 401 North Grant Street, West Lafayette, IN 47907, USA E-mail: jacksomj@purdue.edu *Corresponding author

G.M. Robinson and M.D. Whitfield Micro Machinists, L.L.C., Purdue Research Park, 3000 Kent Avenue, West Lafayette, IN 47906, USA E-mail: grant@micromachinists.com E-mail: mike@micromachinists.com

Waqar Ahmed School of Computing, Engineering and Physical Sciences, Faculty of Science and Technology, University of Central Lancashire, Preston PR1 8ST, UK E-mail: wahmed4@uclan.ac.uk

Abstract: This paper presents information on the commercialisation of nanotechnologies from research laboratories based in the USA. The paper discusses the early implementation of the National Nanotechnology Initiative and provides an analysis of how commercialisation of nanotechnologies is undertaken from university research laboratories.

Keywords: nanotechnology; commercialisation; university research; microtechnologies.

Reference to this paper should be made as follows: Jackson, M.J., Robinson, G.M., Whitfield, M.D. and Ahmed, W. (2009) ‘Commercialisation of nanotechnologies: technology transfer from university research laboratories’, Int. J. Nanomanufacturing, Vol. 4, Nos. 1/2/3/4, pp.308–316.

Biographical notes: Mark J. Jackson is Associate Professor of Mechanical Engineering in the College of Technology at Purdue University. He was educated at Liverpool in Mechanical Engineering and conducted research at the Cavendish Laboratory, University of Cambridge. His areas of research include machine and grinding technologies.

Commercialisation of nanotechnologies 309

Michael D. Whitfield is a Manufacturing Engineer at Solar Turbine. He was previously a Research Assistant at Purdue University conducting research in the area of machinability of difficult to machine alloys. He graduated with a Bachelor and Master degrees in Mechanical Engineering Technology at Purdue University.

Grant Robinson is a Consultant Engineer at Purdue University conducting research in the area of micromachining and grinding processes. He graduated from the University of Liverpool with degrees in Mechanical Engineering and Management and a Doctoral degree from Purdue University in the area of micromachining.

1 Introduction

Technology transfer from universities is largely dependent on support from government agencies, private investors, and corporations. Investment decisions are a major force in how nanotechnology develops and this is dependent upon the support from government, academia, private investors, and corporations. Nanoscale science and engineering activities are growing in the US. The National Nanotechnology Initiative (NNI) is a long-term research and development (R&D) program that began in 2001, and coordinates 25 departments and independent agencies, including the National Science Foundation (NSF), the Department of Defense, the Department of Energy, the National Institutes of Health, the National Institute of Standards and Technology and the National Aeronautical and Space Administration (NASA). The total R&D investment in 2001–2005 was over $4 billion, increasing from the annual budget of $270 million in 2000 to $1.2 billion including congressionally directed projects in 2005. An important outcome of the NNI is the formation of an interdisciplinary nanotechnology community with about 50,000 contributors. An R&D infrastructure with over 60 large centres, networks and user facilities has been established since 2000. This expanding industry consists of more than 1,500 companies with nanotechnology products with a value exceeding $40 billion at an annual rate of growth at about 25%. With such growth and complexity, participation of a coalition of academic organisations, industry, businesses, civil organisations and government in nanotechnology development becomes essential. The role of government continues in basic research but its emphasis is changing, while the private sector becomes increasingly dominant in funding nanotechnology applications. The promise of nanotechnology will not be realised by simply supporting research. A specific governing approach is necessary for emerging nanotechnologies. This chapter explains the roles of each player and their impact on the technology transfer process.

1.1 Investments from venture capitalists

Investment in nanotechnology can gain much from venture capitalists (VCs). Venture capital is money that is invested in unproven companies with the potential to grow into multi-billion dollar industries of the future. VCs are sources of financial and business resources that seek to control part of the business. VCs expect to capture 50 to 70% of return on their investments in a four-to-seven year time period, which is the time it takes to get the start-up company to reach liquidity in terms of acquisition, merger or initial

310 M.J. Jackson et al.

public offering. Nanotechnology start-ups are not particularly attractive to VCs at the present time because the commercialisation horizon is far too long. Start-up companies are particularly attractive to VCs because:

1 the company has a particularly innovative product that is disruptive and has a sustainable business advantage

2 the company has a large and growing market that is worth $1 billion and grows at a rate of 50 to 70% per year

3 the company has products with a very short time-to-market horizon (less than two years)

4 the company has a successful management structure with experienced executives

5 the company has an established customer base with strategic partners that will provide a strong revenue stream.

Nanotechnology is not a single market, but a series of enabling technologies that provide groundbreaking solutions to high value problems in every industry. Product innovations are characterised by the application of nanoscale materials or with process technology conducted at the nanoscale that changes the functionality of the product.

1.2 Start-up companies in nanotechnology

Start-up companies in nanotechnology should be measured by the same metrics as other start-up companies in terms of income generating business dynamics and cost controlling business issues such as sales strategy, management structure, allocation of capital, marketing, business models, product introduction, etc. The key difference of nanotechnology start-ups is that they possess a technology platform that is composed of intellectual property (IP) generated by a team of scientists who are interdisciplinary in nature with no business strategy, focus or management structure. The team is composed of highly respected academic scientists who can lever sources of funding through research contracts. In their initial stages, these companies team up with established companies to help them validate products, provide a channel for marketing and selling products and provide expertise in manufacturing. At this stage, nanotechnology start-ups are characterised in the following primary categories: materials; biotechnology; software; electronics; instrumentation and photonics. The greatest growth is in the area of materials even though most of the funding has gone to developing nanophotonics’ and nanoelectronics’ products.

2 Role of government in nanotechnology commercialisation

The role of government in nanotechnology is to support R&D relevant to national priorities, to support the development of a skilled workforce and supporting infrastructure such as government laboratories and research centres to advance nanotechnology. In 2000, the US Government announced the NNI that was signed into law in 2003 by President George W. Bush that creates a mission enabling the government to establish goals, priorities and metrics for the evaluation of federal spending on nanotechnology. The law also provides for investment in nanotechnology through strategic programs and

Commercialisation of nanotechnologies 311

to provide inter-agency cooperation between government departments. The government also supports the development of workforce education by allowing interested parties to promote the development of curricula via funds channelled through the NSF funds in workforce development is focused on universities to establish the fundamental education in nanoscience and technology, and on community colleges who provide training in nanotechnology activities such as manufacturing process operations, materials production, etc. Articulation agreements also provide pathways so that community college graduates can proceed to universities involved in nanoscience and technology in the form of 2-plus-2 degree programs. Government also provides funds to allow the national laboratories to conduct fundamental research in nanotechnology. The provision of instrumentation is essential especially to major corporations and small-to-medium enterprises that normally cannot afford to purchase such instrumentation. In the USA, job creation is down to major corporations and especially SMEs and it is considered essential that job creators gain unfettered access to these facilities. Nanotechnology education and outreach has impacted over 10,000 graduate students and teachers since 2005. Changes are in preparation for education, by the introduction of nanoscience at an early age. Nanotechnology education has been expanded systematically to earlier education, including undergraduate (The NSF’s Nanotechnology Undergraduate Education program has awarded over 80 awards since 2002) and high schools (since 2003), as well as informal education, science museums and public dissemination. All major science and engineering colleges in the USA have introduced courses related to nanoscale science and engineering in the last five years. NSF has established recently three other networks with national outreach addressing education and societal dimensions:

a The Nanoscale Center for Learning and Teaching aims to reach 1 million students in all 50 states in the next five years.

b The Nanoscale Informal Science Education network will develop, among others, about 100 nanoscale science and technology museum sites in the next five years.

c The Network on Nanotechnology in Society was established in September 2005 with four nodes at the Arizona State University, University of California at Santa Barbara, University of South Carolina and Harvard University. The network will address both short-term and long-term societal implications of nanotechnology, as well as public engagement. All 15 Nanoscale Science and Engineering Centers (NSEC) sponsored by NSF have strong education and outreach activities.

3 Role of academic research in commercialising nanotechnology products

Under the NNI, the NSF plays the largest role in funding nanotechnology research in the US. Additional funding is provided by the Department of Defense, Department of Energy, National Institute of Health, NASA, Environmental Protection Agency and the Department of Agriculture. The NSF has created a tier of funding where one year exploratory research is funded in addition to five-to-ten year centre awards. Each tier creates a different level of maturity of nanotechnological development that is cross-disciplinary. NSEC is awarded for five years initially, and is used as focal points for developing infrastructure and to provide a basis for further funding from other sources of funding. NNI has been recognised for creating an interdisciplinary nanotechnology

312 M.J. Jackson et al.

community in the USA. Two significant and enduring results have emerged from this investment: They are the creation of a nanoscale science and engineering community, and the fostering of a strong culture of interdisciplinary research. The following centres have been created under the auspices of the NNI: Columbia University-Center for Electron Transport in Molecular Nanostructures; Cornell University-Center for Nanoscale Systems; Rensselaer Polytechnic Institute-Center for Directed Assembly of Nanostructures; Harvard University-Science for Nanoscale Systems and their Device Applications; Northwestern University-Institute for Nanotechnology; Rice University-Center for Biological and Environmental Nanotechnology; University of California, Los Angeles-Center for Scalable and Integrated Nanomanufacturing; University of Illinois at Urbana-Champaign-Center for Nanoscale Chemical, Electrical, Mechanical, and Manufacturing Systems; University of California at Berkeley-Center for Integrated Nanomechanical Systems; Northeastern University-Center for High Rate Nanomanufacturing; Ohio State University-Center for Affordable Nanoengineering; University of Pennsylvania-Center for Molecular Function at the Nanoscale; Stanford University-Center for Probing the Nanoscale; University of Wisconsin-Center for Templated Synthesis and Assembly at the Nanoscale; Arizona State University, University of California, Santa Barbara, University of Southern California, Harvard University-Nanotechnology in Society Network Centers from the Nanoscale Science and Engineering Education Solicitation; Northwestern University-Nanotechnology Center for Learning and Teaching; and NSF Networks and Centers that complement the NSECs include: Cornell University and 12 other nodes creating the National Nanotechnology Infrastructure Network; Purdue University and 6 other nodes creating the Network for Computational Nanotechnology; Oklahoma University, Oklahoma State University and the Oklahoma Nano Net; and Cornell University STC: The Nanobiotechnology Center.

With about 25% of global government investments in nanotechnology, the US accounts for about 50% of highly cited papers, ~ 60% of USPTO patents, and about 70% of startup companies in nanotechnology worldwide. Industry investment in USA has exceeded the NNI in R&D, and almost all major companies in the traditional and emerging fields have nanotechnology groups at least to survey the competition. Small Times Magazine reported 1,455 US nanotechnology companies in March 2005, with roughly half being small businesses, and 23,000 new jobs were created in small start-up ‘nano’ companies. The NNI SBIR investment was about $80 million in 2005. More than 200 small businesses, with a total budget of approximately $60 million, have received support from NSF alone since 2001. Many of these are among the 600 nanotechnology companies formed in the USA since 2001. All Fortune 500 companies in emerging materials, electronics, and pharmaceutical markets have nanotechnology related activities since 2003. In 2000, only a handful of companies had corporate interest in nanotechnology (under 1% of the companies). A survey performed by the National Center for Manufacturing Sciences at the end of 2005 showed that 18% of surveyed companies are already marketing nanoproducts. Over 80% of the companies are expected to have nanoproducts by 2010 and 98% in the longer term. Therefore, the role of academic research will play a significant part in this growth.

Commercialisation of nanotechnologies 313

4 Technology transfer for nanotechnology products

Technology transfer is conducted at research-intensive universities for a number of reasons. The first is that there is a federal mandate that makes universities allow discoveries to be available for commercialisation, and that this is an important way of attracting talented faculty into positions within a university that would not otherwise be attracted to a teaching environment. The other reasons include providing equity to faculty members and providing goodwill that will encourage faculty, alumni and alumnae to become donors to the university and to become engaged with the process of commercialisation at the university.

Technology is usually transferred when the professor responsible for the invention allows the university to file a provisional patent, thereby allowing the university to provide a license to the professor to commercialise the technology. The commercialisation is dependent upon the knowledge created by the professor and this in turn allows the professor to be rewarded with a 25–50% share of the royalties generated by the patent, which is very generous compared to the private sector. The office of technology transfer at the university is a key gateway to commercialising such a patent. However, the office of technology transfer has responsibilities such as protecting the professor’s IP, the ability to find a market for the invention, the ability to formulate contracts between professor, university and the private investor. Thus, the success of commercialising the invention depends on the abilities of both the technology transfer office and the professor. There are cultural issues that need to be addressed at universities who are keen on transferring technology to the market. The ability to share the knowledge with the public must be restricted, and this is usually at odds with the ‘publish or perish’ attitude at most academic institutions. However, the type of business relationship will dictate what can and cannot be revealed. In various forms, the relationship can be based on providing licenses to commercialise, faculty consultancy, strategic partnerships with university spin-off companies, special funding schemes for faculty research and research partnerships with major corporations.

5 Intellectual property – impact and ownership

During the growth of nanotechnology during the 1990s, the number of papers containing the word nano increased four-fold according to the ISI Science Citation Index. By 2004 it had risen to over 20,000 articles. The US Patent Office has issued over 15,000 patents containing the word nano up to the year 2006. Many companies are now placing a greater emphasis on IP. Strong IP portfolios decide whether a nanotechnology company can survive, or not.

5.1 Patents

Utility patents offer protection for inventions that can be classified as a novel process or method, or a piece of apparatus that is useful and non-trivial. The exchange of the idea for protection seems obvious, but may also alert the world of the idea. However, under

314 M.J. Jackson et al.

US law the patent is protected for 20 years and prevents others from making and selling the invention contained within the patent. Once granted, it is essential that the patent is protected so that maximum returns can be made from the patent. A strong patent with a solid portfolio can be the foundation of creating wealth from a nanotechnology patent. Protecting nanotechnology-based patents may be difficult because not all of the knowledge is known to protect it from being exploited by other nanotechnology players. Because nanotechnology is inter-disciplinary, it is more difficult to create a novel patent because it may be on a different scale. Therefore, partial protection can only be guaranteed. Therefore, the decision to protect the idea using patents must be considered very carefully.

5.2 Trade secrets

A nanotechnology company can also use trade secrets to protect their IP through the use of trademarks. As of 2005, approximately 1,800 trademarks containing the word ‘nano’ have been registered and are pending. Trade secrets can be indefinite unless publicly disclosed. Trade secrets can be revealed if the product is reverse engineered. However, because of the scale involved it may be difficult to reverse engineer a nanotechnology product. Hence, trade secrets may work if employees maintain confidentiality even when they leave the employ of a particular company. The employment of non-disclosure agreements may also be useful especially when employees move from their original employment with the company.

5.3 Copyrights

Copyrights protect the idea, which is not the case for patents. Protection under copyright protects the idea for up 100 years for work that is made for hire. This is the case for nanotechnology industries.

The case for patenting appears to be self-defeating compared to trade secrets and copyright protection. However, filing a ‘provisional patent’ as opposed to a ‘utility patent’ does indeed show to potential investors that the patent is pending and also shows whom the inventor is. This last statement is interesting in that in the USA, the patent system is based on a ‘first to invent’ standard rather than ‘first to file’ standard. This is unique to the USA and does not exist in other countries. The process of filing a provisional patent is simple, low cost and announces the origin of the invention. A provisional filing also preserves the right to foreign filings.

The restrictions on innovation may stem from patent filings. This may be due to narrow scope of the inventor’s claims in the patent, or may be due to the way that the research was initially funded. If the patent is borne out of government funding, then the government can issue a royalty-free license to the inventor of the patent. This provision was made under the 1980 Bayh-Dole Act and gives universities and small business entities freedom to commercialise the invention at no cost. However, innovations that stem from the invention are still governed by the original license, which may cause problems if the business is sold to a third party after the patent and license has been issued. The issue of developing an IP policy and its impact can take many different forms depending on the short, medium, and long term goals of a nanotechnology business. However, combinations of using patents, trade secrets, copyrights and trademarks can ensure that businesses create revenue streams over differing time scales.

Commercialisation of nanotechnologies 315

6 Role of the entrepreneur, major corporations, and national laboratories in commercialisation

It should be noted that entrepreneurs are individuals who commercialise products with the aim of making money. This does not appear to match that of the requirements of a professor or research team employed in a university or a national laboratory. The characteristics of entrepreneurial activity is characterised by the building of a team dedicated to commercialising nanotechnology products and this is discussed elsewhere n this book. The major corporations play a very important role in commercialising nanotechnology. They are particularly interested in using nanotechnology to enhance and functionalise existing products at all length scales. The corporations are heavily involved in developing their own technology, but do maintain an active interest how government is funding nanotechnology programs and actively looking at the spin-offs that emerge from nanotechnology-funded programs. The national laboratories are not charged with commercialising nanotechnology products, but they do provide access to very expensive equipment that can be used to develop nanotechnology products. This particularly so with large equipments such as synchrotron radiation sources that are used in LiGA applications.

7 Concluding remarks

The NNI has done much to fund the R&D needed in US universities to commercialise nanotechnology products. However, the commercialisation of nanotechnologies for US universities is dependent upon research teams and their relationship with offices of technology transfer at their home institutions. Although funding is well supported by many US Government departments, commercialisation is left in the hands of the business relationships made between research group, offices of technology transfer at universities and the private sector. Further strengthening of the commercialisation route may be necessary in the future if nanotechnology products are to become more widespread in our society. Governments need to address this problem owing to the amount of resources that need to be provided by governments to fund R&Ds in nanotechnology.

In a recent report to the US Congress (Rejeski, 2008), a review was conducted by the Woodrow Wilson Center in Washington D.C. on the effectiveness of the NNI in the USA. It reported that since the NNI was initiated in 2000, there was an increase in the number of nano-enabled consumer products (in excess of 600), that the production and distribution of nanotechnology products has increased globally, that silver has become the most commonly used nano-engineered material mainly in 140 products that requires a anti-microbial agent, that there is an increase in the number of products specifically for children and that nanotechnology products are penetrating markets where regulations are weak. The report states that more effort needs to be made by the government to implement regulations and study the emerging risks of using nanomaterials especially carbon nanotubes that contain a high amount of toxic elements such as chromium and lead. Investors will not fund companies that do not show transparency to the risks of developing nanotechnology products. Therefore, commercialisation strategies will need to incorporate strategies that show the risks and counter those risks so that the public does not become skeptical toward using nanotechnology products. Another aspect of the report

316 M.J. Jackson et al.

points to developing awareness policies of nanotechnology that needs to be developed in order to inform the public of the risks of using nanotechnology products. Therefore, it is critical that health and safety of these products are proven before nanotechnology products are made available to the general public.

References Rejeski, David, (2008) ‘National nanotechnology initiative: charting the course for

re-authorization’, Project on Emerging Nanotechnologies, 24 April 2008, Woodrow Wilson Center for International Scholars, Washington D.C., USA.

Websites http://ncn.purdue.edu/ http://www.cdc.gov/niosh/ http://www.cpsc.gov http://www.epa.gov http://www.fda.gov http://www.nanomanufacturing.eu http://www.nano.gov/NNI_Strategic_Plan_2004.pdf http://www.niehs.nih.gov http://www.nnin.org http://www.osha.gov