NIST

PUBLICATIONS

TECHNOLOGY PROGRAM

STATUS RfePORl

NUMBER 1

WILLIAM R LONG

NIST SPECIAL PUBLICATION 950-1

U.S. DEPARTMENT OF COMMERCE

Technology Administration

National Institute of Standards and Technology

ADVANCED TECHNOLOGY PROGRAM

IS. DEPARTMENT OF

COMMERCE

William M. ]kik\. Secretan

lolofy Administratioc

Gar)'R. Bachula.

}nder Secretary for Taliiiol

National Institute of

Standards and Technology

Raymond G. Kaiimrcr

PERFORMANCE

OF

COMPLETED

PROJECTS

STATUS REPORT

NUMBER 1

NIST SPECIAL PUBLICATION 950-1

Economic Assessment Office Advanced Technology Program

Gaithersburg, Maryland 20899

William F. Long

Business Perfomiance Research Associates, Inc. Bethesda, Maiyland 20814

March 1999
National Institute of Standards and Technology Performance of Completed Projects: Status Report Number 1 NIST Special Publication 950-1 144 pages (March 1999) CODEN: NSPUE2

U.S. Government Printing Office Washington, DC: 1999

For sale by the Superintendent of Documents

U.S. Government Printing Office Washington, DC 20402-9325
Contents

Acknowledgments v

Executive Summary vi

Introduction ix

CHAPTER 1 — Overview of Completed Projects 1

Characteristics ot tlie Projects 2

Timeline of Expected ATP Project Activities and Impacts 4

Gains in Technical Knowledge 8

Dissemination of New Knowledge 10

Commercialization of the New Technology 13

Broad-Based Economic Benefits 15

CHAPTER 2 — Biotechnology 19

Aastrom Biosciences, Inc 20

Aphios Corporation 24

Molecular Simulations, Inc 26 Thermo Trilogy Corporation 29

Tissue Engineering, Inc 31

CHAPTER 3 — Chemicals and Chemical Processing 33

BioTraces, Inc 34

CHAPTER 4 — Discrete Manufacturing 37

Auto Body Consortium (Joint Venture) 38

HelpMate Robotics, Inc 41 PreAmp Consortium (Joint Venture) 44

Saginaw Machine Systems, Inc 46

CHAPTER 5 — Electronics 49

Accuwave Corporation 50

AstroPower, Inc 52

Cree Research, Inc 55

Cynosure, Inc 58 Diamond Semiconductor Group, LLC 60

FSI International, Inc 63

Galileo Corporation 65

Hampshire Instruments, Inc. (Joint Venture) 67

Illinois Superconductor Corporation 69

Light Age, Inc 72

^^:E-2^K2 lii
Contents

CHAPTER 5 — Electronics (continued)

Lucent Technologies Inc 75

Multi-Film Venture (Joint Venture) 78

Nonvolatile Electronics, Inc 80

Spire Corporation 83

Ttiomas Electronics, Inc 85

CHAPTER 6 — Energy and Environment 89

American Superconductor Corporation 90

Armstrong World Industries, Inc 93

E. I. du Pont de Nemours & Company 95

Micliigan Molecular Institute 97

CHAPTER 7 — Information, Computers, and Communications 99

Communication Intelligence Corporation #1 100

Communication Intelligence Corporation #2 103

Engineering Animation, Inc 105 ETOM Technologies, Inc 109

Mathematical Technologies, Inc 111

Torrent Systems, Inc 114

CHAPTER 8 — Materials 117

AlliedSignal, Inc 118

Geltech Incorporated 121 IBM Corporation 123 Appendices 125

Appendix A — Development of New Knowledge and 126

Early Commercial Products and Processes Appendix B —Terminated Projects 131

Endnotes 132

References 134

Certain trade names and products are mentioned in tlie text and tabies of ttie report in order to adequately identify tfie commercial accomplishments to date deriving from completed ATP-funded

researcfi projects. In no case does such identification imply recommendation or endorsement by the National Institute of Standards and Technology

iv ADVANCED TECHNOLOGY PROGRAM
Acknowledgments

I would like to express appreciation to numerous people whose assistance and support were vital to the development of this report.

For technical editing of the text:

Hugh Macintosh

Science writer/editor Chicago, Illinois

For layout design and implementation:

William Welsh

Welsh Design 10200A Old Frederick Road

Frederick, Maryland 21701

For guidance concerning the history of the

projects, for information on the technical accomplishments and current status of the

projects, and for feedback on the substance of

the project write-ups:

Officials at the companies and other organizations involved in the projects, and

project managers and other staff of the Advanced Technology Program (ATP).

For comments and suggestions at critical

junctures in the compilation and writing of the

report, two staff economists in the Economic

Assessment Office of the ATP:

Connie Chang

Jeanne W. Powell

For technical guidance, editorial comments,

the supply of valuable institutional and historical information, attention to the ways the vari- ous parts of the study interacted, and persistent

invitations to stay focused on the project, the

Director of the Economic Assessment Office of

the ATP:

Rosalie T Ruegg

And, finally, for support that goes far beyond

the research and words and tables and figures and pictures, by one who labored as a partner

in this creative work, my wife:

Laura Brouse-Long

The opinions expressed in this report are those

of the author, and do not necessarily express

those of the Advanced Technology Program,

the National Institute of Standards and

Technology, the Technology Administration, or

the Department of Commerce. And, of course, any errors as to factual information are the

responsibility of the author

V
Executive

Summary

Innovations ttiat reduce tlie costs and improve tlie out- comes of medical care, improve the clarity of wireless

communications, and enhance

the quality of manufactured prod- ucts are among the many significant

achievements supported by the

Advanced Technology Program

(ATP).

The First Group of

Completed ATP Projects

This review of the first group of completed

projects suggests that billions of dollars are

likely to flow into the U.S. economy, greatly exceeding the ATP's investment. Thus, the ATP

appears to be on track in fulfilling its mission

to stimulate economic growth by helping American companies and their research partners overcome significant technical challenges

to produce economically valuable new technologies. The details are contained in this

report. Background

During the period 1990 through 1998, the ATP —the nation's civilian technology program

charged with improving the competitiveness of

U.S. businesses — announced 431 multi-year

research project awards as a result of 39 meritbased, peer-review competitions. These projects

cost a total of approximately $2.8 billion, of which industry committed slightly more than

half, and the ATP the remainder More than 1,000 participants are involved

in the single- applicant and joint venture

projects. For-profit companies, universities,

non-profit laboratories, and federal laboratories serve as formal and infomial partners and

subcontractors.

ATP-funded projects are characterized by

ambitious scientific and technological goals

with strong potential to accelerate the develop- ment of technologies that offer substantial economic returns to the United States. The

benefits to the nation are expected to extend

well beyond the direct benefits to the ATP

award recipients. The ATP is administered by

the National Institute of Standards and

Technology (NIST), which is part of the Department of Commerce's Technology

Administration.

Report Objective, Scope and

Approach

Policy makers and other observers are keenly

interested in how ATP-funded research projects

are turning out, what technologies have been

developed thus far, whether these technologies have yet been embodied in commercial products and processes, and the impact that ATP- funded research has made on the U.S. econo- my By the end of March 1997, 38 of all

research projects then announced had been

completed and 12 others had been terminated. This report —which is just one element of

the ATP's evaluation program —provides an

assessment of the status of these projects. It contains a general analysis of the 38 projects

as a group, touching on important technology and commercialization issues by looking at

several across-the-board factore. It also provides a snapshot of each of the 38 completed

projects, describing the context in which it unfolded, noting major accomplishments as of mid- 1998, and highlighting the future outlook

for continued progress. The 12 terminated projects are treated in Appendix B.

It is important to note that this set of completed projects constitutes only a portion of ATP's portfolio, and that it is not a representative sample but simply the firet group to be completed at the time the report was initiated.

Because the technology development efforts are

for the most part still works in progress, this

report is not expected to be the last word on

their accomplishments. It remains the task of

future studies to provide a more comprehensive

assessment of their long-run impacts.

Overview of Completed Projects

The 38 completed projects were carried out by

34 single applicants —mostly small companies — and 4 joint venture teams. The 55

participants came from 21 states. The projects

addressed technical challenges in 7 key industrial sectors; 15 projects involved research in

electronics, 6 in computing, information, and

communications, 5 in biotechnology, 4 in energy and environment, 4 in manufacturing,

3 in materials, and 1 in chemicals and chemical processing. The median duration of these projects was

3 years. The ATP contributed a total of $64.6

million to the 38 projects, accounting for

slightly less than half of the total costs of the

projects, and project participants contributed

$65.7 million. The ATP contributed another

$9-4 million to the 12 projects that were termi- nated before completion, bringing the total ATP spending on these 50 projects to $74.0

million.

Projected Broad-Based

Economic Benefits

Although it is beyond the scope of this status

report to calculate the economic returns from

each individual project, an "investment portfolio" approach can be used to evaluate ATP's investment across the group of funded projects, much as an investor in stocks and bonds might do. Other economic studies have already projected future returns from three of the completed projects, as follows: from the Auto Body Consortium "2mm" project — at

vi ADVANCED TECHNOLOGY PROGRAM
least $3 billion from quality improvements in

U.S.-produced automobiles and associated market share gains; and from two medical

technologies still in clinical trials (Aastrom

Biosciences' stem cell production system and Tissue Engineering's prothesis material) a projected return of several billions of

dollars. Based on these figures, the estimated eco- nomic benefits to the nation resulting from

just these three projects would exceed the ATP's

costs for all 38 completed projects as well as

the 12 terminated projects —indeed, the esti- mated benefits would exceed the total costs of

all projects funded to date by the ATP. Further- more, the returns could be much higher, given

the considerable e\idence that some of the

other projects will also provide substantial eco- nomic benefits to the nation. New Technologies;

Early Products and Processes

The research conducted in the 38 completed

projects produced a number of scientific discoveries, contributed to the U.S. knowledge

base, and produced a number of breakthrough

technologies. Although the full benefits of the

technical achievements of the ATP projects will not be realized until more fime has passed, allowing for their wider diffusion, the creation

of technical knowledge and its diffusion to date

represent critical first steps in realizing real- world benefits for the nation. For 24 of the projects the new technologies have already been incorporated in new or

improved commercial products or processes through the commercialization efforts of the companies. These products and processes

include applications envisioned in the original

proposals submitted to the ATP as well as

unanticipated early spin-offs which exploit

opportunities arising in the serendipitous

process of discovery. Early revenue generation

is important, particularly to small companies

which must keep a close eye on cash flow for solvency This early commercialization of the new technologies represents another critical

step in the delivery of practical national benefits. A few examples, illustrative of the tech- nology development and commercialization achievements to date, are given below,

Technology Development and Qommercialization Examples

Engineering Animation, in Ames, Iowa, developed core algorithms to enable the

creation of three-dimensional images from

sets of two-dimensional cross-sectional images of human body parts, and to provide animation for selected organs. After an

initial failure to commercialize a high-cost

system that incorporated the technology,

the company adapted the technology for three CD-ROMs and two print publications

in 1995, and has more recently created CD- ROMs that are bundled with medical books

and sold as a package. The company is now active in a multiplicity

of applications featuring three-dimensional animations which utilize computer visualization and computational dynamics, in sectors as diverse as medical education,

manufacturing design, and entertainment. The company started receiving outside

recognition for its technical progress in 1994, while it was working on the ATP

project. Since the project ended in 1995, it has experienced outstanding growth as its technology has been applied to more and more fields, and it has been recently recognized by Individual Investor, Business

Week, and Forbes ASAP magazines as one

of the best technology companies in the country,

Illinois Superconductor, in Mount

Prospect, Illinois, developed new processes

for fabricating thick-film, high-temperature

superconducting (HTS) materials and demonstrated their use in wireless communications. By finding a way to make HTS

coatings on inexpensive substrates, the company overcame the substantial difficulties involved in making the large, geometrically complex components needed to handle the radio frequency spectrum.

Superconducting components lower costs and improve services by extending the range of signal transmission, increasing

receiver sensitivity, and improving fre- quency stability, thereby extending the range of base stations and reducing the numbers of base stations needed. The new

technologies have been incorporated into commercial products that are already being used in 12 cities.

The Auto Body Consortium, a Michigan- based joint venture — a group of small- and medium-sized auto tooling and engineering service suppliers, two universities and two auto manufacturers — solved an assortment of long-standing problems on assembly lines by developing new measurement and process control technologies

that cut dimensional variation in auto body

assembly down to a world-class standard

of two millimeters and below. A tighter fit results in higher-quality vehicles and

reduced costs. The new technologies have been incorporated by suppliers in assembly line equip- ment and put to use in 6 of 10 Chrysler

plants and 16 of 31 General Motors plants

in the United States and Canada. Net pro- duction costs have been reduced by an

estimated $10 to $25 per vehicle, translating into millions of dollars of savings per year in plants now using the new technologies. The project team has also published a manual on the new technologies to help extend their use throughout the supply

chain and the aerospace, appliance, metal

furniture, and other industries that use automation to assemble metal parts.

vii
Peer Recognition of

Teclinical Acliievements

The technical achievements of some of the

completed projects were honored by outside

organizations, including trade associations and technical journals. In 1996 alone, the

following six awards were given: R&D magazine — an R&D 100 award to American Superconductor, in Westborough, Massachusetts, for its develop- ment of CryoSaver current leads; Industry Week magazine —one of 25 Technology of the Year Awards to American

Superconductor, for applications of super- conducting wire; Industry Week magazine —one of 25 Technology of the Year Awards to Engineering Animation, in Ames, Iowa,

for its interactive 3D visualization products

used in the manufacturing sector for product

development;

Discover- magazine —one of 36 finalists

for Technology of the Year to HelpMate

Robotics, in Danbury, Connecticut, for the HelpMate robot used in hospitals; Microwave & RF magazine —one of the Top Products of 1996 to Illinois Superconductor, in Mt. Prospect, Illinois,

for cellular phone site filtere and supercon- ducting ceramics; Computenvorld magazine —finalist for

the Smithsonian Innovator Medal to Molecular Simulations, in San Diego,

California, for advances in software to help

scientists simulate and visualize complex

molecules.

Dissemination of New

Teciinical Knowledge

The new knowledge and technologies are being

disseminated widely to promote broader application across the economy and hirther broad- based benefits. Dissemination takes place in

several ways. For instance, inventions that are both novel and usehil can be patented and

licensed to others for their use. Of the 38 completed projects, 15 have been granted patents

so far, and three projects produced at least 5 patents each. For some projects, patent applications have been filed but the patent has not

yet been granted.

Products can be reverse engineered to determine the technology embedded in them. The substantial number of products thus far

released to markets will further the dissemination of new technical knowledge. Other parties can not only use them but attempt to discover how they work by observation and testing. Knowledge has also been shared through

the numerous formal and informal arrange- ments with partners, intermediate customers, and end users, and through professional conferences and technical publications. Of the completed projects, 27 involved the sharing of

technical information with a variety of collaborators: joint venture participants, subcontractors, and informal partners. Of the completed

projects, l6 led to publications in technical and professional journals, and many awardees

reported multiple publications — more than

20 in several cases.

Small Company Growth and

Attraction of Capital

Besides the sales of products and processes

incorporating ATP-funded advances, other

signals also reveal that a company possesses

valuable technology and is probably on the path toward commercialization. These signals

include company growth and initial public

offerings (IPOs) of stock. Of the 27 small single-applicant awardees, 22 experienced some growth in employment, and l6 of these have at least doubled in size

since the start of the ATP project. One company

reported a 19-fold increase in staff. Of the 21

single-applicant awardees that were privately held at the beginning of their ATP projects, five companies raised capital for growth by conducting IPOs during the project, and a sixth

did so afterwards. Why ATP?

The ATP either made research and commercialization possible, or significantly accelerated

it, according to company interviews. For 32 completed projects, 21 would not have been

undertaken at all without ATP funding, and 1

1

would have begun at a later date and pro- ceeded at a slower pace, (Personnel changes,

severe company financial distress, or lack of

clarity in responses to interview questions

made it impossible to include six of the 38 projects in this tabulation.)

In addition, ATP funding significantly

accelerated the time-to-market for the new

technologies, according to the project participants. Of the 32 projects, 13 awardees said the ATP funding helped them raise additional capital, and 23 said it boosted their ability to find

partners to pursue continued development and

commercialization. Examples of company comments about the

role of the ATP include: Torrent Systems — It is doubtful that

the technology could have been successfully developed at all; venture capital funding had

been sought but was unavailable. AlliedSignal —The company would

have needed another five years to reach this

stage of development.

Diamond Semiconductor Group —

The company would have been unable to do

the research or survive as a company; its only

other alternative then was to become part of a

foreign company

Nonvolatile Electronics —ATP funding enabled the project to be done, prevented

the company from failing, and improved the company's ability to attract capital from other

sources. FSI International —The award

enabled FSI to collaborate with Massachusetts

Institute of Technology researchers. Light Age —The visibility generated by

winning the ATP award helped Light Age establish agreements with research partners and, coupled with the success of the ATP project, enabled it to secure additional funding from

private investors. Thomas Electronics —Without the ATP award, the company would have struggled along with its conventional CRT technology and would have stood virtually no chance of competing with other display-component

suppliers, all of which are foreign companies.

viii ADVANCED TECHNOLOGY PROGRAM
Introduction

Industry

has proposed 3,585

projects to the ATP since 1990,

of which 431, or 12 percent,

have been selected by the ATP

for funding. Fifty of the 431

ATP projects were either completed

or terminated as of March 1997,

which is when this study began. Of

the 50 projects, 38 were completed,

and 12 were terminated before

completion. This study focuses on

these first 38 completed projects. A

series of sequential studies will address additional ATP projects as

they are completed or terminated.

Technology Development

Proposals to the ATP

Projects are proposed to the ATP by U.S. companies. Proposals that score high in terms of

their scientific/technical merit and their eco- nomic merit are selected for ATP cost-share

awards. The reviews are carried out in rigorous

peer-review competitions. All proposals are reviewed by government scientists and engineers who are expert in the relevant technology

areas. They are also reviewed by business,

industry, and economic experts who judge the

potential of the proposed project to deliver broadly based economic benefits to the nation —including large benefits extending beyond

the award recipient, i.e., "spillovers". The ATP

issues a proposal preparation kit that presents and explains the selection criteria to prospective proposers and provides guidance on

preparing proposals.^

ATP Project Evaluation

The Economic Assessment Office (EAO) of the ATP is charged with evaluating the perfor- mance of funded projects. One element of the EAO's evaluation plan-^ is to provide an interim assessment of the status of all completed ATP

projects, this being the first status report. Another element is to conduct detailed eco- nomic case studies of selected projects, several

of which are drawn upon and referenced in

this study. Other evaluation activities of the EAO include database development, surveys,

statistical and econometric studies, model

development, and special issues studies.^ "Completed" and "Terminated"

Projects Defined

For the purposes of this study a "completed"

project is defined as one for which a final

report has been filed with the ATP, the financial and other paperwork required for close-out has been done, and the National Institute for Standards and Technology (NIST) Grants

Office has notified the ATP that it considers the

project completed. A "terminated" project is

defined as one that either was selected in an ATP competition and announced but never

officially started, or one that started but was

closed for some reason before the completion

date, with a substantial amount of the technical work still unfinished.

Sources of Information

Information contained in the individual project reports in Chapters 2-8 comes from several

sources: documents filed by project participants; conversations with ATP staff familiar with the project; public documents, such as

patent data from the U.S. Patent and Trademark Office, academic and other professional literature, trade and business literature, news reports, and filings at the Securities and

Exchange Commission; previous EAO studies; and interviews with company project staff. Each of the individual project write-ups was

reviewed for accuracy by the awardee and ATP

staff.

Report Organization

Chapter 1 provides a summary overview of the 38 completed projects as a group. First, the

portfolio is characterized in terms of technologies, company size, and other features. Then, the timing of the various stages of tech- nology development and commercialization is

discussed. Evidence of the gains in technical knowledge is covered, as is dissemination of

the new knowledge, with special attention to

the availability of products and processes that have been introduced to the market. The chapter closes with an oveiTiew of the broad-based

benefits that this portfolio of projects is likely

to produce. The individual project reports are presented

in Chapters 2-8, organized by technology

group. For each completed project, major

accomplishments and the outlook for contin- ued progress are highlighted. A detailed account of how the project has unfolded is

given, with attention to technical and commercial goals and achievements, infonnation about technology diffusion, and views about

the role played by ATP's funding.

Appendix A presents brief descriptions of

technical and commercial achievements of the completed projects in tabular form. Appendix B

provides a brief discussion of the 12 terminated

projects.

ix
ADVANCED TECHNOLOGY PROGRAM
Chapter 1

Overview of

Completed Projects

Characteristics of tlie Projects 2

Timeline of Expected ATP Project Activities and Impacts 4

Gains in Technical Knowledge 8

Dissemination of New Knowledge 10

Commercialization of the New Technology 13

Broad-Based Economic Benefits 15
Overview of Characteristics of the

Completed Projects

Projects

Figure 1 . Distribution of Projects by Technology Area

Technology Area

Chemicals and

Chemical Processing

Materials

Discrete Manufacturing

Energy and

Environment

Biotechnology

Information, Computers and Communication -

Electronics

3 All Projects

Study Projects

The

38 completed projects

within the ATP portfolio

differ in many respects.

They vary in terms of costs, duration, form

(single applicant or joint venture).

Industry, size of company,

public/private ownership status,

type of participating organizations,

research problems addressed,

technology developed and the

degree of progress made toward

meeting technical and business

goals.

Single Applicants and

Joint Ventures

Thirty-four of the completed projects were

proposed by single applicants, with the other

four being proposed by joint ventures. For the majority of the first-completed projects to be

single applicants was expected, since 285 of the 431 projects announced through 1998 were

single-applicant projects, while 146 were joint

ventures. Also single-applicant projects tend to be shorter in duration, completing sooner than most joint ventures. Thirty-three of the single

applicants were for-profit companies, and one was a nonprofit institute.^

0% 5% 10%

Size of Companies

Among the thirty-three companies in singleapplicant projects, 27 were small companies, where "small" is defined as having fewer than 500 employees. One was a medium-sized

company, and the other five were large companies, as defined as Fortune 500 or equivalent firms. Small companies also participated

in joint venture projects, but these are not separately identified here.

Public and Private Companies

Of the 27 single applicants that were small companies, 21 were privately held companies

at the time their projects started. A number of

these have since gone public, as discussed later

in this chapter.

15% 20% 25% 30% 35% 40%

Percentage of Projects

A Variety of Technologies

The 38 completed projects fall into seven

different technology areas, as shown in Figure

1, where percentages of the 38 completed

projects within the areas are shown in the lower of the two bars. The highest concentration, with 15 projects, is in Electronics,

followed by Information, Computers and

Communication, with six. The lowest is in Chemicals and Chemical Processing, with only one project. For comparison purposes, Figure

1, also shows, in the upper of the two bars, the

distribution across the same seven technology

areas for all 431 projects awarded through

1998. The Electronics area is much more

strongly represented in the set of 38 completed

projects reviewed in this study than in the portfolio of all ATP projects.

2 ADVANCED TECHNOLOGY PROGRAM
Table 1 . Single-Applicant Project Cost

ATP Share Total (ATP + Industry)

(millions) Number of ^ Percentage of Number of Percentage of Projects Total Projects Projects Total Projects^

<$1 5 15% 2 6%

> $1 , < $2 29 85% 5 15%

> $2, < $3 14 41%

> $3, < $4 5 15%

> $4. < $5 5 15%

> $5, < $6 3 9%

Total 34 34

Table 2. Joint Venture Project Cost

ATP Share Total (ATP + Industry)

(millions) Number of Percentage of Projects Total Projects

Number of ProjectsPercentage of Total Projects

<$5 3 75% 1 25%

>$5,<$10 1 25% 1 25%

>$10,<$15 2 50%

Total 4 4

Duration of Projects

The 38 projects also varied in duration. The

median length was three years, the maximum

allowable length for single- applicant projects. Half of the projects lasted 33 to 36 months.

Another group clustered around the two-year mark. The two projects that lasted longer than

36 months were joint venture projects, which

can last a maximum of five years.

Differences in Costs of the

Projects

The 38 projects varied significantly in terms of

cost, as shown in Tables 1 and 2. Both the ATP

share and the total cost (ATP share plus industry share) are tabulated. Joint venture projects,

for which project costs are not capped, typically

cost more than single-q^plicant projects, but even within the two groups, marked differences occur

Rules concerning the share of project costs

the ATP will contribute differ between single

applicants and joint ventures. Single-applicant

companies are required to cover all their indirect costs, and the ATP may cover up to 100

percent of direct project costs.^ Since projects from small companies typically have smaller

indirect costs relative to direct costs, it is likely

that the ATP will contribute a larger percentage

of total project costs for these projects than for

others. The large percentage of single-applicants that are small companies (27 out of 34) accounts for the fact that ATP paid more than

half the costs for many of these projects. The cost-share rules affect the cost data

presented in the 38 individual project reports

(displayed project by project in Chapters 2-8).

Tables I and 2 are based on those data. For the 34 single applicants, the industry contribution

to their indirect costs is the amount given in

the original ATP proposal, unless the company

supplied a different amount for this study. None of these amounts was audited. For the remaining four projects, the industry contribution shown is the amount actually spent by

project participants, as audited. Among the 34 single- applicant projects, two had total costs (ATP -1- industry) of a million

dollars or less. At the other end of the cost

range, three projects had total costs between $5

million and $6 million. Altogether, approximately $98.4 million was spent for the 34 single-applicant projects, with an average total

cost of about $2.9 million per project.

Cost data for the four joint ventures are summarized in Table 2. The smallest project, included in the first row, had a total cost (ATP

-I- industiy) of less than $2 million. The

largest, included in the third row, had a total

cost of almost $14 million. Altogether, approximately $31.9 million was spent on the four

projects. The average total cost per joint venture project was about $7.9 million. The ATP contributed $64.6 million to the 38 projects, providing slightly less than half

the total funds. It contributed more than 50

percent of the total cost for 19 projects and less than 50 percent for I9. In the case of the joint

ventures, the ATP's contribution was always

less than half of total costs.

3
Overview of Timeline of

Completed Projects

Expected ATP Project

Activities and Impacts

The

ultimate success of the ATP projects is determined by activities and

impacts that occur within

the award-recipient

companies and in the larger

economy before, during and after each project.

Activities and Impacts

Within Firms

The following activities and impacts are related mainly to the award recipients: fomiing the

initial idea; establishing collaborative research

relationships; developing a research agenda;

applying to the ATP for an award; carrying out

the research; publishing results, filing for

patents, and licensing the technology to others; conducting further post-ATP project research;

attracting other sources of funding; conducting

marketing studies and other precommercialization activities; forming new alliances for commercialization; developing products and

processes that use the new technology; producing, selling and distributing the new goods or

services; generating revenue; and building the

business.^

Activities and Impacts in the

Broader Economy

Activities and impacts that occur in the broader economy — outside the immediate influence

of ATP award recipients —include receipt of

benefits by purchasers of the new products or

users of the new processes^ in the course of

their business operations, receipt of benefits by

other companies that are able to imitate the technology or benefit in other ways from

knowledge derived from the technology, and

receipt of benefits by ultimate consumers of goods and services embodying the technologies.

Figure 2: Conceptual Timeline of ATP's Expected Impacts

d-Term

Increased R&D Spending

Expanded Goals

Acceleration

Collaboration

Proposal ^^^^ Efficiencies)

Preparation Technology Employment

Joint Venture Opportunities

Formation Tecfinological Advances

Resource ID

Spin-Off Products

Product Improvements

- Costs

- Quality New Applications Identified New Products and Processes New Business Opportunities New Business Alliances Company Growtfi

Early Spillover Benefits

More New Products and Processes

Infra-Industry Diffusion

Inter-Industry Diffusion

Market Expansion

Employment Opportunities

- Production

- Distribution

Private ROI

Spillover Benefits ,•*

Taxpayer ROI •

*

Total Economic

,

•

* Benefits

'Van* Awa

• • •

•

Benefits to Awardees

-1 0 1 Announce Announce Compe- Award

tition

(Source; Ruegg, 1999)

2 3 4 5

Complete Project

9 10

or More

Years

Post-Project Period

4 ADVANCED TECHNOLOGY PROGRAM
Timing of Activities and Impacts — A Conceptual Picture

Technolog}' area, market conditions and the

regulator}" environment van^ significantly

across ATP-funded projects, and these differ- ences can substantially affect the time path for

the acti\ities hsted above. Hence, the time

required for technolog}' development, commercialization and difhision varies greatly among

the projects, even when they stay on track. Figure 2 illustrates in concept how the time path of a successful project might unfold,

starting with the announcement of a competition by the ATP.^ On this conceptual chart, economic impacts are depicted on the vertical

scale, and time on the horizontal scale. The

lower of the two curves, rising from left to

right, shows returns to the project innovators

increasing over time as they commercialize it. The upper curve shows returns to the economy

at large increasing as the technology diffuses

into wider use. The difference between the two

curves reflects benefits that "spill over" to those

outside the project. The chart is annotated with events that may lead, or contribute, to the generation of economic benefits during three time periods

designated by the shading. Upon announce- ment of a competition by ATP, companies

begin to prepare their proposal, form collaborative relationships, and identif}' resources. If they receive an ATP award, they tend to

increase R&D spending, expand goals, accelerate research, hire scientists and engineers, and make technical progress. These developments

occur in the short-term, shown here as extend- ing through to the approximate average

project length of three years.

As a successful ATP project ends, the pace of commercialization activity surrounding the

technolog}' generally will pick up as depicted

in the "mid-term" stage. Then, in the longerterm, wider diffusion of the technolog}' —

within the initially targeted industry and, for multi-use technologies, across industry sectors —is expected to occur as it is incorporated

into new products and processes.

Two Specific Timelines —

Differences and Similarities

Figure 3, on the next two pages, illustrates the

specific time paths for two of the 38 projects. One project does not yet have a product or

process on the market, the other does. One

requires regulatory approval, the other does

not. One company is publicly traded, the other

is privately held. One is in biotechnology, the other is in computer software. Still, as shown

in Figure 3, many activities appear in both

timelines —but at very different times. Medical Technology Requiring FDA

Approval — Aastrom Biosciences

Growing out of research done by three faculty members at the University of Michigan in Ann

Arbor, the idea of a bioreactor to grow human

stem cells outside the body began to take shape

in the mid-1980s. In 1988, the professors founded Aastrom Biosciences (while continuing their university research) and later brought

in a partner with business experience. In 1991, with four employees, the company applied for an ATP award. Significant events for this

project are shown in the top panel of Figure 3 on the following page.

After two years of research, Aastrom met the

technical goals of its ATP project. Along the way the company invested heavily in protecting

its discoveries by filing for numerous patents.

It also submitted a substantial number of technical papers documenting its progress to professional societies and journals. The technology for growing stem cells was embodied in the AastromReplicell'^'"' Cell Production System (System). Because it will be used for human medical purposes, the System must be approved by the Food and Drug

Administration (FDA), but only after successhil completion of clinical trials and other tests.

Several tests using human subjects have been

conducted since the ATP project ended, with each test producing favorable results. If that

success continues, the device will likely be approved and available for sale in the next one

to three years. The need for FDA approval creates a lag of

several years between the start of commercialization efforts and the ultimate sale of the

product. In this case, the effort is now in its

11th year, and the total time from concept to

first commercial sale of the Aastrom System

will likely be 12 to 14 years. Nevertheless, there

are factors — including test results from cancer patients and the positive response of

investors to Aastrom 's stock offerings —which

suggest that the technology has a very bright

future.

Parallel Processor Computer

Technology With Immediate

Applications — Torrent Systems

The idea for this project came from the work

and conversations of two computer programmers who formed a company in 1993 and

applied the same year for ATP fijnding for a

project which started the following year The

project made rapid progress in developing parallel processing technology, and it began to

receive inquiries from potential customers

about using the technology in new software

applications. Torrent requested that the project be shortened so that the company could move

quickly to commercialize products incorporating the new technology. Significant events for

this project are shown in the bottom panel of Figure 3- Unlike developers of medical devices, computer software vendors are not required to have any kind of approval to sell their

products. Thus, Torrent was able to enter into

licensing agreements with other companies a mere 18 months after starting its ATP project. The huge difference in development fimes

for these two technologies is illustrated in Figure 3, where key events are graphed against

the same time scale. The first event for Aastrom's System was 12 years in the past, and

broad economic benefits still lie a few years in

the future. The first event for Torrent's new

parallel processing technology was the company's founding in 1993, and customers were

already using the product and receiving its

benefits in 1996. Yet both projects stayed essentially on track and have largely continued to meet ATP's expectations.

5
Figure 3a. Aastrom Biosciences Example from the ATP 38 Project Sample — Successful Project, Slow Commercialization

Economy-Wide

Benefits

Commercial

Development

Incorporate Company Enter Marketing Agreement with COt CBT

Technical Development

Professors Continue Research atUMI ATPResear

Enter Patenting Start Testing Systen- Agreement with UMI with Human Subject

Funding Receive $1.2 Million Award from ATP

*AastromReplicellTM Cell Production System

Figure 3b. Torrent Systems Example from the ATP 38 Project Sample — Successful Project, Fast Commercialization

Economy-Wide

Benefits

Commercial

Development

Incorporate Compar

j

Technical Development

Funding t m

Silt

ATP Awards — Part of a Larger

Funding Picture

For some projects, such as Torrent's, funding from the ATP constitutes a substantial portion

of the total capital used to support research and development and, indeed, a substantial

share of the overall costs. For most projects, including Aastrom's, ATP funds are a relatively

small percentage of the total amounts that v^'ill

i

ultimately be spent to bring the technology

into use. Commercialization costs typically dwarf research costs. Nonetheless, ATP funding —targeted at a critical stage where technical

risks tend to inhibit private investors —may

be essential for ultimate success, as was the

case for the Torrent and Aastrom projects. Funding by the ATP has been shown by

another study^ to address two types of timing

is

f

t

ti

at

to

k

6 ADVANCED TECHNOLOGY PR 0 G R A iVI
r

1

1

1

60 Test Patients Benefitting Large Number of Cancer Patients Are Helped

Enter Marketing Enter Agreements to FDA Approves Patient Agreement witti Manufacture System* Use of System* Rhone-Poulenc Components o * o j i o * ^ StartSellingSystem

-Jer Way Apply for System* Report Clinical Results Report Clinical Bioreactor Patent for Cancer Patients Results for More

Continue Testing System with Receive Bioreactor Patients Human Subjects Patent

Receive $35 Million Receive $21 Million from Rtione-Poulenc from IPO

Receive $11 Million from Additional Stock

nffprinn unci II ly

I

i

1

United Airlines Starts United Airlines Using ttie Product for Increases Revenue by

Improved Scheduling Millions of $

Others Benefit from Use

Develop OrchestrateTM License OrchestrateTM IBM Partnership

lPf|.f,f^ijpp to Additional Users Integrates Identify Hew Applications

OrchestrateTM to Form Marketing ^^^^^^^^ ^^^^ Partnerships

Market for Licensing Partnerships urcnesiraie

i

ATP Research Under Way

ve$1,2 Million Receive $3.8 Million in Private Capital AwardfromATP ^ n ««,, r, , n , Receive $6.2 Million in Private Capital Receive License Fees for OrchestrateTM

!

issues: overcoming an inability to start a Of course, from an evaluation standpoint,

project and speeding up progress needed to multiple funding sources make the task of

> address a critical window of opportunity. Thus, assigning cause and effect relationships more

even though KH' funds will in most cases problematic. Which funding dollars caused amount to a relatively small share of the total what effect? One aspect of this study, therefore,

costs expended to bring a technology to has been to try to identify the role that the ATP

j fruition, they can be a key factor in making it has played in the developments to date.

1 happen.

1

! 7
Overview of GsinS 111

Completed Projects

Technical Knowledge

A

major goal of the ATP

is to build the nation's

scientific and technical

knowledge base. Each

of the 38 completed ATP

projects targeted a number of specific technical knowledge

discovery goals, which are described in Chapters 2-8. Those

chapters also briefly describe, in non-technical language, the technical advances of the 38 completed

projects. More detailed descriptions

of the research are available in the

scientific papers and patent applications generated by the projects.

The following section provides an

overview of the wealth of technical

knowledge generated by these

projects.

A Host of New Technologies and

Knowledge Gains

A number of new technologies have emerged

from the 38 completed projects, and all of the

projects have added something to the U.S.

scientific and technical knowledge base. Even

those projects that were not fully successful in achieving all of their research goals, or those

that have not been followed by strong progress

in commercialization, have achieved knowledge gains—of course, some more than

others. Indeed, even the projects that were carried out by the several companies that have

since ceased operations, or that have stopped work in the technology area, resulted in knowledge gains — albeit the direct market

route of diffusion of the knowledge gains in

those cases may be lost or postponed. Advances were made in each of the seven

technologies areas. In the field of electronics, advances were made, for example, in new

processes and procedures for altering electrical

properties of materials through ion implantation, for fabricating, testing and aligning

extremely precise aspherical, multilayer-coated

mirrors, for interconnecting thin-film integrated circuits, for constructing new devices utiliz- ing the giant magnetoresistance effect, and for growing large silicon carbide single crystals.

In the field of information technology, examples of knowledge gains are embodied in new mathematical algorithms useful for

restoration of digitized video images and for animated visualization, and in componentbased software tools for building parallel

processor applications.

In the field of biotechnology, knowledge

gains include how to grow human stem cells

outside the human body in large quantities at reasonable cost, how to deactivate viral conta- minants in blood and other fluids, how to

genetically engineer plant extracts, as well as techniques for rebuilding lost or damaged

human tissues with engineered tissue.

In the fields of energy supply and environ- mental protection, knowledge gains are reflected in the new fabrication processes that were developed for superconducting materials;

in the improved ability to control microstructure of aerogels, and in new methods of compatibilizing polymers for recycling. Knowledge gains important to discrete manufacturing include new ways to measure and control dimensional variation in parts assembly and intelligent thermal-error correction techniques for machine control. In the

field of materials technology, knowledge gains

led to new processes for safer, less costly near- net-shape gelcasting and new ways of producing optoelectronic polymers with desirable

characteristics. Finally in the field of chemicals and chemical processing, advances were made in multiphoton detection methods. These and other technologies developed in

the 38 projects are listed in Tables AI-A7 of Appendix A, column B, together with a listing

in column C of commercial products or

processes that are based on the technologies. This set of tables is provided for convenient, quick reference by the reader While the entries are arranged according to

the seven technology areas which are used in Chapters 2-8, it should be noted that most of

these projects and the knowledge developed in them do not lend themselves to easy classification. Most entail a mixture of technologies and

interdisciplinary know-how; many could easily be put into one or more of the other categories shown. For example, the themial-error correction technology is listed under "discrete manufacturing," but it could also fit well in the "infomiation technology" category. As another example, the process technology for supercon- ducting materials is listed under "energy and

8 ADVANCED TECHNOLOGY PROGRAM
Table 3. Outside Recognition of Teciinical Actiievements in the

First 38 Completed ATP-Funded Projects

Project Awardee Year Awarding

Organization

Award

American

Superconductor

1996 R&D magazine One of the 100 most important

innovations of ttie year.

American

Superconductor

1996 Industry Week

magazine

Technology of the Year Award.

Communication

Intelligence #1

1997 Artiiritis Foundation "Ease-of-Use Seal of Commendation" for the develop- ment of natural handwritinn tprh- nology, for use by disabled people who have trouble with keyboard

entry.

DuPont 1993 Microwave & RF

magazine

One of the Top Products of 1993,

for high-temperature superconductivity component technology.

Engineering Animation 1994 Computerworld

magazine

Smithsonian Award, for the use of information technology in the field

of medicine.

Engineering Animation 1995 Association of Medical

Illustrators

Award of Excellence in Animation.

Engineering Animation

m

1995 International ANNIE

Awards

Finalist, together with Walt Disney,

for best animations in the film

industry.

Engineering Animation 1996 Industry Week

magazine

One of the 25 Technologies of the

Year, for interactive 3D visualization and dynamics software used

for product development.

HelpMate Robotics -I nnc Discover magazine One of 36 finalists for Technology

of the Year, for the HelpMate robot used in hospitals.

HelpMate Robotics 1997 Science and Tectinology Foundation of Japan

Japan Prize, to CEO Joseph

Engelberger, for "systems

engineering for an artifactual environment."

Illinois Superconductor 1996 Microwave & RF

magazine

One of the Top Products of 1996,

for cellular phone site filters and

superconducting ceramics.

Illinois Superconductor 1997 American Ceramic

Society

Corporate Technical Achievement

Award.

Molecular Simulations 1996 Computerworld

magazine

Finalist for Smithsonian Award,

the 1996 Innovator Medal.

environment," but could fit well under

"materials." Another point to notice is the great diversity of technologies resulting from these

projects. Knowledge gains range from mathematical algorithms underlying new software

tools, to the science of growing human tissue,

to new techniques for fabricating high-temperature superconducting devices. The diversity reflects the fact that all but one^ of the

projects were funded in the ATP's General

Competitions, which cast a wide net for good

ideas regardless of technology area.

Outside Recognition for Tectinology Advances

Although it is beyond the scope of this report

to rate the degree of significance of the scientific and technical knowledge gained from the

projects, various forms of recognition by other

organizations indicate that outside parties see

considerable value in the technical discoveries

of some of the projects. Table 3 provides infor- mation about such outside recognition.'"

9
Overview of

Completed Projects

Dissemination of

New Knowledge

The

pursuit of the tasks in a project usually produces

a number of distinguishable outcomes. Projects

generate new knowledge

about how to apply underlying

scientific principles to develop

products or processes. If the technology is commercially successful,

it provides the basis for products or processes that can be marketed.

And with commercial success and

dissemination of the newly gained

knowledge comes the possibility of benefiting the economy in ways that

go beyond the benefits received

directly by the innovating firm.

Parties Other than the Innovator

Can Benefit

If a project creates and disseminates new

technical knowledge, parties other than the

developers tend to benefit. That is true even if

the new knowledge takes the form of "We tried

to develop this technology using the following

approaches, and we were unsuccessful." In

that case, others may use this information to

avoid pursuing comparable methods that would likely be wasteful. Or an underlying

technology may be successfully developed even though a larger commercialization goal is not

met.New knowledge developed in a project can

be diffused in a variety of ways. One way

discussed in the next section, is the marketing

of new goods or services. Other ways relevant to

the 38 completed ATP projects are publication

by the U.S. Patent and Trademark Office (USPTO) of patents granted; registration of

copyrights; interactions among research partners, suppliers, customers and othere; preparation of technical papers that are published or

presented at conferences; distribution of nonproprietary project descriptions by government

funding agencies; and project-related workshops and meetings.

Public Disclosure of

Patent Filing Information

when applying for a patent, an inventor must

explicitly describe the invention. Because

patent law requires that the invention be both

novel and usehil, the inventor must demonstrate that the invention is essentially different from any other invention and must describe how it can be used. When an application is

filed, the USPTO discloses neither the application nor the fact that it has been filed. But when the USPTO grants a patent, the full

application text describing how the invention may be used and how it is related to other

technologies is put into the public record. The decision to seek patent protection for

intellectual property is influenced by many

factors, including the ease with which others can copy the property's intellectual content and

the difficulty of defending a patent position from infringers. Some companies, therefore, may decide that patent protection is not worth

its expense, or they may decide that a strategy

of trade secrets and speed to market is a more

effective strategy. Or patents may be filed at an

earlier stage in the process and trade secrets used in later stages. The importance of patents as a strategy to

protect intellectual property varies among tech- nology fields. In some, particularly computer

software, patenting is rarely a viable option. Among the six projects that involve only software, no patents have been granted and only one patent was sought.

In other fields patents are important, and many were sought for technologies that emerged from ATP projects. American

Superconductor, for example, has received six

patents for its ATP-funded electric-motor tech- nology and has eight applications still under

consideration. Even when patent protection is sought,

there are substantial differences across industries in the lag time between patent application and grant. Consequently, the absence of

patents at this time does not imply that patents

will not be granted in the future. An application may have been filed but the patent not yet

granted.

In yet other fields, patenting typically

occurs at the very early stages of a project, when the basic ideas are forming. The conse- quences of this fact might show an ATP-funded

project without patent activity, because the ATP

handing comes after the very early stages of the R&D efforts. Even with all these considerations, patent

statistics contain useful information about

technology development and dissemination of

the new knowledge. Fifteen of the projects have

thus far been granted patents, with a total of

50 patents granted to them.

Figure 4 displays the number of projects which had different numbers of patent grants. Three projects each produced five or more

patents. T\vo projects each produced four

patents. Fifteen projects each produced at least one patent. For 23 projects, more than half, no

patents have yet been granted. For some projects, applications for patents have been filed but the patents have not yet been granted. The delay can be caused by a number of factors, such as the technology area and extent of review by the Patent and

Trademark Office, among others. Figure 5

presents data for patent applications filed but

10 ADVANCED TECHNOLOGY PROGRAM
Figure 4. Distribution of 38 Completed Projects by Number of Patents Applied for and Granted

5 or More Patents: 3 Projects

4 Patents: 2 Projects

3 Patents: 2 Projects

2 Patents: 5 Projects

1 Patent: 3 Projects

No Patents: 23 Projects

Figure 5. Distribution of 38 Completed Projects by Number of Patents Applied for But Not Yet Granted

not yet granted for the 38 completed ATP

projects. For 12 projects, patent applications have been filed but patents have not yet been

granted. The total number of outstanding

patent applications is 51 for the 12 projects.^' Three projects have five or more applications

outstanding. For 26 projects, about two-thirds

of the 38, there are no patent applications

outstanding.

Eight of the 12 projects which have patent

filings not yet granted are among the 15

projects which have already received patent

grants; four of the 12 projects that have one or more outstanding patents applications have

not already been granted patents. Thus, 19 of

the 38 projects, or 50%, have engaged in patent

activity for technologies developed with the ATP

funding.

5 or More Applications: 3 Projects

4 Applications: 2 Projects

3 Applications: 1 Project

2 Applications: 3 Projects

1 Application: 3 Projects

No Applications: 26 Projects

Copyrights and Registration for Software

The U.S. copyright system, also administered by the USPTO, works somewhat like the patent system but with important differences. A writer

or other creator of a work or expression has an

inherent copyright. The creator may register

the copyright with the USPTO for added protection. For technology creations, protection via

copyright is not as useful as patent protection, So when patenting is an option, it is usually chosen over copyright registration.

Registration of copyrights would seem to be important for ATP projects that generate computer software applications. Though six of the

projects primarily entailed software technology,

copyrights were not registered for any of them.

In one case, however, the company is considering such a move to better protect its intellectual property.

Technology Transfer to Partners

and Customers

If it conducts a project alone, a company can

maintain a high level of secrecy about its technology. It may, however, develop technology in conjunction with three general classes of collaborators: joint venture members, subcontractors or infomial partners. If it does so, it fre- quently shares technological information with

these collaborators. In addition, the collaboration may be involve several types of partners: companies, universities, national laboratories,

or non-profit organizations.

Providing a precise tabulation of collaborations across the classes and types of partners is

difficult because of the many ways in which

collaboration may be accomplished. Using a

fairly broad definition of collaboration, it appears that for slightly more than half of the 38 projects, there was collaboration with one

or more other companies. The next most

prominent t}pe of partner was the university, with about half of the projects involving one or more universities in the research and develop- ment effort. Government laboratories and nonprofit organizations were each involved in less than a sixth of the projects. For about two-thirds of the projects, there was an explicit arrangement for collaboration

for at least one of the types of partners

described above. In addition, some of the other

projects had collaborative arrangements of a more informal nature that were not captured

in the tabulation of research-related collaborations. For the vast majority of new technologies,

successful development and commercialization

requires the inventor to also secure the participation of companies beyond those involved in

the research. Some will be suppliers of inputs

to the production process. Some will be partners in production. Others will be potential

users and distributors of the new products or

processes derived from the technology.

11
Table 4. Papers Published or Presented

Number of Papers

Number of Projects

Percentage^

0 or Unknown 22 58%

I-512 9 24%

6-10 2 5%

11-20 4 11%

>21 1 3%

Total 38

Disclosure in Technical

Presentations and Publications

Much technology is disseminated via the

publication of papers in technical and professional journals. Through publication, the knowledge gained by participants in an ATP

project is passed on to others outside the

project. These recipients of the knowledge may

then use it commercially Publication of

research findings is therefore frequently delayed until patents or some other kind of

protection for the intellectual property has been secured.

Table 4 summarizes information about

technical papers generated by the 38 projects.

At least sixteen of the projects yielded publications (where the existence of publications is unknown, the project is counted in the "0 or unknown" line in the table), and five projects produced more than ten publications each.

Government Award

Announcements, Workshops and

Product Releases

When the government enters into an agree- ment with an organization, certain information about the agreement is generally made

public. Such is the case with the ATP/company

cost-sharing partnerships. Nonproprietary information has been disclosed to the public

for each of the 431 projects funded by the ATP

through 1998. The project information is

available on the ATP web site on the Internet

(www.atp.nist.gov), and new nonproprietary

project descriptions are added to the site as new

awards are made. ATP Workshops

To help the public learn more about the

projects it funds, the ATP organizes and spon- sor numerous public workshops, where companies present nonconfidential aspects of their ATP-funded research and engage in open discussions. These workshops facilitate information flow in several directions — among

awardee companies and from them to other companies, ATP project managers, other gov- ernment program managers, the press, potential investors, and universities. Knowledge Gained From Product

Use or Examination

when a good or service that incorporates new

technology is delivered, the buyer often will be

able to learn a great deal about the technology. The mere hinctioning of a new product will

reveal some information about the technology,

hitentional investigation into how the product works will reveal more. Taking it apart, sometimes called reverse engineering, will reveal even more. For 24 of the 38 projects reviewed

for this study some commercial products or

processes based on the ATP-funded technology

are already on the market, where through use

or examination they are providing others with information about the new technologies.

12 ADVANCED TECHNOLOGY PROGRAM
Overview of

Completed Projects

Commercialization of tlie

New Teclinology

New

technical knowledge

must be put to use if economic benefits are going to accrue to the

nation. In most

instances, the use will be through

the introduction into the market of

a new product or process by the

inventing firm or other companies.

The new knowledge may be used by

outside researchers before it makes

its way onto the marketplace. But

the new knowledge must eventually

result in new products or processes

in the marketplace for there to be

real-world benefits to the

economy.^^ In competitive markets,

the producer is typically unable to capture all the benefits of a new

product, and the consumer reaps

part of the benefits.

Commercialization — A Critical

Step Toward National Benefits

For 24 of the 38 completed projects, a new

product or service is on the market or a new

process is being used to improve the quality or

reduce the cost of making an existing product

or service. Eighteen projects have introduced new products, five are using new processes in

their own production, and one has introduced

a new service. All of the products and processes

are used by commercial companies in their

production processes. Among the new products are substantial

devices that are self-contained, including

receive filters for cellular phone sites, lasers

that can be tuned to different wavelengths for a

wide range of applications, flat fluorescent

lights to serve as back-lights for color liquid

crystal displays in a variety of applications,

wall units made of mixed recycled plastics for use in pre-fabricated buildings, robots to

provide delivery services in hospitals and other

installations, machine tools that can produce

much higher quality metal parts because they

are self-adjusting for the effects of high heat

that otherwise would cause errors, and a supersensitive measurement instrument for detecting minute amounts of viruses and toxic chemicals in medical and environmental

applications.

Several of the new products are much

smaller devices, commonly viewed as components in other products. These include controllers and fiber-optic collimators for wavelength multiplexers, cheaper blue light-emitting diodes for inclusion in full-color displays,

epitaxial laser wafers, giant magnetoresistance

sensors for automatic brake systems and other

applications, high-temperature superconducting (HTS) wiring for connecting super-cooled

electrical devices to ordinary devices, thin-film HTS components for magnetic resonance imaging equipment in hospitals, and minute

porous glass components in sensors for toxic

gases.

Additional new products and a new service have resulted from research in the computer

software field. These include a pad and stylus

system for allowing the input of handwritten

characters into computers, detailed images and dynamic presentation of the inner parts of the human body for CD-ROMS and books used in medical education, a programming tool that makes the development of programs for parallel processing computers much easier, a system

that produces rotatable three-dimensional

views of very complicated molecules for a number of applications in the chemical and

drug industries, a user interface for use in

sharing product model data, and a service that

helps producers and archivers of movie films improve film quality by removing blemishes from film mastere.

Finally there are new processes that improve the manufacturing of a variety of

products. They include processes for the epitaxial growth of semiconductor components, the

implantation of ions of various materials on

large silicon crystal wafers in a much cheaper way the production of very high quality spherical and cispherical mirrors for use in photolithographic and other fabricating equipment, and the assembly of automobiles which are of

higher quality because stamped metal parts fit

together better

For a convenient, quick reference by the

reader, brief descriptions of the new products or

processes are listed in Tables A1-A7 in Appendix

A, in Column C. For each new product or

process, the new technology on which it is

based is also listed in the Appendix A tables, in Column B. Commercializing a technology is an

important step, but it does not mean that the

project is necessarily a full success from the

perspective of either the company or the ATP. Some products have been sold for testing and

evaluation, and after testing, the purchaser

may decide not to place a larger order. Other

sales are by struggling companies that may fail

in the future, even if the product is a good one.

Widespread diffusion of the technology may or may not ultimately happen, but it is significant that these products and processes are

actually on the market. This is an extremely

important step for the eventual generation of

broad-based benefits for the economy as a

whole.

13
Figure 6. Distribution of 27 Completed Projects at Small, Single-Applicant Companies

by Percentage of Employment Change

Decrease or No Change: 5 Projects

501% or Greater Increase: 7 Projects

101-500% Increase: 9 Projects

1-100% Increase: 6 Projects

Rapidly Growing Companies

The introduction of a new or improved product

into the market is clear evidence of commercialization. Even before that happens, however,

other indicators can signal that a company is probably on the path toward commercialization. One of these is company growth, and some limited data on this performance "indicator" is provided in Figure 6, which focuses on employment at the small, single-applicant

companies. Employment changes in joint

ventures, larger companies and nonprofit

organizations are less closely tied to the

success of individual research projects, and,

therefore, they are not shown in the figure.

Clearly, this group of companies as a whole

has grown rapidly as measured by employ- ment growth rates. All but five of the 27 small companies at least doubled in size; one company grew 1,900 percent. Employment at four companies actually declined, while it remained

constant at one company Companies "Going Public"

Another development that is useful in assessing commercial prospects for small companies is

the initial public offering (IPO) of stock by a company whose stock has heretofore been

privately held. For the most part, these are

start-up or near-start-up companies.

This event is relevant for the 21 single- company applicants that were privately held at

the beginning of their ATP funding periods. Seven of the 21 companies filed IPO state- ments with the Securities and Exchange

Commission (SEC). Five of them conducted

IPOs during their ATP funding periods. In

addition, one company conducted an IPO in

early 1998, after project completion. Another company in filing the required form with the SEC, noted its intention to conduct an IPO and has since been acquired

by a larger company at an apparent substantial premium over the approximate value

placed on the company at the time of the SEC

filing. Conducting an IPO subjects the company

to the scrufiny of stock market analysts and to

the financial decisions of investors. It is a demanding test of whether the capital market

believes the company has a promising future. Even announcing the intention to conduct an

IPO invites potential investors to examine the data presented by the company in its SEC filing, and only infrequently do companies announce intention to file without following

through.

14 ADVANCED TECHNOLOGY PROGRAM
Overview of

Completed Projects

Broad-Based

Economic Benefits

The

actual use of new

products and processes

that result from a new

technology generates a

variety of benefits for the

economy. These benefits may result from lower costs or higher quality

relative to products and processes

they replace. Or they may stem from

unprecedented performance capabilities, such as a novel treatment

for cancer. Those who receive these

"incremental" benefits typically do

not pay for their full value.

What Effect Did ATP

Have on the Project?

Before turning to economy-wide benefits, it is

useful to consider the impact of ATP funding on the research that led to them. Project leaders from each company were questioned about

the role ATP funding played in their projects.

Their answers are presented in the detailed discussions of Chapters 2-8 and summarized in

Table 5. For all 38 completed projects, awardees

were asked whether the project would have

been done at some point without ATP funding. Answers were received for 32 of the projects.

For 21 of them (66%), the companies and

other organizations indicated they would not have done the project at all without ATP funding.^^ For the other 11 projects, they said they would have done the project at some later date

or slower pace. For the 32 projects as a whole, none would have been completed in the same

time frame without ATP funding, and 21 of them would not have been completed at all.

according to officials at the companies and

other organizations. For the 11 companies whose projects would

have been delayed without ATP funding, the

typical lag reported was about two years, with a wide variance around the average. A lag of just 24 months may seem short, but its effects can

be substantial when the costs and benefits of

accelerating the technology' development are

considered. For illustrations, see the detailed

treatments of two ATP projects, Aastrom

Biosciences and Tissue Engineering, later in

this section, where acceleration of the availability of new medical treatment technology is shown to have a potentially large impact on

societal benefits.

Receipt of an ATP award also enhanced the

ability of some of the companies to raise additional capital and acquire partners. Thirteen of

the 32 responding companies reported that the ATP award helped them raise additional capital

(four of them were among the companies that conducted an IPO after receiving ATP funds), and 23 said it boosted their ability to find

partners.'^

Assessing Private and Social

Returns from New Technology

Counting the number of projects that would

not have been done without ATP funding

provides some limited information on the

benefits of the program, as does tabulating the number of months that projects would have been delayed if they would have been done, but on a delayed schedule. These limited data are

insufficient to assess whether the ATP awards

for the 38 completed projects were good uses of

public funds, however. More detailed assess- ment is needed. The value of the ATP-funded research can

be assessed by probing the benefits and costs of

projects and the return on the ATP investment.

It should be kept in mind, however, that Ml

diffusion of technologies generally takes

considerably more time than has elapsed for

these projects, and at this time their ultimate, long-run outcomes cannot be known with

certainty. The Mansfield Study of Private and Social Returns

More than 20 years ago Professor Edward

Mansfield^ of the University of Pennsylvania

established general procedures for economists

to follow when compiling estimates of the

private and social returns from groups of innovations (new products or processes). His work

focused on estimating "consumer surplus"

benefits to consumers of new and improved

goods and services resulting directly from

commercial activities of the innovators — a

type of spillover effect.

Mansfield's method and estimates

addressed market spillovers and those knowledge spillovers which generate benefits via the development of new or improved competitive

goods and services by imitators of the original

Table 5. Impact of ATP Funding on Conducting Projects

Would Have

Proceeded Without ATP Funding

Number

ofProjects

Percent- age

Yes, But at a Slower

Pace, with Delay of^

11 34%

• 18 Months 4

• 21 Months 3

• 24 Months 3

• 60 Months 1

No 21 66%

Total 32

15
innovating companies. He did not address

other kinds of knowledge spillovers, such as

use of the new knowledge in a research process

leading to other new technologies in a different

industry. Hence, for the type of enabling technologies that ATP funds, Mansfield's approach

could be expected to capture an important, but

partial, share of the total impact.

Case Studies of Seventeen

Innovations

Mansfield based his analysis on 17 extensive

individual case studies. His procedures have

been upgraded over the years, but they still

constitute a good starting point for any empirical study of the effects of innovation. He and

his colleagues collected annual data for; cost, revenue and profits from the innovating firm;

cost, revenue and profits from other finns in

the same industry for competitive products or

processes they introduced after imitating the new product or process; cost, revenue and

losses from the innovating firm or other firms

in the industry for products or processes the new product or process supplanted; cost, rev- enue and profits for producer goods from other

fimis that purchased the new product or

licensed the new process; and cost and benefit data from final users for consumer goods. Once these data were in hand, they were

used to calculate: the annual costs of the innovation; the annual private dollar returns to the

innovator; the annual dollar returns to all

other parties (competitive firms, purchasing

firms, final users); the net annual social dollar

returns, by summing all these annual dollar retums (netting out any negative values); the annual private dollar return (using data for

the innovating firm alone); the private rate of

return; and the social rate of return.

Data Requirements for the

IVIansfield Analysis

The landmark results published by Mansfield,

et. al., have been cited numerous times in the economics and technology policy literature,

usually in the context of examining differences between the private and social retums from

innovation. The focus here, however, is on a

different aspect — the amount of data

required to support his analysis. Table 6

presents data from the Mansfield study showing when the 17 innovations entered the market and how many years of data were

available for the empirical estimates. In most

cases, Mansfield was able to draw on 1 1 to 18

yeai-s of historical data for the older innovations. For more than a third of them, however, some projected data were used.^'^

Sufficient Data for Analysis of 38

Completed ATP Projects not Yet

Available

Few data of the type collected in the Mansfield

study exist for new products and processes

generated by the 38 ATP projects, since the

technologies are still so young. Most of these

innovations have multi-application potential, making their evaluation even more complex.

And most of their benefits and many of their

costs are yet to come. Economists can, nevertheless, project the values of these items (as

Mansfield, et. al., did in some cases) in order

to calculate the private and social retums. The

earlier an analysis is conducted, relative to the

year of the innovation, the greater the necessity

to use projected data and, consequently, the

greater the uncertainty in the results.

Uncertainty in results is unavoidable at this time for benefit-cost evaluations of this kind

for ATP-funded projects.

After a sufficient number of years have

passed, an exercise like the Mansfield study —

relying on more years of empirical data —

can be perfomied for the innovations that emerge from these 38 ATP projects. That exercise will be much easier if data are collected and carefully archived along the way The ATP

is doing that as part of its evaluation plan.^^

Table 6. Years of Data Available for Estimating Effects of 17 Innovations,

Mansfield, et. al. (1977)

IVIarket Enltry Number of Years of Innovations Data

1955 1 18

1958 1 15

1962 5 11

1965 4 8 or 15

1968 3 12

1972 3 8

A Portfolio Approach to Costs and

Benefits for the 38 Projects

The ATP awarded $64.6 million to the 38 completed projects described in Chapters 2-8 and

contributed another $9-4 million to the 12 temiinated projects (see Appendix B), bringing

total ATP spending on the 50 projects completed or tenninated by March 1997 to $74.0

million.

Since it is not expected that every project

will be fully successful — all research goals

reached, commercialization achieved, wide- spread dissemination of the knowledge and

extensive benefits realized from the use of the

resulting goods and services —it is more rea- sonable to assess the effectiveness of ATP

awards as a group of funded projects, as an

"investment portfolio," much as an investor in

stocks and bonds might do. Pursuing that line

of thought with the combined set of 50 completed and terminated projects leads to a simple question: For its investment of $74.0

million, what has the public received, or is

likely to receive, in return?

Expected Returns for Just Three of

the Projects

This study did not attempt to estimate returns

to project participants or to society for the

entire portfolio of 38 projects. To do so would

entail an involved process requiring detailed economic evaluation case studies and a much

larger effort than was allocated for this report. But for three of the projects, such detailed esti- mates have been calculated by other

researchers.^^ Aastrom Biosciences: Stem-Cell

Therapy Cost Reductions

The availability of ATP funds enabled Aastrom

Biosciences to achieve its results one to two

years earlier than it would have otherwise. This

finding implies that benefits from the use of

the company's new AastromReplicell''''^ System would start one to two years sooner

Benefits of several kinds are expected to

result from use of the System, as noted in Chapter 2. One of these is a reduction in the

cost of stem cell therapy for cancer patients

after chemotherapy or radiation treatments. Other benefits are reductions in the patient's pain and in the risk of complications. Economists at the Research Triangle

Institute (RTI), a consulting firm in North

16 ADVANCED TECHNOLOGY PROGRAM
Carolina, have calculated estimates of the value of accelerating the availabilit}' of the

S\'stem. using only the reduction in procedure

cost." RTI economists estimated the number

of cancer patients who would use the System in

its first year of availabilit}' (16.000), estimated

the annual growth in applications of the

System, determined the cost reduction per

patient, and used conventional present-value

calculations to get a current value for die cost reduction effect. RTI conducted the calculations assuming die System would be available with ATP funding at the beginning of the year 2000 and repeated the calculations for the

'"without ATP funding" case that assumes the Systems would be available 18 months later RTI estimated that the System, once implemented, would save about S87 million (in 1997 dollars) in medical treatment costs with- out the acceleration provided by ATP support and SI 34 million with the acceleration. The

difference, $47 railhon, is the estimated additional value, in terms of cost savings, created by the ATP funds, based on this one application

area. Other applications of stem-cell therapy

using the System are also expected, which will

likely add to the fumre benefits. This estimate considers only cancer treat- ment cost savings. Besides these benefits, the

t\pical patient is expected to have less pain,

suffering and trauma when stem cells are

collected if the S\ stem is used instead of an

alternative procedure. However, the value of the pain and trauma reduction is not included in

the calculations because data for those effects were not available.

It is also e.xpected that the stem-cell mixture that is injected back into the patient will be freer of cancer cells, leading to a better eventual outcome, if the System is used, but

value was not assigned in the RTI study to that

beneficial effect, either Finally with lower cost and less trauma, stem-cell therapy might become a possibility' for some cancer patients who would otherwise not receive it. Stem-cell therapy is expected to increase survival chances

for some of these patients, but the value of

their prolonged lives is also not included in the

estimate. According to the estimates calculated by

RTI, we can expect the additional retums to

societ}- attributable to ATP's award to Aastrom

Biosciences to be on the order of $47 million,

at least. Funding by ATP for the Aastrom project was $1,2 million. And the contribution by ATP to all 50 completed and terminated projects was $74.0 million. Since the RTI esti- mates from the use of the Aastrom System

product were based on only one of several kinds of potential benefits, it seems clear that retums from this project alone are likely to account for a substantial percentage of the ATP

expenditure for all 50 projects. Auto Body Consortium: Higher

Quality Car Bodies

While the economic and social impact of the Aastrom System is almost entirely in the

future, the Auto Body Consortium's ATP project

is already producing measurable benefits, as noted in Chapter 4. Chrv'sler, a member of the consortium, is making its Concorde line with

the new dimensioning technologv', as discussed

in its marketing literature. Cars in this line are assembled in a plant that has already imple- mented the new technology and has the

capacitv' to assemble about 250,000 cars per year To date, the new technology has been implemented in six of the 10 Chrysler plants in North America, and each is expected to pro- duce a minimum of 200,000 cars in 1998. In a detailed study of this ATP project, Consad Research Corporation (Consad), a consulting firm in Pittsburgh, Pennsylvania, esti- mated a range of $10 to $25 per vehicle in pro- duction cost savings.^2 Multiplying the smaller number ($10) by the minimum number of

cars to be assembled in the sLx Chr\'sler plants

yields an estimate of at least $12 million in production cost savings for 1998 alone. Multiplying by the larger number ($25) results

in a savings esfimate of $30 million. Even' one of those cars produced in 1998

will also cost less to maintain, with the producers saving on warranty costs and consumers

saving on out-of-warranty costs, Consad esti- mated maintenance savings of $50 to $100 per

car over its life, implying that for these 1.2 million cars (six plants producing 200,000

cars each), between $60 million and $120 million in maintenance costs will be saved over

the life of the cars. Only a small portion of

those maintenance savings have been realized

so far, because none of these cars has been on

the road for much more than a year

Actual current savings have also already been realized by General Motors, the other automobile assembler involved in the project.

The new technology has been implemented in

l6 of its 31 plants in North America, Since the number of cars produced per plant by CM is comparable to that by Chrysler (at least 200,000 per year), GM will realize production

cost savings of at least $32 million in 1998, and the figure could be as high as $80 million. And maintenance savings over the life of these

cars would be between $l60 and $320 million. The estimates do not take into account cost savings from extending the technology to the other 4 Chrysler and 15 GM plants. The savings

for those additional plants are still in the

fiiture, but the likelihood of these savings

occurring in the U,S, economy is high. Once again, a comparison with the size of

the portfolio investment is in order At least $44

million ($12 million at Chrv-sler and $32

million at GM) in production cost savings were

expected to be realized in 1998 alone. The

savings could be as high as $110 million. Comparable savings at the six Chr}'sler and l6 GM plants in 1999 and beyond are expected, as

well. The Consad study projected economwide

benefits of about $3 billion in the year 2000 due to resulting qualit}' improvements in U,S,- produced automobiles and associated market

share gains.

Tissue Engineering: New IVIaterials to Repair Damaged Ligaments

The availability of ATP funds enabled Tissue Engineering to achieve its results two years

earlier than it would have otherwise, as noted

in Chapter 2. RTI, which also included this

project in its detailed case studies,^^ estimated

that products using a new prosthesis material — animal-derived extracellular matrix, or ADMAT —based on technology developed by

Tissue Engineering with ATP support, would

reach the market in 2001, The RTI study focused again on a single

application of ADMAT in calculating benefits from the use of this technology, namely the

repair of damaged knee ligaments (specifically,

anterior cruciate ligaments, or ACLs), To

estimate the number of potential users, RTI

questioned officials at Wright Medical

Technologies, a partner with Tissue Engineering, who provided an estimate of the number of persons who damage their ACLs

annually Based on that estimate, RTI esti- mated that the number using the Tissue Engineering technology would start at 9,000 in

17
the first year of availability and grow to 72,000

10 years later In addition, the RTI study

explicitly incorporated benefits from the improvement in the quality of life for such

persons, using a "quality-adjusted-life-years"

index value. RTI concluded that the total benefit to

persons who receive the treatment is expected

to approximate $33 billion with the support of

the ATP funds. Without that support, it is

expected to be on the order of $18 billion, because without the ATP funding benefits are

not expected to start to accrue until 2003. Thus, about $15 billion of the expected net

benefits from the new technology was esti- mated to be attributable to ATP funding.^^ The difference in the sizes of RTFs esti- mated benefits from uses of the Aastrom

Biosciences and Tissue Engineering technologies occurs for two major reasons. One is that

the number of potential users of Tissue

Engineering's ADMAT (patients with ACL

damage) is larger than the number of potential candidates for bone marrow transplantation using Aastrom's System. The other is that

the estimated patient benefits for ACL repair

includes an estimate of the value of improve- ments to the patient's quality of life, whereas

the estimates for bone marrow transplant

benefits reflect only treatment cost savings and

include no values for physical benefits to the

patient. These estimates for benefits to be received by users of the Tissue Engineering technology

are so much larger than the ATP contribution

to the project — $2 million —that making a comparison seems beside the point. What

seems clear, though, is that the expected benefits appear to be much larger than the cost expended to achieve them.

Projected Benefits From ATP

Contribution in Three Projects

Exceed Total ATP Costs

The value of the projected benefits resulting from the ATP contribution in just the three ATP

projects profiled above would greatly exceed

total ATP costs to date. Cost savings already

realized by Chrysler and GM as a result of the Auto Body Consortium project appear likely to

be larger than the $74.0 million that ATP put

into all 50 projects addressed in this report, not

to mention the larger gains to the economy

from quality improvements. If Aastrom

Biosciences succeeds in bringing its product to market and if the RTI estimate of the value of

the acceleration of market availability proves

accurate, the return from ATP's assistance to

the Aastrom project alone would cover more

than half of all ATP funds provided for these 50

projects.

In addition, the estimated social return

attributed to the ATP for the Tissue Engineering project is in the billions of dollars. The value of those benefits obviously swamps

the $74.0 million in ATP funding for the 50

projects. Indeed, if the ADMAT technology

proves to be anywhere nearly as beneficial as

the RTI estimates predict, its benefits would swamp all ATP funding for all projects since

the beginning of the program. Even if the expected number of patients who would benefit were cut, for example, by 80 percent and the expected benefit per patient were reduced by a

like percentage, the estimated return from the ATP's contribution to this technology would

still be more than half a billion dollars.

Potential Benefits from

Other Projects

Based on the investigations of projects conducted for this study, considerable evidence

suggests that others among the 38 projects are

also quite promising in terms of their future

benefits potential.

To mention only a few of the additional promising technologies that have resulted from

this first group of 38 completed projects, consider first the Torrent Systems Project. It was

found, for example, that an early user of its computer software technology expected to generate between $50 and $100 million per year in increased revenue on a $17 million investment

in a system incorporating Torrent's technology, and that other users were also adopting the

technology. As another example, it was found that the

software technology of Engineering Animation

is being used to improve the training of doctors, among other things, and that patients in a particular surgical procedure were having

better outcomes as a result of the company's

imaging software. To these we can add other

projects that were found to have produced

promising technologies — technologies that may facilitate better weather forecasts, improve

communications, enable new drug discovery, improve electronic devices, and lower loss of limb and life globally by improving detection

of old land mines and toxins.

Preparing the Way for Future In-Oepth Studies

Although this study does not provide a detailed

quantitative analysis of the benefits deriving from these 38 completed ATP projects, it does document a number of project performance

characteristics that will be useful for detailed

estimates of returns. The presentations of

project status in Chapters 2-8 contain many

references to relevant markets, the role that the technology plays in those markets, the position

of the innovating firm relative to other firms in

the vertical chain leading to final purchase by

users, and other characteristics that would be used in such a study It also documents

progress as of a point in time.

18 ADVANCED TECHNOLOGY PROGRAM
Chapter 2

Biotechnology

Aastrom Biosciences, Inc 20 A Patient-Friendly Approach to Human Cell Transplantation

Aphios Corporation 24

Reducing Viral Contamination in Donated Blood

IVIolecular Simulations, Inc. 26

Powerful Software for Designing New Molecules and Therapeutic Drugs

Thermo Trilogy Corporation 29

Bioengineering of a Sate, Organic/Chemical Insecticide Tissue Engineering, Inc 31 Prostheses Made of Biomaterials That Regenerate Body Parts

19
Biotechnology

Aastrom Biosciences, inc.

A Patient-Friendly

Approacli to Human

Cell Transplantation

Qneof the most important

recent developments in cancer treatment lias been the ability to harvest stem cells from

bone marrow or blood to produce

blood and immune system cells, and

inject them into a cancer patient

after drug or radiation therapy.

These therapies kill cancer cells,

but they also destroy life-protecting

stem cells. Reinfusion of harvested

stem cells enables the body to regenerate the blood and immune

systems in the now cancer-free

patient. Preferably, the stem cells come from the patient's own bone

marrow. When that is not feasible,

they may be taken from another

donor.

Serious Drawbacks to Existing Methods

Good as it is, stem cell harvesting has important drawbacks. Harvesting stem cells from

bone marrow is painful, usually requiring 100

to 140 needle sticks —performed as major

surgery under general anesthesia — to extract from the hip or other large bones enough marrow for successful transplantation. Some

cancer patients are not strong enough to with- stand so many extractions. A few are so ill they

can't afford to postpone therapy while stem

cells are being hai^ested. Still others suffer significant side effects (pneumonia, pulmonaiy

embolism, bone marrow inflammation) from

the extraction process itself. A typical procedure

involves eight separate donor visits (one for the

Ex Vivo Cell Expansion - From tlie Lab to the Clinic

extraction, several for blood testing and other medical procedures, one for reinfusion of the stem cells), takes about l6 hours altogether and costs $10,000 to $15,000. Another harvesting method —peripheral blood progenitor cell (PBPC) collection — is

in some ways an improvement over traditional bone marrow harvesting. PBPC involves inject- ing the donor (who might be the patient) with drugs to stimulate the movement of stem cells from the bone marrow into the blood stream. When it becomes enriched with stem cells, the blood is circulated through an apheresis

machine, where stem cells are separated, and

then back to the donor PBPC collection typically involves 21 donor

visits (at least one for drug administration,

three or four for apheresis, some for blood

work, others for follow-up work related to the

apheresis, one for reinfusion), takes an average

of 39 total houre, requires about 22 needle

sticks and costs around $16,000. It has gained

popularity over bone marrow harvesting in

recent years, the company reports. This is

particularly true for collecting cells from

cancer patients themselves, in part because some patients receiving PBPC-based treatment have less need for platelet transfusion. The overall costs of cancer treatment where

stem cell therapy is used may total $100,000 or more. These costs include diagnosis, chemotherapy radiation therapy stem cell transplant therapy and patient management. The costs of stem cell transplant therapy include the costs

of cell collection, the costs of reinfusing the

cells, and patient support during posttransplant recovery. The latter involves

hospitalization, antibiotic treatment, infusions

of platelets and red blood cells, and manage- ment of adverse reactions to large-volume cell

infusions.

20 ADVANCED TECHNOLOGY PROGRAM
I PROJECT:

To design and construct a desktop-size device

ttiat can expand small samples of stem cells, a process that would enable reductions in tiie risk,

pain, time and cost of collecting ttiese specialized blood-production cells for use in bone marrow

transplantation for cancer patients.

Duration: 7/1/1992 — 6/30/1994 ATP Number: 91-01-0243

FUNDING (IN THOUSANDS):

ATP $1,220

Company 1.514

Total $2,734

45%

55%

ACCOMPLISHMENTS:

Aastrom designed, constructed and validated a desktop-size bioreactor to produce large amounts

of stem and other cells from bone marrow, umbilical cord blood and possibly other human tissues. A number of signs indicate the value of this accomplishment:

Aastrom received a fundamental patent for its

bioreactor:

"Bioreactor for Mammalian Cell Growth and

Maintenance"

(No. 5,688,687: filed 6/7/1995,

granted 11/18/1997).

It has applied for several additional patents for technologies related to the ATP project.

By the end of the ATP award period in June

1994, Aastrom staff had published or presented at professional conferences numerous technical papers on the company's AastromReplicellTM Cell Production System (System), which incorporates

the Biochamber developed with ATP funds.

In October 1995, Aastrom received $35

million from Rhone-Poulenc Rorer for use of System technology worldwide for cell and gene

therapies involving lymphoid blood cells.

Aastrom raised $21 million in new investment

capital via an initial public stock offering in February 1997.

In November 1997, when Aastrom received

the patent listed above, the company's stock price jumped more than 60 percent in one day. By the end of 1997, Aastrom had entered into agreements with SeaMED and Ethox Corporations and Anchor Advanced Products for the collaborative development and manufacture of certain components of the system.

To date, the System has been used in clinical

trials at six U.S. and two foreign sites with more

than 60 patients, and additional trials are under

way.

COMMERCIALIZATION STATUS:

Clinical trials are in progress. The firm is also looking for partners with whom to develop a marketing relationship.

OUTLOOK:

There are high expectations that this new technology will be useful in a variety of medical treat- ments. Test results at various stages in the regulatory process have been promising. The stock market response to the initial public stock offering, patent-grant announcements and attention from investment analysts suggest that the private market believes the company and its technology have a good future. Also, a recent detailed eco- nomic study indicates this new technological approach could yield significant social benefits

just in treating cancer patients with solid tumors.

COMPANY:

Aastrom Biosciences, Inc. Dominos Farms, Lobby L 24 Frank Lloyd Wright Drive Ann Arbor, Ml 48106

Contact: Alan K. Smith Phone: (734) 930-5555 Number of employees:

4 at project start, 70 at the end of 1997

New Approach Promises

Large Benefits

A cell expansion system developed by Aastrom

Biosciences could potentially mitigate most of

the drawbacks associated with current harvest- ing techniques while reducing costs and

increasing the number of patients who could

use Aastrom's procedure. The company was

founded in 1989 and had only four persons on

staff when it gained ATP support three years

later Wide-scale use of its system would produce large benefits across the economy via new

therapies, reduced treatment costs and lower

risks to patients undergoing cell harvesting and transplantation. Aastrom expects cell harvesting via its AastromReplicelF^ Cell Production System —which induces cells to rapidly multiply or expand —will be cost competitive. The typical

patient/donor is likely to need just two clinic

visits, one for harvesting a small amount of bone marrow and the other for reinfusing the

expanded cells. An average of just seven needle

sticks would be required during the initial visit. The core technology of the system is a

bioreactor that expands small amounts of bone marrow into a transplant product rich in stem

cells and progenitor cells (stem cells that have

started maturing into blood or immune cells). During a single 20-minute outpatient procedure, less than 50 millimeters of bone marrow

is extracted from the patient under local anesthesia. The marrow is injected into a disposable cassette — about the size of a large pizza —which is inserted like a video cassette into

the automated bioreactor A key aspect of the system is the creation of culture conditions

that duplicate the human bone marrow envi- ronment. The cassette uses growth media, oxy- gen supplies and proprietary processes within

the bioreactor to stimulate the marrow to pro- duce its own growth factors. Over 12 days, the

cell population expands five to 10 times while ... the cell expansion

system . . . could

eventually mitigate

most of the drawbacks

associated with

current harvesting

techniques while

reducing costs and

increasing the number

of patients who could

use Aastrom's

procedure.

stem and progenitor cells expand even more, producing enough cells for effective transplantation.

Scale-Up and Clinical Trials

Aastrom has successfully scaled up a small

laboratory prototype of the cell expansion

system to one large enough for clinical use.

Clinical research has confirmed that cells produced by this device, called "the System," can safely be infused into patients.

In the first test of the System, a dose-ranging study with seven lymphoma patients at the

University of Michigan Medical Center in 1993,

21
Injecting into processor.

Aastrom found that stem cells generated with

its procedure were as safe as those collected by

the direct bone-marrow harvesting technique.

And in the first feasibility trial of the System —with 10 breast cancer patients at the

University of Texas M.D. Anderson Cancer

Center in Houston —standard clinical recoveries were seen following injection of the System-produced cells, showing that the System can be operated adequately by clinical

personnel. Another clinical trial, completed in May

1997, reported excellent findings for six breast

cancer patients treated through the Bone Marrow Transplant Program at Loyola

University Medical Center in Chicago. The

study demonstrated that the System technique

produced recovery results in line with out- comes for transplantation using other cell harvesting procedures.

Favorable results were also reported at the American Society of Hematology conference in December 1997. A Duke University Medical

Center preclinical study showed that the System reduced the number of tumor cells during production. At the same conference, Aastrom announced completion of another

Loyola clinical study this one with 19 patients,

that generated further evidence that bone marrow grown in the System retained stem and

other key immune cells needed to restore vital

tissues after drug and radiation therapy

Another clinical trial,

completed in May 1997,

reported excellent

findings for six breast

cancer patients . .

.

Intellectual Property and Stock

Market Reaction

Protection of its intellectual property has

always been important to Aastrom. The company was founded as a joint effort between the company's initial investors and the University

of Michigan. The investors and the University

agreed that inventions by the three principal

researchers., all University professors, would be

assigned to the University and licensed exclusively to Aastrom. In March 1992, prior to the ATP award, Aastrom and the University signed

Aastrom's policy is to

disseminate its findings

widely after establishing

protections for its

intellectual property.

a detailed licensing and royalty agreement. Through the end of 1997, 12 patents covered by the agreement had come out of the

Aastrom/University of Michigan collaboration. Most of them underlay the ATP-funded technology. News reports about the granting of two

of them in September 1997 were immediately

followed by a substantial increase in the price

of the company's stock. The company is also pursuing patent

protection for inventions not covered by the agreement with the university. In 1997, Aastrom received in its own name a funda- mental patent — "Bioreactor for Mammalian

Cell Growth and Maintenance" —for the System method and device. News that this

patent had been granted was accompanied by

a one-day increase of 60 percent in the company's stock price.

Aastrom's policy is to disseminate its findings widely after establishing protections for its

intellectual property. This is true of the technical specifics of its discoveries, as well as the

results of clinical trials. Company staff have produced numerous papers for presentation at

professional conferences or publication in professional journals.

Strategic Alliances for Commercialization

In 1993, the company entered into a strategic

alliance with COBE Laboratories and COBE

BCT (collectively COBE) for the worldwide

distribution of the System for stem cell therapy and related uses. COBE committed up to $20

million in equity investment in Aastrom. In

addition, Aastrom and COBE initiated a clinical trial in France in early 1997 to evaluate the

use of System cells to promote the recovery of blood cell production in breast cancer patients undergoing aggressive marrow-damaging

chemotherapy Aastrom is seeking approval to market the System in Europe.

In September 1995, Aastrom entered into a

research and development collaboration with

22 ADVANCED TECHNOLOGY PROGRAM
Rhone-Poulenc Rorer (RPR), granting RPR a

right to license the System for lymphoid cell

applications. Under the agreement, RPR will

invest $35 million. In September 1997, Aastrom had received $3-5 million in equity

pa\Tnents and $1.5 million in revenues from

RPR.

Initial Public Stock Offering

In addition to financial support from strategic

alliances, the company has secured funding in

the public capital market. In February 1997, Aastrom conducted its initial public stock offering, which raised $21 million, and conducted

another offering in December 1997 that raised $11 million.

All equity funding is invested in Aastrom's

research and development (R&D) efforts and

administrative activities required to support

that research —the only focus of the companies activities. Thus, as Aastrom succeeded in

attracting more private capital, ATP handing

constituted a declining proportion of its R&D

spending. ATP funds amounted to 23 percent

of Aastrom's $2.6 million R&D budget in 1993

but only 11 percent of its $4.9 million R&D

budget in 1994. Aastrom does not manufacture products, nor does it intend to. It arranges with third

parties to manufacture its candidate products and has agreements with SeaMED and Ethox

corporations and Anchor Advanced Products,

Mid-State Plastics Division, for the collaborative development and manufacture of certain components of the AastromReplicelF'^ System.

Large Potential Benefits

Patients —the main beneficiaries of the new

technology — are expected to gain from a less

evasive procedure that is cost effective, provides

greater procedural flexibility, and offers tumor

purging benefits. In addition, because of fewer

hospital or clinic visits, total costs are expected

to be as much as 25 percent less ($12,000

instead of $l6,000) than costs for PBPC

apheresis. Furthermore, if the Aastrom technol- ogy substantially decreases the cost of cell

transplantation, others who could not have

afforded the treatment will now be able to and

will benefit. Their benefit may well be life

itself, since bone marrow transplantation for cancer patients is frequently a life-saving therapy

A study of tissue engineering projects, conducted by economists at Research Triangle

Institute, Inc. (RTI), under contract to the ATP, noted that Aastrom achieved ATP-project

results one to two years earlier than would

have been possible without the ATP award. ^

Having the ATP funds also helped the company

attract additional equity capital and establish new strategic partnerships. These, in turn, helped accelerate the company's R&D even

more.

Wide-scale use of the System is expected to produce large benefits across the economy via reduced treatment costs and lower risks to

patients undergoing cell harvesting and transplantation. The RTI study estimates that the present value of expected net benefits from

using the System technology for just one type

of application — treating cancer patients with

solid tumors —exceeds $100 million.^ The

study estimates that ATP's contribution of $1.5 million to the project will generate nearly $50

million of the expected benefits by speeding the

technology's development by one to two years. The RTI study did not attempt to develop esti- mates based on characteristics of System-based stem cell transplantation that might yield better patient outcomes. It focused only on cost

savings.

In addition, the study did not attempt to

estimate the value of the effects that a number

of other potential applications might have.

First use of the System technology is for expanding small amounts of stem cells from

bone marrow. It has now been extended to the production of stem cells from umbilical cord

blood. Other possible applications include immunotherapy stern cell gene therapy and

cells for solid tissue repair. More benefits can

be expected to be generated as the company

applies the technology to growing other types

of cells —platelets and red blood cells, as well

as liver, kidney and nerve tissue —outside the body

Other possible

applications include

immunotherapy, stem

cell gene therapy and

cells for solid tissue

repair.

Inserting Cell Cassette into Incubator.

23
Aphios Corporation (formerly BioEng, Inc.)

Biotechnology

Reducing Viral

Contamination in

Donated Blood

ThisATP project with

Aphios Corporation, a

small Massachusetts

company founded in 1988

as BioEng, developed

technology to improve the quality of donated blood in the United States.

If the technology is fully developed

and widely applied, substantial

benefits would accrue to patients.

The transfused blood or other therapeutic substances they receive

would essentially be free of hepatitis virus, human immunodeficiency

virus (HIV, which causes acquired

immunodeficiency syndrome, or AIDS) and other viruses that may

contaminate vaccines, donated

blood, blood-related products,

medical instruments and

recombinant-DNA proteins.

Solving the Problem of

Contaminated Blood

Several sterilization procedures using heat, a

chemical, or ultraviolet radiation are already

in use, but each method has drawbacks: it may

leave unsafe levels of some viruses, be very

costly or damage the blood or plasma. The

Aphios sterilization technology, called criticalfluid inactivation (CFI), uses a fluid such as carbon dioxide that is raised above its critical temperature and pressure. Above these levels,

the substance cannot be liquefied. In laboratory tests, such fluids exhibit a combination of

liquid and gaseous properties, and they have

been found to effectively inactivate prototypical

viruses. Critical-fluid viral inactivation uses low temperatures and short process times, so it has a minimal impact on blood and bloodrelated products. And, at an estimated cost of about $1 per liter, it is much less expensive than existing technology.

Overcoming Parvovirus

The procedure Aphios developed during the ATP project has been able to achieve 99-9999

percent inactivation or more for most viruses

in 20 seconds (99-99 percent inactivation by an individual viral inactivation technique is

considered acceptable). The most difficult

challenge has been parvovirus.

Parvovirus B19 in blood and blood products has proven difficult to inactivate, not only

by the CFI process but by others as well. The

virus is relatively benign for patients with

healthy immune systems. But it can have seri- ous consequences for those with weakened immune systems, as well as for pregnant women and persons with sickle cell anemia. The current Aphios procedure has achieved 90

percent inactivation of this virus. The company

is working on a five-step procedure that is expected to achieve better than 99-99 percent

inactivation.

. . . commercial

deployment . . . will be

much easier if the

company can

demonstrate that Its technology can

inactivate parvovirus to

an acceptable degree.

. . . signed a letter

of intent with the

Northeast Region of the

American Red Cross to

develop and field-test a

viral inactivation

prototype . .

.

The blood industry has established an

extremely high standard for new technologies.

Therefore, commercial deployment of the Aphios technology will be much easier if the company can demonstrate that its technology can inactivate parvovirus to an acceptable

degree. If it succeeds with this task, Aphios will

seek to join a larger pharmaceutical company

or consortium to further develop and commercialize the process, with substantial investment coming from these sources. In 1998, Aphios

sought an arrangement with a consortium of

five pharmaceutical companies to complete

development of the CFI process.

If a company wishes to commercialize a

product for use with donated human blood, it must deal with the American Red Cross (ARC),

the source of most blood products used in

clinics and hospitals in the United States. Aphios has signed a letter of intent with the Northeast Region of the ARC to develop and

field-test a viral inactivation prototype for individual units of blood and is seeking funding

for the project.

Health Benefits to Patients and

Those Close to Them

If the technology is fully developed and commercialized, benefits are expected to accrue to

users of blood and blood-derived products that

24 ADVANCED TECHNOLOGY PROGRAM
PROJECT:

To develop a critical-fluid viral inactivation process to protect the nation's supply of donated

blood and blood-related products from contamination by AIDS, hepatitis and other viral diseases.

Duration: 7/1/1992 — 6/30/1995 ATP number: 91-01-0135

FUNDING (IN THOUSANDS):

ATP $2,000

Company 1000

Total $3,000

67%

33%

ACCOMPLISHMENTS:

Aphios developed a procedure using critical

fluids to inactivate viruses in blood and established that the process is applicable to a large number of viruses, although to different levels of

effectiveness. The following achievements indicate technical progress by the company which:

applied for a patent ("Viral Inactivation Method and Apparatus") on technology related

to the ATP project;

presented two papers at conferences on

blood-safety issues;

executed a letter of intent with the Northeast Region of the American Red Cross to develop and field-test a virus inactivation prototype for

individual units of blood; and

submitted a proposal to a consortium of companies to evaluate the viral inactivation tech- nology for use in developing products and

processes.

COMMERCIALIZATION STATUS:

Aphios has not commercialized the process yet. The firm has been negotiating with a health care company interested in sponsoring further devel- opment and commercialization of the technology. Some early knowledge benefits have emerged

from the project via patent disclosures and

scientific papers.

OUTLOOK:

Commercialization may occur after more R&D

work, primarily on the inactivation of parvovirus. There has been evidence of interest in the tech- nology by the health-care community in general and by the American Red Cross in particular. Benefits are expected to accrue to society if the development of the technology can be completed

successfully. However, given the company's

financial difficulties, the outlook at this time is uncertain.

COMPANY:

Aphios Corporation (formerly BioEng, Inc.) 3-EGillSt. Woburn, MA 01801 Contact: Trevor P Castor Phone: (781)932-6933

Number of employees:

3 at project start, 17 at the end of 1997

can be made virus-free with the Aphios technology. Reducing the spread of viral disease is

expected to generate large health-cost savings and related benefits to the United States. Users

will also benefit if the process based on the new

technology is, as expected, less costly than current decontamination procedures. Economic

benefits might also extend to people who avoid

viral disease because users of blood or bloodderived products decontaminated with the Aphios technology do not become infected and

spread the disease. Without the ATP funds, Aphios officials say,

the company would not have conducted the

project. Moreover, it would have been impossible for this small company to attract the interest of the health care company or the American Red Cross.

As this report was going to press in late

1998, it was learned that the company had

reduced staff and was experiencing financial

distress.

Without the ATP funds,

Aphios officials say, the

company would not have

conducted the project.
Molecular Simulations, Inc.

Biotechnology (formerly Biosym Technologies, Inc.)

Powerful Software for

Designing New IVIolecules and

Tlierapeutic Drugs

The

traditional route to discovering new therapeutic drugs and other

useful chemicals should

probably be called "semiautomated serendipity." In the

search for new drugs, hundreds of synthetic chemicals and natural

substances are put through a long

series of trials, starting with effectiveness tests in cell-based assays

and concluding with toxicity and

effectiveness trials in laboratory

animals and, finally, humans. At each stage, the vast majority of substances fail the test and are

discarded.

The geometrical and electron structure of a siliceous CHA-framework material isotopological with the mineral chabazite. Zeolites and related crystalline microporous solids such as chabazite have

industrially useful separative and catalytic properties that are determined by both the micropore

architecture and the nature of active sites.

Using Mathematics to Find New Drugs

This KT? project with Molecular Simulations,

Inc. (MSI), a small San Diego company that had 170 employees when the project began,

combined applied mathematics and computer

programming to develop new methods for simulating molecular structures and reactions. The technology is more efficient than conventional molecule-design techniques, a quality

Density functional

theory (DFT) proved as

accurate as other

approaches, yet much

less expensive.

that translates into speedier product develop- ment and lower costs. The ATP-funded effort led to new understanding of density functional theory (DFT), a quantum mechanics method. Most work to understand molecules is mathematical, and DFT is a relatively new form of applied mathematics previously not widely used to simulate

molecules. Researchers successfully demonstrated the applicability of DFT to the study of biochemical systems, the backbone of drug

research, showing that DFT is as accurate as

other approaches and considerably less

expensive.

Applications in New Drugs and

Petrochemicals

Prior to its ATP award, MSI was already developing, marketing and supporting a suite of

software tools suitable for computing the behavior and properties of molecules. The suite

includes tools for bioinformatics, combinatorial library optimization, determination of

26 ADVANCED TECHNOLOGY PROGRAM
PROJECT:

To develop density functional theory (DF), a

type of first principles quantum mectianics, for use in the development of new therapeutic drugs and other substances, an application that is expected to achieve substantial time and cost

savings.

Duration: 6/1/1992 —5/31/1995 ATP number: 91 01 0224

FUNDING (IN THOUSANDS):

ATP $1,442

Company 1,867

Total $3,309

44%

56%

ACCOMPLISHMENTS:

MSI successfully demonstrated the applicability

of DF to the study of biochemical systems and

developed software that employs DF to efficiently calculate molecular structures and energies. The software was used to study biochemically relevant systems. It proved as accurate as

other approaches, yet much less expensive.

Also, the company:

prepared more than 30 technical papers on

the ATP-funded technology for publication in professional journals or presentation at conferences;

implemented a highly accurate way of applying DF in the company's Turbomole computer

software product;

expanded its physical plant to accommodate

larger R&D and production facilities;

was a finalist for a Computerworld

Smithsonian Award, the 1996 Innovator Medal; and

has grown at a cumulative annual rate of about 20 percent since the end of the ATP

project in May 1995.

COMMERCIALIZATION STATUS:

Commercialization is in progress. MSI incorporated the ATP-funded technology into the company's existing Turbomole software package, which has been distributed to more than 100

sites. The ATP-funded technology has also been

incorporated into MSI's quantum chemistry workbench software. Benefits from the ATPfunded technology are already accruing to users

of MSI software, as well as to users of products developed with the software.

OUTLOOK:

Expectations for this technology and the company are strong. The technology has been incor- porated into commercially distributed products

that are being used extensively by a relatively small, yet global, community of scientists in aca- demic, industrial and governmental laboratories

for rational drug design and petrochemical

research. It has potential applications in biotech- nology, microelectronics and industrial fine chemicals research.

COMPANY:

Molecular Simulations, Inc. (MSI; formerly Biosym Technologies, Inc.) 9685 Scranton Road

San Diego, CA 92121 Contact: John M. Newsam

Phone: (619) 546-5391 Number of employees:

170 at project start, 292 at the end of 1997

Researchers

successfully

demonstrated the

applicability of DFT to

the study of biochemical

systems, the backbone

of drug research . .

.

protein structures from amino acid sequences, and structure- and analog-based rational drug

design. The ATP project enabled MSI

researchers to incorporate the new DFT knowledge into several of these tools. Most MSI soft- ware users benefit from access to several differ- ent tools and will use more than one of them

in a given study. One of the first MSI tools to be enhanced

with the DFT technology was Tbrbomole, a computer software application that integrates a database of atomic functions, a modem userinterface and mathematical tools like DFT. The

computer program calculates tables of molecular characteristics and generates a three-

. . . prepared more than

30 technical papers . .

.

for publication . .

.

The geometry of a heme complex, optimized by

first principles density functional methods

implemented in the program DIVIol, using

technology developed under ATP sponsorship.

In this molecule, which contains more than 150 atoms, the central iron atom (central, dark

red) is coordinated by four nitrogen atoms

(blue) of the heme group, and a dioxygen molecule (red).

dimensional structure of the molecule that can

be viewed by molecular graphics. Another tool upgraded with the new tech- nology is DMol, a quantum chemistry program

that enables users to make reliable, quantitative predictions about molecular systems. The

ATP-funded technology—a DFT-based component of the program—decreases the cost of

these types of computation, potentially reduc- ing the cost of designing new molecules. The

ATP-funded technology is being used experi- mentally in petrochemical research, and it has

potential applications in biotechnology, ratio- nal drug design, microelectronics and industrial fine chemicals research.

. . . potential

applications in

biotechnology, rational

drug design,

microelectronics and

industrial fine chemicals

research.

27
Electron density isosurface of a zirconocene complex, color-coded by electrostatic

potential, as computed by the DMol program. The geometrical and electronic structures in metallocene complexes govern the nature of the polyolefln products produced when single

site catalysts of this type are used to catalyze

olefin polymerization.

Benefits to Companies and

Consumers

Because the MSI software is relatively low-cost,

enters the discovery and development cycle

close to its beginning, and is used by research and development personnel in large organizations, the benefits to the users of the software can be large relative to what MSI earns through software licenses. Such benefits will accrue to chemical, petrochemical, pharmaceutical and biotechnology companies, as well

as to companies in other industries that use MSI software incorporating the ATP-funded

technology. Benefits will also accrue to people

who use therapeutic drugs and other products

made by companies using the new technology. In addition, scientists worldwide might benefit from a database of molecular structures devel- oped under the ATP award — MSI is consider- ing making the database available on the

Internet.

MSI reports that the ATP funds enabled it to complete research on the DFT technology and

incorporate the results into its software products some 18 months earlier than it would otherwise have been able to do. The company its customers in the phamiaceutical and materials industries, and their customers have all

benefited. The project also facilitated the dis- seminafion of new knowledge, particularly via

the many scientific papers that were published about the ATP-funded technology. Company Grows, Announces IPO,

is Acquired at a Large Premium

Since the end of the ATP project in May 1995,

the company has grown at a cumulative annual rate of about 20 percent. In February,

1997, it filed a Form SI with the Securities and

Exchange Commission, announcing its intention to conduct an Inifial Public Offering of

stock, and noted that it expected to raise about $35 million by selling about half of the stock

in the company In Februar}', 1998, the company and Pharmacopeia, Inc., announced that Pharmacopeia would acquire MSI. The acquisifion was finalized in June, 1998, in a transaction valued at approximately $140 million.

. . . scientists

worldwide might benefit

from a database of

molecular structures

developed under the ATP

award — MSI is

considering making the

database available on

the Internet.

28 ADVANCED TECHNOLOGY PROGRAM
Thermo Trilogy Corporation

Biotechnology

(original awardee: AgrlDyne Technologies, Inc.)

Bioengineering of a Safe,

Organic/Chemical Insecticide

Every

year millions of tons

of chemical pesticides are sprayed or irrigated onto

plants in fields and

gardens throughout the

United States. Protected from

weeds and insects, these plants

flourish and grow to provide food

and visual delight for us all. Chemicals used for pest control,

however, sometime turn out to be

poisonous for humans, and the

results are often tragic. Consequently, efforts are under way to reduce the need for toxic chemical

pesticides and, in the process, to eliminate the adverse side effects

they can bring.

Reducing the Risk of

Toxic Pesticides

One promising approach to reducing the hazards of pesticides is to use genetically engi- neered organic compounds based on naturally

occurring pesticides that are harmless to humans. The ATP project with AgriDyne

Technologies offered a novel way to do this by

taking advantage of large-scale biochemical

production. AgriDyne, founded in Utah in the

early 1980s as Native Plants, was a small company that would have been unable to pursue

this research without the ATP award.

Scientific knowledge

generated by the ATP

project ... is disclosed

in two patents and may

be important to the

genetic engineering of

other plant extracts.

A Nontoxic, Chrysanthemum-Based

Pesticide

The technology AgriDyne developed during its ATP project is based on the chemistry of

pyrethrins, a group of six closely related natural insecticides derived from pyrethrum, a

type of chrysanthemum. Pyrethrins kill insects on contact, have low toxicity for mammals,

degrade shortly after application and produce no harmful residues. The only current source

for natural pyrethrins is chiysanthemum from

east Africa. But, according to AgriDyne 's

proposal to ATP, supplies were neither stable nor sufficient to meet the worldwide demand.

Although pyrethrins can be synthesized in

the laboratory, production via traditional chemical processes is difficult and expensive.

AgriDyne 's alternative was to genetically engineer yeast cells to produce chrysanthemyl

alcohol, a precursor that is then chemically

converted to chrysanthemic acid. This, in turn, can be used to produce commercial quantities

of pyrethrin.

Business Upheavals

Stall Technology

AgriDyne achieved most of the technical goals

of the project, but production costs were higher than predicted. The company encountered

financial problems that forced it to close in

1995, just as the project was ending. AgriDyne

apparendy did not have enough management

resources to handle the challenges of both

developing the technology and commercializing a product. The firm was acquired by Biosys

of Columbia, Md., another biopesticides company, which decided not to make the invest- ment required to commercialize the ATPfunded AgriDyne technology.

Biosys, in turn, declared bankruptcy in

1996. Its assets, including patents, were

acquired by Thermo Trilogy, the second largest

biopesticides company in the world. Thermo

Trilogy officials reported having no current

plans to commercialize the ATP-funded technology, since the cost today of procuring

chrysanthemyl from Africa is lower than the

expected cost of producing pyrethrin with the new technology. In addition, they say, detailed knowledge of the scale-up process for the tech- nology (requirements for physical plant investThe company

encountered financial

problems that forced It

to close in 1995,

just as the project was

ending.

29
PROJECT:

To develop a genetic engineering process for producing pyrethrin, a natural insecticide fronn chrysanthemums that is nontoxic to mammals

but was available only from Africa in limited, unstable supplies. The technology wfould provide

a less-costly, stable domestic source of supply.

Duration: 6/1/1992 — 5/31/1995 ATP number: 91-01-0071

FONOING (IN THOOSANDS):

ATP $1,200

Company 2M2

Total $3,212

37%

63%

ACCOMPLISHMENTS:

AgriDyne achieved most of its technical goals and received two project-related patents:

"Storage Stable Pesticide Compositions

Comprising Azadirachtin and Epoxide"

(No. 5,352,697: filed 7/28/1992,

granted 10/4/1994) and

"Chrysanthemyl Diphosphate Synthase, Corresponding Genes and Use in Pyrethrin Synthesis"

(No. 5,443,978: filed 6/25/1993,

granted 8/22/1995).

COMMERCIALIZATION STATOS:

No commercial product has yet been produced.

OOTLOOK:

Commercialization is uncertain, owing to the dissolution of AgriDyne, current market conditions that make the new production approach too

costly to compete with natural sources of supply, and lack of plans, at this writing, by Thermo

Technology (which now owns the intellectual property) to pursue further development.

Scientific knowledge generated by the ATP project, however, is disclosed in two patents and may be important to the genetic engineering of other plant extracts. The knowledge has potential applications in pharmaceuticals and specialized

materials and chemicals, as well as in pesticides.

COMPANY:

AgriDyne Technologies, Inc. (acquired by Biosys, Inc. in 1995; Biosys

assets acquired by Thermo Trilogy in 1996) Thermo Trilogy Corporation 7500 Grace Drive Columbia, MD 21044

Contact: Ramon Georgis Phone: (410) 531-4711

ment, as well as information on the predictability of a viable, consistent production

yield) was unknown to them and their counterparts at Biosys, and they found it difficult to

assess AgriDyne's ATP project. Both companies

considered further pursuit of the technology

too risky for them.

Although no

commercial product

has yet resulted from

the ATP-funded

Gains in Bioengineering

Knowledge

Although no commercial product has yet

resulted from the ATP-funded technology, new

bioengineering knowledge has. Some of it has been disclosed through two patents. But AgriDyne's manufacturing know-how was

apparently not passed on to the company's

successors. Should events in Africa decrease the

supply or increase the cost of natural

pyrethrin, the AgriDyne approach may be

resurrected by funding development of the needed manufacturing skills.

technology, new

bioengineering

knowledge has.

30 ADVANCED TECHNOLOGY PROGRAM
. . , Tissue Engineering, Inc. (TE)

Bioteclinology

s' i / Prostheses Made of

Biomaterials That

Regenerate Body Parts

From

its beginning, tlie

field of bioengineering has

focused on providing tlie best artificial devices —

hearing aids, artificial limbs and other prostheses — to replace body parts that are missing,

broken or dysfunctional. This ATP

project with Tissue Engineering

(TE), a biotechnology start-up company, takes bioengineering far beyond artificial replacements to a technology that regenerates, rather

than replaces, lost or damaged tis- sues. Although this claim sounds

like science fiction, it is in fact

quite real. And it promises to pro- duce real medical benefits in the

very near future.

Technology to Regenerate

Lost or Damaged Body Parts

TE is pioneering a new class of biomaterials

called .ADNLM (animal-derived extracellular

matrix). The idea behind the company's ATP

project is to use ADMAT materials in collagenscaffold "'prostheses" to replace damaged or

dx'sfunctional tissues and organs. The prostheses are designed to provide templates that mobilize the body's own cells and induce them

to rebuild the lost tissue, gradually replacing

the prosthesis itself. Regeneration of body parts

requires a biomaterial with a structure, components and chemical signals that allow the

body's tissue cells to recognize, respond to and

remodel the material without rejecting it as

foreign.

Demand for ADMAT Materials

ADiMAT materials are derived from the by-products of land and marine animals processed for

food. The material can be spun into fibers and woven into fabrics using techniques borrowed from the textile industry, or it can be formed

into foams, sheets and fibns. ADMAT can be used to enhance collagen scaffolds for vascular

This ATP project . . . takes bioengineering

far beyond artificial

replacements to a

technology that

regenerates, rather

than replaces, lost or damaged tissues.

grafts, ligaments, tendons, periodontal tissue and similar reconstructions. During the ATP project, TE successfully

developed techniques and procedures for

extracting and storing a mixture of collagens and for preserNing the desired characteristics of

the extracellular matrix. The company devel- oped new materials for hosting the matrix and

a process for adding the matriK to collagen

fibers in the course of spinning. The demand for products the company

plans to offer clearly exists. The lag time, however, between technolog}' conception and

market availabilit}' —particularly for medical

treatments —is long. Tissue-engineered products face clinical trials and other regulator}'

hurdles, in addition to technical and marketintroduction barriers. The company is making

good progress in navigating these barriers in

accord with its technical and business plans.

31
Collagen fiber decorated with ADMAT

microparticulates via ATP-funded patented

process.

Commercialization is in progress. TE has

placed periodontal prosthesis prototypes with

potential customers for testing. It has created

other products for research, testing and diagnostic applications. These activities are not

regulated, so commercialization can happen more speedily. In addition, it has formed a

venture with Wright Medical Technology for

commercialization of orthopedic applications. TE is also in discussions with several other companies to commercialize other applications, such as a line of skin and woundhealing products.

TE has placed

periodontal prosthesis

prototypes with

potential customers for

testing.

Large Potential

Benefits for Society

The eventual successful commercial introduction of the ATP-funded technologies will bring

large health gains to patients with many forms

of medical problems, ranging from dental to

cardiovascular. Procedures and materials that would enable the regrowth of ligaments and

cartilage in knees and enable dental tissue to

regenerate with a single surgery — at costs

lower than those offered by alternative medical

approaches today, and that one day may even

facilitate organ regeneration —would have

great benefits for society. These potential benefits are likely to be huge because of the large number of patients who could use these prostheses, the advantages

the TE approach has over currently available

alternatives, and improvements in the ability

of patients to function as a result of using the new technology. The ATP award is playing an

PROJECT:

To develop techniques and procedures for processing tissue, extracting and storing collagen, and spinning and weaving collagen fibers

into fabrics and ottier forms suitable for fiuman

prostfieses tfiat could induce tfie body's own

cells to rebuild lost tissue wfiile gradually

replacing the prosthesis.

Duration: 3/1/1993 — 2/28/1996 ATP number: 92-01 0133

FUNDING (IN THOUSANDS):

ATP $1,999 48%

Company 2J28 52%

Total $4,127

ACCOMPLISHMENTS:

TE accomplished its technical goals. The company developed procedures for processing a

tissue-specific extracellular matrix rich in

cytokines (cell-generated proteins), extracting and storing type I collagen (a material present in

all tissues), and spinning collagen into fibers

that can be woven into prosthetic fabrics. The

company:

received two patents for technologies related

to the ATP project:

"Apparatus and IVIethod for Spinning and

Processing Collagen Fiber"

(No. 5,562,946: filed 11/2/1994,

granted 10/8/1996) and

"Bipolymer Foams Having Extracellular

Matrix Particulates"

(No. 5,709,934: filed 11/22/1994,

granted 1/20/1998);

important role in bringing these benefits to

societ}', because applications of the new technology are about two years ahead of where

they would have been without ATP funding. A recent detailed case study by the Research

Triangle Institute estimated that TE's ADMAT

technology could be expected to generate about

$33 billion (in present value dollars) in net

benefits for societ}' in a single medical application area: anterior cruciate ligament repair^ The study estimated that about 100,000

patients per year with ligament damage would

be eligible for the new treatment, that the number using the Tissue Engineering technology would start at 9,000 in the first year of

availability and grow to 72,000 ten years later,

supplanting an increasing percentage of alternative technologies currently in use. The study

applied for three other patents related to the technology; made several presentations at conferences and workshops; and

formed a joint venture with Wright Medical

Technology, Arlington, Tenn., to develop and

distribute products based on the ATP-funded

technology for applications involving ligaments, tendons, cartilage and other musculoskeletal

parts.

COMMERCIALIZATION STATUS: A commercialization venture has been formed for orthopedic applications. Prototypes are in testing, although no product has yet entered the

market. Patent disclosures and a joint venture to commercialize the technology may be providing

useful knowledge to other researchers in the

field.

OUTLOOK:

This project is on track for market entry in the

very near future. The technology is scheduled to

be used first in the fabrication of periodontal prostheses and orthopedic applications. Ideas for

skin and wound-healing products are also being

explored by the company with potential customers.

COMPANY:

Tissue Engineering, Inc. (TE) 451 D St., Suite 807

Boston, MA 02210

Contact: Eugene Bell Phone: (617)946-0520

Number of employees:

1 at project start, 18 at the end of 1997

incorporated estimated benefits from qualityof-life improvements, using a "quality-adjusted-life-years" index value. It estimated that

about $15 billion of the expected benefits would be attributable to ATP's accelerating the

technology development by two years.

. . . formed a venture

with Wright Medical

Technology for

commercialization of

orthopedic applications.

32 ADVANCED TECHNOLOGY PROGRAM
Chapter 3

Chemicals and Chemical

Processing

BioTraces, Inc 34

Highly Sensitive Detectors for Biomedical and Environmental Diagnostics

t^::ZJt!^2. 33
Chemicals and BioTraces, Inc.

Chemical Processing -m.- . . , Highly Sensitive Detectors for

Biomedical and Environmental

Diagnostics

A

technology that can

detect minute traces of biomolecules — pesticides, bacteria in water,

organic toxins lilce botulin — much better than conventional detectors would be extremely

useful in a number of fields. Medicine, for instance, has obvious

need for highly sensitive methods of detecting viruses. Such a technology would also be applicable in a broad range of environmental areas, where early detection of chemicals

or other substances could trigger

corrective action early enough to head off disaster. Detecting traces

of toxic materials in a municipal

water supply, for example, might

lead to the elimination of their source before they poison the city's

population. A highly sensitive

detection technology could also be

useful for the optimized control of semiconductor fabrication.

Detecting Minute Amounts of

Unwanted Molecules

This ATP project created such a technology

through the efforts of BioTraces, a small company founded in 1989 to develop, manufacture and market instruments for detecting microtraces of various materials. During its ATP project, the company developed a highly

Detecting traces of

toxic materials in a

municipal water supply,

for example, might lead to

the elimination of their

source before they poison

the city's population.

sensitive biomolecule detection method based on an improved radioactive tracer detection system originally developed for cosmology. Instruments of this types use radioactive

isotopes that are chemically bound to the

target molecules or atoms. Photon or electron

detectors that register radiation decay particles

are used to spot the "tagged" targets.

Sensitivity is limited by background radiation — 10 to 100 counts per minute for conventional commercial instruments in typical

applications. BioTraces beats this limitation with a sophisticated multiphoton detector (MPD) that registers only counts that match

the multiple-photon decay pattern of the

isotopes used as tags. In contrast to conventional methods, background levels for BioTraces detectors are a few counts per day

Safer Analyses for Patients and the Environment

The BioTraces technology uses different

isotopes to tag different types of molecules in

the sample. This allows several different molecule types to be measured simultaneously,

greatly speeding complex analysis tasks such

as those used in clinical screening (for example, to detect contaminants in blood supplies). Since background interference is so low, the minimum amount of isotope needed for an

analysis can be as much as 1000 times less than that used in conventional radioisotope

analysis, making the BioTraces system considerably safer for patients and the environment. The company met most of the project's

technical goals. Its researchers developed

prototype MPD instrumentation hardware and

software that is much more sensitive than

current state-of-the-art equipment. They also developed biomedical applications of the tech- nology for enhanced immunoassay, chro- matography and nucleic acid analysis.

First Fruits of Commercialization

At the start of the ATP project, BioTraces planned to do only the instrumentation work

and to leave specific applications to partner companies. But lack of success in finding suitable partners led BioTraces to change its approach to commercialization. It is now finishing development work on the MPD technol- ogy and hopes to begin offering its own commercial products widely in the near future. The company has made enough progress to license

the technology exclusively to a new company,

PetroTraces, for petrochemical applications.

PetroTraces uses it to tag and trace different

liquids and gases that are transported in

pipelines so it can supply customers with data

for auditing and other applications.

BioTraces' own initial commercial product,

the ssMPD (sequential sample MPD) is used

for super-sensitive measurement in extremely

small samples — up to a few milliliters. The

34 ADVANCED TECHNOLOGY PROGRAM
ssMPD received market clearance from the U.S. Food and Drug Administration for sale as a

clinical diagnostics device and entered the market in 1997 on a limited basis for use in

research. BioTraces expects to launch widescale sales of die ssMPD in late 1998 or early

1999, after enhancing protection for its proprietary software and establishing a strategic

alliance with a major clinical diagnostics company

The new MPD technology has great potential as an advanced biomedical diagnostic tool and for other uses where detection of minute

traces of biomolecules is critical. BioTraces

entered an agreement with Pasteur-Merieux Connaught, a French company under which it developed an MPD-enhanced quantitative poly- merase chain reaction assay for measuring

tiny amounts of deoxyribonucleic acid (DNA) and ribonucleic acid (RNA). And in June 1997

PROJECT:

To develop instrumentation based on multiphoton detection (MPD), high-speed/high-sensitivity sensors and proprietary software, one tiiat can detect minute concentrations of cfiemicals in

gas, liquid or solid matrices —a tecfinology

that would be extremely useful in environmental

monitoring and biomedical research.

Duration: 1/1/1994 — 12/31/1996 ATP number: 93-01-0250

FUNDING (IN THOUSANDS):

ATP $1,718

Company 773

Total $2,491

69%

31%

ACCOMPLISHMENTS:

BioTraces developed fvlPD instrumentation, both hardware and software, as well as biomedical

applications of the technology for enhanced immunoassay chromatography and nucleic acid

analysis. The company;

applied for two patents on technology

developed during the ATP project:

- "Enhanced Chromatography Using

Multiphoton Detection" and

- "Uitralow Background f\/lultiple Photon

Detection;"

negotiated with the French company

Pasteur-fvlerieux Connaught an agreement under

which BioTraces developed an MPD-enhanced

quantitative polymerase chain reaction assay for measuring tiny amounts of DNA and RNA;

negotiated a $1 .78 million agreement in July 1996 with a newly-formed company

PetroTraces, granting it an exclusive license for commercial applications of the new technology

in the petroleum industry — a deal that so far has generated $585,000 in revenues for PetroTraces and $560,000 in license fees for BioTraces;

arranged in June 1997 for Genetics Institute,

Inc., to evaluate the MPD technology as a pharmaceutical R&D tool; if successful, the test could lead to a license allowing Genetics

Institute, Inc. to use the technology in its drug

discovery program;

created a clinical diagnostics device, the ssMPDTM (sequential sample MPD), which

received market clearance from the U.S. Food

and Drug Administration and entered the market on a limited basis in 1997;

has received since the start of the ATP project $1 million in equity investment to support

commercialization of the new technology; and

entered into discussions with two venture

capital firms about securing an additional $4

million in equity funding in 1998 or 1999.

COMMERCIALIZATION STATUS:

Commercialization is in progress. Applications

of the technology are underway in the petro- chemical field via PetroTraces. BioTraces' first commercial product for medical applications, ssMPDTM, has entered the market on a limited basis and is expected to be more widely avail- able in 1998 or 1999.

OUTLOOK:

Once BioTraces works out a strategy for

protecting its intellectual property, the new tech- nology is expected to be disseminated more

aggressively. Given its potential use in detecting

viruses, bacteria, toxins and pollutants, the ATPfunded technology stands to generate substantial

benefits to the economy If, for example, it were

used to detect a toxin in a water supply preventing a whole town or region from becoming ill,

the benefits would be enormous.

COMPANY:

BioTraces, Inc. 10517-A West Drive

Fairfax, VA 22153

Contact: E. James Wadiak Phone: (703) 273-6941 Number of employees:

3 at project start, 14 at the end of 1997

it arranged for Genetics Institute, Inc., to evaluate the MPD technology as a pharmaceutical

research and development tool. If the test is

successful, it could lead to a license allowing

Genetics Institute, Inc., to use the technology

in its drug discovery program. ATP Gives a

Big Boost to a Small Startup

BioTraces is a very small company, having only

three employees when it started the ATP

project. Since then, the company has received

$1 million in equity investment to support commercialization of the new technology. It has also entered into discussions with two

venture capital finns about securing an additional $4 million in equity funding in 1998. Company officials report that the ATP

award enabled BioTraces to achieve its research

results two to three years sooner than it otherwise would have been able to do. The fijnds

also helped it develop research alliances and

improved its ability to raise investor capital.

BioTraces expects to

launch wide-scale sales of

thessMPD^'' in late 1998

or early 1999 ..

.

35
36 ADVANCED TECHNOLOGY PROGRAM
Chapter 4

Discrete Manufacturing

Auto Body Consortium (Joint Venture) 38 A Systems Solution to a Quality Problem in Auto Body Manufacturing

HelpMate Robotics, Inc 41 Robot Navigation Technology

PreAmp Consortium (Joint Venture) 44 New Models to Speed ttie Development of Electronics Components

Saginaw Machine Systems, Inc 46

Better Precision for Machine Tools Through Thermal-Error Correction

4^::Z^t!^2~ 37
Discrete

Manufacturing

Auto Body Consortium

(Joint Venture, formerly 2mm Auto Body Consortium)

A Systems Solution to a

Quality Problem in Auto Body

Manufacturing

Assembly plant staff members monitor operations using real-time analysis tools developed in the ATP project.

Just

a few millimeters make

a big difference on an automated assembly line as doors, hood, windshield, wheel housings and

other parts are installed on a bodyin-white (BIW), the partially completed body of an automobile. If BIW openings are slightly off kilter or parts vary much from specifications, the overall fit and finish of the completed car suffers. When

dimensions vary more radically, a BIW may have to be custom-assembled by hand. In addition, if the

variations grow too large, the entire

BIW may be pulled from the assembly line and junked.

Toward a Tightly Fitted Car Body

In contrast, a tightly fitted car means fewer

defects, less time and money for factory repairs,

better appearance and performance for the owner, and lower long-term maintenance

costs. And the quicker assembly-line

changeovers can be made while retaining

tightness of fit, the faster new models can be

introduced at reasonable cost. A U.S. Problem Overcome

The problem of "dimensional variation" has

cost the U.S. automotive industry dearly in product quality, wasted materials, increased production time and lost sales. While European auto makers were building cars with dimensional variations less than 2,5 mm and

Japanese manufacturers were achieving results

at or below 2 mm, U.S. producers were assembling cars with as much as 5- or 6-mm variaTlie project lias

published a manual for

use in extending tlie

procedures developed

during tlie project.

tion. But with completion of ATP's "2mm

Project" in 1995, American auto makers have shown a marked increase in their ability to assemble cars with world-class precision. In all

five Chrysler and General Motors (GM) auto assembly plants where the new methods were

tested, overall dimensional variation was

brought down to, or below, the 2 mm standard.

In addition, other technologies developed by

the project have yet to reach the assembly line, and their full implementation in auto body

plants promises to reduce dimensional

variation even further. Lower Production Costs

With an investment of $4.9 million from the ATP and $9 million from the automobile

industry, the 2mm Project developed a number

of interrelated technologies and processes that have already cut net production costs (actual

costs less the cost of implementing 2mm technologies) by $10 to $25 per vehicle in plants where they have been tested.^ When full

38 ADVANCED TECHNOLOGY PROGRAM
PROJECT:

To develop improved measurement tectinology and process control needed to achieve tigtiter fi — as well as better quality and lower costs —

in auto bodies and other products assembled

from sheet metal parts.

Duration: 9/1/1992 — 10/31/1995 ATP number: 91-01-0177

FUNDING (IN THOUSANDS):

ATP $4,487

Companies 6.048

Total $10,535

43%

57%

ACCOMPLISHIVIENTS:

The project achieved the R&D goal of developing measurement and process control technology, which participating companies verified in

several in-plant tests. Widespread adoption of

the technology is now underway in auto assembly plants. Indicative of progress, the companies:

cut dimensional variation in auto body

assembly to a world-class standard of 2 mm or

less and demonstrated the reduction with existing workforces in all five plants initially targeted

by the project;

reduced production costs by $10 to $25 per

vehicle at two plants initially adopting the technology, savings that are expected, according

to consortium staff, to be applied eventually in

plants which produce all 6.5 million cars and

light trucks produced annually by Chrysler and

General Motors;

reduced expected future maintenance costs by an estimated $50-$100 per vehicle;

published several papers in professional

journals;

published The Capture and Communication

of Knowledge: A Lessons-Learned Approach, a manual that will speed the adoption of the tech- nologies and processes developed during the ATP project by showing how to implement them;

worked with the University of Michigan to begin transferring the technology to other GM

and Chrysler assembly plants beyond the original five, implementing it thus far in 22 plants in

the United States and Canada;

generated via ISI Automation Group

(formerly ISI Robotics) the spin-off development

of a new type of clamp, called the SofTouch, for holding sheet metal parts during assembly; and

provided member auto assembly companies

a "quality" peg on which to hang marketing

literature — Chrysler highlights the fact that its new Concorde "literally has a two-millimeter

body."

COIVIMERCIALIZATION STATUS: Some supplier companies have incorporated the new measurement and process technology in assembly line equipment, and the new approach

to tighter fit has been put into use in six of 10

Chrysler plants and 16 of 31 GM plants in the United States and Canada. Net production cost reductions of $10 to $25 per vehicle are esti- mated to have already been achieved using the new approach, meaning millions of dollars saved per year. Higher-quality vehicles from

these plants are becoming available to con- sumers, and U.S. manufacturers are expected to increase their market share.

OUTLOOK:

Because the technology is being used and being

systematically transferred to additional plants, the outlook is excellent. It is now being transferred to all Chrysler and GM plants, and

through the supply chain, to Ford Motor Company. The technology is expected also to be adopted or adapted for use by other discrete manufacturers in, for example, the appliance and

furniture industries. Auto assembly companies

that adopt this new technology can expect to save hundreds of millions of dollars annually in production and maintenance costs. Consumers

will benefit from higher-quality vehicles and will

likely see some of the manufacturing cost savings. Producers and consumers are expected

to benefit from yearly savings of up to $650

million in auto maintenance costs. Quality improvements resulting from the project have been projected to boost U.S. industrial output by

the automotive and related industries by more

than $3 billion in the year 2000 and to create thousands of new jobs. To the extent the quality improvements extend to other manufacturing

industries, the output and employment effects

will be even greater.

COMPANIES:

Auto Body Consortium (joint venture lead; formerly 2mm Auto Body Consortium) 2901 Hubbard Road Ann Arbor, Ml 48105

Contact: Ernest Vahala Phone: (734) 741-5905

Joint venture participants: CDI-Modern

Engineering; Classic Design, Inc.; Detroit Center

Tool, Inc.; ISI Robotics; Perceptron, Inc.; Pioneer

Engineering & Manufacturing; Progressive Tool & Industries, Inc.; Weber Technologies, LLC;

Chrysler Corporation; General Motors

Corporation (GM), Technical Center; University

of Michigan, Mechanical Engineering and

Applied Mechanics. Subcontractor: Wayne State University

adoption by all GM and Chrysler assembly

plants is achieved —probably by the year 2000 — annual production cost savings are

projected in the range of $65 million to $l60

million on the current production volume of

6.5 million vehicles, which amounts to 48

percent of the cars and light trucks sold in the

United States. Some of the cost savings are

likely to be passed on to consumers as a result

of competition among U.S. and foreign

producers in the new vehicle market in the

United States.

ATP's financial

contribution lielped

small- and mediumsupplier companies pay

for an expanded

university effort while

large assemblers

provided most of the

industry cost share,

which covered their own

expenses and

joint venture overhead.

Less Maintenance, Faster Launch

Cars and trucks built with 2mm Project innovations should also cost less to maintain as

better body fit results in reduced wear, less rust and fewer other problems. These savings are

estimated to range from $50 to $100 per

vehicle over its useful lifetime. Several years

after GM and Chrysler have fully implemented

the 2mm Project results, total maintenance

savings are expected to reach $325 million to

$650 million per year based on current

production volume. And, although a dollar

value has not yet been estimated, the new technology is expected to decrease the time

required to launch new auto models.

^^^^

39
Higher Quality and Lower

Costs IVIean Increased Market

Share and Jobs

In addition, assuming the 2mm Project quality and cost improvements lead to at least a 1

percent increase in market share for GM and

Chrysler (at the expense of vehicles built

abroad), economic projections show an overall

increase in U.S. economic output in the year 2000 of more than $3 billion and the creation

of around 70,000 new jobs. These estimates

take into account the impact of an increase in

vehicle sales on related sectors, but they do not

include any increases due to adoption of 2mm

technologies by companies outside the auto

industry.

Collaborative Research to Solve a Complex Systems Problem

The 2mm Project was initiated by the Auto Body Consortium (eight small- and mediumsize companies that provide tooling and engineering sei-vices for auto body assembly lines),

two big auto manufacturers (Chiysler and

General Motors) and two universities, one a

joint venture partner, and the other a subcontractor The joint venture treated BIW

dimensional variation as a systems problem,

selecting 11 subprojects, or tasks, to be accomplished in four general areas. Separate task

groups, with staff from various joint venture members, worked on each subproject. After the

operational tasks were completed, the final

task of the 2mm Project was to synthesize the

information, processes and lessons learned from the research and incorporate the results

into a user-friendly database to help companies

adopt the new technologies and methodologies

The computer display for one of the many

diagnostic procedures provided by the new dimension control system.

and establish an infrastructure for future improvements. The 2mm Project would have been difficult

to achieve without the involvement of the ATP

for several reasons. Dimensional variation in

auto body production is a systems problem that

could not have been solved by any one of the

11 project members alone. The ATP encourages formation of joint ventures like the Auto Body Consortium to solve complex systems

problems. The public/private partnership was

helpful in the face of a long history of federal

antitrust enforcement that has left auto makers

fearfijl of cooperating with each other without

federal government involvement. Assembly line

suppliers are generally small- or medium-size companies without research budgets large enough to fund work of the type undertaken by

. . . organized meetings

to share results with

interested people from

the aerospace, appliance

and metal furniture

industries, as well as

other industries that use

automation to assemble

metal parts.

the 2mm Project, and auto makers have been

reluctant to fund research by their suppliers. The fact that development risks were unevenly

bom by consortium member firms was another

obstacle that ATP participation helped to overcome.

ATP's participation in the 2mm Project proved critical to the formation of this research

joint venture. The ATP provided the catalyst needed to overcome multiple barriers. ATP's

financial contribution helped small- and

medium-supplier companies pay for an

expanded university effort while large assemblers provided most of the industry cost share,

to cover their own expenses and joint venture

overhead. The 2mm Project shows how small- and

medium-size supply companies, large auto

producers, and universities were able to cooperate in the development of an integrated

system to reduce dimensional variation in body

assembly and to improve the quality of the

final product. It also demonstrates the unique

role that comparatively modest investments of money and leadership by ATP can play in

catalyzing complex, cooperative research ventures that pay off handsomely in technological and economic returns. Widespread Adoption

Underway in Auto Plants

The new approach to tighter dimensional fit has been put into use in six of 10 Chrysler

plants and l6 of 31 GM plants in the U.S. and

Canada, and it is being transferred to the remaining GM and Chrysler plants and to Ford Motor Company through the supplier chain.

40 ADVANCED TECHNOLOGY PROGRAM
Discrete

Manufacturing

HelplVlate Robotics, Inc.

(formerly Transitions Research Corporation)

Robot Navigation

Teclinology

Robots are frequently seen

as exotic, make-believe

objects in science fiction movies. They walk, talk,

crack jokes and worry

about whether they are human or have souls. Real robots are much

more mundane, but they are becoming increasingly useful in industry.

They do work too tedious or danger- ous for humans, enduring tedium

without erring and danger without

harm. They paint cars in factories

without needing protective masks.

They transport radioactive materials

in power plants without suffering

from radiation.

Using Robot Technology for Deliveries in Hospitals

Robots are also delivering medicines in hospitals faster and more reliably than humans can. "Do you really see hospitals and nursing

homes starting to use that kind of technology?" an interviewer asked Paul Hoffman of Discover maga2ine after he demonstrated

robot technology on CBS Good Morning

America in May 1996. Replied Hoffman: "They

do. This company, HelpMate Robotics in Danbury, is already using it in hospitals, right now."

Improved Navigation Capabilities

HelpMate Robotics, using ATP funds, has

indeed developed the navigational technology needed to create mobile robots that can scurry around a hospital or other industrial environ- ment. And with other funding, it has built them. This advance, set on the technical

foundations laid by robohcs pioneer and company CEO Joseph Engelberger, has helped

to expand the use of mobile robots throughout

the country. These robots do some of the ambulatory work traditionally done by humans. To work

well, the robots must have dependable vision

systems that can use light from many different

sources and recognize light-shading

differences. They have to be trainable (pro- grammable). They must make quasi-intelligent decisions — "Go around the gurney with

the patient on it." And they have to be able to

report to their human supervisor and ask for

help when encountering problems they cannot

handle — "There is no one here to sign for

the parts."

Specifically, HelpMate researchers successfully developed an improved light direction and range (LlDAR) scanner. LIDAR is a device

in the "eyes" of the robot that senses light,

calculates direction and determines the range

to objects in its path. This is a clear advance

over previous technology, which used sonar to

detect shapes. Researchers also developed navigation capabilities based on new sensing

systems and ways of combining data from

different sensors. These capabilities permit the

control of robots in quasi-structured environ- ments —places with predefined components

such as doorways, light fixtures, windows and

They do work too tedious

or dangerous for

humans, enduring tedium

without erring and

danger without harm.

Drugs are loaded on the HelplVlate robot by a hospital pharmacist for delivery to

staff in one of the hospital's wards.

elevators that are fixed in place and definable from photos or engineering drawings — and among objects that are not predefined, such as

a patient on a gurney and human workers moving about the space. HelpMate in Hospitals

Most of the ATP-funded technology has been embedded in the hospital version of the HelpMate robot. More than 150 HelpMate

robots have been rented by scores of hospitals

in Europe, Japan, Canada and the United

States. Purchased outright, the robots cost about $110,000. Most are rented for $4 to $6 an hour If a robot is used 100 hours a week,

the annual rental fee is about $25,000.

41
HelpMate Robots are

delivering medicines,

supplies, prepared food,

x-ray images and other

material in about 100

hospitals in the United

States and Canada.

Marketing Agreements for Distribution Abroad

Company officials say that ATP funding

enabled HelpMate to achieve its research and

development results much sooner than it would otherwise have been able to do. The

award also helped it develop strategic marketing arrangements abroad. The company has

signed an agreement for Otis Elevator to

distribute HelpMate hospital robots exclusively

in Europe. It has also developed marketing

arrangements with other parties in Europe and Japan. HelpMate raised $6 million through an

initial public stock offering in 1996 and used

the money to build production and sales capabilities. A second offering of $5 million did not go through, and the company had to downsize

temporarily New funding, however, has been

committed, which should enable rebuilding of

staff and marketing, as well as further work on

a home-service version of the robot. In addition, the population of HelpMate robots in the

field continues to serve well and will back up

the company's renewed sales effort.

PROJECT:

To develop the technology for intelligent, autonomous mobile robots, or "robot carts," that can find their way around a factory, hospital or

similar place by sensing and avoiding obstacles and tal(ing alternative routes if a path is blocl<ed. Such robots could reduce costs for delivering

materials and supplies in many different environments.

Duration: 6/15/1992 — 3/31/1994 ATP number: 91-01-0034

FUNDING (IN THOUSANDS):

ATP $699

Company 875

Total $1,574

44%

56%

ACCOMPLISHMENTS:

The company achieved the target navigation

capabilities, including successful development

of a specialized LIDAR (light direction and

range) scanner. Evidence of progress includes

the following:

The company incorporated the new navigation capabilities into its original HelpMate robot and is now producing and selling the upgraded

version.

HelpMate raised $6 million through an initial public stocl< offering in 1996, and used it to

build production and sales capabilities. (A sec- ond offering did not go through, and the company temporarily downsized in 1997. New funding commitments are expected to rebuild staff and marketing.)

The upgraded HelpMate robot was named

one of 36 finalists in the D/scoi/er magazine

competition for technology of the year for 1996. CEO Joseph Engelberger, the principal

investigator for the ATP project, received the Japan Prize in "systems engineering for an

artifactual environment" in 1997 from the Science and Technology Foundation of Japan.

The company and Otis Elevator entered into an alliance in which Otis is to be the exclusive

distributor of HelpMate hospital robots in Europe.

COMMERCIALIZATION STATUS:

Robots incorporating the new navigational tech- nology have been rented or sold to about 100

hospitals in the United States and Canada, and

the company has entered marl<eting arrange- ments with parties in Europe and Japan.

OUTLOOK:

Since the robots are already in use commercially, the outlook for the technology is excellent, despite a temporary downsizing at HelpMate. The company now plans to expand the use of

the technology by developing robots that can

provide assistance in the home to infirm and

elderly persons, a venture that potentially could

save billions of dollars by eliminating some

need for hospitalization or professional help in

the home. Opportunities exist for applying these mobile robots in factories, warehouses and many other environments. Thus, the potential for

future utilization of the technology is high.

COMPANY:

HelpMate Robotics, Inc. (formerly Transitions Research Corporation)

Shelter Rock Lane

Danbury, CT 06810-8159

Contact: J.F. Engelberger Phone: (203) 798-8988 Number of employees:

27 at project start, 14 at the end of 1997

HelpMate plans to expand

the use of the ATP-funded

technology by developing

robots that can assist

infirm and elderly persons

at home.

42 ADVANCED TECHNOLOGY PROGRAM
Benefits From Robots

Hospitals using HelpMate robots are benefiting. HelpMate Robots are delivering medicines,

supplies, prepared food, x-ray images and

other material in about 100 hospitals in the

United States and Canada. They have lowered

the cost and improved the quality of these

deliver}' services. One hospital pharmacy director for example, reported net annual savings

of around $10,000 per robot per year. In addition, the robots made the deliveries faster than humans did. There are about 150 HelpMate

robots in these hospitals, according to company officials. If the savings for each robot to

the hospital is $5,000 to $10,000 per year, then

these hospitals are already realizing an annual

savings of $750,000 to $1.5 million. The cost

savings at the 100 hospitals alone over 10 years would be in the millions. These are savings above the rental cost of the robots. As more

hospitals, factories and other facilities adopt

these robots, cost savings will multiply.

In addition to these cost savings, benefits

accrue to hospitals, physicians and patients through improved delivery service. Not only is

robot delivery faster than human deliver}', but

it is also frequendy more reliable, according to

hospital officials, because of fewer delivery

mistakes.

Robots to Serve the

Elderly and Infirm

The analysis above is only for robots already

employed in hospitals. For in-home nursing

services, the use of robots could generate much

larger savings. HelpMate plans to expand the

use of the ATP-funded technology by developing robots that can assist infirm and elderly

persons at home. But for this application, the company must first solve additional technical

problems. These robots must have highly functional arms, improved vision, more sophisticated programming and some speech recognition capabilities. The company has estimated

that, if successful, this development could substantially reduce health care costs by eliminating some of the need to hospitalize or hire home help for the frail elderly.

Other Potential Uses

Tvo industrial applications currently being

explored are in computer chip fabrication and

clinical laboratory work. In clinical labs, vials containing substances, such as the human

immunodeficiency virus, that are highly

dangerous to human workers could be moved

from one workstation to another by robot. In a

chip fabrication plant, robots could move

supplies to the fabrication line in response to

specific orders from operators. For these appli- cations to be realized, capital will have to be

raised to support the additional engineering

required to tailor robots to the specific needs of each environment. Lab robots, for example,

will need to be built to work without bumping

into delicate research instruments and materials, and chip-plant robots must be engineered

to operate so cleanly they do not contaminate

the superclean rooms where chips are

fabricated.

In addition to these applications, company

officials say, the ATP-funded technology is expected to be used for mobile robots in all

kinds of factories and has potential applications in warehouses, maintenance facilities, mail distribution centers and shopping malls

(for delivery, maintenance and cleaning

services). As in hospitals, the use of robots in

these environments is expected to lower costs

substantially and improve service.

Two industrial

applications currently

being explored are in

computer chip

fabrication and clinical

laboratory work.

43
Discrete PreAmp Consortium (Joint Venture)

Manufacturing

Models to Speed the

Development of Electronics

Components

Printed circuit boards are

ubiquitous. Most people

know that boards are in computers, and that each

computer actually contains several boards. They are also

found in televisions, VCRs and the

hand-held controls for these

devices, as well as in printers, air- planes, thermostats, automobiles,

appliances, calculators, garagedoor openers, industrial controls,

communications satellites and numerous other devices.

Data Sharing Speeds

Component Development

In this ATP project, the PreAmp consortium

developed common parts identifiere (a standard "product model" for components) and fabrication procedures (a generic "manufacturing process model" for making components) that can be shared among producer and users of printed circuit boards and other

electronics components all along the production chain. These models will enable true concurrent (simultaneous) engineering of component design and manufacturing

processes, an arrangement that will reduce the

cost of developing components, improve their

quality and decrease their time-to-market. These improvements, in turn, will lead to

similar improvements in finished electronics

products that incorporate printed circuit boards and other components developed via this new

technology. PreAmp is a joint venture of the South

Carolina Research Authority (SCRA) and four

large companies that use printed circuit boards

These models will

enable true concurrent

(simultaneous)

engineering of

component design

and manufacturing

processes . .

.

in their finished products. Funding from ATP

enabled the consortium to conduct research

that it otherwise would have been unable to do.

It also facilitated the formation of alliances among the research partners, helping them to demonstrate technology-enhanced concurrent

engineering concepts to industr}'. The research involved four major tasks: the

design of software architecture for electronically sharing component specifics; the develop- ment of software prototypes; the implementation, analysis, evaluation and demonstration of

a component database and access mechanism;

and the refinement of the manufacturing

capability database, its software architecture and manufacturing process planning.

Easier to Share Information

The PreAmp "product model" for electronics components was successfully developed. It is a complete standards-based, data-sharing frame- work for automating the design and manufacture of electronic components such as printed

circuit boards. It is an extension to the

electronics industry of STEP (Standard for Exchange of Product Model Data), an international standard that defines a standard product model for automation systems in order to

facilitate the capture and use of all information relevant to product design and manufacture. This extension will speed the development

of electronics components (and, ultimately,

finished electronics products) by greatly easing

the sharing of information among the

engineers who design electronics components and those who design the processes for manufacturing these components.

In addition, the PreAmp generic model of manufacturing processes was designed to

further aid manufacturing engineers by

capturing all relevant data on the manufacturing capabilities of a particular plant, information such as shop-floor equipment capabilities, equipment layout, and operating requirements and limits. As part of this effort, researchers developed a knowledge-based software system

that can extract process "rules" from the manufacturing process data —for example,

"Given current equipment, interconnects may

not be spaced closer than X." Such rules will improve the functioning of the system. The combination of the full product and

manufacturing models allows concurrent

(simultaneous) engineering of component

design, process design and component manufacturing. Studies cited by the consortium suggest the new technology can reduce time-to- market by 50 percent or more, double component quality levels and reduce development

costs by 30 percent to 70 percent. The project's commercialization work is still underway so it

is not yet known whether these expectations

will be matched by improvements in the

quality of actual component design and

manufacturing processes.

Initial Commercialization

Some of the technology developed by the PreAmp consortium has been adapted and

incorporated in software tools by STEP Tools,

Inc., an infomial participant in the ATP project. STEP Tools developed a prototype STEP

44 ADVANCED TECHNOLOGY PROGRAM
PROJECT:

To develop a standards-based data-sharing framework for automating the design and manufacture of electronics components. The frame- work will enable true concurrent (simultaneous)

engineering of component design and manufacturing, which will reduce the cost of developing components, increase their quality and decrease

their time-to-market. Such improvements will

lead to similar improvements in finished electronics products that incorporate these components.

Duration: 7/1/1992 — 7/31/1996 ATP number: 91-01-0267

FUNDING (IN THOUSANDS):

ATP $5,166 37%

Consortium M25 63%

Total $13,791

ACCOMPLISHMENTS:

PreAmp successfully completed all technical

goals, including development of a knowledgebased software system that can extract process

"mies" from manufacturing process data. Other accomplishments include: STEP Tools, an informal participant in the

project, developed prototype software to validate

a standard data access interface library that has

since become part of its ST-Developer product. ST-Developer has been distributed to more than 100 customers worldwide and is being used to

build and maintain STEP (Standard for Exchange

of Product Model Data) applications and

databases.

Researchers presented several papers at professional conferences, including the

•Design and Automation Conference,

•National Electronics Packaging

Conference, and

• Reliability in Agile Manufacturing

Symposium.

data application interface for the project.

Afterward, the company enhanced the

prototype to make it suitable for commercial

use and incorporated it in the ST-Developer an application that already has several hundred customers. The principal "test-bed" implementation of

the models developed during the ATP project was carried out by PreAmp members. Boeing is conducting a pilot project to determine whether it can use the new software technology

in its internal operations to increase the

productivity of printed circuit board design

work. The company is working with an ATPPreAmp hosted a "Vendor Opportunity Forum" to give software vendors opportunities to commercialize the technology developed by the

project.

COMMERCIALIZATION STATUS: A modest amount of commercialization is under way via the product introduced by STEP Tools, but the main commercial goals of the consortium have so far not been accomplished. Boeing

is conducting a pilot project, and SCRA contin- ues to develop the technology and promote

commercialization.

OUTLOOK:

The core technology developed by the project may be commercialized in several years, after additional R&D work. Thus, there is some

prospect of benefits to eventual users. If commercialization does occur, the spillover benefits could be large, since so much of the work of this project is in the development and promulgation

of data-sharing standards.

COMPANIES:

PreAmp Consortium

South Carolina Research Authority (SCRA, consortium lead) 1330 Lady St., Suite 503

Columbia. SC 29201 Contact: Gerry Graves Phone: (803) 760-3793 Other consortium members: Boeing

Company, Defense & Space Group; Hughes

Aircraft Company; Martin Marietta Corporation,

Electronics Information & Missiles Group; and

Rockwell International Corporation, Collins Avionics & Communication Division

Informal participants: Rensselaer

Polytechnic Institute and STEP Tools, Inc.

project subcontractor in developing software to

translate existing database information to work

in the new "product model" system. It will probably be known by 1999 whether the Boeing effort succeeds. If it does, the creation

of commercial products will be much more

likelyThree members (Boeing, Hughes and

Rockwell) have arranged with SCRA for it to

serve as the PreAmp agent with vendors interested in creating commercial software systems

that include the ATP-funded technology. Consortium members, with the help of SCRA,

proposed the enhanced STEP procedures to the

International Standards Organization for

registration, which is expected to be issued as STEP Application Protocol 210. Reorganization and company upheavals

among consortium members, however, seem to be hindering further progress toward

commercialization. Organizational energy has

been siphoned off to deal with mergers and

acquisitions. In addition, reductions in national defense work have caused turmoil in

three of the four corporate members of the consortium that have been very active defense

contractors. But if energy can be refocused on

further developing the ATP-funded technology,

it could be commercialized in several years.

Studies cited by tlie

consortium suggest tlie

new teciinology can

reduce time-to-market by

50 percent or more,

double component

quality levels and reduce

development costs by 30

percent to 70 percent.

Large Potential Benefits From

Data-Sharing Standards

The new technology was intended for use in

the production of printed circuit boards, and it has potential applications in the manufacture

of other electronics components as well. If widely adopted, the product and manufacturing process models would provide a "common

language" for the production process. In that

case, the economic spillover benefits from

widespread use of the technology could be

large since so much of it involves data-sharing

standards. Given the hundreds of millions of

printed circuit boards produced for use in the United States each year, the benefits from this kind of standardization would be extremely

large.

45
ffiscrete Saginaw Machine Systems, Inc.

Manufacturing _ . . _ . . , , , Better Precision for Machine

Tools Through Thermal-Error

Correction

achine tools are used in hundreds of thousands of plants

and shops to cut and

shape metal parts

and pieces. The interface between

the cutting or shaping tool and the

material being worked almost

always gets hot. In most cases, a coolant is directed onto the inter- face area to take away enough heat

to allow the job to be performed.

High Heat Degrades Machining

Quality

Even with the coolant, the machine tool itself

often becomes warm enough to change shape

slightly, and the accuracy of the machining

operation degrades. The result can be a finished part that fails to meet specifications. What would have become a salable part becomes scrap metal, and some high-precision

parts cannot be made at all.

Thermal-Error Compensation

With ATP funding, Saginaw Machine Tools —

a small, privately held company founded in 1983 to build precision computer-controlled

machine tools for high-volume manufacturing — together with researchers at the University

of Michigan, developed a solution to the heat problem. Their technology monitors the temperature gradients in computer numerically

controlled (CNC) machine tools and alters the

control process dynamically (while the machine is working) to compensate for heatrelated changes in the machine tool as the part

is being worked. When the new technology is incorporated into machine tools, the result is

higher-quality parts.

A new high-precision vertical lathe which

incorporates the new thermal-error compensation technology, first delivered to customers in 1998.

The technology uses a laser system to measure machine geometric and thermal errors and heat sensors to monitor temperatures near

the interface between the cutting tool and the metal being worked. A computer program,

using a thermal volumetric error model,

processes the laser and sensor data and sends

corrective instructions to the machine tool in

real time, as it shapes the metal. Use of this thermal-error compensation technology enhances the accuracy of CNC machine-tooled

products by fourfold to fivefold as measured by

spindle drift (shifting of the shaft, in a lathe or other machine tool, that holds the piece being

formed), at a commercially viable cost.

Customers

manufacturing highprecision parts realize

productivity

improvements of 10

percent to

30 percent . .

.

First Products to Market

At the end of the ATP funding period, additional development work not originally foreseen by the company remained to be done. Saginaw continued to advance the technology and has invested as much of its own funds

since the close of the project as the ATP put in

at the beginning.

Since completing the development work,

the company has begun to move its first product, which uses the Accu-System incorporating

the ATP technology, into commercialization. By early 1998, Saginaw had developed prototype tools. One prototype was tested by an inde- pendent laboratory and pronounced ready for market. Another tool from Saginaw was subjected to a competitive evaluation process by a

large tool buyer, in which the Saginaw tool was

pitted against tools from seven other suppliers. The results showed that the Saginaw machine

with the Accu-System was the most accurate.

All in all, 30 characteristics of machine perfor- mance were measured, and the Saginaw

machine had a weighted average score that was 50 percent higher than the next best machine. On the critical characteristic of spindle drift, the Saginaw machine achieved a twothirds reduction in drift compared with the next best machine.

46 ADVANCED TECHNOLOGY PROGRAM
PROJECT:

To develop an easily adaptable thermal-error

correction technology for enhancing the accuracy of computer numerically controlled machine tools.

Duration: 4/15/1991 — 11/16/1993 ATP number: 90-01-0232

FUNDING (IN THOUSANDS):

ATP $540

Company 100

Total $640

34%

16%

ACCOMPLISHMENTS:

Saginaw, working closely with researchers at the University of Michigan, accomplished the project's technical goals by developing a generic mathematical model of thermal errors, as well as

the sensor and computer-control systems for a thermal-error correction technology. The company also

developed several prototype tools incorporating the new technology;

submitted a prototype, as did seven other manufacturers, for testing by an independent

laboratory, which found that the Saginaw

machine was the most accurate of the eight machines, with an overall score 50% higher

than the next best machine; and

developed the Accu-System, which incorporates the ATP-funded technology, offered commercially for the first time in a machine tool in

early 1998.

COMMERCIALIZATION STATUS:

Commercial products were introduced to the market in early 1998.

OUTLOOK:

The outlook for this technology is very promising. Saginaw started receiving orders in early 1998 for machine tools that incorporate the new

technology. Machine tools that could benefit from the improved accuracy are used in plants and shops throughout the nation. Other tool producers are likely to imitate the technology, which is not expected to receive patent protection. Users of the tools that incorporate the new

technology will benefit from a substantial improvement in machine tool accuracy, increasing the overall precision of the pieces produced

by the machines.

COMPANY:

Saginaw Machine Systems, Inc. 301 Park St.

Troy, Ml 48083

Contact: Gerald J. Romito Phone: (248)583-7200

Number of employees:

120 at project start, 120 at the end of 1997 Subcontractor: University of Michigan

. . . most machine tools

that make high-precision

parts are likely to be

improved in the long run.

If Saginaw had not

received the ATP award,

company officials say, it would not have done the

project.

By March 1998, Saginaw had received

orders from other companies for eight machines priced at more than $200,000 each.

Orders for several dozen additional machines

of the same type were expected over the next

several months.

Productivity Improvements

Users of the technology are able to take advantage, at reasonable cost, of a substantial

increase in the accuracy of their machine

tools, improving the precision of the workpieces the machines produce. Customers manufacturing high-precision parts realize

productivity improvements of 10 percent to 30

percent because of reduced requirements for

part testing and rework. The number of potential applications is

large. Because the Saginaw equipment is now

in use, other manufacturers may imitate the

technology. The company has concluded that

none of the technology is patentable, and it is

likely that competitors will be able to imitate

its methods. Consequently most machine tools

that make high-precision parts are likely to be improved in the long run.

If Saginaw had not received the ATP award, company officials say it would not have done

the project. Being primarily a manufacturing company it did not have a substantial research and development capability. While working on

the ATP project, Saginaw collaborated with the

University of Michigan on a subcontractor

basis to extend the company's research capabilities. In addition, officials say, having the ATP award helped Saginaw win a subsequent

$1 million award from the Defense Advanced

Research Projects Agency for a related project.

47
48 ADVANCED TECHNOLOGY PROGRAM
Chapter S

Electronics

Accuwave Corporation 50

Expanding the Number of Light Signals in an Optical Fiber AstroPower, Inc 52

Manufacturing Technology for High-Performance Optoelectronic Devices Cree Research, Inc 55

Processes for Growing Large, Single Silicon Carbide Crystals

Cynosure, Inc 58

Harnessing Cheap Diode Lasers to Power a Low-Cost Surgical Laser Diamond Semiconductor Group, LLC 60

Lowering the Cost and Improving the Quality of Computer Chips

FSI International, Inc 63

A Gas Method to "Dry" Clean Computer-Chip Wafers

Galileo Corporation 65

Low-Cost Night-Vision Technology

Hampshire Instruments, Inc. (Joint Venture) 67

Large-Scale Diode-Array Laser Technology for X-Ray Lithography

Illinois Superconductor Corporation 69

Using High-Temperature Superconductivity to Improve

Cellular Phone Transmission

Light Age, Inc 72

Exploiting Alexandrite's Unique Properties for a Less-Expensive,

More-Reliable Tunable Laser Lucent Technologies Inc 75

Precision Mirrors for Advanced Lithography

Multi-Film Venture (Joint Venture) 78

Joining Several Chips Into One Complex Integrated Circuit

Nonvolatile Electronics, Inc 80

Computer RAM Chips That Hold Memory When Power Is Off

Spire Corporation 83

A Feedback-Controlled, Metallo-Organic Chemical Vapor Deposition Reactor Thomas Electronics, Inc 85

Flat Fluorescent Lamps for Displays

49
Accuwave Corporation

Electronics

Expanding the Number of

Light Signals in an

Optical Fiber

Qverthe last two decades,

the use of optical fiber as an alternative to metal wire and cable has

exploded. Optical fiber is now the technology of choice for use undersea and for most terrestrial applications of more than the

shortest distances.

More Light Signals Per

Optical Fiber

This ATP project with Accuwave Corporation, a

small California company specializing in the development of holographic communications

systems, created a way to substantially increase

the number of signals that can be transmitted

in a single strand of fiber-optic cable. The new

technology is designed to enable the transmission of 80 or more channels per fiber If

adopted, it could eventually reduce the cost per transmission and save hundreds of millions of

dollars over a period of just a few years. A Unique Holography-Based

Approach

The new technology is based on the concept of wavelength division multiplexing (WDM),

which transmits light of more than one wavelength through a single optical fiber, separat- ing the individual wavelengths at the receiver Such systems must discriminate among the

different wavelengths and so are limited by the accuracy of the multiplexing and demultiplexing optics. Accuwave had previously developed a unique approach to WDM using volume holography: holograms "written" in the interior of

thick crystals of photorefractive (light-bending) materials. In the demultiplexer crystal, for example, multiwavelength light enters one end

. . . multiwavelength

light enters one end of

the crystal and

encounters a series of

holographic gratings

. . . that separate the

light signals of

different wavelengths.

of the crystal and encounters a series of holo- graphic gratings —each tuned to deflect a

specific wavelength of light — that separate

the light signals of different wavelengths. Accuwave had demonstrated the individual elements of a system that could multiplex

wavelengths more than 10 times better than

the current state of the art at visible wavelengths. With its ATP hinding, Accuwave

extended its technology to the infrared wavelengths used for long-distance telecommunications, and designed a prototype WDM system. Accuwave officials report that ATP funding

enabled it to develop WDM for signal transmission, a task it would otherwise have been unable to do. In addition, receiving the ATP

award helped the company form important

alliances with research partners during the ATP

project (not identified here for confidentiality

reasons).

Marketing Disappointment Spurs

Alternative Commercialization

Near the end of the ATP funding period, while Accuwave was trying to raise additional private

capital to complete the technical work on its WDM system and sign commercialization agreements with potential customers, another company beat it to market with a competing

system operating in the same infrared wavelengths. Nonetheless, Accuwave continued to work toward completion of its WDM multiplexer, which it believes provides multiplexing

capabilities of higher signal accuracy with more channels per fiber and in a smaller pack- age than the products offered by competitor.

Though Accuwave did not succeed in its

original commercialization plans for sale of a WDM system in the bulk-signal-transmission market, it launched several component products based on the ATP-funded technology. These include wavelength controllers, wavelength lockers and fiber-optic collimators, all

of which are being sold to producers of WDM

systems. The company developed contacts with

potential telecommunications clients in Europe, Japan and Brazil, as well as the United

States, and it planned to introduce its own

wavelength multiplexers in the near future.

Potential Big Savings in Telecommunications

With its potential to increase the number of

signals that a single optical fiber can carry, the Accuwave technology could significantly affect

the cost of communications via fiber-optic

cables, particularly if used for undersea applications. Because of the volume of messages

transmitted via this medium, cost savings would be great, even if the number of signals

per fiber were doubled. The Accuwave technology has the potential to double and redouble

the number of signals per fiber many times

. . . another company

beat it to market with

a competing system

operating in the same

infrared wavelengths.

50 ADVANCED TECHNOLOGY PROGRAM
PROJECT:

To develop holographic-optics technology that

will increase (by more than 10 times) the number of signals that can be transmitted through a

single optical fiber.

Duration: 3/1/1993 — 3/14/1995 ATP number: 92-01-0055

FUNDING (IN THOUSANDS):

ATP $1,987

Company 898

Total $2,885

69%

31%

ACCOMPLISHMENTS:

Accuwave developed a process for producing

photorefractive materials suitable for fiber optics telecommunications applications. The company

also:

received two patents for technologies related

to the ATP project:

"Photorefractive Systems and Methods

(Divisional)"

(No. 5,684,611: filed 6/6/1995,

granted 11/4/1 997) and

"Wavelength Stabilized Laser Sources Using Feedback From Volume Holograms"

(No. 5,691,989: filed 9/14/1993,

granted 11/25/1997);

applied for two additional patents for technologies related to the ATP project;

completed pilot production of wavelength

division multiplexing (WDM) components

designed for incorporation into equipment manufactured by other companies, and introduced

the components in 1996;

signed a purchase agreement with a major

telecommunications equipment manufacturer;

raised $4 million from venture capitalists and

other investors since 1990; and

built a plant and ramped up volume

production in 1998.

COMMERCIALIZATION STATUS:

In 1996 and 1997, Accuwave introduced three WDM system components: wavelength

controllers, wavelength lockers and fiber-optic collimators. The company continued to pursue

its original goal of selling WDM products for fiber optics telecommunications applications.

OUTLOOK:

Despite the heretofore promising prospects for growing applications of this technology in the telecommunications sectors, the commercialization outlook at this time is bleak. As this report was going to press in late 1998, it was learned

that the company had ceased operations and was

in the process of declaring bankruptcy While it

is possible that the technology will be picked up

by other companies and carried forward in the

future, at this point there is insufficient information about the likelihood of this to comment fur- ther on the outlook.

COMPANY:

Accuwave Corporation 1651 19th St. Santa Monica, CA 90404

Contact: Neven Karlovac Phone: (310) 449-5540 Number of employees:

5 at project start, 16 at the end of 1997

. . . launched several

component products

based on the ATP-funded

technology.

... in late 1998 It was

learned that the

company had ceased

operations and was In the process of declaring

bankruptcy.

over, with the count possibly reaching as many

as 80 signals per fiber

In addition to applications in the bulksignal-transmission market, the ATP-funded

technology has the potential of providing

greater cable bandwidth to homes and offices

for use with high-definition TV and to the

closed-circuit T\' market, particularly for security uses. The company was interested in pur- suing these potential applications, but instead used its resources to develop the WDM system

for telecommunications applications. The

technology also has potential applications in ultranarrow band filters, spectrometers and

optical disk memories.

As this report was going to press in late

1998, it was learned that the company had

ceased operations and was in the process of

declaring bankruptcy. It is possible that the technology will be picked up by other companies and carried forward in the future.

51
AstroPower, Inc.

Electronics

Manufacturing Technology for

High-Performance

Optoelectronic Devices

Qptoelectronic devices —

from light-emitting

diodes (LEDs) and solar

cells to lasers and detectors — are abundant in everyday life. Millions of LEDs are used in automobile dashboards and consumer electronic products

(clocks, radios, VCRs, CD players,

coffee brewers and microwave

ovens), as well as in commercial

and industrial products such as fax

machines, copiers and printers.

LEDs That are Four Times as Bright

Although LEDs are used in many applications where digital readout is needed, they have limitations. They do not emit much light, so they cannot be seen at a distance. If they produced

really bright light, LEDs would be even more

widely used than they are already This ATP

project with AstroPower, a small Delaware company incorporated in 1989, developed a new approach to production-scale liquid-phase

epitaxy (LPE). The company has fabricated LEDs in a way that significantly increases, by a

factor of four, the brightness of the light they

emit

. . . made significant

advances in

understanding growth

processes for compound

semiconductor

materials . .

.

A New Approach

LPE is a widely used technique that involves melting a semiconductor material and letting

it crystallize on a substrate. AstroPower's novel enhancement, the first technical goal of the

project, involved the use of a thermal gradient

that promotes the growth of the epitaxial layer

laterally much faster than vertically from the

substrate. Company researchers made signifi- cant advances in understanding growth

processes for compound semiconductor materials and in applying LPE to lateral growth

over buried reflectors and other components. The technology can be used for volume pro- duction of low-cost compound semiconductor

devices —those made from a compound of

elements, such as gallium arsenide, rather than a single element.

. . . succeeded in

designing and

assembling a modular

prototype production

growth system . .

.

AstroPower's second technical goal was to

develop the technology to automate the new

LPE growth process in integrated factory-scale

fabrication equipment. Company researchers succeeded in designing and assembling a modular prototype production growth system

that has already significantly shortened pro- duction scale-up times for currently fabricated

products, as well as for potential products under consideration by customers.

52 ADVANCED TECHNOLOGY PROGRAM
PROJECT:

To develop new crystal growth methods and

high-throughput manufacturing technology for

fabricating light detectors and emitters with

integrated reflecting mirrors.

Duration : 7/15/1992 to 7/14/1995 ATP number: 91-01-0142

FUNDING (IN THOUSANDS):

ATP $1,423 47%

Company 1580 53%

Total $3,003

ACCOMPLISHMENTS:

The company achieved the goals of the ATP

project: developing new epitaxial growth methods, as well as new processes for plant-scale

industrial production operations. Evidence of the company's achievements are that it:

received four patents related to the ATP project technology;

"Columnar-Grained Polycrystalline Solar

Cell and Process of Manufacture"

(No. 5,336,335: filed 10/9/1992,

granted 8/9/1994)

"Hetero-Epitaxial Growth of Non-Lattice Matched Semiconductors"

(No. 5,356,509: filed 10/16/1992,

granted 10/18/1994)

"Columnar-Grained Polycrystalline Solar

Cell and Process of Manufacture"

(No. 5,496,416: filed 8/5/1994,

granted 3/5/1996)

"Semiconductor Device Structures

Incorporating "Buried" Mirrors and/or

"Buried" Metal Electrodes"

(No. 5,828,088: filed 9/5/1996,

granted 10/27/1998)

demonstrated the application of the new

epitaxial production technology to optoelectronic

device structures that have integrated reflecting mirrors for enhancing light output (an ultrabright

light-emitting diode (LED) with buried reflecMarket Developments Upset

Initial Commercialization Plans

Commercialization of the enhanced compound semiconductor devices in high volumes

has not yet happened. An initial goal, to produce high volumes of red LEDs, has been

stymied by market developments. The Japanese have come to dominate the market for red LEDs, which have become a commodity

product. Although AstroPower has a technical advantage in producing the devices, the value

tors), achieving a fourfold increase in brightness;

completed scale-up of liquid-phase epitaxy (LPE)-growth technology to a high-throughput,

production-scale process;

significantly shortened production scale-up times for specific products, compared with previous manufacturing processes;

constructed a demonstration production

facility to implement the technology; and

conducted an initial public offering of stock

in February 1998, raising $16.7 million.

COMMERCIALIZATION STATUS:

Direct commercialization of ultrabright red LEDs,

a proposed initial goal of the project, did not

occur, mainly due to economic and market developments. Knowledge of new crystal growth methods acquired during this project contributed, however, to the enhancement of fabrication methods for the company's Silicon-FilmTM

solar cell and for other compound semiconductor devices.

OUTLOOK:

AstroPower has applied the ATP-funded crystal growth technology to its current manufacturing

processes, improving productivity and lowering

costs. It also plans to use the technology for several breakthrough devices when appropriate market size has been achieved; if such markets

develop substantially, the outlook is promising. Two significant products that are nearing intro- duction are combustion sensors based on gallium-phosphorus compounds, and avalanche photodiodes and detectors based on indiumgallium-arsenic-antimony compounds.

COMPANY:

AstroPower, Inc. Solar Park, 461 Wyoming Road

Newark, DE 19716-2000

Contact: James B. McNeely Phone: (302) 366-0400 Number of employees:

86 at project start; 160 at the end of 1997

of this market to the company is quite small,

since the cost of entering the market is too high to make such a venture profitable.

Use of the Technology for Current Product Lines

Knowledge developed in the ATP-funded

project, especially advances in understanding

epitaxy technology, has proven useful across all company production activities, AstroPower

officials say They report that the company's

... the company's

product lines have all

grown rapidly in recent

years, with much of the

growth attributed to

knowledge developed in

the ATP-funded project.

product lines have all grown rapidly in recent

years, and they attribute much of the growth to

the ATP project. All of AstroPower's compound

semiconductor-based products incorporate

epitaxial growth in their fabrication. This

includes their flagship product, the Silicon- VilmTM solar cell. Silicon-FilmTM is a contin- uous production process to manufacture

crystalline silicon sheets and layers.

Shortened Production

Scale-Up Times

The success of the ATP-funded project ensures

that new and innovative optoelectronic devices

will have significantly shorter production

scale-up times than were possible before the

project. The establishment of a technology that

permits low-cost, high-throughput synthesis of compound semiconductor structures is potentially useful for many optoelectronic device

products. It can be used, for example, in making specialty devices on a job-order basis using

gallium arsenide, gallium arsenide-on-silicon, indium phosphorus and a host of other unexplored alloys. These devices are used in the

fabrication of common products like detectors,

solar cells, sensors and light-emitting products. The new technology can also be used in the production of highly sophisticated devices such

as vertical cavity surface emitting lasers and

resonant optical cavity detectors with back

reflectors. AstroPower intends to incorporate this technology in a number of breakthrough

devices that it can produce in sufficiently large

quantities when appropriate market size has been achieved. T\vo significant applications are

nearing product introduction. The first is combustion sensors, based on gallium phosphorus compounds, that can be used for flame

control in internal combustion engines and

utility burners. The second is avalanche photo53
GaAs Substrate

Cross-sectional photomicrograph of a

light emitting diode showing device

active layers and buried mirror overgrowth.

diodes and detectors, based on indium-gallium-arsenic-antimony and indium-arsenic- antimony-phosphide compounds, that can be used for light direction and range instruments,

collision avoidance, atmospheric gas measurements, weather prediction, spectroscopy blood

gas analysis and noninvasive medical analysis. These two products are currently in pilot production and are being tested by NASA, the

Air Force and industrial companies.

An initial goal, to

produce high volumes of

red LEDs, has been

stymied by market

developments ... red

LEDs have become a

commodity product.

Company Growth

At the beginning of the ATP project in 1992, AstroPower had annual product sales of $1

million. By 1997, sales had grown to $l6

million. And in February 1998, AstroPower

successfully conducted an initial public

offering of stock, raising $l6.7 million. AstroPower is convinced that had it not conducted the ATP-funded project, its growth

experience (as measured by product sales) would have been set back by three years, the

length of the ATP project. This belief is based on the use of improved epitaxial growth tech- nology across all of its product lines, its application of manufacturing automation processes

to all of its manufacturing operations, and to

the overgrowth of semiconductor materials on

dissimilar substrates as well as on mirrors,

insulators, and conducting planes. Without the ATP funds, AstroPower says it would not have

carried out the project. ... had it not conducted

the ATP-funded

project, its growth

experience . . . would

have been set back by

three years.

Potential Large

Economywide Benefits

AstroPower noted at the beginning of its ATP

project in 1992 that it expected in a project like

this that products might take as long as 10

years to move from initial technology develop- ment to new product sales. The demonstration

production facility AstroPower developed is capable of producing millions of LEDs or other LPE-based optoelectronic devices per month. When sufficient demand for the new products

emerges, AstroPower plans to construct an

optoelectronic semiconductor chip-manufacturing facility for new products made possible by the innovative LPE-growth technology.

Benefits are already accruing to purchasers

of the company's solar cells, which have

higher quality and cost less than they did

before the ATP project. If the company succeeds in bringing to market additional products that use the new technology, even more

benefits will accrue to its customers. Because of

substantial uncertainty about these events, it is

too speculative at this time to try to predict the magnitude of these future benefits.

Benefits are already

accruing to purchasers

of the company's solar

cells, which have higher

quality and cost less

than they did before the

ATP project.

54 ADVANCED TECHNOLOGY PROGRAM
Cree Research, Inc.

Electronics

Processes for Growing

Large, Single Silicon

Carbide Crystals

Cree's LED chips are used by Siemens A.G. for back lighting for this dashboard.

Mostcomputer chipstoday consist of tiny

electrical and electronic components

on a thin slice of sil- icon crystal. As many as 5 million

discrete components can be placed

on a piece of crystal less than 2

inches square. Silicon crystal chips,

however, are quite sensitive to

heat. Electricity passing through a

chip's super-thin connecting wires

creates heat, just as it does in the

heating element of a toaster. If too much heat builds up, the chip loses

its functionality.

Beating the Heat in Electronic Devices

This ATP project with Cree Research, a small company in North Carolina's Research

Triangle Park, made significant progress in the development of an alternative raw material for making crystal slices —silicon carbide. This

material belongs to a class of semiconductors having "wide bandgap, " which means they are

relatively insensitive to increased temperatures.

Silicon carbide's thermal conductivit}' is

greater than that of copper, so it rapidly dissipates heat. It is impervious to most chemicals and highly resistant to radiation. Silicon carbide is extremely hard — it is used as grit in common sandpaper — indicating that devices made with the substance can operate under

extreme pressure. It also possesses high field

strength and high saturation drift velocit}',

characteristics suggesting that devices made of

. . . full-color LED

displays become

possible with the

existence of blue LEDs,

as blue was a missing

primary color.

it can be smaller and more efficient than those made of silicon.

Cree and others have shown that, even at

red-hot temperatures, silicon carbide devices maintain functionality'. Some of them, in fact, have continued to operate at 650 degrees

Celsius. The wide bandgap also allows silicon

carbide devices to operate at shorter wavelengths, enabling the creation of blue lightemitting diodes (LEDs) that could not be made

from silicon. Moreover, full-color LED displays

become possible with the existence of blue

LEDs, as blue was a missing primary color.

Growing Large Crystals to Reduce Costs

Cree was founded in 1987 to commercialize

silicon carbide and began by making LEDs on

a silicon carbide substrate. Prior to its ATP

project, Cree was already the world leader in

silicon carbide technology and had been making 1-inch-diameter silicon carbide crystals. But progress in the development of devices

based on silicon carbide had been stymied by

difficulties in growing large, high-qualit\'

single crystals, a bottleneck that led Cree to

pursue more research. During the ATP project, Cree advanced sili- con carbide technology' by developing methods

to greatly reduce the amount of imperfections

in crystals and to increase their size to two

inches or greater in diameter Larger-diameter

crystals result in lower production costs, which

55
The Real Color Oisplaf^, a moving sign

which is capable of displaying the full range of colors, made possible by the use

of blue LEDs.

PROJECT:

To substantially reduce the cost and improve the

durability of light-emitting diodes (LEDs) and

other electronic and optoelectronic devices by

increasing the quality and size (to 2 inches or more) of silicon carbide (SIC) single crystals.

Duration: 6/15/1992 — 6/14/1994 ATP number: 91-01-0256

FUNDING (IN THOUSANDS):

ATP $1,957 82%

Company 435 18%

Total $2,392

ACCOMPLISHMENTS:

Cree essentially met or exceeded alt of the technical milestones. Successful development of the technology is indicated by the fact that the company:

applied for one patent on technology related

to the ATP project;

presented several papers at professional conferences;

raised $13.2 million via an initial public stock offering in February 1993; made high-quality, 2-inch SiC wafers,

greatly opening up the blue LED and SiC wfafer markets;

raised approximately $17.5 million in a

private stock offering in September 1995;

increased annual revenues from $3 million

at the start of the ATP project in 1992 to $7.5

million at the end of the ATP award period in 1994;

received $5.8 million from the Defense Advanced Research Projects Agency in May

1995 for further development of silicon carbide

grovrth processes to support production of 3-inch wafers;

formed Real Color Displays, a wholly owned

subsidiary, to exploit this technology for full- color LED displays;

received a $6 million order in September 1996 from Siemens for blue LEDs; and

supplied the SiC wafers for components in the SiC solid-state transmitter used by Westinghouse Electric to make the first U.S. commercial-scale high-definition TV (HDTV)

broadcast in April 1996.

COMMERCIALIZATION STATUS:

The larger SiC wafers, made with the ATPfunded technology, are being used in the fabri- cation of blue LEDs sold to many industrial customers. The wafers are also being provided in

limited quantities for development projects in government and industry research laboratories.

OUTLOOK:

The improved processing technology makes the outlook for the commercial use of SIC crystals highly promising. The cost of producing blue LEDs has already been reduced substantially, and the expected widespread commercial availability of larger-diameter SiC wafers promises a new range of applications, including HDTV

transmitters. Benefits in the form of lower costs and higher quality will accrue to industrial users

of blue LEDs and SiC wafers, as well as to consumers who use devices containing these two Cree products.

COMPANY:

Cree Research, Inc. 2810 IVleridian Parkway, Suite 176

Durham, NC 27713

Contact: Calvin Carter Phone: (919) 361-5709 Number of employees:

41 at project start, 210 at the end of 1997

. . . devices that were

impractical to malce witli

pure silicon can be made

with silicon carbide.

are crucial to opening markets for silicon carbide devices. The company also developed ways

to significantly improve the doping (adding

impurities to achieve desired properties) and

epitaxial deposition (growing one crystal layer on another) processes for silicon carbide.

Improving doping uniformity directly increases production yield and thus reduces costs.

Cree's success with the ATP project enables

the fabrication of electronic devices that can

operate at much higher temperatures and

withstand high power levels. Silicon carbide components used in experimental high-definition television (HDTV) transmission, for

instance, delivered more power, lasted longer and cost less to produce than conventional

silicon-based components. Now equipment

that was costly to manufacture (owing to the need for heat-dissipation systems) can be pro- duced less expensively, and devices that were

56 ADVANCED TECHNOLOGY PROGRAM
Cree's success with

the ATP project enables

the fabrication of

electronic devices that

can operate at much

higher temperatures and

withstand high power

levels.

impractical to make with pure silicon can be made with silicon carbide. New Products: Blue LEDs and

Silicon Carbide Wafers

The ATP project has been highly productive for

Cree and the economy at large. The company

has used the new technology to produce larger

silicon carbide wafers to use in its fabrication

process for blue LEDs. It is also offering the

larger silicon carbide wafers for sale to other

companies.

Cree is using the ATP-funded technology to

reduce the cost of producing blue LEDs, and

their sales have increased substantially

Production cost is primarily a function of the number of wafers processed. If wafer size can

be increased dramatically the cost per device

will decrease dramatically because so many

more devices can be made on a wafer. The sili- con carbide wafer technology is also aimed at markets for other blue light-emitting optoelectronic devices, optical disk storage, microwave

communications, and blue and ultraviolet

laser diodes, as well as high-temperature,

high-power and high-frequency semiconductors.

Benefits for the Economy

Benefits from the new silicon carbide technology are already accruing to customers who

have bought large volumes of blue LEDs or silicon carbide wafers to use in their own production. Performance measures (resistance, power

output, sensitivity to light, operating temperature) for silicon carbide devices are frequently

large, relative to available alternatives. Economic benefits from these performance

improvements spill over to other producers

involved in fabrication and assembly before a

wafer-based product reaches the end user The

total of these incremental benefits is expected

to be much larger than the profits Cree receives

for selling the silicon carbide wafers.

Cree's private success has led to public

benefit, which is expected to grow as the number of applications for larger silicon carbide wafers increases. Westinghouse, for example,

used Cree's silicon carbide wafers in fabricat- ing components for the transmitter it used in

the first commercial-level HDTV broadcast in

the United States, in 1996. Westinghouse said

its transmitter can deliver three times more

power, has longer life and costs less to produce than conventional silicon-based transmitters. Although the number of HDTV transmitters

that will use silicon carbide wafers is unknown

at this time, widespread use of this technology

in HDTV broadcasting could produce large

general economic benefits if it speeds commercialization of HDTV. ATP Advantages

Cree reports it was attracted to the ATP as a

funding source for the development of the bulk

crystal and epitaxial growth technologies because the company could retain its process

technology knowledge. The ATP award also

helped Cree form alliances with research partners and speed the development work, enabling the company to get results about 18 months sooner than it would otherwise have

been able to do. During the course of its twoyear ATP project, Cree also grew significantly Company officials say the success of the ATP-funded project was primarily responsible

for a subsequent award of $5.8 million from

the Defense Advanced Research Projects Agency

(DARPA) to further develop silicon carbide

grovrth processes to produce 3-inch wafers. If

wafer size can be increased to 3 inches, the

cost per device will drop even hjrther This DARPA project got under way in May 1995.

. . . silicon carbide

wafers . . . used in the

first commercial-level

HDTV broadcast in the

United States . .

.

The low-cost blue light emitting diode

(LED) produced with new silicon carbide

crystal technology.

57
Cynosure, Inc.

Electronics

Harnessing Cheap

Diode Lasers to Power a

Low-Cost Surgical Laser

Surgery

is performed tens

of millions of times a year

in the United States, and

it is usually a painful,

risky procedure for the

patient, it is also risky for the

surgeon in terms of malpractice liability. Patients, surgeons and health

insurance companies are constantly

looking for new, less-invasive pro- cedures to replace conventional

surgery. Laser surgery is a prime

candidate. One problem that limits

this approach, however, is the price

of equipment. A typical 100-watt

surgical laser costs about $700 to

$1 ,000 per watt of laser output, or about $70,000 to $100,000.

A Laser for Lower-Cost,

Less-Invasive Surgery

This ATP project with Cynosure, founded in

1991, was designed to develop a smaller, less- expensive laser source for surgery and other

applications. The idea behind the Cynosure

laser system —which was expected to sell for about $150 to $200 per watt of laser light

delivered at the end of a surgical optical fiber —is based on harnessing the light from an

array of 200 semiconductor, or diode, lasers. The problem with this approach in the past has been the difficulty of exactly aligning all 200 beams before they go into the diffractive

optics transformer that collimates them into one tight, powerful beam. Minor inaccuracies

in the alignment of the individual lasers can

greatly degrade the perfomiance of the system.

Cynosure's innovation was to develop an

automated system to custom-mill arrays of 200

corrective lenses to match arrays of 200 diode

lasers. In such a system, diagnostic equipment

measures the alignment error of each laser beam and feeds the results to a computer, which drives a powerful laser that mills the

lens array in less than 10 minutes. The result

is a customized lenslet array that corrects the beams before they enter the transformer.

Barriers to Commercialization

Cynosure successfully designed and built a customized lenslet array to correct the beams

The researchers,

however, failed to build

a system that could

generate the target

power level . .

.

from an array of 200 diode lasers. The

researchers, however, failed to build a system

that could generate the target power level —

20 watts of laser light from a medical optical

fiber — because the company was unable to

secure an adequate, low-cost supply of a lowtech component: a collimating array The

intended supplier, which was the sole source of

the collimating array stopped making the

device and sold its production division. The new owner also chose not to produce the array To make use of some of the technology

developed in the ATP project. Cynosure is collaborating with the Lincoln Laboratory at Massachusetts Institute of Technology and

using about $100,000 from the Small Business Technology Transfer Program to develop a

"low-cost diode-laser system for treatment of arrhythmia" for the National Heart, Lung and

58 ADVANCED TECHNOLOGY PROGRAM
PROJECT:

To design an optical system for collecting, aligning and combining beams from an array of semiconductor lasers into one powerful beam,

an achievement that will lead to the development

of smaller, cheaper lasers for surgery and other

applications.

Duration: 5/1/1993 — 4/30/1995 ATP number: 92-01-0136

FUNDING (IN THOUSANDS):

ATP $1,965 49%

Company 2^ 51%

Total $4,032

ACCOMPLISHMENTS:

Cynosure designed and built a fault-tolerant

optical system for a diode-laser array but was

unable during the project to obtain a laser beam

with the targeted 20 watts of output from a medical optical fiber. Later, the company

achieved this goal with an alternative approach

built, in part, on the knowledge developed during the ATP project. The company:

received one patent for technology related to

the ATP project:

"Fault-Tolerant Optical System Using

Diode Laser Array"

(No. 5,369,659: filed 12/7/1993,

granted 11/29/1994):

published a paper on its research findings:

was ranked number 112 in the 1996 Inc. magazine list of the 500 fastest-growing private companies in America;

increased its sales from $626,000 in 1991 to more than $23 million in 1997: and

Blood Institute. The company is proposing to extend the scope of the project to include other

conditions, besides arrhythmia, that can be

treated with minimally invasive surgery. This new project is based in part on the demonstration that the ATP-hinded technology, as modified by the company, is capable of delivering 10

watts of power into a 100-micron fiber-optic

tube.

Alternative Approach

After the ATP project. Cynosure investigated

alternative techniques, based on commercially

available components, to channel the many

beams from diode-laser arrays into a surgical

optical fiber The company found this can be done by grinding a hyperbolic lens onto the end of a small optical fiber, fitting one such

fiber to each diode and stacking the fiber-couis collaborating with Lincoln Laboratory and

using funds from the Small Business Technology Transfer Program to develop a "lowcost diode-laser system for treatment of arrhyth- mia," based on the ATP technology, for the National Heart, Lung and Blood Institute.

COMMERCIALIZATION STATUS:

Commercialization was stymied by Cynosure's

inability to secure the supply of a critical part at an affordable price. Since the ATP project ended,

the company has taken a different, less-sophisti- cated approach to building a commercializable

medical laser, using its own funds. That device has achieved the 20-watt ATP goal, and the company is scaling it to achieve 200 watts output. Commercial lasers are scheduled for market

introduction in the near future.

OUTLOOK:

The benefits originally expected from commercialization of the ATP-funded technology should

be realized via commercialization of the alternative technology that built on the technical knowledge developed in the ATP project.

COMPANY:

Cynosure, Inc. 10 Elizabeth Drive Chelmsford, MA 01824

Contact: Horace Furumoto Phone: (978) 256-4200 Number of employees:

30 at project start, 120 at the end of 1997

Informal collaborator:

Massachusetts Institute of Technology,

Lincoln Laboratory

pled diodes into a two-dimensional array, as

the ATP proposal had suggested. The fibers

take the place of the diffractive optics in the proposed ATP laser system, with the tiny lenses

directing the output from the diode array into a single fiber. The company's switch to a different technological approach using readily available parts

to concentrate the laser beams allowed commercialization to resume. Commercial lasers

are now scheduled to be available in the near

future.

Mission Accomplislied

Lower-cost, higher-power medical diode lasers

are a necessity for minimally invasive surgery, and it is said that necessity is the mother of

invention. Cynosure invented the approach

using fiber-coupled lasers, which are manufactured using standard optical fabrication methods and readily available components. The company expects this approach will not only reduce the cost of medical lasers but will

also cost less than the diffractive optics-combiner approach envisioned by the ATP project. By significantly reducing the cost of surgical lasers, the Cynosure technology would

enable wider use of minimally invasive surgery, reducing hospitalization times and lowering

health-care costs. For example, gall bladder removal by conventional surgery requires a

The company's switch

to a different

technological approach

using readily available

parts to concentrate the

laser beams allowed

commercialization to

resume.

4- to 6-inch incision that results in four to

seven days of hospitalization and a month of

recovery time. When the removal is done by

laser via a fiberoptic scope inserted through a

small incision (a procedure already in widespread use), the patient is hospitalized for only two or three days and recovers much faster.

Less-costly medical lasers would likely increase

gall bladder removal by laser Funding from the ATP allowed Cynosure to perform research and development work it would otherwise have been unable to do. The

award enabled it to hire highly qualified optical physicists to conduct the research on diffiactive optics, and to develop the technical

capability needed for future manufacture of

diffractive optics devices. Cynosure is currently

considering licensing this technology to a company whose core business is difractive

opfics. In addition, the availability of highly

sophisficated optical diagnostic equipment

allowed Cynosure to better understand and test

the fiber-coupled equipment it is developing for

the commercial sector

59
Diamond Semiconductor Group, LLC (DSG)

Electronics

Lowering the Cost and

Improving the Quality of

Computer Chips

Worker holding the world's first 300

millimeter silicon wafer populated with

electronic components using the wide

beam ion implantation technology.

illions of integrated

circuits — the tiny cliips

tiiat run personal computers and tliousands of

otiier electronic devices — are fabricated every year in the

United States through ion beam

implantation, a technique for intro- ducing carefully controlled impurities, or dopants, into specific locations on the semiconductor wafers

from which chips are cut. Dopants

control the electrical properties of the semiconductor, forming the

transistors and other microscopic

components of each chip.

Ion Beam Implantation for 300-mm Wafers

With chip components getting smaller and

denser, the need for more accurate control of dopant implantation has risen. At the same

time, competitive manufacturing has driven

the size of production wafers up, making

increased accuracy problematic because of the

difficulty in precisely scanning the implantation beam across the wafer

This ATP project allowed Diamond

Semiconductor Group (DSG), a two-person

start-up company when it applied to the ATP, to

develop a new and better way to implant

dopants on large silicon crystal wafers measuring 300 mm or more in diameter, compared

with the previous industry standard of 200 mm. Because the area of a 300-mm wafer is

2.25 times that of a 200-mm wafer and some

waste always occurs at wafer edges, the new

... the new approach

enables the production

of about 2.5 times as

many chips from a single

wafer as the 200-mm

technology can malce.

approach enables the production of about 2.5

times as many chips from a single wafer as the 200-mm technology can make. The use of DSG's new technology in production equip- ment makes it possible to lower the cost and

improve the quality of computer chips and

other integrated circuits.

Multiple Advantages of

Wide-Beam Technology

A key innovation in the new technology is

passing the wafer under a 350-mm-wide ion beam for implantation, rather than scanning

the ion beam across the wafer The broad beam

is very stable and therefore highly accurate. The new equipment incorporating this technolog}' is also significantly simpler than earlier machines and so is cheaper to build and

maintain and is more reliable. Use of the DSG

technology has already improved fabrication

quality substantially relative to the existing

industrywide standard. It doubled the mean

time between failures, which means that on

average, failures occur only half as often as

with current equipment. The DSG technology also lowers fabrication

costs by allowing implant equipment to be

designed to work on one wafer at a time. Although it seems counter-intuitive, single60 ADVANCED TECHNOLOGY PROGRAM
PROJECT:

To develop a novel approach for introducing dopants — substances ttiat alter the electrical

properties of semiconductor materials — into

large semiconductor wafers to enable faster,

less-costly fabrication of larger wafers with

smaller, more-densely packed components.

Duration: 3/1/1993 — 6/30/1994 ATP number: 92-01-0115

FUNDING (IN THOUSANDS):

ATP $1,326 77%

Company 393 23%

Total $1,719

ACCOMPLISHMENTS:

DSG developed broad-beam ion-implantation technology (now embodied in Varian's SHC80

Serial High-Current Implanter) that successfully implanted the first commercially viable 300-mm

semiconductor wafer. The new technology doubled the existing industrywide mean time between failures and provided additional ways to increase the quality and reduce the cost of chip

fabrication. The company:

received two patents for technology related

to the ATP project:

"Compact High-Current Broad-Beam Ion Implanter"

(No. 5,350,926: filed 3/11/1993,

granted 9/27/1 994) and

"High Speed Movement of Workpieces in Vacuum Processing"

(No. 5,486,080: filed 6/30/1994,

granted 1/23/1996);

applied for two additional patents for technologies related to the ATP project;

licensed the technology developed during

the ATP project to Varian, which incorporated it

in its SHC80 implant system and is actively

wafer processing is actually an advantage. Fewer wafers are lost if equipment fails, compared with current technology. The latter

involves clamping 13 to 17 wafers to a large

wheel, which then rotates at about 1,200 rpm

under the ion beam. One failure may result in

13 to 17 unacceptable wafers. With single- wafer processing, only one wafer would be lost.

In addition, single-wafer processing enables

ion implantation to be coordinated much

selling the equipment to commercial customers; and

licensed its technology to Mitsui Electronics and Shipbuilding for a flat-panel display application, after U.S. companies declined the licens- ing opportunity. DSG used $6.1 million from

Mitsui to develop a 650-mm flat-panel component for displays. In 1997, Mitsui signed its first contract to supply the displays to a customer.

COMMERCIALIZATION STATUS:

The technology has been commercialized in one

application and is very near commercialization

for a second application. Chip manufacturers

using the Varian SHC80 implant system (which

incorporates the technology) are producing

larger (300-mm) wafers than before (200-mm)

and making them faster, with higher quality and

at lower cost.

OUTLOOK:

The outlook is excellent. Varian is already

selling semiconductor fabrication equipment that incorporates the new technology, and a flat- panel display application is under way. The tech- nology generates cost savings not only for companies using it to make computer chips but

also for those who ultimately buy the chips and

the products containing them. The benefits

directly captured by DSG will likely be only a small fraction of the total net benefits the tech- nology generates for the economy.

COMPANY:

Diamond Semiconductor Group, LLC (DSG)

30 Blackburn Center

Gloucester, MA 01930

Contact: Manny Sieradzki Phone: (978) 281-4223 Number of employees:

9 at project start, 25 at the end of 1997

Informal collaborator:

Varian Associates Inc.

better with other fabrication steps, most of which are also performed one wafer at a time.

Licensing for Two Different

Applications

The ATP project is already a commercial

success. DSG licensed the technology to Varian

Associates, an ion-implant equipment manufacturer, which has incorporated the new tech- nology into products now being sold. Worldwide sales of ion implanters total $1

billion to $1.2 billion per year, and Varian has

The new equipment . .

.

is cheaper to build and

maintain and is more

reliable.

40 percent to 50 percent of the market. Most of

the equipment currently sold is for 200-mm

wafers, and Varian was the first to market equipment that handles 300-mm wafers. Over

the next five years, industry analysts say the

majority of implanters sold will be for 300-mm

wafers. All 300-mm-wafer ion implanters

currently manufactured by Varian include the DSG technology, and those produced in the

future are expected to, as well. DSG is also developing the technology for another application: flat-panel displays, such

as those used in notebook computers. The company has completed the development work

through a licensing agreement with Mitsui

Electronics and Shipbuilding, which invested

$6.1 million in the effort. In late 1997, Mitsui announced it had already won a contract to supply the panels to a customer Prior to

licensing the technology to Mitsui, DSG

attempted to interest U.S. flat-panel display companies in it. But most of this industry is off

shore, and there were no interested parties in

the United States.

Benefits All Along the

Supply Chain

DSG's broad-beam technology enables the generation of substantial economic benefits.

Varian sells its ion implanters to chip-fabrication companies such as Intel, Motorola and

Texas Instruments. These companies, in turn,

sell their chips to manufacturers that use computer chips in their products —computer

companies like Apple, Gateway Hewlett- Packard and IBM, as well as firms that make

automobiles, appliances, consumer electronics and communications equipment. All along

this chain of production, the new technology is

saving costs and improving quality. End users of these products can also expect

to benefit from the new technology. Businesses

that use desk-top computers containing chips

made with this technology, for example, will

61
The uniform ribbon beam vertically scanning a wafer, in an ion implanter

manufactured by Varian Associates.

get lower-cost, higher-quality machines. These

will enable better services at lower costs, producing economic benefits for the businesses and their customer. Ultimately, company officials say, the profit DSG earns from its new

technology will likely be only 1 percent to 2

percent or less of the total incremental eco- nomic benefits the technology is apt to generate across the economy that is, the spillover

benefits are likely to be large.

... the company's

status as an ATP

participant facilitated

tlie agreement it negotiated witli

Varian . .

.

ATP Award Invigorates

Small U.S. Company

DSG reports that without the ATP award, it would probably have been unable to do the

research or survive as a company Its only

other alternative then was to become part of a

foreign company All the high-risk research and development work on DSG's broad-beam

technology was done during the ATP project, and there was a high likelihood of failure. In

addition, the company's status as an ATP participant facilitated the agreement it negotiated

with Varian to help DSG meet its cost share for

the project and, later, to include the technology

in Varian 's wafer implantation equipment.

62 ADVANCED TECHNOLOGY PROGRAM
. . FSI International, Inc.

Electronics

A Gas Method to

"Dry" Clean

Computer-Chip Wafers

Manufacturing

processes create

parts for further assembly or final use, as well as a

certain amount of waste. Even if waste is severely controlled, the

part that emerges from fabrication

is almost always contaminated

to a greater or lesser degree by

unwanted particles. The level of unwanted particles varies with the

process, and so does its effect on

the rest of production. If the new

part is a slice of silicon crystal

about to be covered by microscopic

integrated circuits, the presence of unwanted particles — even in minute amounts — is disastrous.

Extreme cleanliness, therefore, is the rule in silicon chip-making

plants, where fabrication takes

place in "clean rooms" designed to eliminate contamination.

New Technology to Clean Ever

Smaller Chip Features

In computer-chip fabrication, a silicon-crystal wafer is thoroughly cleaned before microscopic

electronic components are deposited on it. Conventional cleaning techniques use caustic "wet" chemicals that could be hazardous to

w^orkers and that must be discarded after use, generating disposal costs and the potential for environmental pollution if the chemicals are not handled properly In addition, for chips

with feature sizes below a minimum, wet

chemicals may not be able to get to some fea-

... the presence of

unwanted particles —

even in minute amounts — is disastrous . .

.

tures, such as trenches, because of surface

tension.

Potentially Safer and Less-Costly

The ATP award allowed FSI International, which provides semiconductor wafer surface conditioning equipment and support products,

to develop a "dry" cleaning procedure that

uses chlorine, chlorine/hydrogen and other

gases to clean dirt, trace metals and other particles from wafer surfaces. Researchers completed the assembly and installation of an

experimental module and developed required

support processes. Although the gases are toxic,

they are more easily controlled than wet chemicals. And even though the gases incur disposal

costs, the amount of chemical waste generated

by the FSI technology is expected to be much

smaller than that created via traditional wet

cleaning. Thus, the new technology should improve human and environmental safety and

reduce cleaning costs during wafer processing.

FSI's methodologies for gas-phase dry

cleaning were developed for use in making

computer chips and have potential applications in the fabrication of printed circuit

boards, disk drives and optoelectronics. If the market emerges and the FSI technology becomes widely used, substantial economic

benefits would likely accrue all along the supply chain for computers and other equipment

that include chips. The technology is undergoing initial testing at Texas Instruments. If the

testing is successful, FSI officials say, Texas

Instruments would likely buy and use systems

incorporating the new technology.

ATP funding was critical to generating the gas-phase dry cleaning technology, FSI officials report. The company would not have done the research and development work at

that time without it. The ATP award also enabled FSI to collaborate with Massachusetts

Institute of Technology researchers during the

project.

Commercialization Delayed but

Still Expected

Since initiation of the ATP project, manufacturers of wafer-surface conditioning equipment

have found ways to squeeze more improve- ments out of wet-chemical cleaning methods.

Consequently, chip fabricators have less need

for a dry cleaning technique than was initially

anticipated. The company expected that the

shift in 1997 to smaller (0.25 micron) mini-

. . . caustic "wet"

chemicals that could be

hazardous to workers

and that must be

discarded after use,

generating disposal

costs and the potential

for environmental

pollution . .

.

mum feature sizes for wafer processing would

challenge the capabilities of conventional wet

cleaning processes. Wet processing, however,

continues to meet cleaning needs at this level and may even be viable to minimum feature

sizes of 0.18 micron, which are expected to be

introduced in the year 2000. Furthermore,

63
... the new technology

should improve human

and environmental safety

and reduce cleaning

costs during wafer

processing.

progress has been made in reducing the amount of chemicals needed for wet cleaning

processes. Commercialization of the ATP-funded technology, therefore, depends on how much more

the wet method can be extended, as well as on

the remaining development work needed to demonstrate the robustness, manufacturability and reliability of the process and equipment in a chip-manufacturing environment. Although

the new technology has not become a broad

replacement for traditional wet cleaning in wafer processing, as originally envisioned by

the ATP-project proposal, FSI anticipates the emergence of new applications requiring the unique capabilities of its technology. If the dry

cleaning technology is commercialized, chip

fabricators that use the new technology might

achieve process improvements worth up to five

times their costs for the technology, company

officials say FSI has continued to develop this technology while delaying commercialization

until demand increases sufficiently If that happens soon, the company could have a

product on the market in 1999.

PROJECT:

To develop a cost-effective process to remove

surface contaminants from computer-ctiip wafers during manufacturing, using dry gases (as opposed to wet chemicals) that can clean the ever smaller features on new generations of chips.

Duration: 3/1/1 993 — 2/28/1 995 ATP number: 92-01-0022

FUNDING (IN THOUSANDS):

ATP $2,000

Company 3^82

Total $5,482

36%

64%

ACCOMPLISHMENTS:

FSI achieved its R&D goal of developing a dry gas wafer-cleaning method. Evidence of progress is that the company:

received three patents related to the ATP project:

"UV-Enhanced Dry Stripping of Silicon

Nitride Films"

(No. 5,534,107: filed 8/18/1994,

granted 7/9/1996),

"Apparatus for Surface Conditioning"

(No. 5,580,421: filed 12/21/1994,

granted 12/3/1996), and

"Cleaning Method"

(No. 5,716.495: filed 3/25/1996,

granted 2/10/1998);

applied for nine additional patents, one of which has been unofficially granted (allowed but

not yet published);

presented or published nine technical papers

in the area of dry cleaning, etching or stripping

of surfaces;

received a license to complementary tech- nology that could accelerate the commercialization of an advanced dry gas-phase cleaning system;

entered into an agreement with Texas

Instruments for early-stage testing of a prototype; and

constructed a manufacturing facility to handle all FSI Intemational Surface Conditioning

Division manufacturing, including products

incorporating the ATP-funded technology.

COMMERCIALIZATION STATUS:

No commercialization has occurred so far, owing

to unanticipated changes in demand for the new

technology. The shift in 1997 to 0.25-micron minimum feature sizes for wafer processing was

expected to challenge the capabilities of conventional wet cleaning processes. Wet processing, however, continues to meet cleaning needs for 0.25-micron features and may even be viable to minimum sizes of 0.18 micron, which are expected to be introduced in the year 2000.

OUTLOOK:

Commercialization prospects are uncertain. Much depends on how the market moves, as

well as on remaining development work needed

to demonstrate the robustness, manufacturability and reliability of the process and equipment in a chip-manufacturing environment. Although the ATP-funded technology has not replaced traditional wet cleaning in chip processing, as originally envisioned by the ATP-project proposal,

FSI anticipates the emergence of new applications requiring the unique capabilities of its technology.

COMPANY:

FSI Intemational, Inc. 322 Lake Hazeltine Drive Chaska, MN 55318-1096

Contact: Jeff Butterbaugh Phone: (612)448-8089

Number of employees:

540 at project start, 1,295 at the end of 1997

Unofficial collaborator: Massachusetts

Institute of Technology, Department of Chemical

Engineering

FSI has continued to

develop this technology

while delaying

commercialization until

demand increases

sufficiently.

64 ADVANCED TECHNOLOGY PROGRAM
Electronics

Galileo Corporation

Low-Cost NIglit-Vision

Teclinology

Objects around us emit or

reflect electromagnetic

radiation, some of it in the form of visible light

that we can see. None of us sees well when the light is poor, whether at night, in fog or under

other circumstances of darkness.

Seeing in the Dark

If a way could be found to magnify the unseen

emissions tfiat remain even in darkness, by

passing them through special "glasses," then we could "see" things even when the light is

too dim to sense objects with the naked eye. Such glasses already exist. They were developed

for military use and are quite expensive. Highperfonnance night-vision devices typically cost more than $1,000 —too much for general consumer use.

This ATP project with Galileo Corporation, founded in the middle 1970s to develop microchannel plates (MCPs), aimed to develop a much less-expensive process technology that would make night-vision devices widely available to, for example, law enforcement officials and the estimated 400,000 Americans suffering from retinitis pigmentosa (night blindness). Another potential use of the technology is in

detector components for highly miniaturized

analytical instruments. Funding from the ATP

enabled Galileo to perform research to develop

the new fabrication processes and higher per- foraiance prototype MCPs that it would other- wise have been unable to do and helped the company forai alliances with research partners and contractors.

... a mucti less

expensive process to

malce devices widely

available to law

enforcement officials

and the estimated

400,000 Americans

suffering from retinitis

pigmentosa . .

.

New Electron Multipliers

The ATP project involved the development of new kinds of electron multiplier devices based on the same kind of manufacturing technology used in semiconductor fabrication. An MCP is a flat, usually disc-shaped array of

closely packed microscopic tubes that act as

tiny amplifiers. Electrons, photons or ions

entering one side of the plate trigger a cascade

of thousands of electrons out the other side. MCPs form the heart of image intensifiers used

in night-vision and scientific devices and electronic imaging systems. MCPs are currently made using glass-working techniques devel- oped for producing fiberoptic bundles. The

process has been improved greatly over the

years but has reached its limits in terms of

further cost reductions and perforaiance

improvements.

Galileo's ATP project abandoned the glassfiberoptic production approach to MCPs and

instead used the photolithography dry-etch,

wet-etch, and thin-film-deposition technologies developed by the semiconductor industry

to develop improved MCPs. The company suc- ceeded in the technical goals of the project,

developing new fabrication procedures and

using them to demonstrate prototypes of working, high perfonnance electron-multiplier

devices.

Financial Distress

During the last six months of its 26-month ATP project, Galileo encountered financial problems and decided to abandon its original goal of in-house commercialization of the new

process technologies for electron multipliers. The company has continued to produce MCPs

using its earlier fabrication process and sell them. Even though feasibility of the new

approach was demonstrated by the ATP project,

Galileo officials reported that another $5

million investment would have been needed to commercialize the advanced perfonnance MCPs using the new process. They say they could not justify the investment for commercialization, given the company's financial

difficulties and the length of time needed to

build revenue streams.

Commercialization Potential

At the close of the project, the company entered

into an agreement with the Center for Advanced Fiberoptic Applications (CAFA), a new nonprofit consortium charged with commercializing technologies developed by Galileo and other CAFA members, mainly small to

During the last six

months of its 26 month

ATP project, Galileo

encountered dire

financial problems and

decided to abandon its

original goal of in-house

commercialization . .

.

65
Galileo granted a

non-exclusive

royalty-free license of

the ATP-funded

technology to CAFA.

medium sized optics companies in the midMassachusetts area. Galileo granted a nonexclusive royalty-free license of the ATP-funded

technology to CAFA. The principal investigator on the ATP project left Galileo to become section head for microelectromechanical systems

in the CAFA consortium. In addition to licensing agreements, CAFA is pursuing partnerships

with a number of companies as an avenue for commercializing the ATP-funded MCP technology, but the chances for commercialization

are uncertain at this time.

In theory, it is expected that the technology

will reduce the costs of MCP production and

improve performance, but these effects have

not yet been shown in practice. The prototype demonstration focused on the feasibility of the new process technology adapted from the semiconductor industry to produce MCPs and on improved MCP performance, rather than on

their comparative costs. Laboratory tests and

calculations suggested that production costs would be lower using the new technology, but no pilot project has yet been developed, so

those predictions have not been confimied. Demonstrated lower costs and improved perfor- mance would make it more feasible to pursue new market opportunities for applications to

address night blindness.

. . . CAFA is pursuing

partnerships with a

number of companies

as an avenue for

commercializing . .

.

PROJECT:

To develop fundamentally new, lower-cost

fabrication processes for and prototypes of higher quality microchannel plates (MCPs) —

which form the heart of image intensifiers used

in night vision —to enable wider use of the technology, including applications for the esti- mated 400,000 Americans suffering from retinitis pigmentosa (night blindness).

Duration: 4/1/1993 — 5/31/1995 ATP number: 92-01-0124

FUNDING (IN THOUSANDS):

ATP $1,910

Company 1,428

Total $3,338

57%

43%

ACCOMPLISHMENTS:

Galileo developed new processes for fabricating MCPs and other types of electron multipliers, using techniques from semiconductor fabrication, and used the new processes to produce

prototype MCPs. As evidence of these accomplishments, the company:

received four patents for ATP-related

technology:

"Method for Fabrication of Discrete Dynode

Electron Multipliers"

(No. 5,618,217: filed 7/25/1995,

granted 4/8/1997),

"Method for Fabrication of MicroChannel

Electron Multipliers"

(No. 5,569,355: filed 1/11/1995,

granted 10/29/1996),

"Microfabricated Electron Multipliers"

(No. 5,568,013: Filed 7/29/1994,

granted 10/22/1996) and

"Fabrication of a MicroChannel Plate From a Perforated Silicon Workpiece"

(No. 5,544,772: filed 7/25/1995,

granted 8/13/1996);

published five technical papers, including one as a dissertation and four in professional

journals;

produced working vacuum-electron multipliers by microfabrication methods; and

developed thin-film techniques to produce

dynode structures that support electron

multiplication in MCPs and other channel electron multiplier devices.

COMMERCIALIZATION STATUS:

No products based on the ATP-funded technology have yet reached market.

OUTLOOK:

Prospects for commercialization of this tech- nology are uncertain. Financial difficulties forced

Galileo to abandon plans to directly commercialize the ATP technology. The company now is working with the Center for Advanced Fiberoptic Applications (CAFA), a nonprofit consortium

charged with commercializing technologies developed by Galileo and other CAFA members.

If CAFA can commercialize the ATP technology

to benefit people suffering from night blindness,

or if the technology is adopted for use in producing miniature scientific and analytical instruments, such as a mass spectrometer on a

chip, the broad economic benefits could be very

large.

COMPANY:

Galileo Corporation

Galileo Park

Sturbridge, MA 01566

Contacts:

Enrique Bernal G. Galileo Corporation

(508) 347-4291

William Tasker Center for Advanced Fiberoptic Applications (508) 765-0180 Number of employees:

314 at project start; 240 at the end of 1997

In addition, the technology holds further

potential that might one day be realized. It is important for miniature scientific and analytical instruments —for example, a mass spec- trometer on a chip. The National Aeronautics and Space Administration (NASA) recently awarded a contract to develop components for miniaturized mass spectrometers to CAFA,

Galileo and the Argonne National Laboratory, under which prototypes have been delivered and are now being evaluated. While the NASA

contract did not itself involve the use of the

ATP-funded technology, extensions to additional contracts could easily do so, because of

the need for additional miniaturization. Commercialization of the technology for this

application, if it can be accomplished, could

also have far-reaching economic benefits.

66 ADVANCED TECHNOLOGY PROGRAM
^ . Hampshire Instruments, Inc. (Joint Venture)

Electronics

Large-Scale Diode-Array

Laser Technology for

X-Ray Lithography

Today's

stamp-size computer chips are made by

lithograpliy systems that

project ultraviolet (UV) or deep-UV light through

stencil-like masks onto silicon

wafers to produce the tiny components of integrated circuits (ICs), or chips. To make higher-performing

ICs, more transistors and denser

circuitry will have to be packed

onto each chip.

Ever Smaller, Denser

Computer Chips

Today's densest chips have feature sizes of about 0.15 mm, which can barely be produced

with deep-UV' Hthography To make even

smaller chips, the next generation of lithogra- phy equipment may use x-rays, which have

shorter wavelengths than visible or LFV light.

Shorter wavelengths are needed to make tinier

features. An Inexpensive Laser Approach

X-ray lithography able to make chip features of

0.10 mm and smaller was demonstrated prior

to the start of this project in 1991- But costeffective x-ray lithography systems capable of

large-scale IC manufacturing were not available. Research had shown that a relatively

inexpensive device using a high-energy laser to

stimulate x-ray emission could be used to pro- duce x-rays. Suitable material (neodymiumdoped gadolinium gallium garnet, or NdiGGG)

for this type of laser was available. However,

the inabilit}' to precisely control the energy

used to pump up the material's energy level was a key problem in making such a laser work.

This ATP joint venture project by

Hampshire Instruments and McDonnell

Douglas Corporation (MDC), with help from

Lawrence Livermore National Laboratory,

solved the control problem by developing methods for using powerful arrays of laser

diodes to pump Nd:GGG in a laser-based x-ray

lithography system. Hampshire, a small New

York company, contributed its laser design

expertise. MDC provided expertise in system

design and the design of the critical high- power laser-diode pump. It also provided the

world's largest laser-diode-module manufacturing capacity to support post-project commercialization goals.

Prior to the ATP-funded work, MDC built a

prototype laser-diode-pump system with a peak power output of more than 300 kW. The system was successfully used to pump a Hampshire

laser being developed for a second-generation

Soon after the ATP

project was completed,

Hampshire ran into

serious financial

problems, declared

bankruptcy and was

liquidated.

x-ray lithography system, and its pumping was

significantly more efficient than that of the

flash lamps Hampshire had used in its firstgeneration x-ray lithography system. In addition, life testing of laser-diode-pump systems showed they lasted much longer than the

longest-lasting flash lamps then available.

Doubling the Peak Power Output

During the ATP project, MDC built two prototype laser-diode-pump systems that each delivered more than 750 kW of peak power, by far

the highest laser-diode power produced by any

device then or now. Both met or exceeded all performance and reliability specifications. MDC kept one pump and delivered the other to Lawrence Livermore for testing in the secondgeneration x-ray lithography system being

developed by the lab and Hampshire. The pump, however, was never integrated with the Hampshire laser. Flash lamps with longer life became available, leading Lawrence Livermore

to shift its focus to flash-lamp pumping of the

laser The lab continues to develop x-ray litho- graphy

High Expectations

Dashed by Bankruptcy

Evidence at the start of the project suggested

the ATP-funded technology would be rapidly commercialized if it could be successfully

developed and demonstrated. Hampshire and MDC planned to sell the new x-ray lithography

system in a worldwide market expected, when

the proposal was written, to exceed $1.5 billion

by 1994. They also hoped to sell the technology

in solid-state laser markets. Hampshire, however, ran into serious

financial problems and failed to raise the addi67
. . . MDC built two

prototype

laser-diode-pump

systems that each

delivered more than

750 kW of peak power,

by far the highest

laser-diode power

produced by any

device . .

.

PROJECT:

To develop a laser-diode-pumped laser system

for generating x-rays in a new generation of

litfiography equipment to enable a major advance in the miniaturization of computer ctiips

wfiile reducing manufacturing costs.

Duration: 7/1/1991 — 9/30/1992 ATP number: 90-01-0126

FUNDING (IN THOUSANDS):

ATP $926

Company 930

Total $1,856

50%

50%

ACCOMPLISHMENTS:

Researctiers demonstrated tfie feasibility of using a powerful laser-diode-array to pump up

the energy level of Nd:GGG (neodymium-doped

gadolinium gallium garnet) in a laser intended

for use in producing x-rays. Such a laser could be scaled up to meet the technical, reliability and

affordability requirements for third-generation x-ray lithography systems. All planned tasks were accomplished. The company presented some results at the Advanced Solid State Laser Conference in 1992.

COMMERCIALIZATION STATUS:

No attempt to commercialize the technology has

occurred. Soon after the ATP project was completed, Hampshire ran into serious financial problems, declared bankruptcy and was liquidated. The company's demise halted the effort to develop this type of laser-based x-ray lithogra- phy and led to the collapse of MDC's laser-diode business.

OUTLOOK:

The New York Job Development Authority —

which now owns practically all Hampshire

assets, including intellectual property — shows

no intention to commercialize the technology.

Neither does MDC (Boeing). The semiconductor

industry has shifted some of its attention from

x-ray lithography to competing technologies such as deep ultraviolet (DUV) lithography utilizing excimer lasers. However, given the expectation that feature resolution limits of DUV litho- graphy will be reached in a few years, x-ray lith- ography continues to arouse interest. If the industry comes to view the x-ray approach as a

viable candidate for a new generation of litho- graphy equipment, the technology developed in

this ATP project could be revisited.

COMPANIES:

Hampshire Instruments, Inc.

(joint venture lead) (Since April 25, 1993, no longer in business) Other joint venture participant:

McDonnell Douglas Corporation (MDC), now merged with The Boeing Company

5000 E. McDowell Road

Mesa, AZ 85215-9797

Contact: Henry B. Morris Plione: (602) 891-2194

Informal collaborator:

Lawrence Livermore National Laboratory

tional funds needed to survive. The company

declared bankruptcy and was liquidated. The New York Job Development Authority assumed

ownership of practically all Hampshire assets, including its intellectual property. For a time,

several organizations expressed interest in acquiring the technology, but none completed

the acquisition. MDC intended to commercialize its laser-diode pumps for a variety of applications. With Hampshire's demise, that plan

did not materialize. There is currently no effort

to commercialize the ATP-funded technology,

either by Boeing (MDC) or government agencies. But this may change with renewed interest in x-ray lithography in the future.

68 ADVANCED TECHNOLOGY PROGRAM
'Electronics

Illinois Superconductor Corporation (ISC)

Using High-Temperature

Superconductivity to improve

Ceiiular Plione Transmission

The

number of cellular phones used In the United

States has mushroomed in the last decade.

Estimates provided by the

Cellular Telecommunications

Industry Association are that the

number of wireless telephone subscribers was over 50 million as of August 1997. Additional estimates

are that by 2001 the ceiiular subscriber base is expected to grow to more than 75 million subscribers,

with an additional 15.1 million subscribers using personal communications services (PCS) by the same

year.

Extending and Improving

Cellular Phone Service

To provide cellular phone or PCS service, a communications company using a land-based approach must place base stations — towers and reception/transmission equipment —at

regular intervals throughout its service area. In deciding where to locate these base stations,

the company considers the strength and clarity

of its communications signals and how cus- tomer service will be affected when a signal

shifts from one station to the next while the customer is traveling.

All these factors depend on how well the

station's equipment handles the communications signals. And that depends on how well each component of the equipment works as it attempts to distinguish the user's cellular

A compact one-box enclosure for RangeMastei® and SpectrumMastei®

phone signal from the surrounding electronic

noise. A High-Temperature

Superconductivity Solution

This ATP project with Illinois Superconductor

Corporation (ISC), a small company founded

in 1990, developed technology based on high- temperature superconductivity (a phenomenon

discovered in 1986) to significandy improve

the quality of signal transmission. Superconducting components offer great

benefits to cellular phone communications,

including improvements in range, receiver

sensitivity and frequency stabihty. These

improvements, in turn, will extend the range

Cellular phone users

will receive clearer

signals and suffer fewer

dropped calls as their

signals move from

one base station site to

the next.

of base stations, reducing the number needed

to cover a given area and decreasing the costs

of cellular phone service. Cellular phone users

will receive clearer signals and suffer fewer dropped calls as their signals move from one

base station site to the next.

Despite the promise of superconducting

components, little prior work had gone into developing HTS components for the radio-fre- quency (RF) spectrum, which is used by cellular phone systems. Difficulties in economically

making the relatively large, geometrically

complex structures needed for these frequencies were partly to blame. ISC solved this prob- lem by developing the ability to use thick-film HTS coatings on inexpensive substrates. Focus on Preselector

Receive Filters The goal of the ATP project was to develop and

demonstrate consistently performing RF super- conducting components in a prototype base

station. During the ATP project, however, ISC narrowed its focus (with ATP approval) to

preselector receive filters, which remove all extraneous RF signals and leave only those

within the cellular spectrum allotted to that

69
. . . received the

Microwave & RF

magazine 1996 Top

Product Award for

"cellular phone site

filters, superconducting

ceramics" . .

.

A ceramic torroid form, coated with thick

film HTS material, designed to resonate

at a specific frequency.

By September 1997,

ISC had installed

SpectrumMaster^'^ or RangeMaster^'^ in

22 base stations in

12 cities and had

successfully completed

16 field trials in

10 cities.

PROJECT:

To develop high-temperature, superconducting

thicl<-film materials for equipment used in the reception/transmission stations of cellular phone

and other communications systems.

Duration: 3/1/1993 — 2/29/1996 ATP number: 92-01-0017

FUNDING (IN THOUSANDS):

ATP $1,980 56%

Company 1555 44%

Total $3,535

ACCOMPLISHMENTS:

iSC developed and demonstrated a robust fabrication process to produce radio-frequency (RF) components using thick-film, high-temperature

superconductivity (HTS) technology. It devel- oped a model that predicts the impact of high- performance filters on future digital wireless systems. The company also:

received five patents for technologies related

to the ATP project:

"Superconducting YBa.sub.2 Cu.sub.3

0.sub.7-x Produced at Low Temperatures"

(No. 5,527,765: filed 8/23/1994,

granted 6/18/1996),

"Electromagnetic Resonant Filter Comprising

Cylindrically Curved Split Ring Resonators"

(No. 5,616,540: filed 12/2/1994,

granted 4/1/1997),

"Electromagnetic Resonator Comprised of Annular Resonant Bodies Disposed Between Confinement Plates"

(No. 5,629,266: filed 12/2/1994,

granted 5/13/1997),

"Resonator Mounting Mechanism"

(No. 5,604,472: filed 12/1/1995,

granted 2/18/1997), and

"Superconducting Re-entrant Resonator"

(No. 5,682,128: filed 4/23/1996,

granted 10/28/1997);

applied for one additional patent for technology related to the ATP project;

raised $17.4 million through an initial public stock offering in October 1993;

completed construction of a plant to manufacture RF filters and related products;

began selling SpectrumMaster® in 1996

and RangeMasterTM in 1997, both of which are based on the ATP-funded technology;

received the Microwave & /?F magazine 1996 Top Product Award for "cellular phone site

filters, superconducting ceramics," which were

selected from a field of 5,000 new products; and

received (with subcontractor Lucent

Technologies) a Corporate Technical Achievement Award for 1997 from the American

Ceramic Society.

COMMERCIALIZATION STATUS:

Commercialization is in progress and products

are being sold. The benefits of lower costs and

higher-quality service are accruing to companies

that use ISC's new technology and to their customers.

OUTLOOK:

The outlook for this new technology is excellent.

Its use is expected to spread throughout the economy, lowering the costs and improving the

quality of cellular phone and personal communication services.

COMPANY:

Illinois Superconductor Corporation (ISC) 451 Kingston Court

Mt. Prospect, IL 60056

Contact: Ben Golant Phone: (847)391-9416

Number of employees:

8 at project start, 75 at the end of 1997

particular operator. Investigation of the cellular market indicated that the superconducting

preselector receive filter was of greatest interest

to customers in terms of improving system per- formance. Given the limited resources available to ISC, the company decided to focus on

this component as an initial goal and to integrate others later. The new HTS technology is

useful for other RF equipment and has potential applications in antennas, magnetic reso- nance imaging machines and other components of communications systems. ISC successfully incorporated the ATPfunded technology in a preselector receive filter

and, in late 1996, started selling it under the name of SpectrumMaster® to companies

70 ADVANCED TECHNOLOGY PROGRAM
operating cellular phone systems. A year later,

it launched RangeMaster®, which contains

the SpectrumMaster® preselector receive filter and a cryogenically cooled low-noise amplifier

By September 1997, ISC had installed SpectrumMaster® or RangeMaster® in 22

base stations in 12 cities and had successfully completed l6 field trials in 10 cities. Sales at

that time amounted to $1 million. The company has also modified and installed SpectrumMaster® for use in the base stations

of personal communications systems.

Improved Communications Service

The future looks bright for ISC as it uses the ATP-funded technolog}' to help communications companies serve their customers with

greater-qualit}' services at lower costs. Cellular phone service companies can reduce the number of new base station sites they install. They

can also expand by up to 25 percent the range

of existing sites by replacing an older filter at

the station with a new one based on the ATPfunded technology. A 25 percent range increase

corresponds to a 56 percent increase in the

area covered and translates into a 40 percent

decrease in the number of sites required to

cover the area. The cost of the improved filter

is around $25,000 to $60,000, depending on

site configuration, whereas the cost of a new

site is about $1 million to $2 million. The future also looks bright for customers

of these communications companies, as costs drop and service quality improves. Even greater benefits should accrue to cellular and personal communications customers

with the conversion from analog to digital communications. Digital stations must trans- mit much more data per call, so any quality improvements or cost reductions will apply to a

larger volume of signal traffic. As more transmission sites install digital systems, cellular phone users will get clearer signals and fewer dropped calls. Other sectors, such as mobile communications, will experience lower costs and improved quality as the technology is extended to them. Proliferation of the new

technology will provide an additional benefit

in terms of aesthetics by reducing the number

of signal towers installed for communications

systems.

ATP Award Accelerates

Development

Funding from the ATP enabled ISC to form

alliances with research partners and contractors and to achieve its research and develop- ment results about 18 months earlier than it would otherwise have been able to do. Company officials say the ATP award also enabled ISC to survive as a company and gave

its technology and commercialization plan significant credibility with investors. The

increased credibility, in tum, directly helped

the company raise private capital, especially during its initial public stock offering in 1993-

A 25 percent

range increase

corresponds to a

56 percent increase in

the area covered and

translates into a

40 percent decrease in

tlie number of sites

required to cover the

area.

71
. Light Age, Inc.

Electronics

Exploiting Alexandrite's Unique

Properties for a Less-Expensive,

More-Reliable Tunable Laser

Lasers

today drive many

devices througliout the consumer and commercial

worlds. There are tiny ones

in printers and CD-ROIVI

players, small ones in medical

instruments and large ones in satellite communications systems.

Besides coming in different sizes,

lasers vary in the wavelength and

strength of the light they produce.

In almost all applications, the

wavelength and power of the beam

are fixed.

Tunable Lasers for Many Uses

This ATP project with Light Age, a small privately held company, developed a convenient,

reliable, tunable, compact laser source of

ultraviolet (UV) light suitable for spectroscopy medical applications, photochemical research,

electronics fabrication, and laboratory studies

of atomic and molecular science. Of particular

importance, the new laser can be tuned to the

The new device is the

brightest (most

powerful) available

tunable source of laser

light over much of the

UV spectrum.

shorter UV wavelengths known as vacuum UV

(VUV) light.

Light Age was founded in 1985 by two

scientists who, at AlliedSignal, had pioneered and managed the development of a tunable- wavelength laser based on the alexandrite

crystal. The new light source developed in the ATP project offered improvements over the

AlliedSignal technology and is less expensive,

operationally simpler and more reliable than

other tunable laser light sources. It uses the fundamental output of the alexandrite laser, which is broadly tunable between 700 and 800

nanometers (nm). That output is then converted to UV wavelengths of 190-200 nm, 240- 270 nm or 350-400 nm. The new device is the

brightest (most powerful) available tunable

source of laser light over much of the UV

spectaim.

Surgery and Photolithography

The new tunable laser is particularly promising for corneal sculpting and angioplasty because it provides the control needed for these advanced applications. Its advantage stems from the fact that laser beams of certain wavelengths affect some tissue types but not others. The laser can be tuned, for example, to the wavelength of a light beam that destroys

diseased tissue while leaving healthy tissue undamaged.

The laser can be tuned,

for example, to the

wavelength of a light

beam that destroys

diseased tissue while

leaving healthy tissue

undamaged.

Another, quite different potential application is in photolithography equipment for the production of faster, higher-density, next-generation computer chips. Shorter-wavelength

light is needed to produce the finer features on

these chips. And reliable lasers that can generate shorter-wavelength light are needed to move beyond this manufacturing choke point.

As recently as 1995, almost all chip photolithography used light in the near-UV range (around 350 nm) produced by UV light bulbs. Today the industry is rapidly moving toward

The Pal/Pro • UVTM laser system, tunable to 248 nanometers, 193 nanometers, and

other ultraviolet wavelengths.

72 ADVANCED TECHNOLOGY PROGRAM
PROJECT:

To develop a safe, compact, convenient, reliable, less-expensive, broadly tunable laser source of

ultraviolet (UV) light — particularly at shorter UV wavelengths — suitable for use in science, medicine and photolithography.

Duration: 4/1/1991 — 9/30/1993 ATP number: 90-01-0212

FUNDING (IN THOUSANDS):

ATP $702 41%

Company 1010 59%

Total $1,712

ACCOMPLISHMENTS:

Light Age accomplished its R&D goal. The company also:

introduced several new or improved laser products incorporating the ATP technology,

including: nUVoTM — a continuous-wave, diode- pumped, solid-state laser producing UV

light, PAL/UVTM — a solid-state laser source of 193-nanometer light, and PAL/PROTM — a narrow spectral bandwidth

version of the PALTM laser:

increased revenues an average of 50 percent

per year since the end of the ATP project in 1993, with 1997 revenues exceeding $2.8 million on sales of lasers incorporating the new

technology; and

deep-LT\' laser sources that produce light at 248 nm. Future generations of computer chips may

require \IJV laser sources that produce light at wavelengths of about 193 nm or even shorter

Large Benefits to Intermediate

Users and Customers

Light Age makes L^' and \TJ\' lasers costing S20,000 to $200,000. They are used in applications such as health care and scientific equip- ment that may generate big payoffs to the economy as a whole. In most of these markets,

the company's technology faces global competition. Nonetheless, Light Age is already a significant exporter of laser systems for scientific and medical applications and expects strong, continued growth of these exports.

received more than $10 million worth of product orders, which are currently being filled.

COMMERCIALIZATION STATUS:

Light Age lasers incorporating the ATP-funded

tunable-laser technology are being sold and put

to use in academic R&D and in clinics, hospitals and doctors' offices around the world.

OUTLOOK:

Prospects for wider use of this technology are promising, particularly in medicine for corneal sculpting and angioplasty. Products based on

the ATP-funded technology may generate large payoffs to the U.S. economy in science, health care and electronics manufacturing. The company's lasers are also being used in studies to

refine and extend global weather prediction methods. If atmospheric research using the new

lasers leads to improved weather forecasts, the

benefits in this area alone could be huge for businesses and individuals worldwide.

COMPANY:

Light Age, Inc. 2 Riverview Drive Somerset, NJ 08873 Contact: Donald R Heller Phone: (732)563-0600

Number of employees:

10 at project start, 28 at the end of 1997

Light Age is already a

significant exporter of

laser systems . .

.

Economic benefits are accruing to intennediate customers and end users of the new tech- nology in medical applications. Many applications of the new laser technology are in envi- ronments such as medicine and weather forecasting, where the economic benefits to others

besides Light Age are likely to be large.

Potential for Improved

Weather Prediction

The company's lasers are being used in institutional and government research on the upper atmosphere to refine and extend global weather prediction methods. In these applications,

lasers are a required technology. The research

uses UV lidar (light detecting and ranging) to

illuminate particular atoms in the mesosphere — about 70 miles above the earth. Specific

effects of the illumination are viewed with

powerful telescopes, recorded and used to determine the temperature of the environment

at that altitude. This research aims to develop methods for measuring the temperature and wind speed at

very high altitudes. Current measurement sys- tems mainly use only ground-level data.

Researchers believe that data on several atmospheric strata measured at selected points around the earth could significantly improve

the quality of the very large weather prediction

computer models now in use. If research using

the tunable laser does lead to better weather

predictions, the benefits would likely be huge

for businesses and individuals not just in the United States, but around the world. The tunability of the alexandrite laser from

Light Age has made this new research feasible. To show their effects, different types of atoms must each be illuminated by a lidar laser of a

specific wavelength. With the Light Age laser,

that wavelength can be set by a technician using conventional controls. Alternative laser

sources for this research are hand-constructed

for just one wave-length, which limits their use and makes them much more expensive than

the mass-produced Light Age lasers.

Greater Sales and Revenues

Light Age has done well commercially. The company has expanded product offerings and

increased sales each year since beginning the ATP project in 199 T The new technology

helped Light Age boost revenues an average of more than 50 percent per year after completing

the project in 1993- In 1997, the company generated more than $2.S million in revenues

and, at the beginning of 1998, had back orders worth more than four times its 1997 sales.

^^^^^

73
If atmospheric research

using the new lasers

leads to improved

weather forecasts, the

benefits in this area

alone could be huge for

businesses and

individuals worldwide.

Light Age sees itself as an up-by-your-ownbootstraps company in terras of finances. A

large part of its success comes from paying

detailed attention to financial management,

tightening its budgetary belt, retrenching temporarily when needed, pushing new technology-driven products through to market and

staying in product areas where its strengths lie. The company has adopted a stringent approach to financial matters, plowing all earnings back into additional research. ATP's

participation compelled Light Age to adopt rig- orous financial discipline during the company's early development in order to meet the ATP requirement for cost sharing. The belttightening was difficult for Light Age in the

short run, company officials say but served the long-term interests of the company

The ATP funds enabled Light Age to double

its research budget during the funding period, a move that allowed the research and develop- ment work to be completed 12 to 36 months

sooner than it would have been without the award. In addition, company officials say the

visibility generated by winning the ATP award

helped Light Age establish agreements with

research partners and, coupled with the success of the ATP project, enabled it to secure

addifional funding from private investors.

74 ADVANCED TECHNOLOGY PROGRAM
Electronics

Lucent Technologies Inc. (formerly AT&T)

Precision Mirrors for

Advanced Litliography

The

personal computer rev- olution has been powered,

In large part, by the

development and production of new generations of memory, CPU (central processing

unit) and other chips. With each

generation, chip feature sizes

shrink. However, chip feature size Is reaching the limit of what can be

produced with current lithography

equipment. A new approach to litho- graphy that can operate at shorter

wavelengths is essential if the inte- grated circuit industry is to continue to advance toward more

powerful computer chips.

Advanced Optics to Enable

Chip Miniaturization

The ATP project with Lucent Technologies (for- merly KJlSlT) Bell Laboratories significantly improved the accuraq- of precision reflective

optics —complex multilayer-coated mirrors —that are critical for extreme ultraviolet (ELT) lithography EL!\' or soft x-ray technolog\- is one of several possible approaches to advanced lithography for manufacturing

chips.The goal of the project was to discover whether it is possible to create ultrahigh-precision aspherical mirrors that properly reflect ELT wavelengths for use in lithography This was a high-risk, technically challenging project. ATP cost sharing enabled Lucent to move

ahead with a project that otherwise would have

been difficult to justify', particularly because so

A new approach to

lithography that can

operate at shorter

wavelengths Is essential

if the integrated circuit

industry is to continue

to advance toward more

powerful computer

chips.

much of the funding would go to collaborators

outside the company Ultimately the ATP project showed that the technical obstacles were surmountable and that the optics can be manufactured, measured and aligned.

Characterizing the complex shapes of these mirror surfaces with the high level of precision

required for EU\'' lithography was well beyond

the state of the art when the ATP project began.

Working with Lucent, Tropel developed a specialized interferometer to measure aspheric

surface characteristics, a device that it now

uses in other applications. Lucent, in collaboration with Brookhaven and Sandia National

Laboratories and the Universit}' of Wisconsin,

developed other techniques required to characterize aspheric mirrors. The project also generated increased understanding of multilayercoated aspherical optics and optics surface finishing, advanced techniques for multilayer

coating of mirrors, improved methods for mirror alignment, and new test equipment. To see whether this new technology would

work, Lucent and its collaborators conducted a

two-stage, round-robin test. In the first stage,

four subcontractors fabricated prototype mirrors using the knowledge created in the project. Then each subcontractor tested mirrors

fabricated by each of the four. The mirrors made by Tinsley Laboratories proved to be dra- matically better than any of this type ever seen

before.

Commercialization Status

When this project began, it was uncertain whether aspheric mirrors with the high level of accuracy required for EUV lithography could

be made. And even if they could, it was not

clear whether they could be measured with sufficient accuracy to verify that they met the extreme precision demanded by the specifications. Thus, this high-risk project aimed to

find out whether the ELI\' approach to lithogra- phy deserved further consideration or whether

the mirrors constituted a "show stopper" technical barrier that could not be surmounted. The project demonstrated that the mirror technical barrier could, indeed, be overcome.

Progress on all the advanced-lithography

candidate technologies developed in parallel at

industrv' and government laboratories during

the early 1990s. As data accumulated, Lucent

decided in 1995-1996 (well after the ATP project ended) to reduce its effort in EUV lithogra- phy and focus its attention on another option —scattering with angular limitation projection electron-beam lithography (SCALPEL) —

. . . this high-risk

project aimed to find out

whether ... the mirrors

constituted a "show

stopper" technical

barrier that could not be

surmounted.

75
The high-quality

Tinsley mirrors,

fabricated and tested

with methods

discovered during the

ATP project, are a Icey

component of the EUV

approach to new

generations of

lithography equipment.

which it deemed more promising. Lucent still monitors developments in all areas of advanced lithography, and substantial work on EUV lithography continues elsewhere, particularly at Lawrence Livemiore and Sandia

National Laboratories.

In 1996 Intel, AMD and Motorola formed

the Extreme Ultraviolet Limited Liability Company to pursue EUV lithography In September 1997, this consortium and the

Virtual National Laboratory (a collaboration of Lawrence Berkeley, Lawrence Livermore and

Sandia National Laboratories) agreed to collaborate on the development of EUV lithogra- phy EUV systems would draw on the optics work from the ATP project and related technology developed at the national laboratories. The three chip makers intend to invest about $250 million over three years in the collaboration to determine whether the technology is commercially viable and, if it is, to pursue

commercialization via lithography equipment

manufacturers.

It is too early to tell whether the EUV or one of the other approaches to lithography will

ultimately win in the marketplace. But it is

clear that the ATP project has helped the

industry understand the technical barriers to one major candidate technology and how to overcome them. The ATP project results are

PROJECT:

To develop new fabrication, testing and alignment

tectiniques for making extremely precise aspheric

(nonspherical curvature) mirrors to use for litho- graphy in tfie extreme ultraviolet (EUV) portion of

tiie spectrum. This is one of several approaches

being considered for fabricating future generations

of computer chips with extremely dense, compact

microelectronic circuits.

Duration: 5/15/1991 — 5/14/1994 ATP number: 90-01-0121

FUNDING (IN THOUSANDS):

ATP $2,000 36%

Company 1525 64%

Total $5,525

ACCOMPLISHMENTS:

Lucent and its subcontractors developed dramatically improved techniques for fabricating, testing and aligning extremely precise aspherical, multi- layer-coated mirrors essential to EUV technology,

a candidate for future lithography systems. Lithography is a l<ey step in manufacturing inte- grated circuits. Aspheric mirrors, whose surfaces have nonspherical curvature, are much more difficult to make and measure than mirrors with flat or spherically curved surfaces. They are particularly

difficult to make for the ultrashort wavelengths used in this technology. Researchers significantly advanced the state of the art of the physics and

metrology for these EUV lithography systems. Signs of the project's success are:

Lucent contracted with Tropel to develop a new

advanced interferometer for measuring the surface

properties of aspheric optics. Tropel succeeded

and is now using this technology for its own products.

Tinsley Laboratories, a subcontractor, fabricated mirrors 10 times more precise than any pro- duced before the ATP project. Tinsley has applied

the improved methods learned in the project to all

its products. In part, because of its improved manufacturing technology, Tinsley doubled its sales between 1991 (the start of the ATP project) and

1996.

The researchers presented or published more

than two dozen papers about precision metrology

aspheric mirror fabrication and lithography sys- tems development.

Three computer chip fabrication companies

have agreed to invest $250 million over three

years to continue the research, development and

perhaps ultimate commercialization of EUV litho- graphy technology A critical component of this technology is the multilayer-coated mirrors that were the focus of this ATP project.

COMMERCIALIZATION STATUS:

Although Lucent has decided to concentrate on

another advanced-lithography approach that appears more promising at this time to the company, some technologies developed during the ATP project have already been commercialized, and others may be commercialized in the future.

Tinsley's business rose sharply as a result of manufacturing improvements the firm developed to fabricate the aspheric mirrors for this project. Tropel is using the measurement technology

resulting from its involvement in the project. And

several computer chip manufacturers are incorporating the project results into their lithography R&D. If the EUV approach meets the technical and economic requirements of the chip industry, the ATP-funded technology will be incorporated into equipment used to produce computer chips in the

first decade of the twenty-first century.

OUTLOOK:

The high-quality Tinsley mirrors, fabricated and

tested with methods discovered during the ATP

project, are a key component of the EUV approach

to new generations of lithography equipmenL If

this approach proves to be technically and commercially viable, it will enable a new generation of chip-making equipment that will generate benefits

for chip manufacturers, as well as users of computers, communications equipment and other

electronic devices containing the new chips.

COMPANY:

Lucent Technologies Inc., Bell Laboratories

(formerly AT&T Bell Laboratories) Room 3C-428

600 Mountain Ave. Murray Hill, NJ 07974

Contact: Richard P Muldoon Phone: (908) 582-5330

Subcontractors: Itek Optical Systems, SVG Lithography, Tinsley Laboratories and

Tropel Corp.

Informal collaborators: Sandia, Brookhaven

and Lawrence Livermore national laboratories and NIST I

76 ADVANCED TECHNOLOGY PROGRAM
The researchers

presented or published

more than two dozen

papers about precision

metrology, aspheric

mirror fabrication and

lithography systems

development.

important to this effort because the kind of

aspheric mirrors that Tinsley learned to make

under contract to Lucent will be a critical component of the EUV lithography equipment.

ATP-Project Benefits

Could Be Huge

Benefits have already started accruing to

Tinsley which produced the best aspheric mirrors, and to its customers who use the mirrors.

Tinsley attributes much of its recent success to

the ATP project, because the company was able

to apply the improved manufacturing processes —developed to supply aspheric optics for the

project — to all its products. Tinsley's sales have approximately doubled since the ATP project, Furthermore, in just 27 months the value

of Tinsley's stock increased 600 percent, indicating the value the market places on the company's enhanced capabilities. Tropel and its

customers are also continuing to reap benefits from the interferometer.

If EU\' lithography equipment incorporating the new aspheric mirror technology' becomes the technolog)' of choice for the next

generation of chip-making equipment, the

benefits of the ATP project would be far broader The new technology would have a huge economic impact on the semiconductor

industry and generate spillover benefits to companies that use the improved computer

chips in a wide variety of products, as well as to consumers who use these products. Even if another lithography approach becomes the technology of choice, benefits to companies

like Tinsley and Tropel and to their customers

will continue to accrue. This project illustrates the important fact

that a lack of immediate commercialization

after an ATP project ends does not mean that

the new technology will not eventually be commercialized and yield large benefits. Infomiation gathered in this project helped Lucent better understand the technical issues

related to EUV lithography Publication of numerous technical papers resulting from the

project has advanced the state of the art for everyone in this technical community. And

although Lucent later decided to pursue an

alternative lithography approach, other companies have incorporated the ATP-funded tech- nology into research and development work

that could lead to systems that are commercialized in the future.

... in just 27 months

the value of Tinsley's

stock increased 600

percent, indicating the

value the market places

on the company's

enhanced capabilities.

77
Electronics

Multi-Film Venture (Joint Venture, formerly The

American Scaled-Electronics Corporation)

Joining Several Cliips

Into One Complex

Integrated Circuit

In

the race to boost the perfor- mance and decrease the size of the integrated circuits (ICs)

used in computers, one limitation gets a lot of notice: the

two-dimensional (2D) nature of ICs. An IC, or chip, is flat. Its operating

speed depends greatly on the length

of the wires interconnecting its tiny

components. Chip designers spend enormous resources to make the

longest wire as short as possible

and to reduce component size so

they can be placed closer together. But as long as chips are 2D devices,

wire length constrains how fast they can operate.

New Capabilities From

Interconnected Chips

On a seemingly unrelated front, the need

frequently arises for large electronic displays —in hospital operating rooms, military com- mand centers, industrial applications and even

sports bars. Sometimes the display must also be flat. For home use, a display that mounts

flat on the wall like a picture is ideal and is much sought after by technology leaders. Large CRT (cathode-ray tube) displays are

available. But a 35-inch CRT display may be 30 inches deep and weigh 150 pounds. Flat- panel displays, like those in notebook computers, are also widely available. But they are typically small, since the display usually has just one panel consisting of a single, broad, light- emitting IC. Attempts to greatly increase the

scale of single-IC fabrication have been accompanied by commercially unacceptable

. . . raised $26.6 million

from a second public

stock offering in March

1993 . .

.

levels of defects. Interconnecting several chips

introduces other problems.

One Technology for Two Major Needs

The Multi-Film Venture (MFV) — a partnership between MCC and Kopin Corporation

(a small company spun off in 1984 from

Lincoln Laboratoiy at the Massachusetts

Institute of Technology) —used ATP funding

to speed by two years the development of tech- nology to address the needs for larger flat- panel displays and for shorter IC component

connectors. The new technology can be used to

join several broad light-emitting ICs into a single large display with no visible seam. It can

also be used to join small ICs, stacked like a deck of cards, so that wire lengths can be

shortened. ATP funding made this joint venture possible, and the project's success attracted

further research and development funding from outside sources. The new technology is based on ATPfunded development of advanced methods for

positioning IC components with micron-scale alignment and for connecting individual ICs,

as well as new adhesives procedures for bonding chips together It is also based on proven IC

fabrication methods and proprietary thin-filmtransfer technology previously developed by

Kopin. MCC contributed its expertise in adhesives, bonding and positioning. During the ATP project, MFV researchers proved the feasibility of transferring thin-film,

single-crystal silicon ICs to a substrate and

interconnecting them to form a functioning

multifilm module (MFM). They designed, built and successfully demonstrated a large-area,

flat-panel display to show seamless joining of

several panels (single, broad, light-emitting

ICs) arranged side by side like floor tiles, to form the display

Giant Flat Screens and 3D

Microprocessors

The earliest commercial use of the new MFM

technology is likely to be in military, medical and industrial flat-panel displays and large

high-resolution displays. The tiled displays would replace conventional CRT displays. When cost considerations make it profitable,

. . . researchers proved

the feasibility of

transferring thin-film,

single-crystal silicon ICs

to a substrate and

interconnecting them to

form a functioning

multifilm module . .

.

they would replace large single-panel displays based on relatively expensive technologies such

as liquid crystal display The new technology

also has potential applications in desktop computer displays and —with volume production and lower prices —,in wall displays for the home. In addition, the ATP technology should

be competitive for very high resolution screens,

those with resolutions of 2,000 by 2,000 pixels

per inch up to 10,000 by 10,000 pixels. The MFM process is expected to be useful

for making devices with directly joined layers

78 ADVANCED TECHNOLOGY PROGRAM
PROJECT:

To show the feasibility of interconnecting thin-film

integrated circuits (ICs), packed side by side or in

layers, to form a complex, muitifilm module

(MFM), and to demonstrate this technology in a

large flat-panel display.

Duration: 9/15/1992 — 9/15/1995 ATP number: 91-01-0262

FUNDING (IN THOUSANDS):

ATP $2,776

Company 2.973

Total $5,749

48%

52%

ACCOMPLISHMENTS:

MFV developed the MFM technology and demonstrated it in a large, flat-panel display. In actions

related to the project, Kopin:

received two patents for project-related technology:

"Single Crystal Silicon Tiles for Liquid Crystal Display Panels Including Light Shielding

Layers"

(No. 5,377,031: filed 8/18/1993,

granted 12/27/1994),

"Method for Forming Three-Dimensional

Processor Using Transferred Thin-Film

Circuits"

(No. 5,656,548: filed 9/19/1995,

granted 8/12/1997);

raised $8.1 million from private sources

during the ATP project;

raised $26.6 million from a second public

stock offering in March 1993;

received (with Northeastern University) $2

million from the Office of Naval Research in June

1996 for R&D work, based directly on the ATPfunded MFM technology, to design and fabricate a 3D microprocessor;

received (with Northeastern and Polaroid) $5

million from the Defense Advanced Research

Projects Agency in June 1996 for R&D work —

using the ATP-funded MFM technology — on 3D computational image sensors for compact low- power video cameras;

raised $31 .8 million via private equity invest- ments since the end of the ATP project.

COMMERCIALIZATION STATUS:

Commercialization is expected within one or two

years for products incorporating the 3D micro- processor technology. Large-area flat-panel dis- plays based on the MFM technology are expected

to be commercialized when their market develops.

OUTLOOK:

The outlook is very promising. Products based on

the ATP-funded technology are being developed

by Kopin and are expected to be introduced to the market soon.

COMPANIES:

Multi-Film Venture (MFV; formerly The American Scaled-Electronics Consortium)

Kopin Corporation (joint venture lead) 695 Myles Standish Blvd. Taunton, MA 02780

Contact: OllieWoodard Phone: (508) 870-5959 Number of employees:

70 at project start, 100 at the end of 1997 Other joint venture participant:

MCC, Inc. (formerly Microelectronics & Computer

Technology Corporation.

connected using the ATP-funded MFM technology. This project is supported by $5 million from the Defense Advanced Research Projects

Agency.

Although products

incorporating the ATPfunded technology are

not yet on the market,

they are likely to arrive

soon.

Kopin Succeeds in Capital IVIarl(ets

Although products incorporating the ATPfunded technology are not yet on the market,

they are likely to arrive soon. Kopin has shown

that it can carry out commercialization plans,

as evidenced by its introduction of other products after more than a decade of work on the underlying technology. Also, Kopin's success at

raising funds in the private-capital market

reflects investor confidence in the company's

ability to commercialize its technology. Kopin

has raised an additional $31.8 million via

private equity investments since the end of the ATP project. When the new products —flat-panel

displays and 3D microprocessors — are

introduced, intermediate companies (which

purchase components produced by Kopin),

final-product manufacturers and consumers

are expected to reap large benefits from the ATP-funded technology.

of ICs that perform different functions. In one

application, Kopin is collaborating with

Northeastern University (using $2 million from

the Office of Naval Research) to design, fabricate and demonstrate a three-dimensional

(3D) microprocessor

In a second applicahon, Kopin is working

with Northeastern and Polaroid in a five-year

project, begun in June 1996, to develop a 3D

computational image sensor for compact low- power video cameras. The sensor will be a

stack of three chips: a sensor IC, a computation IC and a read-out IC. The chips will be

. . . potential

applications in desktop

computer displays and — with volume

production and lower

prices — in wall displays

for the home.

79
Nonvolatile Electronics, Inc. (NVE)

Electronics

Computer RAM Chips

That Hold Memory

When Power Is Off

Conventional random

access memory (RAM)

computer chips record

information written or copied into tliem by a computer, and tliey liold tliat data as long as electricity flows through

the chips. Once the power is turned

off, the information is lost unless it has been "saved" to a floppy disk

or to the computer's hard disk,

which hold data even when the

power is off. Many computer users have learned this fact only after a power outage or other mishap

suddenly erases the data they were

working on. Program manuals and

technical support staff repeatedly

advise computer users to "save

often."

RAM That Remembers

Without Power

If a memory chip could store data permanently, it would prevent these accidental loses

of infoiTnation. And if it could be produced in small sizes at competitive costs, the new chip would greatly affect how computers are config- ured and used. For example, an insertable card

The clean roam at Nonvolatile Electronics in which GMR sensors and other devices are fabricated.

containing memory chips (which have no moving parts) could be substituted for a hard

disk drive.

Civilian Use of MRAM Technology

This ATP project with Nonvolatile Electronics (NVE), founded in 1989 (and operated from

the founder's house until the ATP award), aimed to develop such a memoiy chip. The

founder co-invented "magnetoresistive" RAM

(MRAM) technology for defense applications while at Honeywell, which subsequently

licensed the technology to NVE for civilian

uses. For these applications, the technology had to achieve greater density, signal strength and production yield to meet cost consideraPhotomicrograph of a GMR magnetic field sensor, with actual dimensions of 436 X 3370 microns.

tions, which are more important in consumer

markets than in the military market. A metal is magnetoresistive if it shows a

slight change in electrical resistance when

placed in a magnetic field. In 1988, scientists

discovered that a sandwich of metals shows a GMR sensors have many

applications . .

.

much larger change in resistance than a single metal of the same size. This effect was named

"giant magnetoresistance," or GMR.

Researchers at NVE saw the use of GMR

materials as a way to achieve advances in signal strength, and they made important

advances in the producibility of GMR materials. They also achieved the project's circuit

density goals and made substantial improve- ments to production throughput, or yield. These developments are all important for lowering barriers to commercializing the technology for civilian applications. The researchers

80 ADVANCED TECHNOLOGY PROGRAM
PROJECT:

To develop magnetoresistance technology for use in making computer random access memory

(RAM) "nonvolatile" — data will not be lost wtien power is turned off.

Duration: 4/1/1991 — 3/31/1994 ATP Number: 90-01-0166

FUNDING (IN THOUSANDS):

ATP $1,785 67%

Company 869 33%

Total $2,654

ACCOMPLISHMENTS:

In its quest to develop magnetoresistive RAM

(MRAM), NVE made significant advances in

producibility, circuit density and signal strength by using giant magnetoresistance (GMR) materials. In the process, the company developed an

important spinoff application of the technology

in sensors. Indicative of progress, NVE:

started producing an initial commercial

product, a GMR magnetic bridge sensor, in 1994, selling about 50.000 by the end of 1997

to other companies for examination purposes

and earning revenues of more than $150,000

that year alone:

entered into an agreement with Motorola in 1995 to develop MRAMs (development is still under way, with sales possible in 1999);

entered into an agreement with Microtrace in 1996 to use a GMR-based procedure to make

counterfeiting of aircraft parts much easier to

detect (development work is under way);

licensed the ATP-funded technology to Honeywell (for use in military and avionics

made prototype high-qualit\' MRAM cells that were successfully demonstrated at Honeywell.

A Promising Spinoff Application

M N'VT- focused on GMR materials advances, it saw a potential spin-off application that

received only marginal attention when the company started its ATP project: GMR sensors. A major application for sensors based on the new technolog}' is possibly in antilock brake

systems in automobiles and tmcks. These sys- tems use a clamp to grip the edge of a steel

disk attached to the wheel. If the clamp grabs

too tightly, the brake "locks," the wheel stops

rotating, and the tire slides on the road surface

instead of gripping it. In an antilock brake system, a sensor detects the rotation of the disk and feeds that information into a computer If

applications), which incorporated it into computer systems placed in government agencies; and

transferred knowledge about GMR materials

to members of an ATP joint venture working on

technology for magnetic disk storage based on

the GMR effect.

COMMERCIALIZATION STATUS: NVE is successfully making and selling — with

a recent growth rate of about 3,000 percent —

GMR-based sensing products, a spin-off from

its MRAM technology development project. It is also pursuing commercialization of MRAMs

through an agreement with Motorola, an endeavor that could lead to a substantial share

of a $45 billion/year market.

OUTLOOK:

The outlook is excellent for expanded use of GMR sensors, which have many applications, including pace makers, engine control, shock

absorbers, antilock brake systems, current monitoring, cylinder position sensing and automatic meter reading. The outlook for commercialization of the nonvolatile memory chips is potentially bright. But with several more years of development, the extent of use remains uncertain. Spillover benefits are potentially large.

COMPANY:

Nonvolatile Electronics, Inc. (NVE) 5805 Amy Drive

Edina, MN 55436

Contact: James M. Daughton Phone: (612) 996-1607 Number of employees:

10 at project start, 56 at the end of 1997

the computer detects overly rapid deceleration —indicating the brake is about to lock — it

directs the braking mechanism to reduce clamp pressure to keep that from happening. The new NVE sensors are substantially more sensitive than conventional sensors. They

can be farther from the monitored object while performing equally well. Their magnets can be

smaller, so the cost is less. And the NVE sensors can detect rotational speeds closer to zero, which means the computer receives moreaccurate data to use in controlling the brake mechanism. In a vehicle equipped with an

antilock brake system incorporating NVE sensors, the driver will have better skid and stop- ping control.

In a vehicle equipped

with an antilock brake

system incorporating

NVE sensors, the driver

will have better skid and

stopping control.

Product Sales and

Commercialization Agreements

NVE expects to apply its sensor technology in

several other industries, too, including medical

devices, consumer products and machine tool manufacturing. Production for these markets

is planned for the near future. According to NVE, it is the first to make and sell GMR-based

sensing products for the general market, and it has established a new company division for

this purpose. Its sales of GMR-based sensors have grown by about 3,000 percent recently from around $5,000 in 1994 to more than

$150,000 in 1997. The company has also generated revenues from engineering contracts, as

well as royalties from companies that license

its technology. NVE entered into an agreement with Motorola in 1995 to develop MRAMs, and the development work is under way Production

could begin in 1999- If this effort succeeds, NVE expects to capture a sizable share of the

$45 billion annual market for memory and

hard-disk-drive products. The company also

signed an agreement with Microtrace in 1996

to use a procedure based on GMR techniques

to make counterfeiting of aircraft parts much

easier to detect. The development work is under way and products for this application

are also expected in 1999- For GMR applications beyond its own

pursuits, NVE has offered its knowledge to

other companies, universities and national

NVE entered Into an

agreement with Motorola

In 1995 to develop

MRAMs . .

.

81
NVE has offered its

knowledge to other

companies, universities

and national

laboratories.

laboratories, This was done through another ATP project (#91-01-0016: "Ultrahigh-Density

Magnetic Recording Heads") conducted by a

large joint venture led by the National Storage

Industry Consortium. NVE officials consulted on fabrication methods for making GMR films and supplied samples of the films made by NVE.

Benefits From the Technology

Because NVE is selling only sensors, all benefits

will initially come from that product. When

the sensors actually begin appearing in commercial products —some time after the

year 2000 —end users will have access to

competitively priced devices that operate at much greater temperature extremes than do

conventional sensors. Additional benefits will accrue from GMR sensors as more are used in a variety of applications. GMR sensors will likely generate substantial economic benefits beyond those realized by NVE. A sensor is a small part of an antilock brake system, which is a small part of a much

larger device — an automobile. Several manufacturing and subassembly stages lie between

the development of the sensor and the final

product, and the sensors add value to the product at each stage. According to NVE, the total

of this spillover benefit will likely be more than

10 times greater than what the company earns

for the use of its new technology. And the aggregate benefit will increase as more cars

are equipped with antilock brake systems

incoiporating NVE sensors. Spillover benefits promise to be even larger when the sensors are used in other applications.

In addition to these applications, the company's GMR sensors are being used for

portable traffic monitoring instruments, and

they may be very useful for instruments used to

detect land mines. Geometries, Inc., in Denver, Colorado, has contracts to design and test

devices to detect anti-personnel mines for the

U. S. military, and it has subcontracted with NVE to supply GMR sensors for the detectors. If

the design and testing lead to workable detection instruments, a much better job of finding and removing unwanted land mines will be

the result. There are 100-200 million such

land mines throughout the world in areas that were fomierly areas of warfare, and they kill and maim tens of thousands of innocent people each year The market for MRAMs — the application

initially targeted by NVE —may eventually be

important, but it is still in the future. If MRAMs ultimately reduce accidental loss of information to computer users, benefits will be

large. ATP Project Saves Company

Before the ATP project, NVE was a tiny undercapitalized company facing significant technological risks in developing the technology for commercial uses. Funding from the ATP, however, enabled the project to be done and pre- vented the company from failing, NVE officials say In addition, the ATP award improved the company's ability to attract capital from other

sources.

Funding from the

ATP enabled the project

to be done and

prevented the company

from failing . . . and

improved the company's

ability to attract capital

from other sources.

82 ADVANCED TECHNOLOGY PROGRAM
Spire Corporation

A Feedback-Controlled,

Metallo-Organic Chemical

Vapor Deposition Reactor

The advanced metallo-organic chemical vapor deposition reactor constructed with funding from the ATP.

Electronics

Laser

diodes are the tiny

workhorses in many industrial and consumer products. Every CD-ROM player

has at least one, and many

printers and photocopiers have a

large array of them. More than 20

million laser diodes are needed

each year for this market alone, and

the number is growing.

Advanced Fabrication Control for Improved Electronic Devices

This ATP project with Spire Corporation devel- oped a new way to make laser diodes and other

optoelectronic devices. Founded in 1969, Spire

is a specialty manufacturer of semiconductor

wafers and metallo-organic chemical vapor

deposition (MOC\T)) equipment. The company's new method makes possible the manufacture of individual lasers and laser arrays at

lower cost and with higher performance characteristics.

Spire built and demonstrated an advanced MOCVD reactor designed for the fabrication of

laser diodes. Laser diodes are intricate multilayer structures generally grown by MOCVD on compound semiconductor wafers. Researchers

developed in-process sensors to monitor the development of layers on the substrate, as well

as control systems to automatically adjust the many process parameters. They demonstrated

that the new technology can control the growth rate of the layers. They also showed

that the new reactor performed better than

conventional reactors in terms of epitaxial

layer uniformity over the entire wafer, as well

as run-to-run consistency. These two factors can contribute significantly to reducing the

cost of making laser diodes.

Potential for Commercial Products

The project did well technically and limited

commercialization is under way Spire is pursuing its original plan to produce and sell

reactors and license the technology to other

manufacturers, and it is in discussions with

several potential customers. The company also planned to produce low-cost laser diode arrays

. . . planned to produce

low-cost laser diode

arrays in competition

with foreign producers,

but tliat marlcet did not

develop.

^^^^^

83
A wafer populated with arrays of vertical cavity surface emitting lasers.

The company's new

method makes possible

the manufacture of

individual lasers and

laser arrays at lower

cost and with higher

performance

characteristics.

in competition with foreign producers, but that market did not develop.

Spire has successfully used the prototype

reactor to perfomi customer-specific research and development and to produce epitaxial

laser wafers of a demanding stnicture. One

customer has invested more that $250,000 with

Spire to develop vertical cavity surface emitting

laser (VCSEL) wafers and plans to invest another $450,000 in the effort in the near

future. A VCSEL emits light in a cylindrical beam vertically from its surface and may offer

significant advantages over edge-emitting

lasers in some applications. This customer may also buy an MOCVD reactor from Spire in

the next two years, following completion of the

initial development project.

Spire is focusing on use of the new feed- back-controlled reactor for growing laser wafers for VCSELs and edge-emitting lasers. VCSELs would be used in high-speed laser

printers and in optical interconnects for computer links, and edge-emitting lasers would be used in solid-state laser pumps and in measurement and material processing applications. The company contracted with another

large manufacturer in late 1997 to develop

PROJECT:

To develop an advanced feedback-controlled, high-throughput, metallo-organic chemical vapor deposition (MOCVD) reactor for fabricat- ing low-cost, high-quality laser diode arrays.

Duration: 6/15/1992 — 3/31/1995 ATP number: 91-01-0263

FUNDING:

ATP Company

Total

$1,223 973

$2,196

56%

44%

ACCOMPLISHMENTS:

Spire achieved the project's research goal and

afterward conducted additional, company-funded

development to commercialize the technology. A

prototype reactor is being used for commercial

wafer production and customer-specific develop- ment work. Signs of the project's success

Include the fact that the company:

published four papers and presented several others at professional conferences during the award period;

demonstrated the ability to grow epitaxial wafers with high-quality uniformity of composition and thickness over an entire wafer 2.25

inches in diameter;

demonstrated the ability to fabricate vertical

cavity surface emitting lasers (VCSELs) with

state-of-the-art performance characteristics;

published a 1997 update on use of the ATPfunded reactor, '1n Situ Monitoring and Control

for MOCVD Growth of AIGaAs and InGaAs," In

the Journal of Electronic Materials; m received $356,000 from two large manufacturers for development of advanced VCSEL epitaxial wafers and wafer production processes.

with an additional $450,000 to $750,000

expected in the near future; and

expanded sales of commercial epitaxial wafers (mostly for lasers and light-emitting diodes), with sales revenue of about $200,000

in 1998.

COMMERCIALIZATION STATUS:

Limited commercialization has been under way

since 1996. The ATP-funded technology has been incorporated into an MOCVD reactor being used for commercial production of optoelectronic epitaxial wafers. These include VCSEL

epitaxial wafers that are being developed for high-speed laser printing. Spire is also using

the reactor for two development projects funded

by other companies.

OUTLOOK:

Spire expects to produce substantial numbers of VCSEL devices in the future. Because the market

is growing rapidly, the company Is positioned to exploit Its superior in-house epitaxial wafer growth capability, based on the ATP-funded

technology, to produce large quantities of whole

epitaxial wafers, as well as wafers processed into optoelectronic devices ready for packaging.

COMPANY:

Spire Corporation

1 Patriots Park

Bedford, MA 01730-2396

Contact: Harvey B. Serreze or Kurt J. Linden Phone: (781)275-6000

Number of employees:

180 at project start, 150 at the end of 1997

VCSEL arrays for advanced optical computer

interconnects, Spire has already been paid

$106,000 for the project and could potentially

receive another $300,000. If the development work succeeds, Spire believes it will enable the company to enter the huge market for optical

interconnect components.

ATP Project Opens Doors

If the ATP funds had not been available. Spire would not have done the project, company

officials say The ATP award enabled Spire to overcome technical barriers to volume production of VCSEL wafers, some of which contain more than 650 epitaxial layers. These complex

structures had been previously grown only in a few laboratories and in small lots and sometimes virtually by hand. Spire's new capability,

in turn, has attracted an entire new line of

customers. The potential for alliances with research and development partners is now high, and

Spire is already working on advanced device development projects with several companies. The benefits to users of new devices made from

these complex wafers can be significant. The

ATP-funded reactor enables production of many kinds of wafers at lower costs. It also enables the production of some devices, made

from VCSEL wafers, that could not be fabricated any other way The benefits, however, can occur only if the company's limited commercialization expands into full-scale success, and it is still too early to tell whether that will happen.

84 ADVANCED TECHNOLOGY PROGRAM
.... Thomas Electronics, Inc.

Electronics

Flat Fluorescent

Lamps for Displays

Every

cockpit in a large

airplane contains small

windows that are mainly

used when the plane is on

the ground. While flying,

pilots "see" the world not by looking out the windows, but by looking

at the text and images shown by

instrument displays mounted on the

walls of the cockpit. The quality of these images bears directly on the

quality of the flying.

More-Visible Instrument

Displays for Safer Flying

Today, almost even' cockpit display uses

cathode ray tube (CRT) technology. CRTs are a

proven technology; have a long histor\' and are

fabricated by Thomas Electronics —which

undertook this ATP project —for use in the manufacture of cockpit displays. CRT displays have a well-known drawback, however: the

surface is glass, and the view one gets through

it depends on the amount of light in the cockpit and the direction the light is coming from.

In some circumstances, such as bright sunlight, visibility of displays may be seriously

diminished.

Creating a Flat Fluorescent Lamp

Liquid-crystal displays (LCDs) — the flatpanel displays used in notebook computers —

would be a good alternative to CRT displays. The drawback to LCDs, however, is that their

light source is not nearly bright enough for use

in airplane cockpits. This ATP project

addressed that problem by developing the technology needed to make a flat, bright fluorescent lamp for backlighting an LCD. The new

lamp would be about a quarter of an inch

thick, have the same length and width as the LCD, and be attached to its back.

In conventional fluorescent lamps, a cath- ode discharges electrons that excite mercury

vapor to emit ultraviolet light that, in turn,

induces the phosphor coating on the interior of

the lamp to glow white. Flat fluorescent lamps

were not developed eariier because of the diffiIn some

circumstances, such as

bright sunlight, visibility

of displays may be

seriously diminished.

Flat fluorescent lamps for flat panel display back-lighting, in a variety of sizes, ranging from 1.5 inches to 12.5 inches on the diagonal.

85
Fiat fluorescent lamps

were not developed

earlier because of the

difficulty in generating

a bright plasma in the

thin space between

wide, flat sheets.

PROJECT:

To develop a high-efficiency electron source for fluorescent lighting to enable a new class of

efficient, bright, flat lamps with wide applications in computer and instrument displays, high-definition TV displays and wide-area ultraviolet light sources for industrial use.

Duration: 2/1/1994 — 1/31/1997 ATP number: 93-01-0109

FUNDING (IN THOUSANDS):

ATP $718 77%

Company 215 23%

Total $933

ACCOMPLISHMENTS:

Thomas developed the high-efficiency electron source needed to construct flat fluorescent lamps, which was the goal of the project. The company achieved the following:

entered pilot production of flat lamps for key customers in the U.S. display industry;

received orders for further evaluation and

field testing of the new technology in cockpit

applications from Optical Image Systems,

AlliedSignal, Honeywell, Litton Industries, Kaiser

Electronics and five other companies; and

placed prototypes with three military contractors for rugged displays in tanks and other ground vehicles.

COMMERCIALIZATION STATUS:

Current sales of prototypes and pilot models of

flat fluorescent lamps to avionics customers

range from 30 to 50 units per month. If cus- tomer tests prove the technology works for them,

regular commercial sales are expected to begin

after the flat-panel displays have been certified by the Federal Aviation Administration for use in cockpits.

OUTLOOK:

Full commercialization is expected after refine- ments to the technology based on feedback from customers using prototype units. If the technology is commercialized, its users —aircraft manufacturers, airlines and their passengers —

will benefit from brighter, more reliable and

cheaper backlights for flat-panel displays in airplane cockpits.

COMPANY:

Thomas Electronics, Inc. 100 Riverview Drive Wayne, NJ 07470

Contact: Douglas Ketchum Phone: (973) 696-5200 Number of employees:

251 at project start, 324 at the end of 1997

Informal collaborator:

Princeton University

culty in generating a bright plasma in the thin

space between wide, flat sheets. Conventional

cathodes are too inefficient to create enough

light for the color LCDs used in avionic displays. And although barium dispenser cathodes (BDCs) are efficient enough for the task, they were never used in the presence of mercury, which is believed to "poison" the barium and

quickly reduce both the efficiency and life span

of the device. Thomas solved the mercury

problem with BDCs by using a new hollow- cathode design that enabled the company to

construct a truly flat fluorescent lamp.

In addition, Thomas introduced new materials to flat fluorescent lighting. The front of

the lamp is glass. But the back is hardier ceramic material and has all the light-producing components embedded in it. The ceramic

back enables the lamp to withstand severe shock and vibration much better than if both

sides were glass. In addition, the thermal properties of the ceramic material allow the lamp

to operate at significantly higher temperatures than comparable lamps made solely of glass.

As a result, these new lamps can be used for rugged flat-panel displays in applications such

as military tanks.

Field Testing Underway

Follow-on research and development work is on track to meet the project's commercialization goal — the introduction into commercial and military airplane cockpits of flat-panel

displays containing the new fluorescent lamp. To date, Thomas has invested more of its own

money in the effort than it received from ATP, and the work is beginning to pay off. The comADVANCEO TECHNOLOGY PROGRAM
pany is completing a pilot production plant and has received orders for further evaluation and field testing of the new technology from

Optical Image Systems, AlliedSignal, Honewell, Litton Industries, Kaiser Electronics and five other companies. The field testing must yield positive results before the Federal

Aviation Administration will certify the flat- panel displays for use in cockpits. About 10,000 displays are installed in

airplane cockpits each year. Compared with CRT devices, the new flat-panel displays will be more effective (they produce more light), more

reliable (the ceramic material is hardier than

glass) and less-costly (the ceramic material can be machined more easily than glass). Ultimately their use is expected to benefit

aircraft passengers, who will enjoy safer air

travel because pilots have more-effective,

more-reliable instrument displays. It is also

expected to benefit flat-panel display manufacturers, aircraft manufacturers and airlines through cost reductions and quality improvements.

Potential uses for the flat-lamp technology

include displays in military ground vehicles, such as tanks. Displays in these applications must withstand greater extremes in vibration, temperature and other operating conditions than ordinary displays. Three companies

specializing in such displays have ordered flat- lamp prototypes from Thomas. ATP Bolsters U.S. Technology

Without the ATP award, Thomas officials say,

the company would not have done the

research and development work for this project. The company would have struggled along

with its conventional CRT technology and

would have stood virtually no chance of competing with other display-component suppliers,

all of which are foreign companies. In addition, the award helped Thomas establish connections with scientists at Princeton University and form alliances with contractors.

. . . these new lamps

can be used for rugged

flat-panel displays in

applications such as

military tanks.

Without the ATP

award ... the company

would have stood

virtually no chance of

competing with other

display-component

suppliers, all of which

are foreign companies.

87
ADVANCED TECHNOLOGY PROGRAM
Chapter 6

Energy and Environment

American Superconductor Corporation 90

High-Temperature Superconducting Coils for Electric Motor Efficiency Armstrong World industries, inc. 93 New Materials for New-Generation Tfiermal Insulation

E. I. du Pont de Nemours & Company 95

Thallium/Lead Thin Films for Advanced Superconducting Electronic Devices

iViiciiigan iVIoiecuiar institute 97

Recycling Mixed Plastics
American Superconductor Corporation (ASC)

Energy and Environment

High-Temperature

Superconducting Coils for

Electric Motor Efficiency

A 286 hp demonstration motor constructed by Reliance Electric with HTS windings

supplied by ASC.

Large

electric motors of

1 ,000 horsepower (hp) or more are used in many

applications across the

U.S. economy. If moreefficient motors could be developed

and replace older ones, the savings

would be substantial. The new

motors would consume less electricity than older motors. In addition

to cutting electricity bills, the

switch to more-efficient motors

would decrease the need for electricity production, with concomitant

reductions in the burning of fossil fuels and in the resulting air

pollution.

Harnessing Superconductivity to Increase Electric Motor Efficiency

American Superconductor Corporation (ASC), a young development-stage company, was

eager to undertake the long-term research and

development needed to capture the advantages

offered by high-temperature superconductivity

for large electric motors. But it lacked the

necessary financial resources to do it. At the time of the ATP award in 1992, there was little

competitive pressure in the electric power-generation industry, so few incentives existed to reduce costs. And, although the Department of Energy followed the ATP award with a contract

to ASC, that source of funding was unavailable

for the initial research the company proposed

to do. ASC reports that the ATP award made the

research project possible. Without the award.

the company would have been unable to do

the research and development on the new technology, even on a delayed-development

schedule.

Superconductivity

Reduces Energy Losses

The most significant energy losses in motors come from resistive heating in the windings, so superconducting motors with almost no electrical resistance in the windings could realize important efficiency gains. To be able to build such motors required significant advances in

. . . opportunities

abound for reducing

electric energy use via

applications of the

ATP-funded technology.

the design, fabrication and winding of HTS

wires in geometries required for motor

winding.

In addition to industrial motors, the new

technology would be useful in generators,

transmission cables and superconducting

magnetic energy storage systems. It also has

potential applications in x-ray lithography, ion

implantation, medical cyclotrons, magnetically levitated trains, magneto-hydrodynamic

ship propulsion systems, and magnetic separation for materials processing and ore recovery.

Indeed, opportunities abound for reducing

electric energy use via applications of the ATPfunded technology.

90 ADVANCED TECHNOLOGY PROGRAM
PROJECT:

To develop high-temperature superconducting (HTS) wire fabrication and winding techniques

that will enable the development of large HTS

electric motors with almost no electrical resistance. This advance will reduce the motors'

electricity consumption and save the country hundreds of millions of dollars in energy costs each year.

Duration: 7/1/1992 — 6/30/1995 ATP number: 91-01-0146

FUNDING (IN THOUSANDS):

ATP $1,883

Company 2.579

Total $4,462

42%

58%

ACCOMPLISHMENTS:

ASC achieved its goal of developing HTS wire

fabrication and winding techniques. It demonstrated the use of racetrack-shaped HTS coils in a 5-hp motor early in the project and in a 200-hp motor soon after project completion. The company also:

received six patents for technologies related

to the ATP project:

"Current Limiters in Power Utility Applications"

(No. 5,390,064: filed 7/7/1992,

granted 2/14/1995),

"Superconducting Rotor"

(No. 5,482,919: filed 9/15/1993,

granted 1/9/1996),

"Method of Making Superconducting Windand-React Coils"

(No. 5,531,015: filed 1/28/1994,

granted 7/2/1996),

"Superconducting Magnetic Coil"

(No. 5,525,583: filed 2/7/1994,

granted 6/11/1996),

"Magnetostrictive Superconducting Actuator"

(No. 5,585,772: filed 1/11/1995,

granted 12/17/1996), and

"Variable Profile Superconducting Magnetic

Coil"

(No. 5,581,220: filed 10/10/1995,

granted 12/3/1996);

applied for eight additional patents for tech- nologies related to the ATP project; won Industry H/ee/f magazine's Technology

of the Year Award in 1996; won the 100 Award in 1996 from /?(SD magazine, which selects the 100 most important

innovations of the year, for its development of

CryoSaver current leads, a spin-off product

related to the ATP project;

received (with partner Reliance Electric) $10.2 million in Department of Energy Strategic Partnership Initiative awards in 1996 for cost- shared development of high-horsepower, commercial-scale motors;

received a $10-million investment from Electricite de France, the French power company in

April 1997; and

raised $27 million via a second public stock

offering in February 1994.

COMMERCIALIZATION STATUS:

Commercialization is in progress. A partnership with Reliance Electric will help commercialize

the large-motor technology in the form of 1,000- and 5,000-hp motors. In the meantime, ASC has

introduced a related product, CryoSaver current

leads, in 1996. Users of this product have

already achieved better operating efficiencies in magnetic resonance imaging and commercial

energy storage systems.

OUTLOOK:

The project has progressed as planned, and the outlook for achieving significant energy savings from HTS motors is excellent. Large electric motors account for about 65 percent of all

electricity consumption in the United States, so even small efficiency gains in this application

are likely to translate into cost savings of several hundreds of millions of dollars for the nation. In

the future, large users of electric power will be

able to construct new facilities with smaller, more-efficient and reliable motors based on HTS

technology Other applications of the technology

could help residential electricity users in the United States save millions of dollars in energy

costs each year.

COMPANY:

American Superconductor Corporation (ASC)

2 Technology Drive Westborough, MA 01581

Contact: JoeSollecito Phone: (508) 836-4200 Number of employees:

59 at project start, 146 at the end of 1997

Informal collaborators:

Reliance Electric Company (acquired by

Rockwell International in 1995), Oak Ridge

National Laboratory

. . . received six patents

for technologies related

to the ATP project . .

.

Larger and Larger Motors

Researchers from ASC and its partner, Reliance

Electric Company (now part of Rockwell

International), built a 5-hp HTS motor as proof of concept. This team and researchers at Oak Ridge National Laboratory then fabricated and tested a series of racetrack-shaped HTS

coils of a type needed for motors. This effort included studies of mechanical and electrical

properties that affect performance, as well as

the development of fabrication techniques for producing flexible, durable wires in increasing

lengths. Soon after the project ended in June

1995, ASC built a 200-hp HTS motor for testing and demonstration. The company is planning

to complete development work on a laboratory

This advance will reduce

the motors' electricity

consumption and save

the country hundreds of

millions of dollars in

energy costs each year.

model 1,000-hp HTS motor in late 1998 or

early 1999 and then begin development of a 5,000-hp motor Each increment in motor size

represents substantial advances in the underlying technology. A Long-Term Endeavor on Track

ASC has viewed this endeavor from the outset

as requiring a long-term commitment and

substantial infusions of capital along the way

to reach full commercial deployment of the HTS technology in huge electric motors. The

effort is on track. In the meantime, ASC has launched its first commercial product related

to the ATP-funded technology, the CryoSaver

current leads, which carry power into HTS

devices from external electricity supplies. Although this is not the ultimate commercial91
Placing 1000 horsepower NTS motor coils into a cryogenic cooling system.

. . . electricity users are

likely to benefit from

lower electricity costs

enabled by electricity

producers' use of the

new HTS motors.

. . . won Industry Week

magazine's Technology

of the Year Award in

1996. .

.

ization goal envisioned for the technology, CryoSaver current leads provide revenue and

help maintain investor interest in the company. The CryoSaver product has received technical recognition as well as early commercial

success. In 1996, it won Industry Week magazine's Technology of the Year award and the 100 Award from R&D magazine, which selects

the 100 most important innovations of the yearAn HTS motor of at least 1,000 hp is needed

to achieve efficiencies and cost savings in line with the project goals. ASC is deliberately wait- ing until it proves the concept at the 5,000-hp

level before moving the HTS motor into commercialization. The company expects to demonstrate a commercial-scale 1,000-hp motor in 1999- Following the ATP award, ASC received funding from the Department of Energy as

part of a $21 million motor program with

Reliance Electric and several other companies

to complete the development work. In addition, it raised $27 million via a second public

stock offering and attracted another $10 million in private investment from the electric

utility industry. It is actively protecting its

intellectual property position through patent

filings.

Potential for Huge Benefits

Users of ASC's CryoSaver current leads have

achieved better operating efficiencies by

improving the transmission of electricity for cryogenic devices. In the future, users of large

electric motors (electric utilities, steel mills, water pumping stations) will be able to have motors that are smaller, more reliable and more efficient than today's motors. This may be particularly important when

competition is introduced into the electric power industry, which ASC has selected as its

first commercial target. Companies in that

industry have generally operated as regulated

monopolies. With competition in the production of electricity, cost savings will be far more

important in the electric power generation

marketplace. Some of those cost savings are

likely to be achieved by electric power generation companies switching from conventional

large electric motors to HTS motors from ASC. Lower costs for power generation companies, together with pricing pressure as several companies compete for the right to supply commercial and residential customers, is likely

to result in cost savings at the power generation level being passed on, at least partially to

customers. The end result of this chain of

events, which is still in the future, is that electricity users are likely to benefit from lower

electricity costs enabled by electricity producers' use of the new HTS motors. The possibility exists for a large retum to

the economy as a whole from the implementation of this new technology, since even small

gains in motor efficiency translate into large energy savings to the companies and to the

nation.

The company expects to

demonstrate a

commercial-scale

1,000-hp motor in 1999.

Pole set and double pancacke HTS colls for 1000 horsepower Reliance Electric motor.

92 ADVANCED TECHNOLOGY PROGRAM
... . Armstrong World Industries, Inc.

Energy and Environment

New Materials for

New-Generation

Thermal Insulation

Armstrong researchers

planned to investigate

the microstructure of insulation material and

the air cells, or pores,

within it. The project aimed to learn how to control the molecular

morphology — structure — of the

solid material (to reduce its thermal

conductivity), the geometry and

orientation of air cells (to optimize

pore morphology), and the size and

distribution of air cells (to reduce

the thermal conductivity of air within a cell).

Developing Super Insulating

Materials

Though they were not able to hilly achieve

their goals, the researchers made important

progress in the development of super insulating materials as a result of their study of materials with high porosity and of nonspherical

pores that are nanometer in size. The technical work followed two major tracks: the fabrication

of polyethylene and polystyrene foams with carbon dioxide blowing while attempting

explicitly to control the formation of the air

pores, and the development of new process technology for the synthesis of aerogels for use

in insulation products. The blowing of polyethylene and polystyrene foams with carbon dioxide entailed

substantial challenges in attempting to optimize the mechanics to achieve the foam

without a pressure drop leading to collapse of

air cells. The researchers ran into problems

working with polyethylene and, in addition, concluded that modification to extruder equipResearchers achievi^^

more technical success

in their work on process

technology for the

synthesis of aerogels.

raent would be necessary to achieve success with carbon dioxide as the blowing agent. Both changes raised production costs. Armstrong

subsequently shifted away from polyethylene to

other thermoplastics and began blowing with

butane, in addition to carbon dioxide, but costs could not be lowered enough to justify commercialization. No patents or papers resulted from this track of the ATP-sponsored research. Researchers achieved more technical success in their work on process technology for the

synthesis of aerogels. The aerogels and xerogels produced by the process have both a high

porosity and small pores; that is, the resulting

material is microporous, with about 25 percent

of the pore volume in pores less than 50 nanometers in diameter The process also promises to substantially lower the costs of

aerogel production. Armstrong received three

patents for its technical advances in aerogel

synthesis. Company Shifts

At the time the project was awarded, Armstrong saw the ATP project as providing an opportunity to broaden the company's capabilities along lines that it otherwise would not have

pursued. By developing new forms of insulation with superior performance, Armstrong saw

the opportunity to broaden its focus from the

technical insulation market (insulation for

heating, refrigeration, plumbing and specialty

applications) to the structural insulation market (insulation for buildings and other large

structures). Armstrong officials expected their

first aerogel application to be for rigid technical insulation, with eventual opportunities in

structural applications.

Later company reorganizations and strategy shifts changed the company's plans for applying its new technical know-how.

Amistrong officials concluded that —despite

the remarkable insulating properties of the

aerogels and the new process technology, which dramatically reduced production costs — the unit costs were still too high to penetrate the structural insulation market. The

company's initial excitement over the potential

of aerogels for the structural market dimmed.

Armstrong scaled back its estimated demand

for aerogels and decided to procure what it needed through suppliers rather than produce

them in-house. The company has decided to license the

three aerogel process patents to potential

suppliers, and not to be in the aerogel manufacturing business itself. To the extent that

suppliers who obtain the licenses can use tech- nology to produce aerogels more cheaply, Armstrong will benefit from its research in terms of a lower-cost supply Other buyers may

also benefit from lower-cost aerogels, depending on the specific licensing arrangements

negotiated by the suppliers with Armstrong.

The company's Initial

excitement over the

potential of aerogels for

the structural market

dimmed.

93
PROJECT:

To develop process technology for a new-generation insulation material based on controlled morptiology (structure) in order to achieve superior insulating properties and associated energy

savings.

Duration: 8/1/1992 — 7/31/1995 ATP Number: 91-01-0025

FUNDING (IN THOUSANDS):

ATP $1,868

Company $2.650

Total $4,518

41%

59%

ACCOMPLISHMENTS:

Armstrong researchers performed research in

tvi/o major areas: process technology for aerogels and carbon dioxide blowing of polyethylene foams. The company received three patents for technologies related to the ATP project:

"Preparation of High Porosity Xerogels by Chemical Surface Modification"

(No. 5,565,142: filed 4/28/1993,

granted 10/15/1996);

"Thermally Insulative, Microporous Xerogels and Aerogels"

(No. 5,525.643: filed 7/28/1995,

granted 6/11/1996); and

"Wet Silica Gels for Aerogel and Xerogel

Insulation and Processes for the Wet Gels"

(No. 5,762,829: filed 3/5/1997,

granted 6/9/1998).

COMMERCIALIZATION STATUS:

Armstrong has decided to license its low-cost

aerogel synthesis patents to suppliers, rather than to manufacture aerogels directly, but the

licensing has not yet occurred.

OUTLOOK

Despite extremely good insulating properties of the aerogels and lowered processing costs, early applications of the aerogel are expected to be

limited to niche markets, such as rigid technical

insulation for heating, refrigeration and plumbing, or to speciality applications such as superconductivity insulation. Even with lowered costs, the aerogels do not at this time appear to be

cost-competitive with conventional insulation materials for structural applications. Armstrong

is continuing its research on the use of carbon

dioxide foaming of thermoplastics, and this approach may hold promise for the future.

COMPANY:

Armstrong World Industries, Inc. Innovation Center 2500 Columbia Ave.

Lancaster, PA 17603

Contact: Stephen C. Davis Phone: (717) 396-5643

Thus far, no licensing agreements have been

achieved. But, according to company officials, Armstrong stands ready to negotiate licensing

agreements for its aeorogel process technology.

In fall 1996 Armstrong combined, with another unit, the research unit where the ATP

project was carried out, a consolidation that

also entailed personnel changes. The principal

The company has

decided to license the

three aerogel process

patents to potential

suppliers, and not to be

in the aerogel

manufacturing business

itself.

investigator on the ATP project left Armstrong and set up a separate business that is reportedly working in areas related to the ATP

project. This movement of people who worked on the research project and the establishment

of a new business pursuing related technological goals may provide yet another possible path of technology diffusion. Over time, Armstrong's primary interest has

shifted away from the aerogel technology and

toward the foam blowing technology, as indicated by the company's continued involvement

in this area. Here, too, Armstrong's research

effort shifted away from the initial ATP project

focus towards techniques and materials that now are seen to offer more promise of achieving the high-performance foam insulating

products that were the ultimate goal of the ATP-funded research.

94 ADVANCED TECHNOLOGY PROGRAM
J, . . E.I. du Pont de Nemours & Company

Energy and Environment

Thallium/Lead Thin Films for

Advanced Superconducting

Electronic Devices

Superconductivity holds

great promise for reducing energy consumption in practically any process

that uses or transports

electricity. Radar components,

power transmission lines, communications satellites, and a host of electronic and electrical devices,

for example, are good candidates

for superconductor applications.

New Technology for Making

Superconducting Components

At the time of its proposal to the ATP, DuPont

had carried out a three-year research program

to develop high-temperature superconducting

(HTS) materials and was debating whether to disband the effort because of its high technical

uncertainty. The properties of HTS materials were still not well understood, fabrication

processes had not been developed, and the

technical and commercial viability of the

materials had not been proven. DuPont said

later that continuation of its HTS research hinged on receiving an ATP award, which the company considered an indicator of the promising nature of the work. With its ATP award, DuPont developed thinfilm HTS fabrication technology. It is generic

enough to use with a variety of HTS materials

that have form, structure and performance

. . . continuation of

Its HTS research hinged

on receiving an ATP

award . .

.

properties similar to those of thallium/lead. The technology is particularly useful when

using thallium/barium or thallium/lead in the

fabrication of HTS electronics components. The company developed two thin-film fabrication processes — a two-step approach using

sputtering and post- annealing and a singlestep approach with simultaneous sputtering and annealing. Photolithographic and ionmilling techniques are used to form circuits and other electronic features in the films. The

viability of the two processes was demonstrated

. . . HTS component

technology recognized

as one of the "Top

Products of 1993" by

Microwaves & RF

magazine . .

.

by constructing and testing several basic

electronic components, including oscillators,

filters, mixers and coplanar-designed transmission lines. Many New and Potential

HTS Products

DuPont has developed six electronic-compo- nent products: thin films of two or three inches

in diameter made on HTS substrates of erbium/barium, thallium/barium or thallium/lead. All six of these products use the new

HTS thin-film fabrication technology devel- oped in the ATP-funded project. In addition,

the company usually fabricates electronic components on the thin-film wafers, cuts the

wafers into discrete components and encases them in metal casings, all according to cus- tomer specifications.

The company has begun substantial marketing efforts and is successfully selling

products. Most of these are made with erbiunVbarium and thalliunVbarium rather than thallium/lead. Applications requiring the higher operating-temperature capabilities of

thallium/lead HTS components have not yet developed significantly, due in part to improved

cryogenics technology that has increased the number of application areas where the two

other HTS materials are useful. DuPont has maintained its long-term

vision and continues to develop HTS electronics components based on erbium/barium,

thallium/barium and thallium/lead. The

payoffs may be coming soon, especially in magnetic resonance imaging (MRI) equip- ment and possibly in terrestrial and satellite communications. HTS materials also have

potential use in nuclear magnetic resonance

instruments, superconducting quantum interference devices and a variety of microwave

applications. For superconductor technology to realize its

full potential, however, more advances have to

be made in the technology. DuPont continues

to fund its HTS research program at significant

levels.

. . . this technology . .

.

could make magnetic

resonance imaging and

terrestrial and satellite

communications iess

expensive and more

efficient to operate . .

.

95
. . . published more than

20 research papers

on the technology

in professional

journals . .

.

... a small

equipment supplier,

the Kurt J. lesket

Company . . . improved

fabrication

equipment . .

.

PROJECT:

To develop thin-film fabrication processes needed to produce high-temperature superconducting (HTS) electronics components at reasonable

cost.

Duration: 4/1/1991 —3/31/1994 ATP number: 90-01-0064

FUNDING (IN THOUSANDS):

ATP $1,590 67%

Company ZM 33%

Total $2,374

ACCOMPLISHMENTS:

DuPont accomplished the R&D goal and has demonstrated several component products that

directly use the new technology. It has also marketed products based in part on procedures developed by the project, but using thallium/ barium as a key ingredient instead of thallium/

lead. Indicators of successful development of the technology are that the company:

published more than 20 research papers on

the technology in professional journals;

had its HTS component technology recognized as one of the "Top Products of 1993" by Microwaves & /?F magazine in December 1993;

introduced HTS thin-film products that, when built into larger systems such as magnetic resonance imaging machines and communications satellites, can lead to higher performance

at lower overall cost; and

worked with a small equipment-supplier company to develop improved HTS thin-film fabrication equipment.

COMMERCIALIZATION STATUS:

The market for new products based on the fabri- cation technology developed in the project is well established, even though applications that use thallium/lead as the HTS material have been slow to develop. Several products made with the new HTS technology are being marketed. The company has invested large sums to scale up

for production in anticipation of increased demand in the near future.

OUTLOOK:

Use of the new process technology can substantially reduce the cost and improve the quality of superconductors in many applications. Applications based on this technology could, for example, make magnetic resonance imaging and

terrestrial and satellite communications less expensive and more efficient to operate, generating widespread benefits valued at tens of millions of dollars.

COMPANY:

E.I. du Pont de Nemours & Company

RG. Box 80304

Wilmington, DE 19880-0304

Contact: Dennis J. Kountz Phone: (302) 695-4256

Less-Costly, More-Efficient

Electronic Equipment

HTS processes developed in the ATP project could make superconductivity-based equip- ment less costly and more efficient to operate. HTS-based signal coils, for example, permit

the use of a low-cost permanent magnet for MRI, an arrangement that could reduce the

installation cost of this MRI machine to as

little as one-tenth that of a standard MRI

device. In addition, the use of HTS electronics

enables equivalent or better MRI perfomiance

at much lower cost. IGC, an MRI manufacturer that uses DuPont HTS electronics in its

products, reports that operating costs for its MRI machines are expected to be about onesixth those for currently available competitor machines that use low-temperature supercon- ducting technology. Thus, the new technology

helps reduce MRI capital and operating costs while improving diagnostic effectiveness.

The benefits of the new HTS technology are

likely to be substantial and widespread. In MRI

and satellite communications, for example,

the chain of events leading from the manufacturer of the components to the end users has many steps. At each step, some benefits from

the technology are likely to accme to intermediate customers and end-users, who pay for

only a small part of the value they receive from

the technological advance. Given the large number of end users for MRI and satellite

services, the aggregate value of those spillover

benefits is likely to be in the tens of millions of

dollars. During this project, DuPont worked with a

small equipment supplier, the Kurt J. Lesker Company to develop improved fabrication equipment for depositing HTS material on a wafer Lesker is now making these improved

machines available to other companies, as well

as to DuPont.

96 ADVANCED TECHNOLOGY PROGRAM
Energy and Environment

Michigan IVIolecular Institute (iMIUI)

Recycling Mixed

Plastics

ike turning swords into plowshares, the idea of turning waste plastics into fenceposts, park benches,

building blocks and other

useful, long-lasting items holds

tremendous promise for the welfare

of society. Wood rots, iron rusts and

stones weather, but plastic

endures. You can tear, bend or break plastic. But words like "rot"

or "rust" simply do not apply — a blessing when durability is at issue; a curse when plastics are dumped

into landfills.

Wood rots, iron rusts

and stones weather, but

plastic endures.

Technology to Recycle

Much More Waste Plastic

The U.S. economy produces about 75 million pounds of plastic products each year, and the

idea of reqcling them is appealing. A problem

with reusing plastics, though, is that the many

kinds do not mix well in recycling processes. Req'cling today requires sorting of plastics, many of which still get dumped because they

are not compatible with the others. This ATP

project with Michigan Molecular Institute (MMI) aimed to develop a technology that would dramatically increase the proportion of

plastics that can be recycled. The new technology would "compatibilize," or alter, various

plastics so they mix well in recycling. They

could then be formed into pellets with essen-

... a curse when

plastics are dumped into

landfills.

tially the characteristics of virgin plastics. These pellets would be mixed into a slurry fed

into a continuous flow process that puts out a mixed plastic strong enough for construction

materials. A key technical goal of the project was to develop the science and technology of polymer

compatibilization, which would enable poly- mers in the commingled plastic-waste stream

to be recycled into commercially useful products. Collaborating researchers from Eastman

Kodak, Eastman Chemical and the University

of Florida (UF) accomplished that goal by

establishing the fundamentals of compatibilization of multiphase polymer blends, includ- ing new knowledge about the "morphology" —the shape and structure —of polymer

blends. The team also prepared compatibilizers

using a variety of chemical approaches and

produced and tested prototype compatibilized

materials. Researchers found effective methods

to compatibilize commingled-plastic waste. New Recycled-Plastic Products

Results of the ATP project are being used by

Eagle Plastics Systems of Florida to produce

compatibilized plastic panels for housing parts,

in collaboration with UF researchers who were

involved in the ATP project. Large 4-inch-thick panels are fabricated by sandwiching fiberglass

insulation between thin plastic sheets attached

to galvanized steel studs. These wall units are then used for the construction of low-cost modular houses, many of which are used fol- lowing a fire or other disaster, when temporary

housing must be built quickly The company

plans to construct full-scale compatibilized

plastic-panel manufacturing plants in the near

future. Eagle constructed an assembly plant in Kentucky and began manufacturing modular

houses there in late 1996. It uses recycled

plastics brought from a pilot plant to the site by railroad cars that left the state loaded with

coal. Because of the extremely low cost of the

recycled plastics, the company can manufacture its houses for about $6 per square foot, much lower than the cost of conventional

housing, which runs as high as $50 per square

foot. During its first year producing the modular houses. Eagle generated more than $100

million in contracts.

Results of the ATP

project are being used

by Eagle Plastics

Systems of Florida to

produce compatibilized

plastic panels for

housing parts . .

.

In addition, attempts to commercialize the technology are under way via the development

of two new MMI research and development

projects in the auto industry that focus on

recycling plastics from auto parts such as dashboards and door panels. Both projects rely on the knowledge of polymer blend morphology discovered in the ATP project. If these

projects generate applications in the auto

industry, the ATP technology will be commercialized via that route, as well.

97
Commercialization efforts did not proceed

as quickly as anticipated when the proposal was submitted. One obstacle to the speed of

commercialization was a change in ownership and direction of Waste Alternatives, one of the

initial collaborators on the project and the company that was planned to play a key role

in commercializing the technology. ATP Funding Critical for Recycling Research

Without the ATP award, MMI officials say, the

project would not have been undertaken. The

funding helped MMI forge relations with

research partners at the University of Florida,

Eagle, Eastman Kodak and Eastman Chemical.

Research on post-consumer plastics packaging

recycling, based on the ATP-funded technology and substantial funding from Eagle, is contin- uing at the univereity. In addition, researchers

there have extended the ATP technology to

develop new virgin plastics alloys that are

expected to lead to further commercialization. A 30-acre plastics recycling industrial park is being constructed on land owned by the UF

Foundation, and continuing support for

research amounting to about $100 million

over the next 15 years is anticipated.

In addition, the use of knowledge developed

by the ATP project may have advanced the two

succeeding studies at MMI for recycled plastics

parts in the auto industry by as much as two

years. The scientific infomiation generated by

the ATP project has also been made generally

available, via published technical papers, to

the plastics and recycling industries.

PROJECT:

To develop methods for polymer compatibilization — adding small amounts of a substance to a blend of different plastics to make tfiem chemically compatible so thai the material fabricated from them has good mechanical and physical

properties, This technology would greatly increase the amount of waste plastic that can be

recycled.

Duration : 8/15/1992 — 8/14/1995 ATP number: 91 01

30%

70%

FUNDING (IN THOUSANDS):

ATP $1,642

Company 1808

Total $5,450

ACCOMPLISHMENTS:

MMI researchers and their collaborators established the fundamentals of polymer compatibilization, which enables polymers in a waste

stream of different kinds of plastics to be recy- cled into commercially useful products.

Indicators of this accomplishment are that MMI

and its collaborators:

published more than 10 papers on the tech- nology in professional journals; made the technology available to Eagle

Plastics Systems to develop and test materials

for the housing construction industry; and made the technology available through MMI

to two on-going R&D projects in the automobile

industry that focus on recycling plastics from

auto parts such as dashboards, door panels and

tail lights.

COMMERCIALIZATION STATUS:

One collaborating company has begun to use

the technology in the construction of low-cost modular houses. Information on the technology

generated by the project is now available to the

plastics and recycling industries via published

technical papers, and some of it is being used in additional research projects.

OUTLOOK:

Commercialization is underway and is expected

to increase substantially in the construction of modular housing. The technical base developed

in this project is also being used in two new

projects that focus on recycling plastic auto

parts.

ORGANIZATION:

Michigan Molecular Institute (MMI)

1910 W.St. Andrews Road

Midland, Ml 48640-2696

Contact: Conrad F. Balazs Phone: (51 7) 832-3882 ext. 590

Informal collaborators:

University of Florida; Eagle Plastics Systems; Eastman Kodak Company; Eastman Chemical Company; Inter Recycling, Inc.

One obstacle

to the speed of

commercialization

was a change in

ownership . .

.

98 ADVANCED TECHNOLOGY PROGRAM
Chapter 7

Information, Computers

and Communications

Communication Intelligence Corporation #1 100

Computer Recognition of Natural Handwriting

Communication Intelligence Corporation #2 103

Cliinese Cliaracter-Recognition IVletliods for Computer Data Entry Engineering Animation, Inc 105

Three-Dimensional Anatomy of Human Body, With Animation, for Medical Training

ETOM Technologies, Inc 109

Packing More Data Into Optical Data-Storage Disks Mathematical Technologies inc Ill

Mathematical Technology to Restore or Enhance Movies

Torrent Systems, Inc 114 A User-Friendly Programmer's Tool for Writing Parallel-Processing Software

li

99
Information, Computers Communication inteiiigence Corporation (CIC)

and Communications — m. w% -m.- m

Computer Recognition of

Natural Handwriting

A computer user entering information into lier PC witli a pad and stylus. Company

software in the PC converts tlie data from tlie pad into letters and words.

ince the beginning of the

computer age during

World War 11, virtually all data have been entered

into computers via the

keyboard. Teletype machines were

adapted so that typing created a punched paper tape, which was

read by a second device attached to the computer. Later, the key-punch

machine was developed; it created

holes in cards that were read by a card reader connected to the computer. In time, keyboards were used

to enter data directly into computers, first via terminals connected

to main-frame computers, and then

for desktop computers as well.

Handwriting: An Easier Way to Enter Computer Data

Each development advanced the science of data entry, but keyboards have continued to be

problematic. Some people cannot use them

because of physical limitations, such as arthritis or carpal tunnel syndrome, or because they do not know how to type. Others find them

difficult to use in particular settings and

circumstances, such as conducting inventory on the shop floor or a geology sui-vey in the

wilderness, where using a keyboard is cumbersome. Difficulty in using keyboards and their

inappropriateness in certain situations were

seen as two of the obstacles limiting computer

use to only about 5 percent of the U.S. population when this project was proposed in ATP's

first competition in 1990.

Software That Recognizes

Cursive Writing

Communication Intelligence Corporation

(CIC), a small California company spun off from SRI International (formerly Stanford Research Institute), has addressed these key- board problems by using technolog}' created in

its ATP project for a reliable, cost-effective

. . . received, in early

1997, the "Ease-of-Use

Seal of Commendation"

from the Commendation

Program of the Arthritis

Foundation . .

.

alternative: a stylus and pad that can be used

by the computer to "read" handwriting. The

hardware was simple to implement, since

touch-sensitive pads already existed. The difficult part was perfecting techniques for software

that would effectively recognize fully cursive

handwriting. CIC researchers accomplished this technical goal during the project by collecting a

database with thousands of cursive handwriting samples and developing new recognition

algorithms. After analyzing the handwritingsample database and developing the recognition methods, they also developed procedures

that permit fast computation with modest computer memory requirements.

100 ADVANCED TECHNOLOGY PROGRAM
PROJECT:

To develop a natural handwriting data-entry sys- tem for computers for applications where pen- based entry works best and for use by people who do not or cannot use a keyboard.

Duration : 4/1/1991 — 9/30/1993 ATP number: 90-01-0210

FUNDING (IN THOUSANDS):

ATP $1,264

Company 912

Total $2,176

58%

42%

ACCOMPLISHMENTS:

CIC developed new data-entry software tech- nology that recognizes each user's natural handwriting without "training" the computer or the

user. The company:

incorporated some of the ATP-funded tech- nology into an existing software product, Handwriter®, giving it the ability to recognize connected letters in cursive writing in limited circumstances (previously, it recognized only

handprinting);

licensed the Handwriter® software to more

than a dozen computer manufacturers around

the world, generating $360,000 in revenue from

sales of 30,000 units in 1997;

launched a new product in 1 996 called Handwriter® IVIxTM, a stylus-and-tablet dataentry device using the upgraded Handwriter®

software;

sold 1 1 ,000 copies of Handwriter® MxTM in 1997, with sales totaling more than $2.2 million; and

received, in early 1997, the "Ease-of-Use

Seal of Commendation" from the Commendation

Program of the Arthritis Foundation, for the company's Handwriter products — indicating

their value to disabled people who have trouble

with keyboard entry.

COMMERCIALIZATION STATUS:

The ATP-funded software technology is widely

licensed, and a new product fully incorporating

the software is due on the market soon. Both are generating revenue.

OUTLOOK:

The outlook for this technology is strong, since

it opens up possibilities for much wider use of computers and expanded market opportunities

for U.S. producers of hardware and software. The potential is likely to increase further as lan- guages other than English are incorporated into the approach. The company is actively seeking

additional market opportunities for further distri- bution of its products.

COMPANY:

Communication Intelligence Corporation (CIC) 275 Shoreline Drive, Sixth Floor Redwood Shores, CA 94065

Contact: Russ Davis Phone: (650) 802-7757 Number of employees:

33 at project start, 93 at the end of 1997

New and Upgraded Products

Prior to its ATP project, CIC was marketing a

software product called Handwriter®, which

could recognize handwritten printing but not

cursive writing. The company has now incorporated some components of the ATP-funded

technology into Handwriter®. Even though

the technology for recognizing fully cursive handwriting has been developed, the upgraded

software currendy available commercially

cannot yet read fully cursive handwriting. It is

able to recognize connected letters in cursive

writing in limited circumstances, however CIC

has licensed Handwriter® to most of the PC

manufacturers in the world, and the upgraded

Handwriter® software is now incorporated in a number of pen-based, hand-held computer

devices on the market.

. . . this technology . .

.

opens up possibilities for

much wider use of

computers and expanded

market opportunities for

U.S. producers of hardware and software.

The company also developed two new

consumer products based on the ATP-funded

technology. One product is Handwriter®

MxTM, which includes a stylus and pad, as

well as the upgraded Handwriter® software. In

late 1996, CIC began marketing Handwriter®

MxTM in a large computer chain, with a retail

price of about $200. The other product,

Handwriter® fx'^'^, also contains the upgraded software but has a larger writing pad

and other features useful to graphics artists. In

early 1997, CIC began marketing it in the same computer chain. During that year, the company sold more than 1 1,000 units of these two products, generating revenues in excess of

$2.2 million. Company officials say the Handwriter®

software will be upgraded again in the near

future to fully recognize cursive handwriting. One barrier to complete implementation of the ATP-funded technology has been the need for tuning the software system to operate with the standard amount of memory available in modem desktop computers and to run fast enough to keep up with a typical person's handwriting speed. That obstacle is now being

addressed.

Broadening Access to Computers

CIC's handwriting-recognition system should

prove extremely beneficial. Computer users are now able to enter data via the digitizer tablet,

as well as by keyboard or other means. This advance makes computers more useful for more people, especially those whose keyboard

use is limited by physical problems or other

circumstances. Other computer users may find a note-taking stylus a usehil adjunct to the

keyboard. For some jobs, particularly those

that involve field work, the pen-based computer is the only reasonable solution, and the

benefits of having it may be quite high for the

user

As more languages besides English are added to the software, users who write in these languages will benefit from using a handwriting input device that readily accepts all manner of handwriting styles. Markets for hardware and software should expand in response to wider use of computers and related products.

. . . thousands of

cursive handwriting

samples . .

.

new recognition

algorithims . . . fast

computations . .

.

101
CIC projected at the

start of the project in

1991 that the overall

research, development

and marketing effort

needed to get to

market would take four

to five years.

ATP Partnership Speeds

Technology Development

MP's participation in this project advanced

development of the technology by 18 to 24 months and improved the company's credibility with commercial partners. This

credibility was important in establishing the

licensing and manufacturing relationships needed for rapid commercial deployment of

the technology.

The history of this ATP project offers a good

example of the amount of time needed by a

well-run program to both develop and commercialize a new technology. CIC estimated at

the start of the project in 1991 that the overall

research, development and marketing effort needed to get to market would take four to five

years. In 1996, three years after completing the two-and-a-half year ATP research project, the company launched Handwriter® Mx'^'^, and

in 1998, seven years from the time the project began, the company was nearing release of a new software version that fully met the origi- nal goals.

Help for Victims of Arthritis

In early 1997 the Arthritis Foundation awarded CIC its "Ease-of-Use Seal of Commendation"

for the company's Handwriter products. The

Foundation's Commendation Program, founded in the late 1980's, recognizes products and packaging that are particularly accessible and easy to use. The award followed a favorable review by health professionals and arthritis patients.

102 ADVANCED TECHNOLOGY PROGRAM
Information, Computers Communication Intelligence Corporation (CIC)

and Communications ... Chinese CharacterRecognition Mlethods for

Computer Data Entry

China is the world's most

populous country, and in the last decade its economy has begun to mushroom. Because

modern economies rely heavily on

computers, the potential market

for computers in China has grown

along with its economy.

Accessing China's Giant

Computer Market Potential

A major technical problem, however, impedes

the widespread use of computers in China: the Chinese language is ideographic, using

symbols to form characters representing things

or ideas rather than letters to form words.

Written Chinese employs thousands of symbols,

as opposed to the 26 letters used in written

English. Some keyboard methods exist for

entering Chinese characters into a computer, but they are laborious. This technical barrier means that the large potential Chinese market

is not readily accessible to U.S. computer

businesses. This ATP project enabled Communication

Intelligence Corporation (CIC), a small

California company to develop a stylus-andtablet method for writing Chinese directly into

a computer CIC is a spin-off from SRI

International (formerly Stanford Research

Institute) and was founded in 1984 to com-

... the large potential

Chinese market is not

readily accessible to

U.S. computer

businesses.

mercialize English handwriting recognition

technology. In its first ATP project, CIC devel- oped technology for a digitized stylus- and-pad

system that can be used to enter cursive handwriting in English into a computer In this second ATP project, CIC applied several tech- niques from its earlier work: using a tablet and

stylus to record pen strokes, getting tablet

sensory data into the computer and using

algorithms to convert graphics signals to

digital form. In addition, the company created

a way to recognize handwritten Chinese

characters. A System That Recognizes

Nonalphabetic Writing

For the foundation of its system, CIC developed

a high-quality database of about 750,000

characters penned by 2,800 Chinese writers. It

also developed an algorithm that recognizes

6,763 Guojia Biaozhun characters, the stan- dard set of characters determined by the Chinese government to be used by schools,

publishers and other institutions. The tech- nology can be applied to personal computers

in the People's Republic of China, the Republic

of China, Taiwan and countries such as Japan and Korea, where Chinese characters are part

of the written language. The technology will also be useful in

applications for other languages that use nonalphabetic writing. Most important is Japanese, which uses symbols to represent the syllables of words and employs two different syllable sets —hiragana (made with more-flowing

strokes) and katakana (made with moreangular strokes). Application to handwritten

Japanese is also complicated by the interspersion of Chinese characters and English words

in Japanese writing.

4

+ +

+ + + +

+ + 4- 1 + +

A screenful of Chinese characters, with one in the process of being composed. They

were entered into the computer after being written on a pad using a stylus.

103
. . . entered into

discussions witli several

major U.S. computer

companies about

incorporating tlie CIC

cliaracter recognition

teclinology into tlieir

computers for sale in

China.

Entering the Chinese Marl(et

The company has entered into a joint venture, which is called CICC and has 50 employees,

with the Ministry of Electronic Industries of

Jiangsu (the coastal province that includes Shanghai). Under the agreement, CIC will per- form system integration services and market its pen-based business computer systems (incorporating the ATP-funded technology) to Chinese business and government users. The

goal of the venture is to develop and market a

"Chinese computer" designed specifically to meet Chinese business requirements.

Part of the agreement specifies that the company will package U.S. hardware and

office automation software as part of the Chinese computer To implement this agree- ment, CIC is in discussions with several major

U.S. computer companies about installing the CIC character-recognition software in their products before selling them in the Chinese

market. The sale of its products in the Chinese market will open a huge opportunity for CIC,

as well as many other U.S. sellers of personal

computer hardware and software in China. For a country with a population of about one

billion (few of whom now use computers), the

PROJECT:

To develop a Chinese character-recognition system to be used in place of a keyboard for computer entry of information in Chinese, opening Chinese markets to U.S. computer

products.

Duration: 12/20/1993 — 3/19/1996 ATP number: 93-01-0211

FUNDING (IN THOUSANDS):

ATP $1,480

Company 911

Total $2,391

62%

38%

ACCOMPLISHMENTS:

GIG fulfilled its goals by developing a recognition system for Chinese characters. The company's progress is indicated by the fact that it:

collected a high-quality database of about 750,000 Chinese characters penned by 2,800 Chinese writers;

developed a recognition algorithm that supports 6,763 Guojia Biaozhun characters, the standard set of characters determined by the Chinese government to be used by printers, schools and so forth;

entered into a joint venture with the Ministry

of Electronic Industries of Jiangsu Province, China, to perform system integration services and to market the company's pen-based

business computer systems to Chinese busi- nesses and government agencies;

released the first major product version of its character-recognition software in September

1997; and

entered into discussions with several major

U.S. computer companies about incorporating

the CIC character recognition technology into

their computers for sale in China.

COMMERCIALIZATION STATUS:

Commercialization is in progress. CIC recently closed its first major deal with a Chinese company to incorporate the ATP-funded technology

into its products. CIC is also in discussions with major U.S. computer companies to incorporate

the technology into their products for China.

OUTLOOK:

Benefits from this project are expected to accrue

to U.S. companies through U.S. leadership in China's computer market, the development of computer standards in China based on U.S. technology and large direct sales of U.S. computer components into China's markets.

COMPANY:

Communication Intelligence Corporation (CIC) 275 Shoreline Drive, Suite 520 Redwood Shores, CA 94065-1413

Contact: Russ Davis Phone: (650) 802-7757 Number of employees:

66 at project start, 93 at the end of 1997

potential market is vast. But solving the technical barrier to entering data in Chinese was a

necessary step in actualizing the market and making it accessible to U.S. producers of computers and computer products. ATP Accelerates

Technology Development

CIC officials say the company was able to accomplish this technology development 18 to 24 months sooner than it could have without

the ATP funds. Moreover, the ATP award helped

the company develop licensing agreements and

secure a joint-venture partner

... tlie ATP award

helped the company

develop licensing

agreements and

secure a joint-venture

partner.

104 ADVANCED TECHNOLOGY PROGRAM
Information, Computers

and Communications

Engineering Animation, Inc. (EAI)

Three-Dimensional Anatomy of

Human Body, Witli Animation, for

IVIedical Training

Every

day, surgeons

operate on thousands of patients around the

country. For each operation, the surgeon and

support staff have trained in some

way to perform the delicate surgical

procedures, some of them training on cadavers in medical school and

others learning by doing. For each

operation, the patient has gone

through a learning experience as

well, via conversations with doctors

and nurses, while first considering

and then preparing for the surgery. Occasionally, patients get to see a

video of another person undergoing

the procedure to be performed on them.

Animated 3D Anatomy

This ATP project enabled Engineering

Animation, Inc. (EAI) — a small company

founded in 1988 in Ames, Iowa, and specializing in three-dimensional (3D) visualization —to develop a new set of computer-based

technologies for making training tools to help

surgeons and patients better understand

important aspects of surgical procedures before

they are performed. The technology was devel- oped for use in health care, medical research, medical education, surgical planning, rehabilitation equipment design and patient education prior to surgery.

EAI was established to create software that can show animated 3D objects, and its initial

products were used in court cases to present "re-enactments" of car crashes and other

The breathing patterns of asthma patients are demonstrated with a computer-generated dynamic model of the lungs. This Is one of a sequence of Images — the next one In the sequence has the ribs removed.

events. The company sought ATP funding to

develop new methods that would enable it to extend its technical capabilities to depict the

inner parts of the body, not just the exterior In

the process, the company hoped to extend understanding of human anatomy. Its

attempts would be path-breaking, since there were then no other known efforts to gather digital anatomical data from different sources

into one uniform database or to present that

data in 3D motion.

The 3D aspect is critical,

because flat pictures de

not provide enough information for a good understanding of anatomy and

surgical procedures.

"Walk-Through" Surgery

During the ATP project, EAI researchers devel- oped algorithms for a system that can show

realistic 3D images of human body parts and

their motion. The pictures of tissues and

organs can be manipulated to present a "walk- through" of surgery. The 3D aspect is critical, because flat pictures do not provide enough

information for a good understanding of anatomy and surgical procedures. Dynamics,

or animation, is also important because joints

bend, the heart beats and the lungs contract and expand. Seeing these motions is extremely

useful to surgeons planning an operation.

Realism, too, is critical so that the images look

like natural anatomy

The realism of these images was achieved

by using new databases with digitized, two- dimensional (2D) images showing crosssections of human cadavers from head to toe.

Several organizations provided these databases,

including a highly detailed one from the

National Library of Medicine. Using newly

developed methods to combine 2D images, the

researchers put together a complete 3D representation of the human body, including the

exterior and all distinct interior parts. With its ATP award, EAI developed large

databases with detailed, digitized images of a

generic human body and the associated technologies for storing and accessing the information. The project succeeded in depicting the whole body (male and female versions) as a 3D computer-generated image, as well as separately showing each interior part —bones,

muscles, heart, lungs, brain and so forth.

Software Tools Commercialized

Substantial commercialization has been

achieved and further effort is under way After making sufficient progress on the research and

development work of the ATP project, EAI used

105
A snapshot of the beating human heart shown with the output of an EKG, at one

point in time. In use, both are dynamic —

the heart beats in time with the EKG, so medical students can visualize the rela- tion of the beating heart to electrical impulses captured by the EKG.

its own funds to combine the new technology and databases with its existing software in a new product — the Virtual Human —for use

in medical training. The company began offering the Virtual Human at the end of the ATP

funding period but was unable to sell a single copy of it because the hardware was so expensive. The costs for setting up the system using a

Silicon Graphics workstation and the Unix

operating system ran as high as $100,000. The company delayed commercialization of that product to modify the software and databases

to operate on lower-cost personal computers

running the Microsoft NT operating system. The company has recently successfully converted other products to run on the lower-cost

systems, and is on track to do the same for

products derived from the Virtual Human

product.

In the meantime, much of the ATP-funded

technology that went into the Virtual Human

has been adapted to three CD-ROMs (The

Dissectable Human The Dynamic

Human'^'^ and CardioViewer '^DTM) and two medical books which use unique prints show-

... 20 employees at

project start, 400 at the

end of 1997 . . .

PROJECT:

To develop computer visualization and computational dynamics technology for presenting animated 3D images of tfie fiuman body and its

parts in order to improve medical education and

surgical simulation.

Duration: 7/1/92 — 6/30/95 ATP number: 91-01-0184

PONDING (IN THOOSANDS):

ATP $1,947

Company 625

Total $2,572

76%

24%

ACCOMPLISHMENTS:

EAI developed core alg'oritfims to enable the

creation of 3D images from sets of 2D crosssectional images of the human body. Researchers organized and integrated these digitized images in a large database and developed

the technology to present them as animated

visualizations of human anatomy. The company

also:

received the Smithsonian Award from Computerworld mqaime in 1994, for the use of information technology in the field of medicine;

received the Award of Excellence in Animation from the Association of Medical

Illustrators in 1995; was a finalist, together with Walt Disney

Studios, in the International ANNIE Awards

category in 1995, for best animations in the film

industry;

produced and started offering the Virtual Human software, to run on a Silicon Graphics

workstation, in June 1995;

adapted the Virtual Human technology for

three CD-ROMs using dynamic 3D visualization and for two publications, all of which are now on

the market;

incorporated the ATP-funded technology in

the tools EAI uses to provide custom modeling

in biomedicine, health education and custom

animation;

raised $30.5 million via an initial public stock offering in February 1996;

opened international offices in 1997 and

1998, in England, France, Germany, Italy, and

Malaysia;

received one of the 25 Technology and

Innovation Awards from Industry Week in 1996;

entered into an agreement in January 1997

to develop software that supports Endovascular

Technologies' Endovascular Grafting System —

a less-invasive, less-costly alternative to open

vascular surgery that should lead to lower mortality, fewer complications, shorter hospital stays and quicker recoveries;

raised another $26.6 million via a second

public stock offering in June 1997; was named one of "America's Fastest Growing Companies" by Individual Investor magazine, September, 1997;

had its CEO, Matthew Rizai, recognized as one of the best entrepreneurs of 1997 by Business H^ee/r magazine, January 12, 1998; and was recognized as one of the 100 most

dynamic technology companies in the US —

with a rank of number eight — by Forbes ASAP

magazine, Feb. 23,1998.

COMMERCIALIZATION STATUS:

The new computer visualization and computational dynamics technology developed in this

project has been successfully commercialized. Though an early product called the "Virtual Human" was not commercially successful because it could only be run on a very expensive work station, much of the technology was

adapted for three CD-ROMs and two print publi- cations and has also been used to create CD- ROMs that supplement medical books and are sold as a bundled package. Increased sales of medical books are attributed to the CD-ROMs.

Software to support open vascular surgery is being tested and has shown promising results. This rapidly expanding company is now active in a multiplicity of applications featuring 3D ani- mations which utilize computer visualization and

computational dynamics.

OOTLOOK:

Further potential applications of the technical

capabilities developed in the ATP project —and

extended by subsequent research and product development — appear abundant. When a

reduced-price hardware/software system to support the Virtual Human technology becomes

available, potential economy-wide benefits should be large as a result of likely wide-spread use of the technology in health care.

COMPANY:

Engineering Animation, Inc. (EAI) 2625 N. Loop Drive Ames, lA 50010

Contact: Mike Sellberg Phone: (515) 296-9908 Number of employees:

20 at project start, 400 at the end of 1997

Informal collaborators: The Mayo Clinic, Biomechanics Laboratory; Johns Hopkins

University

106 ADVANCED TECHNOLOGY PROGRAM
. . . much of the

ATP-funded technology

has been adapted to

three CD-ROMs

(The Dissectable

Human^*^, The Dynamic

Human^*^ and

CardioViewer ZU^^ and

two medical books . .

.

ing layers of body parts. All five products are now being marketed by Mosby-Year Book, a

subsidiary of Times-Mirror In addition, EAI has formed an alliance with Elsevier Science to

create 3D multimedia titles in the neuroscience

area. These products have achieved several of EATs original marketing objectives and have

been used successfully in training medical students. One professor who used The Dynamic

HumanTM as a teaching aid reported that her

students "seem to retain more information

after using this visual tool" and "are more

excited about anatomy and physiology when

the material is viewed with 3D animation and

graphics on a computer screen."^ The company has also incorporated its ATP-hinded

technology, both the anatomical database and

the motion capability, in the tools it uses to

provide custom modeling in biomedicine,

healdi education, human body animation, and

entertainment. EAI is especially interested in offering its

software as training tools for surgery via

laparoscopy (for example, using a laparoscope

to look into the abdomen) or other less-invasive surgical procedures. One candidate for this

type of treatment is abdominal aortic aneurysm, which afflicts 1.5 million people in

the United States each year If left untreated,

the aorta can rupture, usually causing death.

This t\pe of open-surger\' repair has a morbidity rate of 15 percent to 40 percent.

In January 1997, EAI entered into an agree- ment to develop software that will support Endovascular Technologies 's Endovascular

Grafting System, a less-invasive, less-costly

alternative to open vascular surgery that should lead to lower mortality, fewer complications, shorter hospital stays and quicker patient

recoveries. The software will automatically calA person's body is more than just the "dry

bones" of the skeleton; here the heart and major arteries and veins are shown in their proper places within or along-side the bones.

culate key aortic measurements, based on

actual CT (computerized tomography) data, and enable doctors to "walk through" a

patient's anatomy on the computer The soft- ware allows doctors to identify structures, dis- cem damaged and healthy tissue, and deter- mine a patient's condition without perfomiing

invasive procedures. This application is directly dependent on the technology developed by the ATP project.

Better-Trained Doctors

The CD-ROMs and books developed or bundled

with the new technology and databases have

benefited anatomy and physiology students. The successful modification of the Virtual

One professor who used

The Dynamic Human^*^ as

a teaching aid reported

that her students "seem

to retain more

information after using

this visual tool" . .

.

Human product for less-expensive computers, which will bring down the cost of the complete

system, has the potential for creating large economy-wide benefits. In many areas of

surgery, less-physically invasive procedures are

replacing traditional techniques. Angioplasty,

for example, can often be used instead of open

surgery to repair blood vessels. If the Virtual Human proves valuable in training for these and other surgical techniques, then less-invasive procedures would likely be used more

often in surgery. And by reducing the need for

painful, highly invasive surgeries, the ATPfunded technology would lower the costs and

improve the quality of health care. If this happens, the value of the resulting benefits will be counted in the hundreds, possibly thousands,

of dollars for each patient treated by a doctor

trained with the system — and could amount

to life itself.

Transition from Consulting to Software Products

At the beginning of the ATP award period, June

1992, the company had 20 employees. By the end of 1997 it had 400 employees, and near

the end of 1998 it had more than 900. Total revenues in 1992 were $1 million. By 1994 they had grown to $5.5 million, and in 1996 they were $20.4 million. By 1997, after accounting

for mergers, revenues had grown to $49.7

million. EAI reports that the ATP project was a huge

part of this commercial success. "This cost sharing enabled us to assemble technology,"

said Dr Martin Vanderploeg, EAI executive

vice-president, in 1994 during the ATP project. "The award was a major event that launched

us into this growth phase," he added.^ In 1994,

EAI's total expenditures on research and devel- opment were $869,000, and in that year it

received $564,000 from its ATP grant, about 65% of its total research and development

budget. When it applied for the ATP grant in 1991, EATs only revenues were from consulting fees

for providing support in court cases, and it had

no software products on the market. By 1997, it was no longer reporting this line of business

separately and its computer animation soft- ware products had become its major activity. The company has since its inception

sought to exploit synergies among all its technological assets, continually seeking ways for

107
Awards for technical

achievements

roll in.

the company's product lines to benefit from and build upon each other For instance, it

utilizes its 3D visualization software products

internally, to improve its ability to deliver

high-quality, interactive animation software

products, such as CD-ROM medical education

products, in a timely manner But the flow of technology works in the other direction as well, according to company publications, because it

is continuously modifying and enhancing the 3D visualization software as it develops new

interactive software products. Awards for Technical

Achievements Roll In

EAI began to receive awards for its technical achievements in 1994. In that year, it received

the Smithsonian Award from Compnterivorld

magazine for the use of information technology in the field of medicine. The next year, it

received the Award of Excellence in Animation from the Association of Medical Illustrators, and was a finalist, together with Walt Disney

Studios, in the International ANNIE Awards

category for best animations in the film industry. And in 1996, EAI was one of 25 recipients

of the Technolog}' and Innovation Award from

Industry Week, specifically for its interactive 3D visualization and dynamics products used

in the manufacturing sector for product devel- opment.

ATP Funding Plays a Crucial Role

According to EAI officials, the company would

not have been able do its research and develop- ment work without the ATP funds. The award

enabled EAI to establish collaborations with

The award enabled EAI

to establish

collaborations with the

Mayo Clinic and Johns

Hopkins University, and

work performed during

the ATP project

facilitated collaboration

with the National Library

of Medicine on a later

project.

the Mayo Clinic and Johns Hopkins University, and work performed during the ATP project

facilitated collaboration with the National

Library of Medicine on a later project. And it enabled the company to significantly extend its

capabilities in computer visualization and

computational dynamics, providing new tech- nology that could be applied to other areas of

the company's activities. Having the award and doing the project

also made EAI more attractive to potential

investors. This was crucial in the early years of

the company In a 1995 interview with a

reporter from The Wall StreetJournal}

Matthew Rizai, CEO of the company noted

that winning the ATP award —which was for

$1.9 million — gave him leverage with private investors, from whom he raised an additional $1.5 million. And the company says the ATP grant continued to be important to

investors as it conducted its initial public stock

offering in February 1996, a few months after

the ATP project ended, raising $30.5 million.

Outstanding Commercial

Performance

The company's recent rapid growth, accomplishments, and recognition received are

impressive. Over the past 10 years it has emerged from the ranks of start-up to a company employing nearly 1,000 people. It has made the transition from a company heavily

dependent on consulting revenues to one which relies on high-value software products.

Its success has depended substantially on the

internal integration of all its technical assets to

develop new products in a variety of fields that draw on its technologies for very large database manipulation and visualization of motion, and on its belief that the company can

succeed only if it brings those new products

into the market.

In the September, 1997 issue of Individual

Investor magazine, EAI was named one of

"America's Fastest Growing Companies." And,

early in 1998, two additional magazines recognized the company's achievements. Business Week magazine, in its January 12, 1998 issue,

recognized Matthew Rizai, the company CEO,

as one of the best entrepreneurs of 1997, and

Forbes ASAP magazine, in its Feb. 23, 1998

issue, recognized the company as one of the 100 most dynamic technology companies in

the US —with a rank of number eight.

108 ADVANCED TECHNOLOGY PROGRAM
Information, Computers ETOM Technologies, Inc.

and Communications (formerly Optex Communications, Inc.)

Packing More Data

Into Optical DataStorage Dislcs

Optical data-storage

devices, typically CDROMs (compact disk,

read-only memory), have

taken the desktop computer market by storm, becoming a

standard part of almost every

computer sold. Just five years ago

they were included in such equipment only by special order. Now,

millions of these devices are manufactured and installed every year.

A Rewritable, Higher-Capacity

Compact Disk

Optical disks hold much more data than

conventional magnetic hard or floppy disks,

the alternative data-storage technology. The

optical devices employ the same technology

used with music CDs: a laser stores the data by

pitting the disk surface in a pattern that can be

read by another laser. When it was introduced,

a conventional plastic CD-ROM could hold 650

megabytes of data, whereas typical hard disks

then held fewer than 50 megabytes. Optical

disks, however, could be written only once, and

the drive mechanism was much slower than magnetic hard disk drives. New technology is addressing both deficiencies. Optical-disk-drive speeds have increased

substantially and several techniques for enabling the device to write new data are now

commercially available. This project with ETOM Technologies, a small start-up company,

developed technology that greatly increases the amount of data that can be stored on optical

disks.

Large Jump in Storage Capacity

The ETOM technology uses a glass, rather than

plastic, disk onto which is laid a light-sensitive

substrate that can be written and read by the

lasers in conventional CD-ROM drives. The

core technology is called electron-trapping

optical memory (ETOM). Data are "written" to

the substrate by a low-power laser tuned to a

specific frequency. The laser light raises individual electrons in the substrate to an elevated energy level, where they are trapped indefinitely The data are "read" by a second laser, which releases the trapped electrons to return

to their lower energy state, emitting a light signal in the process.

In addition to being a write-and-read

device, the ETOM disk is able to store data at

multiple energy levels, giving it the ability to

use "multiple-ary" digits, as opposed to the

binary digits (having two energy levels) used

in conventional magnetic data storage. This

capability greatly increases the amount of data

that can be placed on the disk. For example, a

byte (group of eight digits) using binary digits can store 256 different numbers. A byte using a

multiple-ary digit with three energy levels,

however, can store 6,56 1 numbers. Thus, the

use of just three different energy levels instead

of two increases the disk's storage capacity more than 25 times.

. . . barriers arose that

made it impossible to

offer a cost-effective

video CD-ROM.

. . . ceased operations in

January 1998 and filed

for bankruptcy two

months later.

Unforeseen Obstacles Block

Commercialization

The company planned to manufacture and sell ETOM-based digital video recording products if

the technology could be successfully developed. The technology was developed. But barriers

arose that made it impossible to offer a costeffective video CD-ROM. The company needed

a green laser, but a commercial supply of them

did not materialize as expected. Nor did the market materialize for a video-on-demand

device, which would have used the video CD- ROM to temporarily store movies and other

videos downloaded by viewer request from a

cable-TV company.

After attempting to develop additional

technologies to enable it to survive, ETOM ran

into severe financial problems in late 1997.

Private investors in ETOM decided it could not

continue to operate without the business from

a partnership to commercialize one of these

technologies — a deal that ultimately fell through —so they decided to close ETOM. It

ceased operations in January 1998 and filed for bankruptcy two months later.

109
. . . received

12 patents for

technologies related to

the ATP project . .

.

applied for 14

additional patents . .

.

ATP Critical to Developing

New Technology

ETOM reports that if it had not received the

$1.4 million ATP award, it could not have per- formed the research and probably would not have survived as a company long enough to conduct the research. It encountered difficulties in bringing to market an optical disk

device incorporating its new technology. Even though the company is no longer in business,

the new approaches developed in this ATP

project may eventually be picked up and used

by some other company

... the new approaches

developed in this ATP

project may eventually

be picked up and used

by some other company.

PROJECT:

To develop new optical disk data-storage tech- nology capable of recording digital video infor- mation on an ETOM (electron trapping optical nnemory) optical disk, a development tfiat could

substantially reduce the cost of storing digital information.

Duration: 2/15/1893 — 12/31/1994 ATP number: 92-01-0122

FUNDING (IN THOUSANDS):

ATP $1,433 56%

Company $1.118 44%

Total $2,551

ACCOMPLISHMENTS:

ETOM demonstrated the ability to store data in a

radically new optical data-storage mode. The company completed header pattern definition, mask fabrication and software for reading and

writing M-ary (multiple-ary, as opposed to bi- nary) data and developed specialized test equipment. It also:

received 12 patents for technologies related

to the ATP project:

"Partial Response Coding for a Multilevel

Optical Recording Channel"

(No. 5,537,382: filed 11/22/1994,

granted 7/16/1996), "M=7 (3,7) Runlength Limited Code for

Multilevel Data"

(No. 5,657,014: filed 5/12/1995,

granted 8/12/1997), "M=5 (0,2) Runlength Limited Code for

Multilevel Data"

(No. 5,659,310: filed 5/12/1995,

granted 8/19/1997), "M=6 (2,4) Runlength Limited Code for

Multilevel Data"

(No. 5,659,311: filed 5/12/1995,

granted 8/19/1997), "M=10 (3,6) Runlength Limited Code for

Multilevel Data"

(No. 5,663,722: filed 5/12/1995,

granted 9/2/1997), "M=7 (1,3) Runlength Limited Code for

Multilevel Data"

(No. 5,663,723: filed 5/12/1995,

granted 9/2/1997), "M=6 (3,6) Runlength Limited Code for

Multilevel Data"

(No. 5,668,546: filed 5/12/1995,

granted 9/16/1997),

"M=5 (3,7) Runlength Limited Code for

Multilevel Data"

(No. 5,670,956: filed 5/12/1995,

granted 9/23/1997), "M=5 (4,11) Runlength Limited Code for Multilevel Data"

(No. 5,675,330: filed 5/12/1995,

granted 10/7/1997), "M=6 (3,8) Runlength Limited Code for Multilevel Data"

(No. 5,680,128: filed 5/12/1995,

granted 10/21/1997), "M=4 (1,2) Runlength Limited Code for

Multilevel Data"

(No. 5,682,154: filed 5/12/1995,

granted 10/28/1997), and "M=6 (4,11) Runlength Limited Code for Multilevel Data"

(No. 5,682,155: filed 5/12/1995,

granted 10/28/1997);

applied for 14 additional patents for tech- nologies related to the ATP project;

prepared several technical papers for publication or presentation at professional confer- ences; and

entered into preliminary negotiations with

potential users of its patented M-ary coding

algorithms.

COMMERCIALIZATION STATUS:

Commercialization of the original data storage device employing the ATP-funded technology

faltered because not all necessary technical components were available for the system, and

the expected market did not materialize. The company encountered severe financial problems

in late 1997 and declared bankruptcy in March

1998.

OUTLOOK:

Although ETOM's recent bankruptcy precludes

its commercialization of this technology, substantial knowledge was gained, as reflected in

the patent applications and grants. The possibility exists that other companies will license and

commercialize the technology.

COMPANY:

ETOM Technologies, Inc. (formerly Optex Communications, Inc.) 2 Research Court

Rockville, MD 20850 Number of employees:

30 at project start, 3 at the end of 1997

110 ADVANCED TECHNOLOGY PROGRAM
Information, Computers Mathematical Teclinologies Inc. (IVITI)

and Communications ,. Mathematical

Technology to Restore or

Enhance Movies

A frame from the movie Amacord, shown first with several areas that are damaged, and then shown after digital restoration automatically removed

the damaged spots and replaced them with the original images.

any old movies are extremely valuable

If they were made

for entertainment,

reviving them for current showing can earn sizable

profits in addition to providing viewing pleasure to consumers. The film archives of some movie studios, in

fact, are worth hundreds of millions

of dollars. Documentary movies with

footage of important people, industrial processes, and current or historical events have great value, too,

for educational and archival

purposes.

Old Movies: a Resource Too

Valuable to Waste

Movies mean reels of film. Commercial movie- making uses a master film from which others

are copied. Film is a physical thing that can be damaged, soiled or broken like any other

object. But unlike a scratch on a single car, a

scratch or other artifact on an old movie master can affect the film's usefulness to viewing

audiences and the fortunes of the company

that owns it. If the master film is marred, each

copy will also be marred. Even if the master

film is converted to digital form for making

video copies, the artifacts will persist.

Everything on the old film, trash and all, is

converted to electronic data that go onto the

video copy

Another difficulty with movies and other

videos is the existence of several formats. It would be useful for film companies to be able

to change films from one format to another so

that current films could be easily converted to

video, and older films could be made to fit

today's video and film equipment. Format has

to do with the technicalities of converting movies to digitized videos that can be shown

on TV. One format problem involves resolution. The U.S. standard for TV is 525 scan lines and

60 hertz (Hz) — the frame rate. The

European standard is 625 scan lines and

50 Hz. High-definition TV will have a different

pair of numbers. A second forniat problem concerns how to

preserve the natural speed of motion depicted

in a film when translating, for example, from

a format that requires a speed of 24 frames per

second to one that calls for 30. Because of the need to compensate for these differences in

111
Viewers of many films,

both current and

arcliival, are benefiting

from what they do not

see: defects removed by

the technology.

Researchers developed

mathematical algorithms

to create data for filling

in damaged areas . .

.

. . .the 1958 film "A

Night to Remember" . .

.

Fellini's "Amarcord" . .

.

DeMille's "Ten

Commandments" . .

.

PROJECT:

To develop generic software technology that can

repair, enhance or reformat movie and video sequences, enabling the restoration of damaged

movies, enhancement of military images and

conversion between digital image formats.

Duration: 5/1/1993 — 8/31/1995 ATP number: 92-01-0053

FUNDING (IN THOUSANDS):

ATP $989 88%

Company 136 12%

Total $1,125

ACCOMPLISHMENTS:

MTI developed technology to remove artifacts (unwanted defects) from movies, whether

archived or newly created. It made progress in developing the reformatting technology, but this work is still experimental. The company also:

formed MTI Digital Restoration Services

early in 1996, a division now actively marketing

software and restoration services in video postproduction;

received jacket-cover credit for restoration work on the laser disc version of the 1958 film "A Night to Remember," about the sinking of the

Titanic;

participated, via MTI Digital Restoration

Services, in acclaimed restorations of recent re- releases of Federico Fellini's "Amarcord" and

Cecil B. DeMille's "Ten Commandments;" andhad its software used in the perfection or

restoration of hundreds of new and old films for new video releases since 1995.

COMMERCIALIZATION STATUS:

Commercialization is in progress. Film-restoration software and services are being sold by MTI

Digital Restoration Services, and MTI has other products under development. Viewers of many

films, both current and archival, are benefiting from what they do not see: defects removed by

the technology.

OUTLOOK:

In the restoration of old movies and the polishing of new releases, there are excellent expectations for the mathematical algorithm technology.

It also has potential applications in forwardlooking infrared imagery and in medical imaging

areas like ultrasound and fluoroscopy. Completion of the technology for conversion between formats will widen applications further,

particularly in high-definition TV.

COMPANY:

Mathematical Technologies Inc. (MTI)

1 Richmond Square

Providence, Rl 02906-5139

Contact: Donald E. McClure Phone: (401) 831-1315 Number of employees:

4 at project start, 6 at the end of 1997

resolution and film speed, translation from

one format to another is not a trivial process. A Mathematical Approach to Repairing and Converting Films

This ATP project with Mathematical

Technologies Inc. (MTI), a small company

formed in 1981, has solved many of the prob- lems of reformatting and removing defects from films. MTI specializes in bringing mathematical theory to commercial applications via new programming technologies, and its defect- removal research during the ATP project was

particularly successful. Researchers developed mathematical algorithms to create data for

filling in damaged areas of the digitized versions of movie-frame images, a process that

essentially restores the images to their original

quality. Texture matching is an important

problem that had not been anticipated but had

to be solved in order to repair severe, wide

scratches and other defects involving substantial amounts of missing data. The MTI technology can remove tears,

splotches, scratches, dust motes, liquid-spill marks and other unwanted visual defects from

movies. Methods for using the new technology,

as well as a specialized user-friendly screen

display from MTI, have been integrated into

post-production processing at a number of

facilities in Hollywood and elsewhere.

112 ADVANCED TECHNOLOGY PROGRAM
MTI researchers succeeded in developing some components needed for format conversion. Work on other components is still experi- mental. The researchers thoroughly investi- gated motion compensation (which concerns

the way moving objects are detected in a movie) and determined how to make adjust- ments for motion so that the new technology

does not create new artifacts. Specifically, they estimated the frame-to-frame motion of

objects and developed technology for the rapid

calculation of the most significant motions. This technology is critical both for restoration

of damaged images and for translating between film and video recording standards. New Products and Services for Film and Video Industries

Commercialization is under way Near the end

of the ATP project, MTI established a division

called Digital Restoration Services that sells

movie-restoration software and services, and

the company is developing other products that would use the ATP-hinded technology, too. MTI

has invested heavily in the development of new

software for film and video post-production

since the ATP project was completed. A new

state-of-the-art algorithm for converting from

ordinary video resolution to high-definition-TV

resolution was demonstrated at the National

Association of Broadcasters trade show in April

1998.The new MTI offerings face competition from several other products —virtually all of them from abroad. Competitor products, however, tend to focus on the "artistic" end of the

of the movie restoration business rather than on the "technical" end. MTI's products focus on the technical end, and the company reports

it is currently the only one to provide such soft- ware technology for automated restoration. MTI initially intended to develop applications for motion-compensated reformatting and standards conversion, as well as restoration. After the ATP project began, the company

decided to focus almost exclusively on restoration, based on a reassessment of the market for

conversion software and services. It planned to

offer film-restoration software running at commercially viable speeds (perhaps three to four times slower than real-time) on graphics workstations or high-performance personal

computers costing well under $100,000. MTI

succeeded, and it is offering the software for use with contemporary and archived movies.

In addition, the company says it is about two

years ahead of where it would have been with- out the ATP funds.

Restored "Ten Commandments"

Viewers of the many films, both contemporary and archival, restored with MTI's technology have benefited. When Cecil B. DeMille's "Ten Commandments" was restored with the ATP- funded technology and re-released, a commentator on the television program "Entertain- ment Tonight" reported that "the difference between the original and this new vibrant version is a revelation Digital technology is

the modem miracle that's made it possible." As MTI's mathematical algorithm tech- nology is applied to more films, more viewers

will benefit. Further benefits will emerge if the technology is used in other areas. It has potential applications, for example, in forward- looking infrared imagery, which is used by the

military to detect objects at night, and may

also be useful in medical imaging procedures such as ultrasound and fluoroscopy Additional

benefits will materialize if the technology for

standards conversion is completed. The film-restoration technology already commercialized promises spillover economic

benefits to the viewing public and to owners of

films with defects. Many films of historical

interest, once they are restored with the new

technology, will be available to viewers. The number of viewers will grow over the years as

the restored or enhanced films are shown

again and again, so spillover benefits will

grow, as well. If the refonnatting technology is completed and commercialized, additional

benefits will accrue.

A new algoritKm for

converting from ordinary

video resolution to liighdefinition-TV resolution

was demonstrated ... in

April 1998.

113
Information, Computers Torrent Systems, Inc.

and Communications (formerly Applied Parallel Technologies, Inc.)

A User-Friendly Programmer's

Tool for Writing ParallelProcessing Software

Parallel computers —

especially so-called

"massively parallel"

machines with hundreds

or thousands of Individual

processors — hold great promise

for solving many formerly

intractable computing problems in government and industry. Estimates

suggest that parallel processing

would save the U.S. airline industry

alone more than $1 billion annually

through more efficient scheduling

of flight crews. It could enable U.S.

oil companies to reduce exploration costs and increase oil reserves. Analysis of massive transaction

databases using parallel processing

could recover much of the tens of

billions of dollars lost annually to health care and credit card fraud.

Easy-to-Do Programming for Parallel Processing

A difficulty witfi parallel processing, though, is

that writing its software is more art than

science, an art practiced well by a relatively small number of programmers. Torrent

Systems, founded as a two-person company in

1993, had an idea for solving this problem but was unable to find venture capital to finance

the research to develop the technology. The company then sought and won ATP funding

that enabled it to proceed. Torrent ultimately

developed a component software system that

allows programmers to build parallel-process- ing software systems without needing to explicitly understand how the system exploits the

underlying parallel-processing hardware. To

accomplish this project, researchers studied the

actual application needs of typical users — to

assure that the results would be widely

applicable and useful.

Quick to Market

Torrent produced a research prototype of a

parallel-software component framework, created its basic components and perfomied limited testing on them. It also planned to develop

a library of reusable code —containing components for a parallel-processing system. If such a library were available for other developers, then even more applications could come

on line sooner However, the company did not complete this research task. Torrent closed the_

project before its anticipated completion date

in order to commercialize early technical

results and generate needed revenue.

Torrent incorporated the ATP-funded component-based technology in a product called

Orchestrate''''^, which the company describes

as a "parallel application environment that

insulates you from the complexities of parallel programming while delivering scalable applications." United Airlines and Citicorp were two

of the first corporations to license it.

Strategic Marketing Alliances

The company has been quick to form strategic marketing alliances. It formed a partnership

with IBM in July 1997, under which IBM will promote Orchestrate^''^ as a standard compuRie Opbons Duvt He^

A graphic illustration of a 16 processor system under the control of Orchestrate —

three sources of input data (shown at the top of the screen in green) are split into many

parallel data streams, each to be manipulated by a sequence of software components

(the grids at the bottom in red) which apply the same logic to each stream.

114 ADVANCED TECHNOLOGY PROGRAM
PROJECT:

To develop component-based tools for writers of parallel-processing software, as well as a library

of reusable parallel-processing software components.

Duration: 12/1/1994 to 7/31/1996 ATP number: 94-06-0024

FUNDING (IN THOUSANDS):

ATP $1,117

Company 325

Total $1,442

77%

23%

ACCOMPLISHMENTS:

Torrent accomplished most of the project goals, including development of a software environ- ment for building parallel data-processing applications. The company did not develop as extensive a library of reusable components as originally anticipated. It halted the project sooner

than originally planned to exploit the excellent commercial opportunities for technology devel- oped early in the project. Torrent's outstanding progress toward commercialization is indicated by the following:

The company applied for a patent on parallel

training of neural networks, as well as patents on

several other innovations.

Torrent incorporated the ATP-funded tech- nology in a product called OrchestrateTM, intro- duced to the market in 1996. The company

describes it as "a parallel development environ- ment that insulates you from the complexities of

parallel programming while delivering scalable

applications."

OrchestrateTM was described in a December

1996 fatematon article, "Build Your Warehouse

on MRP," as one of a number of approaches to use in data warehousing.

OrchestrateTM was selected in 1997 for use by KOI, IBM, Citicorp, Autozone, Sears Roebuck

and United Airlines.

Torrent entered into a strategic partnership in July 1997 with IBM, which will promote

OrchestrateTM as a standard computer application. IBM is focusing on rapid development and

deployment of a parallel-processing software system that can be enlarged without needing to be replaced by a new version, because expansion of the system is built into its architecture. OrchestrateTM plays a key role in the expansion

capability of the IBM system. Torrent extended

the partnership in September 1997, with IBM

agreeing to resell OrchestrateTM.

Torrent entered into partnerships in September 1997 with three new vendors: The MEDSTAT Group, i.d. Centric and Knowledge

Discovery One.

The company also negotiated bundling arrangements (selling two or more separately produced products as a unit) with independent

software vendors and manufacturers including Emergent, Knowledge Discovery One, Lockheed

Martin IS&T and MRJ Technology Solutions.

During 1997, several commercial software vendors chose OrchestrateTM for building their software products. The first such product, produced by the SAS Institute, reached the market in late 1997.

At the end of 1997, Compyfewor/cf magazine recognized Torrent as one of the "100 Hot Emerging Companies."

Torrent had attracted investments of $3.8

million by the end of the ATP project in July 1996, and it increased the total to $10 million over the next 18 months.

United Airlines, an early customer, is using OrchestrateTM and an IBM parallel-processing computer to design a system for managing air- plane seat assignments. United expects the new

system to generate between $50 million and $100 million per year in increased revenue. The company is spending only about $17 million on

the system, which would not work without OrchestrateTM.

COMMERCIALIZATION STATUS:

The ATP-funded programmer's tool for writing

parallel processing software has been commercialized. It is embodied in OrchestrateTM, as well as in derivative products.

OUTLOOK:

The outlook for further commercialization and economic benefits is excellent. The strong market interest in OrchestrateTM indicates its useful- ness in processing immense amounts of data. Since government and many industries — retail,

health care, energy and transportation — use massive databases, new tools that can dramatically increase processing efficiency stand to

yield billions of dollars in savings across the economy. The benefits from this project will accrue mostly to users of the technology, rather than to Torrent.

COMPANY:

Torrent Systems, Inc. (formerly Applied Parallel Technologies, Inc.) 5 Cambridge Center, Seventh Floor Cambridge, MA 02142

Contact: Robert Utzschneider Phone: (617) 354-8684 ext. 1162 Number of employees:

2 at project start, 32 at the end of 1997

. . . halted the project

sooner than originally

planned to exploit the

excellent commercial

opportunities for

technology developed

early in the project.

ter application. IBM's focus is rapid develop- ment and deployment of a parallel-processing hardware/software system that can be enlarged without needing to be replaced by a new

version, because expansion is built into its

architecture. Orchestrate t''^ plays a key role in

that expansion capability. The IBM system is

specifically designed to make full use of customer sales and other data across an entire company regardless of the type of business.

Torrent extended that partnership a few months later, with IBM agreeing to resell

Orchestrate United Airlines, an early customer, reported

in a November 1997 Chicago Tribune article

that it had installed a new IBM RS6000/SP2

parallel-processing computer The software

supplied by IBM included Orchestrate 'r'^ under

a licensing agreement between Torrent and

IBM. United paid $3-5 million for the hardware and planned to spend another $13.5 million to

get the computer running. The system is

expected to generate between $50 million and

$100 million per year in increased revenue by

doing a better job of matching potential fliers

with available airplane seats. Orchestrate'^'^ is a critical component that enables United personnel to program the computer, which United would not otherwise have bought. This advance is important, since the RS6000/SP2

has been on the market for several years.

. . . new tools that can

dramatically increase

processing efficiency

stand to yield billions

of dollars in savings

across the economy.

115
... a component software system that allows

programmers to build

parallel-processing

systems without needing

to explicitly understand

how the system exploits

the hardware.

. . . this technology . .

.

is embodied in

"industrial strength"

computer programs used

in diverse industries and

by government agencies.

Torrent also formed a marketing partnership with Sun Microsystems in 1997. An early outgrowth of this alliance was a joint demonstration showing the advantages of using

Orchestrate''''^ in a typical data warehousing

application. Orchestrate''''^ was used to integrate the basic Torrent components and specialized components from three other vendors

into a single test application. The test involved

data cleaning of a name-and-address hie of about 13 million records, which was then merged with a demographics file of about l6

million records. When the test was run without

using parallel processing, the application took

32.5 hours on a machine using four processors. With Orchestrate'"^, the application took

only 9 hours. When the number of processors was increased to 12, the Orchestrate'"^ -based

application finished in just 3 hours.

Torrent also entered partnerships in September 1997 with three new software vendors: The MEDSTAT Group, i.d.Centric and

Knowledge Discovery One. And it negotiated

bundling arrangements (selling two or more

separately produced products as a unit) with independent software vendors and manufacturers including Emergent, Knowledge

Discovery One, Lockheed Martin IS&T and MRJ

Technology Solutions,

Potential for Huge Benefits

Torrent has succeeded in marketing its technology, and substantial broad-based benefits can be expected to flow from the use of the new technology incorporated in its software.

Users of Orchestrate'"^ have benefited from the removal of the need to pay attention to pro- gramming details for C/C++ (the most com- mon language used to write programs for

parallel processing), because Orchestrate'"^ handles them. As more applications of the new

technology are implemented through the use

of Orchestrate'"^ and other Torrent products, more analyses of large databases will be done. Another product that uses the ATP-funded tech- nology is Orchestrator for the SAS System""^,

recently released by the SAS Institute. Economic benefits are likely to be large and widespread for this technology. It is embodied in "industrial strength" computer

programs used in diverse industries and by

government agencies. Users in these areas say

they anticipate dramatic savings. Consumers

will also benefit from these savings, as lower

operating costs are passed on to them. Torrent, a small company, will be able to collect only a

small percentage of the total additional value

created by its technology, while the rest will

spill over to others in the economy

The benefits from the ATP project would

likely be even greater if Torrent had been able

to fully develop and make available the library

of reusable components as originally planned.

However, as is often the case with small, nearstartup companies, cash-flow concems related

to ensuring company survival dictated a fast move to generate revenue. In this case, given

its limited resources. Torrent felt it had to stop

the research project early and commercialize

the technology. As customers suggest needs for

other components, they will be developed and

integrated into the company's products. ATP Project Speeds

Exploitation of Parallel Processing

ATP funding for this project allowed Torrent to

research and develop a prototype of a component software system that allows programmers

to create parallel-processing software in a userfriendly way Without the ATP funds, Torrent

officials say it is doubtful that the technology could have been successfully developed at all.

Venture capital hinding had been sought but was unavailable. ATP fijnded the project to enable U.S. industry to broadly and rapidly

exploit parallel processing, expecting that it would generate significant benefits throughout

the economy The speedy adoption of Torrent's

first commercial products confirms that

expectation.

Venture capital funding

had been sought but was

unavailable. ATP funded

the project to enable

U.S. industry to broadly

and rapidly exploit

parallel processing.

116 ADVANCED TECHNOLOGY PROGRAM
Chapter 8

Materials

AlliedSignal, Inc 118 A Process for Making Ceramic Parts Geltech Incorporated 121

Mal<ing Low-Cost, Higli-Quality Glass Microlenses at Low Temperature

IBM Corporation 123 Methods for Making New Optical Switches

^Z^t^2~ 117
AlliedSignal, Inc.

Materials

A Process for Making

Ceramic Parts

Many

types of industrial and commercial

equipment contain

parts that revolve at very high speeds,

under great stress and in extreme

heat. Jet engines, power generation

turbines and automobile engines are a few examples. In the past, metal

has been accepted as the only

material for making such parts.

Safe, Low-Cost Fabrication of

HIgh-Performance Ceramic Parts

With the recent development of high-perfor- mance structural ceramic materials, this ATP

project with AlliedSignal asked whether it was

possible to develop a process for fabricating ceramic parts inexpensively enough to allow them to be substituted for metal parts, thereby

significantly improving equipment perfor- mance and reliability. Ceramic substitutes for metal have per- formed well in certain critical situations. Space

flight is one. Ceramic tile coverings on spacecraft form heat shields that protect astronauts

re-entering earth atmosphere. Atmospheric

friction heats the tiles to a fiery glow. But the

tiles stay in place and dissipate enough heat

for safe re-entry. Metal surfaces would melt under these circumstances, with disastrous

results.

A 16-blade silicon nitride turbine wheel for use in small turbogenerators.

Cost and Safety Issues Hinder Use

Despite such perfomiance advantages, the

application of advanced ceramics has been

held back by the high cost of fabrication. Whereas metal can be melt-processed or plastically deformed using molding, extruding,

stamping or other standard metalworking

techniques, many ceramics cannot be

processed by these methods. Ceramic parts must be made by fomiing ceramic powder into a desired shape at room temperature and then

"reacting" the powder compact at various temperatures to densify it. This process is much

more limited in the shapes it can achieve than

melt-processing or plastic deformation

approaches.

This ATP project offered a novel approach

to ceramics production via a relatively new

process called gelcasting, a technology devel- oped at Oak Ridge National Laboratory. In gelcasting, powdered ceramic precursors are mixed with a polymer precursor (monomer)

and solvent (usually water) to make a slurry

that is poured into a mold. The gel is then

polymerized, locking the ceramic powder in a polymer matrix. The solvent is removed, and

the part is heated to bum out the polymer At

this point, if necessary, the "green" part can be machined to some degree. Finally, the part is

fired to produce the ceramic. The process is capable of making very complex parts such as

turbine wheels. Some shapes made with this technique cannot be made any other way

A major drawback to the original gelcasting technology was its reliance on acrylamide

as the gelling additive. Acrylamide is highly

sensitive to oxygen, which inhibits polymerization. So the process must be done in an inert environment, which raises the cost. Acrylamide

gel is also very difficult to remove if an inert environment is used, raising costs even more. Most important, however, acrylamide is a

cumulative neurotoxin, and safety concerns had prevented the technology's widespread use.

... a novel

near-net-shape . .

.

process for making

liigli-performance

ceramic parts for automobile and aircraft

engines.

118 ADVANCED TECHNOLOGY PROGRAM
PROJECT:

To develop a low-cost, near-net-shape gelcasting process for making structural ceramics in a

safer, less-costly way ttian conventional gelcasting based on acrylamide, a cumulative neurotoxin. Successful development of ttiis process would open the door to commercial gelcasting production of these high-performance ceramics.

Duration: 7/1/1992 — 6/30/1995 ATP number: 91-01-0187

FUNDING (IN THOUSANDS):

ATP $1,136 56%

Company 884 44%

Total $2,020

ACCOMPLISHMENTS:

AlliedSignal achieved its R&D goal. The company also:

presented the new technology at several professional conferences;

invested after the ATP project another $3

million of its own money on additional gelcasting R&D aimed at the development and installation in 1998 of an automated gelcasting system

that can fabricate ceramic automotive turbogenerator wheels at a rate of 10,000 per year; and

received funding from the Department of Energy and the Defense Advanced Research

Projects Agency to further advance gelcasting technology, with the specific goal of establishing

viable manufacturing processes.

AlliedSignal's innovation in this ATP

project was to develop a low-cost, nontoxic

alternative that retains acrylamide's excellent

process characteristics. During the project,

AlliedSignal researchers developed and demonstrated a novel near-net-shape (requiring almost no machining) process for making

high-performance ceramic parts for automobile and aircraft engines. In addition, the new

gelcasting process has potential applications in

energy, chemicals, aerospace, electronics, advanced materials and telecommunications.

Early Commercialization

Expected

Development of the technology is continuing.

In 1995, under the "Partnership to Productionize and Commercialize a

Manufacturing Process for Silicon Nitride Tbrbomachinery Components," AlliedSignal began receiving funds from the Defense Advanced Research Projects Agency for work

that grew directly out of the ATP-funded

COMMERCIALIZATION STATUS:

Commercialization is in progress, and the first gelcast parts made with the new technology are expected to reach the market very soon.

Opportunities exist for commercialization in a

variety of fields.

OUTLOOK:

The company is making excellent progress toward its commercialization goals and is expected to start producing gelcast parts in large volume in the near future. Users of vehicles or equipment made with gelcast ceramic parts will benefit from lower cost and better performance,

with potentially huge benefits accruing in areas

like auto engines, commercial aircraft and

industrial applications such as stationary power

generation.

COMPANY:

AlliedSignal, Inc., Ceramic Components

(formerly Garrett Ceramic Components Division, AlliedSignal Aerospace) 2525 W. 190th St. Torrance, CA 90504

Contact: John Pollinger Phone: (310) 512-5654

Informal collaborator: Oak Ridge National Laboratory

gelcasting project. The company received additional funding for this effort from the Department of Energy in 1997, and it has made substantial progress toward a commercially viable manufacturing process. Marketable products have yet to be sold. But commercial production is expected to begin in

the very near future, with annual sales projected to be several million dollars.

AlliedSignal has constructed a new plant

for manufacturing ceramics parts, including

those made with the gelcasting technology.

Since the close of the ATP project in June 1995,

. . . potential

applications in energy,

chemicals, aerospace,

electronics, advanced

materials and

telecommunications.

the company has invested $3 million to further

develop the technology for particular commercial applications. In addition, based explicitly on the successful completion of the ATP

project, it received funding from the Depart- ment of Energy and the Defense Advanced

Research Projects Agency to advance gelcasting

technology into commercialization.

. . . acrylamide is a

cumulative neurotoxin,

and safety concerns

had prevented the

technology's

widespread use.

Cost Reductions and

Improved Performance

Users of vehicles and other equipment using

gelcast ceramic parts instead of metal ones will

benefit from cost reduction and improved per- formance — in the case of some applications,

to a considerable degree. Since Oak Ridge

National Laboratory holds the underlying

intellectual property for gelcasting, additional

spillover benefits are likely to accrue. As a

national laboratory. Oak Ridge offers its technologies to the public, and other companies

are likely to realize considerable spillover benefits from the AlliedSignal/ATP-funded gelcast- ing technology. Oak Ridge has already licensed

gelcasting technology to two other U.S. companies — a magnetic ferrite manufacturer and a

small manufacturer of ceramics for automotive and fuel cell applications — and is working with a number of other companies evaluating the technology. Future benefits are also expected to come

from applications of the new gelcasting process

in a number of sectors, including large aircraft engine parts. In addition, there may be ^plications in small parts for jet engines, small

turbine generators for hybrid electric/fossil fuel

cars and auxiliary power systems for aircraft.

119
. . . invested . .

.

another $3 million of

its own money . .

.

aimed at the

development and

installation in 1998

of an automated

gelcasting system . .

.

An automated gelcasting machine capable of forming 10,000 ceramic turbine wheels per year.

Progress Accelerated by

Five Years

Because of its success in developing the new

gelcasting technology, AlliedSignal has also succeeded in developing the manufacturing

technology and component fabrication projects

that allow commercialization to progress. The company says that without the ATP funds, it would have needed another five years to reach

this stage of development. And it would have been that much further behind its major competitor, Kyocera of Japan. Instead, AlliedSignal

believes that with the help of the ATP funds, it has now pulled even with Kyocera in most

. . . made possible

by the ATP grant was

the establishment

of a technologydevelopment

relationship between

AlliedSignal and Oak

Ridge National

Laboratory.

applications and is able to make superiorquality products in several areas. Another clear benefit made possible by the ATP grant was the establishment of a techno- logy-development relationship between

AlliedSignal and Oak Ridge National

Laboratory. Relations have continued through

a scientific exchange agreement for an Oak

Ridge scientist who co-invented the original

gelcasting technology to work at AlliedSignal

for two years.

Near-net-shape turbine wheels for use in commercial or military jet engine starters.

120 ADVANCED TECHNOLOGY PROGRAM
..... Geltech Incorporated

Materials

Making Low-Cost, High-Quality

Glass Microlenses at

Low Temperature

Tiny

lenses and other

micro-optical components

appear in many industrial products such as sensors,

laser systems, detector

arrays and fiberoptic data links. Tens of millions of these components are produced every year. Many are made of plastic, are of low quality and cost little. Others

made of silica glass are higherquality, but they cost much more

than plastic lenses.

Technology for Making Small,

Complex Silica Micro-Optics

This ATP project with Geltech, a small Florida company, developed a novel method for pro- ducing low-cost, high-quality silica-glass microlenses based on "sol-gel" technology

pioneered by the company Geltech was

founded in 1985 to commercialize microoptics technology (dealing with light wavelengths in the range of nanometers to hundreds of microns) discovered at the University

of Florida, and it holds exclusive licenses for

patents assigned to the university.

Casting Silica at Room

Temperature

Silica cannot be used with traditional molding

techniques because of its very high melting

temperature. In addition, conventional grinding and polishing processes limit how small and complex the silica micro-optics can be.

Geltech overcame these problems by developing methods to cast net-shape (no grinding

necessary) silica-glass micro-optics at room

temperature using sol-gel technology.

In the sol-gel process, silicon alkoxides are

fornied into larger molecules (polymerized) and combined with a liquid in a suspension, or

sol, that is cast in a mold at room temperature

to make a rigid, wet gel. The gel, in turn, is

dried, strengthened and densified at high temperature into a pure, highly homogeneous,

silica-glass structure. The ATP project demonstrated that fully dense silica glass —hard,

transparent, nonporous glass with a density of two grams per cubic centimeter —can be produced by this process with a quality similar

to that of the best fused silica glass.

Signs of Initial Technical Success

Near the end of the ATP project, five of the company's prototype refractive lens devices were tested by a customer and found to per- form satisfactorily In addition, the Army

recently gave Geltech a Small Business Technology Transfer Research Phase II award

for research using technology partly developed

with the ATP handing. Under the contract the company will build prototype windows molded

in silica using the sol-gel process. The windows

are designed to protect military personnel from

intense laser pulses.

Secondary Products

Although the ATP-project demonstrated that

high-quality, silica-glass micro-optics can be produced by the sol-gel process at low temperature, the technology could not produce refrac-

... the technology

could not produce

refractive microlenses

at a cost low enough to

penetrate

this market . .

.

. . . used some of the

ATP-funded technology

to develop a

porous-glass product,

which has been

introduced to the market

as a component of a

home sensor for toxic

gases.

tive microlenses at a cost low enough to penetrate this market. Therefore, the company has been as yet unable to commercialize

microlenses produced by the new process. The company however, succeeded in using

the new technology to produce diffraction gratings, its second major product, with acceptably

high surface quality and at reasonable cost. A

diffraction grating is a band of equidistant parallel lines (usually more than 5,000 per inch)

ruled on a glass or polished metal surface and

used to break a beam of light into components

of different wave lengths. The company has

just begun to offer parts to customers for use in conjunction with lasers in optical systems. It is

too eariy to tell whether commercialization of

its diffraction gratings will succeed. Acceptance

for this product in the marketplace has taken

longer than anticipated.

Geltech also used some of the ATP-funded

technology —materials processing and mold

fabrication methods — to develop a porousglass product, which has been introduced to

the market as a component of a home sensor

for toxic gases. The details of this application

are still confidential. The company is also

using some of the technology to develop plastic

micro-optics, which are lighter and less expen121
The ATP project

demonstrated that fully

dense silica glass . .

.

can be produced by the

sol-gel process with a

quality similar to that of

the best fused silica

glass.

sive than glass micro-optics, with hopes for commercialization in consumer products in

the near future.

Geltech officials say the ATP funding

helped the company form alliances with

research partners and enabled it to conduct

research it would otherwise have been unable

to do. The funding was also critical in helping

Geltech survive as a company Geltech more

than doubled its revenues over the ATP grant

period, and the new technology played a significant role in boosting the company's rev- enues from less than a quarter million dollars

in 1992 to about $5 million three years later.

. . . ATP funding

helped the company

form alliances with

research partners . .

.

enabled it to

conduct research . .

.

critical in helping

Geltech survive . .

.

PROJECT:

To develop a method of casting net-shape (no

grinding necessary) pure silica glass microoptics at room temperature.

Duration: 4/5/1993 — 7/4/1995 ATP number: 92-01-0074

FUNDING (IN THOUSANDS):

ATP $1,323

Company 1.456

Total $2,779

48%

52%

ACCOMPLISHMENTS:

Geltech demonstrated that high quality, silica glass micro-optics can be produced by a manufacturing process that includes a room-temperature, net-shape casting method. Also, in activities related to the ATP project, the company:

had five prototype refractive lens devices

tested by a customer and found to perform satisfactorily;

used the technology to develop diffraction

gratings, for use in conjunction with lasers in

optical systems, with market introduction just beginning;

used some of the ATP-funded technology

(materials processing and mold fabrication methods) to develop a porous-glass product, which has been introduced to the market;

used the procedures for making opticalquality molds, developed in the ATP project, as

initial steps toward commercialization of plastic micro-optics;

increased revenues from less than a quarter

million dollars in 1992 to $5 million in 1995,

with the new technology playing a significant

role in the company's revenue growth; and

recently received a Small Business Technology Transfer Research Phase II award

from the Army for research using technology developed in the ATP project.

COMMERCIALIZATION STATUS:

Commercialization of refractive microlenses, one

of the major products envisioned in the ATP project, has not occurred because the technology

did not produce microlenses with a high enough

surface quality to penetrate this market. Geltech began using the ATP-funded technology in 1994

to produce a porous-glass product for a home

sensor application, with production reaching a peak of about 500,000 parts per week at the end

of 1995 and sales achieving significant levels. Although today the sales of products derived from the ATP technology are relatively small, sales of diffraction gratings —the second major

micro-optics product envisioned in the project — have just begun.

OUTLOOK:

Despite the successful commercialization of other products using the ATP technology, it is too early to tell when refractive microlenses will enter the commercial marketplace or whether

commercialization of diffraction gratings will succeed. However, if the cost per piece of diffractive gratings continues to drop and Geltech succeeds in selling large volumes of them, pro- ducers and users of systems that contain optical components such as printers will benefit from

parts that are smaller than their refractive counterparts or that perform functions not possible

with refractive parts. Users of one device already on the market, a home sensor product for detect- ing toxic gases (details are still confidential), are already benefitting from the technology.

COMPANY:

Geltech Incorporated 3267 Progress Drive Orlando, FL 32826

Contact: Jean-Luc Nogues Phone: (407) 382-4003 ext. 302 Number of employees:

7 at project start, 65 at the end of 1997

Potential Broad Applications

If the unit-cost of diffraction gratings contin- ues to drop and Geltech succeeds in selling

large volumes of them, producers and users of systems that contain optical components will

benefit from components that are smaller,

lighter and less expensive than their refractive

(light-bending) counterparts. In addition, diffractive parts may perform functions not possible with refractive parts. Geltech's sales are small at this point, and specific applications

are still in the testing stage, but the potential broad applications and benefits are there.

The new gelcasting process technology can

be used in manufacturing microlenses, microlens arrays, beam splitters and other

micro-optics, and the company anticipates moving into these markets when it is economically feasible to do so. The technology has

already been applied to refractive lenses, diffraction gratings and porous glass optics. It might also be used for producing ceramic

packages (casings for chips in computers and

communications equipment) in electronics manufacturing and for applications in the

global surveillance and communications

fields.

122 ADVANCED TECHNOLOGY PROGRAM
Materials

IBM Corporation

Methods for Making

New Optical Switclies

Information is transmitted in a

variety of ways in a developed

economy: by surface mail,

telephone, facsimile, e-mail,

radio and TV broadcast, and

data downloading. Several technologies are useful for each type of transmission, and in some

instances, both electrical and opti- cal methods can be used. Optical

transmission has a signal-quality

advantage over electrical transmission in cable TV, telephone trunk

lines, undersea cables and other

cable applications.

Faster, Cheaper Optical

Transmission of Data

Optical fiber is rapidly replacing metal wires in

terrestrial and oceanic transmission, both for

voice and data, because of cost savings and

improved performance. Optical methods also have a potential advantage for transmitting

information from component to component

within computers. If optical signals could

replace electrical signals in this context, bandwidth could be multiplied many fold, while

heat generation and cross-talk —significant problems in computers —could be greatly

reduced.

New Optoelectronic Polymer and

Prototype Switches

IBM's ATP project aimed to develop optical

switches to link the optical fibers running

between components in computers. Currentgeneration switches convert data from an

optical to an electrical signal, do the necessary switching and then convert the data back to an

optical signal, a process that involves expensive

components and significantly limits the speed

of the system. IBM's proposed technology would help achieve the technical advantages of

optical signals over electrical signals in computers. IBM researchers succeeded in developing

high-speed, inexpensive optoelectronic switches using nonlinear optical polymeric waveguides

suitable for use in the data communications

industry. Specifically, the project developed a

general method for identifying and synthesizing particular dipolar molecules, known as chromophores, that are chemically stable at

temperatures exceeding 300 C. Researchers were able to incorporate these molecules into

thermally stable polymers, producing the

desired optoelectronic polymer.

. . . bandwidth could be

multiplied many fold,

while heat generation

and cross-talk . . . could

be greatly reduced.

Market Fails to Materialize as Expected

Commercialization by IBM is not expected in

the foreseeable future, even though IBM completed working prototypes of polymeric

switches. The need for such switches in the

envisioned application changed, and a broad market opportunity did not materialize. Technological change in this industry is rapid, and trends can suddenly switch directions. New Opportunities Arising

The rapid expansion of digital data transmission, however, is likely to open up opportunities for low-cost, high-speed optoelectronic

switches in the future, and devices based on

polymeric materials are viable candidates. Thus, chances are good that this technology

will ultimately be used in important applications. Of the six key researchers on the project,

five have left the company for other jobs. Knowledge spillover may occur elsewhere, as

these researchers use their knowledge of the

technology in new applications. They conjecture that the technology may be useful in the near future in telecommunications, rather than in computers. One potential application,

according to project researchers, is in wavelength division multiplexing (sending light of more than one wavelength through a single

optical fiber), where the technology might provide significant enhancements for high-speed, broad-band telecommunications. Another possible application is in microprocessor chip-tochip interconnects, but semiconductor industry

experts suggest that the need for those interconnects may not become apparent for 10 or more years or might not ever arise.

123
. . . this technology . .

.

may ... be useful in

telecommunications,

rather than computers.

PROJECT:

To develop high-speed, inexpensive optoelectronic switches using nonlinear optical poly- meric waveguides suitable for use in the data communications industry.

Duration: 8/1/1992 — 7/31/1995 ATP number: 91-01-0017

FUNDING (IN THOUSANDS):

ATP $1,787 44%

Company 1235 56%

Total $4,022

ACCOMPLISHMENTS:

Researchers reduced the size and cost and improved the speed and efficiency of switches

for computers and communications systems. IBM produced working prototypes of polymeric

switches. Technical progress is indicated by the

tact that IBM:

received a patent for technology related to the ATP project:

"Optical photorefractive article"

(No. 5,607,799: filed 4/21/1994,

granted 3/4/1997);

published more than 20 papers in professional journals in areas related to the project

goals; and

presented technical results at several professional society meetings and conferences.

COMMERCIALIZATION STATUS:

The technology has not yet been commercialized

by IBM or others. The market opportunities for the polymer-based switches has yet to materialize.

OUTLOOK:

While predicting the future of this technology is

difficult, it may possibly be useful in telecommunications, rather than computers. One potential application is in wavelength division multi- plexing (sending light of more than one wavelength through a single optical fiber), where the technology may find cost-effective use in switches and other components.

COMPANY:

IBM Corporation, Almaden Research Center 650 Harry Road, K13/E1 San Jose, CA 95120-6099

Contact: Mike Ross Phone: (408) 927-1283

Informal collaborator:

University of Colorado

The support enabled

company researchers to

publish more than 20

papers in professional

journals, enabling the

technology to be

disseminated among

other researchers.

No broad market benefits have emerged

yet, because there are no commercial products

incorporating the technology, either in the intended or other applications. It is likely, however, that the rapidly expanding use of digital data communication will lead to opportunities for low-cost, high-speed optoelectronic

switches in the future. The ATP-funded tech- nology is a core technology for the polymeric

materials and devices that IBM demonstrated, and these products have potential in a number

of future applications. Through its research under ATP funding, IBM was able to gain access to cutting-edge work being done on optoelectronic devices at

the University of Colorado. The support enabled company researchers to publish more

than 20 papers in professional joumals,

enabling the technology to be disseminated among other researchers. The knowledge

gains are well documented.

ADVANCED TECHNOLOGY PROGRAM
Appendices

Appendix A 126

Development of New Knowledge and Early Commercial Products and Processes

Appendix B 131

Terminated Projects

125
Appendix A Development of

New Knowledge and

Early Commercial

Products and Processes

Technical achievements are listed in Column

B - "Technology Developed." And products

being sold in the market or processes being

used in production are given in Column C

-

"Product or Process Commercialized." For

projects where there is no product or process

under current commercialization, a short note conceming the author's opinion about

prospects is given in Column C, in italics. There are seven tables below, one for each

of the seven chapters where results for the

individual projects are presented.

Table A1 . Biotechnology (Chapter 2)

Awardee Name

(A)

Technology Developed

(B)

Product or Process Commercialized

(c)

Aastrom Biosciences, Inc. Bloreactor technology for expansion of stem and

other cells outside the patient's body — used in

tests and clinical trials for more than 60 cancer

patients.

Commercialization lil<eiy.

Aphios Corporation Viral deactivation procedures based on critical

fluid technology — demonstrated in cleaning contaminated blood supplies.

Commercialization possible.

IVIolecular Simulations, Inc. Incorporation of density functional theory (DFT)

into easy-to-use software — targeted toward the

clinical and biotechnology communities for calculating molecular structures and energies.

Enhanced TurbomoleTM, a software tool that enables researchers to design new target molecules for drugs and other substances at much lower costs.

Thermo Trilogy Corporation Genetic engineering processes — demonstrated

in the production of pyrethrin, a natural

insecticide that is nontoxic to mammals.

Commercialization not lil(ely.

Tissue Engineering, Inc. Techniques and procedures for enhancing tissue growth, including processing tissue, extracting and storing collagen, and spinning and weaving

collagen fibers into fabrics for rebuilding lost tissues — demonstrated in production of human

protheses.

Commercialization lil<ely.

Table A2. Chemicals & Chemical Processing (Chapter 3)

Awardee Name

(A)

Technology Developed

(B)

Product or Process Commercialized

(C)

BioTraces, Inc. Multiphoton detection (MFD) technology —

demonstrated in enhanced immunoassay,

chromatography and nucleic acid analysis.

Licensee PetroTraces: applications of the technology in the petrochemical field.

Marketed directly by BioTraces: ssMPDTM, for

clinical diagnostics applications.

126 ADVANCED TECHNOLOGY PROGRAM
Table A3. Discrete Manufacturing (Cliapter 4)

Awardee Name

(A)

Technology Developed

(B)

Product or Process Commercialized

(C)

Auto Body Consortium (Joint Venture) Measurement and process control technology —

demonstrated in reduction of dimensional

variation in auto body assembly to two

millimeters or less.

New measurement and process control systems

in auto assembly plants that cut dimensional

variation to a world-class standard of two

millimeters and below, being implemented in 22

assembly plants in the United States and Canada.

HolnMsito Rnhntirc Inp opeciaiizeo iioar [WQui oireciion ano rangej scanner and related locating teciinologies —

demonstrated in ttie development of an intelligent, autonomous mobile robot capable of maneuvering around on a factory or tiospital floor.

HelpMate Robots in use as delivery devices in about 100 hospitals in the United States and

Canada.

DroAmn Pnncnrfiiim t Inint \/antiipo\ ricHiiip bunauniuiii ^joini vcniurcj A l/n /"Mill i^H rir\ r\or«r\H o/^Ttinofft (^iiofAnrt tri»if />or» M Knowieoge-Dasea sonvi/are system inat can

extract process "rules" from manufacturing

process data — demonstrated in test automations

for designing and manufacturing electronics components.

STEP Tools, Inc., an informal participant in the project, has incorporated the project's data

application interface in its ST-DeveloperTM

software tool.

Commercialization possible for the cnmnlpfp tvitem Saginaw IVIactiine Systems, Inc. Intelligent thermal-error correction technology, based on a generic mathematical model of thermal errors — demonstrated in high precision machine tool applications.

Accu-SystemTM — a new intelligent process

controller for increasing the accuracy of machine

tools.

Table A4. Electronics (Chapter 5)

Awardee Name

(A)

Technology Developed

(B)

Product or Process Commercialized

(C)

Accuwave Corporation A process for producing photorefractive materials based on holographies technology — demonstrated in fiber optics telecommunications

applications.

Wavelength division multiplexing components:

wavelength controllers, wavelength lockers and

fiber-optic collimators.

AstroPower, Inc. Improved liquid-phase epitaxial grovvth methods

and a high-throughput manufacturing technology — demonstrated in the fabrication of high- performance optoelectronic devices such as ultrabright light-emitting diodes (LEDs).

New epitaxy technology incorporated in all company production processes, including the Silicon-FilmTM solar cell.

Cree Research, Inc. Methods for increasing the quality and size (to 2

inches or more) of silicon carbide single crystals — demonstrated in the fabrication of LEDs and

other electronic and optoelectronic devices.

Less expensive blue light-emitting diodes, and

improved silicon carbide wafers that permit

fabrication of electronic devices that deliver more

power, last longer and can withstand very high

temperatures.

Cynosure, Inc. A fault-tolerant optical system — demonstrated

for a diode-laser array in a laser surgical

application.

Commercialization possible.

Diamond Semiconductor Group, LLC Compact high-current broad-beam ion-implantation technology for altering the electrical properties of materials — enabling production of larger semi-conductor wafers and also useful for other

applications.

A new high-current ion implanter, produced by

Varian Associates, which incorporates the new

techniques developed in the ATP project for implanting dopants on large silicon crystal wafers measuring 300 mm or more in diameter.

127
Table A4. Electronics (Chapter 5) — continued

Awardee Name

(A)

Technology Developed

(B)

Product or Process Commercialized

(C)

FS! International, Inc. A dry gas wafer cleaning method — demonstrated in the cleaning of computer-chip wafers during manufacturing (which traditionally has used wet chemical processing), and suitable for

the ever smaller features on new generations of chips.

Commercialization possible.

Galileo Corporation New processes for fabricating micro-channel

plates (MCPs) using photon detectors and other types of electron multipliers — demonstrated in ninht visinn annliratinns

Commercialization possible.

Hampshire Instruments, Inc. (Joint Venture)

Techniques for laser pumping of high-power laser systems — demonstrated using a laser-diode

array to pump a neodymium-doped gadolinium

npliiiim narnpt IpQpr fnr nrnHiipinn Inw-pnQt

x-rays.

Commercialization not likely.

Illinois Superconductor Corporation Fabrication process for thick-film, high- temperature superconducting materials —

demonstrated in the production of radio- frequency components for wireless applications.

Two products — SpectrumMasterTM and RangeMasterTM — installed in 22 cell phone base

stations in 12 cities.

Light Age, Inc. Broadly tunable laser source of ultraviolet (UV)

light based on alexandrite laser technology —

aimed at applications in science, medicine and

photolithography.

Three laser products — nUVoTM, PAL/UVTM

and PAL/PROTM — for laser surgery and potentially for other applications, including next-generation chip fabrication and investigation of weather

conditions in the upper atmosphere (70 miles above earth).

Lucent Technologies Inc. Fabrication, testing and alignment techniques for extremely precise aspherical, multilayer-coated mirrors — essential for extreme ultraviolet (EUV)

technology, a contender for future lithography systems.

Subcontractor Tinsley Laboratories: application of improveo laDricaiion meinoos learneo in tne

project to all its aspherical mirror production.

Subcontractor Tropel: a specialized interferometer

it now uses in other contract work.

Commercialization possible for lithography systems.

Multi-Film Venture (Joint Venture) Procedures tor interconnecting thin-film integrated circuits — targeted at complex, multifilm module (MFM) electronic device applications and suitable for use when the films are arranged

either side by side for flat-panel displays or in

layers for compact processor units.

Commercialization possible.

Nonvolatile Electronics, Inc. New procedures that enhance the producibility,

circuit density and signal strength of giant magnetoresistance (GMR) materials —

demonstrated in random access memory (RAM)

and highly sensitive sensor applications.

Highly sensitive sensors based on giant magnetoresistance materials that could be used in

brakes, pacemakers, and many other applications.

Spire Corporation Feedback-controlled, chemical vapor deposition processes — demonstrated in a reactor in a high-throughput mode for fabricating low-cost, high-quality metallo-organic laser diode arrays and other optoelectronic devices.A prototype reactor being used for limited pro- duction of epitaxial wafers.

Thomas Electronics, Inc. A high-efficiency electron source to enable development of new classes of efficient, bright,

flat fluorescent lamps — with wide applications

in computer and instrument displays and in highdefinition TV screens.

Prototypes and pilot models of flat fluorescent lamps placed with more than a dozen companies

for further evaluation and field testing of the new

technology in cockpit and other applications.

128 ADVANCED TECHNOLOGY PROGRAM
Table A5. Energy & Environment (Chapter 6)

Awardee Name

(A)

Technology Developed

(B)

Product or Process Commercialized

(C)

American Superconductor Corporation Wire fabrication and winding techniques for higti-temperature superconducting materials —

with primary applications in the development of extremely efficient large motors.

CryoSaverTM — electrical wires that carry current

into and out of cryogenically cooled devices, which reduces electrical resistance and helps

usprs arhipvp hpttpr nnpratinn pffiripnrips

Armstrong World Industries, Inc. Process technology for controlling the microstructure of aerogel insulation materials —

targeted toward cost-effectively enhancing its thermal insulating properties.

Commercialization possible thmugti licensing.

E. 1. du Pont de Nemours & Company Thin-film fabrication processes for high- temperature superconducting materials —

targeted toward low-cost electronics components.

New thin-film components, incorporated into magnetic resonance imaging equipment for use in hospitals and clinics.

Michigan Molecular Institute Fundamentals of polymer compatibilization —

targeted at demonstrating that mixed plastics

(either from waste streams or virgin) can be

successfully combined into materials with high performance characteristics.

Prefabricated wall units using compatibilized

plastic panels, made by Eagle Plastics Systems of

Florida in collaboration with University of Florida researchers.

Table A6. Information, Computers and Communications (Chapter 7) liiiHF ^^m._

Technology Developed Product or Process Commercialized

Communication Intelligence

Corporation #1

New data-entry software technology that recognizes each user's natural handwriting

without "training" the computer or the user —

intended to allow a pen and tablet to be used

instead of a keyboard.

Enhanced Handwriter® MXTM — a stylus-and- pad system that recognizes hand-printed text.

Communication Intelligence

Corporation #2

A recognition system for hand-written Chinese —

intended to replace a cumbersome data-entry system that uses a keyboard.

Commercialization likely.

Engineering Animation, Inc. Core algorithms to enable the creation of 3D

images from sets of 2D cross-sectional images — with an initial application targeting animated

visualization of the entire human body.

Three CD-ROMS (The Dissectable HumanTM, The Dynamic HumanTM and CardioViewer 3DTM), plus two medical textbooks that are used to train medical personnel.

ETOM Technologies, Inc. Techniques for writing and reading more than one

bit of information at the same spot on an

optoelectronic disk — and new optoelectronic disk materials.

Commercialization not likely.

Mathematical Technologies Inc. Mathematical methods for managing successive

digitized video images — with the purpose of removing defects from one or more individual frames of new or archived movies.

Digital Restoration ServicesTM, integrated into postproduction movie processing at a number of

facilities in the entertainment industry.

Torrent Systems, Inc. Component-based software and user interface for

building parallel processor applications — a tool

for the professional programmer.

OrchestrateTM — an innovative component soft- ware prototype system that enables a variety of hardware systems to handle massive amounts of

data and increase processing efficiency.

129
Table A7. Materials (Chapter 8)

Awardee Name

(A)

Technology Developed

(B)

Product or Process Commercialized

(C)

AlliedSlgnal, Inc. Near-net-shape gelcasting process that is safer and less costly than conventional gelcasting based on acrylamide, a cumulative neurotoxin —

demonstrated by making structural ceramic parts

for very high-temperature applications.

Commercialization lil<ely.

Geltech Incorporated Room temperature net-shape gelcasting method — demonstrated in the production of highquality, silica glass micro-optics.

Materials processing and mold fabrication methods used to develop a porous-glass product which is a component of a home sensor for toxic gases.

IBM Corporation Nonlinear optical polymeric waveguides —

demonstrated in the development of inexpensive

optoelectronic switches for computers and communications systems.

Commercialization not likely.

130 ADVANCED TECHNOLOGY PROGRAM
Appendix B Terminated Projects

A few ATP projects that are announced are not

carried through to completion. Some of them

never actually start. Others are stopped significantly short of completing their proposed research agenda. Announced projects may not start or may be stopped prior to completion, for a variety of reasons. But the main reason observed to date centers on difficulties with joint venture agree- ments. Sometimes companies that plan to collaborate may find last-minute obstacles to signing a joint venture agreement and decide to disband their planned partnership. A project may also be derailed because technical challenges are found to pose too high a risk from

the company's perspective, even with the ATP

award. Or, a company—particularly a small company—may encounter cash-flow difficulties and

have to drop its research activities to pursue

short-term survival. In addition, the technology and business climate may change in ways that obviate the need for a project, or alter participants' willingness to proceed. Sometimes, companies

simply change their strategic directions and get

out of research areas they formerly wished to pursue. Over the multi-year span of ATP-research

projects, a variety of personal, business, and technical circumstances can develop that alter original

plans. Such change is to some extent inevitable. From the beginning of the program in 1990

through f\/larch 1997, the period covered by this

report, 12 ATP-announced projects that were

scheduled to complete during this period did not complete, and, therefore, are not included in the group of projects addressed in the body of this

report. Of the 12, four were announced but then were canceled without ever getting underway;

eight went some distance in their research agenda,

but were stopped without completing substantial portions of their planned research. The ATP

contributed a total of $9.4 million to the eight

projects that went part way, and $0 to the four that were stopped up front.

The following analysis identifies the major factor

that contributed to the termination of each of the 12 projects, while providing anonymity to the companies to preserve their rights regarding

proprietary information: Case 1: The company, a single-company

awardee, found it necessary to reassign key R&D

personnel in order to pursue critical short-term

objectives that were unanticipated at the time it submitted the proposal. The company requested

that the project be terminated before any costs had

actually been incurred, and the ATP agreed. Case 2: ATP chose not to renew this single- company project after the first year of performance because it was not demonstrated that the company

could successfully carry out the technical effort proposed. Case 3: The company, a single-company

awardee, requested that the project be terminated

following its acquisition by another firm which did

not wish to pursue the ATP project's area of technology development, and the ATP agreed. Case 4: As a result of financial trouble, which

entailed severe restructuring, this single-company awardee decided to end its research in the technical area of its ATP project in order to concentrate its limited resources in other areas with more

immediate prospects for generating needed

revenue. Case 5: Members of the joint venture wished to stop the project due to changes in market trends

in the relevant technology areas, and the ATP

agreed. Case 6: The company requested that the project be discontinued when results produced from its

early work on the project were not as promising as had been expected, and the ATP agreed. Case 7: A key member of the planned joint venture membership withdrew from the project during

the negotiating phase, and ATP determined that,

as a result, the project was no longer competitive

against the ATP's selection criteria, and canceled it

before it got underway.

Case 8: The single-company awardee ran into

financial trouble, and needed to stop its research

effort in order to focus on short-term survival. Case 9: The joint venture members were unable

to correct organizational deficiencies identified by

the ATP and the ATP canceled the award before research work began. Case 10: The ATP elected not to renew this joint venture award because it determined that the project was unlikely to achieve its technical objectives

in a number of different areas and that the joint venture organization was not functioning effectively either managerially or administratively. Case 11: The companies failed to negotiate with one another the terms of their joint venture agree- ment, and subsequently proposed significant changes to their plan and joint venture team. The ATP rejected the revisions as not competitive

against ATP selection criteria, and the project was

never started. Case 12: The companies were unable to reach agreement among themselves on the terms and

conditions of their joint venture project, and it was

never started.

131
End Notes

Introduction

^ The selection criteria in effect from 1990

ttirougfi 1998 are as follows: 30% for scientific and tectinical merit; 20% for potential net broad-based economic benefits; 20% for ade- quacy of plans for eventual commercialization; 20% for level of commitment and organizational structure; and 10% for experience and

qualifications. The criteria are simplified for 1999 competitions: 50% scientific/technical merit and 50% potential broad-based eco- nomic benefits. A detailed description of the

earlier criteria are contained in Advanced

Technology Program Proposal Preparation

Kits published on or before December 1997

(the kit is updated periodically). The current

edition of the kit and other program materials may be obtained by calling 1-800-ATP-FUND,

or viewed at the ATP Web site, http://www.atp, nist.gov.

2 For a description of the ATP evaluation plan, see Ruegg (1998).

EAO's published economic studies are generally available at the ATP Web site, http://www.atp.nist.gov, or can be requested by calling 301-975-4332.

Chapter 1

^ Nonprofit institutes are no longer eligible to apply as single applicants. Two nonprofits,

^

one of which is in this grouping of 38

projects, received single-applicant awards

during the early years of the program, before

this change in eligibility by Congress.

2 Does not add to 100%, due to rounding.

Under a recent change in the ATP cost-share

rules, companies as large as the Fortune 500

companies who apply as single applicants are required to cover at least 60% of total project

costs, but none of these first completed

projects are affected by the change.

^ Proposers to the ATP are asked to identify potential markets for products that might one

day incorporate the new technology to be developed in the project. They are also asked

to discuss plans and pathways for commercializing and diffusing downstream products

or processes based on the technology, assuming that their proposed research objectives are achieved and commercialization becomes

technically feasible. But the ATP's funding

contribution to the project is restricted to research activities and may not be used for product development.

^ "New" in this context means that the product

or process is new in fundamental terms or that

it is significantly improved over earlier ver- sions. The 38 completed projects under study

here have commercialized products or processes of both kinds. And the term "product" is also used, where there is little chance

of confusion, to include both products and

processes.

^ Figure 2 and the explanatory text are taken from Ruegg (1999). An earlier version of Figure 2 may be found in Ruegg (1994).

7 See Powell (1997).

8 See Laidlaw(1997).

9 The Torrent Systems project was funded in ATP's Component Based Software Focused Program Competition in 1994.

^ As noted above, ATP funding and the research and development work it supports typically are

part of a larger picture. A recipient frequently

will have started some related research and development work before receiving ATP funds and may continue with additional efforts after the ATP project has been completed. It is unusual to find a project in wfiich there is an

exact one-to-one matching between technical achievements of the ATP-funded project and

an award citation. For all of the entries in the

table, company officials confirmed that the award was for achievements that were at least partly the result of the ATP-funded project.

For two projects, the company response to the question about patent applications that had been filed but for which the grant had not yet been received was "several" instead of a precise number For tabulation purposes, the number four has been used; it is the simple

132 ADVANCED TECHNOLOGY PROGRAM
average of the number for tfie ten projects for whicti a precise answer was given.

^2 Includes projects reporting "several" papers. ^3 For a detailed treatment of ttie relationship between spillover benefits (knowledge and

market) and commercialization, see Jaffe (1997) . With reference to spillovers that occur

as a new product is sold commercially, he

notes: "Market spillovers will not be realized unless the innovation is commercialized

successfully. Market spillovers accrue to the customers that use the innovative product; they will not come to pass if a technically successful effort does not lead to successful commercialization" (p. 12). In commenting on

spillovers that occur because new knowledge

is disseminated to others outside the inventing firm, he observes: "Note that even in the case of knowledge spillovers, the social return

is created by the commercial use [emphasis in original] of a new process or product, and the

profits and consumer benefits thereby created"

(p. 15).

There were several reasons why answers were

not available for the six remaining projects. In one case, the lead company was out of busi- ness and the owner deceased. In another

instance, the company had changed hands

twice, and the current owners were not knowledgeable about the role of the ATP. In other cases, key staff on the project had left the company. Finally, answers in a few cases were too ambiguous to tabulate. ^5 Project leaders for three of these 21 projects

said their companies would have gone out of business had the ATP award not been made.

Another factor potentially influenced by ATP

funding — the scope and scale of the project — was not explicitly covered in the interviews

for this report.

1'' Mansfield, et. al.(1977). When the awardee supplied a range, the midpoint is used for this tabulation. One

company, HelpMate Robotics, said the research was completed "much sooner" than it could have been done without the ATP funds.

It was counted in the 21 months lag group, which is the median.

It is unclear whether the authors used 8 or 15

years in their calculations for this set of innovations. Therefore, both numbers are given here. 20 See Ruegg (1998) and Powell (1997).

2^ The ATP's Economic Assessment Office has commissioned detailed economic evaluation case studies for selected projects. See Ruegg

(1998) . 22 See RTI (1998), pp. 1-22, table 1-3. 23 See Gonsad Research Corporation (Consad)

(1996).

2^^ See Consad (1996). The Consad study esti- mated economywide benefits for applications

of the technology in the automobile industry

only, so its estimates contain no information about potential benefits from application of the new technology in other industries. 25 See RTI (1998), pp. 1-23, table 1-4. 26 See RTI (1998), pp. 1-22, table 1-3.

Chapter 2

^ See Research Triangle Institute (RTI) (1998),

p. 3-3.

2 Ibid., pp. 1-22, table 1-3.

3 See RTI (1998), p. 1-22, Table 1-3.

Chapter 4

^ These estimates and others below are from Consad Research Corporation (1997).

Chapter 7

^ EAI Web site, at http://vww.eai.com.

2 Technology Transfer Report (1994). 3 Gupta (1995).

^^^^^^^ 133
References

Consad Research Corporation (1997). Advanced

Technology Program Case Study: The Development ol Advanced Technologies and

Systems for Controlling Dimensional Variation in Automobile Body Manufacturing, Report to the Advanced Technology Program of the National

Institute of Standards and Technology, NIST GCR

97-709. U. S. Department of Commerce,

Gaithersburg, MD, March 1997.

Jaffe, Adam (1996). Economic Analysis of

l^esearch Spillovers: Implications for the Advanced Technology Program. Report to the Advanced Technology Program of the National

Institute of Standards and Technology, NIST GCR

97-708. U. S. Department of Commerce,

Gaithersburg, MD, December 1996.

Laidlaw, Frances Jean (1997). Acceleration of Technology Development by the Advanced

Technology Program: The Experience of 28

Projects Eunded in 1991, NISTIR 6047, October 1997.

Mansfield, Edwin, J. Rappaport, A. Romeo, S. Wagner, and G. Beardsley (1977). "Social and

Private Rates of Return from Industrial

I n n 0vat i 0 n

, " Quarterly Journal of Economics

91(2):221-240.

Pow/ell, Jeanne (1997). Development,

Commercialization, and Diffusion of Enabling

Technologies: Progress Report for Projects Eunded 1993-1995, NISTIR 6098, December

1997.

Research Triangle Institute (1998). A Eramework

for Estimating the National Economic Benefits of ATP Funding ofh/ledical Technologies, Report to the Advanced Technology Program of the National

Institute of Standards and Technology, Advanced

Technology Program, NIST GCR 97-737. U. S. Department of Commerce, Gaithersburg, MD,

April, 1998.

Ruegg, Rosalie (1994). "Overview of ATP's

Evaluation Plan and Early Impacts," presentation (unpublished), at a NIST seminar, September

1994.

(1998). "The Advanced Technology

Program, Its Evaluation Plan, and Progress in Implementation," Journal of Technology Transfer, vol.23 (2) Summer 1998: 5-10.

(1999). "The Advanced Technology

Program's Approach to Technology Diffusion,"

invited paper for the NATO Science and

Technology Policy Workshop Report, 1999.

Technology Transfer Report [W^]. November 1, 1994.

Udayan Gupta (1995). "Plan to Kill U.S. NewTechnology Funding Draws Fire — Backers of Cuts Cite 'Corporate Welfare'; Critics Decry Loss

of Seed Money," The Wall Street Journal , May 25, 1995, p. B2.

134 ADVANCED TECHNOLOGY PROGRAM
About the Advanced Technology Program

The Advanced Technolog}' Program (ATP) is a partnership between government and private industry to conduct

high-risk research to develop enabling technologies that promise significant commercial payoffs and widespread

benefits for the economy. The ATP provides a mechanism for industry to extend its technological reach and push

the envelope beyond what it otherwise would attempt.

Promising future technologies are the domain of the ATP:

Enabling technologies that are essential to the development of future new and substantially improved

projects, processes, and services across diverse application areas;

Technologies for which there are challenging technical issues standing in the way of success;

Technologies whose development often involves complex "systems" problems requiring a collaborative

effort by multiple organizations;

Technologies which will go undeveloped and/or proceed too slowly to be competitive in global markets

without the ATP.

The ATP funds technical research, but it does not fund product development. That is the domain of the company partners. The ATP is industry driven, and that keeps it grounded in real-world needs. For-profit companies conceive, propose, co-fund, and execute all of the projects cost-shared by the ATP

Smaller companies working on single-firm projects pay a minimum of all the indirect costs associated with

the project. Large, "Fortune-500" companies participating as a single firm pay at least 60 percent of total project

costs. Joint ventures pay at least half of total project costs. Single-firm projects can last up to three yeare; joint

ventures can last as long as five years. Companies of all sizes participate in ATP-funded projects. To date, more

than half of the ATP awards have gone to individual small businesses or to joint ventures led by a small business.

Each project has specific goals, funding allocations, and completion dates established at the outset. Projects

are monitored and can be terminated for cause before completion. All projects are selected in rigorous

competitions which use peer-review to identify those that score highest against technical and economic criteria.

Contact the ATP for more information- On the World Wide Web; http://www.atp.nist.gov;

By e-mail: atp@nist.gov;

By phone: 1-800-ATP-Fund (1-800-287-3863);

By writing: Advanced Technology Program, National Institute of Standards and Technology, 100 Bureau Drive, Stop 4701, Gaithersburg, MD 20899-4701. About the Author

William F Long is President of Business Performance Research Associates, Inc. (BPRA), a small consulting firm

located in Bethesda, Maryland. He is a research economist affiliated with the National Bureau of Economic

Research, and a research associate and sworn special employee at the Center for Economic Studies of the U.S. Bureau of the Census. In the early 1990s he was a guest scholar at the Brookings Institution. Dn Long received

his Ph.D. in economics from the University of California at Berkeley

Prior to establishing BPRA in 1989, Dr Long served as a research economist at the Federal Trade Commission, where he developed and managed the Commission's Line of Business Reporting Program, and as an assistant professor of economics at Cornell University. Since 1989, he has conducted several studies in the

economics of technology, with support from the National Science Foundation, the University of North Carolina at

Chapel Hill, and private foundations.

Dr. Long performed this study under contract with the National Institute of Standards and Technology.
Nisr